As filed with the Securities and Exchange Commission on January , 1999.
File No. 333-62695
File No. 811-05343
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 X
Pre-Effective Amendment No.2
Post-Effective Amendment No.
For Registration Under the Investment Company Act of 1940 X
Amendment No. 36
GE Life & Annuity Separate Account 4
(Exact Name of Registrant)
GE Life and Annuity Assurance Company
(Name of Depositor)
6610 W. Broad Street
Richmond, Virginia 23230
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (804) 281-6000
Patricia L. Dysart
Assistant Vice President and Associate General Counsel
GE Life and Annuity Assurance Company
6610 W. Broad Street
Richmond, Virginia 23230
(Name and address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-24104
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
Title of Securities Being Registered:
Interests in a Separate Account Under Flexible Premium Variable Annuity
Policies
Filing Fee: None
The Registrant hereby amends this Registration Statement on such 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.
<PAGE>
GE Life & Annuity Separate Account 4 Prospectus For
Flexible Premium Variable Deferred
Annuity Policy
Form P1152 1/99
Issued by: Home Office:
GE Life and Annuity Assurance Company 6610 West Broad Street
Richmond, Virginia 23230
Telephone: (804) 281-6000
This Prospectus describes an individual flexible premium variable deferred
annuity policy issued by GE Life and Annuity Assurance Company. Variable
annuities are long-term vehicles designed to provide retirement income.
Under the policy, you accumulate account value that you can use to buy
retirement income payments. The income payments can be variable or fixed in
amount. You pick the date when payments start. If the annuitant dies before
payments start, your beneficiary may receive a death benefit.
Generally, you do not pay current federal income tax on any growth in the policy
until you receive it. Under some qualified plans, an exclusion from your income
will be allowed generally equal to the amount of your contributions to the plan.
This may include contributions made by way of premium payments to this policy
when used in connection with such qualified plans.
The minimum amount you need to purchase the policy is $10,000.
Investments (premium payments), including the automatic bonus credits we provide
you, may accumulate account value on a variable or fixed basis, or both. If you
choose our variable option , we will invest your premium payments and bonus
credits in mutual fund ("Fund") portfolios. The portfolios are:
Janus Aspen Series:
Growth Portfolio, Aggressive Growth Portfolio, International Growth
Portfolio, Worldwide Growth Portfolio, Balanced Portfolio, Flexible
Income Portfolio, Capital Appreciation Portfolio
Variable Insurance Products Fund:
VIP Equity-Income Portfolio, VIP Overseas Portfolio, VIP Growth
Portfolio
Variable Insurance Products Fund II:
VIP II Asset Manager Portfolio, VIP II Contrafund Portfolio
Variable Insurance Products Fund III:
VIP III Growth & Income Portfolio, VIP III Growth Opportunities
Portfolio
GE Investments Funds, Inc.:
S&P 500 Index Fund, Money Market Fund, Total Return Fund, International
Equity Fund, Real Estate Securities Fund, Value Equity Fund, Income
Fund, U.S. Equity Fund
Oppenheimer Variable Account Funds:
Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer
Growth Fund, Oppenheimer High Income Fund, Oppenheimer Multiple
Strategies Fund
Federated Insurance Series:
Federated American Leaders Fund II, Federated Utility Fund II,
Federated High Income Bond Fund II
The Alger American Fund:
Alger American Growth Portfolio, Alger American Small Capitalization
Portfolio
Goldman Sachs Variable Insurance Trust:
Goldman Sachs Growth and Income Fund, Goldman Sachs Mid Cap Equity Fund
Salomon Brothers Variable Series Fund*
Salomon Investors Fund, Salomon Total Return Fund, Salomon Strategic Bond
Fund
*Not all of these portfolios may be available in all states or markets.
You bear the investment risk if you allocate your premium payments and bonus
credits to our variable option. Your account value will depend on the
performance of the portfolios.
If you choose our fixed option, your premium payments and bonus credits will
grow at a rate of at least 3%. We take the investment risk of premium payments
and bonus credits allocated to our fixed option. The fixed option may not be
available in all states.
<PAGE>
The Securities and Exchange Commission has not approved these securities or
determined if this Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Shares in the portfolios and interests in the policies are not deposits or
obligations of, or guaranteed or endorsed by, a bank, and the shares and
interests are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency; they are subject to
investment risks, including possible loss of principal.
This Prospectus details the information about the policy that you should know
before you buy a policy and make premium payments. You should also review the
prospectuses for the Funds and keep all prospectuses for future reference.
We filed a statement of additional information (SAI), dated ____ __, 1999,
concerning the policy with the Securities and Exchange Commission (SEC) and its
terms are made part of this Prospectus. If you would like a free copy, call us
at 1-800-352-9910. The SAI and other information about the policy is available
on the SEC's internet site at http://www.sec.gov. A table of contents for the
SAI appears on the last page of this Prospectus.
This Prospectus is dated ____ __, 1999
<PAGE>
Table of Contents
Page
Definitions...................................................................
Expense tables................................................................
Synopsis......................................................................
Condensed Financial Information...............................................
Investment Results............................................................
Financial Statements..........................................................
GE Life and Annuity Assurance Company.........................................
Account 4.....................................................................
The Guarantee Account.........................................................
Charges and Other Deductions..................................................
The Policy....................................................................
Income Payments...............................................................
Federal Tax Matters...........................................................
Voting Rights.................................................................
Requesting Payments...........................................................
Distribution of the Policies..................................................
Owner Questions...............................................................
Return Privilege..............................................................
State Regulation..............................................................
Records and Reports...........................................................
Other Information.............................................................
Year 2000 Readiness Disclosure................................................
Legal Matters.................................................................
Table of Contents for Statement of Additional Information.....................
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
<PAGE>
Definitions
We have tried to make this Prospectus as understandable for you as possible.
However, in explaining how the Policy works, we have had to use certain terms
that have special meanings. We define these terms below.
Account 4 -- GE Life & Annuity Separate Account 4, a separate investment account
we established to receive and invest premiums paid under the Policy and other
variable annuity policies we issue. We divide Account 4 into Investment
Subdivisions, each of which invests in a portfolio of the Funds.
Account Value -- The value of the Policy equal to the amount allocated to the
Investment Subdivisions of Account 4 and the Guarantee Account.
Accumulation Unit -- An accounting unit of measure we use in calculating the
Account Value in Account 4 before the Maturity Date.
Annuitant -- The Annuitant is the person you named in the Policy upon whose age
and, where appropriate, sex, we determine monthly income benefits.
Annuity Unit -- An accounting unit of measure we use in the calculation of the
amount of the second and each subsequent variable income payment.
Bonus Credit -- A bonus credit is the "enhanced premium amount" described in
your Policy. For qualifying Policies, it is an amount we will add to each
premium payment we receive. It is not considered a "premium payment" under the
Policy.
Code -- The Internal Revenue Code of 1986, as amended.
Company -- GE Life and Annuity Assurance Company. "We", "us" or "our" refers
to the Company.
Contingent Annuitant -- The person named by the Owner who at the death of the
Annuitant prior to the Maturity Date may become the Annuitant in certain
circumstances.
Death Benefit -- The benefit provided under a Policy upon the death of an
Annuitant prior to the Maturity Date.
Designated Beneficiary(ies) -- The person(s) designated in the Policy who is
alive (or in existence for non-natural designations) on the date of an Owner's,
Joint Owner's or Annuitant's death and who will be treated as the sole Owner of
the Policy following such a death.
General Account -- The assets of the Company that are not segregated in any of
the separate investment accounts of the Company.
Guarantee Account -- Part of our General Account that provides a Guaranteed
Interest Rate for a specified Guarantee Period. This account is not part of and
does not depend on the investment performance of Account 4.
Guarantee Amount - An allocation to the Guarantee Account.
Guarantee Period -- A specific period for which we agree to credit a particular
effective annual rate of interest.
Guaranteed Interest Rate -- The applicable effective annual rate of interest
that we will pay on a Guarantee Amount. The Guaranteed Interest Rate will be at
least three percent per year.
Maturity Date -- The date stated in the Policy on which income payments are
scheduled to commence, if the Annuitant is living on that date.
Owner -- The person or persons (in the case of Joint Owners) entitled to receive
income payments after the Maturity Date. The Owner also is entitled to the
ownership rights stated in the Policy during the lifetime of the Annuitant and
in any application. "You" or "your" refers to the Owner or Joint Owners.
Policy Date -- The date the Policy is issued and becomes effective. Your Policy
Date is shown in your Policy and is used to determine Policy years and
anniversaries.
<PAGE>
Surrender Value -- The Account Value less any applicable surrender charge,
premium tax, and optional benefit charges.
Valuation Day -- For each Investment Subdivision, each day on which the New York
Stock Exchange is open for business except for days that the Fund does not value
its shares.
Valuation Period -- The period between the close of business on a Valuation Day
and the close of business on the next succeeding Valuation Day.
<PAGE>
Expense Table
This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Policy. The table reflects expenses
of the Policy, of the Investment Subdivisions of Account 4, and of the
portfolios. For more complete descriptions of the various costs and expenses
involved, see Charges and Other Deductions in this Prospectus, and the Fund
prospectuses. Premium taxes may also be applicable, although they do not appear
in the table.
Owner transaction expenses:
The maximum surrender charge (as a percentage of premium payments
surrendered/withdrawn): 8%
We reduce the surrender charge percentage over time. In general, the later a
redemption occurs after a premium payment is surrendered or withdrawn, the lower
the surrender charge with respect to that surrender or withdrawal.
Transfer Charge: None*
Annual Expenses (as a percentage of Account Value):
Mortality and Expense Risk Charge 1.30%
Administrative Expense Charge .25%
-----
Total Annual Expenses 1.55%
Other Annual Expenses:
Annual Policy Maintenance Charge $25**
Maximum Guaranteed Minimum Death
Benefit Charge (as a percentage
of average benefit amount) .35%***
*We reserve the right to impose a fee of $10 per transfer.
**We do not assess this charge if your Account Value at the time the charge
is due is at least $10,000.
***If applicable.
<PAGE>
Fund Annual Expenses
Annual expenses of the portfolios of the Funds for the year ended December 31,
1997 (as a percentage of each portfolio's average net assets):
<TABLE>
<CAPTION>
Management Fees Other Expenses
(after fee (after
waiver reimbursement- Total Annual
Fund as applicable) as applicable) Expense
- ---- -------------- -------------- -------
<S> <C> <C> <C>
Balanced
Janus Aspen Balanced Portfolio(1) 0.76% 0.07% 0.83%
VIP II Asset Manager Portfolio*(3) 0.55% 0.10% 0.65%
Salomon Brothers Total Return 0.75% 0.25% 1.00%
Fund(6)
GE Total Return Fund(7) 0.50% 0.15% 0.65%
Oppenheimer Multiple Strategies 0.72% 0.03% 0.75%
Fund
Aggressive Growth
Janus Aspen Aggressive Growth 0.73% 0.03% 0.76%
Portfolio(1)
Oppenheimer Aggressive Growth 0.71% 0.02% 0.73%
Fund
Alger American Small 0.85% 0.04% 0.89%
Capitalization Portfolio
Growth
Janus Aspen Growth Portfolio(1) 0.65% 0.05% 0.70%
Janus Aspen Capital Appreciation 0.23% 1.03% 1.26%
Portfolio(1)
Alger American Growth Portfolio 0.75% 0.04% 0.79%
VIP II Contrafund Portfolio*(3) 0.60% 0.11% 0.71%
VIP Growth Portfolio*(2) 0.60% 0.09% 0.69%
Oppenheimer Growth Fund 0.73% 0.02% 0.75%
VIP III Growth Opportunities 0.60% 0.14% 0.74%
Portfolio*(4)
Goldman Sachs Mid Cap Equity 0.80% 0.15% 0.95%
Fund(5)
GE Value Equity Fund(7) 0.37% 0.09% 0.46%
Growth & Income
Federated American Leaders Fund 0.66% 0.19% 0.85%
II(8)
GE US Equity Fund(7) 0.55% 0.25% 0.80%
Goldman Sachs Growth & Income 0.75% 0.15% 0.90%
Fund(5)
Salomon Brothers Investors Fund(6) 0.75% 0.25% 1.00%
VIP Equity-Income Portfolio*(1) 0.50% 0.08% 0.58%
VIP III Growth & Income 0.49% 0.21% 0.70%
Portfolio*(4)
GE S&P 500 Index Fund(7) 0.34% 0.12% 0.46%
International Stock
Janus Aspen International Growth 0.67% 0.29% 0.96%
Portfolio(1)
VIP Overseas Portfolio*(2) 0.75% 0.17% 0.92%
GE International Equity Fund(7) 0.98% 0.36% 1.34%
Corporate Bond
Oppenheimer Bond Fund 0.73% 0.05% 0.78%
Salomon Brothers Strategic Bond 0.75% 0.25% 1.00%
Fund(6)
GE Income Fund(7) 0.42% 0.17% 0.59%
High Yield Bond
Oppenheimer High Income Fund 0.75% 0.07% 0.82%
Federated High Income Bond Fund(8) 0.51% 0.29% 0.80%
Specialty
Federated Utility Fund II(8) 0.48% 0.37% 0.85%
GE Real Estate Securities Fund(7) 0.83% 0.12% 0.95%
Diversified Bond
Janus Aspen Flexible Income 0.65% 0.10% 0.75%
Portfolio(1)
Global Stock
Janus Aspen Worldwide Growth 0.66% 0.08% 0.74%
Portfolio(1)
Money Market
GE Money Market Fund(7) 0.20% 0.12% 0.32%
</TABLE>
* The fees and expenses for these portfolios are prior to any fee waiver and/or
reimbursement as applicable.
<PAGE>
(1) Absent reimbursements, the total annual expenses of the portfolios of the
Janus Aspen Series during 1997 would have been .78% for Growth Portfolio, .78%
for Aggressive Growth Portfolio, 1.08% for International Growth Portfolio, .81%
for Worldwide Growth Portfolio, .83% for Balanced Portfolio and 2.19% for
Capital Appreciation Portfolio.
(2) With reimbursements, the total annual expenses of the portfolios of the
Variable Insurance Products Fund during 1997 would have been .57% for VIP
Equity-Income Portfolio, .90% for VIP Overseas Portfolio and .67% for VIP Growth
Portfolio.
(3) With reimbursements, the total annual expenses of the portfolios of the
Variable Insurance Products Fund II during 1997 would have been .64% for VIP II
Asset Manager Portfolio and .68% for VIP II Contrafund Portfolio.
(4) With reimbursements, the total annual expenses of the portfolios of the
Variable Insurance Products Fund III during 1997 would have been .73% for VIP
III Growth Opportunities Portfolio.
(5) Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of Goldman Sachs Variable Insurance Trust would have been 1.51%
for Growth and Income Fund and 1.33% for Mid Cap Equity Fund.
(6) Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of Salomon Brothers Variable Series Fund would have been 2.61%
for Investors Fund, 2.71% for Total Return Fund and 2.66% for Strategic Bond
Fund. The Other Expenses listed for these Funds are estimates provided by the
Fund as these portfolios were recently organized and have no operating history,
and actual expenses may be greater or less than those shown.
(7) GE Investment Management Incorporated currently serves as investment
adviser to GE Investments Funds, Inc. (formerly Life of Virginia Series Fund,
Inc.). Prior to May 1, 1997, Aon Advisors, Inc. served as investment adviser to
this Fund and had agreed to reimburse the Fund for certain expenses of each of
the Fund's portfolios. Absent certain fee waivers or reimbursements, the total
annual expenses of the portfolios of GE Investments Funds, Inc. during 1997
would have been .46% for S&P 500 Index Fund, .48% for Money Market Fund, .65%
for Total Return Fund, 1.43% for International Equity, .96% for Real Estate
Fund, .46% for Value Equity Fund, .76% for Income Fund and .86% for U.S. Equity
Fund.
(8) Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of the Federated Insurance Series during 1997 would have been
.94% for Federated American Leaders Fund II, 1.12% for Federated Utility Fund
II, and .89% for Federated High Income Bond Fund II.
<PAGE>
Examples
These examples show what your costs would be under certain hypothetical
situations. The examples do not represent past or future expenses. Your actual
expenses may be more or less than those shown. The examples are based on the
annual expenses of the portfolios for the Funds for the year ended December 31,
1997 (shown above in Fund Annual Expenses). The examples assume that a full 4%
Bonus Credit applies (if a lower Bonus Credit applied, or if no Bonus Credit
applied, the numbers shown would be lower). The examples also assume that the
$25 policy maintenance charge is equivalent to 0.1% of Account Value
attributable to the hypothetical investment (this charge will be waived if the
Account Value is at least $10,000 at the time the charge is due). To the extent
that the examples reflect a charge for the elective Guaranteed Minimum Death
Benefit Rider, the examples assume that the maximum charge (.35% of the average
benefit amount) applies.
* * *
<PAGE>
EXAMPLES: A Policyowner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Fee Table above (including the guaranteed minimum death benefit rider):
1. If you surrender* your Policy at the end of the applicable period:
Fund: 1 Year 3 Years
Balanced
Janus Aspen Balanced Portfolio 101.18 153.90
VIP II Asset Manager Portfolio 99.35 148.34
Salomon Brothers Total Return Fund 102.91 159.13
GE Investments Total Return Fund 99.35 148.34
Oppenheimer Multiple Strategies Fund 100.37 151.43
Aggressive Growth
Janus Aspen Aggressive Growth Portfolio 100.47 151.74
Oppenheimer Aggressive Growth Fund 100.16 150.81
Alger American Small Capitalization 101.79 155.75
Portfolio
Growth
Janus Aspen Growth Portfolio 99.86 149.88
Janus Aspen Capital Appreciation 105.55 167.07
Portfolio
Alger American Growth Portfolio 100.77 152.67
VIP II Contrafund Portfolio 99.96 150.19
VIP Growth Portfolio 99.75 149.58
Oppenheimer Growth Fund 100.37 151.43
VIP III Growth Opportunities Portfolio 100.26 151.12
Goldman Sachs Mid Cap Equity Fund 102.40 157.59
GE Investments Value Equity Fund 97.41 142.43
Growth & Income
Federated American Leaders Fund II 101.38 154.52
GE Investments US Equity Fund 100.88 152.98
Goldman Sachs Growth & Income Fund 101.89 156.06
Salomon Brothers Investors Fund 102.91 159.13
VIP Equity-Income Portfolio 98.63 146.16
VIP III Growth & Income Portfolio 99.86 149.88
GE Investments S&P 500 Index Fund 97.41 142.43
International Stock
Janus Aspen International Growth Portfolio 102.50 157.90
VIP Overseas Portfolio 102.10 156.67
GE Investments International Equity Fund 106.36 169.50
Corporate Bond
Oppenheimer Bond Fund 100.67 152.36
Salomon Brothers Strategic Bond Fund 102.91 159.13
GE Investments Income Fund 98.73 146.47
High Yield Bond
Oppenheimer High Income Fund 101.08 153.59
Federated High Income Bond Fund II 100.88 152.98
Specialty
Federated Utility Fund II 101.38 154.52
GE Investments Real Estate Securities Fund 102.40 157.59
Diversified Bond
Janus Aspen Flexible Income Portfolio 100.37 151.43
Global Stock
Janus Aspen Worldwide Growth Portfolio 100.26 151.12
Money Market
GE Investments Money Market Fund 95.92 137.59
* surrender includes annuitization over a period of less than 5 years.
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
Fund: 1 Year 3 Years
Balanced
Janus Aspen Balanced Portfolio 29.18 90.90
VIP II Asset Manager Portfolio 27.35 85.34
Salomon Brothers Total Return Fund 30.91 96.13
GE Investments Total Return Fund 27.35 85.34
Oppenheimer Multiple Strategies Fund 28.37 88.43
Aggressive Growth
Janus Aspen Aggressive Growth Portfolio 28.47 88.74
Oppenheimer Aggressive Growth Fund 28.16 87.81
Alger American Small Capitalization 29.79 92.75
Portfolio
Growth
Janus Aspen Growth Portfolio 27.86 86.88
Janus Aspen Capital Appreciation Portfolio 33.55 104.07
Alger American Growth Portfolio 28.77 89.67
VIP II Contrafund Portfolio 27.96 87.19
VIP Growth Portfolio 27.75 86.58
Oppenheimer Growth Fund 28.37 88.43
VIP III Growth Opportunities Portfolio 28.26 88.12
Goldman Sachs Mid Cap Equity Fund 30.40 94.59
GE Investments Value Equity Fund 25.41 79.43
Growth & Income
Federated American Leaders Fund II 29.38 91.52
GE Investments US Equity Fund 28.88 89.98
Goldman Sachs Growth & Income Fund 29.89 93.06
Salomon Brothers Investors Fund 30.91 96.13
VIP Equity Income Portfolio 26.63 83.16
VIP III Growth & Income Portfolio 27.86 86.88
GE Investments S&P 500 Index Fund 25.41 79.43
International Stock
Janus Aspen International Growth Portfolio 30.50 94.90
VIP Overseas Portfolio 30.10 93.67
GE Investments International Equity Fund 34.36 106.50
Corporate Bond
Oppenheimer Bond Fund 28.67 89.36
Salomon Brothers Strategic Bond Fund 30.91 96.13
GE Investments Income Fund 26.73 83.47
High Yield Bond
Oppenheimer High Income Fund 29.08 90.59
Federated High Income Bond Fund II 28.88 89.98
Specialty
Federated Utility Fund II 29.38 91.52
GE Investments Real Estate Securities Fund 30.40 94.59
Diversified Bond
Janus Aspen Flexible Income Portfolio 28.37 88.43
Global Stock
Janus Aspen Worldwide Growth Portfolio 28.26 88.12
Money Market
GE Investments Money Market Fund 23.92 74.59
*Surrender includes annuitization over a period of less than 5 years.
<PAGE>
EXAMPLES: A Policyowner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Fee Table above (excluding the elective guaranteed minimum death benefit
rider):
1. If you surrender* your Policy at the end of the applicable period:
Fund: 1 Year 3 Years
Balanced
Janus Aspen Balanced Portfolio 97.62 142.85
VIP II Asset Manager Portfolio 95.78 137.25
Salomon Brothers Total Return Fund 99.35 148.10
GE Investments Total Return Fund 95.78 137.25
Oppenheimer Multiple Strategies Fund 96.80 140.36
Aggressive Growth
Janus Aspen Aggressive Growth Portfolio 96.91 140.67
Oppenheimer Aggressive Growth Fund 96.60 139.74
Alger American Small Capitalization 98.23 144.70
Portfolio
Growth
Janus Aspen Growth Portfolio 96.29 138.81
Janus Aspen Capital Appreciation Portfolio 102.00 156.09
Alger American Growth Portfolio 97.21 141.61
VIP II Contrafund Portfolio 96.40 139.12
VIP Growth Portfolio 96.19 138.50
Oppenheimer Growth Fund 96.80 140.36
VIP III Growth Opportunities Portfolio 96.70 140.05
Goldman Sachs Mid Cap Equity Fund 98.84 146.56
GE Investments Value Equity Fund 93.84 131.31
Growth & Income
Federated American Leaders Fund II 97.83 143.47
GE Investments US Equity Fund 97.31 141.92
Goldman Sachs Growth & Income Fund 98.33 145.01
Salomon Brothers Investors Fund 99.35 148.10
VIP Equity-Income Portfolio 95.07 135.07
VIP III Growth & Income Portfolio 96.29 138.81
GE Investments S&P 500 Index Fund 93.84 131.31
International Stock
Janus Aspen International Growth Portfolio 98.95 146.87
VIP Overseas Portfolio 98.54 145.63
GE Investments International Equity 102.81 158.53
Corporate Bond
Oppenheimer Bond Fund 97.11 141.29
Salomon Brothers Strategic Fund 99.35 148.10
GE Investments Income Fund 95.17 135.38
High Yield Bond
Oppenheimer High Income Fund 97.52 142.54
Federated High Income Bond Fund II 97.31 141.92
Specialty
Federated Utility Fund II 97.83 143.47
GE Investments Real Estate Securities Fund 98.84 146.56
Diversified Bond
Janus Aspen Flexible Income Portfolio 96.80 140.36
Global Stock
Janus Aspen Worldwide Growth Portfolio 96.70 140.05
Money Market
GE Investments Money Market Fund 92.40 126.91
*surrender includes annuitization over a period of less than 5 years.
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
Fund: 1 Year 3 Years
Balanced
Janus Aspen Balanced Portfolio 25.62 79.85
VIP II Asset Manager Portfolio 23.78 74.25
Salomon Brothers Total Return Fund 27.35 85.10
GE Investments Total Return Fund 23.78 74.25
Oppenheimer Multiple Strategies Fund 24.80 77.36
Aggressive Growth
Janus Aspen Aggressive Growth Porfolio 24.91 77.67
Oppenheimer Aggressive Growth Fund 24.60 76.74
Alger American Small Capitalization 26.23 81.70
Portfolio
Growth
Janus Aspen Growth Portfolio 24.29 75.81
Janus Aspen Capital Appreciation Portfolio 30.00 93.09
Alger American Growth Portfolio 25.21 78.61
VIP II Contrafund Portfolio 24.40 76.12
VIP Growth Portfolio 24.19 75.50
Oppenheimer Growth Fund 24.80 77.36
VIP III Growth Opportunities Portfolio 24.70 77.05
Goldman Sachs Mid Cap Equity Fund 26.84 83.56
GE Investments Value Equity Fund 21.84 68.31
Growth & Income
Federated American Leaders Fund II 25.83 80.47
GE Investments US Equity Fund 25.31 78.92
Goldman Sachs Growth & Income Fund 26.33 82.01
Salomon Brothers Investors Fund 27.35 85.10
VIP Equity-Income Portfolio 23.07 72.07
VIP III Growth & Income Portfolio 24.29 75.81
GE Investments S&P 500 Index Fund 21.84 68.31
International Stock
Janus Aspen International Growth Portfolio 26.95 83.87
VIP Overseas Portfolio 26.54 82.63
GE Investments International Equity Fund 30.81 95.53
Corporate Bond
Oppenheimer Bond Fund 25.11 78.29
Salomon Brothers Strategic Bond Fund 27.35 85.10
GE Investments Income Fund 23.17 72.38
High Yield Bond
Oppenheimer High Income Fund 25.52 79.54
Federated High Income Bond Fund II 25.31 78.92
Specialty
Federated Utility Fund II 25.83 80.47
GE Investments Real Estate Securities Fund 26.84 83.56
Diversified Bond
Janus Aspen Flexible Income Portfolio 24.80 77.36
Global Stock
Janus Aspen Worldwide Growth Portfolio 24.70 77.05
Money Market
GE Investments Money Market Fund 20.40 63.91
*Surrender includes annuitization over a period of less than 5 years.
<PAGE>
All of the figures provided under the subheading Fund Annual Expenses and part
of the data used to produce the figures in the examples were supplied by the
Funds. We have not independently verified this information.
Other Policies
We offer other variable annuity policies which also may invest in many of the
same portfolios of the Funds offered under the Policy. These policies have
different charges that could affect the value of the Investment Subdivisions,
and they may offer different benefits more suitable to your needs. To obtain
more information about these policies, contact your registered representative,
or call (800) 352-9910.
Synopsis
What type of Policy am I buying? It is an individual flexible premium variable
deferred annuity policy issued by us. We may issue it as a qualified Policy or
as a non-qualified Policy. This Prospectus is intended to provide disclosure
only about the Policy. See The Policy.
How does the Policy work? Once we approve your application, we will issue the
Policy to you. During the accumulation period, while you are paying in, you can
use your net premium payments (i.e., your purchase payments minus any premium
tax), along with the automatic bonus we provide you, to buy Accumulation Units
under Account 4 or interests in the Guarantee Account. Should you decide to
annuitize (that is, change your Policy to a payout mode rather than an
accumulation mode), we will convert your Accumulation Units and Guarantee
Account interests to Annuity Units. You can choose a fixed or variable income
payment. If you choose a variable income payment, we will base your periodic
income payment upon the number of Annuity Units to which you became entitled at
the time you decided to annuitize and the value of each unit on that Valuation
Day. See The Policy.
What is a Bonus Credit? For qualifying Policies, it is an amount we will add to
each premium payment we receive. If the Annuitant was age 80 or younger when we
issued the Policy, we will add 4% of each premium payment to your Account Value.
For Annuitants age 81 and older at the time we issued the Policy, we will not
pay any Bonus Credits. Bonus Credits are not considered "premium payments" for
purposes of the Policy. See Bonus Credits.
What is Account 4? It is a segregated asset account established under Virginia
insurance law, and registered with the SEC as a unit investment trust. We
allocate the assets of Account 4 to one or more Investment Subdivisions,
according to your investment choice. We do not charge those assets with
liabilities arising out of any other business which we may conduct. See Account
4.
What are my variable investment choices? Through its various Investment
Subdivisions, Account 4 uses your net premium payments to purchase shares, at
your direction, in one or more of the portfolios of the Funds. In turn, each
portfolio holds securities consistent with its own particular investment policy.
See Investments of Account 4.
What is the Guarantee Account? We offer fixed investment choices through our
Guarantee Account. The Guarantee Account is part of our General Account and pays
interest at declared rates ("Guaranteed Interest Rates") guaranteed by us for
selected periods of time ("Guarantee Periods"). The principal, after deductions,
is also guaranteed. Since the Guarantee Account is part of the General Account,
we assume the risk of investment gain or loss on this amount. All assets in the
General Account are subject to our general liabilities from business operations.
The Guarantee Account may not be available in all states.
The Guarantee Account is not part of and does not depend on the investment
performance of Account 4. You may allocate all or a portion of your net premium
payments and Bonus Credits to the Guarantee Account (see The Guarantee Account),
and you may transfer Account Value between the Guarantee Account and Account 4
subject to certain restrictions. See Transfers Before the Maturity Date.
What charges are associated with this Policy? Should you decide to withdraw
Account Value before your premium payments have been in your Policy for a
certain minimum period, you will incur a surrender charge of anywhere from 0% to
8%, depending upon how many full years those payments have been in the Policy.
(Note: We do not assess this surrender charge upon Account Value surrendered,
partially surrendered or annuitized that represents gain. You may also partially
surrender up to 10% of premium payments each Policy year without application of
the surrender charge. We do not assess the surrender charge against any Account
Value annuitized under an Optional Payment Plan with a life contingency or
period certain guaranteeing payments for five years or more. We waive the
surrender charge under certain other conditions). See Surrender Charge.
<PAGE>
If your state assesses a premium tax with respect to your Policy, then at the
time we incur the tax (or at such other time as we may choose), we will deduct
those amounts from premium payments or Account Value, as applicable. See Charges
and Other Deductions and Deductions for Premium Taxes.
We assess annual charges in the aggregate at an effective annual rate of 1.55%
against the daily net asset value of Account 4, including that portion of the
account attributable to your premium payments. These charges consist of .25% as
an administrative expense charge and 1.30% as a mortality and expense risk
charge. If the Guaranteed Minimum Death Benefit Rider (the "GMDB rider") is in
effect, we will assess an annual charge for the benefit under the rider. The
charge at full surrender for this benefit will be a pro-rata portion of the
annual charge. We guarantee that the charge for this benefit will never exceed
an annual rate of .35% of the prior year's average guaranteed minimum death
benefit. There is also a $25 Annual Policy Maintenance Charge which we will
waive if the Account Value is at least $10,000 at the time the charge is due.
For a complete discussion of the charges associated with the Policy, see Charges
and Other Deductions.
There are expenses associated with the Funds. These include management fees and
other expenses associated with the daily operation of each portfolio. See
Investments of Account 4. These Fund expenses are more fully described in the
Prospectus for each Fund.
How much must I pay, and how often? Subject to certain minimum and maximum
payments, the amount and frequency of your premium payments are completely
flexible. See The Policies - Premium Payments.
How will my income payments be calculated? We will pay you a monthly income
beginning on the Maturity Date if the Annuitant is still living. You may also
decide to annuitize under one of the Optional Payment Plans. Your initial
payment will be based on Maturity Value and other factors. See Income Payments.
What happens if I die before the Maturity Date? Prior to the Maturity Date, if
an Owner, Joint Owner, or Annuitant dies while the Policy is in force, we will
treat the Designated Beneficiary as the sole Owner of the Policy, subject to
certain distribution rules. We may pay a Death Benefit to the Designated
Beneficiary. See Death of the Owner, Joint Owner or Annuitant Before the
Maturity Date.
May I transfer Account Value among portfolios? Yes, but there may be limits on
how often you may do so. The minimum transfer amount is currently $100 or the
entire balance in the Investment Subdivision if the transfer will leave a
balance of less than $100. Transfers from or to the Guarantee Account may be
subject to restrictions described in the Guarantee Account rider. See The
Policies - Transfers Before the Maturity Date, Income Payments - Transfers
following the Maturity Date, and the Guarantee Account rider.
May I surrender the Policy or make a partial surrender? Yes, subject to Policy
requirements and to restrictions imposed under certain retirement plans. For
example, Owners under a plan for a public school system or tax-exempt
institution qualifying under Section 403(b) of the Code are subject to special
restrictions upon surrender and partial surrender.
If you surrender the Policy or make a partial surrender, we may assess certain
charges, as discussed above and under Charges and Other Deductions. In addition,
you may be subject to income tax and, if you are younger than age 59 1/2 at the
time of the surrender, a 10% premature withdrawal penalty tax. A surrender or a
partial surrender may also be subject to withholding. See Federal Tax Matters. A
partial surrender will reduce the Death Benefit by the proportion that the
partial surrender (including any applicable surrender charge) reduces Account
Value.
Do I get a free look at this Policy? Yes. You have the right to return the
Policy to us at our Home Office, and have us cancel the Policy within a certain
number of days (usually 10 days from the date you receive the Policy, but some
states require different periods).
If you exercise this right, we will cancel the Policy as of the day we receive
it and send you a refund equal to your Account Value less any bonus credits but
plus any charges we have deducted on or before the date we received the returned
Contract, or if greater and required by the law of your state, your premium
payments (less any withdrawals previously taken). See Return Privilege.
When are my allocations effective? In states that require us to return your
premium payments upon exercise of your free look right, we will allocate any
amounts you allocated to Account 4 to the Money Market Investment Subdivision
until the free look period is deemed to expire. See Allocation of Premium
Payments.
<PAGE>
Condensed Financial Information
Because the Investment Subdivisions which are available under the Policy did not
begin operation before the date of this Prospectus, we do not include financial
information for the Investment Subdivisions in this Prospectus or in the SAI.
Investment Results
At times, Account 4 may compare its investment results to various unmanaged
indices or other variable annuities in reports to shareholders, sales literature
and advertisements. We will calculate the results on a total return basis for
various periods, with or without surrender charges. Results calculated without
surrender charges will be higher. Total returns include the reinvestment of all
distributions of the portfolios, which are reflected in changes in unit value.
See the SAI for further information.
Financial Statements
The financial statements for The Life Insurance Company of Virginia, now known
as GE Life and Annuity Assurance Company, and Life of Virginia Separate Account
4, now known as GE Life & Annuity Separate Account 4, are located in the SAI.
If you would like a free copy of the SAI, call 1-800-352-9910. Otherwise, the
SAI is available on the SEC's website at http://www.sec.gov.
GE Life and Annuity Assurance Company
We are a stock life insurance company operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. We principally offer life insurance
and annuity policies. We are admitted to do business in 49 states and the
District of Columbia. Our principal offices are at 6610 West Broad Street,
Richmond, Virginia 23230. Prior to January 1, 1999, our company name was The
Life Insurance Company of Virginia.
Eighty percent of our capital stock is owned by General Electric Capital
Assurance Company ("GE Capital Assurance"), which is an indirect wholly-owned
subsidiary of GE Capital ("GE Capital"). The remaining 20% is owned by GE
Financial Assurance Holdings Inc., a direct wholly-owned subsidiary of GE
Capital. GE Capital, a New York corporation, is a diversified financial services
company whose subsidiaries consist of specialty insurance, equipment management,
and commercial and consumer financing businesses. GE Capital's indirect parent,
General Electric Company, founded more than one hundred years ago by Thomas
Edison, is the world's largest manufacturer of jet engines, engineering
plastics, medical diagnostic equipment and large electric power generation
equipment.
GNA Corporation, a direct wholly-owned subsidiary of GE Financial Assurance
Holdings, Inc., directly owns the stock of Capital Brokerage Corporation (the
principal underwriter for the Policies and a broker/dealer registered with the
U.S. Securities and Exchange Commission).
We are a member of the Insurance Marketplace Standards Association ("IMSA"). We
may use the IMSA membership logo and language in our advertisements, as outlined
in IMSA's Marketing and Graphics Guidelines. Companies that belong to IMSA
subscribe to a set of ethical standards covering the various aspects of sales
and service for individually sold life insurance and annuities.
Account 4
We established Account 4 as a separate investment account on August 19, 1987.
Account 4 may invest in mutual funds, unit investment trusts, managed separate
accounts, and other portfolios, and we use it to support the Policy as well as
for other purposes permitted by law.
Account 4 currently has 37 Investment Subdivisions available under the Policy,
but that number may change in the future. Each Investment Subdivision invests
exclusively in shares representing an interest in a separate corresponding
portfolio of the Funds described below. We allocate net premium payments and
Bonus Credits (see Bonus Credits), in accordance with your instructions among up
to ten of the 37 Investment Subdivisions available under the Policy.
The assets of Account 4 belong to us. Nonetheless, we do not charge the assets
in Account 4 attributable to the Policies with liabilities arising out of any
other business which we may conduct. The assets of Account 4 shall, however, be
available to cover the liabilities of our General Account to the extent that the
assets of Account 4 exceed its liabilities arising under the Policies supported
by it. Income and both realized and unrealized gains or losses from the assets
of Account 4 are credited to or charged against Account 4 without regard to the
income, gains or losses arising out of any other business we may conduct.
<PAGE>
We registered Account 4 with the SEC as a unit investment trust under the 1940
Act. Account 4 meets the definition of a separate account under the federal
securities laws. Registration with the SEC does not involve supervision of the
management or investment practices or policies of Account 4 by the SEC. You
assume the full investment risk for all amounts you allocate to Account 4.
Investments of Account 4
You decide the Investment Subdivisions to which you allocate net premium
payments and Bonus Credits. You may change your allocation without penalty or
charges. There is a separate Investment Subdivision which corresponds to each
portfolio of a Fund offered in this Policy.
Each Fund is registered with the Securities and Exchange Commission as an
open-end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one portfolio
has no effect on the investment performance of any other portfolio.
Before choosing an Investment Subdivision to allocate your net premium payments,
Bonus Credits, and Account Value, carefully read the prospectus for each Fund,
along with this Prospectus. We summarize the investment objectives of each
portfolio below. There is no assurance that any of the portfolios will meet
these objectives.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the investment
results of any other portfolio, even if the other portfolio has the same
investment adviser or manager, or if the other portfolio has a similar name.
Investment Subdivisions
The Policy offers you a choice from among 37 Investment Subdivisions, each of
which invests in an underlying portfolio of one of the Funds. You may invest in
up to ten Investment Subdivisions at any one time.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Investment Subdivision Investment Objective Adviser
(and Sub-Adviser,
as applicable)
- -------------------------------------------------------------------------------------------
Balanced Funds
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Aspen Series Long term growth of capital, consistent Janus Capital
Balanced Portfolio with the preservation of capital and Corporation
balanced by current income. Normally
invests 40-60% of its assets in securities
selected primarily for their growth
potential and 40-60% of its assets in
securities selected primarily for their
income potential.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable High total return with reduced risk over Fidelity
Insurance Products the long-term by allocating assets among Management &
Fund II VIP II domestic and foreign stocks, bonds and Research Company
Asset Manager Portfolio short-term fixed income instruments.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Salomon Brothers Primarily invests in a broad variety of Salomon Brothers
Variable Series Funds securities, including stocks, fixed-income Asset Management Inc
Total Return Fund securities and short-term obligations
(currently not
available in
California and may
not be available in
all markets)
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investments Funds Objective of providing highest total GE Investment
Total Return Fund return, composed of current income and Management
capital appreciation, as is consistent with Incorporated
prudent investment risk by investing in
common stock, bonds and money market
instruments, the proportion of each being
continuously determined by the investment
adviser.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Oppenheimer Total investment return (which includes OppenheimerFunds,
Variable Account current income and capital appreciation in Inc.
Funds the values of its shares) from investments
Multiple Strategies in common stocks and other equity
Fund securities, bonds and other debt
securities, and "money market" securities.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<PAGE>
Aggressive Growth Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Janus Aspen Series Non-diversified portfolio achieving Janus Capital
Aggressive Growth long-term growth of capital by normally Corporation
Portfolio investing at least 50% of its equity assets
in securities issued by medium- sized
companies.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Oppenheimer Achieves capital appreciation by investing OppenheimerFunds,
Variable Account Funds in "growth-type" companies. Prior to May Inc.
1, 1998 this fund was known as Capital
Aggressive Growth Appreciation Fund.
Fund
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
The Alger American Long-term capital appreciation. Except Fred Alger
Fund during temporary defensive periods, the Management, Inc.
Alger American portfolio invests at least 65% of its total
Small Capitalization assets in equity securities of companies
Portfolio that, at the time of purchase of the
securities, have total market capitalization
within the range of companies included in the
Russell 2000 Growth Index or the S&P Small Cap
600 Index, updated quarterly. Both indexes are
broad indexes of small capitalization stocks.
The portfolio may invest up to 35% of its total
assets in equity securities of companies that,
at the time of purchase, have total market
capitalization outside this combined range and
in excess of that amount (up to 100% of its assets)
during temporary defensive periods.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Growth Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Janus Aspen Series Long-term capital growth consistent with Janus Capital
Growth Portfolio the preservation of capital and pursues its Corporation
objective by investing in common stocks of
companies of any size. Emphasizes larger,
more established issuers.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Janus Aspen Series Long-term growth of capital by investing Janus Capital
Capital Appreciation primarily in common stocks of companies of Corporation
Portfolio any size.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
The Alger American Long-term capital appreciation. Except Fred Alger
Fund during temporary defensive periods, this Management, Inc.
