SEPARATE ACCOUNT A OF PM GROUP LIFE INSURANCE CO, N-4, 1999-01-25

SEPARATE ACCOUNT A OF PM GROUP LIFE INSURANCE CO
N-4, 1999-01-25

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<PAGE>

As filed with the Securities and Exchange Commission on January 21, 1999
Registration No. 333-
811

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post Effective Amendment No. [_]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [_]
(Check appropriate box or boxes)

SEPARATE ACCOUNT A
(Exact Name of Registrant)

PM GROUP LIFE INSURANCE COMPANY*
(Name of Depositor)

700 Newport Center Drive
Newport Beach, California 92660
(Address of Depositor's Principal Executive Offices) (Zip Code)

(949) 640-3743
(Depositor's Telephone Number, including Area Code)

Diane N. Ledger
Vice President
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
(Name and address of agent for service)

Copies of all communications to:

Diane N. Ledger Jane A. Kanter, Esq.
Pacific Life Insurance Company Dechert Price & Rhoads
P. O. Box 9000 1775 Eye Street, N.W.
Newport Beach, CA 92658-9030 Washington, D.C. 20006-2401

Title of Securities being registered: interests in individual flexible premium
variable annuity contracts.

Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement. The Registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

Filing Fee: None

* Depositor has requested authorization from the New York Department of
Insurance to engage in the insurance business in the state of New York. If
such authorization is granted, it is anticipated that Depositor will change
its name to "Pacific Life & Annuity Company."

<PAGE>

SEPARATE ACCOUNT A
FORM N-4
CROSS REFERENCE SHEET

PART A

Item No. Prospectus Heading

1. Cover Page Cover Page

2. Definitions SPECIAL DEFINITIONS

3. Synopsis SUMMARY; FEE TABLE

4. Condensed Financial Information YOUR INVESTMENT OPTIONS --Variable
Investment Option Performance;
ADDITIONAL INFORMATION --Financial
Statements; Financial Highlights

5. General Description of Registrant,
Depositor and Portfolio Companies SUMMARY -- What are My Investment
Options? PM GROUP Life Insurance
Company [Pacific Life and Annuity
Company] AND THE SEPARATE ACCOUNT --
PM Group Life Insurance Company
[Pacific Life and Annuity
Company], -- Separate Account A; YOUR
INVESTMENT OPTIONS --Your Variable
Investment Options; ADDITIONAL
INFORMATION --Voting Rights

6. Deductions SUMMARY -- What Charges Will I Pay?,
--Can I Change My Investment
Options?; FEE TABLE; HOW YOUR
PAYMENTS ARE ALLOCATED --Transfers;
CHARGES, FEES AND DEDUCTIONS;
WITHDRAWALS -- Optional Withdrawals

7. General Description of Variable
Annuity Contracts SPECIAL DEFINITIONS; SUMMARY; WHY
BUY A CONTRACT; PURCHASING YOUR
CONTRACT -- How to Apply for your
Contract; HOW YOUR PAYMENTS ARE
ALLOCATED; RETIREMENT BENEFITS AND
OTHER PAYOUTS -- Choosing Your
Annuity Option, -- Your Annuity
Payments, -- Death Benefits;
ADDITIONAL INFORMATION -- Voting
Rights, -- Changes to Your Contract,
-- Changes to ALL Contracts, --
Inquiries and Submitting Forms
and Requests, -- Timing of
Payments and Transactions

8. Annuity Period RETIREMENT BENEFITS AND OTHER PAYOUTS

9. Death Benefit RETIREMENT BENEFITS AND OTHER PAYOUTS
-- Death Benefits -- Death of Owner
Distribution Rules

10. Purchases and Contract Value SUMMARY - How Do I Purchase a
Contract?; PURCHASING YOUR CONTRACT;
HOW YOUR PAYMENTS ARE ALLOCATED; PM
GROUP Life Insurance Company [Pacific
Life and Annuity Company] AND THE
SEPARATE ACCOUNT -- PM Group Life
Insurance Company [Pacific Life and
Annuity Company]; THE GENERAL
ACCOUNT -- Withdrawals and Transfers

11. Redemptions SUMMARY -- Can I Withdraw My
Contract Value?, -- Can I Return My
Contract?; CHARGES, FEES AND
DEDUCTIONS; WITHDRAWALS; ADDITIONAL
INFORMATION -- Timing of Payments and
Transactions; THE GENERAL ACCOUNT --
Withdrawals and Transfers

12. Taxes SUMMARY; CHARGES, FEES AND DEDUCTIONS
-- Premium Taxes; WITHDRAWALS --
Optional Withdrawals, -- Tax
Consequences of Withdrawals; FEDERAL
TAX STATUS

13. Legal Proceedings Not Applicable

14. Table of Contents of the Statement
of Additional Information CONTENTS OF THE STATEMENT
OF ADDITIONAL INFORMATION

PART B

Item No. Statement of Additional Information
Heading

15. Cover Page Cover Page

16. Table of Contents TABLE OF CONTENTS

17. General Information and History Not Applicable

18. Services Not Applicable

19. Purchase of Securities Being Offered THE CONTRACTS AND THE SEPARATE
ACCOUNT -- Calculating Subaccount
Unit Values, -- Systematic Transfer
Programs

20. Underwriters DISTRIBUTION OF THE CONTRACTS --
Pacific Mutual Distributors, Inc.

21. Calculation of Performance Data PERFORMANCE

22. Annuity Payments THE CONTRACTS AND THE SEPARATE
ACCOUNT --Variable Annuity Payment
Amounts

23. Financial Statements FINANCIAL STATEMENTS

PART C

Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>

PACIFIC PORTFOLIOS
Prospectus
[XXX X, 1999]

[LOGO OF PACIFIC PORTFOLIOS]

The Contract is not available in all states. This prospectus is not an offer in
any state or jurisdiction where we're not legally permitted to offer the
Contract.

The Contract is described in detail in this Prospectus, and its Statement of
Additional Information (SAI), and any supplements to them. The Portfolios
underlying the Variable Investment Options are described in the prospectus for
the Pacific Select Fund, its SAI and any supplements to them. Nobody has the
right to describe the Contract any differently than it has been described in
this Prospectus.

You should be aware that the Securities and Exchange Commission ("SEC") has not
reviewed the Contract and does not guarantee that the information in this
Prospectus, its SAI and any supplements is accurate or complete. It is a
criminal offense to say otherwise.

This annuity Contract is not a deposit or obligation of, or guaranteed or
endorsed by, any bank. It's not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency. Investment in a contract involves risk, including possible loss of
principal.

Pacific Portfolios is an individual flexible premium deferred variable annuity
contract ("Contract") issued by PM Group Life Insurance Company [Pacific Life &
Annuity Company].

This prospectus provides information that you should know before buying a
Contract. Also, a current prospectus of the Pacific Select Fund, a fund that
provides the underlying portfolios for the Variable Investment Options offered
by the Contract, accompanies this Prospectus.

Please read these documents carefully and retain them for your future
reference.

Investment Options

Variable:

<TABLE>
<C> <S>
Money Market Mid-Cap Value
High Yield Bond Equity
Managed Bond Bond and Income
Government Securities Equity Index
Aggressive Equity Small-Cap Index
Growth LT REIT
Equity Income International
Multi-Strategy Emerging Markets
Large-Cap Value

Fixed:

Fixed Option DCA Plus Fixed Option
</TABLE>
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
SPECIAL DEFINITIONS........................................................ 4
SUMMARY.................................................................... 7
FEE TABLE.................................................................. 9
WHY BUY A CONTRACT......................................................... 12
YOUR INVESTMENT OPTIONS.................................................... 13
Your Variable Investment Options......................................... 13
Variable Investment Option Performance................................... 15
Your Fixed Option and DCA Plus Fixed Option.............................. 15
PURCHASING YOUR CONTRACT................................................... 16
How to Apply for Your Contract........................................... 16
Making Your Purchase Payments............................................ 16
HOW YOUR PAYMENTS ARE ALLOCATED............................................ 17
Choosing Your Investment Options......................................... 17
Investing in Variable Investment Options................................. 17
When Your Investment is Effective........................................ 17
Transfers................................................................ 18
CHARGES, FEES AND DEDUCTIONS............................................... 20
Withdrawal Charge........................................................ 20
Premium Taxes............................................................ 21
Annual Fee............................................................... 22
Waivers and Reduced Charges.............................................. 22
Mortality and Expense Risk Charge........................................ 22
Administrative Fee....................................................... 23
Expenses of the Fund..................................................... 23
RETIREMENT BENEFITS AND OTHER PAYOUTS...................................... 23
Selecting Your Annuitant................................................. 23
Annuitization............................................................ 23
Choosing Your Annuity Date ("Annuity Start Date")........................ 24
Default Annuity Date and Options......................................... 25
Choosing Your Annuity Option............................................. 25
Your Annuity Payments.................................................... 26
Death Benefits........................................................... 27
WITHDRAWALS................................................................ 30
Optional Withdrawals..................................................... 30
Tax Consequences of Withdrawals.......................................... 31
Short-Term Cancellation Right ("Free Look").............................. 31
PM GROUP AND THE SEPARATE ACCOUNT.......................................... 32
PM Group Life Insurance Company [Pacific Life and Annuity Company]....... 32
Separate Account A....................................................... 32
FEDERAL TAX STATUS......................................................... 33
Taxes Payable by Contract Owners: General Rules.......................... 33
Qualified Contracts...................................................... 35
Loans.................................................................... 37
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
Page
----
<S> <C>
Withholding.............................................................. 39
Impact of Federal Income Taxes........................................... 39
Taxes on PM Group [PLA].................................................. 39
ADDITIONAL INFORMATION..................................................... 40
Voting Rights............................................................ 40
Changes to Your Contract................................................. 40
Changes to ALL Contracts................................................. 41
Inquiries and Submitting Forms and Requests.............................. 42
Telephone Transactions................................................... 43
Timing of Payments and Transactions...................................... 43
Confirmations, Statements and Other Reports to Contract Owners........... 43
Replacement of Life Insurance or Annuities............................... 44
Financial Statements - Statutory Basis................................... 44
Preparation for the Year 2000............................................ 44
THE GENERAL ACCOUNT........................................................ 45
General Information...................................................... 45
Guarantee Terms.......................................................... 45
Withdrawals and Transfers................................................ 46
CONTENTS OF THE SAI........................................................ 47
</TABLE>

3
<PAGE>

SPECIAL DEFINITIONS

In this Prospectus, "we," "our" and "us" refer to PM Group Life Insurance
Company [Pacific Life & Annuity Company] ("PM Group" ["PLA"]); "you" and
"your" refer to the Contract Owner.

Account Value--The amount of your Contract Value allocated to a specified
Variable Investment Option or the Fixed Option.

Annual Fee--A $30 fee charged each year on your Contract Anniversary and at
the time of a full withdrawal, if your Net Contract Value is less than $50,000
on that date.

Annuitant--A person on whose life annuity payments may be determined. An
Annuitant's life may also be used to determine certain increases in death
benefits, and to determine the Annuity Date. A Contract may name a single
("sole") Annuitant or two ("Joint") Annuitants, and may also name a
"Contingent" Annuitant. If you name Joint Annuitants or a Contingent
Annuitant, "the Annuitant" means the sole surviving Annuitant, unless
otherwise stated.

Annuity Date ("Annuity Start Date")--The date specified in your Contract, or
the date you later elect, if any, for the start of annuity payments if the
Annuitant (or Joint Annuitants) is (or are) still living and your Contract is
in force; or if earlier, the date that annuity payments actually begin.

Annuity Option--Any one of the income options available for a series of
payments after your Annuity Date.

Beneficiary--A person who may have a right to receive the death benefit
payable upon the death of the Annuitant or a Contract Owner prior to the
Annuity Date, or has a right to receive remaining guaranteed annuity payments,
if any, if the Annuitant dies after the Annuity Date.

Business Day--Any day on which the value of an amount invested in a Variable
Investment Option is required to be determined, which currently includes each
day that the New York Stock Exchange is open for trading and on which our
Annuities administrative offices are open. The New York Stock Exchange is
closed on weekends and on the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, July Fourth, Labor Day, Thanksgiving Day and
Christmas Day. We may choose to close our Annuities administrative offices on
other holidays, a day immediately preceding or following a national holiday,
or in emergency situations, such as those extraordinary circumstances as
described in Timing of Payments and Transactions. In this Prospectus, "day" or
"date" means Business Day unless otherwise specified. If any transaction or
event called for under a Contract is scheduled to occur on a day that is not a
Business Day, such transaction or event will be deemed to occur on the next
following Business Day unless otherwise specified. Special circumstances such
as leap years and months with fewer than 31 days are discussed in the SAI.
Each Business Day ends at 4:00 p.m. Eastern time.

Code--The Internal Revenue Code of 1986, as amended.

Contingent Annuitant--A person, named in your Contract, who will become your
sole surviving Annuitant if your existing sole Annuitant (or both Joint
Annuitants) should die.

Contingent Owner--A person, named in your Contract, who will succeed to the
rights as a Contract Owner of your Contract if all named Contract Owners die
before your Annuity Date.

Contract Anniversary--The same date, in each subsequent year, as your Contract
Date.

Contract Date--The date we issue your Contract.

Contract Debt--As of the end of any given Business Day, the principal amount
you have outstanding on any loan under your Contract, plus any accrued and
unpaid interest. Loans are available only on certain Qualified Contracts.

4
<PAGE>

Contract Owner, Owner, Policyholder, you, or your--Generally, a person who
purchases a Contract and makes the Purchase Payments. A Contract Owner has all
rights in the Contract, including the right to make withdrawals, designate and
change beneficiaries, transfer amounts among Investment Options, and designate
an Annuity Option. If your Contract names Joint Owners, both Joint Owners are
Contract Owners and share all such rights.

Contract Value--As of the end of any Business Day, the sum of your Variable
Account Value, Fixed Option Value, DCA Plus Fixed Option Value and the Loan
Account Value.

Contract Year--A year that starts on the Contract Date or on a Contract
Anniversary.

DCA Plus Fixed Option--If you allocate all or part of your Purchase Payments
to the DCA Plus Fixed Option, such amounts are held in our General Account and
receive interest at rates declared periodically (the "Guaranteed Interest
Rate"), but not less than an annual rate of 3%.

DCA Plus Fixed Option Value--The aggregate of your Contract Value allocated to
the DCA Plus Fixed Option.

Earnings--As of the end of any Business Day, your Earnings equal your Contract
Value less your aggregate Purchase Payments which are reduced by withdrawals
of prior Purchase Payments.

Fixed Option--If you allocate all or a part of your Purchase Payments or
Contract Value to the Fixed Option, such amounts are held in our General
Account and receive interest at rates declared periodically, but not less than
an annual rate of 3%.

Fixed Option Value--The aggregate amount of your Contract Value allocated to
the Fixed Option.

Fund--Pacific Select Fund.

General Account--Our General Account consists of all of our assets other than
those assets allocated to Separate Account A or to any of our other separate
accounts.

Guaranteed Interest Rate--The interest rate guaranteed at the time of
allocation (or rollover) for the Guarantee Term on amounts allocated to the
Fixed Option or DCA Plus Fixed Option. All Guaranteed Interest Rates are
expressed as annual rates and interest is accrued daily. The rate will not be
less than an annual rate of 3%.

Guarantee Term--The period during which an amount you allocate to the Fixed
Option earns a Guaranteed Interest Rate. These terms are up to one-year for
the Fixed Option and one year for the DCA Plus Fixed Option.

Investment Option--A Variable Account, the Fixed Option or the DCA Plus Fixed
Option offered under the Contract.

Joint Annuitant--If your Contract is a Non-Qualified Contract, you may name
two Annuitants, called "Joint Annuitants," in your application for your
Contract. Special restrictions apply for Qualified Contracts.

Loan Account Value--The amount transferred from your Investment Options to the
General Account to secure a Contract Loan, increased by interest earned and
decreased by any principal repayments and/or withdrawals or transfers of
interest earned.

Net Contract Value--Your Contract Value less Contract Debt.

Non-Qualified Contract--A Contract other than a Qualified Contract.

Portfolio--A separate portfolio of the Fund.

Primary Annuitant--The individual that is named in your Contract, the events
in the life of whom are of primary importance in affecting the timing or
amount of the payout under the Contract.

5
<PAGE>

Purchase Payment--An amount paid to us by or on behalf of a Contract Owner, as
consideration for the benefits provided under the Contract.

Qualified Contract--A Contract that qualifies under the Code as an individual
retirement annuity ("IRA"), or a Contract purchased by a Qualified Plan,
qualifying for special tax treatment under the Code.

Qualified Plan--A retirement plan that receives favorable tax treatment under
Section 401, 403, 408, 408A or 457 of the Code.

Policyholder--The Contract Owner.

SEC--Securities and Exchange Commission.

Separate Account A (the "Separate Account")--A separate account of ours
registered as a unit investment trust under the Investment Company Act of
1940.

Subaccount--An investment division of the Separate Account. Each Subaccount
invests its assets in shares of a corresponding Portfolio or a class of shares
of a Portfolio.

Subaccount Annuity Unit--Subaccount Annuity Units (or "Annuity Units") are
used to measure variation in variable annuity payments. To the extent you
elect to convert all or some of your Contract Value into variable annuity
payments, the amount of each annuity payment (after the first payment) will
vary with the value and number of Annuity Units in each Subaccount attributed
to any variable annuity payments. At annuitization (after any applicable
premium taxes and/or other taxes are paid), the amount annuitized to a
variable annuity determines the amount of your first variable annuity payment
and the number of Annuity Units credited to your annuity in each Subaccount.
The value of Subaccount Annuity Units, like the value of Subaccount Units, is
expected to fluctuate daily, as described in the definition of "Unit Value."

Subaccount Unit--Before your Annuity Date, each time you allocate an amount to
a Subaccount, your Contract is credited with a number of Subaccount Units in
that Subaccount; these Units are used, for accounting purposes, to measure
your Account Value in that Subaccount. The value of Subaccount Units is
expected to fluctuate daily, as described in the definition of Unit Value.

Unit Value--The value of a Subaccount Unit ("Subaccount Unit Value") or
Subaccount Annuity Unit ("Subaccount Annuity Unit Value"). Unit Value of any
Subaccount is subject to change on any Business Day in much the same way that
the value of a mutual fund share changes each day; the fluctuations in value
reflect the investment results, expenses of and charges against the Portfolio
in which the Subaccount invests its assets, and also reflect charges against
the Separate Account. Changes in Subaccount Annuity Unit Values also reflect
an additional factor that adjusts Subaccount Annuity Unit Values to offset our
Annuity Option Table's implicit assumption of an annual investment return of
5%; the effect of this assumed investment return is explained in detail in the
SAI. Unit Value of a Subaccount Unit or Subaccount Annuity Unit on any
Business Day is measured at or about 4:00 p.m., Eastern time, on that Business
Day.

Variable Account Value--The aggregate amount of your Contract Value allocated
to all Subaccounts.

Variable Investment Option--A Subaccount.

6
<PAGE>

SUMMARY

This is a brief overview of the more significant features of your Contract.
More detailed information may be found in other sections of this Prospectus,
the SAI and the Contract. Endorsements to your Contract may contain variations
form the standardized information in this Prospectus.

If the information in any Contract endorsement or Prospectus supplement differs
from the information in this Prospectus, we will consider the endorsement or
supplement to be correct.

Here is some important information to remember about your Contract.

<TABLE>
<C> <S>
What is the Contract? The Contract is an annuity Contract designed to be a
long-term financial planning device. It permits you
to invest, on a tax-deferred basis, for retirement or
other long-range goals. It also allows you to receive
a series of regular payments for a specific length of
time. See FEDERAL TAX STATUS.

How do I Purchase a You can purchase a Contract with an initial payment
Contract? of at least $5,000 (for a Qualified Contract $2,000).
After the initial Purchase Payment, you may make
additional Purchase Payments if you want, but it is
not required. You can also pay your initial Purchase
Payment over the first Contract Year by automatic
installments. See PURCHASING YOUR CONTRACT.

What are my You select your own Investment Options. Seventeen
Investment Options? Variable Investment Options are available through the
Separate Account A. Each Variable Investment Option
invests in a corresponding Portfolio of the Pacific
Select Fund ("Fund"). Pacific Life Insurance Company
("Pacific Life") is the Investment Advisor of the
Fund. Pacific Life and the Fund have retained other
Portfolio managers for fifteen of the available
Portfolios. You bear the investment associated with
the Variable Investment Options. You should expect
any Contract Value and any Subaccount Annuity Units
attributed to any variable annuity payments to
fluctuate. See HOW YOUR PAYMENTS ARE ALLOCATED. Fixed
annuity payments are funded through Pacific Life's
General Account.

Also available as Investment Options are the Fixed
Option and the DCA Plus Fixed Option. These options
provide a fixed annual rate of at least 3%. We hold
the Purchase Payments that you allocate to the Fixed
Option and the DCA Plus Option in our General
Account. You may select as many Investment Options as
you wish up to the Annuity Date of your Contract.
After that date, you may select the Variable
Investment Options if you choose variable annuity
payments.

Can I Change My On or before your Annuity Date, you may transfer
Investment Options? amounts from any Investment Option to another. After
the Annuity Date, you may make up to four exchanges
of subaccount annuity units in any twelve-month
period. Certain restrictions apply to the Fixed
Option and DCA Plus Fixed Option. You may transfer
amounts automatically using Dollar Cost Averaging,
portfolio rebalancing, or an earnings sweep. In the
future, we may impose transaction fees for excessive
transfers. See HOW YOUR PAYMENTS ARE ALLOCATED-
Transfers and THE GENERAL ACCOUNT-Withdrawals and
Transfers in this Prospectus and THE CONTRACTS AND
THE SEPARATE ACCOUNT-Systematic Transfer Programs in
the SAI.
</TABLE>

7
<PAGE>

<TABLE>
<C> <S>
What Charges Will I Pay? We charge an administrative fee at an annual rate of
.15% and a mortality and expense risk charge at an
annual rate of 1.25% fees against the assets held in
the Variable Investment Options. The amounts invested
in the Variable Investment Options are also subject
each year to the operating expenses imposed on the
corresponding Portfolios of the Fund. Before you
annuities and at the time of a full withdrawal if
your Net Contract Value is less than $50,000, we
charge an annual fee of $30 each year. You may be
subject to a contingent deferred sale charge (or
"withdrawal charge") when you withdraw amounts from
your Contract Value that we attributed to Purchase
Payments. This charge can be up to 7%. It is
determined by:

. the amount of your withdrawal

. the length of time the Purchase Payment
considered withdrawn was held under the Contract.

. You may also be subject to other fees. See
CHARGES, FEES AND DEDUCTIONS.

Can I Withdraw My Generally, you may withdraw all or part of your
Contract Value? Contract Value at any time on or before your Annuity
Date. Withdrawals may be subject to fees, charges and
taxation. In certain circumstances, you may be
subject to a tax penalty. Certain restrictions on
withdrawals are imposed from the Fixed Option and
certain Qualified Contracts. See WITHDRAWALS, FEDERAL
TAX STATUS and THE GENERAL ACCOUNT-Withdrawals and
Transfers.

Can I Return My For 10 days after you receive your Contract, you may
Contract? return it for a refund without any penalties or
surrender charges. This is called a "free look"
provision. See WITHDRAWALS-Short-Term Cancellation
Right ("Free-Look").

How do I You can reach a PM Group [PLA] service representative
Reach PM Group between the hours of 6:00 a.m. and 5:00 p.m., Pacific
[PLA] time at 1-800-XXX-XXXX. For information on sending
payments, forms or other requests, see ADDITIONAL
INFORMATION-Inquiries and submitting Forms and
Requests.
</TABLE>

8
<PAGE>

FEE TABLE

The purpose of this fee table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly under your
Contract.

The table reflects expenses of the Separate Account as well as expenses of
the fund. Expenses shown under "Contract Expenses" and "Separate Account Annual
Expenses" are specified under the terms of the Contract and are fixed. Expenses
shown under "fund Annual Expenses after Expense Limitation" are estimated
expenses of the Fund; Fund expenses are not specified under the terms of the
Contract and may vary from year to year.

In addition to the charges and expenses described below, a charge for premium
taxes and/or other taxes may apply. See CHARGES, FEES AND DEDUCTIONS-Premium
Taxes, the discussion under ORGANIZATION AND MANAGEMENT OF THE FUND in the
Fund's Prospectus, and Investment Adviser and Portfolio Management Agreements
in the Fund's SAI.

<TABLE>
<S> <C>
Contract Expenses

Sales Charge Imposed on Purchase Payments............................... None
Maximum Withdrawal Charge/1/............................................ 7.0%
(computed as a percentage of Purchase Payments)
Withdrawal Transaction Fee/2/........................................... None
Transfer Fee/3/......................................................... None
Annual Fee/4/........................................................... $30.00

Separate Account A Annual Expenses
(as a percentage of average daily account value)
Mortality and Expense Risk Charge....................................... 1.25%
Administrative Fee...................................................... 0.15%
</TABLE>

/1/ The withdrawal charge, also called a "contingent deferred sales charge," may
not apply or may be reduced under certain circumstances. See CHARGES, FEES
AND DEDUCTIONS.

/2/ We reserve the right to impose a transaction fee in the future of up to $15
per withdrawal on partial withdrawals in excess of 15 in any Contract Year.
See WITHDRAWALS-Optional Withdrawals.

/3/ We reserve the right to impose a transaction fee in the future of up to $15
per transfer on transfers in excess of 15 in any Contract year. See HOW YOUR
PAYMENTS ARE ALLOCATED-Transfers.

/4/ This fee will be charged on each Contract Anniversary prior to your Annuity
Date and at the time of a full withdrawal of any Contract Value unless your
Net Contract Value is at least $50,000 on that date.

9
<PAGE>

Fund Annual Expenses After Expense Limitation*
(as a percentage of Portfolio average daily net assets)

<TABLE>
<CAPTION>
Advisory Other Total
Fee Expenses Expenses
-------- -------- --------
<S> <C> <C> <C>
Money Market......................................... .38% .06% .44%
High Yield Bond...................................... .60% .05% .65%
Managed Bond......................................... .60% .06% .66%
Government Securities................................ .60% .06% .66%
Aggressive Equity.................................... .80% .06% .86%
Growth LT............................................ .75% .07% .82%
Equity Income........................................ .65% .05% .70%
Multi-Strategy....................................... .65% .06% .71%
Mid-Cap Value........................................ .85% .06% .91%
Large-Cap Value...................................... .85% .06% .91%
Equity............................................... .65% .05% .70%
Bond and Income...................................... .60% .06% .66%
Equity Index......................................... .17% .06% .23%
Small-Cap Index...................................... .50% .06% .56%
REIT................................................. 1.10% .06% 1.16%
International........................................ .85%* .19% 1.04%
Emerging Markets..................................... 1.10% .36% 1.46%
</TABLE>

*The Mid-Cap Value, Large-Cap Value, Small-Cap Index, and REIT Portfolios have
recently begun operations, and their "other expenses" have been estimated. The
expenses listed for the other thirteen Fund Portfolios reflect current
expenses for the year ending December 31, 1997, except that the Advisory Fee
for the International Portfolio has been adjusted to reflect the Advisory Fee
without any waiver. The Actual Advisory Fee paid by the International
Portfolio in 1997 was 0.83% of the Portfolio's average daily net assets. This
reflects the portion of the Advisory Fee waived by Pacific Life until such
time as shareholders approved a change in the Portfolio Manager to Morgan
Stanley which occurred on June 1, 1997, and a change in the fee paid to the
portfolio manager. In addition Pacific Life, as Investment Adviser to the
Fund, adopted the policy to waive its fees or otherwise reimburse expenses so
that operating expenses (exclusive of advisory fees, additional custodial fees
associated with holding foreign securities, foreign taxes on dividends,
interest or capital gains, and extraordinary expenses) for each Portfolio are
not greater than 0.25% of the average daily net assets per year. Pacific Life
began the policy in 1989 and intends to continue this policy until at least
December 31, 1999. No reimbursement to the Portfolios was necessary for fiscal
year 1997. There can be no assurance that the expense reimbursement
arrangement will continue after December 31, 1999, and any unreimbursed
expenses would be reflected in the Policy Owner's Accumulated Value and in
some instances, the death benefit.

Example: If, at the end of the indicated time period, you annuitize your
Contract Value, you surrender your Contract and withdraw your Contract
Value, or you neither annuitize nor surrender your Contract, you would pay
the following cumulative expenses on each $1,000 invested, assuming 5%
annual return on assets:

10
<PAGE>

<TABLE>
<CAPTION>
Neither Annuitized
Variable Account Annuitized Surrendered Nor Surrendered
- ---------------- ---------- ----------- ------------------
<S> <C> <C> <C>
Managed Bond
1 Year............................ 85 85 22
3 Year............................ 66 120 66
5 Year............................ 114 141 114
10 Year........................... 245 245 245
Government Securities
1 Year............................ $ 85 $ 85 $ 22
3 Year............................ 66 120 66
5 Year............................ 114 141 114
10 Year........................... 245 245 245
Aggressive Equity
1 Year............................ 87 87 24
3 Year............................ 73 127 73
5 Year............................ 124 151 124
10 Year........................... 265 265 265
Growth LT
1 Year............................ 86 86 23
3 Year............................ 71 125 71
5 Year............................ 122 149 122
10 Year........................... 261 261 261
Equity Income
1 Year............................ 85 85 22
3 Year............................ 68 122 68
5 Year............................ 116 143 116
10 Year........................... 249 249 249
Multi-Strategy
1 Year............................ 85 85 22
3 Year............................ 68 122 68
5 Year............................ 116 143 116
10 Year........................... 250 250 250
Mid-Cap Value
1 Year............................ 87 87 24
3 Year............................ 74 128 74
5 Year............................ 127 154 127
10 Year........................... 270 270 270
Large-Cap Value
1 Year............................ 87 87 24
3 Year............................ 74 128 74
5 Year............................ 127 154 127
10 Year........................... 270 270 270
Equity
1 Year............................ 85 85 22
3 Year............................ 68 122 68
5 Year............................ 116 143 116
10 Year........................... 249 249 249
Bond and Income
1 Year............................ 85 85 22
3 Year............................ 66 120 66
5 Year............................ 114 141 114
10 Year........................... 245 245 245
Equity Index
1 Year............................ 80 80 17
3 Year............................ 53 107 53
5 Year............................ 92 119 92
10 Year........................... 199 199 199
Small-Cap Value
1 Year............................ 84 84 21
3 Year............................ 63 117 63
5 Year............................ 109 136 109
10 Year........................... 234 234 234
REIT
1 Year............................ 90 90 27
3 Year............................ 82 136 82
5 Year............................ 139 166 139
10 Year........................... 295 295 295
</TABLE>

11
<PAGE>

The examples should not be considered a representation of past or future
expenses; actual expenses incurred in any given year may be more or less than
those shown in the examples.

The examples use an assumed Contract Value of $45,000, and reflect the
deduction of the Annual Fee amount without regard to the waiver for Contract
Values over $50,000.

WHY BUY A CONTRACT

Your Pacific Portfolios Contract (your "Contract") is an annuity contract that
provides you with flexibility in tax-deferred retirement planning or other
long-term financial planning. You may select among seventeen Variable
Investment Options, the Fixed Option, and the DCA Plus Fixed Option when you
elect DCA Plus. You may choose to add to your Contract Value at any time
before the Annuity Date, and your additional Purchase Payments may be in any
amount you choose (subject to certain limitations). When you annuitize, we
will send the payee a series of variable and/or fixed payments for life or for
a specified number of years.

If you purchase a Contract with after-tax dollars ("Non-Qualified Contract")
or if your Contract is purchased through a Qualified Plan or IRA ("Qualified
Contract"), your earnings on the Contract are not subject to tax until amounts
are withdrawn or distributed (including annuity payments). See Federal Tax
Status.

12
<PAGE>

YOUR INVESTMENT OPTIONS

You may choose among seventeen different Variable Investment Options, the
Fixed Option and the DCA Plus Fixed Option.

Your Variable Investment Options

Separate Account A, a separate account of ours, currently offers you seventeen
"Variable Investment Options" (also called "Subaccounts"). Each Variable
Investment Option invests in a separate Portfolio of the Fund. Your Variable
Investment Options are:

. Money Market Subaccount
. High Yield Bond Subaccount
. Managed Bond Subaccount
. Government Securities Subaccount
. Aggressive Equity Subaccount
. Growth LT Subaccount
. Equity Income Subaccount
. Multi-Strategy Subaccount
. Mid-Cap Value Subaccount
. Large-Cap Value Subaccount
. Equity Subaccount
. Bond and Income Subaccount
. Equity Index Subaccount
. Small-Cap Index Subaccount
. REIT Subaccount
. International Subaccount
. Emerging Markets Subaccount

13
<PAGE>

What Are Each of These Options?

For your convenience, the following chart summarizes some basic data about
each Portfolio. This chart is only a summary. For more complete information on
each Portfolio, including a discussion of the Portfolio's investment
techniques and the risks associated with its investments, see the accompanying
Fund Prospectus. No assurance can be given that a Portfolio will achieve its
investment objective. YOU SHOULD READ THE FUND PROSPECTUS CAREFULLY BEFORE
INVESTING.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Primary Investments
(under normal
Portfolio Investment Objective conditions) Portfolio Manager

- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Current income Highest quality money Pacific Life
consistent with market securities.
preservation of
capital.

