<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
(formerly Life of Virginia Separate Account I)
Financial Statements
Year ended December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Table of Contents
December 31, 1999
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities....................................... F-2
Statements of Operations................................................... F-3
Statements of Changes in Net Assets........................................ F-5
Notes to Financial Statements.............................................. F-7
</TABLE>
<PAGE>
Independent Auditors' Report
Policyholders
GE Life & Annuity Separate Account I
and
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying statements of assets and liabilities of GE
Life & Annuity Separate Account I (the Account) (comprising the GE Investments
Funds, Inc.--S&P 500 Index, Money Market, Total Return and Income Funds) as of
December 31, 1999 and the related statements of operations and changes in net
assets for the aforementioned funds and the GE Investments Funds, Inc.--
Government Securities Fund for each of the years or lesser periods in the
three-year period then ended. These financial statements are the
responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999,
by correspondence with the underlying mutual funds or their transfer agent. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
portfolios constituting GE Life & Annuity Separate Account I as of December
31, 1999 and the results of their operations and changes in their net assets
for each of the years or lesser periods in the three-year period then ended in
conformity with generally accepted accounting principles.
KPMG LLP
Richmond, Virginia
February 11, 2000
F-1
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------
Money Total
S&P 500 Market Return Income
Index Fund Fund Fund Fund
Assets ---------- ------- ------- ---------
<S> <C> <C> <C> <C>
Investment in GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (137,383 shares;
cost -- $2,330,745)..................... $3,860,472 -- -- --
Money Market Fund (103,007 shares;
cost -- $102,383)....................... -- 103,007 -- --
Total Return Fund (38,297 shares;
cost -- $510,450)....................... -- -- 607,392 --
Income Fund (103,793 shares;
cost -- $1,256,061)..................... -- -- -- 1,194,659
---------- ------- ------- ---------
Total assets............................. $3,860,472 103,007 607,392 1,194,659
========== ======= ======= =========
Liabilities
Accrued expenses payable to affiliate
(note 3)................................. 3,047 5,126 1,770 5,596
---------- ------- ------- ---------
Total liabilities........................ 3,047 5,126 1,770 5,596
---------- ------- ------- ---------
Net assets............................... 3,857,425 97,881 605,622 1,189,063
========== ======= ======= =========
Analysis of Net Assets
Attributable to:
Flexible premium variable life insurance
policyholders........................... $3,857,425 92,599 605,622 40,139
GE Life and Annuity Assurance Company.... -- 5,282 -- 1,148,924
---------- ------- ------- ---------
Net assets............................... $3,857,425 97,881 605,622 1,189,063
========== ======= ======= =========
Outstanding units attributable to
policyholders........................... 34,521 4,644 11,369 3,805
========== ======= ======= =========
Net asset value per unit................. $ 111.74 19.94 53.27 10.55
========== ======= ======= =========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Statements of Operations
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------
Government
Securities
S&P 500 Index Fund Fund
------------------------ ------------
Period from
January 1,
1997 to
Year ended December 31, December 11,
1999 1998 1997 1997
-------- ------- ------- ------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary dividends........... $ 27,543 29,478 34,439 --
Expenses -- Mortality and expense risk
charges
(note 3).............................. 18,999 15,812 13,073 275
-------- ------- ------- ------
Net investment income (expense)......... 8,544 13,666 21,366 (275)
-------- ------- ------- ------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss)............... 191,256 95,254 25,044 14,693
Unrealized appreciation (depreciation)
on investments........................ 439,776 565,867 576,234 52,703
Capital gain distribution.............. 38,036 104,514 40,429 --
-------- ------- ------- ------
Net realized and unrealized gain (loss)
on investments......................... 669,068 765,635 641,707 67,396
-------- ------- ------- ------
Increase (decrease) in net assets from
operations............................. $677,612 779,301 663,073 67,121
======== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
--------------------------------------------
Money Market Fund Total Return Fund
----------------------- --------------------
Year ended December Year ended December
31, 31,
1999 1998 1997 1999 1998 1997