Alger American portfolio invests at least 65% of its total
Growth Portfolio assets in equity securities of companies
that, at the time of purchase have a total
market capitalization of $1 billion or
greater
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable Capital appreciation by investing mainly in Fidelity
Insurance Products equity securities of companies believed to Management &
Fund II be undervalued or out-of-favor. Research Company
VIP II Contrafund
Portfolio
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable Capital appreciation by normally purchasing Fidelity
Insurance Products common stocks, although its investments are Management &
Fund not restricted to any one type of Research Company
VIP Growth Portfolio security. Capital appreciation may also be
found in other types of securities,
including bonds and preferred stocks.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Oppenheimer Capital appreciation normally through OppenheimerFunds,
Variable Account purchases in common stocks, although its Inc.
Funds investments are not restricted to any one
Growth Portfolio type of security. Capital appreciation may
also be found in other types of securities
including bonds and preferred stocks
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable Capital growth by investing primarily in Fidelity
Insurance Products common stock and securities convertible to Management &
Fund III common stock. Research Company
VIP III Growth
Opportunities
Portfolio
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Goldman Sachs Long-term capital appreciation, primarily Goldman Sachs
Variable Insurance through equity securities of companies with Asset Management
Trust public stock market capitalization between
Mid Cap Equity Fund $500 million and $10 billion at the time of
investment.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investment Funds Provides long term growth of capital GE Investment
Value Equity Fund appreciation by investing primarily in Management
common stock and other equity Incorporated
securities of companies undervalued by the (Subadvised by NWQ
market and offer above-average growth Investment
potential. Management Company)
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<PAGE>
Growth and Income Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Federated Insurance Long-term growth of capital and a secondary Federated
Series objective of providing income. Seeks to Advisors
American Leaders achieve its objective by investing, under
Fund II normal circumstances, at least 65% of its
total assets in common stock of "blue chip"
companies.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investment Funds Long-term growth of capital through GE Investment
U.S. Equity Fund investments primarily in equity securities Management
of U.S. companies. Incorporated
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Goldman Sachs Long-term capital growth and growth of Goldman Sachs
Variable Insurance income, primarily through equity securities Asset Management
Trust that, in the management team's view, offer
Growth and Income favorable capital appreciation and/or
Fund dividend-paying ability.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Salomon Brothers Long-term growth of capital with current Salomon Brothers
Variable Series Funds income as a secondary objective, primarily Asset Management
Investors Fund through investments in common stocks of Inc
(currently not well-known companies.
available in
California and may
not be available in
all markets)
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable Reasonable income by investing primarily in Fidelity
Insurance Products income-producing equity securities. In Management &
Fund choosing these securities, the Portfolio Research Company
VIP Equity-Income will also consider the potential for
Portfolio capital appreciation. The portfolio's goal
is to achieve a yield, which exceeds the
composite yield on the securities
comprising the Standard & Poor's Composite
Index of 500 Stocks.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable High total return through a combination of Fidelity
Insurance Products current income and capital appreciation by Management &
Fund III investing mainly in equity securities. Research Company
VIP III Growth &
Income Portfolio
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investments Funds Provides capital appreciation and GE Investment
S&P 500(1) Index Fund accumulation of income that corresponds to Management
the investment return of the Standard & Incorporated
Poor's 500 Composite Stock Price Index, (Subadvised by
through investment in common stocks traded State Street
on the New York Stock Exchange and the Global Advisors)
American Stock Exchange, to a limited extent,
in the over-the-counter markets.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
International Stock Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Janus Aspen Series Long-term growth of capital primarily Janus Capital
International Growth through investments in common stocks of Corporation
Portfolio issuers located outside the United States.
The portfolio normally invests at least 65%
of its total assets in securities of issuers
from at least five different countries,
excluding the United States.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Fidelity Variable Long-term growth of capital through Fidelity
Insurance investments in foreign securities and Management &
Products Fund provides a means for investors to diversify Research Company
VIP Overseas their own portfolios by participating in
Portfolio companies and economies outside of the
United States.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investments Funds Long-term capital appreciation by investing GE Investment
International Equity primarily in equity and equity-related Management
Fund securities of companies that are organized Incorporated
outside of the U.S. or whose securities are
principally traded outside the U.S.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- --------
(1) "Standard & Poor's," "S&P," and "S&P 500" are trademarks of The Mc-Graw
Hill Companies, Inc. and have been licensed for use by GE Investment Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation or
warranty, express or implied, regarding the advisability of investing in this
Fund or the Policy.
<PAGE>
Corporate Bond Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Oppenheimer High level of current income and capital OppenheimerFunds,
Variable Account growth when consistent with its primary Inc.
Funds objective. Under normal conditions this
Bond Fund fund will invest at least 65% of its total
assets in investment grade debt securities.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Salomon Brothers High level of current income with capital Salomon Brothers
Variable Series Funds appreciation as a secondary objective, Asset Management
Strategic Bond Fund through a globally diverse portfolio of Inc
(currently not fixed-income investments, including
available in lower-rated fixed income securities
California and may commonly known as junk bonds.
not be available in
all markets)
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investments Funds Maximum income consistent with prudent GE Investment
Income Fund investment management and preservation of Management
capital by investing primarily in Incorporated
income-bearing debt securities and other
income bearing instruments.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
High Yield Bond Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Oppenheimer High current income from investments in OppenheimerFunds,
Variable Account high yield fixed income securities, Inc.
Funds including unrated securities or high risk
High Income Fund securities in lower rating categories.
These securities may be considered
speculative. This Fund may have substantial
holdings of lower-rated debt securities or
"junk" bonds. The risks of investing in
junk bonds are described in the prospectus
for the Oppenheimer Variable Account Funds,
which should be read carefully before investing.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Federated Insurance High current income by investing primarily Federated
Series in a diversified portfolio of Advisers
High Income Bond professionally managed fixed-income
Fund II securities. The fixed income securities in
which the Fund intends to invest are
lower-rated corporate debt obligations,
commonly referred to as "junk bonds". The
risks of these securities are described in
the prospectus for the Federated Insurance
Series, which should be read careful before
investing.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Specialty Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Federated Insurance High current income and moderate capital Federated
Series appreciation by investing primarily in Advisers
Utility Fund II equity and debt securities of utility
companies.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investments Funds Maximum total return through current income GE Investment
Real Estate and capital appreciation by investing Management
Securities Fund primarily in securities of U.S. issuers Incorporated
that are principally engaged in or related (Subadvised by
to the real estate industry including those Seneca Capital
that own significant real estate assets. Management, L.L.C.)
The portfolio will not invest directly in
real estate.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Diversified Bond Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Janus Aspen Series Maximum total return consistent with Janus Capital
Flexible Income preservation of capital. Total return is Corporation
Portfolio expected to result from a combination of
income and capital appreciation. The
portfolio pursues its objective primarily
by investing in any type of income-producing
securities. This portfolio may have
substantial holdings of lower-rated debt
securities or "junk" bonds. The risks of
investing in junk bonds are described in
the prospectus for Janus Aspen Series,
which should be read carefully before
investing.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<PAGE>
Global Stock Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Janus Aspen Series Long-term capital growth in a manner Janus Capital
Worldwide Growth consistent with the preservation of capital Corporation
Portfolio by investing in a diversified portfolio of
common stocks of foreign and domestic
issuers of all sizes. Normally invests in
at least five different companies including
the United States
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Money Market Funds
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
GE Investments Funds Highest level of current income as is GE Investment
Money Market Fund consistent with high liquidity and safety Management
of principal by investing in high quality Incorporated
money market securities.
- -------------------------------------------------------------------------------------------
</TABLE>
We will purchase shares of the portfolios at net asset value and direct them to
the appropriate Investment Subdivisions of Account 4. We will redeem sufficient
shares of the appropriate portfolios at net asset value to pay Death Benefits
and surrender/partial surrender proceeds, to make income payments, or for other
purposes described in the Policy. We automatically reinvest all dividend and
capital gain distributions of the portfolios in shares of the distributing
portfolios at their net asset value on the date of distribution. In other words,
we do not pay portfolio dividends or portfolio distributions out to Owners as
additional units, but instead reflect them in unit values.
Shares of the Funds are not sold directly to the general public. They are sold
to the Company, and may be sold to other insurance companies, for investment of
the assets of the investment subdivisions established by those insurance
companies to fund variable annuity and variable life insurance policies, or to
retirement plans.
When a Fund sells shares in any of its portfolios both to variable annuity and
to variable life insurance separate accounts, it is said to engage in mixed
funding. When a Fund sells shares in any of its portfolios to separate accounts
of unaffiliated life insurance companies, it is said to engage in shared
funding.
Each Fund may engage in mixed and shared funding. Therefore, due to differences
in redemption rates or tax treatment, or other considerations, the interests of
various shareholders participating in a Fund could conflict. A Fund's Board of
Directors will monitor for the existence of any material conflicts, and
determine what action, if any, should be taken. See the Prospectuses for the
Funds.
Changes to Account 4 and the Investment Subdivisions
We reserve the right, within the law, to make additions, deletions and
substitutions for the Funds and/or any portfolios within the Funds in which
Account 4 participates. (We may substitute shares of other portfolios for shares
already purchased, or to be purchased in the future, under the Policy. This
substitution might occur if shares of a portfolio should no longer be available,
or if investment in any portfolio's shares should become inappropriate, in the
judgment of our management, for the purposes of the Policy.) No substitution of
the shares attributable to your account may take place without notice to you and
before approval of the SEC, in accordance with the 1940 Act.
We also reserve the right to establish additional Investment Subdivisions, each
of which would invest in a separate portfolio of a Fund, or in shares of another
investment company, with a specified investment objective. We may also eliminate
one or more Investment Subdivisions if, in our sole discretion, marketing, tax,
or investment conditions warrant.
If permitted by law, we may deregister Account 4 under the 1940 Act in the event
such registration is no longer required; manage Account 4 under the direction of
a committee; or combine Account 4 with other separate accounts of the Company.
Further, to the extent permitted by applicable law, we may transfer the assets
of Account 4 to another separate account.
The Guarantee Account
Due to certain exemptive and exclusionary provisions, we have not registered
interests in the Guarantee Account under the Securities Act of 1933 (the "1933
Act"), and we have not registered either the Guarantee Account or our General
Account as an investment company under the Investment Company Act of 1940 (the
"1940 Act"). Accordingly, neither the interests in the Guarantee Account, nor
our General Account are generally subject to regulation under the 1933 Act and
the 1940 Act. Disclosures relating to the interests in the Guarantee Account,
and the General Account, however, may be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy of statements
made in a registration statement.
<PAGE>
You may allocate some or all of your net premium payments and Bonus Credits, and
transfer some or all of your Account Value, to the Guarantee Account. We credit
the portion of the Account Value allocated to the Guarantee Account with
interest (as described below). Account Value in the Guarantee Account is subject
to some, but not all, of the charges we assess in connection with the Policy.
See Charges and Other Deductions.
Each time you allocate net premium payments and Bonus Credits, or transfer
Account Value to the Guarantee Account, we establish an interest rate Guarantee
Period. Your net premium payment and its accompanying Bonus Credits will share
the same Guarantee Period. We guarantee each Guarantee Period an interest rate
for a specified period of time. At the end of the Guarantee Period, a new
interest rate will become effective, and a one year Guarantee Period will
commence for the remaining portion of that particular allocation. We determine
interest rates in our sole discretion. The determination made will be influenced
by, but not necessarily correspond to, interest rates available on fixed income
investments which we may acquire with the amounts we receive as premium payments
or transfers of Account Value under the Policies. You will have no direct or
indirect interest in these investments. We also will consider other factors in
determining interest rates for a Guarantee Period including, but not limited to,
regulatory and tax requirements, sales commissions, and administrative expenses
borne by us, general economic trends, and competitive factors. Amounts you
allocate to the Guarantee Account will not share in the investment performance
of our General Account, or any portion thereof. We cannot predict or guarantee
the level of interest rates in future guarantee periods. However, the interest
rates for any interest guarantee period will be at least the guaranteed interest
rate shown in your policy.
We will notify Owners in writing at least 10 days prior to the expiration date
of any Guarantee Period about the then currently available Guarantee Periods and
the Guaranteed Interest Rates applicable to such Guarantee Periods. A new one
year Guarantee Period will commence automatically unless we receive written
notice prior to the end of the 30 day period following the expiration of the
Guarantee Period ("30 day window") of your election of a different Guarantee
Period from among those being offered by us at that time, or instructions to
transfer all or a portion of the remaining amount to one or more Investment
Subdivisions subject to certain restrictions. (See Transfers Before the Maturity
Date.) During the 30 day window, the allocation will accrue interest at the new
Guarantee Period's interest rate.
To the extent permitted by law, we reserve the right at any time to offer
Guarantee Periods that differ from those available when we issued the Policy,
and to credit bonus interest on premium payments allocated to a Guarantee
Account participating in the Dollar-Cost Averaging Program. (This may not be
available to all classes of Policies.) We also reserve the right, at any time,
to stop accepting premium payments or transfers of Account Value to a particular
Guarantee Period. Since the specific Guarantee Periods available may change
periodically, please contact our Home Office to determine the Guarantee Periods
currently being offered.
Charges and Other Deductions
All of the charges described in this section apply to Account Value allocated to
Account 4. Account Value in the Guarantee Account is subject to all of the
charges described in this section except for the mortality and expense risk
charge and the administrative expense charge.
We will deduct the charges described below to cover our costs and expenses,
services provided and risks assumed under the Policies. We incur certain costs
and expenses for the distribution and administration of the Policies and for
providing the benefits payable thereunder. More particularly, our administrative
services include: processing applications for and issuing the Policies,
processing purchases and redemptions of portfolio shares as required,
maintaining records, administering annuity payouts, furnishing accounting and
valuation services (including the calculation and monitoring of daily Investment
Subdivision values), reconciling and depositing cash receipts, providing Policy
confirmations, providing toll-free inquiry services and furnishing telephone
fund transfer services. The risks we assume include: the risk that the Death
Benefit will be greater than the Surrender Value; the risk that the actual
life-span of persons receiving income payments under Policy guarantees will
exceed the assumptions reflected in our guaranteed rates (these rates are
incorporated in the Policy and cannot be changed); the risk that more Owners
than expected will qualify for waivers of the surrender charges; and the risk
that our costs in providing the services will exceed our revenues from Policy
charges (which cannot be changed by us). The amount of a charge may not
necessarily correspond to the costs associated with providing the services or
benefits indicated by the designation of the charge. For example, the surrender
charge collected may not fully cover all of the sales and distribution expenses
actually incurred by us. Further, we may realize a profit on one or more of the
charges. We may use any such profits for any corporate purpose, including the
payment of sales expenses.
<PAGE>
Deductions from Account 4
We deduct from Account 4 an amount, computed daily, which is equal to an annual
rate of 1.55% of the daily net asset value. The charge consists of an
administrative expense charge at an effective annual rate of .25% and a
mortality and expense risk charge at an effective annual rate of 1.30%.
Guaranteed Minimum Death Benefit Charge
We will assess an annual charge of not more than .35% of the prior year's
average guaranteed minimum death benefit for expenses related to the Death
Benefit available under the terms of the optional Guaranteed Minimum Death
Benefit Rider ("GMDB Rider"). The current rate at the time your GMDB Rider
becomes effective will apply until coverage under the Rider is terminated. We
deduct this charge against the Account Value in Account 4 on each Policy
anniversary and at surrender to compensate us for the increased risks associated
with providing the enhanced Death Benefit. If the Guarantee Account is available
under the Policy and the Account Value in Account 4 is not sufficient to cover
the charge for the Guaranteed Minimum Death Benefit Rider, we will deduct the
charge in Account 4 first from the available Account Value in Account 4, and
then from the Guarantee Account. Charges from the Guarantee Account will be
taken from the amounts that have been in the Guarantee Account for the longest
period of time. The charge at full surrender will be a pro-rata portion of the
annual charge.
Policy Maintenance Charge
We will deduct an annual charge of $25 annually from the Account Value of each
Policy to compensate us for certain administrative expenses incurred in
connection with the Policies. We will deduct the charge at each Policy
anniversary and at full surrender. We will waive this charge if your Account
Value at the time of deduction is at least $10,000.
We will allocate the annual Policy Maintenance Charge among the Investment
Subdivisions in the same proportion that the Policy's Account Value in each
Investment Subdivision bears to the total Account Value in all Investment
Subdivisions at the time the charge is made. If there is insufficient Account
Value allocated to Account 4, we will deduct any remaining portion of the charge
from the Guarantee Account from the amounts that have been in the Guarantee
Account for the longest period of time. Other allocation methods may be
available upon request.
Surrender Charge
We assess a surrender charge (except as described below) on partial and full
surrenders of premium payments. You pay this charge to compensate us for the
losses we experience on Policy distribution costs when Owners surrender or
partially surrender.
We calculate the surrender charge separately for each premium payment to which a
charge applies. For purposes of calculating this charge, we assume that premium
payments are withdrawn on a first in-first out basis. We deduct the surrender
charge proportionately from the Investment Subdivisions. However, if there is no
Account Value in Account 4, we will deduct the charge from the Guarantee
Account. The surrender charge is as follows:
Surrender charge as a percentage of the surrendered
or partially surrendered premium payment
Year Percentage
Number of full and partially
completed years since the premium 1 8%
payment was received 2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9 or more 0%
We do not assess the surrender charge:
o on amounts representing gain (as defined below);
o on free withdrawal amounts (as defined below);
<PAGE>
o if the surrender is taken under optional payment plan 1,
optional payment plan 2 (for a period of 5 or more years) ,
or optional payment plan 5;
o if a waiver of surrender charge provision applies; or
o upon the death of the Annuitant.
You may withdraw your gain under your Policy free of any surrender charge. We
calculate gain under the Policy as: (a) plus (b) minus (c) minus (d), but not
less than zero where:
(a) is the Account Value on the date we receive your surrender request;
(b) is the total of any partial surrenders previously taken;
(c) is the total of premium payments made; and
(d) is the total of any gain previously surrendered.
In addition to any gain, you may withdraw an amount equal to 10% of your total
premium payments each Policy year without a surrender charge ("free withdrawal
amount"). The free withdrawal amount is not cumulative from Policy year to
Policy year.
Further, we will waive the surrender charge if you annuitize under Optional
Payment Plan 1 (Life Income with Period Certain), Optional Payment Plan 2
(Income for a Fixed Period), provided that you select a fixed period of 5 years
or more, or Optional Payment Plan 5 (Joint Life and Survivor Income). See
Optional Payment Plans.
We also will waive surrender charges arising from a surrender occurring before
income payments begin if, at the time we receive the surrender request, we have
received due proof that the Annuitant has a qualifying terminal illness, or has
a qualifying confinement to a state licensed or legally operated hospital or
inpatient nursing facility for a minimum period as set forth in the Policy
(provided the confinement began, or the illness was diagnosed, at least one year
after the Policy Date). If you surrender the policy under the terminal illness
waiver, please remember that you will be paid the Account Value, which could be
less than the Death Benefit otherwise available. The terms and conditions of the
waivers are set forth in your Policy.
Deductions for Premium Taxes
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the Policies or Account 4 will be deducted from Account Value
when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax generally
ranges from 0.0% to 3.5%.
Other Charges and Deductions
There are deductions from and expenses paid out of the assets of each Fund that
are more fully described in each Fund's Prospectus.
Additional Information
We may reduce or eliminate the administrative expense and surrender charges
described previously for any particular Policy. However, we will reduce these
charges only to the extent that we anticipate lower distribution and/or
administrative expenses, or that we perform fewer sales or administrative
services than those originally contemplated in establishing the level of those
charges. Lower distribution and administrative expenses may be the result of
economies associated with (1) the use of mass enrollment procedures, (2) the
performance of administrative or sales functions by the employer, (3) the use by
an employer of automated techniques in submitting deposits or information
related to deposits on behalf of its employees or (4) any other circumstances
which reduce distribution or administrative expenses. We will state the exact
amount of administrative expense and surrender charges applicable to a
particular Policy in that Policy.
<PAGE>
The Policy
The Policy is an individual flexible deferred variable annuity Policy. Your
rights and benefits are described below and in the Policy. There may be
differences in your Policy because of requirements of the State where we issued
your Policy. We will include any such differences in your Policy.
Purchase of the Policy
If you wish to purchase a Policy, you must apply for it through a sales
representative authorized by us. The completed application is sent to us and we
decide whether to accept or reject it. If we accept the application, our legally
authorized officers prepare and execute a Policy. We then send the Policy to you
through your sales representative. See Distribution of the Policies.
If we receive a completed application and all other information necessary for
processing a purchase order, we will apply an initial premium payment no later
than two business days after we receive the order. While attempting to finish an
incomplete application, we may hold the initial premium payment for no more than
five business days. If the incomplete application cannot be completed within
those five days, we will inform you of the reasons, and will return your premium
payment immediately (unless you specifically authorize us to keep it until the
application is complete). Once you complete your application, we must apply the
initial premium payment within two business days.
To apply for a Policy, you must be of legal age in a state where we may lawfully
sell the Policies and also be eligible to participate in any of the qualified or
non-qualified plans for which the Policies are designed. The Annuitant cannot be
older than age 80, unless we approve a different age.
Ownership
As Owner, you have all rights under the Policy, subject to the rights of any
irrevocable beneficiary. According to Virginia law, the assets of Account 4 are
held for the exclusive benefit of all Owners and their Designated Beneficiaries.
Qualified Policies may not be assigned or transferred except as permitted by the
Employee Retirement Income Security Act (ERISA) of 1974 and upon written
notification to us. We assume no responsibility for the validity or effect of
any assignment. Consult your tax advisor about the tax consequences of an
assignment.
If you name a Joint Owner in the application, we will treat the Joint Owners as
having equal undivided interests in the Policy. All Owners must together
exercise any ownership rights in this Policy.
Premium Payments
You may make premium payments to us at a frequency and in the amount you
selected. You must obtain our prior approval before you make total premium
payments for an Annuitant age 79 or younger that exceed $2,000,000. If the
Annuitant is age 80 or older at the time of payment, the total amount not
subject to prior approval is $1,000,000. Payments may be made or, if stopped,
resumed at any time until the Maturity Date, the surrender of the Policy, or the
death of the Owner (or Joint Owner, if applicable), whichever comes first. We
reserve the right to refuse to accept a premium payment for any lawful reason.
The minimum initial premium payment is $10,000. We may accept a lower initial
premium payment in the case of certain group sales. Each additional premium
payment must be at least $1,000 for non-qualified Policies, $100 for qualified
Policies, or $50 for IRA Policies.
Valuation Day
We will value Accumulation and Annuity Units once daily at the close of trading
(currently 4:00 p.m., New York time) on each day the New York Stock Exchange is
open except for days on which a fund does not value its shares (Valuation Day).
On any date other than a Valuation Day, the Accumulation Unit value and the
Annuity Unit value will not change.
Allocation of Premium Payments
We place net premium payments and Bonus Credits (described below) into Account
4's Investment Subdivisions, each of which invests in shares of a corresponding
portfolio of the Funds, and/or the Guarantee Account, according to your
instructions. However, in those states which require that premium payments be
returned during the free look period (see Return Privilege), we will place your
premium payments allocated to Account 4 in the Money Market Investment
Subdivision (which is the Investment Subdivision that invests in the Money
Market Fund of GE Investments Funds, Inc.). At the end of the free look period,
if we allocated your initial premium payment to the Money Market Investment
Subdivision, we will transfer the value of what is in the Money Market
Investment Subdivision to the Investment Subdivisions you specified in your
application. Solely for the purpose of processing transfers from the Money
Market Investment Subdivision, we will deem the free look period to end 15 days
after the Policy Date. This transfer from the Money Market Investment
Subdivision to the other Investment Subdivisions upon the expiration of the free
look period does not count as a transfer for any other purposes under the
Policy.
<PAGE>
The percentage of any premium payment and Bonus Credit which you can put into
any one Investment Subdivision or Guarantee Period must equal at least 1%. Upon
allocation to the appropriate Investment Subdivision, we convert net premium
payments into Accumulation Units. We determine the number of Accumulation Units
credited by dividing the amount allocated to each Investment Subdivision by the
value of an Accumulation Unit for that Investment Subdivision on the Valuation
Day on which we receive the premium payment at our Home Office if received
before 4:00 p.m., New York time. If we receive the premium payment at or after
4:00 p.m., New York time, we will use the Accumulation Unit value computed on
the next Valuation Day. The number of Accumulation Units determined in this way
is not changed by any subsequent change in the value of an Accumulation Unit.
However, the dollar value of an Accumulation Unit will vary depending not only
upon how well the portfolio's investments perform, but also upon the expenses of
Account 4 and the portfolios.
Bonus Credits
For most Policies, we will add a Bonus Credit to each premium payment we
receive. (The Bonus Credit is referred to as an "enhanced premium amount" in
your Policy.) We fund this credit from our General Account. For each premium
payment you make, we will add 4% of that premium payment to your Account Value,
provided the Annuitant was age 80 or younger when we issued the Policy. For
Annuitants age 81 or older at the time of issue, we will not pay any Bonus
Credits. We apply the Bonus Credits when we apply your premium payment to your
Account Value, and allocate the credits on a pro-rata basis to the investment
options you select in the same ratio as the applicable premium payment. Bonus
Credits are not considered "premium payments" for purposes of the Policy.
Valuation of Accumulation Units
Accumulation Units for each Investment Subdivision are valued separately.
Initially, the value of each Accumulation Unit was set arbitrarily at $10.00.
Thereafter, the value of an Accumulation Unit in any Investment Subdivision for
a Valuation Period equals the value of an Accumulation Unit in that Investment
Subdivision as of the preceding Valuation Period multiplied by the net
investment factor of that Investment Subdivision for the current Valuation
Period.
The net investment factor is an index used to measure the investment performance
of an Investment Subdivision from one Valuation Period to the next. The net
investment factor for any Investment Subdivision for any Valuation Period
reflects the change in the net asset value per share of the portfolio held in
the Investment Subdivision from one Valuation Period to the next, adjusted for
the daily deduction of the administrative expense and mortality and expense risk
charges from assets in the Investment Subdivision. If any "ex-dividend" date
occurs during the Valuation Period, we take into account the per share amount of
any dividend or capital gain distribution so that the unit value is not
impacted. Also, if any taxes need to be reserved, we take into account a per
share charge or credit for any taxes reserved for, which we determine to have
resulted from the operations of the Investment Subdivision.
Transfers Before the Maturity Date
Prior to the earlier of the surrender of the Policy, payment of any Death
Benefit, or the Maturity Date, you may transfer all or a portion of your
investment between and among the Investment Subdivisions of Account 4 and the
Guarantee Account subject to certain conditions. Transfers among the Investment
Subdivisions of Account 4 and from an Investment Subdivision to a Guarantee
Account are made as of the end of the Valuation Period that we receive the
transfer request at our Home Office. We may postpone transfers to, from, or
among the Investment Subdivisions of Account 4 under certain circumstances. See
Requesting Payments.
We restrict transfers from any particular allocation of a Guarantee Account to
an Investment Subdivision. You may make such transfers only during the 30 day
period beginning with the end of the preceding Guarantee Period applicable to
that particular allocation. We also may limit the amount which you may transfer
to the Investment Subdivisions. However, for any particular allocation to an
Investment Subdivision, the limited amount will not be less than any accrued
interest on that allocation plus 25% of the original amount of that allocation.
Further, we may restrict certain transfers from an Investment Subdivision. We
reserve the right to limit the number of transfers from an Investment
Subdivision to the Guarantee Account made during the six month period following
the transfer of any amount from a Guarantee Account to any Investment
Subdivision.
Currently, there is no limit on the number of transfers between and among
Investment Subdivisions of Account 4 and the Guarantee Account; however, we
reserve the right to limit the number of transfers each calendar year to twelve,
or if it is necessary for the Policy to continue to be treated as an annuity
policy by the Internal Revenue Service, a lower number. Currently, all transfers
under the Policy are free. However, we reserve the right to assess a fee of $10
per transfer. The minimum transfer amount is $100 or the entire balance in the
Investment Subdivision or Guarantee Period if the transfer will leave a balance
of less than $100. We may not honor a transfer request: (i) if any of the
Investment Subdivisions that would be affected by the transfer is unable to
purchase or redeem shares of the Fund in which the Investment Subdivision
invests; (ii) if the transfer is a result of more than one trade involving the
same Investment Subdivision within a 30 day period; or (iii) if the transfer
would adversely affect accumulation unit values. We also may not honor transfers
made by third parties holding multiple powers of attorney. (See Powers of
Attorney.)
<PAGE>
When thinking about a transfer of Account Value, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that you will make a transfer at an inopportune time.
Telephone Transfers
We permit telephone transfers. We may be liable for losses resulting from
unauthorized or fraudulent telephone transfers if we fail to employ reasonable
procedures to confirm that the telephone instructions that we receive are
genuine. Therefore, we will employ means to prevent unauthorized or fraudulent
telephone requests, such as sending written confirmation, recording telephone
requests, and/or requesting other identifying information. In addition, we may
require written authorization before allowing you to make telephone transfers.
We reserve the right to limit telephone transfers.
To request a telephone transfer, you should call our telephone transfer line. We
will record all telephone transfer requests. We will execute transfer requests
received prior to the close of the New York Stock Exchange that Valuation Day at
that day's prices. We will execute requests received after that time on the next
Valuation Day at that day's prices.
Powers of Attorney
As a general rule and as a convenience to you, we allow the use of powers of
attorney whereby you give third parties the right to effect transfers on your
behalf. However, when the same third party possesses powers of attorney executed
by many Owners, the result can be simultaneous transfers involving large amounts
of Account Value. Such transfers can disrupt the orderly management of the Funds
underlying the Policy, can result in higher costs to Owners, and are generally
not compatible with the long-range goals of Owners. We believe that such
simultaneous transfers effected by such third parties are not in the best
interests of all shareholders of the Funds underlying the Policies, and the
management of the Funds share this position. Therefore, as described in your
Policy, we may limit transfers made by a third party holding multiple powers of
attorney.
Dollar-Cost Averaging
The dollar-cost averaging program permits you to systematically transfer on a
monthly or quarterly basis a set dollar amount from the Money Market Investment
Subdivision and/or the Guarantee Account to any combination of other
Investment Subdivisions (as long as the total number of Investment Subdivisions
used does not exceed the maximum number allowed under the Policy). The
dollar-cost averaging method of investment is designed to reduce the risk of
making purchases only when the price of units is high, but you should carefully
consider your financial ability to continue the program over a long enough
period of time to purchase Accumulation Units when their value is low as well as
when it is high. Dollar-cost averaging does not assure a profit or protect
against a loss.
You may participate in the dollar-cost averaging program by selecting the
program on the application, completing a dollar-cost averaging agreement , or
calling our Home Office. To use the dollar-cost averaging program, you must
transfer at least $100 from an Investment Subdivision or a Guarantee Period with
each transfer. Once elected, dollar-cost averaging remains in effect from the
date we receive your request until the value of the Investment Subdivision or
the Guarantee Period from which transfers are being made is depleted, or until
you cancel the program by written request or by telephone if we have your
telephone authorization on file.
With regard to dollar-cost averaging from the Guarantee Account, we reserve the
right to determine the amount of each automatic transfer. We reserve the right
to transfer any remaining portion of an allocation used for dollar-cost
averaging to a Guarantee Account with a new Guarantee Period upon termination of
the dollar-cost averaging program for that allocation.
There is no additional charge for dollar-cost averaging. We reserve the right to
discontinue offering or to modify the dollar-cost averaging program at any time
and for any reason.
<PAGE>
Asset Allocation
You may select from five asset allocation model portfolios offered by us, or you
may use a model offered by us as a guide to help you develop your own asset
allocation program. The models designed by us are as follows:
Model Investment and Risk Profile
1 Income
2 Enhanced Income
3 Growth & Income
4 Growth
5 Aggressive Growth
If you elect to participate in the asset allocation program, we will
automatically allocate all premium payments among the Investment Subdivisions
indicated by the model and the Funds within the model you select. The models do
not include allocation to the Guarantee Account. Although you may use only one
model at a time, you may elect to change your selection as your tolerance for
risk, needs, and/or objectives change. You may use a questionnaire that we offer
to determine the model that best meets your risk tolerance and time horizons.
Asset allocation does not guarantee a profit or protect against a loss.
Because each Investment Subdivision performs differently over time, your
portfolio mix may vary from its initial allocations. You may elect to have the
portfolios automatically rebalanced under our portfolio rebalancing program,
described below.
From time to time, we will review the models and may find that allocation
percentages among the Investment Subdivisions or even some of the Investment
Subdivisions within a particular model need to be changed. We will send you
notice that such a change has been made. Unless you elect to participate in the
new allocation model you will remain in your current designated allocation
model. This change will not be made automatically.
There is no additional charge for the asset allocation program. We reserve the
right to discontinue offering this program at any time and for any reason.
Portfolio Rebalancing Program
Once your money has been allocated among the Investment Subdivisions, the
performance of each Investment Subdivision may cause your allocation to shift.
You may instruct us to automatically rebalance (on a quarterly, semi-annual or
annual basis) your Account Value among the Investment Subdivisions to return to
the percentages specified in your allocation instructions. The program does not
include allocations to the Guarantee Account. You may elect to participate in
the portfolio rebalancing program at any time by completing the portfolio
rebalancing agreement. Your percentage allocations must be in whole percentages.
Subsequent changes to your percentage allocations may be made at any time by
written or telephone instructions to the Home Office. Once elected, portfolio
rebalancing remains in effect from the date we receive your written request
until you instruct us to discontinue portfolio rebalancing. There is no
additional charge for using portfolio rebalancing, and we do not consider a
portfolio rebalancing transfer a transfer for purposes of assessing a transfer
processing fee or calculating the maximum number of transfers permitted in a
calendar year. We reserve the right to discontinue offering the portfolio
rebalancing program at any time and for any reason. Portfolio rebalancing does
not guarantee a profit or protect against a loss.
Surrenders and Partial Surrenders
Subject to the rules discussed below, we will allow the surrender of the Policy
or a withdrawal of the Account Value at any time before the Maturity Date upon
your written request. Surrender or partial surrender rights after the Maturity
Date depend upon the income payment Option you select.
We will not permit a partial surrender that is less than $500 or that reduces
Account Value to less than $10,000. If your partial surrender request would
reduce Account Value to less than $10,000, we will surrender only that amount of
Account Value that would reduce the remaining Account Value to $10,000 and
deduct any surrender charge from the amount surrendered.
The amount payable on full surrender of the Policy is the Surrender Value at the
end of the Valuation Period during which we receive the request. The Surrender
Value equals the Account Value on the date we receive a request for surrender
less any applicable surrender charge and GMDB charge and less any applicable
premium tax. We may pay the Surrender Value in a lump sum or under one of the
optional payment plans specified in the Policy.
You may indicate, in writing, from which Investment Subdivisions or Guarantee
Periods we are to take your partial surrender. If you do not so specify, we will
deduct the amount of the partial surrender first from the Investment
Subdivisions of Account 4 on a pro-rata basis, in proportion to the Account
Value in Account 4. We will deduct any remaining amount from the Guarantee
Account. We will take deductions from the Guarantee Account from the amounts
(including any interest credited to such amounts) which have been in the
Guarantee Account for the longest period of time.
<PAGE>
Please remember that a partial surrender will reduce the Death Benefit by the
proportion that the partial surrender (including any applicable surrender
charge) reduced Account Value.
Restrictions on Distributions from Certain Policies
Section 830.105 of the Texas Government Code permits participants in the Texas
Optional Retirement Program ("ORP") to withdraw their interest in a variable
annuity contract issued under the ORP only upon (i) termination of employment in
the Texas public institutions of higher education, (ii) retirement, (iii) death,
or (iv) the participant's attainment of age 70 1/2. Accordingly, before we
distribute any amounts from these Policies, you must furnish us proof that one
of these four events has occurred.
Systematic Withdrawals
At any time after 30 days from the Policy Date, you may elect in writing on a
form provided by us to take systematic withdrawals of a specified dollar amount
(in equal installments of at least $100) on a monthly, quarterly, semi-annual or
annual basis. Your systematic withdrawals in a Policy year may not exceed the
amount which is not subject to a surrender charge. You may provide specific
instructions as to how we are to take the systematic withdrawals. If you have
not provided specific instructions, or if your specific instructions cannot be
carried out, we will process the withdrawals by first taking on a pro-rata basis
Accumulation Units from all of the Investment Subdivisions in which you have an
interest. To the extent that your Account Value in Account 4 is not sufficient
to accomplish the withdrawal, we will take any Account Value you have in the
Guarantee Account to accomplish the withdrawal.
After your systematic withdrawals begin, you may change the frequency and/or
amount of your payments, subject to the following:
o only one such change may be requested in a calendar quarter; and
o the total amount to be withdrawn over the next 12 months is
limited to the maximum amount at the time you elected to
change your systematic withdrawals.
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Account Value to be less than $10,000. If a
systematic withdrawal would cause the Account Value to be less than $10,000,
then that systematic withdrawal transaction will not be processed. You may
discontinue systematic withdrawals at any time by notifying us in writing at our
Home Office.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to federal income taxes on the taxable portion. In
addition, you may be assessed a 10% federal penalty tax on systematic
withdrawals if you are under age 59 1/2 at the time of the withdrawal.
Both partial surrenders at your specific request and withdrawals pursuant to a
systematic withdrawal program will count toward the limit of the amount that you
may withdraw in any Policy year free under the free withdrawal privilege.
We reserve the right to prohibit simultaneous systematic withdrawals and
dollar-cost averaging.
The Beneficiary
You may select one or more primary and contingent Beneficiaries during your
lifetime upon application and by filing a written request with our Home Office.
Each change of Beneficiary revokes any previous designation.
Death Benefit at Death of Annuitant
If the Annuitant dies before income payments begin, regardless of whether the
Annuitant is also an Owner or Joint Owner of the Policy, the amount of proceeds
available is the Death Benefit (which may be referred to in our marketing
materials as the "Annual EstateProtector"). Upon receipt of due proof of the
Annuitant's death, the Death Benefit will constitute the new Surrender Value and
we will treat it in accordance with instructions provided by the Owner, subject
to distribution rules and termination of contract provisions described
elsewhere.
<PAGE>
The Death Benefit equals the sum of (a) and (b) where: (a) is the Account Value
as of the date we receive due proof of death, and (b) is the excess, if any, of
the unadjusted Death Benefit (as defined below) as of the date of the
Annuitant's death over the Account Value as of the date of the Annuitant's
death, with interest credited on that excess from the date of the Annuitant's
death to the date of distribution. The rate credited may depend on applicable
law or regulation. Otherwise, it will be set by us.
The unadjusted Death Benefit varies based on the Annuitant's age at the time the
Policy is issued and on the Annuitant's age at the time of death.
For a Policy issued with an Annuitant who was age 80 or younger on the Policy
Date:
1. If the Annuitant dies during the first Policy year, the unadjusted
Death Benefit is the greater of:
(i) Account Value determined as of the date of the Annuitant's death; or
(ii) the total of premium payments made adjusted by the proportion that
any partial surrender (including applicable surrender charge)
reduced Account Value and less any applicable premium tax.
2. If the Annuitant dies after the first Policy year but prior to the
Policy anniversary that the Annuitant reaches age 80, the unadjusted
Death Benefit is the greater of:
(i) Account Value determined as of the date of the Annuitant's death; or
(ii) the Policy's unadjusted Death Benefit on the previous Policy
anniversary plus the total premium payments made since that date,
less the proportion that any partial surrender (including applicable
surrender charge) reduced Account Value and less any applicable premium
tax.
3. If the Annuitant dies on or after the Policy anniversary the Annuitant
reaches age 80, the unadjusted Death Benefit is the greater of:
(i) Account Value determined as of the date of the Annuitant's death; or
(ii) the unadjusted Death Benefit as of the Policy anniversary the Annuitant
reached age 80 plus any premium payments made since that date, less the
proportion that any partial surrender (including applicable surrender
charge) reduced Account Value and less any applicable premium tax.
Example: Assuming an Owner: (i) purchases a Policy for $100,000; (ii) makes
no additional premium payments and no partial surrenders; (iii) is not
subject to premium taxes; and (iv) the Annuitant's age is 70 on the Policy
date then:
Unadjusted
Annuitant's End of Account Death
Age Year Value Benefit
71 1 $103,000 $103,000
72 2 $110,000 $110,000
73 3 $ 80,000 $110,000
74 4 $120,000 $120,000
75 5 $130,000 $130,000
76 6 $150,000 $150,000
77 7 $160,000 $160,000
78 8 $130,000 $160,000
79 9 $ 90,000 $160,000
80 10 $170,000 $170,000
81 11 $140,000 $170,000
82 12 $190,000 $190,000
83 13 $150,000 $170,000
The purpose of this example is to show how the unadjusted Death Benefit works
based on purely hypothetical values and is not intended to imply performance.
<PAGE>
For a Policy issued with an Annuitant who was age 81 or older on the Policy
Date:
The unadjusted Death Benefit is the Account Value determined as of the date of
the Annuitant's death.
Death of an Owner, Joint Owner, or Annuitant Before the Maturity Date
General: In certain circumstances, Federal tax law requires that
distributions be made under this Policy upon the first death of:
o an Owner or Joint Owner, or
o the Annuitant if any Owner is a non-natural entity (such as a trust or
corporation).
The discussion below describes the methods available for distributing the value
of the Policy upon death.
Designated Beneficiary: At the death of any Owner (or Annuitant, if any Owner is
a non-natural entity), the person or entity first listed below who is alive or
in existence on the date of that death will become the Designated Beneficiary:
(1) Owner or Joint Owners.
(2) primary beneficiary.
(3) contingent beneficiary.
(4) Owner's estate.
The Designated Beneficiary will then be treated as the sole Owner of the Policy.
If there is more than one Designated Beneficiary, each one will be treated
separately in applying the tax law's rules described below.