- ----------------------------------------------------------------------------------------------
High Yield Bond High level of current Intermediate- and Pacific Life
income. long-term high-
yielding lower and
medium quality ("high
risk")
fixed income
securities.

- ----------------------------------------------------------------------------------------------
Managed Bond Maximize total return Investment grade Pacific Investment
consistent with marketable debt Management Company
prudent investment securities. Will
management. normally maintain an
average portfolio
duration of 3-7 years.

- ----------------------------------------------------------------------------------------------
Government Securi- Maximize total return Securities that are Pacific Investment
ties consistent with obligations of or Management Company
prudent investment guaranteed by the U.S.
management. Government, its
agencies or
instrumentalities
(including futures
contracts and options
thereon). Will
normally maintain an
average portfolio
duration of 3-7 years.

- ----------------------------------------------------------------------------------------------
Aggressive Equity Capital appreciation. Common stocks of small Alliance Capital
emerging growth and Management L.P.
medium capitalization
companies.

- ----------------------------------------------------------------------------------------------
Growth LT Long-term growth of Equity securities. Janus Capital
capital consistent Corporation
with preservation of
capital.

- ----------------------------------------------------------------------------------------------
Equity Income Long-term growth of Dividend-paying common J.P. Morgan Investment
capital and income. stock. Management Inc.

- ----------------------------------------------------------------------------------------------
Multi-Strategy High total return. Equity and fixed J.P. Morgan Investment
income securities. Management Inc.

- ----------------------------------------------------------------------------------------------
Mid-Cap Value Capital appreciation. Equity securities of Lazard Asset
medium-capitalization Management
domestic companies
believed to be
undervalued.

- ----------------------------------------------------------------------------------------------
Large-Cap Value Long-term growth of Equity securities of Salomon Brothers Asset
capital. large capitalization Management Inc.
companies.

- ----------------------------------------------------------------------------------------------
Equity Capital appreciation. Common stocks and Goldman Sachs
securities convertible Asset Management
into or exchangeable
for common stocks.

- ----------------------------------------------------------------------------------------------
Bond and Income Provide total return Investment grade debt Goldman Sachs
and income consistent securities. Will Asset Management
with prudent normally maintain an
investment management. average portfolio
duration within one-
half year of a long-
term bond index.
- ----------------------------------------------------------------------------------------------
</TABLE>

14
<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Primary Investments
(under normal
Portfolio Investment Objective conditions) Portfolio Manager

- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Index Investment results Stocks included in the Bankers Trust Company
that correspond to the Standard & Poor's 500
total return Composite Stock Price
performance of common Index (the "S&P 500").
stocks publicly traded
in the U.S.

- -----------------------------------------------------------------------------------------
Small-Cap Index Provide investment Stocks included in the Bankers Trust Company
results that Russell 2000 Index.
correspond to the
total return of the
Russell 2000 Small
Stock Index.

- -----------------------------------------------------------------------------------------
REIT Current income and Real Estate Investment Morgan Stanley Asset
long-term growth of Trusts and equity Management Inc.
capital. securities of
companies principally
engaged in the U.S.
real estate industry.

- -----------------------------------------------------------------------------------------
International Long-term capital Equity securities of Morgan Stanley Asset
appreciation. corporations domiciled Management Inc.
outside the U.S.

- ----------------------------------------------------------------------------------------
Emerging Markets Long-term growth of Common stocks of Blairlogie Capital
capital. companies domiciled in Management
emerging market
countries.

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

</TABLE>

The Investment Adviser

Pacific Life is the investment adviser for the Fund. Pacific Life and the Fund
have retained other portfolio managers, supervised by Pacific Life, for
fifteen of the Portfolios.

Variable Investment Option Performance

Historical performance information can help you understand how investment
performance can affect your investment in the Variable Investment Options. The
Subaccounts are newly established and have no historical performance. Each
Subaccount will be investing in shares of a Portfolio of the Fund. The
majority of these Portfolios do have historical performance data which covers
a longer period. Performance data include total returns for each Subaccount,
current and effective yields for the Money Market Subaccount, and yields for
the other fixed income Subaccounts. Calculations are in accordance with
standard formulas prescribed by the SEC which are described in the SAI. Yields
do not reflect any charge for premium taxes and/or other taxes; this exclusion
may cause yields to show more favorable performance. Total returns may or may
not reflect withdrawal charges, Annual Fees or any charge for premium and/or
other taxes; data that do not reflect these charges may show more favorable
performance.

The SAI presents some hypothetical performance data, showing what the
performance of each Subaccount would have been if it had been investing in the
corresponding Portfolio since that Portfolio's inception. The SAI also
presents some performance benchmarks, based on unmanaged market indices, such
as the S&P 500, and on "peer groups," which use other managed funds with
similar investment objectives. These benchmarks may give you a broader
perspective when you examine hypothetical or actual Subaccount performance.

In addition, we may provide you with reports both as an insurance company and
as to our claims paying ability that are produced by rating agencies and
organizations.

Your Fixed Option and DCA Plus Fixed Option

The Fixed Option and the DCA Plus Fixed Option each offer you a guaranteed
minimum interest rate on the amounts you allocate to these Options. Amounts
you allocate to these Options, and your earnings credited are held in our
General Account. For more detailed information about these Options, see THE
GENERAL ACCOUNT section in this Prospectus.

15
<PAGE>

PURCHASING YOUR CONTRACT

How to Apply for Your Contract

The Contract is intended to be offered for sale in the State of New York. To
purchase a Contract, fill out an application and submit it along with your
initial Purchase Payment to PM Group Life Insurance Company [Pacific Life &
Annuity Company] at 700 Newport Center Drive, Newport Beach, California,
92660. If your application and payment are complete when received, or once
they have become complete, we will issue your Contract within two Business
Days. If some information is missing from your application, we may delay
issuing your Contract while we obtain the missing information; however, we
will not hold your initial Purchase Payment for more than five Business Days
without your permission.

You may also purchase a Contract by exchanging your existing contract. You
must submit all contracts to be exchanged when you submit your application.
Call your representative, or call us at 1-800-XXX-XXXX, if you are interested
in this option.

We reserve the right to reject any application or Purchase Payment for any
reason, subject to any applicable nondiscrimination laws and to our own
standards and guidelines. The maximum age of a Contract Owner, including Joint
and Contingent Owners, for which a Contract will be issued is 85. The Contract
Owner's age is calculated as of his or her age last birthday. If the sole
Contract Owner or sole annuitant named in the application for a Contract dies
prior to our issuance of a Contract, then the application for the Contract
and/or any Contract issued shall be deemed null and void; and any premiums we
receive, including any proceeds received in connection with an exchange or
transfer, will be returned to the applicant/Owner or the applicant/Owner's
estate.

Making Your Purchase Payments

Making Your Initial Payment

Your initial Purchase Payment must be at least $5,000 if you are buying a Non-
Qualified Contract, and at least $2,000 if you are buying a Qualified
Contract. You may pay this entire amount when you submit your application, or
you may choose our pre-authorized checking plan ("PAC"), which allows you to
pay in equal monthly installments over one year (at least $400 per month for
Non-Qualified Contracts, and at least $150 per month for Qualified Contracts).
If you choose PAC, you must make your first installment payment when you
submit your application. Further requirements for PAC are discussed in the PAC
form.

You must obtain our consent before making an initial or additional Purchase
Payment that will bring your aggregate Purchase Payments over $1,000,000.

Making Additional Payments

You may choose to invest additional amounts in your Contract at any time. Each
additional Purchase Payment must be at least $250 for Non-Qualified Contracts
and $50 for Qualified Contracts.

Forms of Payment

Your initial and additional Purchase Payments may be sent by personal or bank
check or by wire transfer. You may also make additional PAC Purchase Payments
via electronic funds transfer. All checks must be drawn on U.S. funds. If you
make Purchase Payments by check other than a cashier's check, your payment of
any withdrawal proceeds and any refund during your "free look" period may be
delayed until your check has cleared.

16
<PAGE>

HOW YOUR PAYMENTS ARE ALLOCATED

Choosing Your Investment Options

You may allocate your Purchase Payments among the seventeen Subaccounts, the
Fixed Option and, if you elect DCA Plus, the DCA Plus Fixed Option.
Allocations of your initial Purchase Payment to the Investment Options you
selected will be effective either on your Contract Date or on your Free Look
Transfer Date. See WITHDRAWALS--Short-Term Cancellation Right ("Free Look").
Each additional Purchase Payment will be allocated to the Investment Options
according to your allocation instructions in your application, or most recent
instructions, if any, subject to the terms described in the WITHDRAWALS--
Short-Term Cancellation Right ("Free Look") section. We reserve the right, in
the future, to require that your allocation to any particular Investment
Option meet a certain minimum amount. If your Contract is issued in exchange
for another annuity contract or a life insurance contract, our administrative
procedures may vary depending on the state in which your Contract is
delivered.

Investing in Variable Investment Options

Each time you allocate your investment to a Variable Investment Option, your
Contract is credited with a number of "Subaccount Units" in that Subaccount.
The number of Subaccount Units credited is equal to the amount you have
allocated to that Subaccount, divided by the "Unit Value" of one Unit of that
Subaccount.

Example: You allocate $600 to the Government Securities Subaccount. At the
end of the Business Day on which your allocation is effective, the value of
one Unit in the Government Securities Subaccount is $15. As a result, 40
Subaccount Units are credited to your Contract for your $600.

Your Variable Account Value Will Change

After we credit your Contract with Subaccount Units, the value of those Units
will usually fluctuate. This means that, from time to time, your investment
allocated to the Variable Investment Options may be worth more or less than
the original Purchase Payments to which those amounts can be attributed.
Fluctuations in Subaccount Unit Value will not change the number of Units
credited to your Contract.

Subaccount Unit Values will vary in accordance with the investment performance
of the corresponding Portfolio. For example, the value of Units in the Managed
Bond Subaccount will change to reflect the performance of the Managed Bond
Portfolio (including that Portfolio's investment income, its capital gains and
losses, and its expenses). Subaccount Unit Values are also adjusted to reflect
the Administrative Fee and Risk Charge imposed on the Separate Account.

We calculate the value of all Subaccount Units at or about 4:00 p.m., Eastern
time on each Business Day. The SAI contains a detailed discussion of these
calculations.

When Your Investment is Effective

Your initial Purchase Payment is ordinarily effective on the day we issue your
Contract. Any additional allocation is effective on the day we receive your
Purchase Payment in proper form.

The day your allocation is effective determines the Unit Value at which
Subaccount Units are attributed to your Contract. In the case of transfers or
withdrawals, the effective day determines the Unit Value at which affected
Subaccount Units are debited and/or credited under your Contract. The Unit
Value at which purchase, transfer and withdrawal transactions are credited or
debited is the value of the Subaccount Units next calculated after your
transaction is effective. Your Variable Account Value begins to reflect the
investment performance results of your new allocations on the day after your
transaction is effective.

17
<PAGE>

Transfers

Once your Payments are allocated to the Investment Options you selected, you
may transfer your Contract Value less Loan Account Value from any Investment
Option to any other Investment Option, except the DCA Plus Fixed Option.
Certain restrictions apply to the Fixed Option and the DCA Plus Fixed Option.
See THE GENERAL ACCOUNT--Withdrawals and Transfers. Transfer requests are
normally effective on the Business Day we receive them in proper form. If your
Contract was issued in a state that requires refund of Purchase Payments under
your Free Look Right, transfers may only be made after your Free Look Transfer
Date. See WITHDRAWALS--Short-Term Cancellation Right ("Free Look").

No transfer fee is currently imposed for transfers among the Investment
Options, but we reserve the right to impose a transaction fee for transfers in
the future; a fee of up to $15 per transfer may apply to transfers in excess
of 15 in any Contract Year. Transfers under the dollar cost averaging and
earnings sweep options are counted toward your total transfers in a Contract
Year. Any such fee would be charged against your Investment Options
proportionately, based on your relative Account Value in each immediately
after the transfer.

We have the right, at our option (unless otherwise required by law), to
require certain minimums in the future in connection with transfers; these may
include a minimum transfer amount and a minimum Account Value, if any, for the
Investment Option from which the transfer is made or to which the transfer is
made. If your transfer request results in your having a remaining Account
Value in an Investment Option that is less than the minimum amount, we may
transfer that remaining amount to your other Investment Options in the
proportions specified in your current allocation instructions. Any such DCA
Plus Fixed Option balance or any amount that would otherwise be allocated to
the DCA Plus Fixed Option will be allocated to the Variable Investment Options
according to your most recent DCA Plus transfer instructions. We also reserve
the right (unless otherwise required by law) to limit the size of transfers,
to limit the number and frequency of transfers, to restrict transfers, and to
suspend transfers. We reserve the right to reject any transfer request.

Exchanges of Annuity Units in any Subaccount(s) to any other Subaccount(s)
after annuitization are limited to four in any twelve-month period. See THE
GENERAL ACCOUNT--Withdrawals and Transfers in the Prospectus and THE CONTRACTS
AND THE SEPARATE ACCOUNT in the SAI.

DCA Plus

DCA Plus provides a way for you to transfer amounts monthly from the DCA Plus
Fixed Option to one or more Variable Investment Option(s) over a period of up
to one year. This allows you to average the Unit Values of the Variable
Investment Option(s) over time, and may permit a "smoothing" of abrupt peaks
and drops in Unit Values.

Prior to the Annuity Date, you may allocate all or a portion of your Purchase
Payment(s) to the DCA Plus Fixed Option. The initial minimum amount that you
may allocate to the DCA Plus Fixed Option is $5,000. You may not transfer any
amounts to the DCA Plus Fixed Option from any other Investment Option. All
Purchase Payments allocated to the DCA Plus Fixed Option will earn interest at
the then current Guaranteed Interest Rate declared by us.

The day that the first Purchase Payment allocation is made to the DCA Plus
Fixed Option will begin a Guaranteed Term of 12 months and a period of 12
monthly transfers. On the same day of each month thereafter, we will transfer
to the Variable Investment Options you selected an amount equal to your DCA
Plus Fixed Option Value on that day divided by the remaining number of monthly
transfers in the Guaranteed Term.

Example: On May 1, you submit a $10,000 Purchase Payment entirely to the
DCA Plus Fixed Option at a then current Guaranteed Interest Rate of 5.00%.
On June 1, the value of the DCA Plus Fixed Option is $10,040.75. On June 1,
a transfer equal to $836.73 ($10,040.75/12) will be made according to your
DCA Plus transfer instructions. Your remaining DCA Plus Fixed Option Value
after the transfer is therefore $9,204.02.

18
<PAGE>

On July 1, your DCA Plus Fixed Option Value has now increased to $9,241.52.
We will transfer $840.14 ($9,241.52/11) to the Variable Investment Options,
leaving a remaining value of $8,401.38 in the DCA Plus Fixed Option.

During the Guarantee Term, you may allocate all or a part of additional
Purchase Payments to the DCA Plus Fixed Option, provided such allocations are
at least $250. Each such allocation will be transferred to the Variable
Investment Options you selected over the remaining Guarantee Term. Transfers
will be made proportionately from the DCA Plus Fixed Option Value attributed
to each Purchase Payment allocation.

Example: (Using the previous example): On July 15, you allocate an
additional $5,000 to the DCA Plus Option at a Guaranteed Interest Rate of
4.00%. On August 1, your DCA Plus Fixed Option Value has increased to
$13,443.79. An amount equal to $1,344.38 ($13,443.79/10) is transferred
from the DCA Plus Fixed Option to the Variable Investment Options. The
remaining DCA Plus Fixed Option Value is $12,099.41.

The minimum amount for the DCA Plus monthly transfer is $250. If a monthly DCA
Plus transfer amount is less than $250, we may transfer your entire DCA Plus
Fixed Option Value to the Variable Investment Options according to your most
recent DCA Plus transfer instructions and automatically terminate your DCA
Plus. DCA Plus transfers must be made on a monthly basis to the Variable
Investment Options; you may not choose to transfer other than monthly nor may
you transfer to the Fixed Option under DCA Plus.

Unless otherwise instructed, any additional Purchase Payment we receive during
a Guarantee Term will be allocated to the Investment Options, including the
DCA Plus Fixed Option if so indicated, according to your most recent Purchase
Payment allocation instructions. If we receive any additional Purchase
Payments after your DCA Plus ends and you have not changed your Purchase
Payment allocation instructions, the portion of additional Purchase Payments
that you had instructed us to allocate to the DCA Plus Fixed Option under DCA
Plus will be allocated to the Variable Investment Options in the same
proportion you had elected under DCA Plus.

When your DCA Plus program ends you may request, in a form satisfactory to us,
to establish a new DCA Plus program subject to our minimum allocation
requirements.

Your DCA Plus program automatically ends at the end of your DCA Plus Guarantee
Term. If we do not receive completed DCA Plus transfer instructions in proper
order by the time your first DCA Plus transfer is due, your DCA Plus will be
automatically terminated at the time and your DCA Plus Fixed Account Value
will be transferred to the Fixed Option at the Fixed Option's then current
Guaranteed Interest Rate, unless you provide us with other transfer
instructions. You may request, in a form satisfactory to us, termination of
your DCA Plus program at any time. Upon our receipt of such request, or when
death benefit proceeds become payable, any remaining balance in your DCA Plus
Fixed Option will be transferred to the Fixed Option at the Fixed Option's
then current Guaranteed Interest Rate, unless you instruct us to transfer such
amounts to other Investment Options. On your Annuity Date any net amount
converted to an annuity from your DCA Plus Fixed Option will be applied to a
fixed annuity and will be held in our General Account, unless you instruct us
otherwise.

You may have only one DCA Plus program in effect at any given time. DCA Plus
may not be used concurrently with our dollar cost averaging program. Further,
the DCA Plus Fixed Option is not available to for use with any of our other
systematic transfer programs; i.e., dollar cost averaging, portfolio
rebalancing or earnings sweep.

We reserve the right to change the terms and conditions of DCA Plus, but not a
DCA Plus you already have in effect.

Dollar Cost Averaging

Dollar cost averaging is a method in which you buy securities in a series of
regular purchases instead of in a single purchase. This allows you to average
the securities' prices over time, and may permit a "smoothing" of

19
<PAGE>

abrupt peaks and drops in price. Prior to your Annuity Date, you may use
dollar cost averaging to transfer amounts, over time, from any Variable
Investment Option with an Account Value of at least $5,000 to one or more
other Variable Investment Options. Each transfer must be for at least $250.
The Fixed Option and DCA Plus Fixed Option are not available for dollar cost
averaging. Detailed information appears in the SAI.

Portfolio Rebalancing

You may instruct us to maintain a specific balance of Variable Investment
Options under your Contract (e.g., 30% in the Equity Index Subaccount, 40% in
the Managed Bond Subaccount, and 30% in the Growth LT Subaccount) prior to
your Annuity Date. Periodically, we will "rebalance" your values in the
elected Subaccounts to the percentages you have specified. Rebalancing may
result in transferring amounts from a Subaccount earning a relatively higher
return to one earning a relatively lower return. The Fixed Option and DCA Plus
Fixed Option are not available for rebalancing. Detailed information appears
in the SAI.

Earnings Sweep

You may instruct us to make automatic periodic transfers of your earnings from
the Money Market Subaccount or from the Fixed Option to one or more Variable
Investment Options (other than the Money Market Subaccount). Detailed
information appears in the SAI.

CHARGES, FEES AND DEDUCTIONS

Withdrawal Charge

No sales charge is imposed on any Purchase Payment. Your Purchase Payments
may, however, be subject to a withdrawal charge; this charge may apply to
amounts you withdraw under your Contract, depending on the length of time each
Purchase Payment has been invested and on the amount you withdraw. No
withdrawal charge is imposed on (i) amounts annuitized after the first
Contract Year, (ii) payments of death benefits, (iii) withdrawals by Contract
Owners to meet the minimum distribution rules for Qualified Contracts as they
apply to amounts held under the Contract, or, (iv) subject to medical evidence
satisfactory to us, after the first Contract Anniversary, full or partial
withdrawals if the Annuitant has been diagnosed with a medically determinable
condition that results in a life expectancy of twelve (12) months or less.

Free Withdrawals

We will not impose a withdrawal charge on withdrawals of your Earnings, or on
withdrawals of amounts held under your Contract for at least six Contract
Years. In addition, during each Contract Year we will not impose a withdrawal
charge on your withdrawal of up to 10% of your remaining Purchase Payments at
the beginning of the Contract Year that would otherwise be subject to the
withdrawal charge plus up to 10% of any additional Purchase Payments received
during the Contract Year. Our calculations of the withdrawal charge deduct
this "free 10%" from your "oldest" Purchase Payment that is still otherwise
subject to the charge.

Example: You make an initial Purchase Payment of $10,000 in Contract Year
1, and make additional Purchase Payments of $1,000 and $6,000 in Contract
Year 2. With Earnings, your Contract Value in Contract Year 3 is $19,000.
In Contract Year 3, you may withdraw $3,700 free of the withdrawal charges
(your total Purchase Payments were $17,000, so 10% of that total equals
$1,700, plus you had $2,000 of Earnings). After this withdrawal, your
Contract Value is $15,300 (all attributable to Purchase Payments). In
Contract Year 4, your Contract Value falls to $12,500; you may withdraw
$1,530 (10% of $15,300) free of any withdrawal charges.

How the Charge is Determined

The amount of the charge depends on how long each Purchase Payment was held
under your Contract. Each Purchase Payment you make is considered to have a
certain "age," depending on the length of time since that

20
<PAGE>

payment was effective. A payment is "one year old" or has an "age of one" from
the day it is effective until your next Contract Anniversary; beginning on
that Contract Anniversary, your payment will have an "age of two" for a full
Contract Year. When you withdraw an amount subject to the withdrawal charge,
the "age" of the Purchase Payment you withdraw determines the level of
withdrawal charge as follows:

<TABLE>
<CAPTION>
"Age" of Payment Withdrawal
in Years Charge
---------------- ----------
<S> <C>
1........................................................ 7%
2........................................................ 7%
3........................................................ 6%
4........................................................ 5%
5........................................................ 3%
6........................................................ 1%
7 or more................................................ 0%
</TABLE>

We calculate your withdrawal charge by assuming that your Earnings are
withdrawn first, followed by amounts attributed to Purchase Payments with the
"oldest" Payment withdrawn first. The withdrawal charge will be deducted
proportionally among all Investment Options from which the withdrawal occurs.
Any applicable Annual Fee will be deducted after the withdrawal charge is
calculated.

We pay sales commissions and other expenses associated with promotion and
sales of the Contracts to broker-dealers. The withdrawal charge is designed to
reimburse us for these costs, although we expect that our actual expenses will
be greater than the amount of the withdrawal charge. Broker-dealers may
receive aggregate commissions of up to 6.75% of your aggregate Purchase
Payments.

Under certain circumstances and in exchange for lower initial commissions,
certain sellers of 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 a Contract, and Account Values. A trail
commission is not anticipated to exceed 1.00%, on an annual basis, of the
Account 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-dealers with which they are affiliated and such arrangements may vary.

Transfers

Transfers of all or part of your Account Value from one Investment Option to
another is not considered a withdrawal of an amount from your Contract, so no
withdrawal charge is imposed at the time of transfer. See HOW YOUR PAYMENTS
ARE ALLOCATED--Transfers.

Premium Taxes

Depending on (among other factors) your state of residence, a tax may be
imposed on your Purchase Payments at the time your payment is made, at the
time of a partial or full withdrawal, at the time any death benefit proceeds
are paid, at annuitization or at such other time as taxes may be imposed. Tax
rates ranging from 0% to 3.5% are currently in effect, but may change in the
future. Some local jurisdictions also impose a tax.

If we pay any taxes attributable to Purchase Payments ("premium taxes") on
your behalf, we will impose a similar charge against your Contract Value. We
normally will charge you when you annuitize some or all of your Contract
Value. We reserve the right to impose this charge for applicable premium taxes
when you make a full or partial withdrawal, at the time any death benefit
proceeds are paid, or when those taxes are incurred. For these purposes,
"premium taxes" include any state or local premium taxes and, where approval
has been obtained, federal premium taxes and any federal, state or local
income, excise, business or any other type of tax (or component thereof)
measured by or based upon, directly or indirectly, the amount of payments we
have received.

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We will base this charge on the Contract Value, the amount of the transaction,
the aggregate amount of Purchase Payments we receive under your Contract, or
any other amount, that in our sole discretion we deem appropriate.

We may also charge the Separate Account or your Contract Value for taxes
attributable to the Separate Account or the Contract, including income taxes
attributable to the Separate Account or to our operations with respect to the
Contract, or taxes attributable, directly or indirectly, to Purchase Payments.
Currently, we do not impose any such charges.

Annual Fee

We will charge you an Annual Fee of $30 on each Contract Anniversary prior to
the Annuity Date, and at the time you withdraw your entire Net Contract Value,
if your Net Contract Value is less than $50,000 on that date. The fee is not
imposed on amounts you annuitize or on payment of death benefit proceeds. The
fee reimburses certain of our costs in administering the Contracts and the
Separate Account; we do not intend to realize a profit from this fee or the
Administrative Fee. This fee is guaranteed not to increase for the life of
your Contract.

Your Annual Fee will be charged proportionately against your Investment
Options. Assessments against your Variable Investment Options are made by
debiting some of the Subaccount Units previously credited to your Contract;
that is, assessment of the Annual Fee does not change the Unit Value for those
Subaccounts.

Waivers and Reduced Charges

We may agree to reduce or waive the withdrawal charge or the Annual Fee, or
credit additional amounts under our Contracts, in situations where selling
and/or maintenance costs associated with the Contracts are reduced, such as
the sale of several Contracts to the same Contract Owner(s), sales of large
Contracts, sales of Contracts in connection with a group or sponsored
arrangement or mass transactions over multiple Contracts.

In addition, we may agree to reduce or waive some or all of such charges
and/or credit additional amounts under our Contracts, for those Contracts sold
to persons who meet criteria established by us, who may include current and
retired officers, directors and employees of us and our affiliates, trustees
of the Pacific Select Fund, registered representatives and employees of
broker/dealers with a current selling agreement with us and their affiliates,
employees of affiliated asset management firms and certain other service
providers, and immediate family members of such persons ("Eligible Persons").
We will credit additional amounts to Contracts owned by Eligible Persons if
such Contracts are purchased directly through Pacific Mutual Distributors,
Inc. Under such circumstances, Eligible Persons will not be afforded the
benefit of services of any other broker/dealer nor will commissions be payable
to any broker/dealer in connection with such purchases. Eligible Persons must
contact us directly with servicing questions, Contract changes and other
matters relating to their Contracts. The amount credited to Contracts owned by
Eligible Persons will equal the reduction in expenses we enjoy by not
incurring brokerage commissions in selling such Contracts, with the
determination of the expense reduction and of such crediting being made in
accordance with our administrative procedures. We may also agree to waive
minimum Purchase Payment requirements for Eligible Persons.

We will only reduce or waive such charges or credit additional amounts on any
Contract where expenses associated with the sale of the Contract and/or costs
associated with administering and maintaining the Contract are reduced. We
reserve the right to terminate waiver, reduced charge and crediting programs
at any time, including for issued Contracts.

Mortality and Expense Risk Charge

We assess a charge against the assets of each Subaccount to compensate for
certain mortality and expense risks that we assume under the Contracts (the
"Risk Charge"). The risk that an Annuitant will live longer (and therefore
receive more annuity payments) than we predict through our actuarial
calculations at the time the Contract is issued is "mortality risk." We also
bear mortality risk in connection with death benefits payable

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under the Contracts. The risk that the expense charges and fees under the
Contracts and Separate Account are less than our actual administrative and
operating expenses is called "expense risk."

This Risk Charge is assessed daily at an annual factor expressed as a decimal
(where 1.00 is equal to 100%) of 0.0125 of each Subaccount's assets; this
charge may not be increased for the duration of your Contract.

The Risk Charge will stop at annuitization if you select a fixed annuity; the
Risk Charge will continue after annuitization if you choose any variable
annuity, even though we do not bear mortality risk if your Annuity Option is
Period Certain Only.

We will realize a gain if the Risk Charge exceeds our actual cost of expenses
and benefits, and will suffer a loss if such actual costs exceed the Risk
Charge. Any gain will become part of our General Account; we may use it for any
reason, including covering sales expenses on the Contracts.

ADMINISTRATIVE FEE

We charge an Administrative Fee as compensation for costs we incur in operating
the Separate Account and issuing and administering the Contracts, including
processing applications and payments, and issuing reports to you and to
regulatory authorities.

The Administrative Fee is assessed daily at an annual factor expressed as a
decimal (where 1.00 is equal to 100%) of 0.0015 of the assets of each
Subaccount. This fee is guaranteed not to increase for the life of your
Contract. A relationship will not necessarily exist between the actual
administrative expenses attributable to a particular Contract and the
Administrative Fee paid in respect of that particular Contract. The
Administrative Fee will continue after annuitization if you choose any variable
annuity.

EXPENSES OF THE FUND

Your Variable Account Value reflects advisory fees and other expenses incurred
by the various Portfolios of the Fund, net of any applicable reimbursements.
These fees and expenses may vary. The Fund is governed by its own Board of
Trustees, and your Contract does not fix or specify the level of expenses of
any Portfolio. The Fund's fees and expenses are described in detail in the
Fund's Prospectus and in its SAI.

RETIREMENT BENEFITS AND OTHER PAYOUTS

SELECTING YOUR ANNUITANT

When you submit the application for your Contract, you must choose a sole
Annuitant or two Joint Annuitants. We will send the annuity payments to the
payee that you designate. If you are buying a Qualified Contract, you must be
the sole Annuitant; if you are buying a Non-Qualified Contract you may choose
yourself and/or another person. Whether you choose to have a sole or two Joint
Annuitants, you may choose a Contingent Annuitant; more information on these
options is provided in the SAI. You will not be able to add or change a sole or
Joint Annuitant after your Contract is issued; however, if you are buying a
Qualified Contract, you may add a Joint Annuitant at the time of annuitization.
You will be able to add or change a Contingent Annuitant until your Annuity
Date or the death of your sole Annuitant or both Joint Annuitants, whichever
occurs first; however, once your Contingent Annuitant has become the Annuitant
under your Contract, no additional Contingent Annuitant may be named. No
Annuitant (primary, joint or contingent) may be named upon or after reaching
his or her 86th birthday. We reserve the right to require proof of age or
survival of the Annuitant(s).

ANNUITIZATION

You may choose both your Annuity Date (or "Annuity Start Date") and your
Annuity Option. At the Annuity Date, you may elect to annuitize some or all of
your Net Contract Value, less any transaction fee, and any

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applicable charge for premium taxes and/or other taxes, (the "Conversion
Amount"), as long as such Conversion Amount annuitized is at least $10,000. If
you annuitize only a portion of this available Contract Value, you may have the
remainder distributed, less any applicable charge for premium taxes and/or
other taxes, any withdrawal transaction fee, any applicable withdrawal charge
and any Annual Fee. Any such distribution will be made to you in a single sum
if the remaining Conversion Amount is less than $10,000 on your Annuity Date.
Distributions under your Contract may have tax consequences. You should consult
a qualified tax adviser for information on annuitization.

CHOOSING YOUR ANNUITY DATE ("ANNUITY START DATE")

You should choose your Annuity Date when you submit your application or we will
apply a default Annuity Date to your Contract.

You may change your Annuity Date by notifying us, in proper form, at least ten
Business Days prior to the earlier of your old Annuity Date or your new Annuity
Date.

Your Annuity Date cannot be earlier than your first Contract Anniversary and
must occur on or before a certain date: If you have a sole Annuitant, your
Annuity Date cannot be later than his or her 95th birthday however, to meet IRS
minimum distribution rules, your Annuity Date may need to be earlier; if you
have Joint Annuitants and a Non-Qualified Contract, your Annuity Date cannot be
later than your younger Joint Annuitant's 95th birthday; if you have Joint
Annuitants and a Qualified Contract, your Annuity Date cannot be later than
your own 95th birthday. Different requirements may apply in some states. If
your Contract is a Qualified Contract, you may also be subject to additional
restrictions. Adverse federal tax consequences may result if you choose an
Annuity Date that is prior to an Annuitant's attained age 59 1/2. See FEDERAL
TAX STATUS.

You should carefully review the Annuity Options with your financial tax
adviser, and, for Contracts used in connection with a Qualified Plan, reference
should be made to the terms of the particular plan and the requirements of the
Code for pertinent limitations respecting annuity payments and other matters.
For instance, under requirements for retirement plans that qualify under
Section 401 or 408 of the Code, annuity payments generally must begin no later
than April 1 of the calendar year following the year in which the Annuitant
reaches age 70 1/2. However, if a plan qualified under Section 401(a) of the
Code or a 403(b) contract so provides, no distributions are required for
individuals who are employed after age 70 1/2 (other than 5% owners) until they
retire.

For retirement plans that qualify under Section 401 or 408 of the Code, the
period elected for receipt of annuity payments under Annuity Options 1 and 4
generally may be no longer than the joint life expectancy of the Annuitant and
Beneficiary in the year that the Annuitant reaches age 70 1/2, and must be
shorter than such joint life expectancy if the Beneficiary is not the
Annuitant's spouse and is more than 10 years younger than the Annuitant. Under
Options 2 and 3, if the secondary or other Annuitant is not the Annuitant's
spouse and is more than 10 years younger than the Annuitant, the 66 2/3% and
100% elections specified above may not be available. The restrictions on
options for retirement plans that qualify under Sections 401 and 408 also apply
to a retirement plan that qualifies under Section 403(b) with respect to
amounts that accrued after December 31, 1986.