------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary dividends.... $5,178 60,571 93,738 12,228 12,450 12,791
Expenses -- Mortality and
expense risk charges
(note 3)....................... 495 576 413 2,943 2,625 2,387
------ ------- ------ ------ ------ ------
Net investment income (expense).. 4,683 59,995 93,325 9,285 9,825 10,404
------ ------- ------ ------ ------ ------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss)........ 437 35,355 243 9,449 4,570 9,612
Unrealized appreciation (depre-
ciation) on investments........ (437) (35,355) 4,052 36,330 49,885 2,077
Capital gain distribution....... -- -- -- 14,354 16,503 54,531
------ ------- ------ ------ ------ ------
Net realized and unrealized gain
(loss) on investments........... -- -- 4,295 60,133 70,958 66,220
------ ------- ------ ------ ------ ------
Increase (decrease) in net assets
from operations................. $4,683 59,995 97,620 69,418 80,783 76,624
====== ======= ====== ====== ====== ======
</TABLE>
F-3
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Statements of Operations -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(continued)
-------------------------------------
Income Fund
-------------------------------------
Period from
December 12,
1997 to
Year ended December 31, December 31,
1999 1998 1997
------------ -----------------------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary dividends........... $ 62,256 57,521 2,969
Expenses -- Mortality and expense risk
charges (note 3)...................... 206 210 13
------------ ---------- -----
Net investment income (expense)......... 62,050 57,311 2,956
------------ ---------- -----
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss)............... 31 592 (144)
Unrealized appreciation (depreciation)
on investments........................ (81,499) 20,898 (800)
Capital gain distribution.............. 1,925 10,151 --
------------ ---------- -----
Net realized and unrealized gain (loss)
on investments......................... (79,543) 31,641 (944)
------------ ---------- -----
Increase (decrease) in net assets from
operations............................. $ (17,493) 88,952 2,012
============ ========== =====
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------
S&P 500 Government
Index Fund Securities Fund
-------------------------------- ---------------
Period from
January 1, 1997
Year ended December 31, to December 11,
1999 1998 1997 1997
---------- --------- --------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense).................. $ 8,544 13,666 21,366 (275)
Net realized gain (loss).... 191,256 95,254 25,044 14,693
Unrealized appreciation
(depreciation) on
investments................ 439,776 565,867 576,234 52,703
Capital gain distribution... 38,036 104,514 40,429 --
---------- --------- --------- ----------
Increase (decrease) in net
assets from operations...... 677,612 779,301 663,073 67,121
---------- --------- --------- ----------
From capital transactions:
Net premiums................ 129,972 130,672 135,730 5,808
Loan interest............... (3,555) (3,856) (4,224) (75)
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits............. (57,237) (7,089) (1,896) --
Surrenders................. (112,781) (93,428) (28,932) (2,083)
Loans...................... (136,455) 974 (803) 467
Cost of insurance
(note 3).................. (146,949) (138,225) (126,732) (4,109)
Transfer gain (loss) and
transfer fees............. (7,100) (781) (3,324) 1,728
Capital contribution (with-
drawal)................... -- -- -- (1,077,814)
Transfers (to) from the
Guarantee Account......... -- 106 -- --
Interfund transfers.......... (31,561) 283 (25,477) (65,455)
---------- --------- --------- ----------
Increase (decrease) in net
assets from capital
transactions................ (365,666) (111,344) (55,658) (1,141,533)
---------- --------- --------- ----------
Increase (decrease) in net
assets...................... 311,946 667,957 607,415 (1,074,412)
Net assets at beginning of
year........................ 3,545,479 2,877,522 2,270,107 1,074,412
---------- --------- --------- ----------
Net assets at end of year.... $3,857,425 3,545,479 2,877,522 --
========== ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
---------------------------------------------------------
Money Market Fund Total Return Fund
------------------------------ -------------------------
Year ended December 31, Year ended December 31,
1999 1998 1997 1999 1998 1997
------- ---------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. 4,683 59,995 93,325 9,285 9,825 10,404
Net realized gain
(loss)................ 437 35,355 243 9,449 4,570 9,612
Unrealized appreciation
(depreciation) on
investments........... (437) (35,355) 4,052 36,330 49,885 2,077
Capital gain
distribution.......... -- -- -- 14,354 16,503 54,531
------- ---------- --------- ------- ------- -------
Increase (decrease) in
net assets from
operations............. 4,683 59,995 97,620 69,418 80,783 76,624