Distribution rules: The distributions required by Federal tax law differ
depending on whether the Designated Beneficiary is the spouse of the deceased
Owner (or of the Annuitant, if the Policy is owned by an entity).
o Spouses - If the Designated Beneficiary is the surviving spouse of the
deceased person, we will continue the Policy in force with the
surviving spouse as the new Owner. If the deceased person was the
Annuitant and there was no surviving Contingent Annuitant, the
surviving spouse will automatically become the new Annuitant. At the
death of the surviving spouse, this provision may not be used again,
even if the surviving spouse remarries. In that case, the rules for
non-spouses will apply.
o Non-Spouses - If the Designated Beneficiary is not the surviving spouse of
the deceased person, this Policy cannot be continued in force
indefinitely. Instead, upon the death of any Owner (or Annuitant, if any
Owner is a non-natural entity), payments must be made to (or for the
benefit of) the Designated Beneficiary under one of the following payment
choices:
(1) Receive the Surrender Value in one lump sum payment upon receipt
of due proof of death.
(2) Receive the Surrender Value at any time during the five year
period following the date of death. At the end of the five year
period, we will pay in a lump sum payment any Surrender Value still
remaining.
<PAGE>
(3) Apply the Surrender Value to provide a Monthly Income Benefit
under Optional Payment Plan 1 or 2. The first Monthly Income Benefit
payment must be made no later than one year after the date of death.
Also, the Monthly Income Benefit payment period must be either the
lifetime of the Designated Beneficiary or a period not exceeding the
Designated Beneficiary's life expectancy.
If no choice is made by the Designated Beneficiary within 30 days
following receipt of due proof of death, we will use payment choice 2
(payment of the entire value of the Policy within 5 years of the date of
death). Due proof of death must be provided within 90 days of the date of
death. No further premium payments will be accepted after the non-spouse's
death. If the Designated Beneficiary dies before the entire Surrender
Value has been distributed, we will pay in a lump sum payment any
Surrender Value still remaining to the person named by the Designated
Beneficiary. If no person is so named, payment will be made to the
Designated Beneficiary's estate.
Under payment choices 1 or 2, the Policy will terminate upon payment of
the entire Surrender Value. Under payment choice 3, this Policy will
terminate when the Surrender Value is applied to provide a Monthly Income
Benefit.
Amount of the proceeds: If an Owner or Joint Owner dies and that person is
someone other than the Annuitant, the amount of the proceeds available is the
Surrender Value. If the Annuitant dies (whether or not he or she is an Owner or
Joint Owner), the amount of the proceeds available is the Death Benefit. Upon
receipt of due proof of the Annuitant's death, the Death Benefit will constitute
the new Surrender Value and will be treated in accordance with the instructions
provided by the Owner, subject to the distribution rules described above.
Guaranteed Minimum Death Benefit Rider
If an Annuitant dies prior to the Maturity Date while the Guaranteed Minimum
Death Benefit Rider (the "GMDB Rider") is in effect, the Designated Beneficiary
may elect the Death Benefit, described below, in lieu of the Surrender Value.
(The death benefit under the GMDB Rider may be referred to in our marketing
materials as the "Six Percent EstateProtector".) The Guaranteed Minimum Death
Benefit Rider may not be available in all states or markets.
If the GMDB Rider applies, the Death Benefit will be the greater of: (1) the
Death Benefit described above under "Death Benefit at Death of Annuitant," and
(2) the Guaranteed Minimum Death Benefit on the date we receive due proof of the
Annuitant's death, or, if later, the date of the request. The Guaranteed Minimum
Death Benefit is, on the Policy Date, equal to the initial premium payment. At
the end of each Valuation Period after such date, the Guaranteed Minimum Death
Benefit is the lesser of: (1) the total of all premium payments received,
multiplied by two, less the proportion by which any partial surrenders
(including applicable surrender charges) made prior to or during that Valuation
Period reduced Account Value; or (2) the Guaranteed Minimum Death Benefit at the
end of the preceding Valuation Period, increased as specified below, plus any
additional premium payments during the current Valuation Period and less the
proportion by which any partial surrender including any applicable surrender
charge reduced Account Value during the current Valuation Period.
The amount of the increase for the Valuation Period will be calculated by
applying a factor to the Guaranteed Minimum Death Benefit at the end of the
preceding Valuation Period. Until the anniversary on which the Annuitant attains
age 80, the factor is determined for each Valuation Period at an effective
annual rate of 6%, except that with respect to amounts invested in certain
Investment Subdivisions shown in the Policy, the increase factor will be
calculated as the lesser of: (1) the Net Investment Factor for the Valuation
Period, minus one, and (2) a factor for the Valuation Period equivalent to an
effective annual rate of 6%. Currently, these subdivisions include only the
Money Market Investment Subdivision. With respect to amounts allocated to the
Guarantee Account, we replace Item (1) above with a factor for the Valuation
Period equivalent to the credited rate(s) applicable to such amounts.
You may only purchase the GMDB Rider at the time of application. The Rider is
effective on the Policy Date and will remain in effect while the Policy is in
force and before income payments begin, or until the Policy anniversary
following the date of receipt of the Owner's request to terminate the rider.
There will be a charge made each year for expenses related to the Death Benefit
available under the terms of the Guaranteed Minimum Death Benefit Rider. This
charge will not exceed .35% of the prior year's average guaranteed minimum death
benefit. (See Guaranteed Minimum Death Benefit Charge.)
Income Payments
When you apply for a Policy, you may select any Maturity Date permitted by law;
however, this date can not be any later than the Policy anniversary following
the Annuitant's 90th birthday, unless we approve it. (Please note the following
exception: Policies issued under qualified retirement plans provide for income
payments to start at the date and under the option specified in the plan.)
<PAGE>
We will pay a Monthly Income Benefit to the Owner beginning on the Maturity Date
if the Annuitant is still living. We will pay the Monthly Income Benefit in the
form of variable income payments similar to those described in Optional Payment
Plan 1, Life Income with 10 Years Certain (automatic payment plan), using the
sex and settlement age of the Annuitant instead of the payee, unless another
election is made by the Owner. You may also choose to receive the Maturity Value
in one lump sum (in which case we will cancel the Policy).
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than ten years, payments will continue for his or her life. If the Annuitant
dies before the end of ten years, the remaining payments for the ten year period
will be discounted at the same rate used to calculate the monthly income. If the
remaining payments are variable income payments, the amount of each payment to
be discounted will be assumed equal to the value of the payment amount on the
date we receive due proof of death. We will pay this discounted amount in one
sum.
The Policy also provides optional forms of annuity payments, each of which is
payable on a fixed basis. Optional Payment Plans 1 and 5 also are available on a
variable basis. The Policy provides that all or part of the Account Value may be
used to purchase an annuity.
If you elect fixed income payments, the guaranteed amount payable will earn
interest at 3% compounded yearly. We may increase the interest rate which will
increase the amount paid to you or the payee.
If you elect variable income payments, your income payments, after the first
payment, will reflect the investment experience of the Investment Subdivisions
to which you allocated Account Value.
Annuity payments will be made monthly unless you elect quarterly, semi-annual or
annual installments. Under the Monthly Income Benefit and all of the Optional
Payment Plans, if any payment made more frequently than annually would be or
becomes less than $100, we reserve the right to reduce the frequency of payments
to an interval that would result in each payment being at least $100. If the
annual payment payable at maturity is less than $20, we will pay the Maturity
Value in a lump sum. Upon making such a payment, we will have no future
obligation under the Policy. Following are explanations of the Optional Payment
Plans available.
Optional Payment Plans
Plan 1 -- Life Income with Period Certain. This option guarantees periodic
payments during a designated period. If the payee lives longer than the minimum
period, payments will continue for his or her life. The minimum period can be
10, 15, or 20 years. The payee selects the designated period. If the payee dies
during the minimum period, we will discount the amount of the remaining
guaranteed payments at the same rate used in calculating income payments. We
will pay the discounted amount in one sum to the payee's estate unless otherwise
provided.
Plan 2 -- Income for a Fixed Period. This option provides for periodic payments
to be made for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly, or monthly. If the payee dies, we will discount the
amount of the remaining guaranteed payments to the date of the payee's death at
the same rate used in calculating income payments. We will pay the discounted
amount in one sum to the payee's estate unless otherwise provided.
Plan 3 -- Income of a Definite Amount. This option provides periodic payments of
a definite amount to be paid. Payments can be annual, semi-annual, quarterly, or
monthly. The amount paid each year must be at least $120 for each $1,000 of
proceeds. Payments will continue until the proceeds are exhausted. The last
payment will equal the amount of any unpaid proceeds. If the payee dies, we will
pay the amount of the remaining proceeds with earned interest in one sum to the
payee's estate unless otherwise provided.
Plan 4 -- Interest Income. This option provides for periodic payments of
interest earned from the proceeds left with us. Payments can be annual,
semi-annual, quarterly, or monthly. If the payee dies, we will pay the amount of
remaining proceeds and any earned but unpaid interest in one sum to the payee's
estate unless otherwise provided. This plan is not available under Qualified
Policies.
Plan 5 -- Joint Life and Survivor Income. This option provides for monthly
payments to be made to two payees for a guaranteed minimum of 10 years. Each
payee must be at least 35 years old when payments begin. Payments will continue
as long as either payee is living. If both payees die before the end of the
minimum period, we will discount the amount of the remaining payments for the
10-year period at the same rate used in calculating income payments. We will pay
the discounted amount in one sum to the survivor's estate unless otherwise
provided.
<PAGE>
If the payee is not a natural person, our consent must be obtained prior to
selecting an Optional Payment Plan.
Prior to the Maturity Date, you may change your Maturity Date to any date at
least ten years after the last premium payment. You also may change your
Optional Payment Plan or change the allocation of your investment among the
Investment Subdivisions before your Maturity Date. Further, during the
Annuitant's lifetime and before the Maturity Date, you may change the Owner,
Joint Owner, primary Beneficiary, contingent Beneficiary, and contingent
Annuitant upon written notice to the Home Office if you reserved this right. We
must receive this request for a change in a form satisfactory to us. The change
will take effect as of the date you sign the request. The change will be subject
to any payment made before we recorded the change.
Fixed income payments will begin on the date we receive due proof of the
Annuitant's death, on surrender, or on the Policy's Maturity Date. Variable
income payments will begin within seven days after the date payments would begin
under the corresponding fixed option. Payments under Optional Payment Plan 4
(Interest Income) will begin at the end of the first interest period after the
date proceeds are otherwise payable.
Variable Income Payments
Variable income payments will be determined using:
1. The maturity value (which is the surrender value of the Policy on the
date immediately preceding the Maturity Date);
2. The annuity tables contained in the Policy;
3. The Optional Payment Option selected; and
4. The investment performance of the portfolios selected.
To determine the amount of payment, we make this calculation:
1. Determine the dollar amount of the first income payment; then
2. Allocate that amount to the Investment Subdivisions according to your
instructions; then
3. Determine the number of Annuity Units for each Investment Subdivision by
dividing the amount allocated by the Annuity Unit Value on the Valuation
Day; and then
4. Calculate the value of the Annuity Units for each Investment Subdivision
on the Valuation Day for each income payment thereafter.
We assume an investment return of 3% per year, as applied to the applicable
mortality table. The amount of each income payment after the initial income
payment will depend upon how the portfolios perform, relative to the 3% assumed
rate.
Transfers After the Maturity Date
After income payments begin, if variable income payments are being made, the
payee may change the Investment Subdivisions from which payments are being made
once each calendar year by exchanging Annuity Units of one Investment
Subdivision for an equivalent dollar amount of Annuity Units of another
Investment Subdivision. We will not assess a charge on such transfers. The
transfer will be effective as of the end of the Valuation Period during which we
receive written request at our Home Office. However, we reserve the right to
limit the number of transfers if necessary for the Policy to continue to be
treated as an annuity under the Code. We also reserve the right to refuse to
execute any transfer if any of the Investment Subdivisions that would be
affected by the transfer is unable to purchase or redeem shares of the Fund in
which the Investment Subdivision invests or if the transfer would adversely
affect Account Value. If the number of annuity units remaining in an Investment
Subdivision after a transfer is less than 1, we will transfer the remaining
balance in addition to the amount requested for the transfer. We do not permit
transfers between the Investment Subdivisions and the Guarantee Account after
the Maturity Date.
<PAGE>
Federal Tax Matters
Introduction
This part of the Prospectus discusses the Federal income tax treatment of the
Policy. The Federal income tax treatment of the Policy is complex and sometimes
uncertain. The Federal income tax rules may vary with your particular
circumstances. This discussion does not address all of the Federal income tax
rules that may affect you and your Policy. This discussion also does not address
other Federal tax consequences, or state or local tax consequences, associated
with a Policy. As a result, you should always consult a tax adviser about the
application of tax rules to your individual situation.
Taxation of Non-Qualified Policies
This part of the discussion describes some of the Federal income tax rules
applicable to Non-Qualified Policies. A Non-Qualified Policy is a Policy not
issued in connection with a qualified retirement plan receiving special tax
treatment under the Code, such as an individual retirement annuity or a section
401(k) plan.
Tax Deferral on Earnings. The Federal income tax law does not tax any increase
in an Owner's Account Value until there is a distribution from the Policy.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
o An individual must own the Policy (or the tax law must treat the
Policy as owned by an individual);
o The investments of Account 4 must be "adequately diversified" in
accordance with Internal Revenue Service ("IRS") regulations;
o The Owner's right to choose particular investments for a Policy
must be limited; and
o The Policy's Maturity Date must not occur near the end of the
Annuitant's life expectancy.
This part of the Prospectus discusses each of these requirements.
Policies not owned by an individual -- no tax deferral and loss of interest
deduction: As a general rule, the Code does not treat a Policy that is owned by
an entity (rather than an individual) as an annuity contract for Federal income
tax purposes. The entity owning the Policy pays tax currently on the excess of
the Account Value over the premiums paid for the Policy. Policies issued to a
corporation or a trust are examples of Policies where the Owner pays current tax
on the Policy's earnings.
There are several exceptions to this rule. For example, the Code treats a Policy
as owned by an individual if the nominal owner is a trust or other entity that
holds the Policy as an agent for an individual. However, this exception does not
apply in the case of any employer that owns a Policy to provide deferred
compensation for its employees.
In the case of a Policy issued after June 8, 1997 to a taxpayer that is not an
individual, or a Policy held for the benefit of an entity, the entity will lose
its deduction for a portion of its otherwise deductible interest expenses. This
disallowance does not apply if the Owner pays tax on the annual increase in the
Account Value. Entities that are considering purchasing the Policy, or entities
that will benefit from someone else's ownership of a Policy, should consult a
tax advisor.
Investments in Account 4 must be diversified: For a Policy to be treated as an
annuity contract for Federal income tax purposes, the investments of a separate
account such as Account 4 must be "adequately diversified." The IRS has issued
regulations that prescribe standards for determining whether the investments of
Account 4 are adequately diversified. If Account 4 fails to comply with these
diversification standards, the Owner could be required to pay tax currently on
the excess of the Account Value over the premiums paid for the Policy.
Although we do not control the investments of all of the Funds (the Company only
indirectly controls those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
Account 4 will be considered "adequately diversified."
<PAGE>
Restrictions on the extent to which an Owner can direct the investment of
Account Values: Federal income tax law limits the Owner's right to choose
particular investments for the Policy. The U.S. Treasury Department stated in
1986 that it expected to issue guidance clarifying those limits, but it has not
yet done so. Thus, the nature of the limits is currently uncertain. As a result,
an Owner's right to allocate Account Values among the portfolios may exceed
those limits. If so, the Owner would be treated as the owner of the assets of
Account 4 and thus subject to current taxation on the income and gains from
those assets.
The Company does not know what limits the Treasury Department may set forth in
any guidance that the Treasury Department may issue or whether any such limits
will apply to existing Policies. The Company therefore reserves the right to
modify the Policy without the Owners' consent to attempt to prevent the tax law
from considering the Owners as the owners of the assets of Account 4.
Age at which annuity payouts must begin: Federal income tax rules do not
expressly identify a particular age by which annuity payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through annuity payouts, of the contract's premiums paid and
earnings. If annuity payouts under the Policy begin or are scheduled to begin on
a date past the Annuitant's 85th birthday, it is possible that the tax law will
not treat the Policy as an annuity contract for Federal income tax purposes. In
that event, the Owner would be currently taxable on the excess of the Account
Value over the premiums paid for the Policy.
No Guarantees Regarding Tax Treatment: The Company makes no guarantees regarding
the tax treatment of any Policy or of any transaction involving a Policy.
However, the remainder of this discussion assumes that your Policy will be
treated as an annuity contract for Federal income tax purposes and that the tax
law will not impose tax on any increase in your Account Value until there is a
distribution from your Policy.
Withdrawals and Surrenders. A withdrawal occurs when you receive less than the
total amount of the Policy's Surrender Value. In the case of a withdrawal, you
will pay tax on the amount you receive to the extent your Account Value before
the withdrawal exceeds your "investment in the contract." (This term is
explained below.) This income (and all other income from your Policy) is
ordinary income. The Code imposes a higher rate of tax on ordinary income than
it does on capital gains.
A surrender occurs when you receive the total amount of the Policy's Surrender
Value. In the case of a surrender, you will pay tax on the amount you receive to
the extent it exceeds your "investment in the contract."
Your "investment in the contract" generally equals the total of your premium
payments under the Policy, reduced by any amounts you previously received from
the Policy that you did not include in your income.
Your Policy imposes mortality charges relating to the Death Benefit, including
any GMDB Rider charges. It is possible that all or a portion of these charges
could be treated as withdrawals from the Policy.
Loans and Assignments. With the exception of certain Qualified Policies, the
Code treats any amount received as a loan under a Policy, and any assignment or
pledge (or agreement to assign or pledge) any portion of your Account Value, as
a withdrawal of such amount or portion.
Gifting a Policy. If you transfer ownership of your Policy - without receiving a
payment equal to your Policy's value - to a person other than your spouse (or to
your former spouse incident to divorce), you will pay tax on your Account Value
to the extent it exceeds your "investment in the contract." In such a case, the
new owner's "investment in the contract" will be increased to reflect the amount
included in your income.
Systematic Withdrawals. In the case of systematic withdrawals, the amount of
each withdrawal should be considered a distribution and taxed in the same manner
as a withdrawal from the Policy. However, there is some uncertainty regarding
the tax treatment of systematic withdrawals, and it is possible that additional
amounts could be included in income.
Taxation of Annuity Payouts. The Code imposes tax on a portion of each annuity
payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract." The Company will notify you
annually of the taxable amount of your annuity payout.
Pursuant to IRS regulations, you will pay tax on the full amount of your annuity
payouts once you have recovered the total amount of the "investment in the
contract." If annuity payouts cease because of the death of the Annuitant and
before the total amount of the investment in the contract has been recovered,
the unrecovered amount generally will be deductible.
<PAGE>
If proceeds are left with the Company (Optional Payment Plan 4), they are taxed
in the same manner as a surrender. The Owner must pay tax currently on the
interest credited on these proceeds. This treatment could also apply to Plan 3
if the payee is at an advanced age, such as age 80 or older.
Taxation of Death Benefits. The Company may distribute amounts from your Policy
because of the death of an Owner, a Joint Owner, or an Annuitant. The tax
treatment of these amounts depends on whether the Owner, Joint Owner, or
Annuitant dies before or after the Policy's Maturity Date.
Prior to the Policy's Maturity Date:
o If received under an annuity payout option, death benefits are taxed
in the same manner as annuity payouts.
o If not received under an annuity payout option, death benefits are
taxed in the same manner as a withdrawal.
After the Policy's Maturity Date:
o If received in accordance with the existing annuity payout option,
death benefits are excludible from income to the extent that they do
not exceed the unrecovered "investment in the contract." All annuity
payouts in excess of the unrecovered "investment in the contract"
are includible in income.
o If received in a lump sum, the tax law imposes tax on death benefits
to the extent that they exceed the unrecovered "investment in the
contract" at that time.
Penalty Taxes Payable on Withdrawals, Surrenders, or Annuity Payouts. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
Policy that is included in your gross income. The Code does not impose the 10%
penalty tax if one of several exceptions applies. These exceptions include
withdrawals, surrenders, or annuity payouts that:
o you receive on or after you reach age 59 1/2,
o you receive because you became disabled (as defined in the tax
law),
o a beneficiary receives on or after the death of the Owner, or
o you receive as a series of substantially equal periodic payments
for the life (or life expectancy) of the Owner.
It is uncertain whether systematic withdrawals will qualify for this last
exception. If they did, any modification of the systematic withdrawals could
result in certain adverse tax consequences. In addition, a transfer between
Investment Subdivisions may result in payments not qualifying for this
exception.
Special Rules If You Own More Than One Policy. In certain circumstances, you
must combine some or all of the Non-Qualified Policies you own in order to
determine the amount of an annuity payout, a surrender, or a withdrawal that you
must include in income. For example:
o If you purchase a Policy offered by this Prospectus and also
purchase at approximately the same time an immediate annuity, the
IRS may treat the two contracts as one contract.
o If you purchase two or more deferred annuity contracts from the same
life insurance company (or its affiliates) during any calendar year,
the Code treats all such contracts as one contract.
The effects of such aggregation are not clear. However, it could affect:
o the amount of a surrender, a withdrawal or an annuity payout that
you must include in income, and
o the amount that might be subject to the penalty tax described
above.
<PAGE>
Qualified Retirement Plans
The Company also designed the Policies for use in connection with certain types
of retirement plans that receive favorable treatment under the Code. Policies
issued to or in connection with a qualified retirement plan are called
"Qualified Policies." The Company does not currently offer all of the types of
Qualified Policies described, and may not offer them in the future. Prospective
purchasers should contact the Company's Home Office to learn the availability of
Qualified Policies at any given time.
The Federal income tax rules applicable to qualified plans are complex and
varied. As a result, this Prospectus makes no attempt to provide more than
general information about use of the Policy with the various types of qualified
plans. Persons intending to use the Policy in connection with a qualified plan
should obtain advice from a competent advisor.
Types of Qualified Policies. Some of the different types of Qualified
Policies include:
o Individual Retirement Accounts and Annuities ("Traditional IRAs")
o Roth IRAs
o Simplified Employee Pensions ("SEP's")
o Savings Incentive Matched Plan for Employees ("SIMPLE plans")
o Public school system and tax-exempt organization annuity plans
("403(b) plans")
o Qualified corporate employee pension and profit-sharing plans
("401(a) plans") and qualified annuity plans ("403(a) plans")
o Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
o Deferred compensation plans of state and local governments and
tax-exempt organizations ("457 plans")
Terms of Qualified Plans and Qualified Policies. The terms of a qualified plan
may affect your rights under a Qualified Policy. When issued in connection with
a qualified plan, the Company will amend a Policy as generally necessary to
conform to the requirements of the type of plan. However, the rights of any
person to any benefits under qualified plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Policy. In addition, the Company is not bound by the terms and conditions of
qualified plans to the extent such terms and conditions contradict the Policy,
unless we consent.
The Death Benefit and Qualified Policies. Pursuant to IRS regulations, IRAs may
not invest in life insurance contracts. We do not believe that these regulations
prohibit the Death Benefit, including that provided by the GMDB Rider, from
being provided under the Policies when the Company issues the Policies as
Traditional IRAs or Roth IRAs. However, the law is unclear and it is possible
that the presence of the Death Benefit under a Policy issued as a Traditional or
Roth IRA could result in increased taxes to the Owner.
It is also possible that the Death Benefit could be characterized as an
incidental death benefit. If the Death Benefit were so characterized, this could
result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental death benefits that may be provided
under qualified plans, such as in connection with a 403(b) plan. Even if the
Death Benefit under the Policy were characterized as an incidental death
benefit, it is unlikely to violate those limits unless the purchaser also
purchases a life insurance contract in connection with such plan.
Treatment of Qualified Policies Compared with Non-Qualified Policies. Although
some of the Federal income tax rules are the same for both Qualified and
Non-Qualified Policies, many of the rules are different. For example:
o The Code generally does not impose tax on the earnings under either
Qualified or Non-Qualified Policies until received.
o The Code does not limit the amount of premium payments and the time
at which premium payments can be made under Non-Qualified Policies.
However, the Code does limit both the amount and frequency of
premium payments made to Qualified Policies.
<PAGE>
o The Code does not allow a deduction for premium payments made for
Non-Qualified Policies, but sometimes allows a deduction or
exclusion from income for premium payments made to a Qualified
Policy.
The Federal income tax rules applicable to qualified plans and Qualified
Policies vary with the type of plan and Policy. For example:
o Federal tax rules limit the amount of premium payments that can be
made, and the tax deduction or exclusion that may be allowed for the
premium payments. These limits vary depending on the type of
qualified plan and the circumstances of the plan participant, e.g.,
the participant's compensation.
o Under most qualified plans, e.g., 403(b) plans and Traditional IRAs,
the Owner must begin receiving payments from the Policy in certain
minimum amounts by a certain age, typically age 70 1/2. However,
these "minimum distribution rules" do not apply to a Roth IRA.
o Loans are allowed in connection with certain types of qualified
plans, but Federal income tax rules prohibit loans under other
types of qualified plans. For example, Federal income tax rules
permit loans under some section 403(b) plans, but prohibit loans
under Traditional and Roth IRAs. If allowed, loans are subject
to a variety of limitations, including restrictions as to the
amount of the loan, the duration of the loan, and the manner in
which the loan must be repaid.
Amounts Received Under Qualified Policies. Amounts are generally subject to
income tax: Federal income tax rules generally include distributions from a
Qualified Policy in your income as ordinary income. Premium payments that are
deductible or excludible from income do not create "investment in the contract."
Thus, under many Qualified Policies there will be no "investment in the
contract" and you include the total amount you receive in your income. There are
exceptions. For example, you do not include amounts received from a Roth IRA if
certain conditions are satisfied.
Additional Federal taxes may be payable in connection with a Qualified Policy:
For example, failure to comply with the minimum distribution rules applicable to
certain qualified plans, such as Traditional IRAs, will result in the imposition
of an excise tax. This excise tax generally equals 50% of the amount by which a
minimum required distribution exceeds the actual distribution from the qualified
plan.
Federal penalty taxes payable on distributions: The Code may impose a penalty
tax equal to 10% of the amount of any payment from your Qualified Policy that is
includible in your income. The Code does not impose the penalty tax if one of
several exceptions apply. The exceptions vary depending on the type of Qualified
Policy you purchase. For example, in the case of an IRA, exceptions provide that
the penalty tax does not apply to a withdrawal, surrender, or annuity payout:
o received on or after the Owner reaches age 59 1/2,
o received on or after the Owner's death or because of the Owner's
disability (as defined in the tax law),
o received as a series of substantially equal periodic payments for
the life (or life expectancy) of the Owner, or
o received as reimbursement for certain amounts paid for medical
care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
Moving Money from One Qualified Policy or Qualified Plan to Another. Rollovers
and Transfers: In many circumstances you may move money between Qualified
Policies and qualified plans by means of a rollover or a transfer. Special rules
apply to such rollovers and transfers. If you do not follow the applicable
rules, you may suffer adverse Federal income tax consequences, including paying
taxes which you might not otherwise have had to pay. You should always consult a
qualified advisor before you move or attempt to move funds between any Qualified
Policy or plan and another Qualified Policy or plan.
Direct rollovers: The direct rollover rules apply to certain payments (called
"eligible rollover distributions") from section 401(a) plans, section 403(a) or
(b) plans, HR 10 plans, and Policies used in connection with these types of
plans. (The direct rollover rules do not apply to distributions from IRAs or
section 457 plans). The direct rollover rules require Federal income tax equal
to 20% of the eligible rollover distribution to be withheld from the amount of
the distribution, unless the Owner elects to have the amount directly
transferred to certain Qualified Policies or plans.
<PAGE>
Prior to receiving an eligible rollover distribution from the Company, we will
provide you with a notice explaining these requirements and how you can avoid
20% withholding by electing a direct rollover.
Federal Income Tax Withholding
The Company will withhold and remit to the IRS a part of the taxable portion of
each distribution made under a Policy unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, Federal income tax rules may require
us to withhold tax. At the time you request a withdrawal, surrender, or annuity
payout, we will send you forms that explain the withholding requirements.
Tax Status of the Company
Under existing Federal income tax laws, the Company does not pay tax on
investment income and realized capital gains of Account 4. The Company does not
anticipate that it will incur any Federal income tax liability on the income and
gains earned by Account 4. The Company, therefore, does not impose a charge for
Federal income taxes. If Federal income tax law changes and the Company must pay
tax on some or all of the income and gains earned by Account 4, the Company may
impose a charge against Account 4 to pay the taxes.
Changes in the Law
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this Prospectus. Congress, the IRS, and the courts may
modify these authorities, however, sometimes retroactively.
Voting Rights
As required by law, we will vote the portfolio shares held in Account 4 at
meetings of the shareholders of the Funds. The voting will be done according to
the instructions of Owners who have interests in any Investment Subdivisions
which invest in the portfolios of the Funds. If the 1940 Act or any regulation
under it should be amended, and if as a result we determine that we are
permitted to vote the portfolios' shares in our own right, we may elect to do
so.
We will determine the number of votes which you have the right to cast by
applying your percentage interest in an Investment Subdivision to the total
number of votes attributable to the Investment Subdivision. In determining the
number of votes, we will recognize fractional shares.
We will vote portfolio shares of a class held in an Investment Subdivision for
which we received no timely instructions in proportion to the voting
instructions which we received for all Policies participating in that Investment
Subdivision. We will apply voting instructions to abstain on any item to be
voted on a pro-rata basis to reduce the number of votes eligible to be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in an Investment Subdivision will receive proxy voting material,
reports and other materials relating to the portfolio. Since each portfolio may
engage in shared funding, other persons or entities besides the Company may vote
portfolio shares. See Investments of Account 4.
Requesting Payments
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, partial surrenders, or surrender
proceeds within seven days after receipt at our Home Office of all the
requirements for such a payment. We will determine the amount as of the date our
Home Office receives all such requirements.
We may delay making a payment, applying Account Value to a payment plan, or
processing a transfer request if: (1) the disposal or valuation of Account 4's
assets is not reasonably practicable because the New York Stock Exchange is
closed for other than a regular holiday or weekend, trading is restricted by the
SEC, or the SEC declares that an emergency exists; or (2) the SEC, by order,
permits postponement of payment to protect our Owners. We also may defer making
payments attributable to a check that has not cleared (which may take up to 15
days), and we may defer payment of proceeds from the Guarantee Account for a
withdrawal, surrender, or transfer request for up to six months from the date we
receive the request. The amount deferred will earn interest at a rate and for a
time period not less than the minimum required in the jurisdiction in which the
Policy is delivered.
<PAGE>
Distribution of the Policies
Distributor
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New Mexico,
and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is the
distributor and principal underwriter of the Policies. Capital Brokerage, a
Washington corporation and an affiliate of the Company, is located at 6630 W.
Broad St., Richmond, Virginia 23230.
Properly licensed registered representatives of independent broker-dealers will
sell the Policies. These broker-dealers have selling agreements with Capital
Brokerage and have been licensed by state insurance departments to represent us.
Properly licensed registered representatives of Capital Brokerage will also sell
the Policies. Capital Brokerage is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. (NASD). The Company will offer Policies
in all states where it is licensed to do business.
Commissions
Writing agents of the Company will receive commissions based on a commission
schedule and rules. The agents will receive a maximum commission of 2.5% of the
initial premium payment and any additional premium payment.
Agents may also be eligible to receive certain bonuses and allowances, as well
as retirement plan credits, based on commissions earned. Field management of the
Company receives compensation which we may base in part on the level of agent
commissions in their management units. Broker-dealers and their registered
agents will receive first-year and subsequent year commissions equivalent to the
total commissions and benefits received by the field management and writing
agents of the Company. We do not deduct these commissions from premium payments
or Account Value; we pay these commissions.
Owner Questions
The obligations to Owners under the Policies are those of the Company. Please
direct your questions and concerns to us at our Home Office.
Return Privilege
Within the free-look period after you receive the Policy, you may cancel it for
any reason by delivering or mailing it postage prepaid, to our Home Office,
Variable Products Department, 6610 W. Broad Street, Richmond, Virginia 23230. A
Policy canceled under this provision will be void. Unless state law requires
that premium payments be returned as the refund, the amount of the refund will
equal the Account Value less the bonus credits but without reduction of any
surrender charge. If state law requires that premium payments be returned, the
amount of the refund will equal the greater of (1) the Account Value less the
bonus credits but without reduction by any surrender charges, plus any amount
deducted from the premium payments prior to allocation to Account 4 and (2) the
premium payments made less any withdrawals previously taken. In certain states
the Owner may have more than 10 days to return the Policy for a refund.
State Regulation
As a life insurance company organized and operated under the laws of the
Commonwealth of Virginia, we are subject to provisions governing life insurers
and to regulation by the Virginia Commissioner of Insurance.
Our books and accounts are subject to review and examination by the State
Corporation Commission of the Commonwealth of Virginia at all times. That
Commission conducts a full examination of our operations at least every five
years.
Records and Reports
As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to Account 4. At
least once each year, we will send you a report showing information about your
Policy for the period covered by the report. The report will show the Account
Value in each Investment Subdivision. The report also will show premium payments
and charges made during the statement period. We also will send you an annual
and a semi-annual report for each portfolio underlying an Investment Subdivision
to which you have allocated Account Value, as required by the 1940 Act. In
addition, when you make premium payments, make transfers or make partial
surrenders, you will receive a written confirmation of these transactions.
<PAGE>
Other Information
A Registration Statement has been filed with the SEC, under the Securities Act
of 1933 as amended, for the Policies being offered here. This Prospectus does
not contain all the information in the Registration Statement, its amendments
and exhibits. Please refer to the Registration Statement for further information
about Account 4, the Company, and the Policies offered. Statements in this
Prospectus about the content of Policies and other legal instruments are
summaries. For the complete text of those Policies and instruments, please refer
to those documents as filed with the SEC and available on the SEC's website at
http://www.sec.gov.
Year 2000 Readiness Disclosure
Like all financial services providers, we utilize computer systems that may be
affected by Year 2000 date data processing issues and we also rely on service
providers, including banks, custodians, administrators, and investment managers
that also may be affected. We are engaged in a process to evaluate and develop
plans to have our computer systems and critical applications ready to process
Year 2000 date data. We also are confirming that our service providers are also
so engaged. The resources that are being devoted to this effort are substantial.
Further, we anticipate that we will spend approximately $2 million to $5 million
dollars on this conversion. Remedial actions include inventorying our computer
systems, applications and interfaces, assessing the impact of Year 2000 date
data on them, developing a range of solutions specific to particular situations
and implementing appropriate solutions. Some systems, applications and
interfaces will be replaced or upgraded to new software or new releases or
existing software which are Year 2000 ready. It is difficult to predict with
precision whether the amount of resources ultimately devoted, or the outcome of
these efforts, will have any negative impact on us and Account 4. However, as of
the date of this prospectus, we do not anticipate that Owners will experience
negative effects on their investment, or on the services provided in connection
therewith, as a result of Year 2000 transition implementation. Our target dates
for completion of these activities depend upon the particular situation. Our
goal is to be substantially Year 2000 ready for critical applications on or
about mid-1999, but there can be no assurance that we will be successful, or
that interaction with other service providers will not impair our services at
that time.
If we are not successful in our Year 2000 transition, or implementation, or
if interaction with other service providers is impaired, it is possible that we
could encounter difficulty and/or delays in calculating unit values, redeeming
shares, delivering account statements and providing other information,
communication and servicing to our policyowners. In light of our current efforts
to address this issue, we do not consider the likelihood of such occurrences to
be very high.
Legal Matters
The Company, like other life insurance companies, is involved in lawsuits,
including class action lawsuits. In some class action and other lawsuits
involving insurance companies, substantial damages have been sought and/or
material settlement payments have been made. Although the Company cannot predict
the outcome of any litigation with certainty, the Company believes that at the
present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on it or Account 4.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
The Policies
Transfer of Annuity Units.
Net Investment Factor.
Termination of Participation Agreements.
Calculation of Performance Data
Money Market Investment Subdivisions
Other Investment Subdivisions.
Federal Tax Matters.
Taxation of GE Life & Annuity
IRS Required Distributions
General Provisions
Using the Policies as Collateral
Non-Participating.
Misstatement of Age or Sex
Incontestability
Statement of Values.
Written Notice
Distribution of the Policies
Legal Developments Regarding Employment-Related Benefit Plans.
Legal Matters.
Experts.
Change in Auditors
Financial Statements
<PAGE>
PART B
GE Life & Annuity Separate Account 4
Statement of Additional Information
For the
Flexible Premium Variable Deferred Annuity Policy
Form P1152 1/99
Offered by
GE Life and Annuity Assurance Company
(A Virginia Stock Corporation)
6610 W. Broad Street
Richmond, Virginia 23230
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the above-named Flexible Premium Variable Deferred
Annuity Policy ("Policy") offered by GE Life and Annuity Assurance Company. You
may obtain a copy of the Prospectus dated _________ by calling (800) 352-9910,
or by writing to GE Life and Annuity Assurance Company, 6610 W. Broad Street,
Richmond, Virginia 23230. Terms used in the current Prospectus for the Policy
are incorporated in this Statement.
This Statement of Additional Information is
not a Prospectus and should be read only in conjunction
with the Prospectuses for the Policy and the Funds.
Dated ___________
<PAGE>
Statement of Additional Information
Table of Contents
Page
The Policies
Transfer of Annuity Units.
Net Investment Factor.
Termination of Participation Agreements.
Calculation of Performance Data
Money Market Investment Subdivisions
Other Investment Subdivisions.
Federal Tax Matters.
Taxation of GE Life & Annuity
IRS Required Distributions
General Provisions
Using the Policies as Collateral
Non-Participating.
Misstatement of Age or Sex
Incontestability
Statement of Values.
Written Notice
Distribution of the Policies
Legal Developments Regarding Employment-Related Benefit Plans.
Legal Matters.
Experts.
Change in Auditors
Financial Statements
<PAGE>
The Policies
Transfer of Annuity Units
At the Owner's request, Annuity Units may be transferred once per calendar year
from the Investment Subdivisions in which they are currently held. However,
where permitted by state law, we reserve the right to refuse to execute any
transfer if any of the Investment Subdivisions that would be affected by the
transfer are unable to purchase or redeem shares of the mutual funds in which
the Investment Subdivisions invest. The number of Annuity Units to be
transferred is (a) times (b) divided by (c) where: (a) is the number of Annuity
Units in the current Investment Subdivision desired to be transferred; (b) is
the Annuity Unit Value for the Investment Subdivision in which the Annuity Units
are currently held; and (c) is the Annuity Unit Value for the Investment
Subdivision to which the transfer is made.
If the number of Annuity Units remaining in an Investment Subdivision after the
transfer is less than 1, we will transfer the amount remaining in addition to
the amount requested. We will not transfer into any Investment Subdivision
unless the number of Annuity Units of that Investment Subdivision after the
transfer is at least 1. The amount of the income payment as of the date of the
transfer will not be affected by the transfer (however, subsequent variable
income payments will reflect the investment experience of the selected
Investment Subdivisions).
Net Investment Factor
The net investment factor measures investment performance of the Investment
Subdivisions of Account 4 during a Valuation Period. Each Investment Subdivision
has its own net investment factor for a Valuation Period. The net investment
factor of an Investment Subdivision available under the Policies for a Valuation
Period is (a) divided by (b) minus (c) where:
(a) is (1) the value of the net assets of that Investment Subdivision at the
end of the preceding Valuation Period, plus (2) the investment income and
capital gains, realized or unrealized, credited to the net assets of that
Investment Subdivision during the Valuation Period for which the net
investment factor is being determined, minus (3) the capital losses, realized
or unrealized, charged against those assets during the Valuation Period, minus
(4) any amount charged against that Investment Subdivision for taxes, or any
amount we set aside during the Valuation Period as a provision for taxes
attributable to the operation or maintenance of that Investment Subdivision;
and
(b) is the value of the net assets of that Investment Subdivision at the end
of the preceding Valuation Period; and
(c) is a charge no greater than .004271% for each day in the Valuation Period.
This corresponds to 1.30% and 0.25% per year of the net assets of that
Investment Subdivision for mortality and expense risks, and for administrative
expenses, respectively.
The values of the assets in Account 4 will be taken at their fair market value
in accordance with generally accepted accounting practices and applicable laws
and regulations.
Termination of Participation Agreements
The participation agreements pursuant to which the Funds sell their shares to
Account 4 contain varying provisions regarding termination. The following
summarizes those provisions:
Janus Aspen Series. This agreement may be terminated by the parties on six
months' advance written notice.
Variable Insurance Products Fund, Variable Insurance Products Fund II and
Variable Insurance Products Fund III. ("the Fund") These agreements provide for
termination (1) on one year's advance notice by either party, (2) at the
Company's option if shares of the Fund are not reasonably available to meet
requirements of the policies, (3) at the option of either party if certain
enforcement proceedings are instituted against the other, (4) upon vote of the
policyowners to substitute shares of another mutual fund, (5) at the Company's
option if shares of the Fund are not registered, issued, or sold in accordance
with applicable laws, or if the Fund ceases to qualify as a regulated investment
company under the Code, (6) at the option of the Fund or its principal
underwriter if it determines that the Company has suffered material adverse
changes in its business or financial condition or is the subject of material
adverse publicity, (7) at the option of the Company if the Fund has suffered
material adverse changes in its business or financial condition or is the
subject of material adverse publicity, or (8) at the option of the Fund or its
principal underwriter if the Company decides to make another mutual fund
available as a funding vehicle for its policies.
<PAGE>
GE Investments Funds, Inc. This agreement may be terminated at the option of any
party upon six months' written notice to the other parties, unless a shorter
time is agreed to by the parties.
Oppenheimer Variable Account Funds. This agreement may be terminated by the
parties on six months' advance written notice.
Federated Insurance Series. This agreement may be terminated by any of the
parties on 180 days written notice to the other parties.