If you annuitize only a portion of your Net Contract Value on your Annuity
Date, you may, at that time, have the option to elect not to have the remainder
of your Contract Value distributed, but instead to continue your Contract with
that remaining Contract Value (a "continuing Contract"). If this option is
available, you would then choose a second Annuity Date for your continuing
Contract, and all references in this Prospectus to your "Annuity Date" would,
in connection with your continuing Contract, be deemed to refer to that second
Annuity Date. This option may not be available, or may be available only for
certain types of Contracts. You should be aware that some or all of the
payments received before the second Annuity Date may be fully taxable. We
recommend that you call your tax adviser for more information if you are
interested in this option.

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Default Annuity Date and Options

If you have a Non-Qualified Contract and you do not choose an Annuity Date
when you submit your application, your Annuity Date will be your Annuitant's
95th birthday or your younger Joint Annuitant's 95th birthday, whichever
applies; however some states' laws may require a different Annuity Date.
Certain Qualified Plans may require annuitization to occur at an earlier age.

If you have not specified an Annuity Option or do not instruct us otherwise,
at your Annuity Date your Net Contract Value, less any applicable transaction
fees and/or charges for premium taxes and/or other taxes, will be annuitized
(if this net amount is at least $10,000) as follows: the net amount from your
Fixed Option and DCA Plus Fixed Option Value will be converted into a fixed-
dollar annuity and the net amount from your Variable Account Value will be
converted into a variable-dollar annuity directed to the Subaccounts
proportionate to your Account Value in each. If you have a Non-Qualified
Contract, or if you have a Qualified Contract and are not married, your
default Annuity Option will be Life with ten year Period Certain. If you have
a Qualified Contract and you are married, your default Annuity Option will be
Joint and Survivor Life with survivor payments of 50% and your spouse will
automatically be named your Joint Annuitant.

Choosing Your Annuity Option

You may make three basic decisions about your annuity payments. First, you may
choose whether you want those payments to be a fixed-dollar amount and/or a
variable-dollar amount. Second, you may choose the form of annuity payments
(see ANNUITY OPTIONS). Third, you may decide how often you want annuity
payments to be made (the "frequency" of the payments). You may not change
these selections after annuitization.

Fixed and Variable Annuities

You may choose a fixed annuity (i.e., with fixed-dollar amounts), a variable
annuity (i.e., with variable-dollar amounts), or you may choose both,
converting one portion of the net amount you annuitize into a fixed annuity
and another portion into a variable annuity.

If you select a fixed annuity, each periodic annuity payment received will be
equal to the initial annuity payment, unless you select a joint and survivor
life annuity with reduced survivor payments and the Primary Annuitant dies.
Any net amount you convert to a fixed annuity will be held in our General
Account, (but not under the Fixed Option or DCA Plus Fixed Option).

If you select a variable annuity, you may choose as many Variable Investment
Options as you wish; the amount of the periodic annuity payments will vary
with the investment results of the Variable Investment Options selected. After
the Annuity Date, Annuity Units may be exchanged among available Variable
Investment Options up to four times in any twelve-month period. How your
Contract converts into a variable annuity is explained in more detail in THE
CONTRACTS AND THE SEPARATE ACCOUNT in the SAI.

Annuity Options

Four Annuity Options are currently available under the Contracts, although
additional options may become available in the future.

. Life Only. Periodic payments are made to the designated payee during his
or her lifetime. Payments stop when the designated payee dies.

. Life with Period Certain. Periodic payments are made to the designated
payee during his or her lifetime, with payments guaranteed for a
specified period. You may choose to have payments guaranteed for
anywhere from 5 through 30 years (in full years only). If the designated
payee dies before the guaranteed payments are completed, the Beneficiary
receives the remainder of the guaranteed payments, if living; otherwise
the Owner, if living; otherwise the Owner's estate.

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. Joint and Survivor Life. Periodic payments are made to the Primary
Annuitant during the lifetime of the Primary Annuitant. After the death
of the Primary Annuitant, periodic payments are made to the secondary
Annuitant named in the election if and so long as such secondary
Annuitant lives. You may choose to have the payments to the surviving
secondary Annuitant equal 50%, 66 2/3% or 100% of the payments made
during the lifetime of the Primary Annuitant (you must make this
election when you choose your Annuity Option). Payments stop when both
Annuitants have died.

. Period Certain Only. Periodic payments are made to the designated payee
over a specified period. You may choose to have payments continue for
anywhere from 5 through 30 years (in full years only). If the designated
payee dies before the guaranteed payments are completed, the Beneficiary
receives the remainder of the guaranteed payments, if living; otherwise
the Owner, if living; otherwise the Owner's estate.

If your Contract was issued in connection with a Qualified Plan subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), your
spouse's consent may be required when you seek any distribution under your
Contract, unless your Annuity Option is Joint and Survivor Life with survivor
payments of at least 50%, and your spouse is your Joint Annuitant.

Frequency of Payments

You may choose to have annuity payments made monthly, quarterly, semiannually,
or annually. The amount of a variable payment will be determined in each
period on the date corresponding to your Annuity Date, and payment will be
made on the next succeeding day.

Your initial annuity payment must be at least $250. Depending on the net
amount you annuitize, this requirement may limit your options regarding the
period and/or frequency of annuity payments.

Your Annuity Payments

Amount of the First Payment

Your Contract contains tables that we use to determine the amount of the first
annuity payment under your Contract, taking into consideration the annuitized
portion of your Net Contract Value at the Annuity Date. This amount will vary,
depending on the annuity period and payment frequency you select; this amount
will be larger in the case of shorter Period Certain annuities and smaller for
longer Period Certain annuities. Similarly, this amount will be greater for a
Life Only annuity than for a Joint and Survivor Life annuity, because we will
expect to make payments for a shorter period of time on a Life Only annuity.
If you do not choose the Period Certain Only annuity, this amount will also
vary depending on the age of the Annuitant(s) on the Annuity Date and, for
some Contracts in some states, the sex of the Annuitant(s).

For fixed annuity payments, the guaranteed income factors in our tables are
based on an annual interest rate of 3% and the 1983a Annuity Mortality Table
with the ages set back 10 years. If you elect a fixed annuity, fixed annuity
payments will be based on the periodic income factors in effect for your
Contract on the Annuity Date which are at least the guaranteed income factors
under the Contract.

For variable annuity payments, the tables are based on an assumed annual
investment return of 5% and the 1983a Annuity Mortality Table with the ages
set back 10 years. If you elect a variable annuity, your initial variable
annuity payment will be based on the applicable variable annuity income
factors in our table. A higher assumed investment return would mean a larger
first variable annuity payment, but subsequent payments would increase only
when actual net investment performance exceeds the higher assumed rate and
would fall when actual net investment performance is less than the higher
assumed rate. A lower assumed rate would mean a smaller first payment and a
more favorable threshold for increases and decreases. If the actual net
investment performance is a constant 5% annually, annuity payments will be
level. The assumed investment return is explained in more detail in the SAI
under THE CONTRACTS AND THE SEPARATE ACCOUNT.

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DEATH BENEFITS

A death benefit may be payable on proof of death before the Annuity Date of
the Annuitant or of any Contract Owner while the Contract is in force. The
amount of the death benefit will be paid according to the DEATH BENEFIT
PROCEEDS section.

Death Benefit Proceeds

The proceeds of any death benefit payable will be payable upon receipt, in
proper form, of proof of death and instructions regarding payment of death
proceeds. Such proceeds will equal the amount of the death benefit reduced by
any charge for premium taxes and/or other taxes and any Contract Debt. The
death benefit proceeds will be payable in a single sum, as an annuity, or in
accordance with IRS regulations (see DEATH OF OWNER DISTRIBUTION RULES). Any
such annuity is subject to all restrictions (including minimum amount
requirements) as are other annuities under this Contract; in addition, there
may be legal requirements that limit the recipient's Annuity Options and the
timing of any payments. A recipient should consult a qualified tax adviser
before electing to receive an annuity.

Additional provisions apply if your Contract names a Joint or Contingent Owner
or Annuitant, or if the Beneficiary, Joint Owner, or Contingent Owner is your
spouse. Further information about these provisions is contained in the SAI.

Death of Owner Distribution Rules

If a Contract Owner of a Non-Qualified Contract dies before the Annuity Date,
any death benefit proceeds under this Contract must begin distribution within
five years after the Owner's death. In order to satisfy this requirement, the
designated recipient must receive a lump sum payment or elect to receive an
annuity for life or over a period that does not exceed the life expectancy of
the designated recipient with annuity payments that start within one year
after the Owner's death. If an election to receive an annuity is not made
within 60 days of our receipt of proof in proper form of the Owner's death or,
if earlier, 60 days (or shorter period as we permit) prior to the first
anniversary of the Owner's death, the lump sum option will be deemed elected,
unless otherwise required by law. If the lump sum option is deemed elected, we
will consider that deemed election as receipt of instructions regarding
payment of death benefit proceeds. If a Non-Qualified Contract has Joint
Owners, this requirement applies to the first Contract Owner to die.

If the Contract Owner was not an Annuitant but was a Joint Owner and there is
a surviving Joint Owner, that surviving Joint Owner is the designated
recipient; if no Joint Owner survives but a Contingent Owner is named in the
Contract and is living, he or she is the designated recipient, otherwise the
designated recipient is the Beneficiary; if no Beneficiary is living, the
designated recipient is the Owner's estate.

If the Contract Owner was an Annuitant, the designated recipient is the
Beneficiary; if no Beneficiary is living, the designated recipient is the
Owner's estate. A sole designated recipient who is the Contract Owner's spouse
may elect to become the Contract Owner (and sole Annuitant if the deceased
Contract Owner had been the Annuitant) and continue the Contract until the
earliest of the spouse's death, the death of the Annuitant, or the Annuity
Date. A Joint or Contingent Owner who is the designated recipient but not the
Contract Owner's spouse may not continue the Contract, but may purchase a new
Contract.

If you are a non-individual Owner of a Contract other than a Contract issued
under a Qualified Plan as defined in Section 401 or 403 of the Code, the
Primary Annuitant will be treated as the Owner of the Contract for purposes of
these Distribution Rules. If there is a change in the Primary Annuitant prior
to the Annuity Date, such change will be treated as the death of the Owner.
The amount of the death benefit in this situation will be (a) the Contract
Value if the non-individual Owner elects to maintain the Contract and reinvest
the Contract Value into the Contract in the same amount as immediately prior
to the distribution, or (b) the Contract Value less any Annual Fee, any
withdrawal and/or transaction fee, any charges for withdrawals, and/or premium

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taxes and/or other taxes, if the non-individual Owner elects a cash
distribution. The amount of the death benefit will be determined as of the
Business Day we receive, in proper form, the request to change the Primary
Annuitant and instructions regarding maintaining the Contract or cash
distribution.

Qualified Plan Death of Annuitant Distribution Rules

Under Internal Revenue Service regulations, if the Contract is owned under a
Qualified Plan as defined in Section 401, 403, 408, 408A, or 457 of the Code
and the Annuitant dies before the commencement of distributions, the payment
of any death benefit must be made to the designated recipient no later than
December 31 of the calendar year in which the fifth anniversary of the
Annuitant's death falls. In order to satisfy this requirement, the designated
recipient must receive a lump sum payment or elect to receive the Annuitant's
interest in the Contract in equal or substantially equal installments over a
period not exceeding the lifetime or life expectancy of the designated
recipient. If the designated recipient elects the installment payment option,
the Internal Revenue Service regulations provide that payments must begin no
later than December 31 of the calendar year which follows the calendar year in
which the Annuitant died. However, (except in the case of a Roth IRA) if the
designated recipient is the spouse of the Annuitant at the time of the
Annuitant's death ("surviving spouse"), then, under the regulations, payments
under the installment payment option must begin no later than December 31 of
the calendar year in which the Annuitant would have reached age 70 1/2.

Under our administrative procedures, payments must commence no later than the
first anniversary of the death of the Annuitant; however, if the designated
recipient is the surviving spouse and if the surviving spouse elects to defer
the commencement of installment payments beyond the first anniversary of the
Annuitant's death, the surviving spouse will be deemed to continue the
contract as the sole Annuitant and will not be entitled to death benefit
proceeds as a result of the death of the Annuitant; instead the Guaranteed
Minimum Death Benefit Amount (defined below) and payment of any death benefit
proceeds will be determined upon our receipt of proof of death and
instructions regarding payment of the surviving spouse as sole Annuitant.
Further, under our administrative procedures, if the installment payment
(annuity) option election is not received by us in good order within 60 days
of (or shorter period as we permit) our receipt of proof in proper form of the
Annuitant's death or, if earlier, before the sixtieth day preceding (1) the
first anniversary of the Annuitant's death or (2) the date on which the
Annuitant would have attained age 70 1/2, the lump sum option will be deemed
by us to have been elected, unless otherwise required by law. If the lump sum
option is deemed elected, we will treat that deemed election as receipt of
instructions regarding payment of death benefit proceeds.

If the Annuitant dies after the commencement of distributions but before the
Annuitant's entire interest in the Contract (other than a Roth IRA) has been
distributed, the remaining interest in the Contract must be distributed to the
designated recipient at least as rapidly as under the distribution method in
effect at the time of the Annuitant's death.

Death Benefit Amounts

The Death Benefit Amount as of any day (prior to the Annuity Date) is equal to
the greater of (a) your Contract Value as of that day, or (b) your aggregate
Purchase Payments, reduced by any applicable charges and/or fees and further
reduced by an amount for each withdrawal that is calculated by multiplying the
aggregate Purchase Payments received prior to each withdrawal by the ratio of
the amount of each withdrawal, including applicable withdrawal charges, to the
Contract Value immediately prior to each withdrawal.

We calculate the Death Benefit Amount as of the "Notice Date". The "Notice
Date" is the day on which we receive proof (in proper form) of death and
instructions regarding payment of death benefit proceeds.

The Guaranteed Minimum Death Benefit Amount is calculated only when death
benefit proceeds become payable as a result of the death of the sole Annuitant
prior to the Annuity Date, and is determined as follows: First, we calculate
what the Death Benefit Amount would have been as of your sixth Contract
Anniversary and each Subsequent Contract Anniversary that occurs while the
Annuitant is living and before the Annuitant reaches his

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or her 76th birthday (each of these Contract Anniversaries is a "Milestone
Date"). If your Contract is issued before the Annuitant's 75th birthday, we
will calculate what the Death Benefit Amount would have been as of the
Contract Anniversary immediately following the Annuitant's 75th birthday while
the Annuitant is living (also a Milestone Date) even if such Milestone Date
occurs before your sixth Contract Anniversary. This added feature will benefit
Contracts where the Annuitant is from age 69 through 74 at the time the
Contract is issued.

We then adjust the Death Benefit Amount for each Milestone Date by: (i) adding
the aggregate amount of any Purchase Payments received by us since the
Milestone Date; and (ii) subtracting an amount for each withdrawal that has
occurred since that Milestone Date, which is calculated by multiplying the
Death benefit Amount by the ratio of the amount of each withdrawal that has
occurred since that Milestone Date, including any withdrawal charge, to the
Contract Value immediately prior to the withdrawal.

The highest of these adjusted Death Benefit Amounts for each Milestone Date,
as of the Notice Date, is your Guaranteed Minimum Death Benefit Amount.
Calculations of any Guaranteed Minimum Death Benefit are only made once death
benefit proceeds become payable under your Contract.

The Notice Date is the day on which we receive proof (in proper form) of death
and instructions regarding payment of death benefit proceeds.

The Amount of the Death Benefit: Death of Annuitant

If the sole Annuitant dies prior to the Annuity Date, the death benefit will
be equal to (a) the Death Benefit Amount as of the Notice Date; or if
applicable (b) the "Guaranteed Minimum Death Benefit Amount" as of the Notice
Date, if greater.

The following procedures apply in the event of death of an Annuitant who is
not also a Contract Owner: If your Contract names Joint Annuitants and only
one Joint Annuitant dies, the surviving Joint Annuitant becomes your sole
Annuitant and the death benefit is not yet payable. If your sole Annuitant
dies (or if no Joint Annuitant survives) and your Contract names a surviving
Contingent Annuitant, he or she becomes the sole Annuitant and the death
benefit is not yet payable. If there is no surviving Joint or Contingent
Annuitant, the death benefit is payable to your Beneficiary, if living. To
avoid the possibility of an adverse gift tax situation upon the death of a
sole Annuitant with no living Beneficiary, the death benefit will be paid to
the Owner or the Owner's estate.

If both the Owner and Annuitant die simultaneously, the death benefit proceeds
will be paid to the Beneficiary, if living; if not, to the Owner's estate.

The Amount of the Death Benefit: Death of a Contract Owner

If a Contract Owner who is not the Annuitant dies before the Annuity Date, the
amount of the death benefit will be equal to your Contract Value as of the
Notice Date and will be paid in accordance with the Death Benefit Proceeds
section above. The death benefit proceeds will be paid to the Joint Owner, if
living; if not, to the Contingent Owner, if living; if not, to the
Beneficiary, if living; if not, to the Owner's estate. See THE GENERAL
ACCOUNT--Withdrawals and Transfers.

If a Contract Owner who is the Annuitant dies before the Annuity Date, the
amount of the death benefit will be equal to the greater of (a) your Death
Benefit Amount as of the Notice Date, or (b) the "Guaranteed Minimum Death
Benefit Amount" as of the Notice Date, and will be paid in accordance with the
Death Benefit Proceeds section above. The death benefit proceeds will be paid
to the Beneficiary if living; if not, to the Owner's estate. Joint and/or
Contingent Owners and/or Annuitants will not be considered in determining the
recipient of death benefit proceeds.

If both you and the Annuitant(s) are non-individual persons, no death benefit
will be payable, and any distribution will be treated as a withdrawal and
subject to any applicable annual fee, withdrawal fee, withdrawal charge,
charge for premium taxes and/or other taxes.

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WITHDRAWALS

Optional Withdrawals

You may, on or prior to your Annuity Date, withdraw all or a portion of the
amount available under your Contract. You may surrender your Contract and make
a full withdrawal at any time. Except as provided below, beginning 30 days
after your Contract Date, you also may make partial withdrawals from your
Investment Options at any time. You may request to withdraw a specific dollar
amount or a specific percentage of an Account Value or your Net Contract
Value. You may choose to make your withdrawal from specified Investment
Options; if you do not specify Investment Options, your withdrawal will be
made from all of your Investment Options proportionately. Each partial
withdrawal must be for $500 or more, except pre-authorized withdrawals, which
must be at least $250. If your partial withdrawal from an Investment Option
would leave a remaining Account Value in that Investment Option of less than
any minimum Account Value we may require in the future, we have the right, at
our option, to transfer that remaining amount to your other Investment Options
on a proportionate basis relative to your most recent allocation instructions.
Any such DCA Plus Fixed Option balance or any amount that would otherwise be
allocated to the DCA Plus Fixed Option will be allocated to the Variable
Investment Options according to your most recent DCA Plus transfer
instructions. If your partial withdrawal leaves you with a Net Contract Value
of less than $1,000, we have the right, at our option, to terminate your
Contract and send you the withdrawal proceeds described in the next section.
Partial withdrawals from the Fixed Option in any Contract Year are subject to
restrictions. See GENERAL ACCOUNT--Withdrawals and Transfers.

Amount Available for Withdrawal

The amount available for withdrawal is your Net Contract Value at the end of
the Business Day on which your withdrawal request is effective, less any
applicable Annual Fee, any withdrawal charge, any withdrawal transaction fee,
and any charge for premium taxes and/or other taxes. The amount we send to you
(your "withdrawal proceeds") will also reflect any required or requested
federal and state income tax withholding. See FEDERAL TAX STATUS.

You assume investment risk on investments in the Subaccounts; as a result, the
amount available to you for withdrawal from any Subaccount may be more or less
than the total Purchase Payments you have allocated to that Subaccount.

Withdrawal Transaction Fees

There is currently no transaction fee for partial withdrawals. However, we
reserve the right to impose a withdrawal transaction fee in the future of up
to $15 for each partial withdrawal (including pre-authorized partial
withdrawals) in excess of 15 in any Contract Year. Any such fee would be
charged against your Investment Options proportionately based on your Account
Value in each immediately after the withdrawal.

Pre-Authorized Withdrawals

If your Contract Value is at least $5,000, you may select the pre-authorized
withdrawal option, and you may choose monthly, quarterly, semiannual or annual
withdrawals. Each withdrawal must be for at least $250. Each pre-authorized
withdrawal is subject to federal income tax on its taxable portion and may be
subject to a 10% penalty tax if you have not reached age 59 1/2. See FEDERAL
TAX STATUS. Additional information and options are set forth in the SAI and in
the Pre-Authorized Withdrawal section of your application.

Special Requirements for Full Withdrawals

If you wish to withdraw the entire amount available under your Contract, you
must either return your Contract to us or sign and submit to us a "lost
Contract affidavit."

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Special Restrictions Under Qualified Plans

Individual Qualified Plans may have additional rules regarding withdrawals from
a Contract purchased under such a Plan. In general, if your Contract was issued
under certain Qualified Plans, you may not withdraw amounts attributable to
contributions made pursuant to a salary reduction agreement (as defined in
Section 402(g)(3)(A) of the Code) or to transfers from a custodial account (as
defined in Section 403(b)(7) of the Code) except in cases of your
(a) separation from service, (b) death, (c) disability as defined in Section
72(m)(7) of the Code, (d) reaching age 59 1/2, or (e) hardship as defined for
purposes of Section 401(k) of the Code.

These limitations do not affect certain rollovers or exchanges between
Qualified Plans, and do not apply to rollovers from these Qualified Plans to an
individual retirement account or individual retirement annuity. In the case of
tax sheltered annuities, these limitations do not apply to certain salary
reduction contributions made, and investment results earned, prior to dates
specified in the Code.

Hardship withdrawals under the exception provided above are restricted to
amounts attributable to salary reduction contributions, and do not include
investment results; this additional restriction does not apply to salary
reduction contributions made, and investment results earned, prior to dates
specified in the Code.

Certain distributions, including rollovers, may be subject to mandatory
withholding of 20% for federal income tax and to a penalty tax of 10% or more
if the distribution is not transferred directly to the trustee of another
Qualified Plan, or to the custodian of an individual retirement account or
issuer of an individual retirement annuity. See FEDERAL TAX STATUS.
Distributions may also trigger withholding for state income taxes. The tax and
ERISA rules relating to Contract withdrawals are complex. We are not the
administrator of any Qualified Plan. You should consult your tax adviser and/or
your plan administrator before you withdraw any portion of your Contract Value.

Effective Date of Withdrawal Requests

Withdrawal requests are normally effective on the Business Day we receive them
in proper form. If you make Purchase Payments by check and submit a withdrawal
request immediately afterwards, payment of your withdrawal proceeds may be
delayed until your check clears.

TAX CONSEQUENCES OF WITHDRAWALS

Withdrawals, including pre-authorized withdrawals, will generally have federal
income tax consequences, which could include tax penalties. YOU SHOULD CONSULT
WITH A TAX ADVISER BEFORE MAKING ANY WITHDRAWAL OR SELECTING THE PRE-AUTHORIZED
WITHDRAWAL OPTION. See FEDERAL TAX STATUS.

SHORT-TERM CANCELLATION RIGHT ("FREE LOOK")

You may return your Contract for cancellation and a full refund during your
"free look period." Your free look period is usually the 10-day period
beginning on the day you receive your Contract. If you return your Contract, it
will be canceled and treated as void from your Contract Date. You will then
receive a refund of your Contract Value as of the end of the Business Day on
which we receive your Contract for cancellation, plus a refund of any amounts
that may have been deducted as Contract fees and charges. Thus, an Owner who
returns a Contract within the Free-Look Period bears only the investment risk
(i.e., the Owner's Accumulated Value allocated to the Variable Accounts may
increase or decrease based on investment performance), but the Owner will not
be subject to any Contract charges and fees which would otherwise be deducted
from Accumulated Values. Any amounts credited to your Variable Account as a
result of any variation of charges, as described in WAIVERS AND REDUCED
CHARGES, and any earnings on such amounts, will not be included in the amount
refunded to you.

If your Contract is issued in exchange for another annuity contract or a life
insurance policy, our administrative procedures may vary.

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PM GROUP AND THE SEPARATE ACCOUNT

PM Group Life Insurance Company [Pacific Life & Annuity Company]

[Pacific Life & Annuity Company, formerly] PM Group Life Insurance Company
("PM Group" ["PLA"]) is a stock life insurance company with total admitted
assets of $338.2 million at December 31, 1997. PM Group was incorporated in
1982 under the name Pacific Financial Life Insurance Company. It merged with
Pacific Financial Life Insurance Company of Arizona and assumed its current
name [the PM Group name] in effecting a transfer of domicile from California
to Arizona which was completed in 1990. [On , PM Group changed its
name to its current name, PLA.] PM Group is a direct, wholly-owned subsidiary
of Pacific Life Insurance Company ("Pacific Life"), formerly Pacific Mutual
Life Insurance Company ("Pacific Mutual"). Pursuant to consent received from
the Insurance Department of the State of California, Pacific Mutual
implemented a plan of conversion to form a mutual holding company structure
(the "Conversion"). The Conversion created Pacific LifeCorp, an intermediate
stock holding company and Pacific Mutual Holding Company ("PMHC"), a mutual
holding company. Pacific Mutual was converted to a stock life insurance
company and renamed Pacific Life. Under their respective charters, PMHC must
always own at least 51% of the outstanding voting stock of Pacific LifeCorp,
and Pacific LifeCorp must always own 100% of the voting stock of Pacific Life.

PM Group's operations include both life insurance and annuity products as well
as group life and health insurance programs and various investment products
and services. PM Group is authorized to conduct life insurance [and annuity]
business in the District of Columbia and all states except [Maine], New
Hampshire [New York] and Vermont. PM Group's principal offices are located at
700 Newport Center Drive, Newport Beach, California 92660.

Pacific Life administers the policies sold under this Prospectus. Pacific
Life's operations include both life insurance and annuity products as well as
financial and retirement services. As of the end of 1997, Pacific Life had
$80.0 billion of individual life insurance in force and total admitted assets
of approximately $31.8 billion. Pacific Life has been ranked according to
admitted assets as the 20th largest life insurance carrier in the nation for
1997. The Pacific Life family of companies has total assets and funds under
management of over $236 billion. Pacific Life is authorized to conduct life
insurance and annuity business in the District of Columbia and all states
except New York. Pacific Life's principal offices are located at 700 Newport
Center Drive, Newport Beach, California 92660.

The principal underwriter for the Policies is Pacific Mutual Distributors,
Inc. ("PMD"), one of Pacific Life's wholly-owned subsidiaries. PMD is
registered as a broker-dealer with the Securities and Exchange Commission
("SEC").

Separate Account A

Separate Account A was established on September 24, 1998 as a separate account
of ours, and is registered with the SEC under the Investment Company Act of
1940 (the "1940 Act"), as a type of investment company called a "unit
investment trust."

Obligations arising under your Contract are our general corporate obligations.
We are also the legal owner of the assets in the Separate Account. Assets of
the Separate Account attributed to the reserves and other liabilities under
the Contract and other contracts issued by us that are supported by the
Separate Account may not be charged with liabilities arising from any of our
other business; any income, gain or loss (whether or not realized) from the
assets of the Separate Account are credited to or charged against the Separate
Account without regard to our other income, gain or loss.

We may invest money in the Separate Account in order to commence its
operations and for other purposes, but not to support contracts other than
variable annuity contracts. A portion of the Separate Account's assets may
include accumulations of charges we make against the Separate Account and
investment results of assets so accumulated. These additional assets are ours
and we may transfer them to our General Account at any time;

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however, before making any such transfer, we will consider any possible
adverse impact the transfer might have on the Separate Account. Subject to
applicable law, we reserve the right to transfer our assets in the Separate
Account to our General Account.

The Separate Account is not the sole investor in the Fund. Investment in the
Fund by other separate accounts in connection with variable annuity and
variable life insurance contracts may create conflicts. See MORE ON THE FUND'S
SHARES in the accompanying Prospectus for the Fund.

FEDERAL TAX STATUS

The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial or
administrative action. The summary is general in nature, and does not consider
any applicable state or local tax laws. We do not make any guarantee regarding
the tax status, federal, state or local, of any Contract or any transaction
involving the Contracts. Accordingly, you should consult a qualified tax
adviser for complete information and advice before purchasing a Contract.

The following rules generally do not apply to variable annuity contracts held
by or for non-natural persons (e.g., corporations) unless such an entity holds
the contract as nominee for a natural person. If a contract is not owned or
held by a natural person or a nominee for a natural person, the contract
generally will not be treated as an "annuity" for tax purposes, meaning that
the contract owner will be taxed currently on annual increases in Contract
Value at ordinary income rates unless some other exception applies.

Section 72 of the Code governs the taxation of annuities in general, and we
designed the Contracts to meet the requirements of Section 72 of the Code. We
believe that, under current law, the Contract will be treated as an annuity
for federal income tax purposes if the Contract Owner is a natural person or a
nominee for a natural person, and that we (as the issuing insurance company),
and not the Contract Owner(s), will be treated as the owner of the investments
underlying the Contract. Accordingly, no tax should be payable by you as a
Contract Owner as a result of any increase in Contract Value until you receive
money under your Contract. You should, however, consider how amounts will be
taxed when you do receive them. The following discussion assumes that your
Contract will be treated as an annuity for federal income tax purposes.

Section 817(h) of the Code provides that the investments underlying a variable
annuity must satisfy certain diversification requirements. Details on these
diversification requirements appear under OTHER INFORMATION ABOUT THE FUND in
the Fund's Prospectus. We believe the underlying Variable Investment Options
for the Contract meet these requirements. In connection with the issuance of
temporary regulations relating to diversification requirements under Section
817(h), the Treasury Department announced that such regulations do not provide
guidance concerning the extent to which you may direct your investments to
particular divisions of a separate account. Such guidance may be included in
regulations or revenue rulings under Section 817(d) relating to the definition
of a variable contract. Because of this uncertainty, we reserve the right to
make such changes as we deem necessary or appropriate to ensure that your
Contract continues to qualify as an annuity for tax purposes. Any such changes
will apply uniformly to affected Contract Owners and will be made with such
notice to affected Contract Owners as is feasible under the circumstances.

Taxes Payable by Contract Owners: General Rules

These general rules apply to Non-Qualified Contracts. As discussed below,
however, tax rules may differ for Qualified Contracts and you should consult a
qualified tax adviser if you are purchasing a Qualified Contract.

Distributions of net investment income or capital gains that each Subaccount
receives from its corresponding Portfolio are automatically reinvested in such
Portfolio unless we, on behalf of the Separate Account, elect otherwise. As
noted above, you will be subject to federal income taxes on the investment
income from your Contract only when it is distributed to you.

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Multiple Contracts

All Non-Qualified contracts that are issued by us, or our affiliates, to the
same Owner during any calendar year are treated as one contract for purposes
of determining the amount includible in gross income under Code Section 72(e).
Further, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of Section 72(e) through the serial purchase of
contracts or otherwise.

Taxes Payable on Withdrawals

Amounts you withdraw before annuitization, including amounts withdrawn from
your Contract Value in connection with partial withdrawals for payment of any
charges and fees, will be treated first as taxable income to the extent that
your Contract Value exceeds the aggregate of your Purchase Payments (reduced
by non-taxable amounts previously received), and then as non-taxable recovery
of your Purchase Payments.

The assignment or pledge of (or agreement to assign or pledge) the value of
the Contract for a loan will be treated as a withdrawal subject to these
rules. Moreover, all annuity contracts issued to you in any given calendar
year by us and any of our affiliates are treated as a single annuity contract
for purposes of determining whether an amount is subject to tax under these
rules. The Code further provides that the taxable portion of a withdrawal may
be subject to a penalty tax equal to 10% of that taxable portion unless the
withdrawal is: (1) made on or after the date you reach age 59 1/2, (2) made by
a Beneficiary after your death, (3) attributable to your becoming disabled, or
(4) in the form of level annuity payments under a lifetime annuity.

Taxes Payable on Annuity Payments

A portion of each annuity payment you receive under a Contract generally will
be treated as a partial recovery of Purchase Payments (as used here, "Purchase
Payments" means the aggregate Purchase Payments less any amounts that were
previously received under the Contract but not included in income) and will
not be taxable. (In certain circumstances, subsequent modifications to an
initially-established payment pattern may result in the imposition of a
penalty tax.) The remainder of each annuity payment will be taxed as ordinary
income. However, after the full amount of aggregate Purchase Payments has been
recovered, the full amount of each annuity payment will be taxed as ordinary
income. Exactly how an annuity payment is divided into taxable and non-taxable
portions depends on the period over which annuity payments are expected to be
received, which in turn is governed by the form of annuity selected and, where
a lifetime annuity is chosen, by the life expectancy of the Annuitant(s) or
payee(s).

Should the death of a Contract Owner cause annuity payments to cease before
Purchase Payments have been fully recovered, an Annuitant (or in certain cases
the Beneficiary) is allowed a deduction on the final tax return for the
unrecovered Purchase Payments; however, if any remaining annuity payments are
made to a Beneficiary, the Beneficiary will recover the balance of the
Purchase Payments as payments are made. A lump sum payment taken in lieu of
remaining monthly annuity payments is not considered an annuity payment for
tax purposes. The portion of any lump sum payment to a Beneficiary in excess
of aggregate unrecovered Purchase Payments would be subject to income tax.
Such a lump sum payment may also be subject to a penalty tax.