------- ---------- --------- ------- ------- -------
From capital
transactions:
Net premiums........... 4,475 5,705 6,957 32,651 34,420 34,821
Loan interest.......... (94) (81) (22) (1,249) (1,133) (1,356)
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits........ -- -- -- -- -- (1,883)
Surrenders............ (46,085) (3,904) -- (11,297) (4,083) (30,483)
Loans................. 78 (120) (74) (6,933) 1,137 (6,398)
Cost of insurance
(note 3)............. (6,791) (11,292) (10,681) (39,997) (37,929) (35,165)
Transfer gain (loss)
and transfer fees.... (265) (6,072) 17,954 (320) (85) (1,218)
Capital contribution
(withdrawal)......... -- (1,918,081) -- -- -- --
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 32,065 18,769 30,083 336 -- 2,778
------- ---------- --------- ------- ------- -------
Increase (decrease) in
net assets from capital
transactions........... (16,617) (1,915,076) 44,217 (26,809) (7,673) (38,904)
------- ---------- --------- ------- ------- -------
Increase (decrease) in
net assets............. (11,934) (1,855,081) 141,837 42,609 73,110 37,720
Net assets at beginning
of year................ 109,815 1,964,896 1,823,059 563,013 489,903 452,183
------- ---------- --------- ------- ------- -------
Net assets at end of
year................... 97,881 109,815 1,964,896 605,622 563,013 489,903
======= ========== ========= ======= ======= =======
</TABLE>
F-5
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Statements of Changes in Net Assets -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(continued)
-------------------------------
Income Fund
-------------------------------
Year ended December 31,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense).............. $ 62,050 57,311 2,956
Net realized gain (loss)..................... 31 592 (144)
Unrealized appreciation (depreciation) on
investments................................. (81,499) 20,898 (800)
Capital gain distribution.................... 1,925 10,151 --
--------- --------- ---------
Increase (decrease) in net assets from
operations................................... (17,493) 88,952 2,012
--------- --------- ---------
From capital transactions:
Net premiums................................. 4,961 5,397 229
Loan interest................................ (167) (149) 12
Transfers (to) from the general account of
GE Life and Annuity:
Death benefits.............................. -- -- --
Surrenders.................................. (850) (2,195) --
Loans....................................... 103 (316) --
Cost of insurance (note 3).................. (3,706) (3,628) (161)
Transfer gain (loss) and transfer fees...... 83 25 (39)
Capital contribution (withdrawal)........... -- -- 1,077,814
Transfers (to) from the Guarantee Account..... -- -- --
Interfund transfers........................... (840) (19,052) 58,071
--------- --------- ---------
Increase (decrease) in net assets from capital
transactions................................. (416) (19,918) 1,135,926
--------- --------- ---------
Increase (decrease) in net assets............. (17,909) 69,034 1,137,938
Net assets at beginning of year............... 1,206,972 1,137,938 --
--------- --------- ---------
Net assets at end of year..................... 1,189,063 1,206,972 1,137,938
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Notes to Financial Statements
December 31, 1999
(1) Description of Entity
GE Life & Annuity Separate Account I, formerly Life of Virginia Separate
Account I, (the Account) is a separate investment account established in 1984
by GE Life and Annuity Assurance Company (GE Life & Annuity), formerly The
Life Insurance Company of Virginia, under the laws of the Commonwealth of
Virginia. The Account operates as a unit investment trust under the Investment
Company Act of 1940. The Account is used to fund certain benefits for flexible
premium variable life insurance policies issued by GE Life & Annuity prior to
December 31, 1988. GE Life and Annuity Assurance Company is a stock life
insurance company operating under a charter granted by the Commonwealth of
Virginia on March 21, 1871. A majority of the capital stock of GE Life &
Annuity is owned by General Electric Capital Assurance Company. General
Electric Capital Assurance Company and its parent, GE Financial Assurance
Holdings, Inc. are indirect, wholly-owned subsidiaries of General Electric
Capital Corporation (GE Capital). GE Capital, a diversified financial services
company, is a wholly-owned subsidiary of General Electric Company (GE), a New
York corporation.
On December 12, 1997, the Account added the GE Investments Funds, Inc.--
Income Fund as a new investment subdivision and made a substitution of shares
of the GE Investments Funds, Inc.--Government Securities for shares of the GE
Investments Funds, Inc.--Income Fund. The foregoing substitution was carried
out pursuant to an order of the Securities and Exchange Commission
(Commission) issued on December 11, 1997, with the approval of any necessary
department of insurance.