The Alger American Fund. This agreement may be terminated at the option of any
party upon six months' written notice to the other parties, unless a shorter
time is agreed to by the parties.
Goldman Sachs Variable Insurance Trust. This agreement may be terminated at the
option of any party upon six months' written notice to the other parties, unless
a shorter time is agreed to by the parties.
Salomon Brothers Variable Series Funds Inc. This agreement may be terminated at
the option of any party upon six months' advance written notice to the other
parties, unless a shorter time is agreed to by the parties.
Calculation of Performance Data
From time to time, we may disclose total return, yield, and other performance
data for the Investment Subdivisions pertaining to the Policies. Such
performance data will be computed, or accompanied by performance data
computed, in accordance with the standards defined by the Securities and
Exchange Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Policy. Premium taxes currently range generally from 0% to 3.5% of premium
payments and are generally based on the rules of the state in which you reside.
"Money Market" Investment Subdivisions
From time to time, advertisements and sales literature may quote the yield of
one or more of the "money market" Investment Subdivisions for a seven-day
period, in a manner which does not take into consideration any realized or
unrealized gains or losses on shares of the corresponding money market
investment portfolio or on its portfolio securities. This current annualized
yield is computed by determining the net change (exclusive of realized gains and
losses on the sale of securities and unrealized appreciation and depreciation
and income other than investment income) at the end of the seven-day period in
the value of a hypothetical account under a Policy having a balance of one unit
in that "money market" Investment Subdivision at the beginning of the period,
dividing such net change in account value by the value of the account at the
beginning of the period to determine the base period return, and annualizing the
result on a 365-day basis. The net change in account value reflects: 1) net
income from the investment portfolio attributable to the hypothetical account;
and 2) charges and deductions imposed under the Policy which are attributable to
the hypothetical account. The charges and deductions include the per unit
charges for the policy maintenance charge, administrative expense charge, and
the mortality and expense risk charge. For purposes of calculating current
yields for a Policy, an average per unit policy maintenance charge is used.
Current Yield will be calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) X (365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized appreciation
and depreciation and income other than investment income) for the seven-day
period attributable to a hypothetical account having a balance of one
Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
<PAGE>
UV = the unit value on the first day of the seven-day period.
The effective yield of a "money market" Investment Subdivision determined on a
compounded basis for the same seven-day period may also be quoted. The
effective yield is calculated by compounding the base period return according
to the following formula:
Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized appreciation
and depreciation and income other than investment income) for the seven-day
period attributable to a hypothetical account having a balance of one
Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
The yield on amounts held in a "money market" Investment Subdivision normally
will fluctuate on a daily basis. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates of
return. A "money market" Investment Subdivision's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the Investment Subdivision's corresponding money market investment portfolio,
the types and quality of portfolio securities held by that investment portfolio,
and that investment portfolio's operating expenses. Because of the charges and
deductions imposed under the Policy, the yield for a "money market" Investment
Subdivision will be lower than the yield for its corresponding "money market"
investment portfolio.
Yield calculations do not take into account the surrender charge under the
Policy, a maximum of 8% of each premium payment made during the 8 years prior to
a full or partial surrender, or charges for the GMDB rider. Yield calculations
also do not reflect the Bonus Credit.
As of the date of this SAI, the available Money Market Investment Subdivision
had not yet commenced operations. However, yields calculated for the underlying
GE Investments Money Market Fund as of December 31, 1997, less the Mortality and
Expense Risk charge (1.30%), the Administrative Expense Charge (.25%), and the
Policy Maintenance Charge (which, for these purposes, is assumed to be
equivalent to .10% of Account Value) are as follows:
Current 3.78%
Effective 3.85%
The above figures do not reflect the surrender charge, the GMDB charge, or the
Bonus Credit. Past performance is not a guarantee of future results.
Please note that the underlying Fund supplied information on which these yields
were calculated. While we have no reason to doubt the accuracy of the
information provided by the Fund, we have not independently verified this
information.
Other Investment Subdivisions
Total Return. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Investment
Subdivisions for various periods of time including 1 year, 5 years and 10 years,
or from inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Policy to the redemption value of that investment as of the last day of
the period. The ending date for each period for which total return quotations
are provided will be for the most recent practicable, considering the type and
media of the communication, and will be stated in the communication.
For periods that begin before the Policy was available, performance data will be
based on the performance of the underlying portfolios, with the level of Account
4 and policy charges currently in effect. Average annual total return will be
calculated using Investment Subdivision unit values and deductions for the
policy maintenance charge and the surrender charge as described below:
1. We calculate unit value for each Valuation Period based on the
performance of the Investment Subdivision's underlying investment portfolio
(after deductions for Fund expenses, the administrative expense charge, and
the mortality and expense risk charge).
2. The policy maintenance charge is $25 per year, deducted at the beginning of
each Policy Year after the first. For purposes of calculating average annual
total return, an average policy maintenance charge (currently 0.1% of account
value attributable to the hypothetical investment) is used. This charge will
be waived if the Account Value is at least $10,000 at the time the charge is
due.
3. The surrender charge will be determined by assuming a surrender of the
Policy at the end of the period. Average annual total return for periods of
eight years or less will therefore reflect the deduction of a surrender
charge.
4. Total return does not consider the GMDB charges.
5. Total return assumes the payment of a 4% bonus credit. The total return
figures would be lower if a reduced bonus credit applied, or if no bonus credit
applied.
6. Total return will then be calculated according to the following formula:
TR = (ERV/P)1/N - 1
where:
TR = the average annual total return for the period.
ERV = the ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
N = the duration of the period (in years).
The available Investment Subdivisions have not yet commenced operations;
therefore, standard performance data for the available Investment Subdivisions
is not available at this time. However, non-standard adjusted historical
performance data (reflects all fees and charges including surrender charges, but
not including charges for the optional GMDB) for the Funds underlying the
available Investment Subdivisions is as follows:
Total Return for the available Investment Subdivisions is as follows:
<TABLE>
<CAPTION>
From the
For the For the Date of
For the For the 5-year 10-year Portfolio Date of
1-year 3-year period period Inception Portfolio
period period ended ended to Inception
ended ended 12/31/97 12/31/97 12/31/97
12/31/97 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Subdivision
Balanced
Janus Aspen Balanced 17.70 19.08 N/A N/A 14.76 09/13/93
Portfolio
VIP II Asset Manager 16.21 15.41 11.39 N/A 11.40 09/06/89
Portfolio
Salomon Brothers Total N/A N/A N/A N/A N/A N/A
Return Fund
GE Investments Total 13.48 16.72 12.71 12.22 10.73 07/01/85
Return Fund
Oppenheimer Multiple 12.71 16.04 11.75 11.33 10.60 02/09/87
Strategies Fund
Growth
Janus Aspen Growth 18.36 21.86 N/A N/A 16.15 09/13/93
Portfolio
Janus Aspen Capital N/A N/A N/A N/A 22.97 05/01/97
Appreciation Portfolio
Alger American Growth 21.43 22.98 17.78 N/A 18.04 01/09/89
Portfolio
VIP II Contrafund Portfolio 19.78 N/A N/A N/A 26.77 01/03/95
VIP Growth Portfolio 19.11 22.41 16.49 15.71 13.91 10/09/86
Oppenheimer Growth Fund 22.38 27.68 17.10 15.20 13.88 04/03/85
VIP III Growth 25.73 N/A N/A N/A 25.04 01/03/95
Opportunities Portfolio
Goldman Sachs Mid Cap N/A N/A N/A N/A N/A N/A
Equity Fund
GE Investments Value N/A N/A N/A N/A 29.10 05/01/97
Equity Fund
International Stock
Janus Aspen International 14.02 23.47 N/A N/A 17.65 05/02/94
Growth Portfolio
VIP Overseas Portfolio 6.91 9.35 12.55 8.24 6.82 01/28/87
GE Investments 5.50 N/A N/A N/A 7.99 05/01/95
International Equity Fund
High Yield Bond
Oppenheimer High Income 7.58 13.89 12.20 12.87 11.84 04/30/86
Fund
Federated High Income Bond 9.24 14.14 N/A N/A 9.55 03/01/94
Fund II
Diversified Bond
Janus Aspen Flexible 7.12 12.73 N/A N/A 8.40 09/13/93
Income Portfolio
Aggressive Growth
Janus Aspen Aggressive 8.04 13.73 N/A N/A 17.71 09/13/93
Growth Portfolio
Oppenheimer Aggressive 7.03 19.29 14.39 14.76 13.80 08/15/86
Growth Fund
Alger American Small 6.74 16.81 11.08 N/A 17.76 09/21/88
Capitalization Portfolio
Growth & Income
Federated American Leaders 28.17 27.35 N/A N/A 19.94 02/10/94
Fund II
GE Investments US Equity 27.94 N/A N/A N/A 28.01 01/02/95
Fund
Goldman Sachs Growth & N/A N/A N/A N/A N/A N/A
Income Fund
Salomon Brothers Investors N/A N/A N/A N/A N/A N/A
Fund
VIP Equity-Income 23.84 23.73 18.65 15.25 13.02 10/09/86
Portfolio
VIP III Growth & Income 25.87 N/A N/A N/A 25.87 12/31/96
Portfolio
GE Investments S&P 500 26.08 28.51 18.91 16.27 14.38 04/14/85
Index Fund
Corporate Bond
Oppenheimer Bond Fund 4.55 8.08 6.60 8.12 8.40 04/03/85
Salomon Brothers Strategic N/A N/A N/A N/A N/A N/A
Bond Fund
GE Investments Income Fund 4.34 N/A N/A N/A 7.28 01/02/95
Specialty
Federated Utility Fund II 22.33 18.71 N/A N/A 12.83 02/10/94
GE Investments Real Estate 15.05 N/A N/A N/A 25.42 05/01/95
Securities Fund
Global Stock
Janus Aspen Worldwide 17.75 24.36 N/A N/A 21.44 09/13/93
Growth Portfolio
Money Market
GE Investments Money 0.60 3.25 2.86 4.04 4.02 06/30/85
Market Fund
</TABLE>
++ Returns for periods of less than one year are not annualized.
Past performance is not a guarantee of future results.
The Funds have provided the price information used to calculate the total return
of the Investment Subdivisions for periods prior to the inception of the
Investment Subdivisions. While we have no reason to doubt the accuracy of the
figures provided by the Funds, we have not independently verified such
information.
Other Performance Data
We may disclose cumulative total return in conjunction with the standard format
described above. The cumulative total return will be calculated using the
following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting
deductions as described above) of the
hypothetical investment at the end of
the period.
P = a hypothetical single investment of $1,000.
Sales literature may also quote cumulative and/or average annual total return
that does not reflect the surrender charge. This is calculated in exactly the
same way as average annual total return, except that the ending redeemable value
of the hypothetical investment is replaced with an ending value for the period
that does not take into account any charges on withdrawn amounts.
Other non-standard quotations of Investment Subdivision performance may also be
used in sales literature. Such quotations will be accompanied by a description
of how they were calculated.
Federal Tax Matters
Taxation of GE Life & Annuity
We do not expect to incur any federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Policies. (See Federal Tax Matters section of the Prospectus.) Based upon these
expectations, no charge is being made currently to Account 4 for federal income
taxes which may be attributable to the Account. We will periodically review the
question of a charge to Account 4 for federal income taxes related to the
Account. Such a charge may be made in future years if we believe that we may
incur federal income taxes. This might become necessary if the tax treatment of
the Company is ultimately determined to be other than what we currently believe
it to be, if there are changes made in the federal income tax treatment of
annuities at the corporate level, or if there is a change in our tax status. In
the event that we should incur federal income taxes attributable to investment
income or capital gains retained as part of the reserves under the Policies, the
Account Value would be correspondingly adjusted by any provision or charge for
such taxes.
<PAGE>
We may also incur state and local taxes (in addition to premium taxes) in
several states. At present, these taxes, with the exception of premium taxes,
are not significant. If there is a material change in applicable state or local
tax laws causing an increase in taxes other than premium taxes (for which we
currently impose a charge), charges for such taxes attributable to Account 4
may be made.
IRS Required Distributions
In order to be treated as an annuity contract for federal income tax purposes,
section 72(s) of the Code requires any Non-Qualified Policy to provide that (a)
if any Owner dies on or after the Maturity Date but prior to the time the entire
interest in the Policy has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Maturity Date, the entire interest in the Policy will be
distributed (1) within five years after the date of that Owner's death, or (2)
as income payments which will begin within one year of that Owner's death and
which will be made over the life of the Owner's "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary. The
"designated beneficiary" generally is the person who will be treated as the sole
owner of the Policy following the death of the Owner, Joint Owner or, in certain
circumstances, the Annuitant. However, if the "designated beneficiary" is the
surviving spouse of the decedent, these distribution rules will not apply until
the surviving spouse's death (and this spousal exception will not again be
available). If any Owner is not an individual, the death of the Annuitant will
be treated as the death of an Owner for purposes of these rules.
The Non-Qualified Policies contain provisions which are intended to comply with
the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code section 72(s) when clarified by regulation or otherwise.
Other rules may apply to Qualified Policies.
General Provisions
Using the Policies as Collateral
A Non-Qualified Policy can be assigned as collateral security. We must be
notified in writing if a Policy is assigned. Any payment made before the
assignment is recorded at our Home Office will not be affected. We are not
responsible for the validity of an assignment. Your rights and the rights of a
Beneficiary may be affected by an assignment.
A Qualified Policy may not be sold, assigned, transferred, discounted, pledged
or otherwise transferred except under such conditions as may be allowed under
applicable law.
The basic benefits of the Policy are assignable. Additional benefits added by
rider may or may not be available/eligible for assignments.
Non-Participating
The Policy is non-participating. No dividends are payable.
Misstatement of Age or Sex
If an Annuitant's age or sex was misstated on the policy data page, any policy
benefits or proceeds, or availability thereof, will be determined using the
correct age and sex.
Incontestability
We will not contest the Policy.
Statement of Values
At least once each year, we will send you a statement of values within 30 days
after each report date. The statement will show Account Value, premium payments
and charges made during the report period.
Written Notice
Any written notice should be sent to us at our Home Office at 6610 West Broad
Street, Richmond, Virginia 23230. The policy number and the Annuitant's full
name must be included.
<PAGE>
We will send all notices to the Owner at the last known address on file with the
company.
Distribution of the Policies
Capital Brokerage Corporation, the principal underwriter of the Policies, is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc.
The Policies are sold to the public through brokers licensed and registered
under the federal securities laws and state insurance laws that have entered
into agreements with Capital Brokerage Corporation. The Policy is also sold by
properly licensed registered representatives of Capital Brokerage Corporation.
The offering is continuous and we do not anticipate discontinuing the offering
of the Policies. However, we do reserve the right to discontinue the offering of
the Policies.
Legal Developments Regarding Employment-Related Benefit Plans
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for Tax
Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity benefits
provided under an employee's deferred compensation plan could not, under Title
VII of the Civil Rights Act of 1964, vary between men and women on the basis of
sex. The Policy contains guaranteed annuity purchase rates for certain optional
payment plans that distinguish between men and women. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris, and Title VII generally, on any employment-related insurance
or benefit program for which a Policy may be purchased.
In addition, we are subject to the insurance laws and regulations of other
states within which we are licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
determining permissible investments. Presently, we are licensed to do business
in the District of Columbia and all states, except New York.
Legal Matters
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to federal securities laws applicable to the
issue and sale of the Policies described in this Prospectus. Patricia L. Dysart,
Assistant Vice President and Associate General Counsel of the Company, has
provided advice on certain legal matters pertaining to the Policy, including the
validity of the Policy and the Company's right to issue the Policies under
Virginia insurance law.
Experts
KPMG LLP.
The consolidated balance sheets of The Life Insurance Company of Virginia, now
known as GE Life and Annuity Assurance Company, and subsidiary as of December
31, 1997 and 1996, and the related consolidated statements of income,
stockholder's equity and cash flows for the year ended December 31, 1997, the
nine months ended December 31, 1996 and the preacquisition three months period
ended March 31, 1996, and the statement of assets and liabilities of Life of
Virginia Separate Account 4, now known as GE Life & Annuity Separate Account 4,
as of December 31, 1997 and the related statements of operations and changes in
net assets for each of the two years or lesser periods then ended have been
included herein and in the registration statement in reliance upon the reports
of KPMG LLP, independent certified public accountants, appearing elsewhere
herein and upon the authority of such firm as experts in accounting and
auditing.
The report of KPMG LLP with respect to the consolidated financial statements of
The Life Insurance Company of Virginia, now known as GE Life and Annuity
Assurance Company, and subsidiary contains an explanatory paragraph that states
that effective April 1, 1996, General Electric Capital Corporation acquired all
of the outstanding stock of The Life Insurance Company of Virginia, now known as
GE Life and Annuity Assurance Company, in a business combination accounted for
as a purchase. As a result of the acquisition, the consolidated financial
information for the periods after the acquisition is presented on a different
cost basis than that for the periods before the acquisition and, therefore, is
not comparable.
Ernst & Young LLP.
<PAGE>
Ernst & Young LLP, independent auditors, have audited the consolidated
statements of income, stockholder's equity and cash flows of GE Life and Annuity
Assurance Company and subsidiaries (formerly The Life Insurance Company of
Virginia and subsidiaries) for the year ended December 31, 1995 and the
statements of operations and changes in net assets of GE Life & Annuity Separate
Account 4 (formerly Life of Virginia Separate Account 4) for the year or period
ended December 31, 1995 as set forth in their report, which is included in this
Statement of Additional Information and Registration Statement. The financial
statements are included herein in reliance on their report, given on their
authority as experts in accounting and auditing.
Change in Auditors
Subsequent to the acquisition of us by GNA Corporation on April 1, 1996, we
selected KPMG LLP to be our auditor. Accordingly, our principal auditor
changed for the year ending December 31, 1996, from Ernst & Young LLP, to KPMG
LLP. The former auditors were dismissed and KPMG LLP was retained because KPMG
LLP is the auditor for GE Capital, the indirect parent of GNA Corporation. This
change was approved by the members of the Board of Directors of the Company.
Neither KPMG LLP's nor Ernst & Young LLP's reports on the financial statements
contain any adverse opinion or a disclaimer of opinion, or were qualified or
modified as to uncertainty or audit scope. Furthermore, there were no
disagreements with either on any matter of accounting principle or practice,
financial statement disclosure or auditing scope or procedure which would have
caused them to make reference to the subject matter of the disagreement in
connection with their reports.
Financial Statements
This Statement of Additional Information contains financial statements for the
Company and for Life of Virginia Separate Account 4, now known as GE Life &
Annuity Separate Account 4, as of December 31, 1997, and for each of the three
years in the period then ended.
Unaudited interim financial statements for the Company through September 30,
1998 have also been included.
The consolidated financial statements of The Life Insurance Company of Virginia,
now known as GE Life and Annuity Assurance Company, and subsidiaries included
herein should be distinguished from the financial statements of Account 4 and
should be considered only as bearing on the ability of the Company to meet its
obligations under the Policy.
Such consolidated financial statements of The Life Insurance Company of
Virginia, now known as GE Life and Annuity Assurance Company, and subsidiaries
should not be considered as bearing on the investment performance of the assets
held in Account 4.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
Year ended December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Table of Contents
Year ended December 31, 1997
=============================================================================
Page
Independent Auditors' Report................................................1
Financial Statements:
Statements of Assets and Liabilities..................................3
Statements of Operations..............................................9
Statements of Changes in Net Assets..................................20
Notes to Financial Statements..............................................31
=============================================================================
<PAGE>
1
Report of Independent Auditors
Contractholders
Life of Virginia Separate Account 4
and Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying statements of assets and liabilities of Life of
Virginia Separate Account 4 (the Account) (comprising the GE Investments Funds,
Inc.--S&P 500 Index, Money Market, Total Return, International Equity, Real
Estate Securities, Global Income, Value Equity and Income Funds; the Oppenheimer
Variable Account Funds--Bond, Capital Appreciation, Growth, High Income and
Multiple Strategies Funds; the Variable Insurance Products Fund--Equity-Income,
Growth and Overseas Portfolios; the Variable Insurance Products Fund II--Asset
Manager and Contrafund Portfolios; the Variable Insurance Products III--Growth &
Income and Growth Opportunities Portfolios; the Federated Investors Insurance
Series--American Leaders, High Income Bond and Utility Funds II; the Alger
American--Small Cap and Growth Portfolios; the PBHG Insurance Series Fund--PBHG
Large Cap Growth and PBHG Growth II Portfolios; and the Janus Aspen
Series--Aggressive Growth, Growth, Worldwide Growth, Balanced, Flexible Income,
International Growth and Capital Appreciation Portfolios) as of December 31,
1997 and the related statements of operations and changes in net assets for the
aforementioned funds and the GE Investments Funds Inc. --Government Securities
Fund; Oppenheimer Variable Account Funds--Money Fund; Variable Insurance
Products Funds--Money Market and High Income Portfolios; and Neuberger & Berman
Advisers Management Trust--Balanced, Bond and Growth Portfolios of Life of
Virginia Separate Account 4 for each of the two years or lesser periods 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. The accompanying statements of operations and
changes in net assets of Life of Virginia Separate Account 4 for the year or
period ended December 31, 1995, were audited by other auditors, whose report
thereon dated February 8, 1996 expressed an unqualified opinion on those
statements.
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, 1997, 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.
<PAGE>
In our opinion, the 1997 and 1996 financial statements referred to above present
fairly, in all material respects, the financial position of each of the
respective portfolios constituting Life of Virginia Separate Account 4 as of
December 31, 1997 and the results of their operations and changes in their net
assets for each of the two years or lesser periods then ended in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
-------------------------
KPMG LLP
Richmond, Virginia
February 13, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Policyholders
Life of Virginia Separate Account 4
and
Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying statements of operations and changes in net
assets for the year ended December 31, 1995 for the Life of Virginia Series
Fund, Inc. Common Stock Index, Government Securities, Money Market and Total
Return portfolios, the Oppenheimer Variable Account Funds portfolios, the
Variable Insurance Products Fund portfolios, the Variable Insurance Products
Fund II Asset Manager portfolio, the Advisers Management Trust portfolios, the
Janus Aspen Aggressive Growth, Growth, and Worldwide Growth portfolios, and for
the period from May 23, 1995 (date of inception) to December 31, 1995 for the
Life of Virginia Series Fund, Inc. International Equity portfolio, for the
period from May 2, 1995 (date of inception) to December 31, 1995 for the Life of
Virginia Series Fund, Inc. Real Estate Securities portfolio, for the period from
January 5, 1995 (date of inception) to December 31, 1995 for the Variable
Insurance Products Fund II Contrafund portfolio, for the period from February 3,
1995 (date of inception) to December 31, 1995 for the Insurance Management
Series Corporate Bond portfolio, for the period from January 27, 1995 (date of
inception) to December 31, 1995 for the Insurance Management Series Utility
portfolio, for the period from October 11, 1995 (date of inception) to December
31, 1995 for the Janus Aspen Balanced portfolio, for the period from October 13,
1995 (date of inception) to December 31, 1995 for the Janus Aspen Flexible
Income portfolio, for the period from October 3, 1995 (date of inception) to
December 31, 1995 for the Alger American Small Cap portfolio and for the period
from October 4, 1995 (date of inception) to December 31, 1995 for the Alger
American Growth portfolio. 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 audit.
We conducted our audit 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 out audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and changes in net assets for
the periods described in the first paragraph of each of the respective
portfolios constituting Life of Virginia Separate Account 4, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Richmond, Virginia
February 8, 1996
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GE Investment Funds, Inc.
(formerly Life Of Virginia Series Fund, Inc.)
------------------------------------------------
S&P 500 Money Total
Index Market Return
Fund Fund Fund
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
Investment GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (7,976,419 shares; cost - $145,723,059) $ 153,386,538 - -
Money Market Fund (118,336,576 shares; cost - $117,791,205) - 118,336,576 -
Total Return Fund (3,370,192 shares; cost - $48,733,062) - - 44,520,238
International Equity Fund (2,151,087 shares; cost - $24,524,231) - - -
Real Estate Securities Fund (3,452,544 shares; cost - $48,950,718) - - -
Global Income Fund (611,834 shares; cost - $6,150,915) - - -
Value Equity Fund (1,199,676 shares; cost - $14,841,949) - - -
Income Fund (1,845,624 shares; cost - $22,362,706) - - -
Receivable from affiliate 131,054 - 34,825
Receivable for units sold 52,884 5,964,313 -
- ----------------------------------------------------------------------------------------------------------------
$ 153,570,476 124,300,889 44,555,063
- ----------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 144,152 606,185 27,866
Payable for units withdrawn - - 80
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 144,152 606,185 27,946
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 153,426,324 123,694,704 44,527,117
- ----------------------------------------------------------------------------------------------------------------
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders $ 153,426,324 123,694,704 44,527,117
The Life Insurance Company
of Virginia - - -
- ----------------------------------------------------------------------------------------------------------------
Net assets $ 153,426,324 123,694,704 44,527,117
- ----------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 918,847 3,512,260 631,828
- ----------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 39.63 14.77 28.96
- ----------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 3,025,140 4,980,487 928,145
- ----------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 38.68 14.42 28.26
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)(continued)
---------------------------------------------------------------------
International Real Estate Global Value
Equity Securities Income Equity Income
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S><C>
Investment GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (7,976,419 shares; cost - $145,723,059) - - - - -
Money Market Fund (118,336,576 shares; cost - $117,791,205) - - - - -
Total Return Fund (3,370,192 shares; cost - $48,733,062) - - - - -
International Equity Fund (2,151,087 shares; cost - $24,524,231) 22,973,610 - - - -
Real Estate Securities Fund (3,452,544 shares; cost - $48,950,718) - 52,754,866 - - -
Global Income Fund (611,834 shares; cost - $6,150,915) - - 6,026,567 - -
Value Equity Fund (1,199,676 shares; cost - $14,841,949) - - - 15,727,748 -
Income Fund (1,845,624 shares; cost - $22,362,706) - - - - 22,350,507
Receivable from affiliate 12,571 26,750 - 14,492 -
Receivable for units sold - 27 89,788 166,328 -
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets 22,986,181 52,781,643 6,116,355 15,908,568 22,350,507
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 7,311 22,389 1,057 8,560 306,136
Payable for units withdrawn 102,337 75,457 - - 33,511
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 109,648 97,846 1,057 8,560 339,647
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets 22,876,533 52,683,797 6,115,298 15,900,008 22,010,860
- ----------------------------------------------------------------------------------------------------------------------------------
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders 9,954,696 33,635,732 944,793 11,923,320 22,010,860
The Life Insurance Company
of Virginia 12,921,837 19,048,065 5,170,505 3,976,688 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets 22,876,533 52,683,797 6,115,298 15,900,008 22,010,860
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 1,212,802 1,385,306 516,898 479,621 1,295,638
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 12.53 18.46 10.26 13.15 10.01
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 614,410 1,478,247 79,290 730,616 903,249
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 12.50 18.34 10.24 13.13 10.01
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------------------------------------
Capital High Multiple
Bond Appreciation Growth Income Strategies
Assets Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Oppenheimer Variable Account Funds,
at fair value (note 2):
Bond Fund (3,338,044 shares; cost-$38,648,132) $39,756,108 - - - -
Capital Appreciation Fund (5,085,365 shares; cost-$177,299,340) - 208,296,549 - - -
Growth Fund (4,282,333 shares; cost-$115,624,020) - - 138,918,887 - -
High Income Fund (12,856,952 shares; cost-$143,356,020) - - - 148,112,092 -
Multiple Strategies Fund (4,239,791 shares; cost-$61,776,406) - - - - 72,118,841
Receivable from affiliate 3,463 56,595 - 89,573 13,227
Receivable for units sold 84,091 81,846 211,756 188,070 6,302
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $39,843,662 208,434,990 139,130,643 148,389,735 72,138,370
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 43,140 587,754 114,827 104,109 114,775
Payable for units withdrawn 54,839 - - - 42
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 97,979 587,754 114,827 104,109 114,817
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity
contractholders $39,745,683 207,847,236 139,015,816 148,285,626 72,023,553
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 929,630 2,591,419 1,291,813 1,869,843 1,553,549
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 20.92 36.52 37.62 31.32 26.43
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 994,017 3,176,448 2,462,359 2,934,974 1,200,126
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 20.42 35.64 36.72 30.57 25.80
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
-----------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (25,284,474 shares; cost - $481,451,916) $ 613,907,020 - -
Growth Portfolio (8,496,260 shares; cost - $238,768,154) - 315,211,237 -
Overseas Portfolio (5,812,347 shares; cost - $99,900,187) - - 111,597,056
Receivable from affiliate 204,695 116,417 14,558
Receivable for units sold 118,450 58,665 -
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 614,230,165 315,386,319 111,611,614
- -----------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note3) $ 437,839 312,937 172,653
Payable for units withdrawn 209,554 59,775 3,134,340
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 647,393 372,712 3,306,993
- -----------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $ 613,582,772 315,013,607 108,304,621
- -----------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 6,589,338 4,467,825 3,398,260
- -----------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 37.36 39.40 21.16
- -----------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 10,074,173 3,614,598 1,762,588
- -----------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 36.47 38.45 20.65
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
--------------------------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Investment in Variable Insurance Products Fund II, at fair value (note 2):
Asset Manager Portfolio (26,932,347 shares; cost - $393,528,382) $ 485,051,564 - - -
Contrafund Portfolio (12,134,794 shares; cost - $193,722,470) - 241,967,789 - -
Investment in Variable Insurance Products Fund III, at fair value (note 2):
Growth & Income Portfolio (1,247,313 shares; cost - $15,170,737) - - 15,628,837 -
Growth Opportunities Portfolio (883,879 shares; cost - $15,976,584) - - - 17,032,342
Receivable from affiliate 5,351 176,780 25,307 3,157
Receivable for units sold 43,195 255,163 64,010 64,775
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $ 485,100,110 242,399,732 15,718,154 17,100,274
- ---------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 1,187,116 176,209 9,932 12,499
Payable for units withdrawn 38,182 86,127 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,225,298 262,336 9,932 12,499
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $ 483,874,812 242,137,396 15,708,222 17,087,775
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 17,101,510 3,296,201 294,329 341,417
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 24.53 20.47 12.38 12.30
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 2,678,933 8,595,677 976,086 1,049,540
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 24.03 20.32 12.36 12.28
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federated Investors
Insurance Series
-----------------------------------------
American High
Leaders Income Bond Utility
Assets Fund II Fund II Fund II
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
Investments in Federated Investors Insurance Series, at fair value (note 2):
American Leaders Fund II (1,767,003 shares; cost - $31,138,913) $ 34,686,268 - -
High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - 35,218,348 -
Utility Fund II (2,126,742 shares - cost - $24,061,328) - - 30,391,148
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) - - -
Growth Portfolio (1,691,682 shares; cost - $61,989,581) - - -
PBHG Insurance Series Fund at fair value (note 2):
PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) - - -
PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - - -
Receivable from affiliate 9,118 6,282 20,101
Receivable for units sold 223,715 12,611 12,121
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 34,919,101 35,237,241 30,423,370
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 25,357 26,612 22,088
Payable for units withdrawn 18 15,282 3,388
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 25,375 41,894 25,476
- -------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $ 34,893,726 35,195,347 30,397,894
- -------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 361,619 456,124 485,332
- -------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I $ 14.48 15.11 16.88
- -------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 2,056,691 1,886,887 1,325,701
- -------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II $ 14.42 15.00 16.75
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Statements of Assets and Liabilities, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Alger American
---------------------------
Small
Cap Growth
Assets Portfolio Portfolio
<S> <C>
- ------------------------------------------------------------------------------------------------------------
Investments in Federated Investors Insurance Series, at fair value (note 2):
American Leaders Fund II (1,767,003 shares; cost - $31,138,913) - -
High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - -
Utility Fund II (2,126,742 shares - cost - $24,061,328) - -
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) 73,961,717 -
Growth Portfolio (1,691,682 shares; cost - $61,989,581) - 72,336,337
PBHG Insurance Series Fund at fair value (note 2):
PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) - -
PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - -
Receivable from affiliate 23,461 28,703
Receivable for units sold - 7,598
- -----------------------------------------------------------------------------------------------------------
Total assets 73,985,178 72,372,638
- -----------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 56,893 156,426
Payable for units withdrawn 100,595 62,399
- -----------------------------------------------------------------------------------------------------------
Total liabilities 157,488 218,825
- -----------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders 73,827,690 72,153,813
- -----------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 1,325,070 1,022,514
- -----------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 10.64 13.42
- -----------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 5,645,458 4,380,186
- -----------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 10.58 13.34
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Statements of Assets and Liabilities, Continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PBHG Insurance Series Fund
--------------------------
PBHG Large PBHG
Cap Growth Growth II
Assets Portfolio Portfolio
<S> <C>
- -------------------------------------------------------------------------------------------------------
Investments in Federated Investors Insurance Series, at fair value (note 2):
American Leaders Fund II (1,767,003 shares; cost - $31,138,913) - -
High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - -
Utility Fund II (2,126,742 shares - cost - $24,061,328) - -
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) - -
Growth Portfolio (1,691,682 shares; cost - $61,989,581) - -
PBHG Insurance Series Fund at fair value (note 2):
PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) 4,748,811 -
PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - 6,766,864
Receivable from affiliate 19,040 423
Receivable for units sold 24,969 241,497
- -------------------------------------------------------------------------------------------------------
Total assets 4,792,820 7,008,784
- -------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 21,750 5,127
Payable for units withdrawn 52,803 51,717
- -------------------------------------------------------------------------------------------------------
Total liabilities 74,553 56,844
- -------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders 4,718,267 6,951,940
- -------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 55,997 76,611
- -------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 11.73 10.67
- -------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 346,833 576,010
- -------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 11.71 10.65
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statements of Assets and Liabilities, Continued
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Assets Portfolio Portfolio Portfolio Portfolio
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Investment in Janus Aspen Series,
at fair value (note 2):
Aggressive Growth Portfolio
(5,150,041 shares; cost - $90,470,714) 105,833,338 - - -
Growth Portfolio (12,128,299
shares; cost - $177,459,821) - 224,130,972 - -
Worldwide Growth Portfolio
(14,763,565 shares; cost - $285,300,634) - - 345,319,777 -
Balanced Portfolio (4,444,303
shares; cost - $72,670,094) - - - 77,641,966
Flexible Income Portfolio
(1,218,449 shares; cost - $14,017,277) - - - -
International Growth Portfolio
(3,130,281 shares; cost - $56,025,325) - - - -
Capital Appreciation Portfolio
(214,897 shares; cost - $2,699,822) - - - -
Receivable from affiliate 48,595 24,477 118,902 52,126
Receivable for units sold 10,900 166,892 194,595 5,036
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 105,892,833 224,322,341 345,633,274 77,699,128
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 77,711 253,424 249,062 52,851
Payable for units withdrawn - - 258,130 8,042
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 77,711 253,424 507,192 60,893
- -------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders $105,815,122 224,068,917 345,126,082 77,638,235
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 1,817,576 4,505,765 4,938,272 2,481,552
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 20.26 19.15 23.10 14.73
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 3,442,667 7,270,898 10,111,685 2,804,435
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 20.04 18.95 22.85 14.65
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
Statements of Assets and Liabilities, Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------
Flexible International Capital
Income Growth Appreciation
Assets Portfolio Portfolio Portfolio
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio
(5,150,041 shares; cost - $90,470,714) - - -
Growth Portfolio (12,128,299
shares; cost - $177,459,821) - - -
Worldwide Growth Portfolio
(14,763,565 shares; cost - $285,300,634) - - -
Balanced Portfolio (4,444,303
shares; cost - $72,670,094) - - -
Flexible Income Portfolio
(1,218,449 shares; cost - $14,017,277) 14,353,326 - -
International Growth Portfolio
(3,130,281 shares; cost - $56,025,325) - 57,847,585 -
Capital Appreciation Portfolio
(214,897 shares; cost - $2,699,822) - - 2,712,004
Receivable from affiliate 4,412 34,124 812
Receivable for units sold 42,930 - 1,500
- ------------------------------------------------------------------------------------------------------------------
Total assets 14,400,668 57,881,709 2,714,316
- ------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 10,126 40,026 39,487
Payable for units withdrawn 53,791 3,175,957 5,254
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 63,917 3,215,983 44,741
- ------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable deferred annuity contractholders 14,336,751 54,665,726 2,669,575
- ------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 280,878 1,004,669 49,257
- ------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type I 12.52 13.69 12.56
- ------------------------------------------------------------------------------------------------------------------
Outstanding units: Type II (note 2) 869,089 3,001,600 163,550
- ------------------------------------------------------------------------------------------------------------------
Net asset value per unit: Type II 12.45 13.63 12.54
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)
- -------------------------------------------------------------------------------------------------
<S> <C>
S&P 500 Government
Index Securities
Fund Fund
-------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
Investment income:
Income - Dividends 4,001,897 23,435,279 411,769 - 1,309,648 565,524
Expenses - Mortality and expense
risk charges (note 3) 1,356,740 492,403 139,329 147,796 143,919 83,929
- ----------------------------------------------------------------------------------------------------------
Net investment income (expense) 2,645,157 22,942,876 272,440 (147,796) 1,165,729 481,595
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (899,446) 1,510,464 345,068 (242,895) (68,248) (20,275)
Unrealized appreciation
(depreciation) on investments 21,611,136 (16,204,375) 2,539,788 987,049 (995,503) 567,616
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 20,711,690 (14,693,911) 2,884,856 744,154 (1,063,751) 547,341
- ----------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 23,356,847 8,248,965 3,157,296 596,358 101,978 1,028,936
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.)
-----------------------------------------------------------------
<S> <C>
Money Market Total Return
Fund Fund
--------------------------------- ----------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
Investment income:
Income - Dividends 5,626,589 5,204,323 1,098,198 6,098,862 9,319,880 1,576,466
Expenses - Mortality and expense
risk charges (note 3) 1,421,044 980,270 144,841 496,469 357,589 187,419
- --------------------------------------------------------------------------------------------------------
Net investment income (expense) 4,205,545 4,224,053 953,357 5,602,393 8,962,291 1,389,047
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (4,421,730) 1,686,452 312,501 (454,827) 614,446 308,073
Unrealized appreciation
(depreciation) on investments 4,383,879 (2,984,484) (757,472) 657,828 (6,827,262) 1,987,241
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (37,851) (1,298,032) (444,971) 203,001 (6,212,816) 2,295,314
- --------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 4,167,694 2,926,021 508,386 5,805,394 2,749,475 3,684,361
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.)