If a Contract Owner dies before annuity payments begin, certain minimum
distribution requirements apply. If a Contract Owner dies after the Annuity
Date, the remaining interest in the Contract must be distributed at least as
rapidly as under the method of distribution in effect on the date of death.

Generally, the same tax rules apply to amounts received by the Beneficiary as
those set forth above, except that the early withdrawal penalty tax does not
apply. Thus, any annuity payments or lump sum withdrawal will be divided into
taxable and non-taxable portions. If the Contract Owner or Annuitant dies and
within sixty days after the date on which a lump sum death benefit first
becomes payable the designated recipient elects to receive annuity payments in
lieu of the lump sum death benefit, then the designated recipient will not be
treated for tax purposes as having received the lump sum death benefit in the
tax year it first becomes payable. Rather, in that case, the designated
recipient will be taxed on the annuity payments as they are received.

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In addition, designation of a Beneficiary who either is 37 1/2 or more years
younger than a Contract Owner or is a grandchild of a Contract Owner may have
Generation Skipping Transfer Tax consequences under section 2601 of the Code.

Generally, gifts of non-tax qualified contracts prior to the annuity start
date will trigger tax on the gain on the contract, with the donee getting a
stepped-up basis for the amount included in the donor's income. The 10%
penalty tax and gift tax also may be applicable. This provision does not apply
to transfers between spouses or incident to a divorce.

Qualified Contracts

The Contracts are available to a variety of Qualified Plans. Tax restrictions
and consequences for Contracts under each type of Qualified Plan differ from
each other and from those for Non-Qualified Contracts. In addition, individual
Qualified Plans may have terms and conditions that impose additional rules.
Therefore, no attempt is made herein to provide more than general information
about the use of the Contract with the various types of Qualified Plans.
Participants under such Qualified Plans, as well as Contract Owners,
Annuitants and Beneficiaries, are cautioned that the rights of any person to
any benefits under such Qualified Plans may be subject to the terms and
conditions of the Plans themselves or limited by applicable law, regardless of
the terms and conditions of the Contract issued in connection therewith.

The following is only a general discussion about types of Qualified Plans for
which the Contracts are available. We are not the administrator of any
Qualified Plan. The plan administrator and/or custodian, whichever is
applicable, (but not us) is responsible for all Plan administrative duties
including, but not limited to, notification of distribution options,
disbursement of Plan benefits, compliance regulatory requirements and federal
and state tax reporting of income/distributions from the Plan to Plan
participants and, if applicable, Beneficiaries of Plan participants and IRA
contributions from Plan participants. Our administrative duties are limited to
administration of the Contract and any disbursements of any Contract benefits
to the Owner, Annuitant, or Beneficiary of the Contract, as applicable. Our
tax reporting responsibility is limited to federal and state tax reporting of
income/distributions to the applicable payee and IRA contributions from the
Owner of a Contract, as recorded on our books and records. The Qualified Plan
(the plan administrator or the custodian) is required to provide us with
information regarding individuals with signatory authority on the Contract(s)
owned. If you are purchasing a Qualified Contract, you should consult with
your plan administrator and/or a qualified tax adviser. You should also
consult with your tax adviser and/or plan administrator before you withdraw
any portion of your contract value.

Individual Retirement Annuities ("IRAs")

Recent federal tax legislation has expanded the type of IRAs available to
individuals for tax deferred retirement savings: In addition to "traditional"
IRAs established under Code Section 408, there are Roth IRAs governed by Code
Section 408A and SIMPLE IRAs established under Code Section 408(p).
Contributions to each of these types of IRAs are subject to differing
limitations. In addition, distributions from each type of IRA are subject to
differing restrictions. The following is a very general description of each
type of IRA:

Traditional IRAs
- ----------------

Traditional IRAs are subject to limitations on the amount that may be
contributed, the persons who may be eligible, and on the time when
distributions must commence. Depending upon the circumstances of the
individual, contributions to a traditional IRA may be made on a deductible or
non-deductible basis. Failure to make mandatory distributions may result in
imposition of a 50% penalty tax on any difference between the required
distribution amount and the amount actually distributed. A 10% penalty tax is
imposed on the amount includable in gross income from distributions that occur
before you attain age 59 1/2 and that are not made on account of death or
disability, with certain exceptions. These exceptions include distributions
that are part of a series of substantially equal periodic payments made over
your life (or life expectancy) or the joint lives (or

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joint life expectancies) of you and your Joint Annuitant. Distributions of
minimum amounts specified by the Code must commence by April 1 of the calendar
year following the calendar year in which you attain age 70 1/2. Additional
distribution rules apply after your death.

You may rollover funds from certain existing Qualified Plans (such as proceeds
from existing insurance policies, annuity contracts or securities) into your
Traditional IRA if those funds are in cash; this will require you to liquidate
any value accumulated under the existing Qualified Plan. Mandatory withholding
of 20% may apply to any rollover distribution from your existing Qualified
Plan if the distribution is not transferred directly to your Traditional IRA;
to avoid this withholding you should have cash transferred directly from the
insurance company or plan trustee to us. Similar limitations and tax penalties
apply to tax sheltered annuities, government plans, 401(k) plans, and pension
and profit-sharing plans.

SIMPLE Individual Retirement Annuities
- --------------------------------------

The Small Business Job Protection Act of 1996 created a new retirement plan,
the Savings Incentive Match Plan for Employees of Small Employers ("SIMPLE
Plans"). Depending upon the type of SIMPLE Plan, employers may deposit the
plan contributions into a single trust or into SIMPLE individual retirement
annuities ("SIMPLE IRAs") established by each participant. Contributions to a
SIMPLE IRA may be either salary deferral contributions or employer
contributions. Distributions from a SIMPLE IRA may be rolled over to another
SIMPLE IRA tax free or may be eligible for tax free rollover to a traditional
IRA after a required two year period. A distribution from a SIMPLE IRA,
however, is never eligible to be rolled over to a retirement plan qualified
under Code Section 401 or a Section 403(b) annuity contract.

Roth IRAs
- ---------

Section 408A of the Code permits eligible individuals to establish a Roth IRA,
a new type of IRA which becomes available in 1998. Contributions to a Roth IRA
are not deductible, but withdrawals that meet certain requirements are not
subject to federal income tax. In general, Roth IRAs are subject to
limitations on the amount that may be contributed and the persons who may be
eligible to contribute and are subject to certain required distribution rules
on the death of the Contract Owner. Unlike a traditional IRA, Roth IRAs are
not subject to minimum required distribution rules during the Contract Owner's
lifetime. Generally, however, the amount remaining in a Roth IRA must be
distributed by the end of the fifth year after the death of the Contract
Owner. Beginning in 1998, the owner of a traditional IRA may convert a
traditional IRA into a Roth IRA under certain circumstances. The conversion of
a traditional IRA to a Roth IRA will subject the amount of the converted
traditional IRA to federal income tax. Anyone considering the purchase of a
Qualified Contract as a "conversion" Roth IRA should consult with a qualified
tax adviser.

Tax Sheltered Annuities ("TSAs")

Section 403(b) of the Code permits public school systems and certain tax-
exempt organizations to adopt annuity plans for their employees; Purchase
Payments made on Contracts purchased for these employees are excludable from
the employees' gross income (subject to maximum contribution limits).
Distributions under these Contracts must comply with certain limitations as to
timing, or result in tax penalties.

Government Plans

Section 457 of the Code permits employees of a state or local government (or
of certain other tax-exempt entities) to defer compensation through an
eligible government plan. Contributions to a Contract in connection with an
eligible government plan are subject to limitations.

401(k) Plans; Pension and Profit-Sharing Plans

Deferred compensation plans may be established by an employer for certain
eligible employees under Sections 401(a) and 401(k) of the Code. Contributions
to these plans are subject to limitations.

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LOANS

Certain Qualified Contract Owners may borrow against their Contracts; otherwise
loans from us are not permitted. If yours is a Qualified Contract issued under
Section 401 or 403 of the Code and the terms of your Qualified Plan permit, you
may request a loan from us, using your Contract Value as your only security.

Tax and Legal Matters

The tax and ERISA rules relating to Contract loans are complex and in many
cases unclear. For these reasons, and because the rules vary depending on the
individual circumstances of each Contract, WE URGE YOU TO CONSULT WITH A
QUALIFIED TAX ADVISER PRIOR TO EFFECTING ANY LOAN TRANSACTION UNDER YOUR
CONTRACT.

Interest paid on your loan under a 401 plan or 403(b) tax-sheltered annuity
will be considered "personal interest" under Section 163(h) of the Code, to the
extent the loan comes from your pre-tax contributions, even if the proceeds of
your loan are used to acquire your principal residence.

We may change these loan provisions to reflect changes in the Code or
interpretations thereof.

Loan Procedures

Your loan request must be submitted on our Loan Agreement Form. You may submit
a loan request at any time after your first Contract Anniversary and before
your Annuity Date; however, before requesting a new loan, you must wait thirty
days after the last payment of a previous loan. If approved, your loan will
usually be effective as of the end of the Business Day on which we receive all
necessary documentation in proper form. We will normally forward proceeds of
your loan to you within seven calendar days after the effective date of your
loan. A loan administration fee of $500 will be deducted from your loan
proceeds, although we reserve the right to waive this fee.

In order to secure your loan, on the effective date of your loan, we will
transfer an amount equal to the principal amount of your loan into an account
called the "Loan Account." To make this transfer, we will transfer amounts
proportionately from your Investment Options, in accordance with the Loan
Agreement.

As your loan is repaid, a portion, corresponding to the amount of the repayment
of any amount then held as security for your loan, will be transferred from the
Loan Account back into your Investment Options relative to your current
allocation instructions.

Loan Terms

You may have only one loan outstanding at any time. The minimum loan amount is
$1,000, subject to certain state limitations. Your Contract Debt at the
effective date of your loan may not exceed the lesser of:

. 50% of your Contract Value; or

. $50,000 less your highest outstanding Contract Debt during the 12-month
period immediately preceding the effective date of your loan.

You should refer to the terms of your particular Qualified Plan for any
additional loan restrictions. If you have other loans outstanding pursuant to
other Qualified Plans, the amount you may borrow may be further restricted. We
are not responsible for making any determinations (including loan amounts
permitted) or any interpretations with respect to your Qualified Plan.

You will be charged interest on your Contract Debt at an annual rate, set at
the time of the loan withdrawal, equal to the higher of (a) Moody's Corporate
Bond Yield Average-Monthly Average Corporates (the "Moody's Rate"), as
published by Moody's Investors Service, Inc., or its successor, for the most
recently available calendar month, or (b) 5%. In the event that the Moody's
Rate is no longer available, we may substitute a substantially

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<PAGE>

similar average rate, subject to compliance with applicable state regulations.
The amount held in the Loan Account to secure your loan will earn a return
equal to an annual rate that is two percentage points lower than the annual
rate of interest charged on your Contract Debt. Interest charges accrue on
your Contract Debt daily, beginning on the effective date of your loan.
Interest earned on the Loan Account Value accrue daily beginning on the day
following the effective date of the loan, and those earnings will be
transferred once a year to your Investment Options in accordance with your
current allocation instructions. Any amounts that would otherwise be
transferred to the DCA Plus Fixed Option will be transferred to the Variable
Investment Options according to your most recent DCA Plus transfer
instructions.

Repayment Terms

Your loan, including principal and accrued interest, generally must be repaid
in quarterly installments. An installment will be due in each quarter on the
date corresponding to the effective date of your loan, beginning with the
first such date following the effective date of your loan.

Example: On May 1, we receive your loan request, and your loan is
effective. Your first quarterly payment will be due on August 1.

Adverse tax consequences may result if you fail to meet the repayment
requirements for your loan. You must repay principal and interest of any loan
in substantially equal payments over the term of the loan. Normally, the term
of the loan will be five years from the effective date of the loan; however,
if you have certified to us that your loan proceeds are to be used to acquire
a principal residence for yourself, you may request a loan term of 30 years.
In either case, however, you must repay your loan prior to your Annuity Date.
If you elect to annuitize (or withdraw) your Net Contract Value while you have
an outstanding loan, we will deduct any Contract Debt from your Contract Value
at the time of the annuitization (or withdrawal) to repay the Contract Debt.

You may prepay your entire loan at any time; if you do so, we will bill you
for any unpaid interest that has accrued through the date of payoff. Your loan
will be considered repaid only when the interest due has been paid. Subject to
any necessary approval of state insurance authorities, while you have Contract
Debt outstanding, we will treat all payments you send us as Purchase Payments
unless you specifically indicate that your payment is a loan repayment or
include your loan stub with your payment. To the extent allowed by law, any
loan repayments in excess of the amount then due will be refunded to you,
unless such amount is sufficient to pay the balance of your loan.

If we have not received your full payment by its due date, we will declare the
entire remaining loan balance in default. At that time, we will send written
notification of the amount needed to bring the loan back to a current status.
You will have sixty (60) days from the date on which the loan was declared in
default (the "grace period") to make the required payment.

If the required payment is not received by the end of the grace period, the
defaulted loan balance plus accrued interest and any withdrawal charge will be
withdrawn from your Contract Value, if amounts under your Contract are
eligible for distribution. In order for an amount to be eligible for
distribution from a Qualified Plan you must meet one of six triggering events.
They are: attainment of age 59 1/2; separation from service; death;
disability; plan termination; and financial hardship. If those amounts are not
eligible for distribution, the defaulted loan balance plus accrued interest
and any withdrawal charge will be considered a Deemed Distribution and will be
withdrawn when such Contract Values become eligible. In either case, the
Distribution or the Deemed Distribution will be considered a currently taxable
event, and may be subject to federal tax withholding, the withdrawal charge
and the federal early withdrawal penalty tax.

If there is a Deemed Distribution under your Contract and to the extent
allowed by law, any future withdrawals will first be applied as repayment of
the defaulted Contract Debt, including accrued interest and charges for
applicable taxes. Any amounts withdrawn and applied as repayment of Contract
Debt will first be withdrawn from your Loan Account, and then from your
Investment Options on a proportionate basis relative to the Account

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<PAGE>

Value in each Investment Option. If you have an outstanding loan that is in
default, the defaulted Contract Debt will be considered a withdrawal for the
purpose of calculating any Death Benefit Amount and/or Guaranteed Minimum
Death Benefit.

The terms of any such loan are intended to qualify for the exception in Code
Section 72(p)(2) so that the distribution of the loan proceeds will not
constitute a distribution that is taxable to you. To that end, these loan
provisions will be interpreted to ensure and maintain such tax qualification,
despite any other provisions to the contrary. We reserve the right to amend
your Contract to reflect any clarifications that may be needed or are
appropriate to maintain such tax qualification or to conform any terms of our
loan arrangement with you to any applicable changes in the tax qualification
requirements. We will send you a copy of any such amendment. If you refuse
such an amendment, it may result in adverse tax consequences to you.

Withholding

Unless you elect to the contrary, any amounts you receive under your Contract
that are attributable to investment income will be subject to withholding to
meet federal and state income tax obligations. The rate of withholding on
annuity payments made to you will be determined on the basis of the
withholding information you provide to us with your application. If you do not
provide us with required withholding information, we will withhold, from every
withdrawal from your Contract and from every annuity payment to you, the
appropriate percentage of the taxable amount of the payment. Please call us at
1-800-XXX-XXXX with any questions about the required withholding information.
For purposes of determining your withholding rate on annuity payments, you
will be treated as a married person with three exemptions. The rate of
withholding on all other payments made to you under your Contract, such as
amounts you receive upon withdrawals, will be 10%, unless otherwise specified
by the Code. Generally, there will be no withholding for taxes until you
actually receive payments under your Contract.

Distributions from a Contract under a Qualified Plan (not including an
individual retirement annuity subject to Code Section 408 or Code Section
408A) to an employee, surviving spouse, or former spouse who is an alternate
payee under a qualified domestic relations order, in the form of a lump sum
settlement or periodic annuity payments for a fixed period of fewer than 10
years are subject to mandatory income tax withholding of 20% of the taxable
amount of the distribution, unless (1) the distributee directs the transfer of
such amounts in cash to another Qualified Plan or a Traditional IRA; or (2)
the payment is a minimum distribution required under the Code. The taxable
amount is the amount of the distribution less the amount allocable to after-
tax contributions. All other types of taxable distributions are subject to
withholding unless the distributee elects not to have withholding apply.

Certain states have indicated that pension and annuity withholding will apply
to payments made to residents. Generally, an election out of federal
withholding will also be considered an election out of state withholding.

Impact of Federal Income Taxes

In general, if you expect to accumulate your Contract Value over a relatively
long period of time without making significant withdrawals, there should be
tax advantages, regardless of your tax bracket, in purchasing a Contract
rather than, for example, a mutual fund with a similar investment policy and
approximately the same level of expected investment results. This is because
little or no income taxes are incurred by you or by us while you are
participating in the Subaccounts, and it is generally advantageous to defer
the payment of income taxes, so that the investment return is compounded
without any deduction for income taxes. The advantage will be greater if you
decide to liquidate your Contract Value in the form of monthly annuity
payments after your retirement, or if your tax rate is lower at that time than
during the period that you held the Contract, or both.

Taxes on PM Group [PLA]

Although the Separate Account is registered as an investment company, it is
not a separate taxpayer for purposes of the Code. The earnings of the Separate
Account are taxed as part of our operations. No charge is made against the
Separate Account for our federal income taxes (excluding the charge for
premium taxes), but we will review, periodically, the question of charges to
the Separate Account or your Contract for such taxes. Such a charge may be
made in future years for any federal income taxes that would be attributable
to the Separate Account or to our operations with respect to your Contract, or
attributable, directly or indirectly, to Purchase Payments on your Contract.

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<PAGE>

Under current law, we may incur state and local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant and they
are not charged against the Contract or the Separate Account. If there is a
material change in applicable state or local tax laws, the imposition of any
such taxes upon us that are attributable to the Separate Account or to our
operations with respect to your Contract may result in a corresponding charge
against the Separate Account or your Contract.

ADDITIONAL INFORMATION

VOTING RIGHTS

We are the legal owner of the shares of the Portfolios held by the Subaccounts,
and consequently have the right to vote on any matter voted on at Fund
shareholders' meetings. However, our current interpretation of applicable law
requires us to vote the shares attributable to your Variable Account Value
(your "voting interest") in accordance with your directions.

We will pass shareholder proxy materials on to you so that you have an
opportunity to give us voting instructions for your voting interest. You may
provide your instructions by proxy or in person at the shareholders' meeting.
If there are shares of a Portfolio held by a Subaccount for which we do not
receive timely voting instructions, we will vote those shares in the same
proportion as all other shares of that Portfolio held by that Subaccount for
which we have received timely voting instructions. If we hold shares of a
Portfolio in our General Account, or hold unvoted shares in the Separate
Account, and/or if any of our non-insurance subsidiaries hold shares of a
Portfolio, such shares will be voted in the same proportion as other votes cast
by all of our separate accounts in the aggregate, including Separate Account A.

We may elect, in the future, to vote shares of the Portfolios held in Separate
Account A in our own right if we are permitted to do so through a change in
applicable federal securities laws or regulations, or in their interpretation.

The number of Portfolio shares that form the basis for your voting interest is
determined as of the record date set by the Board of Trustees of the Fund. It
is equal to (a) your Contract Value allocated to the Subaccount corresponding
to that Portfolio, divided by (b) the net asset value per share of that
Portfolio. Fractional votes will be counted. We reserve the right, if required
or permitted by a change in federal regulations or their interpretation, to
amend how we calculate your voting interest.

After your Annuity Date, if you have selected a variable annuity, the voting
rights under your Contract will continue during the payout period of your
annuity, but the number of shares that form the basis for your voting interest,
as described above, will decrease throughout the payout period.

CHANGES TO YOUR CONTRACT

Contract Owner(s) and Contingent Owner

You may change your Non-Qualified Contract at any time prior to your Annuity
Date to name a different Contract Owner or to add a Joint Owner, or to add or
change a Contingent Owner; if yours is a Qualified Contract, you must be the
only Contract Owner, but you may still add or change a Contingent Owner. Your
Contract cannot name more than two Contract Owners (Joint Owners) and one
Contingent Owner at any time. Any newly-named Contract Owners, including Joint
and/or Contingent Owners, must be under the age of 86 at the time of change or
addition. Joint ownership is in the form of a joint tenancy. The Contract
Owner(s) may make all decisions regarding the Contract, including making
allocation decisions and exercising voting rights. Transactions under jointly
owned Contracts require authorization from both Contract Owners. Transfer of
Contract ownership may involve federal income tax consequences; you should
consult a qualified tax adviser before effecting such a transfer. A change to
joint Contract ownership is considered a transfer of ownership.

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<PAGE>

Annuitant and Contingent or Joint Annuitant

Your sole Annuitant cannot be changed, and Joint Annuitants cannot be added or
changed, once your Contract is issued. Certain changes may be permitted in
connection with Contingent Annuitants. See RETIREMENT BENEFITS AND OTHER
PAYOUTS--Selecting Your Annuitant. There may be limited exceptions for certain
Qualified Contracts.

Beneficiaries

Your Beneficiary is a person(s) who may receive death benefits under your
Contract. You may change or remove your Beneficiary or add Beneficiaries at
any time prior to the death of the Annuitant or Owner, as applicable. If you
have named your Beneficiary irrevocably, you will need to obtain that
Beneficiary's consent before making any changes. Qualified Contracts may have
additional restrictions on naming and changing Beneficiaries; for example, if
your Contract was issued in connection with a Qualified Plan subject to Title
I of ERISA, your spouse must either be your Beneficiary or consent to your
naming of a different Beneficiary. If you leave no surviving Beneficiary, your
estate will receive any death benefit proceeds under your Contract.

Changes to ALL Contracts

If, in the judgment of our management, continued investment by Separate
Account A in one or more of the Portfolios becomes unsuitable or unavailable,
we may seek to alter the Variable Investment Options available under the
Contracts. We do not expect that a Portfolio will become unsuitable, but
unsuitability issues could arise due to changes in investment policies, market
conditions, or tax laws, or due to marketing or other reasons.

Alterations of Variable Investment Options may take differing forms. We
reserve the right to replace shares of any Portfolio that were already
purchased under any Contract (or shares that were to be purchased in the
future under a Contract) with shares of another Portfolio, shares of another
investment company or series of an investment company, or another investment
vehicle. We may also purchase, through a Subaccount, other securities for
other series or other classes of contracts, and may permit conversions or
exchanges between series or classes of contracts on the basis of Contract
Owner requests. Required approvals of the SEC and state insurance regulators
will be obtained before any such substitutions are effected, and you will be
notified of any planned substitution.

We may add new Subaccounts to Separate Account A, and any new Subaccounts may
invest in Portfolios or in other investment vehicles; availability of any new
Subaccounts to existing Contract Owners will be determined at our discretion.
We will notify you, and will comply with the filing or other procedures
established by applicable state insurance regulators, to the extent required
by applicable law. We also reserve the right, after receiving any required
regulatory approvals, to do any of the following:

. cease offering any subaccount

. add or change designated investment companies or their portfolios, or
other investment vehicles;

. add, delete or make substitutions for the securities and other assets
that are held or purchased by the Separate Account or any Variable
Account;

. permit conversion or exchanges between portfolios and/or classes of
contracts on the basis of Owners' requests;

. add, remove or combine Variable Accounts;

. combine the assets of any Variable Account with any other of our
separate accounts or of any of our affiliates;

. register or deregister Separate Account A or any Variable Account under
the 1940 Act;

. operate any Variable Account as a managed investment company under the
1940 Act; or any other form permitted by law;

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<PAGE>

. run any Variable Account under the direction of a committee, board, or
other group;

. restrict or eliminate any voting rights of Owners with respect to any
Variable Account or other persons who have voting rights as to any
Variable Account;

. make any changes required by the 1940 Act or other federal securities
laws;

. make any changes necessary to maintain the status of the Contracts as
annuities under the Code;

. make other changes required under federal or state law relating to
annuities;

. suspend or discontinue sale of the Contracts; and

. comply with applicable law.

Inquiries and Submitting Forms and Requests

You may reach our service representatives at 1-800-XXX-XXXX between the hours
of 6:00 a.m. and 5:00 p.m., Pacific time.

Please send your forms and written requests or questions to:

PM Group Life Insurance Company [Pacific Life & Annuity Company]
700 Newport Center Drive
Newport Beach, California 92660

If you are submitting a purchase or other payment by mail, please send it,
along with your application if you are submitting one, to:

PM Group Life Insurance Company [Pacific Life & Annuity Company]
700 Newport Center Drive
Newport Beach, California 92660

If you are using an overnight delivery service to send payments, please send
them to:

PM Group Life Insurance Company [Pacific Life & Annuity Company]
700 Newport Center Drive
Newport Beach, California 92660

The effective date of certain notices or of instructions is determined by the
date and time on which we "receive" the notice or instructions. We "receive"
this information only when it arrives, in proper form, at the correct mailing
address set out above. Please call us at 1-800-XXX-XXXX if you have any
questions regarding which address you should use.

Purchase Payments after your initial Purchase Payment, loan requests, transfer
requests, loan repayments and withdrawal requests we receive before 4:00 p.m.
Eastern time will normally be effective on the same Business Day that we
receive them in "proper form," unless the transaction or event is scheduled to
occur on another day. Generally, whenever you submit any other form, notice or
request, your instructions will be effective on the next Business Day after we
receive them in "proper form" unless the transaction or event is scheduled to
occur on another day. "Proper form" means in a form satisfactory to us and may
require, among other things, a signature guarantee or other verification of
authenticity. We do not generally require a signature guarantee unless it
appears that the Owner's signature may have changed over time; an executed
application or confirmation of application, as applicable, in proper form is
not received by us; or, due to other circumstances. Requests regarding death
benefits must be accompanied by both proof of death and instructions regarding
payment satisfactory to us. You should call your registered representative or
us if you have questions regarding the required form of a request.

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Telephone Transactions

After your "free look" period, you may make transfer requests by telephone if
you have authorized telephone requests (a "telephone authorization"). We
cannot guarantee that you will always be able to reach us to complete a
telephone transaction; for example, all telephone lines may be busy during
certain periods, such as periods of substantial market fluctuations or other
drastic economic or market change, or telephones may be out of service during
severe weather conditions or other emergencies. Under these circumstances, you
should submit your request in writing (or other form acceptable to us).
Transaction instructions we receive by telephone before 4:00 p.m. Eastern time
on any Business Day will normally be effective on that day, and we will send
you written confirmation of each telephone transfer.

We have established procedures reasonably designed to confirm that
instructions communicated by telephone are genuine. These procedures may
require any person requesting a telephone transaction to provide certain
personal identification upon our request. We may also record all or part of
any telephone conversation with respect to transaction instructions. We
reserve the right to deny any transaction request made by telephone. When you
make a proper request for a telephone authorization, you authorize us to
accept and to act upon instructions received by telephone with respect to your
Contract, and you agree that, as long as we comply with our procedures,
neither we, any of our affiliates, nor the Fund, or any of their directors,
trustees, officers, employees or agents will be liable for any loss,
liability, cost or expense (including attorneys' fees) in connection with
requests that are effected in accordance with your telephone authorization and
that we believe to be genuine. This policy means that you will bear the risk
of loss arising out of your telephone transaction privileges. If a Contract
has Joint Owners, both Owners must sign the written request for a telephone
authorization, but each Owner individually may make transfer requests by
telephone.

Timing of Payments and Transactions

For withdrawals from the Variable Investment Options or for death benefit
payments attributable to your Variable Account Value, we will normally send
the proceeds within seven calendar days after your withdrawal request is
effective or after the Notice Date, as the case may be. Similarly, for
transfers from the Variable Investment Options, we will normally send the
proceeds within seven calendar days after your transfer (or exchange) request
is effective. We will normally effect periodic annuity payments on the day
that corresponds to the Annuity Date and will make payment on the following
day. Payments or transfers may be suspended for a longer period under certain
abnormal circumstances. These include a closing of the New York Stock Exchange
other than on a regular holiday or weekend, a trading restriction imposed by
the SEC, or an emergency declared by the SEC. For (i) withdrawals from the
Fixed Option or DCA Plus Fixed Option, (ii) death benefit payments
attributable to Fixed Option Value or DCA Plus Fixed Option Value, or (iii)
fixed periodic annuity payments, payment of proceeds may be delayed for up to
six months after the request is effective. Similar delays may apply to loans
and transfers from the Fixed Option and the DCA Plus Fixed Option. See THE
GENERAL ACCOUNT for more details.

Confirmations, Statements and Other Reports to Contract Owners

Confirmations will be sent out for unscheduled Purchase Payments and
transfers, loans, loan repayments, unscheduled partial withdrawals, a full
withdrawal, and on payment of any death benefit proceeds. Each quarter prior
to your Annuity Date, we will send you a statement that provides certain
information pertinent to your Contract. These statements disclose Contract
Value, Subaccount values, values under the Fixed Option and DCA Plus Fixed
Option, fees and charges applied to your Contract Value, transactions made and
specific Contract data that apply to your Contract. Confirmations of your
transactions under the pre-authorized checking plan, dollar cost averaging,
earnings sweep, portfolio rebalancing, and pre-authorized withdrawal options
will appear on your quarterly account statements. Your fourth-quarter
statement will contain annual information about your Contract Value and
transactions. If you suspect an error on a confirmation or quarterly
statement, you must notify us in writing within 30 days from the date of the
first confirmation or statement on which the transaction you believe to be
erroneous appeared. When you write, tell us your name, contract number and a
description of the suspected

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error. You will also be sent an annual report for the Separate Account and the
Fund and a list of the securities held in each Portfolio of the Fund, as
required by the 1940 Act; or more frequently if required by law.

Replacement of Life Insurance or Annuities

The term "replacement" has a special meaning in the life insurance industry
and is described more fully below. Before you make your purchase decision, PM
Group [PLA] wants you to understand how a replacement may impact your existing
plan of insurance.

A policy "replacement" occurs when a new policy or contract is purchased and,
in connection with the sale, an existing policy or contract is surrendered,
lapsed, forfeited, assigned to the replacing insurer, otherwise terminated, or
used in a financed purchase. A "financed purchase" occurs when the purchase of
a new life insurance policy or annuity contract involves the use of funds
obtained from the values of an existing life insurance policy or annuity
contract through withdrawal, surrender or loan.

There are circumstances in which replacing your existing life insurance policy
or annuity contract can benefit you. As a general rule, however, replacement
is not in your best interest. Accordingly, you should make a careful
comparison of the costs and benefits of your existing policy or contract and
the proposed policy or contract to determine whether replacement is in your
best interest.

Financial Statements - Statutory Basis

PM Group's [PLA] audited financial statements - statutory basis as of December
31, 1997 and for the two years ended December 31, 1997, are contained in the
SAI. Unaudited financial statements - statutory basis as of September 30, 1998
and for each of the nine month periods ended September 30, 1998 and 1997 are
also contained in the SAI.

Preparation for the Year 2000

We rely significantly on Pacific Life's computer systems and applications in
our daily operations. In 1995, Pacific Life began the process of identifying,
evaluating and implementing changes to computer programs necessary to address
the year 2000 issue. This issue involves the ability of computer systems to
properly recognize the year 2000. The inability to do so could result in major
failures or miscalculations.

Pacific Life has a coordinated plan to remediate, or replace if necessary, any
non-compliant systems and to obtain assurances of the ability to be year 2000
compliant by our service providers, vendors and those with significant
relationships with us. The plan is directed and overseen by an experienced
Vice President dedicated to year 2000 compliance. Pacific Life completed the
identification of all critical systems and are in the process of remediating
systems. In addition, they have retained two internationally recognized
consultants to assist in reviewing and remediating our systems and interfaces
with third parties. The plan calls for all remediation to be completed by the
fourth quarter of 1998 and testing to commence as remediation is completed and
throughout 1999. Some testing has already begun.

Pacific Life's remediation expenses to make its systems year 2000 compliant
are currently estimated to range from $15 to $20 million, which excludes the
cost of personnel who support year 2000 compliance efforts. They do not
anticipate any other material future costs associated with the year 2000
compliance project, although there can be no assurance. Pacific Life currently
expects to be year 2000 compliant; however, there can be no assurances that
they will succeed. In the event Pacific Life or our significant service
providers, vendors, financial institutions or others with which we conduct
business, fail to be year 2000 compliant, there would be a materially adverse
effect on us.

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<PAGE>

THE GENERAL ACCOUNT

GENERAL INFORMATION

All amounts allocated to the Fixed Option and DCA Plus Fixed Option become
part of our General Account. Subject to applicable law, we exercise sole
discretion over the investment of General Account assets, and bear the
associated investment risk; you will not share in the investment experience of
General Account assets.

Because of exemptive and exclusionary provisions, interests in the General
Account under the Contract are not registered under the Securities Act of 1933
and the General Account has not been registered as an investment company under
the 1940 Act. Any interest you have in the Fixed Option or DCA Plus Fixed
Option is not subject to these Acts, and we have been advised that the SEC
staff has not reviewed disclosure in this Prospectus relating to the Fixed
Option. This disclosure may, however, be subject to certain provisions of
federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.