(2) Summary of Significant Accounting Policies
(a) Investments
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective funds. Purchases and sales of
investments are recorded on the trade date and income distributions are
recorded on the ex-dividend date. Realized gains and losses on investments are
determined on the average cost basis. The units and unit values are disclosed
as of the last business day in the applicable year.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the year ended December 31, 1999 were:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund Acquired Shares Sold
- ---- -------- -----------
<S> <C> <C>
GE Investments Funds, Inc.:
S&P 500 Index Fund........................................ $210,652 530,527
Money Market Fund......................................... 42,058 53,789
Total Return Fund......................................... 62,609 65,738
Income Fund............................................... 69,467 6,003
</TABLE>
F-7
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(b) Capital Transactions
The increase (decrease) in outstanding units from capital transactions for
the years or lesser periods ended December 31, 1999, 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------------
S&P 500 Government Money Total
Index Securities Market Return Income
Fund Fund Fund Fund Fund
------- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31,
1996............................... 40,336 2,615 3,463 13,084 --
------ ------ ------ ------ ------
Net premiums....................... 2,340 231 396 931 23
Loan interest...................... (73) (3) (1) (36) 1
Transfers (to) from the general
account of
GE Life and Annuity:
Death benefits.................... (33) -- -- (50) --
Surrenders........................ (499) (83) -- (816) --
Loans............................. (14) 19 (4) (171) --
Cost of insurance................. (2,184) (164) (608) (941) (16)
Interfund transfers................ (439) (2,615) 1,712 74 5,807
------ ------ ------ ------ ------
Net increase (decrease) in units
from capital transactions.......... (902) (2,615) 1,495 (1,009) 5,815
------ ------ ------ ------ ------
Units outstanding at December 31,
1997............................... 39,434 -- 4,958 12,075 5,815
------ ------ ------ ------ ------
Net premiums....................... 1,603 -- 336 743 531
Loan interest...................... (47) -- (5) (24) (15)
Transfers (to) from the general
account of
GE Life and Annuity:
Death benefits.................... (87) -- -- -- --
Surrenders........................ (1,146) -- (230) (88) (216)
Loans............................. 12 -- (7) 25 (31)
Cost of insurance................. (1,695) -- (664) (820) (357)
Transfers (to) from the Guarantee
Account.......................... 1 -- -- -- --
Interfund transfers................ 3 -- 1,104 -- (1,877)
------ ------ ------ ------ ------
Net increase (decrease) in units
from capital transactions.......... (1,356) -- 534 (164) (1,965)
------ ------ ------ ------ ------
Units outstanding at December 31,
1998............................... 38,078 -- 5,492 11,911 3,850
------ ------ ------ ------ ------
From capital transactions:
Net premiums....................... 1,290 -- 232 668 449
Loan interest...................... (35) -- (5) (26) (15)
Transfers (to) from the general
account of
GE Life and Annuity:
Death benefits.................... (568) -- -- -- --
Surrenders........................ (1,119) -- (2,390) (231) (77)
Loans............................. (1,354) -- 4 (142) 9
Cost of insurance................. (1,458) -- (352) (818) (335)
Interfund transfers................ (313) -- 1,663 7 (76)
------ ------ ------ ------ ------
Net increase (decrease) in units
from capital transactions......... (3,557) -- (848) (542) (45)
------ ------ ------ ------ ------
Units outstanding at December 31,
1999.............................. 34,521 -- 4,644 11,369 3,805
====== ====== ====== ====== ======
</TABLE>
F-8
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT I
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(c) Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of GE Life & Annuity. GE Life & Annuity is
taxed as a life insurance company under the Internal Revenue Code (the Code).
GE Life & Annuity is included in the General Electric Capital Assurance
Company consolidated federal income tax return. Under existing federal income
tax law, no taxes are payable on the investment income or on the capital gains
of the Account.
(d) Use of Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions
that affect amounts and disclosures reported therein. Actual results could
differ from those estimates.
(3) Related Party Transactions
Net premiums transferred from GE Life & Annuity to the Account represent
gross premiums recorded by GE Life & Annuity on its flexible premium variable
life insurance policies, less deductions retained as compensation for certain
distribution expenses and premium taxes. A charge equal to the lesser of $25
or 2% of the amount paid on a partial surrender is made to compensate GE Life
& Annuity for the costs incurred in connection with accomplishing the
surrender.
A charge based on the policy specified amount of insurance, death benefit
option, cash values, duration, the insured's sex, issue age and risk class is
deducted from the policy cash values each month to compensate GE Life &
Annuity for the cost of insurance and any benefits added by rider. In
addition, GE Life & Annuity charges the Account for the mortality and expense
(M&E) risk that GE Life & Annuity assumes. This M&E charge is deducted daily
at an effective annual rate of .50% of the net assets of the Account.
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company.
Capital Brokerage Corporation, an affiliate of GE Life & Annuity, is a
Washington corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation serves
as principal underwriter for variable life insurance policies issued by GE
Life & Annuity.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid
an investment advisory fee by the Fund based on the average daily net assets
at an effective annual rate of .35% for the S&P 500 Index Fund, and .50% for
the Money Market, Total Return, and Income Funds. Prior to May 1, 1997, Aon
Advisors, Inc. served as investment advisor to the Fund and was subject to the
same compensation arrangement as GE Investment Management Incorporated.
Certain officers and directors of GE Life & Annuity are also officers and
directors of Capital Brokerage Corporation.
F-9