(continued)
<S> <C>
-------------------------------------------------------------------------------
International Real Estate
Equity Securities
Fund Fund
--------------------------------- ----------------------------------------
Period from Period from
May 23, May 2,
Year ended Year ended 1995 to Year ended Year ended 1995 to
December 31 December 31 December 31, December 31, December 31, December 31
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------- ----------------------- -----------------------------------------
Investment income:
Income - Dividends 2,686,699 1,056,063 31,010 5,456,896 1,627,291 670,339
Expenses - Mortality and expense risk
charges (note 3) 113,987 56,953 4,298 292,230 49,030 2,663
- ------------------------------------------------------- ----------------------- -----------------------------------------
Net investment income 2,572,712 999,110 26,712 5,164,666 1,578,261 667,676
- ------------------------------------------------------- ----------------------- -----------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) 665,649 86,537 646 2,710,582 299,159 24,928
Unrealized appreciation (depreciation)
on investments (1,565,382) (11,119) 25,880 (1,305,117) 4,059,521 1,049,744
- ------------------------------------------------------- ------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (899,733) 75,418 26,526 1,405,465 4,358,680 1,074,672
- ------------------------------------------------------- ------------------------------------------------------------------
Increase in net assets from operations 1,672,979 1,074,528 53,238 6,570,131 5,936,941 1,742,348
- ------------------------------------------------------- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
(continued)
-------------------------------------------
Global Value
Income Equity Income
Fund Fund Fund
---------- ---------- ----------
Period from Period from Period from
May 1, May 1, December 12,
1997 to 1997 to 1997 to
December 31 December 31 December 31,
1997 1997 1997
- ------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 300,672 142,788 58,034
Expenses - Mortality and expense risk
charges (note 3) 2,982 38,307 14,197
- ------------------------------------------------------------------------------------
Net investment income 297,690 104,481 43,837
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) 2,417 357,048 (6,710)
Unrealized appreciation (depreciation)
on investments (124,348) 885,799 (12,199)
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (121,931) 1,242,847 (18,909)
- -----------------------------------------------------------------------------------
Increase in net assets from operations 175,759 1,347,328 24,928
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------
Money
Fund
----------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 110,711 175,537 303,556
Expenses - Mortality and expense
risk charges (note 3) 25,908 40,663 64,415
- ---------------------------------------------------------------------
Net investment income (expense) 84,803 134,874 239,141
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain - - -
Unrealized appreciation
(depreciation) on investments - - -
- --------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments - - -
- --------------------------------------------------------------------
Increase in net assets
from operations $ 84,803 134,874 239,141
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
---------------------------------------------
Bond
Fund
-----------------------------------
Year ended December 31,
1997 1996 1995
- ---------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 2,260,511 1,774,226 1,222,079
Expenses - Mortality and expense
risk charges (note 3) 437,693 336,825 220,766
- ---------------------------------------------------------------------
Net investment income (expense) 1,822,818 1,437,401 1,001,313
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 187,695 106,242 53,120
Unrealized appreciation
(depreciation) on investments 663,371 (442,815) 1,654,610
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 851,066 (336,573) 1,707,730
- ---------------------------------------------------------------------
Increase in net assets
from operations 2,673,884 1,100,828 2,709,043
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
-----------------------------------------------
Capital
Appreciation
Fund
------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 8,221,818 6,069,096 331,803
Expenses - Mortality and expense
risk charges (note 3) 2,381,196 1,506,102 868,053
- ---------------------------------------------------------------------
Net investment income (expense) 5,840,622 4,562,994 (536,250)
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 6,868,228 6,301,279 1,666,666
Unrealized appreciation
(depreciation) on
investments) 5,927,622 7,478,382 18,977,772
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 12,795,850 13,779,661 20,644,438
- ----------------------------------------------------------------------
Increase in net assets
from operations 18,636,472 18,342,655 20,108,188
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
---------------------------------------------
Growth
Fund
---------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 4,911,400 3,110,376 393,011
Expenses - Mortality and expense
risk charges (note 3) 1,372,378 599,846 265,718
- ----------------------------------------------------------------------------
Net investment income (expense) 3,539,022 2,510,530 127,293
- ----------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 5,826,603 1,959,742 739,151
Unrealized appreciation
(depreciation) on
investments) 11,621,155 5,568,726 5,287,316
- ----------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 17,447,758 7,528,468 6,026,467
- ----------------------------------------------------------------------------
Increase in net assets
from operations 20,986,780 10,038,998 6,153,760
- ----------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
----------------------------------------------------------------------
High Multiple
Income Strategies
Fund Fund
-------------------------------- -------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $9,138,791 6,387,294 3,582,283 4,485,399 3,343,955 2,521,297
Expenses - Mortality and expense
risk charges (note 3) 1,397,317 825,956 471,932 794,598 571,993 410,701
- ------------------------------------------------------------------------------------------------------
Net investment income 7,741,474 5,561,338 3,110,351 3,690,801 2,771,962 2,110,596
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 1,298,149 763,575 (105,319) 1,435,981 701,256 353,442
Unrealized appreciation
(depreciation) on
investments) 2,089,422 2,079,281 2,497,291 4,025,778 2,786,345 3,750,075
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 3,387,571 2,842,856 2,391,972 5,461,759 3,487,601 4,103,517
- -----------------------------------------------------------------------------------------------------
Increase in net assets
from operations $11,129,045 8,404,194 5,502,323 9,152,560 6,259,563 6,214,113
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
--------------------------------------------------------------------------------------------------
High Equity-
Money Market Income Income
Portfolio Portfolio Portfolio
-------------------------------- -----------------------------------------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $843,023 1,655,033 3,320,468 1,930,318 2,780,632 1,144,671 42,510,440 12,605,854 10,037,638
Expenses - Mortality and expense
risk charges (note 3) 212,121 382,911 699,880 277,254 332,922 297,241 6,650,343 4,253,036 2,138,272
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 630,902 1,272,122 2,620,588 1,653,064 2,447,710 847,430 35,860,097 8,352,818 7,899,366
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) - - - 4,673,705 479,085 425,760 15,417,526 9,394,625 4,284,587
Unrealized appreciation
(depreciation) on
investments - - - (2,814,608) 308,688 2,702,738 65,899,106 23,601,942 37,953,951
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments - - - 1,859,097 787,773 3,128,498 81,316,632 32,996,567 42,238,538
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from
operations $630,902 1,272,122 2,620,588 3,512,161 3,235,483 3,975,928 117,176,729 41,349,385 50,137,904
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Fund
----------------------------------------
Growth
Portfolio (continued)
---------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 9,229,913 13,903,188 567,790
Expenses - Mortality and expense
risk charges (note 3) 3,552,903 2,834,086 1,696,933
- ----------------------------------------------------------------------
Net investment income (expense) 5,677,010 11,069,102 (1,129,143)
- ----------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 14,576,544 9,229,819 7,510,176
Unrealized appreciation
(depreciation) on
investments) 34,536,532 6,990,625 29,804,134
- ---------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 49,113,076 16,220,444 37,314,310
- ---------------------------------------------------------------------
Increase in net assets from
operations 54,790,086 27,289,546 36,185,167
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund Variable Insurance Products Fund II
-------------------------------- ---------------------------------------------------
Asset
Overseas Manager Contrafund
Portfolio Portfolio Portfolio
------------------------------- ------------------------------- ---------------------
Year ended Year ended
Year ended December 31, Year ended December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $9,303,257 2,309,161 644,375 52,909,448 27,801,550 9,085,957 4,672,962 634,656
Expenses - Mortality and expense
risk charges (note 3) 1,401,167 1,245,263 999,548 5,474,604 4,059,911 4,926,810 2,588,608 1,322,883
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 7,902,090 1,063,898 (355,173) 47,434,844 23,741,639 4,159,147 2,084,354 (688,227)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 6,802,686 2,693,770 734,798 9,093,636 7,507,674 1,958,733 9,468,307 2,738,082
Unrealized appreciation
(depreciation) on investments (3,387,543) 7,585,836 6,428,977 24,430,304 23,008,153 55,306,129 26,750,686 17,275,767
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments 3,415,143 10,279,606 7,163,775 33,523,940 30,515,827 57,264,862 36,218,993 20,013,849
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 11,317,233 11,343,504 6,808,602 80,958,784 54,257,466 61,424,009 38,303,347 19,325,622
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Products
Fund II (continued) Fund III
----------------------------- --------------------------
Growth & Growth
Contrafund Income Opportunities
Portfolio Portfolio Portfolio
------------- --------- ----------
Period from Period from Period from
January 5, May 1, May 1,
1995 to 1997 to 1997 to
December 3 December 31, December 31,
1995 1997 1997
- ------------------------------------------------------- -------------------------
<S> <C>
Investment income:
Income - Dividends 784,088 - -
Expenses - Mortality and expense risk
charges (note 3) 323,922 53,296 69,440
- ----------------------------------------------------- -------------------------
Net investment income (expense) 460,166 (53,296) (69,440)
- ----------------------------------------------------- -------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 905,255 103,153 67,071
Unrealized appreciation (depreciation)
on investments 4,218,866 458,100 1,055,758
- ----------------------------------------------------- -----------------------
Net realized and unrealized gain on
investments 5,124,121 561,253 1,122,829
- ----------------------------------------------------- -----------------------
Increase in net assets from operations 5,584,287 507,957 1,053,389
- ------------------------------------------------------- ----------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
---------------------------------------------------------------------
Balanced Bond
Portfolio Portfolio
-------------------------------- ------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $1,992,971 5,226,886 748,770 550,544 1,231,424 958,338
Expenses - Mortality and expense
risk charges (note 3) 337,918 381,777 385,789 99,586 151,484 210,707
- ----------------------------------------------- ----------------------------------------------------
Net investment income 1,655,053 4,845,109 362,981 450,958 1,079,940 747,631
- ----------------------------------------------- ----------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 5,097,861 419,822 895,552 12,018 (136,701) 45,793
Unrealized appreciation
(depreciation) on
investments) (2,501,835) (3,501,201) 5,264,633 (23,525) (646,673) 816,276
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 2,596,026 (3,081,379) 6,160,185 (11,507) (783,374) 862,069
- ------------------------------------------------------------------------------------------------------
Increase in net assets from
operations $ 4,251,079 1,763,730 6,523,166 439,451 296,566 1,609,700
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Neuberger & Berman Advisers
Management Trust (continued)
-----------------------------------
Growth
Portfolio
-----------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 903,849 1,152,528 246,676
Expenses - Mortality and expense
risk charges (note 3) 132,989 146,484 127,144
- --------------------------------------------------------------------
Net investment income 770,860 1,006,044 119,532
- --------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 2,304,768 315,046 242,067
Unrealized appreciation
(depreciation) on
investments) (880,241) (363,320) 1,957,190
- --------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 1,424,527 (48,274) 2,199,257
- --------------------------------------------------------------------
Increase in net assets from
operations 2,195,387 957,770 2,318,789
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series
--------------------------------------------------------------------------------------
American High Income
Leaders Bond Utility
Fund II Fund II Fund II
--------------------- ------------------------------- --------------------------------
Year ended Period from Year ended Year ended Period from Year ended Year ended Period from
December 31, May 6, 1996 to December 31, December 31, February 3, December 31, December 31, January 27,
1997 December 31, 1997 1996 1995 to 1997 1996 1995 to
1996 December 31, December 31,
1995 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $228,362 15,977 1,129,533 579,337 45,272 1,046,132 766,616 223,744
Expenses - Mortality
and expense risk
charges (note 3) 228,448 12,003 302,211 87,381 6,392 326,253 243,314 61,497
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income
(expense) (86) 3,974 827,322 491,956 38,880 719,879 523,302 162,247
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on
investments:
Net realized gain
(loss) 544,140 29,680 630,351 31,769 3,368 731,431 336,527 90,613
Unrealized appreciation
(depreciation) on
investments 3,385,309 162,046 1,256,745 424,014 26,388 4,302,272 1,113,241 914,307
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) loss
on investments 3,929,449 191,726 1,887,096 455,783 29,756 5,033,703 1,449,768 1,004,920
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets from operations $3,929,363 195,700 2,714,418 947,739 68,636 5,753,582 1,973,070 1,167,167
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Alger American
----------------------------------------------------------------
Small
Cap Growth
Portfolio Portfolio
-------------------------------- -------------------------------
Period from Period from
October 3, October 4,
Year ended Year ended 1995 to Year ended Year ended 1995 to
December 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 2,044,748 105,411 - 528,437 668,828 -
Expenses - Mortality and expense
risk charges (note 3) 799,242 414,206 9,745 811,338 358,846 6,776
- ----------------------------------------------------------------------------------------------------------
Net investment income (expense) 1,245,506 (308,795) (9,745) (282,901) 309,982 (6,776)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 411,624 (122,299) (20,417) 3,954,588 315,644 (2,380)
Unrealized appreciation
(depreciation) on
investments) 4,016,910 (80,937) (25,048) 8,095,163 2,224,353 27,240
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
loss) on investments 4,428,534 (203,236) (45,465) 12,049,751 2,539,997 24,860
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 5,674,040 (512,031) (55,210) 11,766,850 2,849,979 18,084
- ------------------------------------------------------------------------------------------------------------
</TABLE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
PBHG Insurance
Series Fund
---------------------
PBHG
Large Cap PBHG
Growth Growth II
Portfolio Portfolio
---------- ----------
Period from Period from
May 1, May 1,
1997 to 1997 to
December 31, December 31,
1997 1997
- -------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ - -
Expenses - Mortality and expense
risk charges (note 3) 17,112 30,512
- ---------------------------------------------------------------------
Net investment income (expense) (17,112) (30,512)
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 13,525 7,643
Unrealized appreciation
(depreciation) on investments 149,898 (89,829)
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 163,423 (82,186)
- ---------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ 146,311 (112,698)
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
--------------------------------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
------------------------------------ ------------------------------------
Year ended Year ended
December 31, December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ - 755,467 701,550 5,821,316 3,316,849 1,774,926
Expenses - Mortality and expense risk charges
(note 3) 1,187,720 880,271 464,496 2,533,302 1,496,337 686,203
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) (1,187,720) (124,804) 237,054 3,288,014 1,820,512 1,088,723
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 6,675,700 3,422,984 1,735,504 9,346,395 4,286,543 1,220,855
Unrealized appreciation (depreciation) on
investments 5,540,954 109,555 7,840,280 23,212,981 11,457,707 11,886,046
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 12,216,654 3,532,539 9,575,784 32,559,376 15,744,250 13,106,901
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 11,028,934 3,407,735 9,812,838 35,847,390 17,564,762 14,195,624
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------
Worldwide
Growth
Portfolio
------------------------------------
Year ended
December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 4,490,822 2,094,632 225,282
Expenses - Mortality and expense risk charges
(note 3) 3,656,021 1,418,611 477,320
- ----------------------------------------------------------------------------------------
Net investment income (expense) 834,801 676,021 (252,038)
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 11,585,008 5,069,677 439,501
Unrealized appreciation (depreciation) on
investments 32,530,512 18,944,795 9,549,318
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 44,115,520 24,014,472 9,988,819
- ----------------------------------------------------------------------------------------
Increase in net assets from operations 44,950,321 24,690,493 9,736,781
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
--------------------------------------------------------------------------
Flexible
Balanced Income
Portfolio Portfolio
-------------------------------------- ------------------------------------
Period from Period from
October 11, October 13,
Year ended Year ended 1995 to Year ended 1995 to
December 31,December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 1,376,630 283,521 12,299 699,223 288,802 20,133
Expenses - Mortality and expense risk charges
(note 3) 445,275 113,425 2,009 120,354 40,424 980
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 931,355 170,096 10,290 578,869 248,378 19,153
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 1,239,519 122,576 9,364 86,470 4,524 29
Unrealized appreciation (depreciation) on
investments 4,013,343 920,620 37,909 269,390 68,898 (2,240)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 5,252,862 1,043,196 47,273 355,860 73,422 (2,211)
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 6,184,217 1,213,292 57,563 934,729 321,800 16,942
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-----------------------------------------
International Capital
Growth Appreciation
Portfolio Portfolio
----------------------- --------------
Period from Period from
May 3, 1996 May 2, 1997
Year ended to
December 31, December 31, December 31,
1997 1996 1997
- -------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 348,585 54,433 8,437
Expenses - Mortality and expense risk charges
(note 3) 516,236 45,378 9,981
- --------------------------------------------------------------------------------------------
Net investment income (expense) (167,651) 9,055 (1,544)
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 3,329,942 187,391 31,894
Unrealized appreciation (depreciation) on
investments 1,235,644 586,615 12,182
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 4,565,586 774,006 44,076
- --------------------------------------------------------------------------------------------
Increase in net assets from operations 4,397,935 783,061 42,532
- --------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
----------------------------------------------------
S&P 500
Index
Fund
---------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 2,645,157 22,942,876 272,440
Net realized gain (loss) (899,446) 1,510,464 345,068
Unrealized appreciation (depreciation)
on investments 21,611,136 (16,204,375) 2,539,788
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 23,356,847 8,248,965 3,157,296
- -----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 40,575,050 18,225,715 7,357,078
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,735,027) (77,864) (143,652)
Surrenders (3,415,596) (1,079,082) (306,506)
Administrative expense (note 3) (102,362) (45,091) (22,813)
Transfer gain (loss) and transfer fees (4,503) 7,463 (8,822)
Transfers (to) from the Guarantee
Account (note 1) 14,747,561 3,139,208 695,771
Interfund transfers 24,135,903 5,665,381 5,341,899
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 74,201,026 25,835,730 12,912,955
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 97,557,873 34,084,695 16,070,251
Net assets at beginning of year 55,868,451 21,783,756 5,713,505
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 153,426,324 55,868,451 21,783,756
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)
--------------------------------------------------------------------------
Government
Securities
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (147,796) 1,165,729 481,595
Net realized gain (loss) (242,895) (68,248) (20,275)
Unrealized appreciation (depreciation)
on investments 987,049 (995,503) 567,616
- -------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 596,358 101,978 1,028,936
- -------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,053,538 3,734,757 1,619,783
Transfers (to) from the general account of
Life of Virginia:
Death benefits (64,230) (76,802) (44,216)
Surrenders (666,510) (492,750) (500,706)
Administrative expense (note 3) (18,501) (21,731) (17,040)
Transfer gain (loss) and transfer fees (36,688) 8,420 (9,439)
Transfers (to) from the Guarantee
Account (note 1) 827,432 135,548 60,927
Interfund transfers (14,821,369) (65,339) 2,038,922
- -------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions (13,726,328) 3,222,103 3,148,231
- -------------------------------------------------------------------------------------------------------------
Increase in net assets (13,129,970) 3,324,081 4,177,167
Net assets at beginning of year 13,129,970 9,805,889 5,628,722
- -------------------------------------------------------------------------------------------------------------
Net assets at end of year - 13,129,970 9,805,889
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.) (continued)
----------------------------------------------------------
Money Market
Fund
-------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 4,205,545 4,224,053 953,357
Net realized gain (loss) (4,421,730) 1,686,452 312,501
Unrealized appreciation (depreciation)
on investments 4,383,879 (2,984,484) (757,472)
- ------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 4,167,694 2,926,021 508,386
- ------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 107,140,555 153,728,177 52,511,585
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,753,311) (781,386) (4,954)
Surrenders (18,383,973) (8,255,412) (2,099,100)
Administrative expense (note 3) (134,339) (78,769) (17,072)
Transfer gain (loss) and transfer fees (130,614) 28,173 52,426
Transfers (to) from the Guarantee
Account (note 1) 10,195,112 4,298,099 4,957,966
Interfund transfers (67,593,593) (93,981,321) (30,878,764)
- ------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 29,339,837 54,957,561 24,522,087
- ------------------------------------------------------------------------------------------------------------
Increase in net assets 33,507,531 57,883,582 25,030,473
Net assets at beginning of year 90,187,173 32,303,591 7,273,118
- ------------------------------------------------------------------------------------------------------------
Net assets at end of year 123,694,704 90,187,173 32,303,591
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued)
- --------------------------------------------------------------------------------------------------------------
Total Return
Fund
- --------------------------------------------------------------------------------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 5,602,393 8,962,291 1,389,047
Net realized gain (loss) (454,827) 614,446 308,073
Unrealized appreciation (depreciation)
on investments 657,828 (6,827,262) 1,987,241
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 5,805,394 2,749,475 3,684,361
- ----------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,641,626 8,515,814 4,777,568
Transfers (to) from the general account of
Life of Virginia:
Death benefits (271,179) (153,153) (184,615)
Surrenders (2,558,265) (946,894) (685,070)
Administrative expense (note 3) (60,731) (51,588) (40,610)
Transfer gain (loss) and transfer fees (15,082) (69,616) 5,627
Transfers (to) from the Guarantee
Account (note 1) 2,622,768 919,901 401,449
Interfund transfers (231,875) 75,151 2,419,115
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 5,127,262 8,289,615 6,693,464
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets 10,932,656 11,039,090 10,377,825
Net assets at beginning of year 33,594,461 22,555,371 12,177,546
- ----------------------------------------------------------------------------------------------------------------
Net assets at end of year 44,527,117 33,594,461 22,555,371
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)
(continued)
---------------------------------------------
International
Equity
Fund
--------------------------------------------
Period from
May 23,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income $ 2,572,712 999,110 26,712
Net realized gain (loss) 665,649 86,537 646
Unrealized appreciation (depreciation) on investments (1,565,382) (11,119) 25,880
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 1,672,979 1,074,528 53,238
- -------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,854,537 2,563,735 332,761
Transfers (to) from the general account of Life of Virginia:
Death benefits (2,360) (3,522) (2,053)
Surrenders (349,063) (103,501) (1,796)
Administrative expense (note 3) (10,458) (6,060) (661)
Transfer gain and transfer fees 49,348 (92,027) 1,565
Capital contribution - 10,925,561 -
Transfers from the Guarantee Account (note 1) 1,095,648 557,466 101,612
Interfund transfers 664,758 1,263,184 1,237,114
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 3,302,410 15,104,836 1,668,542
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets 4,975,389 16,179,364 1,721,780
Net assets at beginning of period 17,901,144 1,721,780 -
- -------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 22,876,533 17,901,144 1,721,780
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia
Series Fund, Inc.) (continued)
-------------------------------------------------------
Real Estate
Securities
Fund
-------------------------------------------------------
Period from
May 2,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 5,164,666 1,578,261 667,676
Net realized gain (loss) 2,710,582 299,159 24,928
Unrealized appreciation (depreciation) on investments (1,305,117) 4,059,521 1,049,744
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 6,570,131 5,936,941 1,742,348
- -----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 10,679,221 2,949,990 301,414
Transfers (to) from the general account of Life of Virginia:
Death benefits (18,462) - (1,392)
Surrenders (654,786) (41,760) (1,136)
Administrative expense (note 3) (19,846) (3,136) (286)
Transfer gain and transfer fees 122,915 (107,856) 1,212
Capital contribution - - 10,000,000
Transfers from the Guarantee Account (note 1) 4,443,497 539,647 70,614
Interfund transfers 5,849,780 4,063,439 261,308
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 20,402,319 7,400,324 10,631,734
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 26,972,450 13,337,265 12,374,082
Net assets at beginning of period 25,711,347 12,374,082 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 52,683,797 25,711,347 12,374,082
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.) (continued)
----------------------------------------------------------------
Global Value
Income Equity Income
Fund Fund Fund
------------------ ----------------- -----------------
Period from Period from Period from
May 1, May 1, December 12,
1997 to 1997 to 1997 to
December 31, December 31, December 31,
1997 1997 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 297,690 104,481 43,837
Net realized gain (loss) 2,417 357,048 (6,710)
Unrealized appreciation (depreciation) on investments (124,348) 885,799 (12,199)
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 175,759 1,347,328 24,928
- --------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 198,123 3,244,942 19,521
Transfers (to) from the general account of Life of Virginia:
Death benefits - (1,960) -
Surrenders (5,701) (75,503) (59,137)
Administrative expense (note 3) (209) (1,938) (2,414)
Transfer gain and transfer fees (472) 15,109 (467)
Capital contribution 5,000,000 3,000,000 -
Transfers from the Guarantee Account (note 1) 234,749 2,034,025 52,096
Interfund transfers 513,049 6,338,005 21,976,333
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 5,939,539 14,552,680 21,985,932
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 6,115,298 15,900,008 22,010,860
Net assets at beginning of period - - -
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 6,115,298 15,900,008 22,010,860
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
--------------------------------------------------------
Money
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 84,803 134,874 239,141
Net realized gain - - -
Unrealized appreciation (depreciation) on investments - - -
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 84,803 134,874 239,141
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 440 1,000 1,236,189
Transfers (to) from the general account of Life of Virginia:
Death benefits - (25,650) -
Surrenders $ (84,605) (248,877) (534,163)
Administrative expense (note 3) - (7,741) (12,911)
Transfer gain (loss) and transfer fees (4,611) (6,711) (10,807)
Transfers (to) from the Guarantee Account (note 1) (9,897) (72,686) (522,980)
Interfund transfers (2,736,806) (1,858,335) (3,724,005)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (2,835,479) (2,219,000) (3,568,677)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,750,676) (2,084,126) (3,329,536)
Net assets at beginning of year 2,750,676 4,834,802 8,164,338
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 2,750,676 4,834,802
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------
Bond
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 1,822,818 1,437,401 1,001,313
Net realized gain 187,695 106,242 53,120
Unrealized appreciation (depreciation) on investments 663,371 (442,815) 1,654,610
- --------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 2,673,884 1,100,828 2,709,043
- --------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 3,472,666 6,447,661 3,897,393
Transfers (to) from the general account of Life of Virginia:
Death benefits (234,610) (255,232) (103,070)
Surrenders (2,350,488) (1,174,644) (1,044,752)
Administrative expense (note 3) (53,814) (47,633) (43,224)
Transfer gain (loss) and transfer fees (12,509) 15,212 (70,035)
Transfers (to) from the Guarantee Account (note 1) 3,535,189 1,424,034 277,812
Interfund transfers 1,076,424 1,248,636 1,434,738
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 5,432,858 7,658,034 4,348,862
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 8,106,742 8,758,862 7,057,905
Net assets at beginning of year 31,638,941 22,880,079 15,822,174
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 39,745,683 31,638,941 22,880,079
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------
Capital
Appreciation
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 5,840,622 4,562,994 (536,250)
Net realized gain 6,868,228 6,301,279 1,666,666
Unrealized appreciation (depreciation) on investments 5,927,622 7,478,382 18,977,772
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 18,636,472 18,342,655 20,108,188
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 25,418,900 35,523,585 13,056,769
Transfers (to) from the general account of Life of Virginia:
Death benefits (450,528) (577,949) (315,870)
Surrenders (7,755,383) (5,679,609) (3,725,572)
Administrative expense (note 3) (291,649) (237,053) (179,980)
Transfer gain (loss) and transfer fees (53,714) (234,268) (110,449)
Transfers (to) from the Guarantee Account (note 1) 13,461,161 5,093,547 910,511
Interfund transfers 37,796 16,982,928 899,125
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 30,366,583 50,871,181 10,534,534
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 49,003,055 69,213,836 30,642,722
Net assets at beginning of year 158,844,181 89,630,345 58,987,623
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 207,847,236 158,844,181 89,630,345
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
------------------------------------------------------
Growth
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 3,539,022 2,510,530 127,293
Net realized gain 5,826,603 1,959,742 739,151
Unrealized appreciation (depreciation) on investments 11,621,155 5,568,726 5,287,316
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 20,986,780 10,038,998 6,153,760
- ----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 31,719,458 15,322,231 8,623,363
Transfers (to) from the general account of Life of Virginia:
Death benefits (350,617) (246,052) (11,683)
Surrenders (5,238,134) (1,802,707) (531,276)
Administrative expense (note 3) (138,883) (79,593) (49,718)
Transfer gain (loss) and transfer fees (28,403) (9,390) (2,381)
Transfers (to) from the Guarantee Account (note 1) 12,928,357 2,323,647 807,793
Interfund transfers 11,277,889 8,265,699 5,644,624
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 50,169,667 23,773,835 14,480,722
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 71,156,447 33,812,833 20,634,482
Net assets at beginning of year 67,859,369 34,046,536 13,412,054
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of year 139,015,816 67,859,369 34,046,536
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------
High
Income
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income $ 7,741,474 5,561,338 3,110,351
Net realized gain (loss) 1,298,149 763,575 (105,319)
Unrealized appreciation (depreciation) on investments 2,089,422 2,079,281 2,497,291
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 11,129,045 8,404,194 5,502,323
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 21,931,355 22,356,655 11,530,804
Transfers (to) from the general account of Life of Virginia:
Death benefits (689,590) (693,092) (69,961)
Surrenders (5,920,831) (2,655,530) (1,461,891)
Administrative expense (note 3) (139,006) (100,320) (73,580)
Transfer gain (loss) and transfer fees (112,330) (25,953) 144,255
Transfers (to) from the Guarantee Account (note 1) 12,750,648 3,777,050 1,497,477
Interfund transfers 23,573,698 9,730,803 2,860,809
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 51,393,944 32,389,613 14,427,913
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets 62,522,989 40,793,807 19,930,236
Net assets at beginning of year 85,762,637 44,968,830 25,038,594
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 148,285,626 85,762,637 44,968,830
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
-------------------------------------------------------
Multiple
Strategies
Fund
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 3,690,801 2,771,962 2,110,596
Net realized gain (loss) 1,435,981 701,256 353,442
Unrealized appreciation (depreciation) on investments 4,025,778 2,786,345 3,750,075
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 9,152,560 6,259,563 6,214,113
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 9,089,218 8,520,761 4,566,130
Transfers (to) from the general account of Life of Virginia:
Death benefits (332,263) (389,751) (183,215)
Surrenders (4,493,985) (2,097,537) (1,641,635)
Administrative expense (note 3) (119,442) (104,392) (93,990)
Transfer gain (loss) and transfer fees (8,995) (27,395) (65,699)
Transfers (to) from the Guarantee Account (note 1) 4,101,390 1,507,791 282,847
Interfund transfers 516,158 198,943 787,704
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 8,752,081 7,608,420 3,652,142
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets 17,904,641 13,867,983 9,866,255
Net assets at beginning of year 54,118,912 40,250,929 30,384,674
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 72,023,553 54,118,912 40,250,929
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
--------------------------------------------------------
Money Market
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 630,902 1,272,122 2,620,588
Net realized gain - - -
Unrealized appreciation (depreciation) on investments - - -
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 630,902 1,272,122 2,620,588
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums (28,472) 117,921 36,176,530
Transfers (to) from the general account of Life of Virginia:
Death benefits (193,170) (458,667) 103,982
Surrenders (1,206,916) (2,213,343) (4,660,173)
Administrative expense (note 3) (39,130) (65,257) (121,073)
Transfer gain (loss) and transfer fees 86,971 (204,381) 49,754
Transfers (to) from the Guarantee Account (note 1) (27,901) (661,457) (141,309)
Interfund transfers (21,205,932) (23,959,305) (47,938,008)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (22,614,550) (27,444,489) (16,530,297)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (21,983,648) (26,172,367) (13,909,709)
Net assets at beginning of year 21,983,648 48,156,015 62,065,724
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 21,983,648 48,156,015
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
--------------------------------------------------------
High
Income
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 1,653,064 2,447,710 847,430
Net realized gain 4,673,705 479,085 425,760
Unrealized appreciation (depreciation) on investments (2,814,608) 308,688 2,702,738
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 3,512,161 3,235,483 3,975,928
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 8,207 (248,987) 7,262,170
Transfers (to) from the general account of Life of Virginia:
Death benefits (66,792) (33,131) (117,911)
Surrenders (2,281,288) (1,859,776) (953,927)
Administrative expense (note 3) (46,012) (54,571) (51,018)
Transfer gain (loss) and transfer fees (18,007) (14,545) (10,918)
Transfers (to) from the Guarantee Account (note 1) (23,044) (109,624) 860,461
Interfund transfers (25,886,326) (7,008,575) 4,509,566
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (28,313,262) (9,329,209) 11,498,423
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (24,801,101) (6,093,726) 15,474,351
Net assets at beginning of year 24,801,101 30,894,827 15,420,476
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year - 24,801,101 30,894,827
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
--------------------------------------------------------
Equity-
Income
Portfolio
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 35,860,097 8,352,818 7,899,366
Net realized gain 15,417,526 9,394,625 4,284,587
Unrealized appreciation (depreciation) on investments 65,899,106 23,601,942 37,953,951
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 117,176,729 41,349,385 50,137,904
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 78,673,490 91,217,558 63,044,040
Transfers (to) from the general account of Life of Virginia:
Death benefits (3,144,602) (2,317,929) (623,306)
Surrenders (22,544,378) (12,923,609) (7,390,359)
Administrative expense (note 3) (744,663) (565,181) (384,060)
Transfer gain (loss) and transfer fees (156,609) (81,577) (128,097)
Transfers (to) from the Guarantee Account (note 1) 34,236,802 14,669,920 8,592,478
Interfund transfers 4,787,401 12,688,430 43,164,815
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 91,107,441 102,687,612 106,275,511
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 208,284,170 144,036,997 156,413,415
Net assets at beginning of year 405,298,602 261,261,605 104,848,190
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 613,582,772 405,298,602 261,261,605
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
-----------------------------------------------------
Growth
Portfolio
-----------------------------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 5,677,010 11,069,102 (1,129,143)
Net realized gain 14,576,544 9,229,819 7,510,176
Unrealized appreciation (depreciation) on investments 34,536,532 6,990,625 29,804,134
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 54,790,086 27,289,546 36,185,167
- ----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 19,742,111 40,351,417 35,842,400
Transfers (to) from the general account of Life of Virginia:
Death benefits (1,127,415) (1,395,457) (338,418)
Surrenders (15,488,583) (8,362,725) (5,531,711)
Administrative expense (note 3) (502,085) (441,506) (345,393)
Transfer gain (loss) and transfer fees (84,076) (243,398) 13,309
Transfers (to) from the Guarantee Account (note 1) 9,277,787 7,334,280 3,842,828
Interfund transfers (3,139,585) (3,259,632) 18,922,427
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 8,678,154 33,982,979 52,405,442
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 63,468,240 61,272,525 88,590,609
Net assets at beginning of year 251,545,367 190,272,842 101,682,233
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of year 315,013,607 251,545,367 190,272,842
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund (continued)
-------------------------------------------------------
Overseas
Portfolio
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 7,902,090 1,063,898 (355,173)
Net realized gain 6,802,686 2,693,770 734,798
Unrealized appreciation (depreciation) on investments (3,387,543) 7,585,836 6,428,977
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 11,317,233 11,343,504 6,808,602
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,009,263 11,020,984 10,634,049
Transfers (to) from the general account of Life of Virginia:
Death benefits (527,674) (528,522) (556,976)
Surrenders (5,102,924) (3,972,175) (3,063,268)
Administrative expense (note 3) (220,173) (214,759) (208,318)
Transfer gain (loss) and transfer fees (38,435) (85,300) (53,050)
Transfers (to) from Guarantee Account (note 1) 3,378,950 3,116,987 590,771
Interfund transfers (12,846,872) (4,620,473) (7,084,976)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (10,347,865) 4,716,742 258,232
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 969,368 16,060,246 7,066,834
Net assets at beginning of period 107,335,253 91,275,007 84,208,173
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 108,304,621 107,335,253 91,275,007
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II
---------------------------------------------------------
Asset
Manager
Portfolio
--------------------------------------------------------
Year ended December 31,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 47,434,844 23,741,639 4,159,147
Net realized gain 9,093,636 7,507,674 1,958,733
Unrealized appreciation (depreciation) on investments 24,430,304 23,008,153 55,306,129
- --------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 80,958,784 54,257,466 61,424,009
- --------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 12,956,133 15,580,792 21,217,331
Transfers (to) from the general account of Life of Virginia:
Death benefits (2,389,147) (3,090,108) (2,849,779)
Surrenders (26,860,066) (23,863,347) (23,760,769)
Administrative expense (note 3) (1,170,300) (1,159,170) (1,245,010)
Transfer gain (loss) and transfer fees (5,281,252) (2,150,299) (305,606)
Transfers (to) from Guarantee Account (note 1) 4,580,560 2,112,849 (7,015,144)
Interfund transfers (14,758,069) (31,512,425) (58,702,053)
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (32,922,141) (44,081,708) (72,661,030)
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 48,036,643 10,175,758 (11,237,021)
Net assets at beginning of period 435,838,169 425,662,411 436,899,432
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 483,874,812 435,838,169 425,662,411
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II (continued)
------------------------------------------------------
Contrafund
Portfolio
------------------------------------------------------
Period from
January 5,
Year ended Year ended 1995
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 2,084,354 (688,227) 460,166
Net realized gain 9,468,307 2,738,082 905,255
Unrealized appreciation (depreciation) on investments 26,750,686 17,275,767 4,218,866
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 38,303,347 19,325,622 5,584,287
- -----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 39,049,020 41,520,289 26,666,752
Transfers (to) from the general account of Life of Virginia:
Death benefits (778,781) (569,391) (17,699)
Surrenders (7,578,528) (3,409,236) (676,614)
Administrative expense (note 3) (239,385) (139,550) (42,327)
Transfer gain (loss) and transfer fees (1,813) (6,491) (28,134)
Transfers (to) from Guarantee Account (note 1) 20,874,655 8,894,897 4,851,438
Interfund transfers 9,642,188 15,486,630 25,426,220
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 60,967,356 61,777,148 56,179,636
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 99,270,703 81,102,770 61,763,923
Net assets at beginning of period 142,866,693 61,763,923 -
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period 242,137,396 142,866,693 61,763,923
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Variable Insurance Products
Fund III
------------------------------------
Growth & Growth
Income Opportunities
Portfolio Portfolio
------------------------------------
Period from Period from
May 1, May 1,
1997 to 1997 to
December 31, December 31,
1997 1997
- ----------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (53,296) (69,440)
Net realized gain 103,153 67,071
Unrealized appreciation (depreciation) on investments 458,100 1,055,758
- ----------------------------------------------------------------------------------------------------
Increase in net assets from operations 507,957 1,053,389
- ----------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,782,503 6,759,512
Transfers (to) from the general account of Life of Virginia
Death benefits (2,062) (11,218)
Surrenders (116,741) (178,411)
Administrative expense (note 3) (3,046) (4,370)
Transfer gain (loss) and transfer fees 358,955 734
Transfers (to) from Guarantee Account (note 1) 2,665,501 2,684,605
Interfund transfers 6,515,155 6,783,534
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 15,200,265 16,034,386
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 15,708,222 17,087,775
Net assets at beginning of period - -
- ----------------------------------------------------------------------------------------------------
Net assets at end of period 15,708,222 17,087,775
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
---------------------------------------------------------
Balanced
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income $ 1,655,053 4,845,109 362,981
Net realized gain (loss) 5,097,861 419,822 895,552
Unrealized appreciation (depreciation) on investments (2,501,835) (3,501,201) 5,264,633
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 4,251,079 1,763,730 6,523,166
- ------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums (6,001) - 2,535,815
Transfers (to) from the general account of Life of Virginia:
Death benefits (126,435) (191,199) (153,937)
Surrenders (2,675,228) (2,074,244) (1,503,514)
Administrative expense (note 3) (71,576) (82,124) (88,114)
Transfer gain (loss) and transfer fees (78,959) (12,205) 7,049
Capital contribution (629,209) - -
Transfers (to) from the Guarantee Account (note 1) (185,078) (37,694) (134,229)
Interfund transfers (31,241,057) (3,810,712) (2,179,193)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (35,013,543) (6,208,178) (1,516,123)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (30,762,464) (4,444,448) 5,007,043
Net assets at beginning of year 30,762,464 35,206,912 30,199,869
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 30,762,464 35,206,912
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust (continued)
--------------------------------------------------------
Bond
Portfolio
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 450,958 1,079,940 747,631
Net realized gain (loss) 12,018 (136,701) 45,793
Unrealized appreciation (depreciation) on investments (23,525) (646,673) 816,276
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 439,451 296,566 1,609,700
- -----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,800 - 4,761,820
Transfers (to) from the general account of Life of Virginia:
Death benefits (196,037) (225,838) (7,505)
Surrenders (508,821) (366,908) (522,591)
Administrative expense (note 3) (15,911) (24,278) (37,167)
Transfer gain (loss) and transfer fees (11,476) (9,665) (23,158)
Capital contribution - - -
Transfers (to) from the Guarantee Account (note 1) (86,454) (92,797) 798,511
Interfund transfers (9,344,589) (5,700,964) (9,447,152)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (10,161,488) (6,420,450) (4,477,242)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (9,722,037) (6,123,884) (2,867,542)
Net assets at beginning of year 9,722,037 15,845,921 18,713,463
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of year - 9,722,037 15,845,921
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust (continued)
-------------------------------------------------------
Growth
Portfolio
-------------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income 770,860 1,006,044 119,532
Net realized gain (loss) 2,304,768 315,046 242,067
Unrealized appreciation (depreciation) on investments (880,241) (363,320) 1,957,190
- ------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 2,195,387 957,770 2,318,789
- ------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 6,456 4,370 2,833,430
Transfers (to) from the general account of Life of Virginia:
Death benefits (58,098) (56,431) (78,819)
Surrenders (247,815) (415,296) (251,354)
Administrative expense (note 3) (22,353) (25,172) (23,723)
Transfer gain (loss) and transfer fees (2,057) (10,420) (697)
Capital contribution - - -
Transfers (to) from the Guarantee Account (note 1) - (14,970) 36,976
Interfund transfers (12,373,616) (3,652,818) 1,961,133
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (12,697,483) (4,170,737) 4,476,946
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (10,502,096) (3,212,967) 6,795,735
Net assets at beginning of year 10,502,096 13,715,063 6,919,328
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of year - 10,502,096 13,715,063
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series
---------------------------------------
American
Leaders
Fund II
---------------------------------------
Period from
Year ended May 6, 1996 to
December 31, December 31,
1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (86) 3,974
Net realized gain 544,140 29,680
Unrealized appreciation (depreciation)
on investments 3,385,309 162,046
- ---------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 3,929,363 195,700
- ---------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 13,540,849 2,249,062
Transfers (to) from the general account
of Life of Virginia:
Death benefits (91,917) -
Surrenders (423,567) (28,376)
Administrative expense (note 3) (11,789) (522)
Transfer gain (loss) and transfer fees 791 4,221
Transfers from the Guarantee Account (note 1) 4,966,466 146,563
Interfund transfers 9,208,512 1,208,370
- ---------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 27,189,345 3,579,318
- ---------------------------------------------------------------------------------------------------------
Increase in net assets 31,118,708 3,775,018
Net assets at beginning of period 3,775,018 -
- ---------------------------------------------------------------------------------------------------------
Net assets at end of period $ 34,893,726 3,775,018
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series (continued)
----------------------------------------------------------
High Income
Bond
Fund II
----------------------------------------------------------
Period from
February 3,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 827,322 491,956 38,880
Net realized gain 630,351 31,769 3,368
Unrealized appreciation (depreciation)
on investments 1,256,745 424,014 26,388
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 2,714,418 947,739 68,636
- ---------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 9,254,617 4,468,263 1,448,946
Transfers (to) from the general account
of Life of Virginia:
Death benefits (120,443) (42,084) -
Surrenders (861,128) (428,701) (12,805)
Administrative expense (note 3) (18,435) (5,233) (601)
Transfer gain (loss) and transfer fees (2,424) (43) 5,535
Transfers from the Guarantee Account (note 1) 4,882,888 670,397 200,240
Interfund transfers 5,675,771 6,113,878 235,916
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 18,810,846 10,776,477 1,877,231
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets 21,525,264 11,724,216 1,945,867
Net assets at beginning of period 13,670,083 1,945,867 -
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 35,195,347 13,670,083 1,945,867
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Series (continued)
------------------------------------------------------
Utility
Fund II
------------------------------------------------------
Period from
January 27,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 719,879 523,302 162,247
Net realized gain 731,431 336,527 90,613
Unrealized appreciation (depreciation)
on investments 4,302,272 1,113,241 914,307
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 5,753,582 1,973,070 1,167,167
- -----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 3,510,754 7,032,730 4,723,697
Transfers (to) from the general account
of Life of Virginia:
Death benefits (63,646) (172,666) -
Surrenders (1,420,075) (708,499) (150,715)
Administrative expense (note 3) (32,050) (25,376) (7,470)
Transfer gain (loss) and transfer fees (1,043) 11,752 (650)
Transfers from the Guarantee Account (note 1) 1,540,929 1,313,211 982,260
Interfund transfers (1,399,267) 830,436 5,539,763
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 2,135,602 8,281,588 11,086,885
- -----------------------------------------------------------------------------------------------------------------------
Increase in net assets 7,889,184 10,254,658 12,254,052
Net assets at beginning of period 22,508,710 12,254,052 -
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period 30,397,894 22,508,710 12,254,052
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Alger American
--------------------------------------------------------------
Small
Cap
Portfolio
--------------------------------------------------------------
Period from
October 3,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
-----------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 1,245,506 (308,795) (9,745)
Net realized gain (loss) 411,624 (122,299) (20,417)
Unrealized appreciation (depreciation)
on investments 4,016,910 (80,937) (25,048)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 5,674,040 (512,031) (55,210)
- --------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 12,048,925 25,934,981 3,369,922
Transfers (to) from the general account
of Life of Virginia:
Death benefits (296,448) (167,439) -
Surrenders (1,974,869) (837,016) (18,166)
Administrative expense (note 3) (69,752) (32,819) (1,420)
Transfer gain (loss) and transfer fees 20,656 (18,410) 7,625
Transfers from the Guarantee Account (note 1) 9,339,897 5,067,731 298,188
Interfund transfers 1,782,889 10,297,239 3,969,177
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 20,851,298 40,244,267 7,625,326
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 26,525,338 39,732,236 7,570,116
Net assets at beginning of period 47,302,352 7,570,116 -
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 73,827,690 47,302,352 7,570,116
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Alger American
----------------------------------------------------
Growth
Portfolio
----------------------------------------------------
Period from
October 4,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
-----------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (282,901) 309,982 (6,776)
Net realized gain (loss) 3,954,588 315,644 (2,380)
Unrealized appreciation (depreciation)
on investments 8,095,163 2,224,353 27,240
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 11,766,850 2,849,979 18,084
- ----------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 13,470,987 21,518,317 2,632,716
Transfers (to) from the general account
of Life of Virginia:
Death benefits (317,671) (22,815) -
Surrenders (2,065,182) (539,265) (4,789)
Administrative expense (note 3) (68,206) (26,996) (895)
Transfer gain (loss) and transfer fees (390,379) (32,858) 1,883
Transfers from the Guarantee Account (note 1) 6,594,835 3,628,084 (47,006)
Interfund transfers (1,557,814) 11,823,073 2,922,881
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 15,666,570 36,347,540 5,504,790
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets 27,433,420 39,197,519 5,522,874
Net assets at beginning of period 44,720,393 5,522,874 -
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of period 72,153,813 44,720,393 5,522,874
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PBHG Insurance Series Fund
------------------------------------
PBHG PBHG
Large Cap Growth II
Portfolio Portfolio
------------------------------------
Period from Period from
May 1, May 1,
1997 to 1997 to
December 31, December 31,
1997 1997
------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (17,112) (30,512)
Net realized gain (loss) 13,525 7,643
Unrealized appreciation (depreciation)
on investments 149,898 (89,829)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 146,311 (112,698)
- --------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,239,113 3,502,382
Transfers (to) from the general account
of Life of Virginia:
Death benefits (715) -
Surrenders (12,383) (53,142)
Administrative expense (note 3) (684) (1,455)
Transfer gain (loss) and transfer fees 865 787
Transfers from the Guarantee Account (note 1) 610,146 1,108,447
Interfund transfers 2,735,614 2,507,619
- --------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 4,571,956 7,064,638
- --------------------------------------------------------------------------------------------------
Increase in net assets 4,718,267 6,951,940
Net assets at beginning of period - -
- --------------------------------------------------------------------------------------------------
Net assets at end of period 4,718,267 6,951,940
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
-------------------------------------------------------
Aggressive
Growth
Portfolio
----------------------------------------------------
Year ended
December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (1,187,720) (124,804) 237,054
Net realized gain 6,675,700 3,422,984 1,735,504
Unrealized appreciation (depreciation) on investments 5,540,954 109,555 7,840,280
- ----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 11,028,934 3,407,735 9,812,838
- ----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 11,681,150 17,880,226 16,756,982
Transfers (to) from the general account of Life of Virginia:
Death benefits (427,386) (394,284) (86,506)
Surrenders (2,997,601) (2,851,517) (1,216,524)
Administrative expense (note 3) (120,078) (112,813) (73,928)
Transfer gain (loss) and transfer fees (19,458) (40,003) 38,529
Transfers (to) from the Guarantee Account (note 1) 4,987,441 3,328,781 2,434,875
Interfund transfers (2,281,417) 8,025,078 7,553,096
- ----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 10,822,651 25,835,468 25,406,524
- ----------------------------------------------------------------------------------------------------------------------------
Increase in net assets 21,851,585 29,243,203 35,219,362
Net assets at beginning of year 83,963,537 54,720,334 19,500,972
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 105,815,122 83,963,537 54,720,334
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
----------------------------------------------------------------
Growth
Portfolio
----------------------------------------------------------------
Year ended
December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 3,288,014 1,820,512 1,088,723
Net realized gain 9,346,395 4,286,543 1,220,855
Unrealized appreciation (depreciation) on investments 23,212,981 11,457,707 11,886,046
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 35,847,390 17,564,762 14,195,624
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 30,338,859 35,456,497 20,907,687
Transfers (to) from the general account of Life of Virginia:
Death benefits (1,849,634) (483,092) (292,563)
Surrenders (9,041,380) (3,747,509) (1,304,563)
Administrative expense (note 3) (280,500) (199,595) (125,440)
Transfer gain (loss) and transfer fees (152,642) (208,664) (42,445)
Transfers (to) from the Guarantee Account (note 1) 16,216,500 7,027,293 2,397,459
Interfund transfers 1,293,752 11,381,396 14,146,981
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 36,524,955 49,226,326 35,687,116
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 72,372,345 66,791,088 49,882,740
Net assets at beginning of year 151,696,572 84,905,484 35,022,744
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 224,068,917 151,696,572 84,905,484
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
-----------------------------------------------------------------
Worldwide
Growth
Portfolio
---------------------------------------------------------------
Year ended
December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 834,801 676,021 (252,038)
Net realized gain 11,585,008 5,069,677 439,501
Unrealized appreciation (depreciation) on investments 32,530,512 18,944,795 9,549,318
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 44,950,321 24,690,493 9,736,781
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 77,908,754 45,862,046 14,202,159
Transfers (to) from the general account of Life of Virginia:
Death benefits (916,155) (407,146) (146,748)
Surrenders (9,754,795) (2,394,900) (1,173,774)
Administrative expense (note 3) (346,218) (172,873) (87,512)
Transfer gain (loss) and transfer fees (116,774) (183,599) (23,608)
Transfers (to) from the Guarantee Account (note 1) 30,845,279 8,313,366 1,874,804
Interfund transfers 25,144,972 42,049,450 7,110,222
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 122,765,063 93,066,344 21,755,543
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 167,715,384 117,756,837 31,492,324
Net assets at beginning of year 177,410,698 59,653,861 28,161,537
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 345,126,082 177,410,698 59,653,861
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
-----------------------------------------------------------------
Balanced
Portfolio
--------------------------------------------------------------
Period from
October 11,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 931,355 170,096 10,290
Net realized gain 1,239,519 122,576 9,364
Unrealized appreciation (depreciation) on investments 4,013,343 920,620 37,909
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 6,184,217 1,213,292 57,563
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 15,654,806 8,643,527 619,039
Transfers (to) from the general account of
Life of Virginia:
Death benefits (98,529) (37,496) -
Surrenders (1,560,191) (271,087) (61,992)
Administrative expense (note 3) (34,113) (7,301) (379)
Transfer gain (loss) and transfer fees (11,920) 5,413 (240)
Transfer (to) from the Guarantee Account (note 1) 6,551,408 1,091,622 210,233
Interfund transfers 34,492,843 3,850,513 1,147,007
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 54,994,304 13,275,191 1,913,668
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets 61,178,521 14,488,483 1,971,231
Net assets at beginning of period 16,459,714 1,971,231 -
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 77,638,235 16,459,714 1,971,231
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
--------------------------------------------------------------
Flexible
Income
Portfolio
--------------------------------------------------------------
Period from
October 13,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) 578,869 248,378 19,153
Net realized gain 86,470 4,524 29
Unrealized appreciation (depreciation) on investments 269,390 68,898 (2,240)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 934,729 321,800 16,942
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 3,465,715 2,591,080 312,671
Transfers (to) from the general account of Life of Virginia:
Death benefits (55,866) - -
Surrenders (425,891) (29,518) (451)
Administrative expense (note 3) (8,897) (2,717) (111)
Transfer gain (loss) and transfer fees 1,786 (413) 179
Transfer (to) from the Guarantee Account (note 1) 3,010,637 345,536 41,646
Interfund transfers 2,406,219 992,086 419,589
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 8,393,703 3,896,054 773,523
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 9,328,432 4,217,854 790,465
Net assets at beginning of period 5,008,319 790,465 -
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 14,336,751 5,008,319 790,465
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
-------------------------------------------------------------
International Capital
Growth Appreciation
Portfolio Portfolio
--------------------------------------- -------------------
Period from Period from
May 3, 1996 May 2, 1997
Year ended to to
December 31, December 31, December 31,
1997 1996 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) (167,651) 9,055 (1,544)
Net realized gain 3,329,942 187,391 31,894
Unrealized appreciation (depreciation) on investments 1,235,644 586,615 12,182
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 4,397,935 783,061 42,532
- -----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 19,031,016 4,654,797 720,613
Transfers (to) from the general account of Life of Virginia:
Death benefits (197,552) - -
Surrenders (1,293,141) (51,116) (37,177)
Administrative expense (note 3) (39,068) (3,441) (826)
Transfer gain (loss) and transfer fees 24,476 3,766 (33,752)
Transfer (to) from the Guarantee Account (note 1) 8,279,728 935,954 446,414
Interfund transfers 10,950,154 7,189,157 1,531,771
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 36,755,613 12,729,117 2,627,043
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 41,153,548 13,512,178 2,669,575
Net assets at beginning of period 13,512,178 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 54,665,726 13,512,178 2,669,575
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
December 31, 1997
================================================================================
(1) Description of Entity
Life of Virginia Separate Account 4 (the Account) is a separate
investment account established in 1987 by The Life Insurance Company of
Virginia (Life 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 deferred annuity life insurance
policies issued by Life of Virginia. The Life Insurance Company of
Virginia is a stock life insurance company operating under a charter
granted by the Commonwealth of Virginia on March 21, 1871. Eighty
percent of the capital stock of Life of Virginia is owned by General
Electric Capital Assurance Corporation. The remaining 20% is owned by
GE Financial Assurance Holdings, Inc. General Electric Capital
Assurance Corporation and GE Financial Assurance Holdings, Inc. are
indirectly, wholly-owned subsidiaries of General Electric Capital ("GE
Capital"). GE Capital, a diversified financial services company, is a
wholly-owned subsidiary of General Electric Company (GE), a New York
corporation. Prior to April 1, 1996, Life of Virginia was an indirect
wholly-owned subsidiary of Aon Corporation (Aon).