GUARANTEE TERMS

When you allocate any portion of your Purchase Payments or Contract Value to
the Fixed Option or the DCA Plus Fixed Option in the General Account, we
guarantee you an interest rate. The Fixed Option and DCA Plus Fixed Option
each offer a separate Guaranteed Interest Rate and Guarantee Term. Guarantee
Terms will be offered at our discretion. Presently, we offer Guarantee Terms
of up to one year for the Fixed Option and the DCA Plus Fixed Option. You
should specify the Fixed Option and/or DCA Plus Fixed Option into which you
want us to allocate your Purchase Payments or Contract Value, if any.

Guaranteed Interest Rates for each Fixed Option and DCA Plus Fixed Option may
be changed periodically for new allocations; your allocation will receive the
Guaranteed Interest Rate in effect for that Fixed Option or DCA Plus Fixed
Option on the effective date of your allocation. All Guaranteed Interest Rates
will be expressed as annual effective rates; however, interest will accrue
daily. The Guaranteed Interest Rate on your Fixed Option and/or DCA Plus Fixed
Option will remain in effect for the Guarantee Term and will never be less
than an annual rate of 3%.

DCA Plus Fixed Option

WHEN YOU ESTABLISH A DCA PLUS AND YOU MAKE YOUR INITIAL PURCHASE PAYMENT
ALLOCATION TO THE DCA PLUS FIXED OPTION, WE ESTABLISH A GUARANTEE TERM THAT
ENDS ONE YEAR FROM THE DAY YOUR ALLOCATION IS EFFECTIVE. We credit each
allocation made to the DCA Plus Fixed Option during that Guarantee Term at the
Guaranteed Interest Rate in effect on the day each allocation is effective
through the earliest of:

(i) the end of the Guarantee Term;
(ii) the day on which the DCA Plus Fixed Option Value is zero;
(iii) the Annuity Date; or
(iv) the day on which death benefit proceeds become payable.

We stop crediting interest on any amount transferred or withdrawn from the DCA
Plus Fixed Option as of the day the transfer or withdrawal is effective.

Fixed Option

EACH ALLOCATION (OR ROLLOVER) YOU MAKE TO THE FIXED OPTION RECEIVES A
GUARANTEE TERM THAT BEGINS ON THE DAY THAT ALLOCATION OR ROLLOVER IS EFFECTIVE
AND ENDS AT THE END OF THAT CONTRACT YEAR OR, IF EARLIER, ON YOUR ANNUITY
DATE. At the end of that Contract Year, we will roll over your Fixed Option
Value on that day into a new Guarantee Term of one year (or, if shorter, the
time remaining until your Annuity Date) at the then current Guaranteed
Interest Rate, unless you instruct us otherwise.

45
<PAGE>

Example: Your Contract Anniversary is February 1. On February 1 of year 1,
you allocate $1,000 to the Fixed Option and receive a Guarantee Term of one
year and a Guaranteed Interest Rate of 5%. On August 1, you allocate
another $500 to the Fixed Option and receive a Guaranteed Interest Rate of
6%. Through January 31, year 1, your first allocation of $1,000 earns 5%
interest and your second allocation of $500 earns 6% interest. On February
1, year 2, a new interest rate may go into effect for your entire Fixed
Option Value.

Withdrawals and Transfers

Prior to the Annuity Date, you may withdraw amounts from your Fixed Option
and/or DCA Plus Fixed Option, or transfer amounts from your Fixed Option
and/or DCA Plus Fixed Option to one or more of the other Investment Options,
except that you may not transfer amounts to the DCA Plus Fixed Option. If your
Contract was issued in a state that requires refund of Purchase Payments under
the Free Look Right, transfers may only be made after your Free Look Transfer
Date. In addition, no partial withdrawal or transfer (other than a monthly
transfer under DCA Plus) may be made from your Fixed Option and/or DCA Plus
Fixed Option within 30 days of the Contract Date. If your withdrawal leaves
you with a Net Contract Value of less than $1,000, we have the right, at our
option, to terminate your Contract and send you the withdrawal proceeds.

Payments or transfers from the Fixed Option or DCA Plus Fixed Option may be
delayed, as described under ADDITIONAL INFORMATION--Timing of Payments and
Transactions; any amount delayed will, as long as it is held under the Fixed
Option or DCA Plus Fixed Option, continue to earn interest at the Guaranteed
Interest Rate then in effect until that Guarantee Term has ended, and the
minimum guaranteed interest rate of 3% thereafter, unless state law requires a
greater rate be paid.

Fixed Option

After the first Contract Anniversary, you may make one transfer or partial
withdrawal from your Fixed Option during any Contract Year, except as provided
under the dollar cost averaging, earnings sweep and pre-authorized withdrawal
programs. You may make one transfer or one partial withdrawal within the 30
days after the end of each Contract Anniversary. Normally, you may transfer or
withdraw up to one-third (33 1/3%) of your Fixed Option Value in any given
Contract Year. However, in consecutive Contract Years you may transfer or
withdraw up to one-third (33 1/3%) of your Fixed Option Value in one year; you
may transfer or withdraw up to one-half (50%) of your remaining Fixed Option
Value in the next year; and you may transfer or withdraw up to the entire
amount (100%) of any remaining Fixed Option Value in the third year. In
addition, if, as a result of a partial withdrawal or transfer, the Fixed
Option Value is less than $500, we have the right, at our option, to transfer
the entire remaining amount to your other Investment Options on a
proportionate basis relative to your most recent allocation instructions. Any
amount that would otherwise be allocated to the DCA Plus Fixed Option will be
allocated to the Variable Investment Options according to your most recent DCA
Plus transfer instructions.

DCA Plus Fixed Option

No transfer to the DCA Plus Fixed Option may be made at any time.

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CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
Page
----
<S> <C>
PERFORMANCE................................................................ 1
Total Returns............................................................ 1
Yields................................................................... 2
Performance Comparisons and Benchmarks................................... 2
Separate Account Performance - Hypothetical Total Return................. 4
DISTRIBUTION OF THE CONTRACTS.............................................. 7
Pacific Mutual Distributors, Inc......................................... 7
THE CONTRACTS AND THE SEPARATE ACCOUNT..................................... 8
Calculating Subaccount Unit Values....................................... 8
Variable Annuity Payment Amounts......................................... 8
Corresponding Dates...................................................... 10
Age and Sex of Annuitant................................................. 11
Systematic Transfer Programs............................................. 11
Pre-Authorized Withdrawals............................................... 13
Death Benefit............................................................ 13
Joint Annuitants on Qualified Contracts.................................. 14
1035 Exchanges........................................................... 14
Safekeeping of Assets.................................................... 14
Dividends................................................................ 14
FINANCIAL STATEMENTS - STATUTORY BASIS..................................... 14
</TABLE>

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To receive a current copy of the Pacific Portfolios SAI without charge, call
(800) xxx-xxxx or complete the following and send it to:

PM Group Life Insurance Company [Pacific Life & Annuity Company]
Variable Annuities
700 Newport Center Drive
Newport Beach, CA 92660

Name _________________________
Address ______________________
City _________________________State Zip

PH02/53003.29
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
<PAGE>

PACIFIC PORTFOLIOS

The Pacific Portfolios Where to go for more information
variable annuity
contract is issued by For more information about Pacific Portfolios,
PM Group Life please call or write to us at the address below.
Insurance Company You should also use this address to send us any
[Pacific Life & notices, forms or requests about your contract.
Annuity Company], 700
Newport Center Drive, PM Group Life Insurance Company
Newport Beach, [Pacific Life & Annuity Company]
California 92660. Variable Annuity Department
P.O. Box XXXX
Pasadena, CA 9XXXX-XXXX
1-800-XXX-XXXX
6 a.m. through 5 p.m. Pacific Time

You can find reports and other information about
the Contract and Separate Account on the Securities
and Exchange Commission's website: www.sec.gov

<PAGE>

Underwritten by:

[PM GROUP LOGO TO COME]

HOME OFFICE
PM Group Life Insurance Company [Pacific Life & Annuity Company] (800) xxx-xxxx

MAILING ADDRESS
Variable Annuity Department 700 Newport Center Drive Newport Beach, California
92660

Form No.
<PAGE>

[LOGO OF PACIFIC PORTFOLIOS]

STATEMENT OF ADDITIONAL INFORMATION

PACIFIC PORTFOLIOS

SEPARATE ACCOUNT A

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

Pacific Portfolios (the "Contract") is a variable annuity contract
underwritten by PM Group Life Insurance Company [Pacific Life & Annuity
Company] ("PM Group" ["PLA"]).

This Statement of Additional Information is not a Prospectus and should be
read in conjunction with the Contract's Prospectus, dated , which
is available without charge upon written or telephone request to PM Group
[PLA]. Terms used in this Statement of Additional Information ("SAI") have the
same meanings as in the Prospectus, and some additional terms are defined
particularly for this SAI.

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

PM Group Life Insurance Company
[Pacific Life & Annuity Company]
Mailing Address: 700 Newport Center Drive
Newport Beach, California 92660

1-800-XXX-XXXX
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PERFORMANCE............................................................ 1
Total Returns........................................................ 1
Yields............................................................... 2
Performance Comparisons and Benchmarks............................... 2
Separate Account Performance......................................... 4
DISTRIBUTION OF THE CONTRACTS.......................................... 7
Pacific Mutual Distributors, Inc. ................................... 7
THE CONTRACTS AND THE SEPARATE ACCOUNT................................. 8
Calculating Subaccount Unit Values................................... 8
Variable Annuity Payment Amounts..................................... 8
Corresponding Dates.................................................. 10
Age and Sex of Annuitant............................................. 11
Systematic Transfer Programs......................................... 11
Pre-Authorized Withdrawals........................................... 13
Death Benefit........................................................ 13
Joint Annuitants on Qualified Contracts.............................. 14
1035 Exchanges....................................................... 14
Safekeeping of Assets................................................ 14
Dividends............................................................ 14
FINANCIAL STATEMENTS - STATUTORY BASIS................................. 14
</TABLE>
<PAGE>

PERFORMANCE

From time to time, our reports or other communications to current or
prospective Contract Owners or our advertising or other promotional material
may quote the performance (yield and total return) of a Subaccount. Quoted
results are based on past performance and reflect the performance of all
assets held in that Subaccount for the stated time period. QUOTED RESULTS ARE
NEITHER AN ESTIMATE NOR A GUARANTEE OF FUTURE INVESTMENT PERFORMANCE, AND DO
NOT REPRESENT THE ACTUAL EXPERIENCE OF AMOUNTS INVESTED BY ANY PARTICULAR
CONTRACT OWNER.

TOTAL RETURNS

A Subaccount may advertise its "average annual total return" over various
periods of time. "Total return" represents the average percentage change in
value of an investment in the Subaccount from the beginning of a measuring
period to the end of that measuring period. "Annualized" total return assumes
that the total return achieved for the measuring period is achieved for each
such period for a full year. "Average annual" total return is computed in
accordance with a standard method prescribed by the SEC.

Average Annual Total Return

To calculate a Subaccount's average annual total return for a specific
measuring period, we first take a hypothetical $1,000 investment in that
Subaccount, at its then-applicable Subaccount Unit Value (the "initial
payment") and we compute the ending redeemable value of that initial payment
at the end of the measuring period based on the investment experience of that
subaccount ("withdrawal value"). The redeemable value reflects the effect of
all recurring fees and charges applicable to a Contract Owner under the
Contract, including the Risk Charge, the asset-based Administrative Fee and
the deduction of the applicable withdrawal charge, but does not reflect any
charges for applicable premium taxes and/or other taxes. The Annual Fee is
also taken into account, assuming an average Contract Value of $45,000. The
redeemable value is then divided by the initial payment and this quotient is
taken to the Nth root (N represents the number of days in the measuring
period), and 1 is subtracted from this result. Average annual total return is
expressed as a percentage.

T = (ERV/P)(/365//N)-1

<TABLE>
<C> <S>
where T = average annual total return
ERV = ending redeemable value
P = hypothetical initial payment of $1,000
N = number of days
</TABLE>

Average annual total return figures will be given for recent one-, three-,
five- and ten-year periods (if applicable), and may be given for other periods
as well (such as from commencement of the Subaccount's operations, or on a
year-by-year basis).

When considering "average" total return figures for periods longer than one
year, it is important to note that the relevant Subaccount's annual total
return for any one year in the period might have been greater or less than the
average for the entire period.

Aggregate Total Return

A Subaccount may use "aggregate" total return figures along with its "average
annual" total return figures for various periods; these figures represent the
cumulative change in value of an investment in the Subaccount for a specific
period. Aggregate total returns may be shown by means of schedules, charts or
graphs and may indicate subtotals of the various components of total return.
The SEC has not prescribed standard formulas for calculating aggregate total
return.

Total returns may also be shown for the same periods that do not take into
account the withdrawal charge, or the Annual Fee.

1
<PAGE>

YIELDS

Money Market Subaccount

The "yield" (also called "current yield") of the Money Market Subaccount is
computed in accordance with a standard method prescribed by the SEC. The net
change in the Subaccount's Unit Value during a seven-day period is divided by
the Unit Value at the beginning of the period to obtain a base rate of return.
The current yield is generated when the base rate is "annualized" by
multiplying it by the fraction 365/7; that is, the base rate of return is
assumed to be generated each week over a 365-day period and is shown as a
percentage of the investment. The "effective yield" of the Money Market
Subaccount is calculated similarly but, when annualized, the base rate of
return is assumed to be reinvested. The effective yield will be slightly
higher than the current yield because of the compounding effect of this
assumed reinvestment.

The formula for effective yield is: [(Base Period Return +1) (To the power of
365/7)] -1.

Realized capital gains or losses and unrealized appreciation or depreciation
of the assets of the underlying Money Market Portfolio are not included in the
yield calculation. Current yield and effective yield do not reflect the
deduction of charges for any applicable premium taxes and/or other taxes, but
do reflect a deduction for the Annual Fee, the Risk Charge and the asset-based
Administrative Fee and assume an average Contract Value of $45,000.

At December 31, 1997, the Money Market Portfolio current yield was 4.05% and
the effective yield was 4.13%.

Other Subaccounts

"Yield" of the other Subaccounts is computed in accordance with a different
standard method prescribed by the SEC. The net investment income (investment
income less expenses) per Subaccount Unit earned during a specified one-month
or 30-day period is divided by the Subaccount Unit Value on the last day of
the specified period. This result is then annualized (that is, the yield is
assumed to be generated each month or each 30-day period for a year),
according to the following formula, which assumes semiannual compounding:

YIELD = 2[((a-b + 1) (to the power of 6)) - 1]
---
cd

<TABLE>
<C> <S>
where: a = net investment income earned during the period by the Portfolio
attributable to the Subaccount.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Subaccount Units outstanding during
the period that were entitled to receive dividends.
d = the Unit Value of the Subaccount Units on the last day of the
period.
</TABLE>

The yield of each Subaccount reflects the deduction of all recurring fees and
charges applicable to the Subaccount, such as the Risk Charge, the asset-based
Administrative Fee and the Annual Fee (assuming an average Contract Value of
$45,000), but does not reflect any withdrawal charge, any charge for
applicable premium taxes and/or other taxes.

The Subaccounts' yields will vary from time to time depending upon market
conditions, the composition of each Portfolio and operating expenses of the
Fund allocated to each Portfolio. Consequently, any given performance
quotation should not be considered representative of the Subaccount's
performance in the future. Yield should also be considered relative to changes
in Subaccount Unit Values and to the relative risks associated with the
investment policies and objectives of the various Portfolios. In addition,
because performance will fluctuate, it may not provide a basis for comparing
the yield of a Subaccount with certain bank deposits or other investments that
pay a fixed yield or return for a stated period of time.

PERFORMANCE COMPARISONS AND BENCHMARKS

In advertisements and sales literature, we may compare the performance of some
or all of the Subaccounts to the performance of other variable annuity issuers
in general and to the performance of particular types of variable annuities
investing in mutual funds, or series of mutual funds, with investment
objectives similar to each of the

2
<PAGE>

Subaccounts. This performance may be presented as averages or rankings
compiled by Lipper Analytical Services, Inc. ("Lipper"), the Variable Annuity
Research and Data Service ("VARDS(R)") or Morningstar, Inc. ("Morningstar"),
which are independent services that monitor and rank the performance of
variable annuity issuers and mutual funds in each of the major categories of
investment objectives on an industry-wide basis. Lipper's rankings include
variable life issuers as well as variable annuity issuers. VARDS(R) rankings
compare only variable annuity issuers. The performance analyses prepared by
Lipper and VARDS(R) rank such issuers on the basis of total return, assuming
reinvestment of dividends and distributions, but do not take sales charges,
redemption fees or certain expense deductions at the separate account level
into consideration. In addition, VARDS(R) prepares risk adjusted rankings,
which consider the effects of market risk on total return performance. We may
also compare the performance of the Subaccounts with performance information
included in other publications and services that monitor the performance of
insurance company separate accounts or other investment vehicles. These other
services or publications may be general interest business publications such as
The Wall Street Journal, Barron's, Business Week, Forbes, Fortune, and Money.

In addition, our reports and communications to Contract Owners,
advertisements, or sales literature may compare a Subaccount's performance to
various benchmarks that measure the performance of a pertinent group of
securities widely regarded by investors as being representative of the
securities markets in general or as being representative of a particular type
of security. These benchmarks may include the following: (1) the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500"), an unmanaged weighted
index of 500 companies that represent approximately 80% of the market
capitalization of the United States equity markets; (2) the Consumer Price
Index ("CPI"), published by the U.S. Bureau of Labor Statistics, a statistical
measure of change, over time, in the prices of goods and services in major
expenditure groups and generally considered to be a measure of inflation; (3)
the Dow Jones Industrial Average ("DJIA"); (4) the Donoghue Money Market
Institutional Averages; (5) the Lehman Brothers Government Corporate Index;
(6) the Lehman Brothers Government Bond Index; (7) the Salomon Brothers High
Yield Bond Indexes; and (8) the Morgan Stanley Capital International's EAFE
Index. We may also compare the performance of the Subaccounts with that of
other appropriate indices of investment securities and averages for peer
universes of funds or data developed by us derived from such indices or
averages. Unmanaged indices generally assume the reinvestment of dividends or
interest but do not generally reflect deductions for investment management or
administrative costs and expenses.

3
<PAGE>

Separate Account Performance

The Contract was not available prior to 1999. However, in order to help you
understand how investment performance can affect your Variable Account Value,
we are including performance information based on the historical performance
of the Subaccounts.

The Separate Account had not yet commenced operations as of , .
Therefore, no historical performance data exists for the Subaccounts prior to
that date. The following table represents what the performance of the
Subaccounts would have been if the Subaccounts had been both in existence and
invested in the corresponding Portfolio since the date of the Portfolio's (or
predecessor series') inception or for the indicated time period. of the
Portfolios of the Fund available under the Contract have been in operation
since January 4, 1988 (January 30, 1991 in the case of the Equity Index
Portfolio, January 4, 1994 in the case of the Growth LT Portfolio and April 1,
1996 in the case of the Aggressive Equity Portfolio and Emerging Markets
Portfolio). Historical performance information for each of the Equity
Portfolio and the Bond and Income Portfolio is based in part on the
performance of that Portfolio's predecessor; each predecessor series was a
series of Pacific Corinthian Variable Fund that began its first full year of
operations on January 1, 1984, the assets of which were acquired by the Fund
on December 31, 1994. Because the Subaccounts had not commenced operations as
of December 31, 1997, and because the Contracts were not available until 1999,
these are not actual performance numbers for the Subaccounts or for the
Contract. The results shown are hypothetical returns as if the subaccounts had
been in existence and invested in the corresponding Portfolios.

These are hypothetical total return numbers based on Account Value ("AV") and
Full Withdrawal Value ("FWV") that represent the actual performance of the
Portfolios, adjusted for the fees and charges applicable to the Contract; the
FWV also includes applicable withdrawal charges. Any charge for premium taxes
and/or other taxes are not reflected in these data, and reflection of the
Annual Fee assumes an average Contract size of $45,000. The information
presented also includes data representing unmanaged market indices.

The results shown in this section are not an estimate or guarantee of future
investment performance.

Annualized Rates of Return for Periods Ended December 31, 1997
All numbers are expressed as a percentage

<TABLE>
<CAPTION>
Since
1 year 3 years** 5 years** 10 years* Inception**
------------ ----------- ----------- ----------- ------------
Variable Accounts AV FWV AV FWV AV FWV AV FWV AV FWV
- ----------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 1/2/96*.... 3.75 (2.55) 3.79 2.09 2.95 2.47 3.89 3.89
High Yield Bond 1/2/96*. 7.85 1.55 11.56 10.10 9.86 9.48 9.57 9.57
Managed Bond 1/2/96*.... 8.33 2.03 9.36 7.84 6.29 5.86 7.94 7.94
Government Security
1/2/96*................ 7.90 1.60 8.69 7.14 5.57 5.13 7.30 7.30
Aggressive Equity
4/17/96*............... 2.27 (4.03) 5.12 1.57
Growth LT 1/2/96*....... 9.35 3.05 19.70 18.43 17.67 16.97
Equity Income 1/2/96*... 26.82 20.52 24.70 23.53 15.25 14.94 13.01 13.01
Multi-Strategy 1/2/96*.. 17.96 11.66 17.37 16.05 11.07 10.71 10.37 10.37
Equity 1/2/96*.......... 16.54 10.24 21.55 20.32 14.50 14.18 13.17 13.17 13.42 13.42
Bond and Income 1/2/96*. 14.71 8.41 13.94 12.54 9.48 9.10 9.74 9.74 10.93 10.93
Equity Index 1/2/96*.... 31.11 24.81 28.78 27.69 18.05 17.77 17.11 17.11
International 1/2/96*... 7.69 1.39 12.17 10.72 12.96 12.62 7.76 7.76
Emerging Markets
4/17/96*............... (3.12) (9.42) (4.20) (8.02)
</TABLE>

<TABLE>
<CAPTION>
Major Indices 1 year 3 years 5 years 10 years
- ------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
EAFE........................................... 1.78 6.27 11.39 6.25
First Boston High Yield Bond................... 12.63 14.12 11.84 12.10
LB Aggregate................................... 9.65 10.41 7.48 9.17
LBG/Bond....................................... 9.59 10.05 7.34 8.88
LBG/C Bond..................................... 9.76 10.43 7.61 9.15
LBG/C LT Bond.................................. 14.52 14.22 9.97 11.03
Russell 2500................................... 24.36 24.92 17.59 16.94
MSCI Emerging Markets Free..................... (11.59) (3.86) 7.57
S&P 500........................................ 33.36 31.15 20.27 18.05
</TABLE>

4
<PAGE>

- --------
* Date Variable Account commenced operations.

** The performance of the Aggressive Equity, Equity Income, Multi-Strategy,
Equity, Bond and Income, and International Variable Accounts for a portion
of this period occurred at a time when other Portfolio Managers managed
the corresponding Portfolio in which each Variable Account invests.
Effective January 1, 1994, J. P. Morgan Investment Management, Inc. became
the Portfolio Manager of the Equity Income and Multi-Strategy Portfolios;
prior to January 1, 1994, some of the investment policies of the Equity
Income Portfolio and the investment objective of the Multi-Strategy
Portfolio differed. Effective June 1, 1997 Morgan Stanley Asset Management
Inc. became the Portfolio Manager of the International Portfolio.
Effective May 1, 1998, Alliance Capital Management L.P. became the
Portfolio Manager of the Aggressive Equity Portfolio and Goldman Sachs
Asset Management became the Portfolio Manager of the Equity and Bond and
Income Portfolios; prior to May 1, 1998 some of the investment policies of
the Aggressive Equity, Equity and Bond and Income Portfolios and the
investment objective of the Bond and Income Portfolio differed.
Performance of the Equity Portfolio and the Bond and Income Portfolio is
based in part on the performance of predecessor portfolios of Pacific
Corinthian Variable Fund, which began their first full year of operations
January 1, 1984 and were acquired by the Fund on December 31, 1994.

Prior to January 1, 1999, the Mid-Cap Value, the Large-Cap Value, the Small-
Cap Index and the REIT Portfolios had not yet begun operations and there is no
historical value available for these Portfolios.

Tax Deferred Accumulation

In reports or other communications to you or in advertising or sales
materials, we may also describe the effects of tax-deferred compounding on the
Separate Account's investment returns or upon returns in general. These
effects may be illustrated in charts or graphs and may include comparisons at
various points in time of returns under the Contract or in general on a tax-
deferred basis with the returns on a taxable basis. Different tax rates may be
assumed.

In general, individuals who own annuity contracts are not taxed on increases
in the value under the annuity contract until some form of distribution is
made from the contract. Thus, the annuity contract will benefit from tax
deferral during the accumulation period, which generally will have the effect
of permitting an investment in an annuity contract to grow more rapidly than a
comparable investment under which increases in value are taxed on a current
basis. The following chart illustrates this benefit by comparing accumulation
under a variable annuity contract with accumulations from an investment on
which gains are taxed on a current basis. The chart shows accumulations on an
initial Purchase Payment of $10,000, assuming hypothetical annual returns of
0%, 4% and 8%, compounded annually, and a tax rate of 36%. The values shown
for the taxable investment do not include any deduction for management fees or
other expenses but assume that taxes are deducted annually from investment
returns. The values shown for the variable annuity do not reflect the
deduction of contractual expenses such as the Risk Charge (equal to an annual
rate of 1.25% of average daily account value), the Administrative Fee (equal
to an annual rate of 0.15% of average daily account value) and the Annual Fee
(equal to $30 per year if your Net Contract Value is less than $50,000), any
charge for premium taxes and/or other taxes, or the expenses of an underlying
investment vehicle, such as the Fund. The values shown also do not reflect the
Withdrawal Charge. Generally, the Withdrawal Charge is equal to 7% of the
amount withdrawn attributable to Purchase Payments that are one year old, 7%
of the amount withdrawn attributable to Purchase Payments that are two years
old, 6% of the amount withdrawn attributable to Purchase Payments that are
three years old, 5% of the amount withdrawn attributable to Purchase Payments
that are four years old, 3% of the amount withdrawn attributable to Purchase
Payments that are five years old, and 1% of the amount withdrawn attributable
to Purchase Payments that are six years old. The age of Purchase Payments is
considered 1 year old in the Contract Year we receive it and increases by one
year on each Contract Anniversary. There is no Withdrawal Charge on
withdrawals of your Earnings, on amounts attributed to Purchase Payments at
least 7 years old, or to the extent that total withdrawals that are free of
charge during the Contract Year do not exceed 10% of the sum of your remaining
Purchase Payments at the beginning of the Contract Year that have been held
under your Contract for less than seven years plus additional Purchase
Payments applied to your Contract during that Contract Year. If these expenses
and fees were taken into account, they would reduce the investment return
shown for both the

5
<PAGE>

taxable investment and the hypothetical variable annuity contract. In
addition, these values assume that you do not surrender the Contract or make
any withdrawals until the end of the period shown. The chart assumes a full
withdrawal, at the end of the period shown, of all Contract Value and the
payment of taxes at the 36% rate on the amount in excess of the Purchase
Payment.

The rates of return illustrated are hypothetical and are not an estimate or
guarantee of performance. Actual tax rates may vary for different taxpayers
from that illustrated and withdrawals by Contract Owners who have not reached
age 59 1/2 may be subject to a tax penalty of 10%.

6
<PAGE>

POWER OF TAX DEFERRAL

$10,000 investment at annual rates of return of 0%, 4% and 8%, taxed @ 36%

Taxable Tax-Deferred
Investment Investment
---------- ------------
10 Years
0% $10,000.00 $10,000.00
4% $12,875.97 $13,073.56
8% $16,476.07 $17,417.12

20 Years
0% $10,000.00 $10,000.00
4% $16,579.07 $17,623.19
8% $27,146.07 $33,430.13

30 Years
0% $10,000.00 $10,000.00
4% $21,347.17 $24,357.74
8% $44,726.05 $68,001.00

DISTRIBUTION OF THE CONTRACTS

Pacific Mutual Distributors, Inc.

Pacific Mutual Distributors, Inc. ("PMD"), a wholly-owned subsidiary of Pacific
Life; acts as the principal underwriter ("distributor") of the Contracts and
offers the Contracts on a continuous basis. PMD is registered as a broker-
dealer with the SEC and is a member of the National Association of Securities
Dealers ("NASD"). We pay PMD for acting as principal underwriter under a
Distribution Agreement. We and PMD enter into selling agreements with broker-
dealers whose registered representatives are authorized by state insurance
departments to sell the Contracts. The aggregate amount of underwriting
commissions paid to PMD for 1998 with regard to this Contract was $0 of which
$0 was retained.

7
<PAGE>

THE CONTRACTS AND THE SEPARATE ACCOUNT

CALCULATING SUBACCOUNT UNIT VALUES

The Unit Value of the Subaccount Units in each Variable Investment Option is
computed as of the end of each Business Day. The initial Unit Value of each
Subaccount was $10 on the Business Day the Subaccount began operations. At the
end of each Business Day, the Unit Value for a Subaccount is equal to:

Y x Z

where (Y)= the Unit Value for that Subaccount as of the end of the preceding
Business Day; and

(Z)= the Net Investment Factor for that Subaccount for the period (a
"valuation period") between that Business Day and the immediately
preceding Business Day.

The "Net Investment Factor" for a Subaccount for any valuation period is equal
to:

(A/B) - C

where (A)= the "per share value of the assets" of that Subaccount as of the end
of that valuation period, which is equal to: a+b+c

where (a)= the net asset value per share of the corresponding Portfolio
shares held by that Subaccount as of the end of that valuation
period;

(b)= the per share amount of any dividend or capital gain distributions
made by the Fund for that Portfolio during that valuation period;
and

(c)= any per share charge (a negative number) or credit (a positive
number) for any income taxes and/or any other taxes or other
amounts set aside during that valuation period as a reserve for
any income and/or any other taxes which we determine to have
resulted from the operations of the Subaccount or Contract, and/or
any taxes attributable, directly or indirectly, to Purchase
Payments;

(B)= the net asset value per share of the corresponding Portfolio shares
held by the Subaccount as of the end of the preceding valuation
period; and

(C)= a factor that assesses against the Subaccount net assets for each
calendar day in the valuation period, the basic Risk Charge and the
Administrative Fee (see CHARGES, FEES AND DEDUCTIONS in the
Prospectus).

VARIABLE ANNUITY PAYMENT AMOUNTS

The following steps show how we determine the amount of each variable annuity
payment under your Contract.

First: Pay Applicable Premium Taxes

When you convert your Net Contract Value into annuity payments, you must pay
any applicable charge for premium taxes and/or other taxes on your Contract
Value (unless applicable law requires those taxes to be paid at a later time).
We assess this charge by reducing your Contract Value proportionately,
relative to your Account Value in each Subaccount, in the Fixed Option and in
the DCA Plus Fixed Option, in an amount equal to the aggregate amount of the
charges. The remaining amount of your available Contract Value may be used to
provide variable annuity payments. Alternatively, your remaining available
Contract Value may be used to provide fixed annuity payments, or it may be
divided to provide both fixed and variable annuity payments. You may also
choose to withdraw some or all of your remaining Net Contract Value,
withdrawal charge, and any charges for premium taxes and/or other taxes
without converting this amount into annuity payments.

Second: The First Variable Payment

We begin by referring to your Contract's Option Table for your Annuity Option
(the "Annuity Option Table"). The Annuity Option Table allows us to calculate
the dollar amount of the first variable annuity payment under

8
<PAGE>

your Contract, based on the amount applied toward the variable annuity. The
number that the Annuity Option Table yields will be based on the Annuitant's
age (and, in certain cases, sex) and assumes a 5% investment return, as
described in more detail below.

Example: Assume a man is 65 years of age at his Annuity Date and has
selected a lifetime annuity with monthly payments guaranteed for 10 years.
According to the Annuity Option Table, this man should receive an initial
monthly payment of $5.79 for every $1,000 of his Contract Value (reduced by
applicable charges) that he will be using to provide variable payments.
Therefore, if his Contract Value after deducting applicable fees and
charges is $100,000 on his Annuity Date and he applies this entire amount
toward his variable annuity, his first monthly payment will be $579.00.

You may choose any other Annuity Option Table that assumes a different rate of
return which we offer at the time your Annuity Option is effective.

Third: Subaccount Annuity Units

For each Subaccount, we use the amount of the first variable annuity payment
under your Contract attributable to each Subaccount to determine the number of
Subaccount Annuity Units that will form the basis of subsequent payment
amounts. First, we use the Annuity Option Table to determine the amount of
that first variable payment for each Subaccount. Then, for each Subaccount, we
divide that amount of the first variable annuity payment by the value of one
Subaccount Annuity Unit (the "Subaccount Annuity Unit Value") as of the end of
the Annuity Date to obtain the number of Subaccount Annuity Units for that
particular Subaccount. The number of Subaccount Annuity Units used to
calculate subsequent payments under your Contract will not change unless
exchanges of Annuity Units are made (or if the Joint and Survivor Annuity
Option is elected and the Primary Annuitant dies first), but the value of
those Annuity Units will change daily, as described below.

Fourth: The Subsequent Variable Payments

The amount of each subsequent variable annuity payment will be the sum of the
amounts payable based on each Subaccount. The amount payable based on each
Subaccount is equal to the number of Subaccount Annuity Units for that
Subaccount multiplied by their Subaccount Annuity Unit Value at the end of the
Business Day in each payment period you elected that corresponds to the
Annuity Date.