In May 1997, seven new investment subdivisions were added to the
Account, for both Type I and II policies. The Growth & Income Portfolio
and Growth Opportunities Portfolio each invest solely in a designated
portfolio of the Variable Insurance Products Fund III. The Global
Income Fund and the Value Equity Fund each invest solely in a
designated portfolio of the GE Investments Funds, Inc. The Capital
Appreciation Portfolio invests solely in a designated portfolio of the
Janus Aspen Series. The Growth II Portfolio and the Large Cap Growth
Portfolio each invest solely in a designated portfolio of the PBHG
Insurance Series Fund. All designated portfolios described above are
series type mutual funds.
During 1997, the Life of Virginia Series Fund, Inc. changed its name to
the GE Investments Funds, Inc. As a result the Life of Virginia Series
Funds, Inc.--Common Stock Index, Government Securities, Money Market,
Total Return, International Equity and Real Estate Securities
Portfolios were renamed the GE Investments Funds, Inc.--S&P 500 Index,
Government Securities, Money Market, Total Return, International Equity
and Real Estate Securities Funds, respectively. On December 12, 1997,
the Account added the GE Investments Funds, Inc.--Income Fund as a new
investment subdivision and made the following substitutions of shares
held by the investment subdivisions:
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
================================================================
(1) Continued
<TABLE>
<S> <C>
Before the Substitution After the Substitution
Shares of Money Market Portfolio - Shares of Money Market Fund -
Variable Insurance Products Fund GE Investments Funds, Inc.
Shares of Money Fund - Shares of Money Market Fund -
Oppenheimer Variable Account Funds GE Investments Funds, Inc.
Shares of Bond Portfolio - Shares of Income Fund Neuberger & Berman -
Advisers Management Trust GE Investments Funds, Inc.
Shares of High Income Portfolio - Shares of High Income Fund -
Variable Insurance Products Fund Oppenheimer Variable Account Funds
Shares of Growth Portfolio - Shares of Growth Portfolio -
Neuberger & Berman Advisers Management Trust Variable Insurance Products Fund
Shares of Balanced Portfolio - Shares of Balanced Portfolio -
Neuberger & Berman Advisers Management Trust Janus Aspen Series
</TABLE>
The foregoing substitutions were 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.
The effect of such a share substitution was to replace certain
portfolios of Variable Insurance Products Fund, Oppenheimer Variable
Account Funds, GE Investments Funds, Inc., and Neuberger & Berman
Advisers Management Trust with those of GE Investments Funds, Inc.,
Oppenheimer Variable Account Funds, Variable Insurance Products Fund,
and Janus Aspen Series as investment options.
<PAGE>
(1) Continued
In May 1996, two new investment subdivisions were added to the Account,
for both Type I and II policies. One of these subdivisions, the
International Growth Portfolio, invests solely in a designated
portfolio of the Janus Aspen Series, a series type mutual fund. The
other new subdivision, the American Leaders Fund II, invests solely in
a designated portfolio of the Federated Investors Insurance Series, a
series type mutual fund.
During 1995, nine new investment subdivisions were added to the
Account, for both Type I and Type II policies. The Utility Fund II and
High Income Bond Fund II each invest solely in a designated portfolio
of the Federated Investors Insurance Series, a series type mutual fund.
The Contrafund Portfolio invests solely in a designated portfolio of
the Variable Insurance Products Fund II, a series type mutual fund. The
International Equity Portfolio and the Real Estate Securities Portfolio
each invest solely in a designated portfolio of GE Investments Funds,
Inc., a series type mutual fund. The Balanced Portfolio and Flexible
Income Portfolio each invest solely in a designated portfolio of the
Janus Aspen Series, a series type mutual fund. The Growth Portfolio and
Small Cap Portfolio each invest solely in a designated portfolio of the
Alger American Fund, a series type mutual fund.
In November 1995, six subdivisions were closed to new money for both
Type I and Type II policies. For each policy type, three of these
subdivisions, the Balanced Portfolio, Bond Portfolio, and Growth
Portfolio each invest solely in a designated portfolio of the Advisers
Management Trust, a series type mutual fund. The fourth and fifth
closed subdivisions, the Money Market Portfolio and High Income
Portfolio, each invest solely in a designated portfolio of the Variable
Insurance Products Fund, a series type mutual fund. The sixth closed
subdivision, the Money Fund, invests solely in a designated portfolio
of the Oppenheimer Variable Account Funds, a series type mutual fund.
Policyowners may transfer cash values between the Account's portfolios
and the Guarantee Account that is part of the general account of Life
of Virginia. Amounts transferred to the Guarantee Account earn interest
at the interest rate in effect at the time of such transfer and remain
in effect for one year, after which a new rate may be declared.
<PAGE>
(2) Summary of Significant Accounting Policies
Unit Classes
There are two unit classes included in the Account. Type I units are
sold under policy form P1140 and P1141. Type II units are sold under
policy forms P1142, P1142N and P1143. Type II unit sales began in the
third quarter of 1994.
Investments
Investments are stated at fair value which is based on the underlying
net asset value per share of the respective portfolios or funds.
Purchases and sales of investments are recorded on the trade date and
income distributions are recorded on the ex-dividend date. Realized
gains and losses on investments are determined on the average cost
basis. The units and unit values are disclosed as of the last business
day in the applicable year or period.
<PAGE>
(2) Continued
The aggregate cost of investments acquired and the aggregate proceeds
of investments sold, for the year or period ended December 31, 1997
were:
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- ----------------------------------------------------------------------------
GE Investments Funds, Inc.:
S&P 500 Index $ 132,222,938 31,818,054
Government Securities 10,499,388 23,055,080
Money Market 887,060,254 868,724,486
Total Return 30,724,166 10,679,067
International Equity 18,393,561 11,389,194
Real Estate Securities 43,204,050 16,152,111
Global Income 6,336,231 187,733
Value Equity 17,622,017 3,137,116
Income 25,679,422 3,310,006
Oppenheimer Variable Account Funds:
Money 314,112 3,030,625
Bond 16,807,159 9,544,382
Capital Appreciation 93,466,672 56,992,604
Growth 85,183,495 31,490,581
High Income 95,915,615 36,944,770
Multiple Strategies 23,819,771 11,316,157
Variable Insurance Products Fund:
Money Market 1,556,148 23,557,498
High Income 3,620,650 30,349,068
Equity - Income 220,439,185 93,043,056
Growth 83,553,084 68,794,613
Overseas 72,741,759 71,928,713
Variable Insurance Products Fund II:
Asset Manager 85,456,484 70,466,360
Contrafund 118,473,800 55,310,933
Variable Insurance Products Fund III:
Growth & Income 18,484,934 3,417,350
Growth Opportunities 17,590,719 1,681,206
- ----------------------------------------------------------------------------
<PAGE>
(2) Continued
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -----------------------------------------------------------------------------
Neuberger & Berman Advisers
Management Trust:
Balanced $ 2,635,418 36,069,865
Bond 1,856,865 11,649,317
Growth 977,918 12,925,079
Federated Investors Insurance Series:
American Leaders II 32,823,606 5,793,581
High Income Bond II 38,421,195 18,759,547
Utility 10,012,564 7,198,898
II
Alger American:
Small Cap 46,888,772 24,542,187
Growth 46,869,978 31,444,158
PBHG Insurance Series Fund:
PBHG Large Cap Growth 6,296,317 1,710,929
PBHG Growth II 7,969,729 1,120,679
Janus Aspen Series:
Aggressive Growth 99,975,217 90,226,548
Growth 86,207,354 46,144,088
Worldwide Growth 183,578,974 59,756,806
Balanced 67,917,334 11,980,846
Flexible Income 12,301,658 3,313,161
International Growth 94,751,055 54,755,744
Capital Appreciation 5,675,613 3,007,685
- -----------------------------------------------------------------------------
Capital Transactions
The increase (decrease) in outstanding units for Type I and Type II
from capital transactions for the years or periods ended December 31,
1997, 1996 and 1995 are as follows:
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
(2) Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------
S&P 500 Government Money Total International Real Estate
Index Securities Market Return Equity Securities
Type I Units Fund Fund Fund Fund Fund Fund
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 297,274 384,930 484,719 666,497 - -
Net premiums 37,545 7,450 265,952 38,485 5,889 3,842
Transfers (to) from the
general account of Life of Virginia:
Death benefits (3,332) (2,593) (365) (8,225) (201) (130)
Surrenders (11,616) (27,386) (138,205) (30,218) (166) (82)
Administrative expenses (991) (994) (1,241) (1,911) (64) (27)
Transfers (to)/from the Guarantee Account 17,804 (78) 347,444 6,958 8,347 6,278
Interfund transfers 142,337 67,621 (64,330) 73,915 101,757 13,762
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 181,747 44,020 409,255 79,004 115,562 23,643
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 479,021 428,950 893,974 745,501 115,562 23,643
Net premiums 34,082 36,100 706,581 33,745 22,527 14,587
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,231) (163) (16,043) (6,096) - -
Surrenders (22,370) (25,884) (412,885) (31,853) (5,008) (1,361)
Administrative expenses (1,347) (1,204) (4,925) (2,175) (446) (192)
Transfers (to)/from the Guarantee Account 37,400 4,534 358,505 1,905 22,249 21,124
Interfund transfers 54,702 62,264 1,023,952 (32,962) 52,528 147,118
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 101,236 75,647 1,655,185 (37,436) 91,850 181,276
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 580,257 504,597 2,549,159 708,065 207,412 204,919
Net premiums 43,467 2,027 273,183 24,404 (153,291) 215,116
Transfers (to) from the
general account of Life of Virginia:
Death benefits (2,505) (3,654) (88,771) (5,480) - -
Surrenders (34,875) (27,521) (773,658) (56,645) 494,961 (112,838)
Administrative expenses (1,886) (938) (6,382) (1,805) 20,280 (5,712)
Transfers (to)/from the Guarantee Account 41,669 9,540 304,035 5,882 (736,706) 208,742
Interfund transfers 292,720 (484,051) 1,254,694 (42,593) 1,380,146 875,079
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 338,590 (504,597) 963,101 (76,237) 1,005,390 1,180,387
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 918,847 - 3,512,260 631,828 1,212,802 1,385,306
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. Oppenheimer Variable Account Funds
----------------------------------- -------------------------------------------
Global Capital
Income Value Equity Income Money Bond Appreciation Growth
Type I Units Fund Fund Fund Fund Fund Fund Fund
<S> <C>
- ---------------------------------------------------------------------------------- -------------------------------------------
Units outstanding at December 31, 1994 - - - 549,261 967,029 2,708,957 734,287
Net premiums - - - 36,722 (11,303) 222,696 (521,582)
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - 263 (31,865) 48,092
Surrenders - - - (38,250) 5,282 (311,147) 564,254
Administrative expenses - - - (910) 309 (13,475) 27,690
Transfers (to)/from the Guarantee Account - - - (33,828) (4,115) 27,379 (11,025)
Interfund transfers - - - (230,533) (4,765) 45,448 144,969
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - - (266,799) (14,329) (60,964) 252,398
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - - - 282,462 952,700 2,647,993 986,685
Net premiums - - - - (4,744) (181,755) 267,359
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - (1,782) 2,016 44,441 (29,174)
Surrenders - - - (16,283) 7,728 332,700 (364,042)
Administrative expenses - - - (531) 407 14,718 (16,121)
Transfers (to)/from the Guarantee Account - - - (4,896) (7,110) (185,173) 105,286
Interfund transfers - - - (96,465) (9,728) 53,131 240,629
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - - (119,957) (11,431) 78,062 203,937
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 - - - 162,505 941,269 2,726,055 1,190,622
Net premiums 15,669 30,034 595 - 12,729 48,378 50,650
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - (4,708) (2,476) (1,990)
Surrenders (2,874) (1,979) (5,500) (5,366) (114,775) (146,760) (99,247)
Administrative expenses (489) (345) (199) (298) (2,868) (6,721) (2,955)
Transfers (to)/from the Guarantee Account 131,841 33,741 - - 30,993 33,837 40,477
Interfund transfers 372,751 418,170 1,300,742 (156,841) 66,990 (60,894) 114,256
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 516,898 479,621 1,295,638 (162,505) (11,639) (134,636) 101,191
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 516,898 479,621 1,295,638 - 929,630 2,591,419 1,291,813
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Oppenheimer Variable
Account Funds Variable Insurance Products Fund
----------------------- ----------------------------------------------------------
High Multiple Money High Equity-
Income Strategies Market Income Income Growth Overseas
Type I Units Fund Fund Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------- ---------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 1,125,497 1,797,950 4,123,571 804,420 5,088,608 4,641,036 5,128,595
Net premiums 44,999 65,632 730,434 85,480 485,381 247,726 200,203
Transfers (to) from the
general account of Life of Virginia:
Death benefits (296) (9,569) 8,759 (5,083) (26,937) (11,327) (22,477)
Surrenders (12,636) (95,101) (323,643) (42,301) (295,625) (179,497) (183,059)
Administrative expenses (1,249) (5,559) (8,471) (2,631) (16,777) (12,038) (12,905)
Transfers (to)/from the Guarantee Account 10,579 (3,036) 36,658 35,020 214,956 67,303 (35,433)
Interfund transfers 96,818 12,445 (2,144,243) 83,390 1,492,501 433,983 (566,178)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 138,215 (35,188) (1,700,506) 153,875 1,853,499 546,150 (619,849)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Units outstanding at December 31, 1995 1,263,712 1,762,762 2,423,065 958,295 6,942,107 5,187,186 4,508,746
Net premiums 15,693 26,028 8,114 (11,013) 209,607 133,676 102,472
Transfers (to) from the
general account of Life of Virginia:
Death benefits (411) (15,299) (26,867) - (39,084) (25,152) (17,537)
Surrenders (23,047) (88,160) (136,342) (64,247) (314,228) (232,300) (188,428)
Administrative expenses (1,163) (4,615) (4,247) (2,193) (16,695) (13,593) (11,116)
Transfers (to)/from the Guarantee Account 13,792 26,304 (46,251) (1,584) 129,570 60,757 48,453
Interfund transfers 89,651 (66,358) (1,024,299) (147,328) (63,823) (278,909) (373,467)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 94,515 (122,100) (1,229,892) (226,365) (94,653) (355,521) (439,623)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Units outstanding at December 31, 1996 1,358,227 1,640,662 1,193,173 731,930 6,847,454 4,831,665 4,069,123
Net premiums 44,846 26,455 (2,769) - 132,909 46,481 33,637
Transfers (to) from the
general account of Life of Virginia:
Death benefits (6,846) (7,589) (3,458) (2,224) (25,251) (14,556) (15,035)
Surrenders (87,976) (127,118) (72,594) (65,456) (376,813) (325,620) (189,716)
Administrative expenses (3,299) (4,137) (2,380) (1,503) (17,119) (12,146) (9,227)
Transfers (to)/from the Guarantee Account 54,141 17,555 (1,822) (257) 81,689 26,348 10,283
Interfund transfers 510,750 7,721 (1,110,150) (662,490) (53,531) (84,347) (500,805)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 511,616 (87,113) (1,193,173) (731,930) (258,116) (363,840) (670,863)
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
Units outstanding at December 31, 1997 1,869,843 1,553,549 - - 6,589,338 4,467,825 3,398,260
- ----------------------------------------------- ---------- ----------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Products
Fund II Fund III Advisers Management Trust
---------------------------- --------------------------- -------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities Balanced Bond Growth
Type I Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 27,382,848 - - - 2,303,795 1,644,509 619,834
Net premiums 387,499 582,483 - - 19,872 (319,688) (14,507)
Transfers (to) from the
general account of Life of Virginia:
Death benefits (158,949) (1,220) - - (260) 29,267 4,454
Surrenders (1,411,202) (39,641) - - (16,268) 86,040 50,773
Administrative expenses (74,816) (3,373) - - (1,256) 8,665 2,990
Transfers (to)/from the Guarantee Account (514,204) 257,604 - - 22,814 19,812 13,112
Interfund transfers (3,617,814) 1,639,032 - - (302,761) (529,362) 79,845
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (5,389,486) 2,434,885 - - (277,859) (705,266) 136,667
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 21,993,362 2,434,885 - - 2,025,936 939,243 756,501
Net premiums 164,394 191,853 - - - 692 -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (142,857) (14,740) - - (13,542) (625) (7,106)
Surrenders (1,189,857) (156,723) - - (19,441) (46,729) (82,100)
Administrative expenses (60,017) (7,215) - - (1,491) (2,782) (3,304)
Transfers (to)/from the Guarantee Account (9,338) 168,994 - - (6,661) (1,863) (1,563)
Interfund transfers (1,775,712) 480,447 - - (300,225) (348,334) (131,122)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (3,013,387) 662,616 - - (341,360) (399,641) (225,195)
- --------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 18,979,975 3,097,501 - - 1,684,576 539,602 531,306
Net premiums 152,156 110,477 41,831 30,072 (343) 141 348
Transfers (to) from the
general account of Life of Virginia:
Death benefits (89,850) (9,932) - - (4,573) (13,722) (3,133)
Surrenders (1,096,143) (211,184) (813) (5,989) (131,590) (27,704) (10,160)
Administrative expenses (52,182) (7,854) (183) (318) (3,702) (1,043) (1,125)
Transfers (to)/from the Guarantee Account 25,895 101,581 19,562 24,545 (9,256) (144) -
Interfund transfers (818,341) 215,612 233,932 293,107 (1,535,112) (497,130) (517,236)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (1,878,465) 198,700 294,329 341,417 (1,684,576) (539,602) (531,306)
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 17,101,510 3,296,201 294,329 341,417 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Federated Investors Insurance PBHG Insurance
Series Alger American Series Fund
--------------------------------- --------------------- --------------------
American High
Leaders Income Large Cap
Portfolio Bonds Utility Small Cap Growth Growth Growth II
Type I Units Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - - - - - -
Net premiums - 6,661 74,380 67,353 46,215 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - - - -
Surrenders - (60) (682) (606) (423) - -
Administrative expenses - (15) (144) (147) (90) - -
Transfers (to)/from the Guarantee Account - 1,534 126,922 8,574 4,799 - -
Interfund transfers - 32,694 339,152 330,617 210,724 - -
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - 40,814 539,628 405,791 261,225 - -
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - 40,814 539,628 405,791 261,225 - -
Net premiums 6,132 11,997 34,892 260,309 140,387 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (1,489) (13,689) (10,458) - - -
Surrenders (234) (8,472) (35,752) (35,446) (31,027) - -
Administrative expenses (47) (273) (1,868) (2,659) (2,129) - -
Transfers (to)/from the Guarantee Account 1,547 23,451 31,866 150,713 122,150 - -
Interfund transfers 68,264 145,478 (9,854) 571,403 700,068 - -
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 75,662 170,692 5,595 933,862 929,449 - -
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 75,662 211,506 545,223 1,339,653 1,190,674 - -
Net premiums 35,396 49,848 7,670 694,521 66,490 1,019 17,111
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (469) (853) (42,319) (2,907) - -
Surrenders (1,961) (14,353) (38,555)(1,148,701) (80,029) (92) (49)
Administrative expenses (502) (718) (1,375) (36,907) (3,546) (32) (101)
Transfers (to)/from the Guarantee Account 24,074 50,940 9,699 749,029 2,066 2,432 1,623
Interfund transfers 228,950 159,370 (36,477) (230,206) (150,234) 52,670 58,027
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 285,957 244,618 (59,891) (14,583) (168,160) 55,997 76,611
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 361,619 456,124 485,332 1,325,070 1,022,514 55,997 76,611
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Janus Aspen Series
----------------------------------------------------------------------------------
Aggressive Flexible International Capital
Growth Growth Worldwide Balanced Income Growth Appreciation
Type I Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 1,272,142 3,183,404 2,247,224 - - - -
Net premiums 41,540 495,631 154,654 47,108 369 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (8,424) (9,493) (2,123) - - -
Surrenders (37,096) (129,651) (38,101) (16,212) (8) - -
Administrative expenses (196) (9,290) (4,194) (1,376) (11) - -
Transfers (to)/from the Guarantee Account 90,712 109,046 25,268 9,645 2,769 - -
Interfund transfers 598,635 792,010 381,858 74,930 35,960 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 693,595 1,249,322 509,992 111,972 39,079 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 1,965,737 4,432,726 2,757,216 111,972 39,079 - -
Net premiums 1,581 1,661,740 880,684 49,343 4,021 34,924 -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (181,059) (51,566) (2,953) - - -
Surrenders (429) (2,320,448) (739,842) (15,986) (1,075) (1,689) -
Administrative expenses (22) (113,310) (48,025) (1,541) (194) (301) -
Transfers (to)/from the Guarantee Account 1,256 1,066,999 455,640 26,519 11,223 37,626 -
Interfund transfers 7,695 217,761 916,700 191,453 64,966 403,878 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 10,081 331,683 1,413,591 246,835 78,941 474,438 -
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 1,975,818 4,764,409 4,170,807 358,807 118,020 474,438 -
Net premiums 55,368 109,351 257,478 32,492 8,506 99,898 2,452
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,972) (66,404) (7,323) - - - -
Surrenders (87,614) (321,901) (229,991) (34,024) (17,779) (40,170) (1,327)
Administrative expenses (4,772) (11,195) (12,079) (1,430) (403) (2,200) (58)
Transfers (to)/from the Guarantee Account 29,407 64,006 148,276 55,427 78,205 64,693 344
Interfund transfers (148,659) (32,501) 611,104 2,070,280 94,329 408,010 47,846
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (158,242) (258,644) 767,465 2,122,745 162,858 530,231 49,257
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 1,817,576 4,505,765 4,938,272 2,481,552 280,878 1,004,669 49,257
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
- ------------------------------------------------------------------------------
(2) Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------
S&P 500 Government Money Total International Real Estate
Index Securities Market Return Equity Securities
Type II Units Fund Fund Fund Fund Fund Fund
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 10,408 889 75,600 12,498 - -
Net premiums 287,747 94,804 3,703,628 189,643 26,411 23,750
Transfers (to) from the
general account of Life of Virginia:
Death benefits (3,020) - - (523) - -
Surrenders (1,937) (2,139) (17,008) (2,245) (10) (23)
Administrative expenses (18) (6) (18) (12) (1) -
Transfers (to)/from the Guarantee Account 12,961 3,954 18,590 12,174 1,577 324
Interfund transfers 93,868 56,254 (2,272,432) 41,049 19,067 10,426
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 389,601 152,867 1,432,760 240,086 47,044 34,477
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 400,009 153,756 1,508,360 252,584 47,044 34,477
Net premiums 647,438 194,563 10,719,294 345,169 204,787 214,051
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,638) (4,586) (41,657) (930) (313) -
Surrenders (17,183) (4,362) (189,358) (11,361) (4,056) (1,826)
Administrative expenses (290) (130) (792) (196) (80) (43)
Transfers (to)/from the Guarantee Account 78,749 3,809 (49,295) 38,959 26,698 19,914
Interfund transfers 155,417 (66,854) (8,053,173) 35,026 58,323 162,396
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 862,493 122,440 2,385,019 406,667 285,359 394,492
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 1,262,502 276,196 3,893,379 659,251 332,403 428,969
Net premiums 1,106,640 58,332 7,321,970 188,455 143,803 604,427
Transfers (to) from the
general account of Life of Virginia:
Death benefits (46,669) - (31,824) (4,811) (188) (1,092)
Surrenders (61,683) (10,472) (497,702) (40,510) (16,180) (24,343)
Loans - - - - - -
Administrative expenses (1,001) (115) (2,877) (508) (358) (445)
Transfers (to)/from the Guarantee Account 376,140 37,807 406,500 93,000 69,865 236,279
Interfund transfers 389,211 (361,748) (6,108,959) 33,268 85,065 234,452
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,762,638 (276,196) 1,087,108 268,894 282,007 1,049,278
- ------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 3,025,140 - 4,980,487 928,145 614,410 1,478,247
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------
Global
Income Value Equity Income
Type II Units Fund Fund Fund
<S> <C>
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - -
Net premiums - - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - -
Surrenders - - -
Administrative expenses - - -
Transfers (to)/from the Guarantee Account - - -
Interfund transfers - - -
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - -
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - - -
Net premiums - - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - -
Surrenders - - -
Administrative expenses - - -
Transfers (to)/from the Guarantee Account - - -
Interfund transfers - - -
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - - -
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 - - -
Net premiums 19,022 242,987 1,357
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (153) -
Surrenders (487) (5,196) (415)
Loans - - -
Administrative expenses (8) (28) (42)
Transfers (to)/from the Guarantee Account 19,733 146,978 5,210
Interfund transfers 41,030 346,028 897,139
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 79,290 730,616 903,249
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 79,290 730,616 903,249
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------------------
Capital High Multiple
Money Bond Appreciation Growth Income Strategies
Type II Units Fund Fund Fund Fund Fund Fund
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 50,143 11,655 68,052 12,276 77,818 26,302
Net premiums 54,745 214,451 355,504 325,547 366,507 185,233
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (219) (166) (229) - (1,207)
Surrenders (652) (5,734) (5,891) (3,339) (1,757) (2,408)
Administrative expenses (31) (49) (30) (68) (24) (36)
Transfers (to)/from the Guarantee Account (4,360) 13,097 21,250 28,166 20,898 17,850
Interfund transfers (41,682) 42,279 143,860 61,411 97,702 30,947
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 8,020 263,825 514,527 411,488 483,326 230,379
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 58,163 275,480 582,579 423,764 561,144 256,681
Net premiums 70 307,614 1,152,800 440,344 922,316 383,300
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (3,625) (23,778) (2,446) (14,183) (3,190)
Surrenders (1,020) (13,875) (34,224) (9,335) (24,799) (11,252)
Administrative expenses (6) (160) (668) (213) (520) (329)
Transfers (to)/from the Guarantee Account (156) 32,015 169,506 50,413 94,808 45,770
Interfund transfers (33,183) 109,648 275,079 189,075 176,989 77,022
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (34,295) 431,617 1,538,715 667,838 1,154,611 491,321
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 23,868 707,097 2,121,294 1,091,602 1,715,755 748,002
Net premiums 30 167,289 713,649 880,279 703,696 349,189
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (8,306) (10,958) (8,211) (16,328) (5,971)
Surrenders (202) (30,599) (79,872) (48,836) (109,043) (55,647)
Loans - - - - - -
Administrative expenses (5) (513) (1,748) (951) (1,245) (701)
Transfers (to)/from the Guarantee Account - 156,266 369,347 337,722 379,179 151,804
Interfund transfers (23,691) 2,783 64,736 210,754 262,960 13,450
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (23,868) 286,920 1,055,154 1,370,757 1,219,219 452,124
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - 994,017 3,176,448 2,462,359 2,934,974 1,200,126
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Variable Insurance Product Funds
-------------------------------------------------------------
Money High Equity-
Market Income Income Growth Overseas
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 450,740 56,076 276,392 141,845 197,672
Net premiums 1,923,388 288,601 2,285,441 1,079,779 464,979
Transfers (to) from the
general account of Life of Virginia:
Death benefits (1,352) (1,092) (898) (663) (12,509)
Surrenders (10,590) (7,686) (33,936) (16,831) (10,082)
Administrative expenses (211) (53) (378) (170) (235)
Transfers (to)/from the Guarantee Account (48,336) 9,984 165,649 72,558 71,820
Interfund transfers (1,333,295) 149,732 427,705 248,497 117,726
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 529,604 439,486 2,843,583 1,383,170 631,699
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 980,344 495,562 3,119,975 1,525,015 829,371
Net premiums 138 - 3,158,538 1,222,269 521,600
Transfers (to) from the
general account of Life of Virginia:
Death benefits (5,285) (1,518) (43,181) (21,919) (11,961)
Surrenders (18,734) (18,658) (134,965) (50,499) (31,329)
Administrative expenses (323) (228) (2,658) (1,349) (733)
Transfers (to)/from the Guarantee Account (31) (3,382) 402,673 186,018 127,385
Interfund transfers (659,500) (168,501) 541,485 167,039 123,110
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (683,735) (192,287) 3,921,892 1,501,559 728,072
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 296,609 303,275 7,041,867 3,026,574 1,557,443
Net premiums 931 306 2,260,371 504,224 230,215
Transfers (to) from the
general account of Life of Virginia:
Death benefits (9,387) (206) (70,511) (17,520) (11,283)
Surrenders (6,379) (17,828) (310,722) (121,652) (59,094)
Loans - - - - -
Administrative expenses (179) (172) (5,614) (2,437) (1,374)
Transfers (to)/from the Guarantee Account - (595) 959,930 232,691 169,290
Interfund transfers (281,595) (284,780) 198,852 (7,282) (122,609)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (296,609) (303,275) 3,032,306 588,024 205,145
- --------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - - 10,074,173 3,614,598 1,762,588
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III Advisers Management Trust
-------------------- ------------------------- --------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities Balanced Bond Growth
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 450,885 - - - 22,065 83,962 13,906
Net premiums 902,148 1,499,030 - - 199,692 240,461 167,067
Transfers (to) from the
general account of Life of Virginia:
Death benefits (13,552) (200) - - - - (1,865)
Surrenders (26,495) (14,316) - - (2,564) (2,394) (1,381)
Administrative expenses (510) (43) - - (46) (47) (47)
Transfers (to)/from the Guarantee Account 88,564 128,048 - - 6,725 11,012 19,747
Interfund transfers 68,627 395,429 - - (34,434) 65,282 12,482
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,018,782 2,007,948 - - 169,373 314,314 196,003
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 1,469,667 2,007,948 - - 191,438 398,276 209,909
Net premiums 640,444 2,595,994 - - - (252) -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (19,704) (23,500) - - (1,089) (8,981) (1,419)
Surrenders (67,829) (72,281) - - (2,814) (3,959) (6,733)
Administrative expenses (1,135) (2,159) - - (103) (315) (174)
Transfers (to)/from the Guarantee Account 117,636 428,333 - - - 120 -
Interfund transfers 109,440 559,664 - - (44,480) (127,260) (46,447)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 778,852 3,486,051 - - (48,486) (140,647) (54,773)
- ---------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 2,248,519 5,493,999 - - 142,952 257,629 155,136
Net premiums 317,380 2,003,590 452,458 553,737 25 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (14,483) (32,105) (176) (968) (2,194) (1,620) -
Surrenders (101,528) (196,054) (9,166) (9,539) (10,921) (12,250) (3,242)
Loans - - - - - - -
Administrative expenses (1,272) (4,990) (79) (66) (108) (204) (81)
Transfers (to)/from the Guarantee Account 132,093 1,027,864 208,287 207,607 (601) (6,721) -
Interfund transfers 98,224 303,373 324,762 298,769 (129,153) (236,834) (151,813)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 430,414 3,101,678 976,086 1,049,540 (142,952) (257,629) (155,136)
- -----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 2,678,933 8,595,677 976,086 1,049,540 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Federated Investors Insurance
Series
-----------------------------------
American High
Leaders Income
Portfolio Bonds Utility
Type II Units Fund II Fund II Fund II
<S> <C>
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - -
Net premiums - 112,682 377,786
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - -
Surrenders - (398) (2,336)
Administrative expenses - - (32)
Transfers (to)/from the Guarantee Account - 4,581 19,944
Interfund transfers - 6,287 68,114
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions - 123,152 463,476
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 - 123,152 463,476
Net premiums 208,871 343,618 543,077
Transfers (to) from the
general account of Life of Virginia:
Death benefits - (1,859) (3,067)
Surrenders (2,478) (25,640) (28,920)
Administrative expenses (2) (143) (566)
Transfers (to)/from the Guarantee Account 12,459 29,882 81,126
Interfund transfers 46,982 340,979 75,307
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 265,832 686,837 666,957
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 265,832 809,989 1,130,433
Net premiums 998,765 599,938 229,931
Transfers (to) from the
general account of Life of Virginia:
Death benefits (7,020) (7,987) (3,557)
Surrenders (30,390) (46,149) (62,619)
Loans - - -
Administrative expenses (399) (579) (981)
Transfers (to)/from the Guarantee Account 355,249 292,000 95,492
Interfund transfers 474,654 239,675 (62,998)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,790,859 1,076,898 195,268
- ----------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 2,056,691 1,886,887 1,325,701
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Series Fund Janus Aspen Series
------------------------------------------- ----------------------
Large Cap Aggressive
Small Cap Growth Growth Growth II Growth Growth
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 - - - - 169,799 159,068
Net premiums 291,288 228,664 - - 781,202 1,408,112
Transfers (to) from the
general account of Life of Virginia:
Death benefits - - - - - (2,390)
Surrenders (1,324) (74) - - (487) (24,299)
Administrative expenses (2) (3) - - (77) (303)
Transfers (to)/from the Guarantee Account 23,122 (9,752) - - 84,482 173,800
Interfund transfers 88,174 93,176 216,085 161,652
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 401,258 312,011 - - 1,081,205 1,716,572
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 401,258 312,011 - - 1,251,004 1,875,640
Net premiums 2,385,857 1,979,744 - - 1,109,539 1,939,884
Transfers (to) from the
general account of Life of Virginia:
Death benefits (6,505) (2,249) - - (5,075) (28,847)
Surrenders (49,583) (21,913) - - (20,314) (111,109)
Administrative expenses (658) (517) - - (141) (2,321)
Transfers (to)/from the Guarantee Account 364,980 234,626 - - 99,771 288,072
Interfund transfers 472,803 460,475 - - 227,267 921,603
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 3,166,894 2,650,166 - - 1,411,047 3,007,282
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 3,568,152 2,962,177 - - 2,662,051 4,882,922
Net premiums 1,139,813 1,030,593 108,061 306,146 608,750 1,633,216
Transfers (to) from the
general account of Life of Virginia:
Death benefits (25,827) (23,277) (63) - (22,328) (36,365)
Surrenders (95,915) (104,485) (998) (4,853) (80,725) (180,611)
Loans - - - - - -
Administrative expenses (3,710) (2,759) (28) (35) (1,935) (4,325)
Transfers (to)/from the Guarantee Account 865,037 527,894 51,297 100,624 253,985 867,094
Interfund transfers 197,908 (9,957) 188,564 174,128 22,869 108,967
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 2,077,306 1,418,009 346,833 576,010 780,616 2,387,976
- --------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 5,645,458 4,380,186 346,833 576,010 3,442,667 7,270,898
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
<TABLE>
<CAPTION>
Janus Aspen Series
------------------------------------------------------------------
Flexible International Capital
Worldwide Balanced Income Growth Appreciation
Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1994 117,700 - - - -
Net premiums 873,533 55,928 30,062 - -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (786) (74) - - -
Surrenders (10,106) (831) (36) - -
Administrative expenses (144) (10) - - -
Transfers (to)/from the Guarantee Account 88,410 6,328 1,290 - -
Interfund transfers 158,463 12,197 4,956 -
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 1,109,370 73,538 36,272 - -
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 1,227,070 73,538 36,272 - -
Net premiums 2,853,570 547,525 240,317 388,753 -
Transfers (to) from the
general account of Life of Virginia:
Death benefits (26,212) (1,525) - - -
Surrenders (94,535) (10,808) (1,714) (2,959) -
Administrative expenses (2,275) (267) (63) (11) -
Transfers (to)/from the Guarantee Account 475,568 75,940 21,420 47,466 -
Interfund transfers 713,001 308,093 28,937 249,356 -
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 3,919,117 918,958 288,897 682,605 -
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 5,146,187 992,496 325,169 682,605 -
Net premiums 3,372,062 1,117,148 284,347 1,872,823 55,458
Transfers (to) from the
general account of Life of Virginia:
Death benefits (35,456) (7,246) (4,723) (15,267) -
Surrenders (228,974) (78,945) (17,933) (60,571) (1,630)
Loans - - - - -
Administrative expenses (4,300) (1,005) (342) (863) (7)
Transfers (to)/from the Guarantee Account 1,289,775 423,506 175,029 576,462 35,560
Interfund transfers 572,391 358,481 107,542 446,411 74,169
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 4,965,498 1,811,939 543,920 2,818,995 163,550
- ---------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 10,111,685 2,804,435 869,089 3,501,600 163,550
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
Federal Income Taxes
The Account is not taxed separately because the operations of the
Account are part of the total operations of Life of Virginia. Life of
Virginia is taxed as a life insurance company under the Internal
Revenue Code (the Code). Life of Virginia is included in the General
Electric Capital Assurance Company consolidated federal income tax
return. The Account will not be taxed as a regulated investment company
under subchapter M of the Code. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains
of the Account.
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 Life of Virginia to the Account represent
gross premiums recorded by Life of Virginia on its flexible premium
variable deferred annuity products, less deductions retained as
compensation for premium taxes. For policies issued on or after May 1,
1993, the deduction for premium taxes will be deferred until surrender.
For Type I policies, during the first ten years following a premium
payment, a charge of .20% of the premium payment is deducted monthly
from the policy Account values to reimburse Life of Virginia for
certain distribution expenses. In addition, a charge is imposed on full
and certain partial surrenders that occur within six years of any
premium payment (seven years for certain Type II policies) to cover
certain expenses relating to the sale of a policy. Subject to certain
limitations, the charge equals 6% (or less) of the premium surrendered,
depending on the time between premium payment and surrender.
Life of Virginia will deduct a charge of $30 per year and $25 plus .15%
per year from the policy account values for certain administrative
expenses incurred for policy Type I and Type II, respectively. For Type
II policies, the $25 charge may be waived if the account value is
greater than $75,000. In addition, Life of Virginia charges the Account
1.15% and 1.25% on policy Type I and Type II, respectively, for the
mortality and expense risk
<PAGE>
(3) Continued
that Life of Virginia assumes. Administrative expenses as well as
mortality and risk charges are deducted daily and reflect the effective
annual rates.
GE Investments Funds, Inc. (the Fund) is an open-end diversified
management investment company.
Capital Brokerage Corporation, an affiliate of Life of Virginia, 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 also serves as principal underwriter for variable life
insurance policies issued by Life of Virginia.
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, .10% for the Government Securities Fund, .50%
for the Money Market and Total Return Funds, 1.00% for the
International Equity Fund and .85% for the Real Estate Securities Fund.
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 Life of Virginia are also officers
and directors of Capital Brokerage Corporation.
===============================================================================
<PAGE>
Life of Virginia Separate Account 4
Financial Statements
For the nine months ended September 30, 1998
(Unaudited)
<PAGE>
Life of Virginia Separate Account 4
Table of Contents
For the nine months ended September 30, 1998
- --------------------------------------------------------------------------------
Page
Financial Statements:
(Unaudited)
Statements of Assets and Liabilities..................................1
Statements of Operations..............................................6
Statements of Changes in Net Assets..................................11
Notes to Financial Statements............................................16
(Unaudited)
- --------------------------------------------------------------------------------
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
As of September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
====================================================================================================================================
GE Investments Funds, Inc.
-------------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Assets Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment in GE Investments Funds, Inc., at
fair value (note 2):
S&P 500 Index Fund (10,997,032 shares;
cost - $216,414,448) $ 223,679,636 - - - -
Money Market Fund (244,932,155 shares;
cost - $244,932,150) - 244,932,155 - - -
Total Return Portolio (3,973,919 shares;
cost - $57,183,361) - - 54,999,039 - -
International Equity Fund (2,152,831 shares;
cost - $24,913,630) - - - 22,755,420 -
Real Estate Securities Fund (3,718,509 shares;
cost - $52,748,423) - - - - 48,266,241
Global Income Fund (797,674 shares;
cost - $8,061,698) - - - - -
Value Equity Fund (2,663,875 shares;
cost - $35,774,318) - - - - -
Income Fund (2,294,425 shares; cost $28,158,943) - - - - -
U.S. Equity Fund (25,953 shares; cost $780,192) - - - - -
Receivable from affiliate (note 3) 137,362 - 39,993 385,311 44,713
Receivable for units sold 56,001 1,520,795 19,241 10,273 9,163
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 223,872,999 246,452,950 55,058,273 23,151,004 48,320,117
====================================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 331,737 849,924 68,886 12,934 42,442
Payable for units withdrawn 20,428 - - 33 135
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 352,165 849,924 68,886 12,967 42,577
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $ 223,520,834 245,603,026 54,989,387 23,138,037 48,277,540
====================================================================================================================================
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders 223,520,834 245,603,026 54,989,387 9,974,218 32,071,725
The Life Insurance Company of Virginia - - - 13,163,819 16,205,815
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets 223,520,834 245,603,026 54,989,387 23,138,037 48,277,540
====================================================================================================================================
Outstanding units: Type I (note 2) 999,081 6,571,205 587,557 1,230,000 1,387,184
====================================================================================================================================
Net asset value per unit: Type I 41.56 15.23 30.08 12.29 15.55
====================================================================================================================================
Outstanding units: Type II (note 2) 4,496,023 9,806,170 1,273,572 655,338 1,731,960
====================================================================================================================================
Net asset value per unit: Type II 40.48 14.84 29.30 12.24 15.42
====================================================================================================================================
<CAPTION>
==============================================================================================================
GE Investments Funds, Inc.
---------------------------------------------------
Global Value U.S.
Income Equity Income Equity
Assets Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment in GE Investments Funds, Inc., at
fair value (note 2):
S&P 500 Index Fund (10,997,032 shares;
cost - $216,414,448) - - - -
Money Market Fund (244,932,155 shares;
cost - $244,932,150) - - - -
Total Return Portolio (3,973,919 shares;
cost - $57,183,361) - - - -
International Equity Fund (2,152,831 shares;
cost - $24,913,630) - - - -
Real Estate Securities Fund (3,718,509 shares;
cost - $52,748,423) - - - -
Global Income Fund (797,674 shares;
cost - $8,061,698) 8,750,486 - - -
Value Equity Fund (2,663,875 shares;
cost - $35,774,318) - 32,685,741 - -
Income Fund (2,294,425 shares; cost $28,158,943) - - 29,896,362 -
U.S. Equity Fund (25,953 shares; cost $780,192) - - - 744,846
Receivable from affiliate (note 3) 17 48,932 - -
Receivable for units sold 25,090 33,363 84,038 -
- --------------------------------------------------------------------------------------------------------------
Total assets 8,775,593 32,768,036 29,980,400 744,846
==============================================================================================================
Liabilities
- --------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 20,034 65,511 118,525 789
Payable for units withdrawn 1 - 6,221 -
- --------------------------------------------------------------------------------------------------------------
Total liabilities 20,035 65,511 124,746 789
- --------------------------------------------------------------------------------------------------------------
Net assets 8,755,558 32,702,525 29,855,654 744,057
==============================================================================================================
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders 3,012,885 28,919,970 29,855,654 744,057
The Life Insurance Company of Virginia 5,742,673 3,782,555 - -
- --------------------------------------------------------------------------------------------------------------
Net Assets 8,755,558 32,702,525 29,855,654 744,057
==============================================================================================================
Outstanding units: Type I (note 2) 553,920 713,964 1,344,334 18,198
==============================================================================================================
Net asset value per unit: Type I 11.33 12.20 10.68 8.93
==============================================================================================================
Outstanding units: Type II (note 2) 219,632 1,973,040 1,453,862 65,196
==============================================================================================================
Net asset value per unit: Type II 11.29 12.16 10.66 8.92
==============================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
1
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
As of September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================================
Oppenheimer Variable Account Funds
-------------------------------------------------------------------
Capital High Multiple
Bond Appreciation Growth Income Strategies
Assets Fund Fund Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment in Oppenheimer Variable
Account Funds, at fair value (note 2):
Bond Fund (4,418,090 shares;
cost - $51,944,009) $ 54,475,048 - - - -
Capital Appreciation Fund (5,030,878 shares;
cost - $192,892,655) - 180,860,047 - - -
Growth Fund (5,164,301 shares;
cost - $166,150,140) - - 149,403,219 - -
High Income Fund (15,056,038 shares;
cost - $169,212,902) - - - 160,949,051 -
Multiple Strategies Fund (4,780,091 shares;
cost - $72,410,885) - - - - 73,278,788
Investment in Goldmans Sachs Variable
Insurance Trust, at fair value (note 2):
Growth & Income Fund (267,353 shares;
cost - $2,792,027) - - - - -
Mid Cap Equity Fund (285,461 shares;
cost - $2,550,043) - - - - -
Receivable from affiliate (note 3) - 22,832 - 58,573 7,840
Receivable for units sold 155,168 5,906 62,281 81,428 -
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 54,630,216 180,888,785 149,465,500 161,089,052 73,286,628
=========================================================================================================================
Liabilities
- -------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 92,336 664,413 259,478 205,539 167,665
Payable for units withdrawn 24,971 87,119 485 1,013 6,154
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 117,307 751,532 259,963 206,552 173,819
- -------------------------------------------------------------------------------------------------------------------------
Net assets $ 54,512,909 180,137,253 149,205,537 160,882,500 73,112,809
=========================================================================================================================
Outstanding units: Type I (note 2) 879,022 2,334,489 1,239,081 1,768,204 1,434,711
=========================================================================================================================
Net asset value per unit: Type I 22.17 32.62 36.49 30.21 25.13
=========================================================================================================================
Outstanding units: Type II (note 2) 1,621,528 3,272,065 2,926,040 3,651,548 1,513,828
=========================================================================================================================
Net asset value per unit: Type II 21.60 31.78 35.54 29.43 24.48
=========================================================================================================================
<CAPTION>
===========================================================================
Goldman Sachs Variable
Insurance Trust
-----------------------
Growth & Mid Cap
Income Equity
Assets Fund Fund
- ---------------------------------------------------------------------------
<S> <C> <C>
Investment in Oppenheimer Variable
Account Funds, at fair value (note 2):
Bond Fund (4,418,090 shares;
cost - $51,944,009) - -
Capital Appreciation Fund (5,030,878 shares;
cost - $192,892,655) - -
Growth Fund (5,164,301 shares;
cost - $166,150,140) - -
High Income Fund (15,056,038 shares;
cost - $169,212,902) - -
Multiple Strategies Fund (4,780,091 shares;
cost - $72,410,885) - -
Investment in Goldmans Sachs Variable
Insurance Trust, at fair value (note 2):
Growth & Income Fund (267,353 shares;
cost - $2,792,027) 2,628,081 -
Mid Cap Equity Fund (285,461 shares;
cost - $2,550,043) - 2,232,304
Receivable from affiliate (note 3) - -
Receivable for units sold 19,980 11,771
- ---------------------------------------------------------------------------
Total assets 2,648,061 2,244,075
===========================================================================
Liabilities
- ---------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 2,330 2,699
Payable for units withdrawn - -
- ---------------------------------------------------------------------------
Total liabilities 2,330 2,699
- ---------------------------------------------------------------------------
Net assets 2,645,731 2,241,376
===========================================================================
Outstanding units: Type I (note 2) 43,050 40,401
===========================================================================
Net asset value per unit: Type I 8.28 7.77
===========================================================================
Outstanding units: Type II (note 2) 276,817 248,065
===========================================================================
Net asset value per unit: Type II 8.27 7.77
===========================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
2
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
As of September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
======================================================================================================================
Variable Insurance
Variable Insurance Products Fund Products Fund II
------------------------------------- -----------------------
Equity Asset
Income Growth Overseas Manager Contrafund
Assets Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (27,771,370 shares;
cost - $576,861,564) $ 611,525,562 - - - -
Growth Portfolio (9,338,970 shares;
cost - $278,909,811) - 337,136,826 - - -
Overseas Portfolio (5,417,542 shares;
cost - $102,708,584) - - 91,989,868 - -
Investment in Variable Insurance Products
Fund II, at fair value (note 2):
Asset Manager Portfolio (28,551,256 shares;
cost - $428,049,072) - - - 459,675,215 -
Contrafund Portfolio (13,844,998 shares;
cost - $240,108,231) - - - - 273,854,067
Investment in Variable Insurance Products
Fund III, at fair value (note 2):
Growth & Income Portfolio (2,698,871 shares;
cost - $36,054,312) - - - - -
Growth Opportunities Portfolio
(1,988,973 shares; cost - $38,168,564) - - - - -
Receivable from affiliate (note 3) - 48,318 - - 102,346
Receivable for units sold 158,620 - 3,807 32,596 47,317
- ----------------------------------------------------------------------------------------------------------------------
Total assets $ 611,684,182 337,185,144 91,993,675 459,707,811 274,003,730
======================================================================================================================
Liabilities
- ----------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 782,705 659,329 232,020 1,701,606 351,602
Payable for units withdrawn 36,029 448,459 74,174 231,493 28,926
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 818,734 1,107,788 306,194 1,933,099 380,528
- ----------------------------------------------------------------------------------------------------------------------
Net assets $ 610,865,448 336,077,356 91,687,481 457,774,712 273,623,202
- ----------------------------------------------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 6,047,973 4,022,569 2,947,195 15,459,382 3,097,818
======================================================================================================================
Net asset value per unit: Type I 35.82 43.83 20.03 24.80 21.35
======================================================================================================================
Outstanding units: Type II (note 2) 11,299,142 3,741,643 1,673,765 3,067,300 9,810,156
======================================================================================================================
Net asset value per unit: Type II 34.89 42.70 19.51 24.25 21.15
======================================================================================================================
<CAPTION>
==============================================================================
Variable Insurance
Product Fund III
------------------------
Growth & Growth
Income Opportunities
Assets Portfolio Portfolio
- ------------------------------------------------------------------------------
<S> <C> <C>
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (27,771,370 shares;
cost - $576,861,564) - -
Growth Portfolio (9,338,970 shares;
cost - $278,909,811) - -
Overseas Portfolio (5,417,542 shares;
cost - $102,708,584) - -
Investment in Variable Insurance Products
Fund II, at fair value (note 2):
Asset Manager Portfolio (28,551,256 shares;
cost - $428,049,072) - -
Contrafund Portfolio (13,844,998 shares;
cost - $240,108,231) - -
Investment in Variable Insurance Products
Fund III, at fair value (note 2):
Growth & Income Portfolio (2,698,871 shares;
cost - $36,054,312) 36,029,928 -
Growth Opportunities Portfolio
(1,988,973 shares; cost - $38,168,564) - 37,691,045
Receivable from affiliate (note 3) - 4,233
Receivable for units sold 31,972 20,506
- ------------------------------------------------------------------------------
Total assets 36,061,900 37,715,784
==============================================================================
Liabilities
- ------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 83,292 48,165
Payable for units withdrawn - 1,807
- ------------------------------------------------------------------------------
Total liabilities 83,292 49,972
- ------------------------------------------------------------------------------
Net assets 35,978,608 37,665,812
- ------------------------------------------------------------------------------
Outstanding units: Type I (note 2) 555,028 529,619
==============================================================================
Net asset value per unit: Type I 13.15 12.58
==============================================================================
Outstanding units: Type II (note 2) 2,189,312 2,472,345
==============================================================================
Net asset value per unit: Type II 13.10 12.54
==============================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
As of September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
=============================================================================================================================
Federated Investors Insurance Series Alger American Fund
--------------------------------------- -----------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Assets Fund II Fund II Fund II Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in Federated Investors Insurance Series,
at fair value (note 2):
American Leaders Fund II (3,107,096 shares;
cost - $59,972,495) $ 57,978,412 - - - -
High Income Bond Fund II (4,244,938 shares;
cost - $45,751,122) - 44,996,345 - - -
Utility Fund II (2,628,490 shares;
cost - $32,346,450) - - 37,639,973 - -
Investment in Alger American,
at fair value (note 2):
Small Capitalization Portfolio (1,989,833 shares;
cost - $81,461,941) - - - 70,181,393 -
Growth Portfolio (2,291,621 shares;
cost - $91,405,218) - - - - 96,843,917
Investment in PBHG Insurance Series
Fund Inc., at fair value (note 2):
PBHG Large Cap Portfolio (725,044 shares;
cost - $9,121,531) - - - - -
PBHG Growth II Portfolio (897,847 shares;
cost - $9,794,392) - - - - -
Receivable from affiliate (note 3) 22,908 6,643 18,127 12,283 -
Receivable for units sold 21,634 - 76,546 - 24,906
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 58,022,954 45,002,988 37,734,646 70,193,676 96,868,823
=============================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 75,377 56,460 50,185 121,909 264,681
Payable for units withdrawn 47 16,598 12,702 66,406 13,850
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities 75,424 73,058 62,887 188,315 278,531
=============================================================================================================================
Net assets $ 57,947,530 44,929,930 37,671,759 70,005,361 96,590,292
=============================================================================================================================
Outstanding units: Type I (note 2) 456,645 562,002 404,957 1,271,687 1,077,251
=============================================================================================================================
Net asset value per unit: Type I 14.53 14.94 17.88 9.77 15.64
=============================================================================================================================
Outstanding units: Type II (note 2) 3,553,496 2,468,488 1,718,302 5,936,184 5,138,021
=============================================================================================================================
Net asset value per unit: Type II 14.44 14.80 17.71 9.70 15.52
=============================================================================================================================
<CAPTION>
================================================================================
PBHG Insurance
Series Fund
-----------------------
PBHG PBHG
Large Cap Growth II
Assets Portfolio Portfolio
- --------------------------------------------------------------------------------
<S> <C> <C>
Investments in Federated Investors Insurance Series,
at fair value (note 2):
American Leaders Fund II (3,107,096 shares;
cost - $59,972,495) - -
High Income Bond Fund II (4,244,938 shares;
cost - $45,751,122) - -
Utility Fund II (2,628,490 shares;
cost - $32,346,450) - -
Investment in Alger American,
at fair value (note 2):
Small Capitalization Portfolio (1,989,833 shares;
cost - $81,461,941) - -
Growth Portfolio (2,291,621 shares;
cost - $91,405,218) - -
Investment in PBHG Insurance Series
Fund Inc., at fair value (note 2):
PBHG Large Cap Portfolio (725,044 shares;
cost - $9,121,531) 9,084,797 -
PBHG Growth II Portfolio (897,847 shares;
cost - $9,794,392) - 8,367,932
Receivable from affiliate (note 3) 19,881 120
Receivable for units sold - 37,546
- --------------------------------------------------------------------------------
Total assets 9,104,678 8,405,598
================================================================================
Liabilities
- --------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 32,442 11,736
Payable for units withdrawn 43,242 94,196
- --------------------------------------------------------------------------------
Total liabilities 75,684 105,932
================================================================================
Net assets 9,028,994 8,299,666
================================================================================
Outstanding units: Type I (note 2) 93,044 121,276
================================================================================
Net asset value per unit: Type I 12.33 9.17
================================================================================
Outstanding units: Type II (note 2) 641,387 786,386
================================================================================
Net asset value per unit: Type II 12.28 9.14
================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
4
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
As of September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
====================================================================================================================================
Janus Aspen Series
------------------------------------------------------------------------
Aggressive Worldwide Flexible
Growth Growth Growth Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio (4,811,044 shares;
cost - $92,491,724) $ 98,578,298 - - - -
Growth Portfolio (13,622,366 shares;
cost - $217,283,170) - 251,196,420 - - -
Worldwide Growth Portfolio (17,044,934 shares;
cost - $390,790,569) - - 410,782,910 - -
Balanced Portfolio (6,400,837 shares;
cost - $112,608,063) - - - 121,039,822 -
Flexible Income Portfolio (2,261,803 shares;
cost - $26,773,371) - - - - 27,729,705
International Growth Portfolio (3,464,824 shares;
cost - $71,978,767) - - - - -
Capital Appreciation Portfolio (1,008,797 shares;
cost - $15,421,408) - - - - -
Receivable from affiliate (note 3) 39,531 - 124,855 13,635 1,508
Receivable for units sold 29,355 53,647 - 208,287 455,008
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 98,647,184 251,250,067 410,907,765 121,261,744 28,186,221
====================================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 146,129 477,383 567,092 159,277 37,432
Payable for units withdrawn 36,909 - 157,974 212,803 82
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 183,038 477,383 725,066 372,080 37,514
====================================================================================================================================
Net assets $ 98,464,146 250,772,684 410,182,699 120,889,664 28,148,707
====================================================================================================================================
Outstanding units: Type I (note 2) 1,589,195 4,308,965 4,870,129 2,621,386 504,304
====================================================================================================================================
Net asset value per unit: Type I 20.03 20.17 24.43 16.30 13.43
====================================================================================================================================
Outstanding units: Type II (note 2) 3,370,388 8,225,947 12,073,194 4,830,721 1,603,594
====================================================================================================================================
Net asset value per unit: Type II 19.77 19.92 24.12 16.18 13.33
====================================================================================================================================
<CAPTION>
=========================================================================================
Janus Aspen Series
--------------------------------
International Capital
Growth Appreciation
Portfolio Portfolio
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio (4,811,044 shares;
cost - $92,491,724) - -
Growth Portfolio (13,622,366 shares;
cost - $217,283,170) - -
Worldwide Growth Portfolio (17,044,934 shares;
cost - $390,790,569) - -
Balanced Portfolio (6,400,837 shares;
cost - $112,608,063) - -
Flexible Income Portfolio (2,261,803 shares;
cost - $26,773,371) - -
International Growth Portfolio (3,464,824 shares;
cost - $71,978,767) 63,233,035 -
Capital Appreciation Portfolio (1,008,797 shares;
cost - $15,421,408) - 15,020,982
Receivable from affiliate (note 3) 28,564 3,627
Receivable for units sold 1,441 11,958
- -----------------------------------------------------------------------------------------
Total assets 63,263,040 15,036,567
=========================================================================================
Liabilities
- -----------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 82,482 63,023
Payable for units withdrawn 18,625 184,089
- -----------------------------------------------------------------------------------------
Total liabilities 101,107 247,112
=========================================================================================
Net assets 63,161,933 14,789,455
=========================================================================================
Outstanding units: Type I (note 2) 1,102,660 248,936
=========================================================================================
Net asset value per unit: Type I 13.64 14.67
=========================================================================================
Outstanding units: Type II (note 2) 3,548,794 761,804
=========================================================================================
Net asset value per unit: Type II 13.56 14.62
=========================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
5
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations
For the period ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
===========================================================================================================================
GE Investments Funds, Inc.
------------------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
------------------------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income - Dividends $ - 6,381,187 - - -
Expenses - Mortality and expense
risk charges (note 3) 2,042,155 1,543,135 499,825 113,919 360,154
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) (2,042,155) 4,838,052 (499,825) (113,919) (360,154)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) 6,078,207 545,367 (117,395) 416,571 (387,143)
Unrealized appreciation (depreciation)
on investments (398,290) (545,367) 2,028,502 (607,588) (8,286,331)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 5,679,917 - 1,911,107 (191,017) (8,673,474)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ 3,637,762 4,838,052 1,411,282 (304,936) (9,033,628)
===========================================================================================================================
<CAPTION>
=========================================================================================================
GE Investments Funds, Inc.
------------------------------------------------------------
Global Value U.S.
Income Equity Income Equity
Fund Fund Fund Fund
------------------------------------------------------------
Nine Months Nine Months Nine Months Period from
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 5/04-9/30/98
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Income - Dividends - - - -
Expenses - Mortality and expense
risk charges (note 3) 17,651 243,905 228,303 1,461
- ---------------------------------------------------------------------------------------------------------
Net investment income (expense) (17,651) (243,905) (228,303) (1,461)
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) 14,275 648,515 116,178 (3,880)
Unrealized appreciation (depreciation)
on investments 813,135 (3,974,376) 1,749,617 (35,346)
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 827,410 (3,325,861) 1,865,795 (39,226)
- ---------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 809,759 (3,569,766) 1,637,492 (40,687)
=========================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
For the period ended September 30, 1998
(Unaudited)
===================================================================================================================================
Oppenheimer Variable Account Funds
------------------------------------------------------------------------------
Capital High
Bond Appreciation Growth Income
Fund Fund Fund Fund
------------------------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Income - Dividends $ 1,310,262 5,903,722 14,489,848 7,439,338
Expenses - Mortality and expense
risk charges (note 3) 425,072 2,051,663 1,563,085 1,566,708
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 885,190 3,852,059 12,926,763 5,872,630
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 336,892 18,283,263 21,248,106 664,387
Unrealized appreciation (depreciation)
on investments 1,423,063 (43,029,816) (40,041,789) (13,019,924)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1,759,955 (24,746,553) (18,793,683) (12,355,537)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ 2,645,145 (20,894,494) (5,866,920) (6,482,907)
===================================================================================================================================
<CAPTION>
==========================================================
Goldman Sachs Variable Insurance Trust
-----------------------------------------------------------
Multiple Growth & Mid Cap
Strategies Income Equity
Fund Fund Fund
----------------------------------------------------------
Nine Months Period from Period from
Ended 9/30/98 05/12-9/30/98 05/08-9/30/98
----------------------------------------------------------
<C>
Investment income:
Income - Dividends $ 4,756,691 - -
Expenses - Mortality and expense
risk charges (note 3) 720,559 4,586 6,114
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 4,036,132 (4,586) (6,114)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 1,378,355 (10,091) (14,458)
Unrealized appreciation (depreciation)
on investments (9,474,532) (163,946) (317,740)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (8,096,177) (174,037) (332,198)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ (4,060,045) (178,623) (338,312)
==================================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
For the period ended September 30, 1998
(Unaudited)
================================================================================================================
Variable Insurance Products Fund
---------------------------------------------------------
Equity
Income Growth Overseas
Portfolio Portfolio Portfolio
-----------------------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- ----------------------------------------------------------------------------------------------------------------
Investment income:
Income - Dividends $ 40,199,361 43,602,357 8,392,807
Expenses - Mortality and expense
risk charges (note 3) 6,405,043 3,185,697 1,028,976
- ----------------------------------------------------------------------------------------------------------------
Net investment income (expense) 33,794,318 40,416,660 7,363,831
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 35,421,326 12,576,239 11,370,984
Unrealized depreciation on investments (97,791,106) (18,216,069) (22,415,585)
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (62,369,780) (5,639,830) (11,044,601)
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ (28,575,462) 34,776,830 (3,680,770)
================================================================================================================
<CAPTION>
==============================================================================
Variable Insurance Products Fund II Variable Insurance Product Fund III
------------------------------------ -------------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Income - Dividends $ 61,032,559 14,347,723 102,863 948,628
Expenses - Mortality and expense
risk charges (note 3) 4,266,661 2,713,312 271,310 301,348
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 56,765,898 11,634,411 (168,447) 647,280
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 9,798,800 11,603,223 834,037 208,599
Unrealized depreciation on investments (59,897,040) (14,499,482) (482,485) (1,533,277)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (50,098,240) (2,896,259) 351,552 (1,324,678)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations $ 6,667,658 8,738,152 183,105 (677,398)
===================================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
For the period ended September 30, 1998
(Unaudited)
===============================================================================================================
Federated Investors Insurance Series
----------------------------------------------------------
American High
Leaders Income Bond Utility
Fund II Fund II Fund II
------------------------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income:
Income - Dividends $ 2,907,843 1,241,858 2,141,701
Expenses - Mortality and expense
risk charges (note 3) 530,349 428,014 343,071
- -----------------------------------------------------------------------------------------------------------------
Net investment income (expense) 2,377,494 813,844 1,798,630
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 1,175,402 951,554 1,239,445
Unrealized depreciation on investments (5,541,438) (2,461,925) (1,036,297)
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (4,366,036) (1,510,371) 203,148
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations $ (1,988,542) (696,527) 2,001,778
===================================================================================================================
<CAPTION>
=============================================================================
Alger American PBHG Insurance Series Fund
-------------------------------- ---------------------------------------
Small PBHG PBHG
Capitalization Growth Large Cap Growth II
Portfolio Portfolio Portfolio Portfolio
--------------------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Income - Dividends $ 10,556,556 14,231,938 - -
Expenses - Mortality and expense
risk charges (note 3) 794,725 894,323 73,556 88,443
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 9,761,831 13,337,615 (73,556) (88,443)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) (748,027) 3,239,141 255,122 (101,524)
Unrealized depreciation on investments (15,191,474) (4,908,057) (186,631) (1,336,632)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (15,939,501) (1,668,916) 68,491 (1,438,156)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations $ (6,177,670) 11,668,699 (5,065) (1,526,599)
==================================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Operations, Continued
For the period ended September 30, 1998
(Unaudited)
===================================================================================================================================
Janus Aspen Series
------------------------------------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
------------------------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Income - Dividends $ - 16,918,805 16,445,382 3,439,526
Expenses - Mortality and expense
risk charges (note 3) 1,079,438 2,508,154 4,259,161 994,058
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) (1,079,438) 14,410,651 12,186,221 2,445,468
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 10,033,802 8,916,092 41,870,502 2,222,279
Unrealized appreciation (depreciation)
on investments (9,276,050) (12,757,900) (40,026,802) 3,459,886
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 757,752 (3,841,808) 1,843,700 5,682,165
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations $ (321,686) 10,568,843 14,029,921 8,127,633
===================================================================================================================================
<CAPTION>
==========================================================
Janus Aspen Series
----------------------------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
---------------------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
---------------------------------------------------------
<S> <C> <C> <C>
Investment income:
Income - Dividends $ 826,620 1,294,926 1,541
Expenses - Mortality and expense
risk charges (note 3) 201,557 671,549 77,199
- --------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 625,063 623,377 (75,658)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 149,996 8,389,241 301,813
Unrealized appreciation (depreciation)
on investments 620,285 (10,567,991) (412,608)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 770,281 (2,178,750) (110,795)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations $ 1,395,344 (1,555,373) (186,453)
====================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets
For the period ended September 30, 1998
(Unaudited)
===================================================================================================================================
GE Investments Funds, Inc.
===============================================
S&P 500 Money Total
Index Market Return
Fund Fund Fund
-----------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (2,042,155) 4,838,052 (499,825)
Net realized gain (loss) 6,078,207 545,367 (117,395)
Unrealized appreciation (depreciation)
on investments (398,290) (545,367) 2,028,502
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 3,637,762 4,838,052 1,411,282
- -----------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 41,868,478 81,220,108 5,542,951
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (727,803) (3,758,912) (245,319)
Surrenders (8,315,679) (30,860,131) (2,588,266)
Loans - - -
Cost of insurance and administrative expense (note 3) (130,302) (151,624) (46,242)
Transfer gain (loss) and transfer fees 728,851 5,263,084 107,555
Transfers (to) from the Guarantee Account (note 1) 26,878,016 17,853,530 6,538,302
Interfund transfers 6,155,187 47,504,215 (257,993)
- -----------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 66,456,748 117,070,270 9,050,988
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 70,094,510 121,908,322 10,462,270
Net assets at beginning of year 153,426,324 123,694,704 44,527,117
- -----------------------------------------------------------------------------------------------------------
Net assets at end of year $ 223,520,834 245,603,026 54,989,387
===========================================================================================================
<CAPTION>
===================================================================================================================================
GE Investments Funds, Inc.
====================================================================
International Real Estate Global Value
Equity Securities Income Equity
Fund Fund Fund Fund
---------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
---------------------------------------------------------------
<C> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (113,919) (360,154) (17,651) (243,905)
Net realized gain (loss) 416,571 (387,143) 14,275 648,515
Unrealized appreciation (depreciation)
on investments (607,588) (8,286,331) 813,135 (3,974,376)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (304,936) (9,033,628) 809,759 (3,569,766)
- --------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 849,665 4,681,713 292,948 8,994,031
Loan interest - - - -
Transfers (to) from the general account of Life of Virginia
Death benefits (49,268) (180,442) - (25,562)
Surrenders (487,717) (938,719) (46,222) (1,221,314)
Loans - - - -
Cost of insurance and administrative expense (note 3) (9,864) (22,514) (800) (12,071)
Transfer gain (loss) and transfer fees 121,629 (414,218) (14,506) 1,079,707
Transfers (to) from the Guarantee Account (note 1) 1,146,352 5,452,947 758,896 6,075,878
Interfund transfers (1,004,357) (3,951,396) 840,185 5,481,614
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 566,440 4,627,371 1,830,501 20,372,283
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 261,504 (4,406,257) 2,640,260 16,802,517
Net assets at beginning of year 22,876,533 52,683,797 6,115,298 15,900,008
- --------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 23,138,037 48,277,540 8,755,558 32,702,525
================================================================================================================================
<CAPTION>
===================================================================================================================================
GE Investments Funds, Inc.
===============================================
U.S.