Each Subaccount's Subaccount Annuity Unit Value, like its Subaccount Unit
Value, changes each day to reflect the net investment results of the
underlying investment vehicle, as well as the assessment of the Risk Charge at
a rate equal on an annual basis to the annual factor expressed as a decimal
(where 1.00 is equal to 100%) of 0.0125 and the Administrative Fee at a rate
equal on an annual basis to the annual factor of 0.0015. In addition, the
calculation of Subaccount Annuity Unit Value incorporates an additional
factor; as discussed in more detail below, this additional factor adjusts
Subaccount Annuity Values to correct for the Option Table's implicit
assumption of a 5% annual investment return on amounts applied but not yet
used to furnish annuity benefits.

Different Subaccounts may be selected for your Contract before and after your
Annuity Date, subject to any restrictions we may establish. Currently, you may
exchange Subaccount Annuity Units in any Subaccount for Subaccount Annuity
Units in any other Subaccount(s) up to four times in any twelve month period
after your Annuity Date. The number of Subaccount Annuity Units in any
Subaccount may change due to such exchanges. Exchanges following your Annuity
Date will be made by exchanging Subaccount Annuity Units of equivalent
aggregate value, based on their relative Subaccount Annuity Unit Values.

Understanding the "Assumed Investment Return" Factor

The Annuity Option Table incorporates a number of implicit assumptions in
determining the amount of your first variable annuity payment. As noted above,
the numbers in the Annuity Option Table reflect certain actuarial assumptions
based on the Annuitant's age, and, in some cases, the Annuitant's sex. In
addition, these numbers assume that the amount of your Contract Value that you
convert to a variable annuity will have a positive net investment return of 5%
each year during the payout of your annuity; thus 5% is referred to as an
"assumed investment return."

9
<PAGE>

The Subaccount Annuity Unit Value for a Subaccount will increase only to the
extent that the investment performance of that Subaccount exceeds its Risk
Charge, the Administrative Fee, and the assumed investment return. The
Subaccount Annuity Unit Value for any Subaccount will generally be less than
the Subaccount Unit Value for that same Subaccount, and the difference will be
the amount of the assumed investment return factor.

Example: Assume the net investment performance of a Subaccount is at a rate
of 5.00% per year (after deduction of the 1.25% Mortality and Expense Risk
Charge and the 0.15% Administrative Fee). The Subaccount Unit Value for
that Subaccount would increase at a rate of 5.00% per year, but the
Subaccount Annuity Unit Value would not increase (or decrease) at all. The
net investment factor for that 5% return [1.05] is then divided by the
factor for the 5% assumed investment return [1.05] and 1 is subtracted from
the result to determine the adjusted rate of change in Subaccount Annuity
Unit Value: 1.05 = 1; 1 - 1 = 0; 0 X 100% = 0%.
----
1.05

If the net investment performance of a Subaccount's assets is at a rate less
than 5.00% per year, the Subaccount Annuity Unit Value will decrease, even if
the Subaccount Unit Value is increasing.

Example: Assume the net investment performance of a Subaccount is at a rate
of 2.60% per year (after deduction of the 1.25% Mortality and Expense Risk
Charge and the 0.15% Administrative Fee). The Subaccount Unit Value for
that Subaccount would increase at a rate of 2.60% per year, but the
Subaccount Annuity Unit Value would decrease at a rate of 2.29% per year.
The net investment factor for that 2.6% return [1.026] is then divided by
the factor for the 5% assumed investment return [1.05] and 1 is subtracted
from the result to determine the adjusted rate of change in Subaccount
Annuity Unit Value:
1.026 = 0.9771; 0.9771 - 1 = - 0.0229; - 0.0229 X 100% = - 2.29%.
-----
1.05

The assumed investment return will always cause increases in Subaccount
Annuity Unit Values to be somewhat less than if the assumption had not been
made, will cause decreases in Subaccount Annuity Unit Values to be somewhat
greater than if the assumption had not been made, and will (as shown in the
example above) sometimes cause a decrease in Subaccount Annuity Unit Values to
take place when an increase would have occurred if the assumption had not been
made. If we had assumed a higher investment return in our Annuity Option
tables, it would produce annuities with larger first payments, but the
increases in subaccount annuity payments would be smaller and the decreases in
subsequent annuity payments would be greater; a lower assumed investment
return would produce annuities with smaller first payments, and the increases
in subsequent annuity payments would be greater and the decreases in
subsequent annuity payments would be smaller.

CORRESPONDING DATES

If any transaction or event under your Contract is scheduled to occur on a
"corresponding date" that does not exist in a given calendar period, the
transaction or event will be deemed to occur on the following Business Day. In
addition, as stated in the Prospectus, any event scheduled to occur on a day
that is not a Business Day will occur on the next succeeding Business Day.

Example: If your Contract is issued on February 29 in year 1 (a leap year),
your Contract Anniversary in years 2, 3 and 4 will be on March 1.

Example: If your Annuity Date is July 31 and you select monthly annuity
payments, the payments received will be based on valuations made on July
31, August 31, October 1 (for September), October 31, December 1 (for
November), December 31, January 31, March 1 (for February), March 31, May 1
(for April), May 31 and July 1 (for June).

AGE AND SEX OF ANNUITANT

As mentioned in the Prospectus, the Contracts generally provide for sex-
distinct annuity income factors in the case of life annuities. Statistically,
females tend to have longer life expectancies than males; consequently, if the
amount of annuity payments is based on life expectancy, they will ordinarily
be higher if an annuitant is male than if an annuitant is female. Contracts
issued in connection with Qualified Plans are required to use unisex factors.

10
<PAGE>

We may require proof of your Annuitant's age and sex before or after
commencing annuity payments. If the age or sex (or both) of your Annuitant are
incorrectly stated in your Contract, we will correct the amount payable to
equal the amount that the annuitized portion of the Contract Value under that
Contract would have purchased for your Annuitant's correct age and sex. If we
make the correction after annuity payments have started, and we have made
overpayments, we will deduct the amount of the overpayment, with interest at
3% a year, from any payments due then or later; if we have made underpayments,
we will add the amount, with interest at 3% a year, of the underpayments to
the next payment we make after we receive proof of the correct age and/or sex.

Systematic Transfer Programs

The DCA Plus Fixed Option is not available for any systematic transfer
programs, except that if you elect DCA Plus, such transfers must be made from
the DCA Plus Fixed Option. For a description of DCA Plus, including its
limitations and restrictions, see HOW YOUR PAYMENTS ARE ALLOCATED--Transfers
in the Prospectus. The Fixed Account is not available in connection with
rebalancing and DCA Plus and may not be used as a source account for dollar
cost averaging programs newly established by you. You may not use dollar cost
averaging, DCA Plus and or the earnings sweep at the same time.

Dollar Cost Averaging

When you request dollar cost averaging, you are authorizing us to make
periodic reallocations of your Contract Value without waiting for any further
instruction from you. You may request to begin or stop dollar cost averaging
at any time prior to your Annuity Date; the effective date of your request
will be the day we receive written notice from you in proper form. Your
request may specify the date on which you want your first transfer to be made.
If you do not specify a date for your first transfer, we will treat your
request as if you had specified the effective date of your request. Your first
transfer may not be made until 30 days after your Contract Date, and if you
specify an earlier date, your first transfer will be delayed until one
calendar month after the date you specify. If you request dollar cost
averaging on your application for your Contract and you fail to specify a date
for your first transfer, your first transfer will be made one period after
your Contract Date (that is, if you specify monthly transfers, the first
transfer will occur 30 days after your Contract Date; quarterly transfers, 90
days after your Contract Date; semiannual transfers, 180 days after your
Contract Date; and if you specify annual transfers, the first transfer will
occur on your Contract Anniversary). If you stop dollar cost averaging, you
must wait 30 days before you may begin this option again.

Your request to begin dollar cost averaging must specify the Investment Option
you wish to transfer money from (your "source account"). You may choose any
one Variable Investment Option as your source account. The Account Value of
your source account must be at least $5,000 for you to begin dollar cost
averaging.

Your request to begin dollar cost averaging must also specify the amount and
frequency of your transfers. You may choose monthly, quarterly, semiannual or
annual transfers. The amount of your transfers may be specified as a dollar
amount or a percentage of your source Account Value; however, each transfer
must be at least $250. Dollar cost averaging transfers are subject to the same
requirements and limitations as other transfers.

Finally, your request must specify the Fixed or Variable Investment Option(s)
you wish to transfer amounts to (your "target account(s)"). If you select more
than one target account, your dollar cost averaging request must specify how
transferred amounts should be allocated among the target accounts. Your source
account may not also be a target account.

Your dollar cost averaging transfers will continue until the earlier of (i)
your request to stop dollar cost averaging is effective, or (ii) your source
Account Value is zero, or (iii) you annuitize. If, as a result of a dollar
cost averaging transfer, your source Account Value falls below any minimum
Account Value we may establish, we have the right, at our option, to transfer
that remaining Account Value to your target account(s) on a proportionate
basis relative to your most recent allocation instructions. We may change,
terminate or suspend the dollar cost averaging option at any time.

11
<PAGE>

Portfolio Rebalancing

Portfolio rebalancing allows you to maintain the percentage of your Contract
Value allocated to each Variable Investment Option at a pre-set level prior to
annuitization. For example, you could specify that 30% of your Contract Value
should be in the Equity Index Subaccount, 40% in the Managed Bond Subaccount,
and 30% in the Growth LT Subaccount. Over time, the variations in each
Subaccount's investment results will shift this balance of these Subaccount
Value allocations. If you elect the portfolio rebalancing feature, we will
automatically transfer your Subaccount Value back to the percentages you
specify.

You may choose to have rebalances made quarterly, semiannually or annually
until your Annuity Date; portfolio rebalancing is not available after you
annuitize.

Procedures for selecting portfolio rebalancing are generally the same as those
discussed in detail above for selecting dollar cost averaging: You may make
your request at any time prior to your Annuity Date and it will be effective
when we receive it in proper form. If you stop portfolio rebalancing, you must
wait 30 days to begin again. You may specify a date for your first rebalance,
or we will treat your request as if you selected the request's effective date.
If you specify a date fewer than 30 days after your Contract Date, your first
rebalance will be delayed one month, and if you request rebalancing on your
application but do not specify a date for the first rebalance, it will occur
one period after your Contract Date, as described above under Dollar Cost
Averaging. We may change, terminate or suspend the portfolio rebalancing
feature at any time.

Earnings Sweep

An earnings sweep automatically transfers the earnings attributable to a
specified Investment Option (the "sweep option") to one or more other
Investment Options (your "target option(s)"). If you elect to use the earnings
sweep, you may select either the Fixed Option or the Money Market Subaccount
as your sweep option. The Account Value of your sweep option will be required
to be at least $5,000 when you elect the earnings sweep. You may select one or
more Variable Investment Options (but not the Money Market Subaccount) as your
target option(s).

You may choose to have earnings sweeps occur monthly, quarterly, semiannually
or annually until you annuitize. At each earnings sweep, we will automatically
transfer your accumulated earnings attributable to your sweep option for the
previous period proportionately to your target option(s). That is, if you
select a monthly earnings sweep, we will transfer the sweep option earnings
from the preceding month; if you select a semiannual earnings sweep, we will
transfer the sweep option earnings accumulated over the preceding six months.
Earnings sweep transfers are subject to the same requirements and limitations
as other transfers.

To determine the earnings, we take the change in the sweep option's Account
Value during the sweep period, add any withdrawals or transfers out of the
sweep option Account that occurred during the sweep period, and subtract any
allocations to the sweep option Account during the sweep period. The result of
this calculation represents the "total earnings" for the sweep period.

If, during the sweep period, you withdraw or transfer amounts from the sweep
option Account, we assume that earnings are withdrawn or transferred before
any other Account Value. Therefore, your "total earnings" for the sweep period
will be reduced by any amounts withdrawn or transferred during the sweep
option period. The remaining earnings are eligible for the sweep transfer.

Procedures for selecting the earnings sweep are generally the same as those
discussed in detail above for selecting dollar cost averaging and portfolio
rebalancing: You may make your request at any time and it will be effective
when we receive it in proper form. If you stop the earnings sweep, you must
wait 30 days to begin again. You may specify a date for your first sweep, or
we will treat your request as if you selected the request's effective date. If
you specify a date fewer than 30 days after your Contract Date, your first
earnings sweep will be delayed one month, and if you request the earnings
sweep on your application but do not specify a date for the first sweep, it
will occur one period after your Contract Date, as described above under
Dollar Cost Averaging.

12
<PAGE>

If you are using the earnings sweep, you may also use portfolio rebalancing
only if you selected the Fixed Option as your sweep option. You may not use
the earnings sweep, DCA Plus and dollar cost averaging at the same time. If,
as a result of an earnings sweep transfer, your source Account Value falls
below any minimum Account Value we may establish, we have the right, at our
option, to transfer that remaining Account Value to your target account(s) on
a proportionate basis relative to your most recent allocation instructions. We
may change, terminate or suspend the earnings sweep option at any time.

Pre-Authorized Withdrawals

You may specify a dollar amount for your pre-authorized withdrawals, or you
may specify a percentage of your Contract Value or an Account Value. You may
direct us to make your pre-authorized withdrawals from one or more specific
Fixed, DCA Plus Fixed or Variable Investment Options; if you do not give us
these specific directions, amounts will be deducted proportionately from your
Account Value in each Fixed, DCA Plus Fixed or Variable Investment Option.

Procedures for selecting pre-authorized withdrawals are generally the same as
those discussed in detail above for selecting dollar cost averaging, portfolio
rebalancing, and earnings sweeps: You may make your request at any time and it
will be effective when we receive it in proper form. If you stop the pre-
authorized withdrawals, you must wait 30 days to begin again. You may specify
a date for the first withdrawal, or we will treat your request as if you
selected the request's effective date. If you specify a date fewer than 30
days after your Contract Date, your first pre-authorized withdrawal will be
delayed one month, and if you request the pre-authorized withdrawals on your
application but do not specify a date for the first withdrawal, it will occur
one period after your Contract Date.

If your pre-authorized withdrawals cause your Account Value in any Investment
Option to fall below any minimum Account Value we establish, we have the
right, at our option, to transfer that remaining Account Value to your other
Investment Options on a proportionate basis relative to your most recent
allocation instructions. Any such DCA Plus Fixed Option balance or any amount
that would otherwise be allocated to the DCA Plus Fixed Option will be
allocated to the Variable Investment Options according to your most recent DCA
Plus transfer instructions. If your pre-authorized withdrawals cause your
Contract Value to fall below $1,000, we may, at our option, terminate your
Contract and send you the remaining withdrawal proceeds.

Pre-authorized withdrawals are subject to the same withdrawal charges as are
other withdrawals, and each withdrawal is subject to any applicable charge for
premium taxes and/or other taxes, to federal income tax on its taxable
portion, and, if you have not reached age 59 1/2, a 10% tax penalty.

Death Benefit

Any death benefit payable will be calculated as of the date we receive proof
(in proper form) of the Annuitant's death (or, if applicable, the Contract
Owner's death) and instructions regarding payment; any claim of a death
benefit must be made in proper form. A recipient of death benefit proceeds may
elect to have this benefit paid in one lump sum, in periodic payments, in the
form of a lifetime annuity or in some combination of these. Annuity payments
will begin within 30 days once we receive all information necessary to process
the claim.

If your Contract names Joint or Contingent Annuitants, no death benefit will
be payable unless and until the last Annuitant dies prior to the Annuity Date
or a Contract Owner dies prior to the Annuity Date. If yours is a Qualified
Contract, your Contingent Annuitant or Contingent Owner must be your spouse.

Joint Annuitants on Qualified Contracts

If your Contract was issued in connection with a Qualified Plan subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), and
you change your marital status after your Contract Date, you may be permitted
to add a Joint Annuitant on your Annuity Date and to change your Joint
Annuitant. Generally speaking, you may be permitted to add a new spouse as a
Joint Annuitant, and you may be permitted to remove a Joint Annuitant who is
no longer your spouse. You may call us for more information.

13
<PAGE>

1035 Exchanges

You may make your initial Purchase Payment through an exchange of an existing
annuity contract. To exchange, you must complete a 1035 Exchange form, which
is available by calling your representative, or by calling us at 1-800-XXX-
XXXX, and mail the form along with the annuity contract you are exchanging
(plus your completed application if you are making an initial Purchase
Payment) to us.

In general terms, Section 1035 of the Code provides that you recognize no gain
or loss when you exchange one annuity contract solely for another annuity
contract. However, transactions under Section 1035 may be subject to special
rules and may require special procedures and record-keeping, particularly if
the exchanged annuity contract was issued prior to August 14, 1982. You should
consult your tax adviser prior to effecting a 1035 Exchange.

Safekeeping of Assets

We are responsible for the safekeeping of the assets of the Separate Account.
These assets are held separate and apart from the assets of our General
Account and our other separate accounts.

Dividends

The current dividend scale is zero and we do not anticipate that dividends
will be paid. If any dividend is paid, you may elect to receive the dividend
in cash or to add the dividend to your Contract Value. If you make no
election, the dividend will be added to your Contract Value. We will allocate
any dividend to Contract Value in accordance with your most recent allocation
instructions, unless instructed otherwise. You should consult with your tax
adviser before making an election.

FINANCIAL STATEMENTS - STATUTORY BASIS

PM Group's [PLA] audited financial statements - statutory basis as of
December 31, 1997 and 1996 and for each of the two years ended December 31,
1997 are set forth beginning on the next page. Unaudited financial
statements - statutory basis as of September 30, 1998 and for each of the nine
month periods ended September 30, 1998 and 1997 are also included. These
financial statements should be considered only as bearing on the ability of PM
Group [PLA] to meet its obligations under the Contracts and not as bearing on
the investment performance of the assets held in the Separate Account.

The financial statements - statutory basis of PM Group [PLA] as of December
31, 1997 and 1996 and for each of the two years ended December 31, 1997 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein.

14
<PAGE>

PM GROUP LIFE INSURANCE COMPANY

Financial Statements - Statutory Basis as of and for the years ended
December 31, 1997 and 1996
and Independent Auditors' Report

15
<PAGE>

INDEPENDENT AUDITORS' REPORT
- ----------------------------

PM Group Life Insurance Company:

We have audited the accompanying statements of admitted assets, liabilities and
capital and surplus - statutory basis of PM Group Life Insurance Company (the
"Company") as of December 31, 1997 and 1996, and the related statements of
operations - statutory basis, capital and surplus - statutory basis, and cash
flows - statutory basis for the years then ended. 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.

As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of Arizona which practices
differ from generally accepted accounting principles. The effects on the
financial statements of the variances between the statutory basis of accounting
and generally accepted accounting principles are presumed to be material.

In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial
position of PM Group Life Insurance Company as of December 31, 1997 and 1996,
or the results of its operations or its cash flows for the years then ended.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities and capital and surplus
of PM Group Life Insurance Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended, on the
basis of accounting described in Note 1.

DELOITTE & TOUCHE LLP

Costa Mesa, California
February 19, 1998, except for Note 10,
as to which the date is November 6, 1998

16
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF ADMITTED ASSETS,
LIABILITIES AND CAPITAL AND SURPLUS - STATUTORY BASIS

<TABLE>
<CAPTION>
December 31,
1997 1996
- --------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ADMITTED ASSETS
Bonds $227,199 $205,048
Preferred stocks 5,215 4,979
Common stocks 8,591 2,397
Mortgage loans 14,079 16,452
Real estate 687 1,790
Cash and short-term investments 33,185 39,704
Premiums due and uncollected 25,635 30,564
Other assets 23,589 15,878
- --------------------------------------------------------------------------
TOTAL ADMITTED ASSETS $338,180 $316,812
==========================================================================
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Policy reserves $126,716 $142,500
Policy benefits payable 85,338 68,133
Deposit funds 9,882 7,248
Other liabilities 37,714 30,704
Asset valuation reserve 6,870 5,035
- --------------------------------------------------------------------------
Total Liabilities 266,520 253,620
- --------------------------------------------------------------------------
Capital and Surplus:
Common stock - $1 par value; 5 million shares
authorized, 2.9 million shares issued and outstanding 2,900 2,900
Paid-in surplus 37,607 37,607
Unassigned surplus 31,153 22,685
- --------------------------------------------------------------------------
Total Capital and Surplus 71,660 63,192
- --------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS $338,180 $316,812
==========================================================================
</TABLE>

See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis

17
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF OPERATIONS - STATUTORY BASIS

<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996
- -------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums $ 439,629 $ 408,692
Net investment income 23,143 19,654
Other income 2,695 217
- -------------------------------------------------------------
TOTAL REVENUES 465,467 428,563
- -------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 330,435 308,417
Operating expenses 110,288 99,113
- -------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 440,723 407,530
- -------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 24,744 21,033
Federal income taxes 8,581 7,270
- -------------------------------------------------------------
NET GAIN FROM OPERATIONS 16,163 13,763
Net realized capital gains 1,228 2,179
- -------------------------------------------------------------
NET INCOME $ 17,391 $ 15,942
=============================================================
</TABLE>

See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis

18
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF CAPITAL AND SURPLUS - STATUTORY BASIS

<TABLE>
<CAPTION>
Common Stock
------------- Paid-in Unassigned
Shares Amount Surplus Surplus Total
- ----------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
BALANCES,
JANUARY 1, 1996 2,900 $2,900 $37,607 $ 32,645 $ 73,152
Net income 15,942 15,942
Dividend paid to parent (25,000) (25,000)
Other surplus transactions (902) (902)
- ----------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1996 2,900 2,900 37,607 22,685 63,192
Net income 17,391 17,391
Dividend paid to parent (14,000) (14,000)
Other surplus transactions 5,077 5,077
- ----------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1997 2,900 $2,900 $37,607 $ 31,153 $ 71,660
======================================================================
</TABLE>

See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis

19
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF CASH FLOWS - STATUTORY BASIS

<TABLE>
<CAPTION>
Years Ended
December 31,
1997 1996
- --------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
Premiums $ 444,232 $ 401,341
Net investment income 21,363 19,988
Other, net 8,598 5,490
Payments:
Policy benefit payments (326,113) (292,389)
Operating expenses (106,716) (98,835)
Net payments under reinsurance agreements (2,522)
Federal income taxes (9,688) (8,123)
- --------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 31,676 24,950
- --------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds:
Bonds 56,909 56,906
Stocks 3,768 6,880
Mortgage loans 2,469 4,324
Other 2,623 6,327
Payments for the purchases of:
Bonds (79,015) (45,781)
Stocks (3,300) (946)
Other (7,649) (4,119)
- --------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (24,195) 23,591
- --------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid to parent (14,000) (25,000)
- --------------------------------------------------------------------------
Change in cash and short-term investments (6,519) 23,541
Cash and short-term investments, beginning of year 39,704 16,163
- --------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 33,185 $ 39,704
==========================================================================
</TABLE>

See Independent Auditors' Report and Notes to Financial Statements - Statutory
Basis

20
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

PM Group Life Insurance Company ("PM Group") is a stock life insurance
company domiciled in the State of Arizona, and a wholly-owned subsidiary
of Pacific Life Insurance Company ("Pacific Life"), formerly, Pacific
Mutual Life Insurance Company ("Pacific Mutual"). PM Group offers group
health, dental and life products to three principal market segments in the
United States. Its Group Employee Benefits Operation serves larger
employer groups of fifty or more lives, while the Multiple Employer Trust
unit insures smaller employer groups with less than fifty lives per group.
The Pacific Risk Management Services unit offers stop loss and life
products to self-funded plan sponsors.

Pursuant to consent received from the Insurance Department of the State of
California, Pacific Mutual implemented a plan of conversion to form a
mutual holding company structure (the "Conversion") on September 1, 1997.
The Conversion created Pacific LifeCorp, an intermediate stock holding
company and Pacific Mutual Holding Company ("PMHC"), a mutual holding
company. Pacific Mutual was converted to a stock life insurance company
and renamed Pacific Life. Under their respective charters, PMHC must
always own at least 51% of the outstanding voting stock of Pacific
LifeCorp, and Pacific LifeCorp must always own 100% of the voting stock of
Pacific Life.

BASIS OF PRESENTATION

These financial statements have been prepared in accordance with
accounting practices prescribed or permitted by the Insurance Department
of the State of Arizona, which is a comprehensive basis of accounting
other than generally accepted accounting principles ("GAAP"). Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners ("NAIC"), as well as state
laws, regulations, and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so prescribed.
Accounting practices prescribed or permitted by the Insurance Department
of the State of Arizona differ in certain respects, which in some cases
may be material from GAAP. The significant differences are noted below:

An interest maintenance reserve ("IMR") is established to capture
realized investment gains and losses, net of tax, on the sale of
fixed income investments resulting from changes in the general level
of interest rates, and is amortized into income over the remaining
years to expected maturity of the assets sold under statutory
accounting practices; no such reserve is required under GAAP.

An asset valuation reserve ("AVR"), based upon a formula prescribed
by the NAIC, is established as a liability to offset potential non-
interest related investment losses, and changes in the AVR are
charged or credited directly to surplus under statutory accounting
practices; no such reserve is required under GAAP.

Investments in bonds and preferred stocks are generally carried at
amortized cost under statutory accounting practices; under GAAP,
investments in bonds and preferred stocks, other than those
classified as held to maturity, are carried at estimated fair value.

Certain assets, principally deferred income taxes and furniture and
equipment, are designated as non admitted and excluded from assets by
a direct charge to surplus under statutory accounting practices;
under GAAP, such assets are carried on the statement of financial
condition with appropriate valuation allowances.

21
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The following is a reconciliation of statutory capital and surplus, as
reflected in the accompanying financial statements, to stockholder's
equity on a GAAP basis:

<TABLE>
1997 1996
--------------------
<S> <C> <C>
Statutory capital and surplus as reported
herein $ 71,660 $63,192
Unrealized gain on securities 18,740 15,716
Non-admitted deferred income tax 16,632 17,142
Asset valuation reserve 6,870 5,035
Other non-admitted assets 3,102 3,049
Interest maintenance reserve 1,186 997
Deferred tax on unrealized gains on
securities (9,380) (6,010)
Other (2,084) (1,978)
--------------------
Stockholder's equity - GAAP basis $106,726 $97,143
====================
</TABLE>

Differences between statutory net income as reported herein and GAAP net
income is not considered material in relation to the financial statements
set forth herein.

The more significant of PM Group's statutory accounting practices are
described below.

INVESTMENTS

Bonds qualifying for amortization are carried at amortized cost; all other
bonds are carried at prescribed values. Preferred stocks are principally
stated at amortized cost. Common stocks are carried at market value.

Mortgage loans are stated at unpaid principal balances. Real estate is
valued at the lower of depreciated cost or market, less related mortgage
debt. Real estate is depreciated using the straight-line method over 15 to
30 years.

Short-term investments are carried at amortized cost which approximates
estimated fair value. Short-term investments generally consist of bonds,
commercial paper and money market instruments whose maturities at the time
of acquisition were one year or less.

The AVR is computed in accordance with a prescribed formula and is
designed to stabilize surplus against valuation and credit-related losses
for certain invested assets. Changes to the AVR are reported as direct
additions or deductions from surplus. The IMR results in the deferral of
after-tax realized capital gains and losses attributable to interest rate
fluctuations on fixed income investments and these capital gains and
losses are amortized into investment income over the remaining years to
expected maturity of the investment sold. The IMR of $1.2 million and $1.0
million as of December 31, 1997 and 1996, respectively, is included in
other liabilities on the accompanying statements of admitted assets,
liabilities and capital and surplus - statutory basis.

Net realized capital gains and losses are determined on the specific
identification method and are presented net of Federal capital gains tax
and transfers to the IMR.

Derivatives are used principally for hedging purposes and are valued
consistently with the hedge items. Realized hedging gains and losses on
fixed income contracts are deferred and amortized over the average life of
the related hedged assets or insurance liabilities.

22
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

POLICY RESERVES AND DEPOSIT FUNDS

Medical expense claim reserves are based on PM Group's actual loss
experience. Life insurance reserves, including premium waivers, are based
on various tabular methods and actual loss experience. Disabled life
reserves are determined using various tabular reserve methods.

The liability for deposit funds is based primarily on the policyholders'
equity in their deposit accounts, including credited interest.

REVENUES AND EXPENSES

Premiums are recognized as revenue over the premium paying period.
Investment income is recorded as earned.

Expenses, including policy acquisition costs, and Federal income taxes are
charged to operations as incurred.

FEDERAL INCOME TAXES

PM Group's operations are included in the consolidated Federal income tax
return of PMHC, PM Group's ultimate parent. PM Group is allocated an
income tax expense based on the effect of including its operations in the
consolidated provision. Deferred taxes are provided for as permitted by
the Insurance Department of the State of Arizona. The net tax asset is non
admitted. This practice has no effect on total surplus.

OTHER SURPLUS TRANSACTIONS

Other surplus transactions primarily consist of unrealized capital gains
and losses, changes in nonadmitted assets and change in the AVR.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of financial instruments disclosed in Notes 2 and
3 has been determined using available market information and appropriate
valuation methodologies. However, considerable judgment is required to
interpret market data to develop the estimates of fair value. Accordingly,
the estimates presented may not be indicative of the amounts PM Group
could realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies could have a significant
effect on the estimated fair value amounts.

RISK-BASED CAPITAL

Risk-based capital is a method developed by the NAIC to measure the
minimum amount of capital appropriate for an insurance company to support
its overall business operations in consideration of its size and risk
profile. The formulas for determining the amount of risk-based capital
specify various weighting factors that are applied to financial balances
or various levels of activity based on the perceived degree of risk. The
adequacy of a company's actual capital is measured by comparing it to the
risk-based capital as determined by the formulas. Companies below minimum
risk-based capital requirements are classified within certain levels, each
of which requires specified corrective action. As of December 31, 1997 and
1996, PM Group exceeded the minimum risk-based capital requirements.

BUSINESS RISKS

PM Group operates in a business environment which is subject to various
risks and uncertainties. PM Group's health care products are subject to
varying levels of regulation. The United States Congress has, from time to
time, considered various health care proposals and several states have
enacted health care reform legislation. Although it is not possible to
predict what changes may be adopted at the state or Federal level, certain
changes could have a negative impact upon the group health business of PM
Group.

23
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
practices prescribed or permitted by regulatory authorities requires
management to make estimates and assumptions that affect the reported
amounts of admitted assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECLASSIFICATION

Certain prior year amounts have been reclassified to conform to the 1997
financial statement presentation.

2. INVESTMENTS IN DEBT SECURITIES

The statement value, gross unrealized gains and losses and estimated fair
values of debt securities are shown below. Debt securities include bonds,
redeemable preferred stocks and short-term investments of $31.1 million
and $39.3 million as of December 31, 1997 and 1996, respectively. The
estimated fair value of publicly traded securities was based on quoted
market prices. For securities not actively traded, estimated fair values
were provided by independent pricing services specializing in "matrix
pricing" and modeling techniques. PM Group also estimates certain fair
values based on interest rates, credit quality and average maturity or
from securities with comparable trading characteristics.

<TABLE>
<S> <C> <C> <C> <C>
Gross Unrealized
Statement ---------------- Estimated
Value Gains Losses Fair Value
-------------------------------------
(In Thousands)
December 31, 1997:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 5,907 $ 56 $ 5,963
Obligations of states, political
subdivisions and foreign
governments 7,605 228 7,833
Corporate securities 143,201 20,115 $429 162,887
Mortgage-backed and asset-backed
securities 101,613 1,591 274 102,930
Redeemable preferred stock 5,203 165 193 5,175
-------------------------------------
Total $263,529 $22,155 $896 $284,788
=====================================
December 31, 1996:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 6,244 $ 65 $ 1 $ 6,308
Obligations of states, political
subdivisions and foreign govern-
ments 3,603 62 3,665
Corporate securities 136,006 17,016 908 152,114
Mortgage-backed and asset-backed se-
curities 98,515 854 303 99,066
Redeemable preferred stock 3,640 158 3,798
-------------------------------------
Total $248,008 $ 18,155 $ 1,212 $264,951
=====================================
</TABLE>

24
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS

2. INVESTMENTS IN DEBT SECURITIES (CONTINUED)

The carrying value and estimated fair value of debt securities as of
December 31, 1997 by contractual repayment date of principal are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.

<TABLE>
<CAPTION>
Statement Estimated
Value Fair Value
--------------------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 42,993 $ 56,847
Due after one year through five years 79,282 82,599
Due after five years through ten years 22,933 23,485
Due after ten years 16,708 18,927
--------------------
161,916 181,858
Mortgage-backed and asset-backed securities 101,613 102,930
--------------------
Total $263,529 $284,788
====================
</TABLE>

Proceeds from sales of investments in debt securities for the years ended
December 31, 1997 and 1996 were $39.0 million and $22.9 million,
respectively. Gross gains of $16,000 and $260,000 and gross losses of
$715,000 and $485,000 were realized on those sales for the years ended
December 31, 1997 and 1996, respectively.

3. FINANCIAL INSTRUMENTS

The estimated fair values of PM Group's financial instruments, including
debt securities (Note 2), are as follows:

<TABLE>
<S> <C> <C> <C> <C>
December 31, 1997 December 31, 1996
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
--------------------------------------
(In Thousands)
Assets:
Debt securities $263,529 $284,788 $248,008 $264,951
Preferred and common
stocks 8,603 8,617 3,736 4,745
Mortgage loans 14,079 15,775 16,452 18,100
Derivative financial
instruments:
Equity warrants 828 828
Liabilities:
Deposit funds 9,882 9,882 7,248 7,248
Derivative financial
instruments:
Asset swap contract (2,327) (2,235)
</TABLE>

The following methods and assumptions were used to estimate the fair
values of these financial instruments as of December 31, 1997 and 1996:

PREFERRED AND COMMON STOCKS

The estimated fair values are based on quoted market prices or dealer
quotes.

25
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS

3. FINANCIAL INSTRUMENTS (CONTINUED)

MORTGAGE LOANS

The estimated fair value of the mortgage loan portfolio is determined by
discounting estimated future cash flows, using a year-end market rate
which is applicable to the yield, credit quality and average maturity of
the composite portfolio.

DERIVATIVE FINANCIAL INSTRUMENTS

PM Group uses an asset swap contract to manage interest rate and equity
risk to better match portfolio duration to liabilities. Asset swap
contracts involve the exchange of upside equity potential for preferred
cash flow streams. The amounts to be received or paid pursuant to the
agreement are accrued and recognized in the statements of operations -
statutory basis through an adjustment to net investment income over the
life of the agreement. The asset swap contract matures during 1998. As of
December 31, 1997 and 1996, the asset swap contract had a notional
principal of $5.0 million.

PM Group also holds equity warrants which entitle the right, but not the
obligation, to purchase the underlying common stocks at a specified price
during a given time period. The equity warrants, which are valued at
market, expire during 2000 through 2007.

DEPOSIT FUNDS

The estimated fair values of deposit funds with no defined maturities are
the amounts payable on demand.

4. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES

Activity in the liability for unpaid claims and claim adjustment expenses,
which is included in policy reserves and policy benefits payable on the
statements of admitted assets, liabilities and capital and surplus -
statutory basis, is summarized as follows:

<TABLE>
<CAPTION>
Years Ended
December 31,
1997 1996
-------------------
(In Thousands)
<S> <C> <C>
Balance at January 1 $118,712 $110,821
Less reinsurance recoverables 1,009 525
-------------------
Net balance at January 1 117,703 110,296
-------------------
Incurred related to:
Current year 350,231 304,248
Prior years (17,973) (11,047)
-------------------
Total incurred 332,258 293,201
-------------------
Paid related to:
Current year 241,508 215,658
Prior years 68,920 70,136
-------------------
Total paid 310,428 285,794
-------------------
Net balance at December 31 139,533 117,703
Plus reinsurance recoverables 755 1,009
-------------------
Balance at December 31 $140,288 $118,712
===================
</TABLE>

26
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS

4. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES (Continued)

As a result of payment of prior years estimated claims, the provision for
claims and claim adjustment expenses decreased by $18.0 million and $11.0
million for the years ended December 31, 1997 and 1996, respectively. This
reduction is primarily due to lower than anticipated settlement of claims
and reduced claim adjustment expenses.

5. RELATED PARTY TRANSACTIONS

Pacific Life provided office space, services of certain management and
other personnel, and other support services to PM Group. Services provided
include employee participation in a pension plan and postretirement
healthcare and life insurance plans maintained by Pacific Life. Charges
for these services amounted to $13.1 million and $14.2 million for the
years ended December 31, 1997 and 1996, respectively, and are included in
operating expenses on the accompanying statements of operations -
statutory basis.

PM Group assumes substantially all of Pacific Life's group insurance under
a reinsurance agreement. Premiums of $98.6 million and $88.7 million and
benefits of $82.1 million and $68.3 million were assumed for the years
ended December 31, 1997 and 1996, respectively. Amounts receivable under
this agreement were $16.8 million and $11.4 million as of December 31,
1997 and 1996, respectively.

6. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE PLANS

PM Group participates in a defined benefit health care plan and a defined
benefit life insurance plan (the "Plans") sponsored by Pacific Life that
provide postretirement benefits for all eligible retirees and their
dependents. Generally, qualified employees may become eligible for these
benefits if they reach normal retirement age, have been covered under
Pacific Life's policy as an active employee for a minimum continuous
period prior to the date retired, and have an employment date before
January 1, 1990. The Plans contain cost-sharing features such as
deductibles and coinsurance, and require retirees to make contributions
which can be adjusted annually. Pacific Life's commitment to qualified
employees who retire after April 1, 1994 is limited to specific dollar
amounts. Pacific Life reserves the right to modify or terminate the Plans
at any time.

Pacific Life and PM Group utilize the accrual method of accounting for the
costs of the Plans as prescribed by the Insurance Departments of the
States of California and Arizona, respectively. PM Group has elected to
amortize the transition obligation, which has been allocated from Pacific
Life, of $3.7 million over twenty years. The transition obligation
amortization amounted to $183,000 for each of the years ended December 31,
1997 and 1996.

7. DIVIDEND RESTRICTIONS

Dividend payments by PM Group to its parent cannot exceed the lesser of
10% of surplus as regards to policyholders or the statutory net gain from
operations, without prior approval from the Insurance Commissioner of the
State of Arizona. During 1997 and 1996, PM Group received approval to pay
extraordinary dividends in excess of these limitations. For the years
ended December 31, 1997 and 1996, PM Group paid dividends of $14.0 million
and $25.0 million, of which $8.0 million and $18.0 million, respectively,
were considered extraordinary. During 1998, PM Group can pay dividends
amounting to approximately $6.9 million without prior approval from the
Insurance Commissioner of the State of Arizona.

27
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS

8. INVESTMENT COMMITMENTS

PM Group has outstanding commitments to make investments in limited
partnerships as follows (In Thousands):

<TABLE>
<CAPTION>
Year Ending December 31:
------------------------
<S> <C>
1998 $ 4,045
1999-2002 8,566
2003 and thereafter 1,079
-------
Total $13,690
=======
</TABLE>

9. LITIGATION

PM Group is a respondent in a number of legal proceedings, some of which
involve extra-contractual damages. In the opinion of management, the
outcome of these proceedings is not likely to have a material adverse
effect on the financial position of PM Group.

10.SUBSEQUENT EVENT

PM Group is currently in the process of requesting from the New York
Insurance Department authority to transact business in the State of New
York. In connection with this request, PM Group has also made a filing
with the Insurance Department of the State of Arizona to amend its
certificate of authority in order to sell variable annuities and variable
life insurance. If these authorizations are received, it is anticipated
that PM Group will change its name to Pacific Life & Annuities Company.

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

28
<PAGE>

PM GROUP LIFE INSURANCE COMPANY

Financial Statements - Statutory Basis
as of September 30, 1998 and December 31, 1997
and for the Nine Months ended September 30, 1998 and 1997

29
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF ADMITTED ASSETS,
LIABILITIES AND CAPITAL AND SURPLUS - STATUTORY BASIS

<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
- --------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ADMITTED ASSETS
Bonds $227,427 $227,199
Preferred stocks 4,966 5,215
Common stocks 10,306 8,591
Mortgage loans 11,896 14,079
Real estate 687
Cash and short-term investments 31,660 33,185
Premiums due and uncollected 26,735 25,635
Other assets 23,669 23,589
- --------------------------------------------------------------------------
TOTAL ADMITTED ASSETS $336,659 $338,180
==========================================================================
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Policy reserves $128,675 $126,716
Policy benefits payable 82,251 85,338
Deposit funds 9,331 9,882
Other liabilities 30,687 37,714
Asset valuation reserve 7,542 6,870
- --------------------------------------------------------------------------
Total Liabilities 258,486 266,520
- --------------------------------------------------------------------------
Capital and Surplus:
Common stock - $1 par value; 5 million shares
authorized; 2.9 million shares issued and
outstanding 2,900 2,900
Paid-in surplus 37,607 37,607
Unassigned surplus 37,666 31,153
- --------------------------------------------------------------------------
Total Capital and Surplus 78,173 71,660
- --------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS $336,659 $338,180
==========================================================================
</TABLE>

See Notes to Financial Statements - Statutory Basis

30
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF OPERATIONS - STATUTORY BASIS
(Unaudited)

<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
- -------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums $ 372,752 $ 325,450
Net investment income 17,356 15,874
Other income 3,639 5,203
- -------------------------------------------------------
TOTAL REVENUES 393,747 346,527
- -------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 298,977 248,348
Operating expenses 88,120 81,730
- -------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 387,097 330,078
- -------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 6,650 16,449
Federal income taxes 2,279 5,705
- -------------------------------------------------------
NET GAIN FROM OPERATIONS 4,371 10,744
Net realized capital gains 634 3,197
- -------------------------------------------------------
NET INCOME $ 5,005 $ 13,941
=======================================================
</TABLE>

See Notes to Financial Statements - Statutory Basis

31
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF CAPITAL AND SURPLUS - STATUTORY BASIS

<TABLE>
<CAPTION>
Common Stock
------------- Paid-in Unassigned
Shares Amount Surplus Surplus Total
- ---------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
BALANCES,
JANUARY 1, 1997 2,900 $2,900 $37,607 $22,685 $63,192
Net income 17,391 17,391
Dividend paid to parent (14,000) (14,000)
Other surplus transactions 5,077 5,077
- ---------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1997 2,900 2,900 37,607 31,153 71,660
Net income 5,005 5,005
Other surplus transactions 1,508 1,508
- ---------------------------------------------------------------------
BALANCES (UNAUDITED),
SEPTEMBER 30, 1998 2,900 $2,900 $37,607 $37,666 $78,173
=====================================================================
</TABLE>

See Notes to Financial Statements - Statutory Basis

32
<PAGE>

PM Group Life Insurance Company

STATEMENTS OF CASH FLOWS - STATUTORY BASIS
(Unaudited)

<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
- ---------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts
Premiums $ 372,093 $ 320,340
Net investment income 17,305 14,635
Other, net 13,346
Payments
Policy benefit payments (296,096) (237,316)
Operating expenses (79,131) (71,865)
Net payments under reinsurance agreements (11,493) (10,088)
Federal income taxes (4,171) (8,213)
Other, net (3,695)
- ---------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (5,188) 20,839
- ---------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds
Bonds 53,278 44,199
Stocks 1,283 3,651
Mortgage loans 2,473 1,297
Other 7,101 2,904
Payments for the purchase of
Bonds (53,215) (61,914)
Stocks (771) (2,950)
Other (6,486) (4,364)
- ---------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,663 (17,177)
- ---------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid to parent (14,000)
- ---------------------------------------------------------------------------
Decrease in cash and short-term investments (1,525) (10,338)
Cash and short-term investments, beginning of period 33,185 39,704
- ---------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 31,660 $ 29,366
===========================================================================
</TABLE>

See Notes to Financial Statements - Statutory Basis

33
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS
(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS

BASIS OF PRESENTATION

The information set forth in the statement of admitted assets, liabilities
and capital and surplus statutory basis as of September 30, 1998 and the
statements of operations statutory basis and of cash flows statutory basis
for the nine months ended September 30, 1998 and 1997 is unaudited. The
information reflects all adjustments, consisting only of normal recurring
adjustments, that, in the opinion of management, are necessary to present
fairly the financial position and results of operations of PM Group for
the periods indicated. Results of operations for the interim periods are
not necessarily indicative of the results of operations for the full year.
For further information, refer to the financial statements and footnotes
thereto included in PM Group's audited financial statements for the years
ended December 31, 1997 and 1996.

These financial statements have been prepared in accordance with
accounting practices prescribed or permitted by the Insurance Department
of the State of Arizona, which is a comprehensive basis of accounting
other than generally accepted accounting principles ("GAAP"). Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners, as well as state laws,
regulations, and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so prescribed.
Accounting practices prescribed or permitted by the Insurance Department
of the State of Arizona differ in certain respects, which in some cases
may be material from GAAP.

34
<PAGE>

PM Group Life Insurance Company

NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS
(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

The following is a reconciliation of statutory capital and surplus, as
reflected in the accompanying financial statements, to stockholder's
equity on a GAAP basis:

<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---------------------------
<S> <C> <C>
Statutory capital and
surplus as reported
herein $ 78,173 $ 71,660
Non-admitted deferred
income tax 16,413 16,632
Asset valuation reserve 7,542 6,870
Other non-admitted
assets 2,492 3,102
Unrealized gain on
securities 2,009 18,740
Interest maintenance
reserve 1,386 1,186
Deferred tax on
unrealized gains on
securities (3,893) (9,380)
Other (2,002) (2,084)
---------------------------
Stockholder's equity -
GAAP basis $102,120 $106,726
===========================
</TABLE>

Differences between statutory net income as reported herein and GAAP net
income is not considered material in relation to the financial statements
set forth herein.

2. SUBSEQUENT EVENT

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

35
<PAGE>

Form No. 801-8A
<PAGE>

PART II

Part C: OTHER INFORMATION

Item 24. Financial Statements and Exhibits
---------------------------------

(a) Financial Statements

Part A: None

Part B:

(1) Registrant's Financial Statements

None

(2) Depositor's Financial Statements

Audited Financial Statements - Statutory Basis dated as of
December 31, 1997 and 1996, and for the two year
period ending December 31, 1997, included in
Part B include the following for PM Group Life Insurance
Company:

Statements of Admitted Assets, Liabilities and
Capital - Statutory Basis
Statements of Operations - Statutory Basis
Statements of Capital and Surplus - Statutory Basis
Statements of Cash Flows - Statutory Basis
Notes to Financial Statements - Statutory Basis

(b) Exhibits

1. (a) Minutes of Action of Board of Directors of PM
Group Life Insurance Company (PM Group) dated July
1, 1998

II-1

<PAGE>

2. Not applicable

3. (a) Distribution Agreement between PM Group Life
Insurance Company and Pacific Mutual Distributors,
Inc. ("PMD")

(b) Form of Selling Agreement between PM Group, PMD
and Various Broker-Dealers

4. (a) Form of Individual Flexible Premium Variable
Accumulation Annuity Contract

(b) Qualified Plan Loan Endorsement

(d) 403(b) Tax-Sheltered Annuity Rider

(e) Section 457 Plan Rider

(f) IRA Rider

(g) Roth IRA Rider

(h) Simple IRA Rider

(i) DCA Plus Fixed Option Endorsement

(j) Guaranteed Minimum Death Benefit Endorsement

5. (a) Application Form for Individual Flexible Premium
Variable Accumulation Annuity Contract.

6. (a) PM Group's Articles of Incorporation

(b) By-laws of PM Group

7. Not applicable

8. (a) Fund Participation Agreement

(b) Administrative Agreement Between PM Group and
Pacific Life Insurance Company ("Pacific Life")

9. Opinion and Consent of legal officer of PM Group
Life as to the legality of Contracts being registered.

II-2
<PAGE>

10. (a) Consent of Independent Auditors

11. Not applicable

12. Not applicable

13. Performance Calculations

14. Not applicable

15. Powers of Attorney

Item 25. Directors and Officers of PM Group

Positions and Offices
Name and Address with PM Group

William L. Ferris Director, President and Chief Executive
Officer

Thomas C. Sutton Director and Chairman of the Board

David R. Carmichael Director, Senior Vice President and General
Counsel

Audrey L. Milfs Director and Secretary

Glenn S. Schafer Director

Khanh T. Tran Chief Financial Officer and Treasurer

Lynn C. Miller Executive Vice President

William J. Doomey Senior Vice President

Gary L. Falde Vice President

II-3
<PAGE>

______________________________

The address for each of the persons listed above is as follows:

700 Newport Center Drive
Newport Beach, California 92660

Item 26. Persons Controlled by or Under Common Control with PM Group
or Separate Account A

The following is an explanation of the organization chart of PM Group
and its affiliates:

PM GROUP & AFFILIATED ENTERPRISES
LEGAL STRUCTURE

PM Group Life Insurance Company is an Arizona Corporation and a
subsidiary of Pacific Life Insurance Company, a California Stock Life
Insurance Company that is wholly-owned by Pacific LifeCorp (a Delaware
Stock Holding Company) which is, in turn, is approximately 99% owned
by Pacific Mutual Holding Company (a California Mutual Holding
Company). Pacific Life has a 40% ownership of American Maturity Life
Insurance Company (a Connecticut Corporation), a 50% ownership of
Pacific Mezzanine Associates, L.L.C. (a Delaware Limited Liability
Company), and is the parent company of Pacific Asset Management LLC (a
Delaware Limited Liability Company), Pacific Mutual Realty Finance,
Inc., Pacific Mutual Distributors, Inc., and World-Wide Holdings
Limited (a United Kingdom Corporation) in addition to PM Group. A
subsidiary of Pacific Mezzanine Associates, L.L.C. is Pacific
Mezzanine Investors, L.L.C., along with its subsidiary Pacific
Mezzanine Fund, L.P. Subsidiaries of Pacific Asset Management LLC are
PMRealty Advisors Inc., PPA LLC (a Delaware Limited Liability
Company), CCM LLC (a Delaware Limited Liability Company), NFJ LLC (a
Delaware Limited Liability Company), and PIMCO Holding LLC (a Delaware
Limited Liability Company). Pacific Asset Management LLC directly and
in-directly owns 29.65% of the outstanding partnership interests in
PIMCO Advisors L.P. (a Delaware Limited Partnership). Subsidiaries of
Pacific Mutual Distributors, Inc. include: Associated Financial Group,
Inc.; Mutual Service Corporation (a Michigan Corporation), along with
its subsidiaries Advisors' Mutual Service Center, Inc. (a Michigan
Corporation) and Titan Value Equities Group, Inc.; and United
Planners' Group, Inc. (an Arizona Corporation which is 97% owned),
along with its subsidiary United Planners' Financial Services of
America (an Arizona Limited Partnership). Subsidiaries of World-Wide
Holdings limited include: World-Wide Reassurance Company Limited (a
United Kingdom Corporation) and World-Wide Reassurance Company (BVI)
Limited (a British Virgin Islands Corporation). All corporations are
100% owned unless otherwise indicated. All entities are California
corporations unless otherwise indicated.

II-4
<PAGE>

Item 27. Number of Contractholders

None

Item 28. Indemnification

(a) The Distribution Agreement between PM Group and PMD provides
substantially as follows:

PM Group hereby agrees to indemnify and hold harmless PMD and its
officers and directors, and employees for any expenses (including
legal expenses), losses, claims, damages, or liabilities incurred
by reason of any untrue or alleged untrue statement or
representation of a material fact or any omission or alleged
omission to state a material fact required to be stated to make
other statements not misleading, if made in reliance on any
prospectus, registration statement, post-effective amendment
thereof, or sales materials supplied or approved by PM Group or
the Separate Account. PM Group shall reimburse each such person
for any legal or other expenses reasonably incurred in connection
with investigating or defending any such loss, liability, damage,
or claim. However, in no case shall PM Group be required to
indemnify for any expenses, losses, claims, damages, or
liabilities which have resulted from the willful misfeasance, bad
faith, negligence, misconduct, or wrongful act of PMD.

PMD hereby agrees to indemnify and hold harmless PM Group,
its officers, directors, and employees, and the Separate
Account for any expenses, losses, claims, damages, or liabilities
arising out of or based upon any of the following in connection
with the offer or sale of the contracts: (1) except for such
statements made in reliance on any prospectus, registration
statement or sales material supplied or approved by PM Group
or the Separate Account, any untrue or alleged untrue
statement or representation made; (2) any failure to deliver a
currently effective prospectus; (3) the use of any unauthorized
sales literature by any officer, employee or agent of PMD or
Broker; (4) any willful misfeasance, bad faith, negligence,
misconduct or wrongful act. PMD shall reimburse each such person
for any legal or other expenses reasonably incurred in connection
with investigating or defending

II-5
<PAGE>

any such loss, liability, damage, or claim.

(b) The Form of Selling Agreement between PM Group, PMD and Various
Broker-Dealers provides substantially as follows:

PM Group and PMD agree to indemnify and hold harmless Selling
Broker-Dealer and General Agent, their officers, directors,
agents and employees, against any and all losses, claims, damages
or liabilities to which they may become subject under the 1933
Act, the 1934 Act, or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or any omission to state a
material fact required to be stated or necessary to make the
statements made not misleading in the registration statement for
the Contracts or for the shares of Pacific Select Fund (the
"Fund") filed pursuant to the 1933 Act, or any prospectus
included as a part thereof, as from time to time amended and
supplemented, or in any advertisement or sales literature
approved in writing by PM Group and PMD pursuant to Section IV.E.
of this Agreement.

Selling Broker-Dealer and General Agent agree to indemnify and
hold harmless PM Group, the Fund and PMD, their officers,
directors, agents and employees, against any and all losses,
claims, damages or liabilities to which they may become subject
under the 1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon: (a) any oral or
written misrepresentation by Selling Broker-Dealer or General
Agent or their officers, directors, employees or agents unless
such misrepresentation is contained in the registration statement
for the Contracts or Fund shares, any prospectus included as a
part thereof, as from time to time amended and supplemented, or
any advertisement or sales literature approved in writing by PM
Group and PMD pursuant to Section IV.E. of this Agreement, (b)
the failure of Selling Broker-Dealer or General Agent or their
officers, directors, employees or agents to comply with any
applicable provisions of this Agreement or (c) claims by Sub-
agents or employees of General Agent or Selling Broker-Dealer for
payments of compensation or remuneration of any type. Selling
Broker-Dealer and General Agent will reimburse PM Group or PMD or
any director, officer, agent or employee of either entity for any
legal or other expenses reasonably incurred by PM Group, PMD, or
such officer, director, agent or employee in connection with
investigating or defending any such loss, claims, damages,
liability or action. This indemnity agreement will be in addition
to any liability which Broker-Dealer may otherwise have.

II-6
<PAGE>

Item 29. Principal Underwriters

(a) PMD also acts as principal underwriter for Pacific Select Exec
Separate Account of PM Group Life Insurance Company, Pacific
Select Fund, and the following Separate Accounts of Pacific Life:
Pacific Select Separate Account, Pacific Select Exec Separate
Account, Pacific Select Variable Annuity Separate Account,
Pacific Corinthian Variable Separate Account, Separate Account A,
and Separate Account B.

(b) For information regarding PMD, reference is made to Form B-D, SEC
File No. 8-15264, which is herein incorporated by reference.

Item 30. Location of Accounts and Records

The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company
Act of 1940 and the rules under that section will be maintained
by Pacific Life at 700 Newport Center Drive, Newport Beach,
California 92660.

Item 31. Management Services

Not applicable

Item 32. Undertakings

The registrant hereby undertakes:

(a) to file a post-effective amendment to this registration statement
as frequently as is necessary to ensure that the audited
financial statements in this registration statement are never
more than 16 months old for so long as payments under the
variable annuity contracts may be accepted, unless otherwise
permitted.

(b) to include either (1) as a 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, or (3) to deliver a
Statement of Additional Information with the Prospectus.

(c) 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.

Additional Representations

II-7
<PAGE>

(a) The Registrant and its Depositor are relying upon American Council of
Life Insurance, SEC No-Action Letter, SEC Ref. No. 1P-6-88 (November 28, 1988)
with respect to annuity contracts offered as funding vehicles for retirement
plans meeting the requirements of Section 403(b) of the Internal Revenue Code,
and the provisions of paragraphs (1)-(4) of this letter have been complied with.

(b) REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY
ACT OF 1940: PM Group, the sponsoring insurance company of the Registrant,
represents that the fees and charges to be deducted under the Variable Annuity
Contract ("Contract") described in the prospectus contained in this registration
statement are, in the aggregate, reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed in
connection with the Contract.

II-8
<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it has caused this Registration Statement on
Form N-4 to be signed on its behalf by the undersigned thereunto duly authorized
in the City of Newport Beach, and the State of California on this 21st day of
January, 1999.

SEPARATE ACCOUNT A
(Registrant)
By: PM GROUP LIFE INSURANCE COMPANY

By: William L. Ferris*
President and Chief Executive Officer

By: PM GROUP LIFE INSURANCE COMPANY
(Depositor)

By: William L. Ferris*
President and Chief Executive Officer

As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated:

Signature Title Date

_____________________ Director, President and Chief ___________, 1998
William L. Ferris* Executive Officer

_____________________ Director and Chairman of the ___________, 1998
Thomas C. Sutton* Board

_____________________ Director, Senior Vice President
David R. Carmichael* and General Counsel ___________, 1998

_____________________ Director and Secretary ___________, 1998
Audrey L. Milfs*

_____________________ Director ___________, 1998
Glenn S. Schafer*

_____________________ Chief Financial Officer and ___________, 1998
Khanh T. Tran* Treasurer

_____________________ Executive Vice President ___________, 1998
Lynn C. Miller*

_____________________ Senior Vice President ___________, 1998
William J. Doomey*

_____________________ Vice President ___________, 1998
Gary L. Falde*

<PAGE>

*By: /s/ DAVID R. CARMICHAEL
David R. Carmichael January 21, 1999
as attorney-in-fact

(Powers Of Attorney are contained in this Registration Statement on Form N-
4 for Separate Account A as Exhibit 15 on Form N-4.)

<PAGE>

EXHIBIT 99.1(a)

Minutes of Action of Board of Directors of PM Group Life Insurance Company (PM
Group)
<PAGE>

MINUTES OF ACTION OF BOARD OF DIRECTORS
OF
PM GROUP LIFE INSURANCE COMPANY

TAKEN BY UNANIMOUS WRITTEN CONSENT
WITHOUT A MEETING

The undersigned, and each of them, constituting all of the directors of PM
Group Life Insurance Company, an Arizona corporation, acting by unanimous
written consent without a meeting pursuant to Section 10-044 of the Arizona
Revised Statutes and Article III, Section 12 of the bylaws of this corporation,
take the following actions:

Authority to Establish Fixed or Variable Dollar Separate Accounts, or Both,
---------------------------------------------------------------------------
and to Issue Variable Life Insurance Policies and Variable Annuity Contracts.
- ----------------------------------------------------------------------------
The following resolution is adopted:

RESOLVED, that the Board of Directors of this corporation hereby authorizes
this corporation to obtain approval from the appropriate regulatory
authorities of an amendment to its Certificate of Authority to issue
variable life insurance policies and variable annuity contracts and any
derivative thereof being herein collectively referred to as "Variable
Contracts"; and

RESOLVED FURTHER, that the Board of Directors of this corporation hereby
authorizes and directs the establishment of Separate Accounts ("Separate
Accounts") to which the amounts received by this corporation in connection
with the sale of Variable Contracts or contracts payable in fixed dollar
amounts, or both, may be allocated; and

RESOLVED FURTHER, that within the Separate Accounts payable in variable
dollar amounts there may be a number of variable accounts with different
investment policies and objectives into which a policyowner may direct
their interests in the Separate Accounts; and

RESOLVED FURTHER, that the Separate Accounts are to be established and
maintained in accordance with the provisions of Section 20-651 of the
Arizona Insurance Code and the regulations promulgated under that Section;
and

RESOLVED FURTHER, that any officer of this corporation is authorized and
directed to take whatever action may be necessary or advisable to obtain
the appropriate regulatory authority to amend the Certificate of Authority
to issue Variable Contracts and to establish and maintain fixed or variable
Separate Accounts, or both, and to register, file or qualify the Variable
Contracts for sale, including, but not limited to, determining the states
or other jurisdictions in which action shall be taken to qualify, file, or
register the Variable Contracts for sale, performing any and all acts as
such officer deems necessary or advisable to comply with the applicable
laws of any such state or jurisdiction including making any required
filings with the Arizona Insurance Department or any other regulatory
authority in Arizona or any other regulatory authority in any state or
jurisdiction having jurisdiction over the insurance activities of this
corporation or over
<PAGE>

the Variable Contracts; performing any and all acts as such officer deems
necessary or advisable to comply with the applicable laws of the United
States including, but not limited to, preparing and filing registration
statements with the Securities and Exchange Commission to register any
Variable Contracts or interests therein under the Securities Act of 1933
and the Investment Company Act of 1940 and to register any Separate
Account, the benefits of which are payable in variable dollar amounts, or
interests therein under the Investment Company Act of 1940, and to file any
exemptive application if necessary or advisable under the Investment
Company Act of 1940 and to make such other filings or seek any
interpretations that are necessary or advisable from the Securities and
Exchange Commission or any other agency of the United States Government; or
making any filings, seek any interpretations, or make other submissions
that such officer deems necessary or advisable with other regulatory
authorities having jurisdiction over the offer and sale of the Variable
Contracts and to execute and file all requisite papers and documents,
including, but not limited to, applications, reports, surety bonds,
irrevocable consents, powers of attorneys, and appointments of agents for
service of process, and the paying of all necessary fees and expenses as in
such officer's judgment may be necessary or advisable.

RESOLVED FURTHER, that actions taken by officers of this corporation prior
to the adoption of these resolutions, which are within the authority
conferred hereby had these resolutions predated such action, are hereby
ratified, confirmed and approved.

Dated: July 1, 1998
------------

__________________________ __________________________
David R. Carmichael William L. Ferris

__________________________ __________________________
Audrey L. Milfs Glenn S. Schafer

__________________________
Thomas C. Sutton

<PAGE>

EXHIBIT 99.3(a)

Distribution Agreement between PM Group Life Insurance Company and Pacific
Mutual Distributors, Inc. ("PMD")

<PAGE>

DRAFT

DISTRIBUTION AGREEMENT

AGREEMENT made this ____ day of ____________, 199__, by and between PM Group
Life Insurance Company [Pacific Life & Annuity Company], an Arizona Corporation,
("PM Group") ["PLA"] on its own behalf and on behalf of the segregated asset
accounts of PM Group [PLA] listed on Exhibit A to this Agreement (the "Separate
Accounts"), and Pacific Mutual Distributors, Inc., a California corporation,
("PMD").

WHEREAS, PM Group [PLA] has established and maintains the Separate Accounts, a
separate investment account, for the purpose of selling variable life contracts
("Contracts") to commence after the effectiveness of the Registration Statement
relating thereto filed with the Securities and Exchange Commission on form S-6,
or any successor form thereto, pursuant to the Securities Act of 1933, as
amended (the "1933 Act"), through PMD, acting as general agent of PM Group
[PLA];

WHEREAS, the Separate Accounts are registered as a unit investment trust under
the Investment Company Act of 1940 ("the 1940 Act");

WHEREAS, PMD is registered as a broker-dealer under the Securities Exchange Act
of 1934 (the "Securities Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and

WHEREAS, PM Group [PLA] desires to retain PMD as the Distributor and Principal
Underwriter to provide for the sale and distribution to the public of the
Contracts issued by PM Group [PLA] and funded by interests in the General
Account of PM Group [PLA] and in the Separate Accounts and PMD is willing to
render such services;

NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter
set forth, the parties agree as follows:

1. Principal Underwriter. PM Group [PLA] hereby appoints PMD, during the term
---------------------
of this Agreement, subject to the registration requirements of the 1933 Act
and the 1940 Act and the provisions of the Securities Exchange Act, to be
the Distributor and Principal Underwriter for the sale of Contracts to the
public in each state and other jurisdictions in which the Contracts may be
lawfully sold. PM Group [PLA] also appoints PMD as its independent General
Agent for sale of its Contracts (including any riders which PM Group [PLA]
may make available in connection therewith or any contracts for which the
Contracts may be exchanged or converted) and for sale of such other
insurance contracts or annuity contracts as PM Group [PLA] may, from time
to time, authorize in writing by amendment thereto. PMD shall offer the
Contracts for sale and distribution at premium rates set by PM Group [PLA].

2. Selling Agreements. PMD is hereby authorized to enter into separate
------------------
written agreements, on such terms and conditions as PMD determines are not
inconsistent with this Agreement, with such organizations which agree to
participate as a general agent and/or broker-dealer in the distribution of
the Contracts and to use their best efforts to solicit applications for
<PAGE>

Contracts. Any such broker-dealer (hereinafter "Broker") shall be both
registered as a broker-dealer under the Securities Exchange Act and a
member of the NASD. PMD shall be responsible for ensuring that Broker and
its agents or representatives and general agent and its sub-agents
soliciting applications for Contracts shall be duly and appropriately
licensed, registered and otherwise qualified for the sale of the Contracts
(and the riders and other contracts offered in connection therewith) under
the insurance laws and any applicable blue sky laws of each state or other
jurisdiction in which such policies may be lawfully sold and in which PM
Group [PLA] is licensed to sell such Contracts. PM Group [PLA] shall
undertake to appoint Broker's qualified agents or representatives and
general agent's sub-agents as life insurance agents of PM Group [PLA],
provided that PM Group [PLA] reserves the right to refuse to appoint any
proposed representative, agent, or sub-agent or once appointed, to
terminate such appointment. PMD shall be responsible for ensuring that
Broker and general agent supervise its agents, representatives, or sub-
agents.

PMD is also authorized to enter into separate written agreements, on such
terms and conditions as PMD determines are not inconsistent with this
Agreement, with such organizations ("wholesalers") that agree to
participate in the distribution of the Contracts and to use their best
efforts to solicit Brokers and general agents that, in turn, will solicit
applications of the Contracts.

3. Life Insurance Agents. PM Group [PLA] shall be responsible for ensuring
---------------------
that Broker and its agents or representatives and general agent and its
sub-agents meet all qualifications and hold any licenses or authorizations
that may be required for the solicitation or sale of the Contracts under
the insurance laws of the applicable jurisdictions.

4. Suitability. PM Group [PLA] desires to ensure that Contracts will be sold
-----------
to purchasers for whom the Contract will be suitable. PMD shall take
reasonable steps to ensure that the various representatives of Broker and
sub-agents of general agents shall not make recommendations to an applicant
to purchase a Contract in the absence of reasonable grounds to believe the
purchase of the Contract is suitable for such applicant. While not limited
to the following, a determination of suitability shall be based on
information furnished to a representative or sub-agent after reasonable
inquiry of such applicant concerning the applicant's other security
holdings, insurance and investment objectives, financial situation and
needs, and the likelihood that the applicant will continue to make any
premium payments contemplated by the Contracts and will keep the Policy in
force for a sufficient period of time so that PM Group's [PLA's]
acquisition costs are amortized over a reasonable period of time.

5. Conformity with Registration Statement and Approved Sales Materials. In
-------------------------------------------------------------------
performing its duties as Distributor, PMD will act in conformity with the
Prospectus and with the instructions and directions of PM Group [PLA], the
requirements of the 1933 Act, the 1940 Act, the Securities Exchange Act,
and all other applicable federal and state laws and regulations. PMD shall
not give any information nor make any representations, concerning any
aspect of the Contract or of PM Group's [PLA's] operations to any persons
or entity unless such information or representations are contained in the
Registration Statement and
<PAGE>

the pertinent prospectus filed with the Securities and Exchange Commission,
or are contained in sales or promotional literature approved by PM Group
[PLA]. PMD will not use and will take reasonable steps to ensure Broker
will not use any sales promotion material and advertising which has not
been previously approved by PM Group [PLA].

6. Expenses. During the term of this Agreement, PMD will bear all of its
--------
expenses in complying with this Agreement, including the following
expenses:

(a) costs of sales presentations, mailings, sales promotion materials,
advertising, and any other marketing efforts by PMD in connection with
the distribution or sale of the Contracts; and

(b) any compensation paid to employees of PMD and to wholesalers, Brokers
and general agents in connection with the distribution or sale of the
Contracts.

Notwithstanding any other provision of this Agreement, it is understood and
agreed that PM Group [PLA] shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement, and for marketing the Contract, and reserves the right to
direct, approve or disapprove any action hereunder taken on its behalf by
PMD.

7. Applications. Completed applications for Contracts solicited by such
------------
Broker through its agents or representatives or by general agent through
its sub-agents shall be transmitted directly to PM Group [PLA]. All
payments under the Contracts shall be made by check to PM Group [PLA] or by
other method acceptable to PM Group [PLA], and if received by PMD, shall be
held at all times in a fiduciary capacity and remitted promptly to PM Group
[PLA]. All such payments will be the property of PM Group [PLA]. PM Group
[PLA] has the sole authority to approve or reject such applications or
payments and maintains ultimate responsibility for underwriting. Anything
in this Agreement to the contrary notwithstanding, PM Group [PLA] retains
the ultimate right to control the sale of the Contracts and to appoint and
discharge life insurance agents of PM Group [PLA].

8. Standard of Care. PMD shall be responsible for exercising reasonable care
----------------
in carrying out the provisions of this Agreement.

9. Reports. PMD shall be responsible for maintaining the records of Broker
-------
and general agent and their agents, representatives or sub-agents who are
licensed, registered and otherwise qualified to sell the Contracts;
calculating and furnishing the fees payable to Brokers or general agents;
and for furnishing periodic reports to PM Group [PLA] as to the sale of
Contracts made pursuant to this Agreement.

10. Records. PMD shall maintain and preserve such records as are required of
-------
it by applicable laws and regulations. The books, accounts and records of
PM Group [PLA], the Separate Accounts and PMD shall be maintained so as to
clearly and accurately disclose the nature
<PAGE>

and details of the transactions, including such accounting information as
necessary to support the reasonableness of the amounts to be paid by PM
Group [PLA] hereunder.

11. Compensation. For the services rendered and product development in the
------------
initial sales efforts and continuing obligations under this Agreement, PM
Group [PLA] shall pay PMD in the amounts set forth in Schedule A, which
schedule is incorporated herein. PM Group [PLA] shall arrange for the
payment of commissions, through PMD, to those Brokers and general agents
that sell Contracts under agreements entered into pursuant to Section 2,
hereof, and to wholesalers that solicit brokers and general agents to sell
Contracts under agreements entered into pursuant to Section 2, hereof, in
amounts as may be agreed to by PM Group [PLA] and PMD specified in such
written agreements.

12. Investigation and proceedings. PMD and PM Group [PLA] agree to cooperate
-----------------------------
fully in any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts distributed under this
Agreement. PMD further agrees to furnish regulatory authorities with any
information or reports in connection with such services which may be
requested in order to ascertain whether the operations of PM Group [PLA]
and the Separate Accounts are being conducted in a manner consistent with
applicable laws and regulations. PMD and PM Group [PLA] further agree to
cooperate fully in any securities regulatory investigation or proceeding
with respect to PM Group [PLA], PMD, their affiliates and their agents or
representatives to the extent that such investigation or proceeding is in
connection with Contracts distributed under this Agreement. Without
limiting the foregoing:

(a) PMD will be notified promptly of any customer complaint or notice of
any regulatory investigation or proceeding or judicial proceeding
received by PM Group [PLA] with respect to PMD or any agent,
representative, or sub-agent of a Broker or general agent or which may
affect PM Group's [PLA's] issuance of any Contract sold under this
Agreement; and

(b) PMD will promptly notify PM Group [PLA] of any customer complaint or
notice of any regulatory investigation or proceeding received by PMD
or its affiliates with respect to PMD or any agent, representative, or
sub-agent of a Broker or general agent in connection with any Contract
distributed under this Agreement or any activity in connection with
any such Contract.

In the case of a meritorious customer complaint, PMD and PM Group [PLA]
will cooperate in investigating such complaint and any response will be
sent to the other party to this Agreement for approval not less than five
business days prior to its being sent to the customer or regulatory
authority, except that if a more prompt response is required, the proposed
response shall be communicated by telephone or telegraph.

13. Indemnification. PM Group [PLA] hereby agrees to indemnify and hold
---------------
harmless PMD and its officers and directors, and employees for any expenses
(including legal expenses), losses, claims, damages, or liabilities
incurred by reason of any untrue or alleged untrue statement
<PAGE>

or representation of a material fact or any omission or alleged omission to
state a material fact required to be stated to make other statements not
misleading, if made in reliance on any prospectus, registration statement,
post-effective amendment thereof, or sales materials supplied or approved
by PM Group [PLA] or the Separate Accounts. PM Group [PLA] shall reimburse
each such person for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, liability,
damage, or claim. However, in no case shall PM Group [PLA] be required to
indemnify for any expenses, losses, claims, damages, or liabilities which
have resulted from the willful misfeasance, bad faith, negligence,
misconduct, or wrongful act of PMD.

PMD hereby agrees to indemnify and hold harmless PM Group [PLA], its
officers, directors, and employees, and the Separate Accounts for any
expenses, losses, claims, damages, or liabilities arising out of or based
upon any of the following in connection with the offer or sale of the
contracts: 1) except for such statements made in reliance on any
prospectus, registration statement or sales material supplied or approved
by PM Group [PLA] or the Separate Accounts, any untrue or alleged untrue
statement of representation made; 2) any failure to deliver a currently
effective prospectus; 3) the use of any unauthorized sales literature by
any officer, employee, agent, or sub-agent of PMD, Broker or general agent;
or 4) any willful misfeasance, bad faith, negligence, misconduct or
wrongful act. PMD shall reimburse each such person for any legal or other
expenses reasonably incurred in connection with investigating or defending
any such loss, liability, damage, or claim.

Promptly after receipt by a party entitled to indemnification ("indemnified
party") of notice of the commencement of any action, if a claim for
indemnification in respect thereof is to be made against PM Group [PLA] or
PMD ("indemnifying party") such indemnified party will notify indemnifying
party in writing of the commencement thereof, but failure to notify the
indemnifying party of any claim shall not relieve it from any liability
which it may have to the person against whom such action is brought
otherwise than on account of this agreement contained in this Section 13.
The indemnifying party will be entitled to participate in the defense of
the indemnified party and such participation will not relieve such
indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses incurred by such indemnified party in
defending himself.

14. Agent of PM Group [PLA] or Separate Accounts. Any person, even though also
--------------------------------------------
an officer, director, employee, or agent of PMD, who may be or become an
officer, director, employee, or agent of PM Group [PLA] or the Separate
Accounts shall be deemed when rendering services to PM Group [PLA] or the
Separate Accounts or acting in any business of PM Group [PLA] or the
Separate Accounts, to be rendering such services to or acting solely for PM
Group [PLA] or the Separate Accounts and not as an officer, director,
employee, or agent or one under the control or direction of PMD even
thought paid by PMD. Likewise, any person even though also an officer,
director, employee, or agent of PM Group [PLA] or the Separate Accounts,
who may be or become an officer, director, employee, or agent of PMD shall
be deemed, when rendering services to PMD or acting in any business of PMD,
to be rendering such services to or acting solely for PMD and not as an
officer, director,
<PAGE>

employee, or agent or one under the control or direction of PM Group [PLA]
or the Separate Accounts even though paid by PM Group [PLA] or the Separate
Accounts.

15. Books and Records. It is expressly understood and agreed that all
-----------------
documents, reports, records, books, files and other materials relating to
this Agreement and the services to be performed hereunder shall be the sole
property of PM Group [PLA] and the Separate Accounts and that such property
shall be held by PMD as agent, during the effective term of this Agreement.
This material shall be delivered to PM Group [PLA] upon the termination of
this Agreement free from any claim or retention of rights by PMD. During
the term of this Agreement and for a period of three years from the date of
termination of this Agreement, PMD will not disclose or use any records or
information and will regard and preserve as confidential all information
related to the business of PM Group [PLA] or the Separate Accounts that may
be obtained by PMD from any source as a result of this Agreement and will
disclose such information only if PM Group [PLA] or the Separate Accounts
has authorized such disclosure, or if such disclosure is expressly required
by applicable federal or state regulatory authorities. PMD further
acknowledges and agrees that, in the event of a breach or threatened breach
by it of the provisions of this article, PM Group [PLA] will have no
adequate remedy in moneys or damages and, accordingly, PM Group [PLA] shall
be entitled in its discretion to seek an injunction against such breach.
However, no specification in this Agreement of a specific legal or
equitable remedy shall be construed as a waiver or prohibition against any
other legal or equitable remedy in the event of a breach of a provision of
this Agreement.

16. Employees. PMD will not employ, except with the prior written approval of
---------
the Commissioner of Insurance of the state of Arizona, in any material
connection with the handling of the Separate Accounts' assets any person
who, to the knowledge of PMD:

(a) in the last 10 years has been convicted of any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion,
or misappropriation of funds or securities, or involving violations of
Sections 1341, 1342, or 1343 of Title 18, United States Code; or

(b) within the last 10 years has been found by any state regulatory
authority to have violated or has acknowledged violation of any
provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or

(c) within the last 10 years has been found by any federal or state
regulatory authorities to have violated or have acknowledged violation
of any provision of federal or state securities laws involving fraud,
deceit, or knowing misrepresentation.

17. Termination. This Agreement shall terminate automatically upon its
-----------
assignment without the prior written consent of both parties. This
Agreement may be terminated at any time, for any reason, by either party on
60 days' written notice to the other party, without the payment of any
penalty. Upon termination of this Agreement, all authorizations, rights
and obligations
<PAGE>

shall cease except the obligation to settle accounts hereunder, including
commissions on premiums subsequently received for Contracts in effect at
time of termination, and the agreements contained in Sections 12 and 13
hereof.

18. Regulations. This Agreement shall be subject to the provisions of the 1940
-----------
Act and the Securities Exchange Act and the rules, regulations and rulings
thereunder, and of the applicable rules and regulations of the NASD, and
applicable state insurance law and other applicable law, from time to time
in effect, and the terms hereof shall be interpreted and construed in
accordance therewith.

19. Independent Contractor. PMD shall act as an independent contractor and
----------------------
nothing herein contained shall constitute PMD or its agents, officers or
employees as agents, officers, or employees of PM Group [PLA] in connection
with the sale of the Contracts.

20. Notices. Notices of any kind to be given to PMD by PM Group [PLA] or the
-------
Separate Accounts shall be in writing and shall be duly given if mailed,
first class postage prepaid, or delivered to PMD at 700 Newport Center
Drive, Newport Beach, California 92660, or at such other address or to such
individual as shall be specified by PMD. Notices of any kind to be given to
PM Group [PLA] or the Separate Accounts shall be in writing and shall be
duly given if mailed, first class postage prepaid, or delivered to them at
700 Newport Center Drive, Newport Beach, California 92660, or at such other
address or to such individual as shall be specified by PM Group [PLA].

If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.

21. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with and governed by the laws of the State of Arizona.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]

Attest: By:
- --------------------------------- ---------------------------------
Name: Name:
Title:

PACIFIC MUTUAL DISTRIBUTORS, INC.

Attest: By:
- --------------------------------- ---------------------------------
Name: Name:
Title:
<PAGE>

EXHIBIT A

PACIFIC SELECT EXEC SEPARATE ACCOUNT
SEPARATE ACCOUNT A
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to be executed
by their Officers designated below on this ____ day of ____________, 1998.

PACIFIC MUTUAL DISTRIBUTORS, INC.

Attest: By:
- ------------------------------------- --------------------------------
Name: Name:
Title: President

PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]

Attest: By:
- ------------------------------------- --------------------------------
Name: Name:
Title: President

<PAGE>

EXHIBIT 99.3(b)

Form of Selling Agreement between PM Group, PMD and various Broker-Dealers.
<PAGE>

DRAFT

PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]
VARIABLE CONTRACT SELLING AGREEMENT

This Agreement ("Agreement") is made as of _______________________, 19__ by
and among PM GROUP LIFE INSURANCE COMPANY ("PM Group") [PACIFIC LIFE & ANNUITY
COMPANY ("PLA")], PACIFIC MUTUAL DISTRIBUTORS, INC. ("Distributor"), a
broker/dealer registered with the Securities and Exchange Commission ("SEC")
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"),
and a member of the National Association of Securities Dealers, Inc. ("NASD"),
___________________________________________________________ ("Broker/Dealer"),
and each undersigned agency (jointly and severally referred to herein as
"Agency"); Broker/Dealer and Agency jointly and severally hereinafter referred
to collectively as "Selling Entities".

This Agreement is for the purpose of providing for the distribution of
certain variable life insurance policies and/or annuity contracts set forth in
Schedule A hereto and of any successor additional SEC registered insurance
products (as discussed in Paragraph [3] of this Agreement) issued by PM Group
[PLA] and distributed by Distributor through representatives who are both (a)
state insurance licensed and appointed agents of PM Group [PLA] and associated
with the Agency and (b) NASD registered representatives of Broker/Dealer who are
appropriately licensed both with the NASD and with the relevant states. The
variable life insurance and/or annuity contracts set forth in Schedule A hereto,
as such Schedule may be amended and/or restated from time to time to include any
successor or additional SEC registered insurance products, and together with any
riders to such contracts, are referred to collectively herein as the
"Contracts".

1. APPOINTMENT

In consideration of the mutual promises and covenants contained in this
Agreement, PM Group [PLA] and Distributor appoint Broker/Dealer and those
persons associated with Agency who are NASD registered representatives of
Broker/Dealer and state insurance licensed agents of PM Group [PLA] to solicit
and procure applications for the Contracts.

These appointments are not deemed to be exclusive in any manner and extend
only to those jurisdictions, set forth in Schedule B hereto as such Schedule B
may be amended from time to time by PM Group [PLA] in its sole discretion, where
the Contracts specified in such Schedule B have been approved for sale.

From time to time, PM Group [PLA] will provide Selling Entities with
information regarding the jurisdictions in which PM Group [PLA] is authorized to
solicit applications for the Contracts and any limitations on the availability
of such Contracts in any jurisdiction.

2. RESPONSIBILITIES

Broker/Dealer is authorized to collect the premium on the Contracts and
must remit such premiums to PM Group [PLA] in the manner set forth in the
applicable Compensation Schedule set forth in one of the Schedule Ds. Contract
applications shall be taken only on preprinted, state-appropriate application
forms supplied by PM Group [PLA]. All completed applications, supporting
documents and payments are the sole property of PM Group [PLA] and must be
promptly delivered to PM Group [PLA]. All applications are subject to
acceptance by PM Group [PLA] at its sole discretion.

3. NEW PRODUCTS

Distributor may propose and PM Group [PLA] may issue additional or
successor products, in which event Broker/Dealer will be informed of the new
product and its related Compensation Schedule. If Broker/Dealer does not agree
to distribute such new product(s), it must notify PM Group [PLA] in writing
within 30 days of receipt of the Compensation Schedule for such new product(s).
If Broker/Dealer does not indicate disapproval of the new product(s) or the
terms contained in its related Compensation Schedule, Broker/Dealer will be
deemed to have thereby agreed (a) to distribute such new product(s) and agreed
to its related Compensation Schedule, which shall be attached to and made a part
of this Agreement as an amendment or addendum to the applicable Schedule D, or
as

1
<PAGE>

a new Schedule D hereto, and (b) to the amendment of Schedules A and B to this
Agreement to name such new product(s) and to identify where their offer and sale
has been approved.

4. SUBAGENTS

Agency is authorized to appoint Subagents to solicit sales of the Contracts
("Subagents"); provided, however, that PM Group [PLA] shall have the right in
its sole discretion to terminate the appointment of any Subagent upon notice
from PM Group [PLA] to Agency. Agency warrants that no Subagent shall commence
solicitation nor aid, directly or indirectly, in the solicitation of any
application for any Contract unless, at the time of such solicitation or aid,
such Subagent is appropriately licensed for such product under applicable
insurance laws and is an NASD registered representative of Broker/Dealer.

Selling Entities each represent that they have, for each Subagent,
fulfilled all requirements set forth in the form of general letter of
recommendation set forth in Schedule C hereto; and agree, upon reasonable
request by PM Group [PLA], to furnish proof of such fulfillment as PM Group
[PLA] may require.

5. SALES MATERIAL

Neither Selling Entities nor any of their respective Subagents, officers,
directors, employees, affiliates, representatives or agents shall utilize in
their marketing efforts for the Contracts any written brochure, prospectus,
descriptive literature, printed and published material, audio-visual material or
standard letters; provided, however, that they may: (a) use material that has
been provided preprinted by PM Group [PLA] or Distributor, and (b) use material,
the use of which PM Group [PLA] or Distributor has specifically approved, in
writing, prior to such use. In order for PM Group [PLA] or Distributor to
review and approve materials not produced by PM Group [PLA] in accordance with
clause (b) above, Broker/Dealer must provide PM Group [PLA] and Distributor with
evidence that any material proposed to be used was filed with the NASD in
accordance with applicable rules and copies of correspondence with the NASD
relating to the proposed material.

6. RECORDS

In accordance with the requirements of federal and state laws and rules of
applicable self-regulatory organizations as defined in the Exchange Act ("SROs")
including but limited to the Rules of Fair Practice of the NASD ("NASD Rules"),
Selling Entities shall maintain complete records concerning the sale of the
Contracts, information regarding the customs relating to the sale and/or
servicing of the Contracts, including the manner and extent of distribution of
any sales, marketing or other solicitation material, shall make such records and
files available to staff of PM Group [PLA] or Distributor at such times as PM
Group [PLA] or Distributor may reasonably request and shall make such material
available to personnel of state insurance departments, the NASD or other
regulatory agency, including the SEC, that have regulatory authority over PM
Group [PLA] or Distributor.

7. DELIVERY OF PROSPECTUSES

Selling Entities warrant that each solicitation, specifically including any
solicitation effected by any Subagent, will be made by use of a currently
effective prospectus, that a prospectus will be delivered concurrently with each
sales presentation and that no statements shall be made to a client superseding
or controverting any statement made in the prospectus. PM Group [PLA] and
Distributor shall furnish Selling Entities, at no cost to Selling Entities,
reasonable quantities of prospectuses and such other material as PM Group [PLA]
and Distributor deem necessary to aid in the solicitation of Contracts.

8. BROKER/DEALER REPRESENTATIONS

The representations, warranties and covenants of Broker/Dealer set forth in
this Agreement are continuous during the term of this Agreement and
Broker/Dealer agrees to notify each of PM Group [PLA] and Distributor
immediately, in writing, if, at any time during the course of this Agreement,
any of the representations, warranties or covenants set forth herein become
inaccurate or untrue of the facts related thereto.

Broker/Dealer represents, warrants and covenants that:

(a) Broker/Dealer is affiliated with Agency which is an entity properly
licensed under the insurance laws of the jurisdiction(s) in which Broker/Dealer
will act under this Agreement;

2
<PAGE>

(b) Broker/Dealer is registered with the SEC as a broker/dealer under the
Exchange Act, a member of the NASD and will, throughout the duration of this
Agreement, remain in compliance with the requirements of the NASD and of the
Exchange Act, including but not limited to laws requiring that the Broker/Dealer
and each of its Subagents/registered representatives be appropriately securities
registered, insurance licensed and appointed by PM Group [PLA], and such other
applicable federal or state laws;

(c) Broker/Dealer has established rules, procedures, and supervisory and
inspection techniques necessary to train and to supervise diligently the
activities of its NASD registered representatives who are state insurance
licensed and appointed agents of PM Group [PLA];

(d) Broker/Dealer shall ensure that no registered representative of
Broker/Dealer, including any Subagent, shall sell or recommend for sale any
Contract to any person without reasonable grounds for believing, after
appropriate inquiry, that the purchase of that Contract is suitable for that
person;

(e) Upon request by PM Group [PLA] and Distributor, Broker/Dealer will
furnish such appropriate records as are necessary to document the training,
licensing and diligent supervision required by subparagraph (b) above, and
client suitability determinations required by subparagraph (c) above.

9. AGENCY REPRESENTATIONS

The representations, warranties and covenants of Agency set forth in this
Agreement are continuous during the term of this Agreement and Agency agrees to
notify each of PM Group [PLA] and Distributor immediately, in writing, if, at
any time during the course of this Agreement, any of the representations,
warranties or covenants set forth herein become inaccurate or untrue of the
facts related thereto.

Agency represents, warrants and covenants that it will, and will cause each
Subagent to, comply fully with the requirements of state insurance law and
applicable federal laws, including but not limited to assuring appropriate state
insurance licensing and appointment by PM Group [PLA], and will establish rules
and procedures necessary to supervise diligently the activities of licensed and
appointed agents of PM Group [PLA] associated with Agency. Upon request by PM
Group [PLA] or Distributor, Agency will furnish such appropriate records as are
necessary to document such diligent supervision.

10. PM GROUP [PLA] REPRESENTATIONS

PM Group [PLA] represents that the prospectus(es) and registration
statement(s) relating to the Contracts that are and shall be in effect from time
to time contain no untrue statements of material fact and do not omit to state
material facts, the omission of which makes any statement contained in such
prospectus(es) and registration statement(s) misleading.

11. COMPENSATION

11.1 PM Group [PLA], through Distributor, will remit to Broker/Dealer or
Agency compensation as set forth in the applicable Schedule D hereto, which
payments or termination thereof shall be governed by the administrative rules
established by PM Group [PLA] in its sole discretion. Selling Entities shall
pay all Subagents. PM Group [PLA] reserves the right not to pay compensation on
a Contract, the premium for which is paid in whole or in part by the loan or
surrender value of any other life insurance policy or annuity contract issued by
PM Group [PLA].

11.2 PM Group [PLA] may offset, against any claim for commission and any
other compensation payable to Broker/Dealer or Agency under this Agreement, any
existing or future indebtedness of, respectively, Broker/Dealer or Agency,
whether fixed or contingent, whether such indebtedness arises under this
Agreement or otherwise. Such indebtedness shall constitute a first lien against
any such compensation. Neither Broker/Dealer nor Agency may offset, against any
such indebtedness, any compensation accruing under this Agreement.

12. COMPLAINTS AND INVESTIGATIONS

PM Group [PLA], Distributor, Broker/Dealer and Agency agree to cooperate
fully in any insurance or securities regulatory investigation or proceeding or
judicial proceeding with respect to PM Group [PLA],

3
<PAGE>

Distributor, Broker/Dealer and/or Agency, their affiliates and their agents or
representatives to the extent that such investigation or proceeding is in
connection with the Contracts distributed under this Agreement. Without limiting
the foregoing:

(a) Selling Entities shall promptly notify PM Group [PLA] and Distributor
of any complaint or comment regarding the Contracts and/or any allegation that
Selling Entities or any of its Subagents/representatives violated any law,
regulation or rule in soliciting applications for or servicing the Contracts.
Selling Entities shall promptly investigate such complaint or allegation, take
appropriate remedial measures and notify PM Group [PLA] and Distributor of same.
Selling Entities shall provide PM Group [PLA] and Distributor with full details
of and correspondence relating to any of the foregoing, including copies of all
legal documents pertaining thereto.

(b) Selling Entities shall cooperate fully with PM Group [PLA] and
Distributor in any regulatory proceeding or judicial proceeding involving the
solicitation of applications for or the servicing of Contracts by the Selling
Entities or any of their representatives.

13. INDEMNIFICATION

13.1 PM Group [PLA] and Distributor agree to indemnify and hold harmless
Selling Entities, their officers, directors, agents and employees, against any
and all losses, claims, damages, or liabilities to which they may become subject
under the Securities Act, the Exchange Act, the Investment Company Act of 1940,
or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission to state
a material fact required to be stated or necessary to make the statements made
not misleading in the registration statement for the Contracts or for the shares
of Pacific Select Fund (the "Fund") filed pursuant to the Securities Act, or any
prospectus included as a part thereof, as from time to time amended and
supplemented, or in any advertisement or sales literature provided by PM Group
[PLA] and Distributor.

13.2 Selling Entities agree to, jointly and severally, hold harmless and
indemnify PM Group [PLA] and Distributor and any of their respective affiliates,
employees, officers, agents and directors (collectively, "Indemnified Persons")
against any and all claims, liabilities and expenses (including, without
limitation, losses occasioned by any rescission of any Contract pursuant to a
"free look" provision or by any return of initial purchase payment in connection
with an incomplete application), including, without limitation, reasonable
attorneys' fees and expenses and any loss attributable to the investment
experience under a Contract, that any Indemnified Person may incur from
liabilities resulting or arising out of or based upon (a) any untrue or alleged
untrue statement other than statements contained in the registration statement
or prospectus relating to any Contract, (b) (i) any inaccurate or misleading, or
allegedly inaccurate or misleading sales material used in connection with any
marketing or solicitation relating to any Contract, other than sales material
provided preprinted by PM Group [PLA] or Distributor, and (ii) any use of any
sales material that either has not been specifically approved in writing by PM
Group [PLA] or Distributor or that, although previously approved in writing by
PM Group [PLA] or Distributor, has been disapproved, in writing by either of
them, for further use, or (c) any act or omission of a Subagent, director,
officer or employee of Selling Entities, including, without limitation, any
failure of Selling Entities or any Subagent to be registered as required as a
broker/dealer under the 1934 Act, or licensed in accordance with the rules of
any applicable SRO or insurance regulator.

14. FIDELITY BOND

Selling Entities each represent and covenant that all directors, officers,
employees and Subagents of Selling Entities licensed pursuant to this Agreement
or who have access to funds of PM Group [PLA] are and will continue to be
covered by a blanket fidelity bond including coverage for larceny, embezzlement
and other defalcation, issued by a bonding company rated A- or better from A.M.
Best or equivalent rating from another nationally recognized statistical rating
organization. This bond shall be maintained at Broker/Dealer's and/or Agency's
expense. Such bond shall be at least equivalent to the minimal coverage
required under the NASD Rules, and endorsed to extend coverage to life insurance
and annuity transactions. Selling Entities acknowledge that PM Group [PLA] may
require evidence that such coverage is in force, and Broker/Dealer or Agency
shall promptly give notice to PM Group [PLA] of any notice of cancellation or
change of coverage.

4
<PAGE>

Selling Entities each assign any proceeds received from the fidelity bond
company, error and omissions or other liability coverage, to PM Group [PLA] to
the extent of PM Group's [PLA's] loss due to activities covered by the bond. If
there is any deficiency, Selling Entities will promptly pay PM Group [PLA] the
amount of such deficiency on demand. Selling Entities each shall indemnify and
hold harmless PM Group [PLA] from any such deficiency and from the cost of
collection.

15. LIMITATIONS OF AUTHORITY

The Contract forms are the sole property of PM Group [PLA]. No person
other than PM Group [PLA] has the right or authority to: (i) make, alter or
discharge any policy, Contract, certificate, supplemental contract or form
issued by PM Group [PLA]; (ii) make, alter, modify or discharge any Contract;
(iii) waive or modify any provision with respect to any Contract or policy; (iv)
incur indebtedness or liability, or expend or contract for expenditure of any
funds on behalf of PM Group [PLA] or the Contracts; (v) extend the time for
payment of any premiums, bind PM Group [PLA] to reinstate any terminated
Contracts, or accept notes for payment of premiums; (vi) enter into any
proceeding in a court of law or before a regulatory agency in the name of or on
behalf of PM Group [PLA]; or (vii) institute or file any response to any legal
proceeding in connection with any matter pertaining to the Contracts on behalf
of PM Group [PLA] without the prior written consent of PM Group [PLA] (except
that if Selling Entities themselves are named as a party or parties in such
proceedings each named party may enter into legal proceedings on its own behalf
without the written consent of PM Group [PLA]).

16. GENERAL PROVISIONS

16.1 Waiver

Failure of any of the parties to insist promptly upon strict compliance
with any of the obligations of any other party under this Agreement will not be
deemed to constitute a waiver of the right to enforce strict compliance.

16.2 Independent Contractors

Selling Entities are each an independent contractor and not an employee or
subsidiary of PM Group [PLA] or Distributor. Nothing contained in this
Agreement or otherwise shall be deemed to make any registered representative of
Broker/Dealer or any Subagent appointed by Agency an employee or agent of PM
Group [PLA] or Distributor for tax or any other purposes. Neither PM Group
[PLA] nor Distributor shall have any responsibility for training or supervision
of any such Subagent or registered representative or of any other employee or
affiliate of any Selling Entities.

16.3 Independent Assignment

No assignment of this Agreement or of commissions or other payments under
this Agreement shall be valid without prior written consent of PM Group [PLA].
Any purported assignment in violation of this Paragraph 16.3 is void.

16.4 Notice

Any notice required or otherwise given pursuant to this Agreement may be
given electronically by facsimile or electronic mail (but not orally by
telephone) or by mail, postage paid, (including any express mail service),
transmitted to the last address communicated by the receiving party to the other
parties to this Agreement. The current address for mailing purposes of this
Agreement shall be set forth on the signature page.

16.5 Severability

To the extent this Agreement may be in conflict with any applicable law or
regulation, this Agreement shall be construed in a manner consistent with such
law or regulation. The invalidity or illegality of any provisions of this
Agreement shall not be deemed to affect the validity or legality of any other
provision of this Agreement.

16.6 Amendment

Except as expressly provided herein, this Agreement may be amended only by
a writing signed by all parties. The Schedules hereto may be amended by PM
Group [PLA] or Distributor upon 10 days' written notice to Broker/Dealer and
Agency which shall be deemed received the earlier of actual receipt or 10 days
after mailing or transmission. The submission of an application for the
Contracts by Broker/Dealer or Agency after the date of any

5
<PAGE>

such amendment shall constitute such party's agreement to such amendment. No
amendment will impair the right to receive commissions as accrued with respect
to Contracts issued and applications procured prior to the amendment.

16.7 Termination

This Agreement may be terminated by any party for any reason upon 10 days'
prior written notice. It may be terminated, for cause, by any party
immediately. Termination of this Agreement shall not impair the right to
receive commissions accrued with respect to applications procured prior to the
termination except as otherwise specifically provided in the applicable Schedule
D hereto.

16.8 Survival

All representations and warranties made in or pursuant to this Agreement
and the provisions of Paragraphs 11, 12 and 14.10 of this Agreement shall
survive the termination of this Agreement.

16.9 Governing Law

This Agreement shall be construed in accordance with the laws of the State
of California, without giving effect to the conflict of law provisions thereof.
Broker/Dealer and Agency consent to the jurisdiction of the courts of the State
of California and to the jurisdiction of federal courts located within
California.

16.10 Proprietary Information

Selling Entities acknowledge that information pertaining to any Distributor
program or service, including names of Contract owners, is proprietary in nature
and belongs exclusively to Distributor. Selling Entities agree that they will
not disclose any information concerning Distributor programs or services to any
person, for consideration or otherwise, unless (a) PM Group [PLA] or Distributor
has authorized such disclosure in writing or (b) if such disclosure is expressly
required by state or federal regulatory authorities and PM Group [PLA] and
Distributor have received notice, in writing, of such disclosure. Selling
Entities agree further that, following termination of this Agreement for any
reason, they will not solicit or otherwise contact any Contract owner for any
reason except as expressly agreed in writing by Distributor or PM Group [PLA].

16.11 Entire Agreement

This Agreement shall constitute the entire agreement among the parties and
supersedes all prior agreements and understandings, whether written or verbal.

By signing below, each of the undersigned agrees to have read and be bound
by the terms and conditions of this Agreement. Each of the undersigned
acknowledges receipt of a copy of this Agreement.

PM GROUP LIFE INSURANCE COMPANY [PACIFIC LIFE & ANNUITY COMPANY]
700 Newport Center Drive
Newport Beach, CA 92660