Income Equity
Fund Fund
-------------------------------
Nine Months Period from
Ended 9/30/98 5/04-9/30/98
-------------------------------
<S> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ (228,303) (1,461)
Net realized gain (loss) 116,178 (3,880)
Unrealized appreciation (depreciation)
on investments 1,749,617 (35,346)
- ---------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 1,637,492 (40,687)
- ---------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,092,477 378,981
Loan interest - -
Transfers (to) from the general account of Life of Virginia
Death benefits (145,003) -
Surrenders (1,274,780) (228)
Loans - -
Cost of insurance and administrative expense (note 3) (23,374) (214)
Transfer gain (loss) and transfer fees (187,915) 2,884
Transfers (to) from the Guarantee Account (note 1) 2,546,940 103,868
Interfund transfers 4,198,957 299,453
- ---------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 6,207,302 784,744
- ---------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 7,844,794 744,057
Net assets at beginning of year 22,010,860 -
- ---------------------------------------------------------------------------------------------------------
Net assets at end of year $ 29,855,654 744,057
=========================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
For the period ended September 30, 1998
(Unaudited)
===========================================================================================================================
Oppenheimer Variable Account Funds
---------------------------------------------------------------
Capital High
Bond Appreciation Growth Income
Fund Fund Fund Fund
---------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 885,190 3,852,059 12,926,763 5,872,630
Net realized gain (loss) 336,892 18,283,263 21,248,106 664,387
Unrealized appreciation (depreciation) on investments 1,423,063 (43,029,816) (40,041,789) (13,019,924)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 2,645,145 (20,894,494) (5,866,920) (6,482,907)
- ---------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 4,639,138 8,242,326 15,133,377 11,476,009
Loan interest - - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (397,156) (699,319) (603,324) (920,913)
Surrenders (2,955,658) (8,422,572) (6,934,517) (7,702,207)
Loans - - - -
Cost of insurance and administrative expense (note 3) (38,312) (210,270) (132,678) (141,215)
Transfer gain (loss) and transfer fees (223,763) (819,009) 197,923 (550,079)
Transfers (to) from the Guarantee Account (note 1) 6,168,977 9,397,038 13,293,443 15,470,392
Interfund transfers 4,928,855 (14,303,683) (4,897,583) 1,447,794
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 12,122,081 (6,815,489) 16,056,641 19,079,781
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 14,767,226 (27,709,983) 10,189,721 12,596,874
Net assets at beginning of period 39,745,683 207,847,236 139,015,816 148,285,626
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 54,512,909 180,137,253 149,205,537 160,882,500
=========================================================================================================================
<CAPTION>
=======================================================
Oppenheimer
Variable
Account Funds Goldman Sachs Variable Insurance Trust
-------------- --------------------------------------
Multiple Growth & Mid Cap
Strategies Income Equity
Fund Fund Fund
-----------------------------------------------
Nine Months Period from Period from
Ended 9/30/98 05/12-9/30/98 05/08-9/30/98
-----------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 4,036,132 (4,586) (6,114)
Net realized gain (loss) 1,378,355 (10,091) (14,458)
Unrealized appreciation (depreciation) on investments (9,474,532) (163,946) (317,740)
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (4,060,045) (178,623) (338,312)
- -----------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,130,694 1,330,177 976,430
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (496,830) - -
Surrenders (4,874,689) (4,840) (1,559)
Loans - - -
Cost of insurance and administrative expense (note 3) (88,553) (196) (173)
Transfer gain (loss) and transfer fees (257,688) 46,253 (2,401)
Transfers (to) from the Guarantee Account (note 1) 6,524,137 508,431 855,508
Interfund transfers (787,770) 944,529 751,883
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 5,149,301 2,824,354 2,579,688
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,089,256 2,645,731 2,241,376
Net assets at beginning of period 72,023,553 - -
- -----------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 73,112,809 2,645,731 2,241,376
=================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
For the period ended September 30, 1998
(Unaudited)
==============================================================================================================
Variable Insurance Products Fund
---------------------------------------------
Equity
Income Growth Overseas
Portfolio Portfolio Portfolio
------------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 33,794,318 40,416,660 7,363,831
Net realized gain 35,421,326 12,576,239 11,370,984
Unrealized depreciation on investments (97,791,106) (18,216,069) (22,415,585)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (28,575,462) 34,776,830 (3,680,770)
- ------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 41,951,405 12,126,353 1,664,234
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (3,036,850) (1,792,241) (285,475)
Surrenders (28,603,108) (18,018,219) (4,789,369)
Loans - - -
Cost of insurance and administrative expense (note 3) (581,606) (363,831) (136,062)
Transfer gain (loss) and transfer fees (3,491,155) (1,223,294) (1,101,872)
Transfers (to) from the Guarantee Account (note 1) 38,693,709 6,434,962 1,936,228
Interfund transfers (19,074,257) (10,876,811) (10,224,054)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 25,858,138 (13,713,081) (12,936,370)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,717,324) 21,063,749 (16,617,140)
Net assets at beginning of year 613,582,772 315,013,607 108,304,621
- ------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 610,865,448 336,077,356 91,687,481
=============================================================================================================
<CAPTION>
=========================================================================
Variable Insurance Products Fund Variable Insurance Product Fund III
------------------------------------ ----------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
--------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
--------------------------------------------------------------
<C> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 56,765,898 11,634,411 (168,447) 647,280
Net realized gain 9,798,800 11,603,223 834,037 208,599
Unrealized depreciation on investments (59,897,040) (14,499,482) (482,485) (1,533,277)
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 6,667,658 8,738,152 183,105 (677,398)
- ----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 8,584,053 20,447,734 9,806,472 8,303,248
Loan interest - - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (2,335,486) (1,121,483) (603,412) (89,764)
Surrenders (30,386,874) (9,720,387) (1,013,663) (880,185)
Loans - - - -
Cost of insurance and administrative expense (note 3) (814,836) (214,199) (17,547) (17,471)
Transfer gain (loss) and transfer fees (4,879,348) (212) 743,536 452,660
Transfers (to) from the Guarantee Account (note 1) 6,804,884 19,181,695 6,626,435 7,369,824
Interfund transfers (9,740,151) (5,825,494) 4,545,460 6,117,123
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (32,767,758) 22,747,654 20,087,281 21,255,435
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (26,100,100) 31,485,806 20,270,386 20,578,037
Net assets at beginning of year 483,874,812 242,137,396 15,708,222 17,087,775
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 457,774,712 273,623,202 35,978,608 37,665,812
============================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
For the period ended September 30, 1998
(Unaudited)
============================================================================================================
Federated Investors Insurance Series
-----------------------------------------------
American High
Leaders Income Bond Utility
Fund II Fund II Fund II
------------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets From operations:
<S> <C> <C> <C>
Net investment income (expense) $ 2,377,494 813,844 1,798,630
Net realized gain (loss) 1,175,402 951,554 1,239,445
Unrealized depreciation (5,541,438) (2,461,925) (1,036,297)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (1,988,542) (696,527) 2,001,778
- ------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 15,034,695 6,407,594 4,108,101
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (636,914) (206,312) (212,881)
Surrenders (1,657,436) (1,903,747) (1,274,683)
Loans - - -
Cost of insurance and administrative expense (note 3) (31,960) (22,687) (24,937)
Transfer gain (loss) and transfer fees (note 3) 409,078 702,366 (816,179)
Transfers (to) from the Guarantee Account (note 1) 10,823,567 9,791,479 3,812,641
Interfund transfers 1,101,316 (4,337,583) (319,975)
- ------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 25,042,346 10,431,110 5,272,087
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 23,053,804 9,734,583 7,273,865
Net assets at beginning of year 34,893,726 35,195,347 30,397,894
- ------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 57,947,530 44,929,930 37,671,759
=============================================================================================================
<CAPTION>
==============================================================
Alger American PBHG Insurance Series Fund
--------------------------- ---------------------------------
Small PBHG PBHG
Capitalization Growth Large Cap Growth II
Portfolio Portfolio Portfolio Portfolio
--------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income (expense) $ 9,761,831 13,337,615 (73,556) (88,443)
Net realized gain (loss) (748,027) 3,239,141 255,122 (101,524)
Unrealized depreciation (15,191,474) (4,908,057) (186,631) (1,336,632)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (6,177,670) 11,668,699 (5,065) (1,526,599)
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 5,471,855 8,329,851 1,937,231 1,708,773
Loan interest - - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (350,016) (599,493) (31,834) (109,053)
Surrenders (2,435,841) (3,630,139) (316,976) (197,221)
Loans - - - -
Cost of insurance and administrative expense (note 3) (60,812) (61,586) (4,992) (6,137)
Transfer gain (loss) and transfer fees (note 3) 122,825 222,102 50,532 (15,288)
Transfers (to) from the Guarantee Account (note 1) 6,463,800 6,765,918 1,462,546 1,975,531
Interfund transfers (6,856,470) 1,741,127 1,219,285 (482,280)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 2,355,341 12,767,780 4,315,792 2,874,325
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (3,822,329) 24,436,479 4,310,727 1,347,726
Net assets at beginning of year 73,827,690 72,153,813 4,718,267 6,951,940
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 70,005,361 96,590,292 9,028,994 8,299,666
=================================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
For the period ended September 30, 1998
(Unaudited)
===================================================================================================================================
Janus Aspen Series
----------------------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------------
Nine Months Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets From operations:
<S> <C> <C> <C> <C>
Net investment income (expense) $ (1,079,438) 14,410,651 12,186,221 2,445,468
Net realized gain 10,033,802 8,916,092 41,870,502 2,222,279
Unrealized appreciation (depreciation) on investments (9,276,050) (12,757,900) (40,026,802) 3,459,886
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (321,686) 10,568,843 14,029,921 8,127,633
- ----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 4,077,619 16,599,531 34,573,904 16,992,550
Loan interest - - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (688,802) (1,046,847) (1,000,222) (675,395)
Surrenders (4,633,044) (9,075,010) (14,197,210) (6,542,200)
Loans - - - -
Cost of insurance and administrative expense (note 3) (90,086) (225,531) (338,613) (97,503)
Transfer gain (loss) and transfer fees (240,160) (457,004) 812,219 1,053,204
Transfers (to) from the Guarantee Account (note 1) 3,573,710 14,390,935 30,056,044 15,804,505
Interfund transfers (9,028,527) (4,051,150) 1,120,574 8,588,635
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (7,029,290) 16,134,924 51,026,696 35,123,796
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (7,350,976) 26,703,767 65,056,617 43,251,429
Net assets at beginning of period 105,815,122 224,068,917 345,126,082 77,638,235
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 98,464,146 250,772,684 410,182,699 120,889,664
===================================================================================================================================
<CAPTION>
===================================================================================================================================
Janus Aspen Series
----------------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
----------------------------------------------
Nine Months Nine Months Nine Months
Ended 9/30/98 Ended 9/30/98 Ended 9/30/98
----------------------------------------------
Increase (decrease) in net assets From operations:
<S> <C> <C> <C>
Net investment income (expense) $ 625,063 623,377 (75,658)
Net realized gain 149,996 8,389,241 301,813
Unrealized appreciation (depreciation) on investments 620,285 (10,567,991) (412,608)
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 1,395,344 (1,555,373) (186,453)
- ----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 2,959,627 6,482,753 4,120,274
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits (36,188) (333,165) (10,982)
Surrenders (580,263) (1,660,151) (459,389)
Loans - - -
Cost of insurance and administrative expense (note 3) (13,591) (49,966) (5,330)
Transfer gain (loss) and transfer fees 462,970 110,518 298,931
Transfers (to) from the Guarantee Account (note 1) 4,858,530 7,551,205 2,045,400
Interfund transfers 4,765,527 (2,049,614) 6,317,429
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 12,416,612 10,051,580 12,306,333
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 13,811,956 8,496,207 12,119,880
Net assets at beginning of period 14,336,751 54,665,726 2,669,575
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 28,148,707 63,161,933 14,789,455
===================================================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
15
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
September 30, 1998
(Unaudited)
- ------------------------------------------------------------------------------
(1) Description of Entity
Life of Virginia Separate Account 4 (the Account) is a separate investment
account established in 1987 by The Life Insurance Company of Virginia
(Life 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 deferred annuity life insurance policies issued by Life
of Virginia. The Life Insurance Company of Virginia is a stock life
insurance company operating under a charter granted by the Commonwealth of
Virginia on March 21, 1871. Eighty percent of the capital stock of Life of
Virginia is owned by General Electric Capital Assurance Corporation. The
remaining 20% is owned by GE Financial Assurance Holdings, Inc. General
Electric Capital Assurance Corporation and GE Financial Assurance
Holdings, Inc. are indirectly, wholly-owned subsidiaries of General
Electric Capital ("GE Capital"). GE Capital, a diversified financial
services company, is a wholly-owned subsidiary of General Electric Company
(GE), a New York corporation. Prior to April 1, 1996, Life of Virginia was
an indirect wholly-owned subsidiary of Aon Corporation (Aon).
In May 1998, three new investment subdivisions were added to the Account,
for both Type I and Type II policies. The U.S. Equity Portfolio invests
solely in a designated portfolio of the GE Investments Funds, Inc. The Mid
Cap Equity Portfolio and Growth & Income Portfolio each invest solely in a
designated portfolio of the Goldman Sachs Variable Insurance Trust. All
designated portfolios described above are series type mutual funds.
Policyowners may transfer cash values between the Account's portfolios and
the Guarantee Account that is part of the general account of Life of
Virginia. Amounts transferred to the Guarantee Account earn interest at
the interest rate in effect at the time of such transfer and remain in
effect for one year, after which a new rate may be declared.
16
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
September 30, 1998
(Unaudited)
- ------------------------------------------------------------------------------
(2) Summary of Significant Accounting Policies
Unit Classes
There are two unit classes included in the Account. Type I units are sold
under policy form P1140 and P1141. Type II units are sold under policy
forms P1142, P1142N and P1143. Type II unit sales began in the third
quarter of 1994. Type III units will be sold under policy form P1152
beginning on or about February 9, 1999.
Investments
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income
distributions are recorded on the ex-dividend date. Realized gains and
losses on investments are determined on the average cost basis. The units
and unit values are disclosed as of the last business day in the
applicable year or period.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the nine months ended September 30, 1998 were:
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- --------------------------------------------------------------------------
GE Investment Funds, Inc.:
S&P 500 Index $ 121,940,139 $ 57,326,957
Money Market 1,266,907,775 1,140,312,196
Total Return 16,145,017 7,577,323
International Equity 12,010,941 12,038,113
Real Estate Securities 17,062,178 12,877,330
Global Income 2,535,486 638,978
Value Equity 30,780,625 10,496,771
Income 10,521,455 4,841,395
U.S. Equity 908,227 124,155
17
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
September 30, 1998
(Unaudited)
- ------------------------------------------------------------------------------
(2) Continued
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- --------------------------------------------------------------------------
Oppenheimer Variable Account Funds:
Bond 24,094,501 11,135,515
Capital Appreciation 134,271,418 136,961,367
Growth 164,544,524 135,266,510
High Income 68,561,669 43,369,173
Multiple Strategies 22,716,649 13,460,525
Variable Insurance Products Fund:
Equity-Income 287,040,047 227,051,725
Growth 88,701,290 61,135,871
Overseas 308,039,574 316,602,161
Variable Insurance Products Fund II:
Asset Manager 101,552,325 76,830,434
Contrafund 93,919,053 59,136,517
Variable Insurance Products Fund III:
Growth & Income 34,432,519 14,382,980
Growth Opportunties 27,338,345 5,354,963
Goldman Sachs Variable Insurance Trust
Growth & Income 2,945,048 142,929
Mid Cap Equity 2,735,548 171,046
18
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
September 30, 1998
(Unaudited)
- ------------------------------------------------------------------------------
(2) Continued
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- --------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth 68,680,368 76,693,160
Growth 69,270,450 38,363,193
Worldwide Growth 240,371,237 176,751,804
Balanced 57,264,876 19,549,185
Flexible Income 18,022,658 5,416,559
International Growth 150,154,366 142,590,166
Capital Appreciation 19,305,319 6,885,545
Federated Insurance Series:
Utility Fund II 15,635,597 8,589,920
High Income Bond Fund II 39,642,423 28,354,055
American Leaders Fund II 44,099,083 16,440,902
The Alger American Fund
Small Capitalization 138,656,466 126,497,289
Growth 49,169,118 22,992,622
PBHG Insurance Series Fund, Inc.
PBHG Large Cap Growth 7,380,770 3,113,274
PBHG Growth II 7,429,990 4,390,767
Capital Transactions
The increase/(decrease) in outstanding units for Type I and Type II from
capital transactions for the nine months ended September 30, 1998 is as
follows:
19
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securites
Type I Units Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1997 918,847 3,512,260 631,828 1,212,802 1,385,306
From capital transactions:
Net premiums 41,401 2,283,462 6,804 (45,181) 2,932
Loan Interest - - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (5,634) (23,698) (2,493) 542 (45)
Surrenders (66,612) (1,413,223) (46,344) 27,673 (1,993)
Loans - - - - -
Cost of insurance (1,891) (7,998) (935) 642 (60)
Fixed Transfers 42,819 146,201 22,016 (22,232) 2,410
Interfund transfers 70,151 2,074,201 (23,319) 55,754 (1,366)
------ --------- -------- -------- -------
Net increase (decrease) in units resulting
from capital transactions 80,234 3,058,945 (44,271) 17,198 1,878
------ --------- -------- ------- ------
Units outstanding at September 30, 1998 999,081 6,571,205 587,557 1,230,000 1,387,184
==============================================================================================================
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------
Global Value U.S.
Income Equity Income Equity
Type I Units Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 516,898 479,621 1,295,638
From capital transactions:
Net premiums 3,257 64,967 19,466 1,408
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits - (258) (5,666) -
Surrenders (3,101) (27,978) (59,737) -
Loans - - - -
Cost of insurance (46) (700) (1,275) (13)
Fixed Transfers 8,140 53,914 31,816 -
Interfund transfers 28,772 144,398 64,092 16,803
------- ------- -------- -------
Net increase (decrease) in units resulting
from capital transactions 37,022 234,343 48,696 18,198
------- ------- --------- -------
Units outstanding at September 30, 1998 553,920 713,964 1,344,334 18,198
====================================================================================================
</TABLE>
20
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
--------------------------------------------------------------------------
Capital High Multiple
Bond Appreciation Growth Income Strategies
Type I Units Fund Fund Fund Fund Fund
- -------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1997 929,630 2,591,419 1,291,813 1,869,843 1,553,549
From capital transactions:
Net premiums 30,014 17,659 24,406 30,351 40,990
Loan Interest - - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (6,555) (4,934) (2,226) (11,064) (7,632)
Surrenders (132,051) (132,795) (66,743) (134,409) (133,426)
Loans - - - - -
Cost of insurance (1,687) (4,148) (1,600) (3,506) (2,784)
Fixed Transfers 38,623 15,695 14,131 50,265 18,020
Interfund transfers 21,048 (148,407) (20,700) (33,276) (34,006)
------- --------- --------- --------- ----------
Net increase (decrease) in units resulting
from capital transactions (50,608) (256,930) (52,732) (101,639) (118,838)
-------- ---------- ---------- ---------- -----------
Units outstanding at September 30, 1998 879,022 2,334,489 1,239,081 1,768,204 1,434,711
================================================================================================================
<CAPTION>
Variable Insurance Products Fund
---------------------------------------------
Equity
Income Growth Overseas
Type I Units Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Units outstanding at December 31, 1997 6,589,338 4,467,825 3,398,260
From capital transactions:
Net premiums 87,650 22,362 20,308
Loan Interest - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (20,445) (19,448) (7,325)
Surrenders (439,325) (310,402) (164,865)
Loans - - -
Cost of insurance (11,251) (6,955) (5,356)
Fixed Transfers 48,633 7,425 16,754
Interfund transfers (206,627) (138,238) (310,581)
--------- --------- ----------
Net increase (decrease) in units resulting
from capital transactions (541,365) (445,256) (451,065)
---------- ---------- ----------
Units outstanding at September 30, 1998 6,047,973 4,022,569 2,947,195
==================================================================================================
</TABLE>
21
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Products
Fund II Fund III
-------------------------------- ----------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Type I Units Portfolio Portfolio Portfolio Portfolio
- ----------------------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 17,101,510 3,296,201 294,329 341,417
From capital transactions:
Net premiums 73,871 60,518 34,668 50,248
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (75,352) (2,971) - -
Surrenders (1,112,564) (210,453) (29,998) (34,673)
Loans - - - -
Cost of insurance (31,674) (4,843) (933) (827)
Fixed Transfers 17,816 39,965 43,495 35,026
Interfund transfers (514,225) (80,599) 213,467 138,428
----------- --------- -------- --------
Net increase (decrease) in units resulting
from capital transactions (1,642,128) (198,383) 260,699 188,202
----------- --------- -------- --------
Units outstanding at September 30, 1998 15,459,382 3,097,818 555,028 529,619
=============================================================================================================
<CAPTION>
Federated Insurance Series Alger American
------------------------------------------- -------------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Type I Units Fund II Fund II Fund II Portfolio Portfolio
- ----------------------------------- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1997 361,619 456,124 485,332 1,325,070 1,022,514
From capital transactions:
Net premiums 48,191 65,921 21,895 (32,265) 28,417
Loan Interest - - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits - (5,919) (8,154) (384) (8,307)
Surrenders (36,399) (31,570) (43,301) (28,813) (99,427)
Loans - - - - -
Cost of insurance (804) (1,361) (1,527) (1,249) (1,935)
Fixed Transfers 22,943 101,416 27,757 27,106 17,748
Interfund transfers 61,095 (22,609) (77,045) (17,778) 118,241
-------- -------- --------- --------- ---------
Net increase (decrease) in units resulting
from capital transactions 95,026 105,878 (80,375) (53,383) 54,737
-------- -------- --------- ---------- ---------
Units outstanding at September 30, 1998 456,645 562,002 404,957 1,271,687 1,077,251
=========================================================================================================================
</TABLE>
22
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
=======================================================================================================
Janus Aspen Series
-----------------------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Type I Units Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 1,817,576 4,505,765 4,938,272 2,481,552
From capital transactions:
Net premiums 14,538 65,855 57,631 181,791
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (8,275) (12,043) (7,233) (24,761)
Surrenders (113,442) (236,308) (167,715) (551,541)
Loans - - - -
Cost of insurance (2,632) (7,587) (5,262) (8,561)
Fixed Transfers 11,095 47,960 38,844 147,934
Interfund transfers (129,665) (54,677) 15,592 394,972
----------- ---------- ---------- ----------
Net increase (decrease) in units resulting
from capital transactions (228,381) (196,800) (68,143) 139,834
---------- --------- ---------- ----------
Units outstanding at September 30, 1998 1,589,195 4,308,965 4,870,129 2,621,386
=======================================================================================================
<CAPTION>
Janus Aspen Series
------------------------------------------------
Flexible International Capital
Income Growth Appreciation
Type I Units Portfolio Portfolio Portfolio
- ------------------------------------------- ------------------------------------------------
<S> <C> <C> <C>
Units outstanding at December 31, 1997 280,878 1,004,669 49,257
From capital transactions:
Net premiums 37,976 48,545 17,666
Loan Interest - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (2,030) (2,665) -
Surrenders (17,106) (44,411) (4,239)
Loans - - -
Cost of insurance (620) (1,510) (244)
Fixed Transfers 57,499 26,630 10,466
Interfund transfers 147,707 71,402 176,030
--------- ---------- --------
Net increase (decrease) in units resulting
from capital transactions 223,426 97,991 199,679
--------- ---------- --------
Units outstanding at September 30, 1998 504,304 1,102,660 248,936
===================================================================================================
</TABLE>
23
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
==========================================================================
PBHG Insurance Series Fund, Inc. Goldman Sachs Variable Insurance Trust
----------------------------------- ---------------------------------------
PBHG PBHG Growth & Mid Cap
Large Cap Growth II Income Equity
Type I Units Portfolio Portfolio Fund Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 55,997 76,611
From capital transactions:
Net premiums 8,042 39,330 7,806 -
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits - - - -
Surrenders (6,362) (1,006) (114) -
Loans - - - -
Cost of insurance (131) (151) (15) (18)
Fixed Transfers 7,061 5,049 12,712 1,432
Interfund transfers 28,437 1,443 22,661 38,987
------- -------- ------- -------
Net increase (decrease) in units resulting
from capital transactions 37,047 44,665 43,050 40,401
------- -------- ------- --------
Units outstanding at September 30, 1998 93,044 121,276 43,050 40,401
==================================================================================================================
</TABLE>
24
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
===========================================================================================================
GE Investments Funds, Inc.
-------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securites
Type II Units Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1997 3,025,140 4,980,487 928,145 614,410 1,478,247
From capital transactions:
Net premiums 944,781 3,449,828 176,032 46,791 226,044
Loan Interest - - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (12,458) (234,079) (5,355) (3,549) (9,264)
Surrenders (140,541) (815,512) (34,221) (26,159) (34,003)
Loans - - - - -
Cost of insurance (1,519) (3,049) (493) (496) (721)
Fixed Transfers 593,411 1,081,254 192,092 78,707 271,359
Interfund transfers 87,209 1,347,241 17,372 (54,366) (199,702)
--------- --------- --------- --------- ----------
Net increase (decrease) in units resulting
from capital transactions 1,470,883 4,825,683 345,427 40,928 253,713
--------- --------- --------- --------- ----------
Units outstanding at September 30, 1998 4,496,023 9,806,170 1,273,572 655,338 1,731,960
===========================================================================================================
<CAPTION>
GE Investments Funds, Inc.
--------------------------------------------
Global Value U.S.
Income Equity Income Equity
Type II Units Fund Fund Fund Fund
- ------------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 79,290 730,616 903,249
From capital transactions:
Net premiums 24,706 607,803 78,055 38,870
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits - (1,680) (5,935) -
Surrenders (1,506) (70,164) (37,923) (24)
Loans - - - -
Cost of insurance (33) (420) (437) (10)
Fixed Transfers 64,281 404,125 201,449 11,032
Interfund transfers 52,894 302,760 315,404 15,328
-------- --------- --------- -------
Net increase (decrease) in units resulting
from capital transactions 140,342 1,242,424 550,613 65,196
-------- ----------- --------- -------
Units outstanding at September 30, 1998 219,632 1,973,040 1,453,862 65,196
==============================================================================================
</TABLE>
25
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Oppenheimer Variable Account Funds
----------------------------------------------------------------------
Capital High Multiple
Bond Appreciation Growth Income Strategies
Type II Units Fund Fund Fund Fund Fund
- ---------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1997 994,017 3,176,448 2,462,359 2,934,974 1,200,126
From capital transactions:
Net premiums 197,316 208,888 348,817 340,747 153,705
Loan Interest - - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (13,764) (14,238) (12,336) (19,830) (11,455)
Surrenders (37,084) (97,057) (90,203) (129,384) (57,568)
Loans - - - - -
Cost of insurance (500) (1,579) (1,321) (1,465) (708)
Fixed Transfers 263,397 242,652 315,566 451,205 227,380
Interfund transfers 218,146 (243,049) (96,842) 75,301 2,348
--------- ---------- --------- --------- ---------
Net increase (decrease) in units resulting
from capital transactions 627,511 95,617 463,681 716,574 313,702
--------- ---------- --------- --------- ---------
Units outstanding at September 30, 1998 1,621,528 3,272,065 2,926,040 3,651,548 1,513,828
================================================================================================================
<CAPTION>
Variable Insurance Products Fund
-------------------------------------------
Equity
Income Growth Overseas
Type II Units Portfolio Portfolio Portfolio
- ------------------------------------------ -------------------------------------------
<S> <C> <C> <C>
Units outstanding at December 31, 1997 10,074,173 3,614,598 1,762,588
From capital transactions:
Net premiums 1,005,403 246,490 52,926
Loan Interest - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (60,578) (21,866) (5,476)
Surrenders (357,009) (116,191) (52,523)
Loans - - -
Cost of insurance (5,253) (1,726) (862)
Fixed Transfers 955,204 134,809 68,019
Interfund transfers (312,798) (114,471) (150,907)
------------ ----------- -----------
Net increase (decrease) in units resulting
from capital transactions 1,224,969 127,045 (88,823)
------------ ----------- -----------
Units outstanding at September 30, 1998 11,299,142 3,741,643 1,673,765
==============================================================================================
</TABLE>
26
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
==================================================================================================
Variable Insurance Products Variable Insurance Products
Fund II Fund III
----------------------------- ----------------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Type II Units Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 2,678,933 8,595,677 976,086 1,049,540
From capital transactions:
Net premiums 208,658 856,849 690,861 588,451
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (14,752) (47,338) (44,169) (6,810)
Surrenders (91,427) (228,694) (50,874) (38,129)
Loans - - - -
Cost of insurance (1,053) (4,837) (559) (642)
Fixed Transfers 196,394 820,319 451,224 530,211
Interfund transfers 90,547 (181,820) 166,743 349,724
--------- ---------- ---------- ----------
Net increase (decrease) in units resulting
from capital transactions 388,367 1,214,479 1,213,226 1,422,805
--------- ---------- ---------- ----------
Units outstanding at September 30, 1998 3,067,300 9,810,156 2,189,312 2,472,345
=================================================================================================
<CAPTION>
Federated Insurance Series Alger American
----------------------------------- -------------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Type II Units Fund II Fund II Fund II Portfolio Portfolio
- ------------------------------------------- -------------------------------------------------------------------
Units outstanding at December 31, 1997 2,056,691 1,886,887 1,325,701 5,645,458 4,380,186
From capital transactions:
Net premiums 920,998 385,138 231,698 432,641 509,715
Loan Interest - - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (40,564) (10,329) (8,944) (25,559) (31,517)
Surrenders (77,958) (107,887) (55,965) (144,411) (150,306)
Loans - - - - -
Cost of insurance (1,426) (748) (798) (3,323) (2,345)
Fixed Transfers 671,943 588,159 211,788 529,649 418,416
Interfund transfers 23,812 (272,732) 14,822 (498,271) 13,872
--------- --------- --------- --------- ----------
Net increase (decrease) in units resulting
from capital transactions 1,496,805 581,601 392,601 290,726 757,835
--------- --------- --------- --------- ---------
Units outstanding at September 30, 1998 3,553,496 2,468,488 1,718,302 5,936,184 5,138,021
=====================================================================================================================
</TABLE>
27
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
======================================================================================================
Janus Aspen Series
-------------------------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Type II Units Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 3,442,667 7,270,898 10,111,685 2,804,435
From capital transactions:
Net premiums 138,987 726,756 1,207,618 956,133
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (18,942) (38,964) (27,328) (29,479)
Surrenders (82,379) (222,946) (298,956) (134,028)
Loans - - - -
Cost of insurance (1,270) (4,048) (5,405) (1,832)
Fixed Transfers 123,095 638,010 1,065,202 899,563
Interfund transfers (231,770) (143,759) 20,378 335,929
---------- ---------- ----------- -----------
Net increase (decrease) in units resulting
from capital transactions (72,279) 955,049 1,961,509 2,026,286
--------- --------- ---------- ------------
Units outstanding at September 30, 1998 3,370,388 8,225,947 12,073,194 4,830,721
======================================================================================================
<CAPTION>
Janus Aspen Series
------------------------------------------
Flexible International Capital
Income Growth Appreciation
Type II Units Portfolio Portfolio Portfolio
- ------------------------------------------ ------------------------------------------
<S> <C> <C> <C>
Units outstanding at December 31, 1997 869,089 3,001,600 163,550
From capital transactions:
Net premiums 196,500 372,778 251,629
Loan Interest - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (1,081) (18,981) (714)
Surrenders (30,370) (62,263) (25,987)
Loans - - -
Cost of insurance (526) (1,694) (124)
Fixed Transfers 326,663 465,277 123,369
Interfund transfers 243,319 (207,923) 250,081
--------- ----------- --------
Net increase (decrease) in units resulting
from capital transactions 734,505 547,194 598,254
Units outstanding at September 30, 1998 1,603,594 3,548,794 761,804
=============================================================================================
</TABLE>
28
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
<TABLE>
=====================================================================================================
PBHG Insurance Series Fund, Goldman Sachs Variable Insurance
Inc. Trust
------------------------------- ----------------------------------
PBHG PBHG Growth & Mid Cap
Large Cap Growth II Income Equity
Type II Units Portfolio Portfolio Fund Fund
- ---------------------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1997 346,833 576,010
From capital transactions:
Net premiums 141,349 110,218 144,911 109,649
Loan Interest - - - -
Tranfers (to) from the
general acct. of Life of Virginia:
Death benefits (2,437) (9,791) - -
Surrenders (18,782) (16,601) (445) (175)
Loans - - - -
Cost of insurance (269) (385) (8) (1)
Fixed Transfers 105,862 171,820 45,994 94,584
Interfund transfers 68,831 (44,885) 86,365 44,008
-------- --------- --------- --------
Net increase (decrease) in units resulting
from capital transactions 294,554 210,376 276,817 248,065
-------- --------- --------- --------
Units outstanding at September 30, 1998 641,387 786,386 276,817 248,065
======================================================================================================
</TABLE>
29
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
September 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
(2) Continued
Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of Life of Virginia. Life of Virginia is
taxed as a life insurance company under the Internal Revenue Code (the
Code). Life of Virginia is included in the General Electric Capital
Assurance Company consolidated federal income tax return. The Account will
not be taxed as a regulated investment company under subchapter M of the
Code. Under existing federal income tax law, no taxes are payable on the
investment income or on the capital gains of the Account.
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 Life of Virginia to the Account represent
gross premiums recorded by Life of Virginia on its flexible premium
variable deferred annuity products, less deductions retained as
compensation for premium taxes. For policies issued on or after May 1,
1993, the deduction for premium taxes will be deferred until surrender.
For Type I policies, during the first ten years following a premium
payment, a charge of .20% of the premium payment is deducted monthly from
the policy Account values to reimburse Life of Virginia for certain
distribution expenses. In addition, a charge is imposed on full and
certain partial surrenders that occur within six years of any premium
payment (seven years for certain Type II policies) to cover certain
expenses relating to the sale of a policy. Subject to certain limitations,
the charge equals 6% (or less) of the premium surrendered, depending on
the time between premium payment and surrender.
Life of Virginia will deduct a charge of $30 per year and $25 plus .15%
per year from the policy account values for certain administrative
expenses incurred for policy Type I and Type II, respectively. For Type II
policies, the $25 charge may be waived if the account value is greater
than $75,000. In addition, Life of Virginia charges the Account 1.15% and
1.25% on policy Type I and Type II, respectively, for the mortality and
expense risk
(Continued)
30
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
Notes to Financial Statements
September 30, 1998
(Unaudited)
- -------------------------------------------------------------------------------
(3) Continued
that Life of Virginia assumes. Administrative expenses as well as
mortality and risk charges are deducted daily and reflect the effective
annual rates.
GE Investments Funds, Inc. (the Fund) is an open-end diversified
management investment company.
Capital Brokerage Corporation, an affiliate of Life of Virginia, 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 also
serves as principal underwriter for variable life insurance policies
issued by Life of Virginia.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is
paid an investment advisory fee by the Fund based on the average daily net
assets at an effective annual rate of .35% for the S&P 500 Index Fund,
.50% for the Money Market, Income Fund and Total Return Funds, 1.00% for
the International Equity Fund, .85% for the Real Estate Securities Fund,
.60% for the Global Income Fund, .65% for the Value Equity Fund and .55%
for the U.S. Equity Fund.
Certain officers and directors of Life of Virginia are also officers and
directors of Capital Brokerage Corporation.
- --------------------------------------------------------------------------------
31
<PAGE>
THE LIFE INSURANCE COMPANY OF
VIRGINIA AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1997, 1996, and 1995
(With Independent Auditors' Report Thereon)
<PAGE>
<PAGE>
Independent Auditors' Report
The Board of Directors
The Life Insurance Company of Virginia:
We have audited the accompanying consolidated balance sheets of The Life
Insurance Company of Virginia (an indirect wholly-owned subsidiary of General
Electric Capital Corporation) and subsidiary as of December 31, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the year ended December 31, 1997 and the nine months ended
December 31, 1996. We have also audited the preacquisition statements of income,
stockholders' equity and cash flows for the three months ended March 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The accompanying consolidated
financial statements of The Life Insurance Company of Virginia for the year
ended December 31, 1995, were audited by other auditors whose report, dated
February 8, 1996 on those consolidated financial statements included an
explanatory paragraph that described the change in the Company's method of
accounting for certain investments.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Life Insurance
Company of Virginia and subsidiary as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the year ended December 31,
1997, the nine month period ended December 31, 1996 and the preacquisition three
month period ended March 31, 1996, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective April
1, 1996, General Electric Capital Corporation acquired all of the outstanding
stock of The Life Insurance Company of Virginia in a business combination
accounted for as a purchase. As a result of the acquisition, the consolidated
financial information for the periods after the acquisition is presented on a
different cost basis than that for the periods before the acquisition and,
therefore, is not comparable.
KPMG LLP
Richmond, Virginia
January 6, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITIORS
Board of Directors
The Life Insurance Company of Virginia
We have audited the accompanying consolidated statements of income,
stockholder's equity, and cash flows of The Life Insurance Company of Virginia
and subsidiaries for the year ended December 31, 1995. 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of The Life Insurance Company of Virginia and subsidiaries for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Richmond, Virginia
February 8, 1996
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1997 and 1996
(in millions)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Assets 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments:
Fixed maturities:
Available for sale - at fair value (amortized cost:
December 31, 1997 - $5,468.1; 1996 - $5,102.2) $ 5,622.6 5,142.7
Equity securities - at fair value
Common stocks (cost: December 31, 1997 - $43.1; 1996 - $31.6) 54.1 34.7
Preferred stocks (cost: December 31, 1997 - $87.6; 1996 - $123.5) 97.6 130.8
Mortgage loans on real estate (net of reserve for losses:
December 31, 1997 - $17.2; 1996 - $20.8) 496.2 585.4
Real estate (net) 11.8 19.4
Policy loans 188.4 179.5
Short-term investments - 42.4
- ------------------------------------------------------------------------------------------------------------------
Total investments 6,470.7 6,134.9
- ------------------------------------------------------------------------------------------------------------------
Cash 0.2 6.4
Receivables:
Premiums and other 6.6 7.9
Reinsurance recoverable 8.7 13.1
Accrued investment income 123.1 116.6
- ------------------------------------------------------------------------------------------------------------------
Total receivables 138.4 137.6
Deferred policy acquisition costs 165.0 70.3
Goodwill (net of accumulated amortization: December 31, 1997 - $11.3;
1996 - $5.0) 117.1 125.4
Present value of future profits (net) 332.6 419.2
Property and equipment at cost (net) 3.2 1.7
Deferred income taxes 57.4 72.9
Other assets 15.4 12.3
Assets held in separate accounts 4,066.4 2,762.7
- ------------------------------------------------------------------------------------------------------------------
Total assets $ 11,366.4 9,743.4
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued)
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Balance Sheets, Continued
December 31, 1997 and 1996
(in millions, except share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Policy liabilities:
Future policy benefits $ 520.6 518.3
Policy and contract claims 83.0 69.1
Unearned and advance premiums 0.1 0.1
Other policyholder funds 5,369.2 5,094.4
- ------------------------------------------------------------------------------------------------------------------
Total policy liabilities 5,972.9 5,681.9
General liabilities:
Payable to affiliate, net 9.4 8.8
Commissions and general expenses 51.1 46.8
Current income taxes 45.8 45.4
Other liabilities 71.5 192.2
Liabilities related to separate accounts 4,066.4 2,762.7
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 10,217.1 8,737.8
- ------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Liabilities
- ------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock - $1,000 par value:
Authorized, issued and outstanding: 4,000 shares 4.0 4.0
Additional paid-in capital 925.9 928.1
Net unrealized investment gains 74.3 19.4
Retained earnings 145.1 54.1
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,149.3 1,005.6
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 11,366.4 9,743.4
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Income
For the year ended December 31, 1997, the periods from April 1, 1996 to December
31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December
31, 1995 (in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Preacquisition
--------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Revenue
Premiums and policy fees $ 273.2 154.7 92.4 179.3
Separate account fees 44.4 23.1 5.9 17.7
Net investment income (note 2) 472.5 334.4 112.0 402.1
Realized investment gains (losses) (note 2) 13.3 6.0 9.0 (76.5)
Other income 2.5 0.6 1.0 2.8
- ----------------------------------------------------------------------------------------------------------------------
Total revenue earned 805.9 518.8 220.3 525.4
- ----------------------------------------------------------------------------------------------------------------------
Benefits and Expenses
Benefits to policyholders 509.8 326.4 166.0 372.9
Commissions and general expenses 82.5 53.2 28.8 43.7
Amortization of intangibles 59.6 50.1 0.6 3.2
Amortization of deferred policy acquisition
costs 10.8 3.2 6.0 39.3
- ----------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 662.7 432.9 201.4 459.1
Income Before Income Tax 143.2 85.9 18.9 66.3
Provision for income tax (note 3)
Current expense (benefit) 64.8 39.7 (3.8) 37.9
Deferred expense (benefit) (12.6) (7.9) 10.8 (10.8)
- ----------------------------------------------------------------------------------------------------------------------
52.2 31.8 7.0 27.1
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 91.0 54.1 11.9 39.2
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the year ended December 31, 1997, the periods from April 1, 1996 to December
31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December
31, 1995 (in millions)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Preacquisition
---------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Common stock
$1,000 par value common stock, authorized,
issued and outstanding 4,000 in 1997,
1996 and 1995)
- ------------------------------------------------------------------------------------------------------------------
Balance at beginning and end of period $ 4.0 4.0 4.0 4.0
- ------------------------------------------------------------------------------------------------------------------
Additional Paid-in Capital
Balance at beginning of period 928.1 818.4 749.1 704.1
Adjustment to reflect purchase method (note 1) (2.2) 109.7 - -
Capital contribution from parent (notes 4, 7) - - 69.3 45.0
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period 925.9 928.1 818.4 749.1
- ------------------------------------------------------------------------------------------------------------------
Net Unrealized Investment Gains (Losses)
Balance at beginning of period 19.4 11.9 103.1 (97.5)
Adjustment to reflect purchase method
(note 1) - (11.9) - -
Net unrealized investment gains (losses) 54.9 19.4 (91.2) 200.6
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period 74.3 19.4 11.9 103.1
- ------------------------------------------------------------------------------------------------------------------
Net Foreign Exchange Gains (Losses)
Balance at beginning of period - - - (3.0)
Net foreign exchange gains (losses) - - - 3.0
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period - - - -
- ------------------------------------------------------------------------------------------------------------------
Retained Earnings (Deficit)
Balance at beginning of period 54.1 (22.4) (34.3) 159.8
Adjustment to reflect purchase method
(note 1) - 22.4 - -
Net income 91.0 54.1 11.9 39.2
Dividends to stockholder - - - (40.0)
Stock dividend to affiliate (note 7) - - - (193.3)
- ------------------------------------------------------------------------------------------------------------------
Balance at end of period 145.1 54.1 (22.4) (34.3)
- ------------------------------------------------------------------------------------------------------------------
Stockholders' equity at end of period $ 1,149.3 1,005.6 811.9 821.9
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the year ended December 31, 1997, the periods from April 1, 1996 to December
31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December
31, 1995 (in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Preacquisition
----------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net income $ 91.0 54.1 11.9 39.2
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Change in policy liabilities 239.0 53.5 (32.8) 114.2
Change in accrued investment income (6.5) (37.6) 4.1 (2.1)
Deferred policy acquisition costs (112.3) (74.9) (22.2) (76.1)
Amortization of deferred policy acquisition costs 10.8 3.2 6.0 39.3
Amortization of intangibles 59.6 50.1 0.6 3.2
Other amortization and depreciation 8.0 7.3 1.4 (1.2)
Premiums and operating receivables, commissions and general
expenses, income taxes and other (128.5) 77.8 22.9 (65.7)
Realized investment (gains) losses (13.3) (6.0) (9.0) 76.5
- ------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) operating activities 147.8 127.5 (17.1) 127.3
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Sale (purchase) of short-term investments - net 42.4 49.4 (10.1) (18.8)
Sale or maturity of investments
Fixed maturities - held to maturity:
Maturities - - - 3.9
Calls and prepayments - - - 60.9
Fixed maturities - available for sale
Maturities - 201.5 46.1 35.0
Calls and prepayments - 353.5 101.0 58.6
Sales 739.1 452.0 115.8 1,700.3
All other investments 145.1 177.3 44.9 124.6
Purchase of investments:
Fixed maturities - available for sale (1,104.1) (1,279.5) (144.1) (1,950.7)
All other investments (30.8) (39.5) (65.5) (183.5)
Purchase of property and equipment (2.4) - (0.2) (0.8)
- ------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities (210.7) (85.3) 87.9 (170.5)
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Capital contribution - - 2.8 -
Cash dividends to stockholder - - (40.0) (6.0)
Change in cash overdrafts 4.7 (12.7) 28.8 -
Interest sensitive life, annuity and investment contract deposits 1,894.2 1,275.4 301.9 1,059.5
Interest sensitive life, annuity and investment contract withdrawals (1,842.2) (1,305.6) (358.8) (1,031.7)
- ------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities 56.7 (42.9) (65.3) 21.8
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (6.2) (0.7) 5.5 (21.4)
Cash at beginning of period 6.4 7.1 1.6 23.0
- ------------------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 0.2 6.4 7.1 1.6
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
===============================================================================
(1) Summary of Significant Accounting Principles and Practices
Basis of Presentation
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles (GAAP) and
include the accounts of The Life Insurance Company of Virginia ("Life
of Virginia" or "Company") and its subsidiary, Assigned Settlements
Inc. All material intercompany accounts and transactions have been
eliminated.
Prior to April 1, 1996, Combined Insurance Company of America ("CICA")
owned 100% or 4,000 shares of Life of Virginia. CICA is a wholly-owned
subsidiary of AON Corporation (AON). On April 1, 1996, CICA sold 100%
of the issued and outstanding shares of Life of Virginia to General
Electric Capital Corporation ("GE Capital"). Immediately thereafter,
80% was contributed to General Electric Capital Assurance Company (the
"Parent"). On December 31, 1996, the remaining 20% was contributed to
General Electric Financial Assurance Holdings, Inc. ("GEFAH").
Effective January 1, 1999, an affiliate, The Harvest Life Insurance
Company (Harvest), was merged with and into the Company. The financial
position and results of operation of Harvest will be included with the
Company's beginning January 1, 1999, and, accordingly, are not
reflected herein. Also, effective January 1, 1999, the Company changed
its name to GE Life and Annuity Assurance Company.
Life of Virginia primarily sells variable annuities and universal life
insurance to customers throughout most of the United States. Life of
Virginia distributes variable annuities primarily through stockbrokers
and universal life insurance primarily through career agents and
independent brokers. Life of Virginia is also engaged in the sale of
traditional individual and group life products and guaranteed
investment contracts. Approximately 23%, 34% and 43% of premium and
annuity consideration collected, in 1997, 1996, and 1995, respectively,
came from customers residing in the South Atlantic region of the United
States.
Although the Company markets its products through numerous
distributors, approximately 22%, 21% and 14% of the Company's sales in
1997, 1996 and 1995, respectively, have been through two specific
national stockbrokers. Loss of all or a substantial portion of the
business provided by these stockbrokers could have a material adverse
effect on the business and operations of the Company. The Company does
not believe, however, that the loss of such business would have a
long-term adverse effect because of the Company's competitive position
in the marketplace and the availability of business from other
distributors.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARY
Notes to Consolidated Financial Statements
===============================================================================
(1) Continued
Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and
assumptions that could affect amounts and disclosures reported therein.
Actual results could differ from those estimates. As further discussed
in the accompanying notes to the consolidated financial statements,
significant estimates and assumptions affect deferred acquisition
costs, PVFP, future life policy benefits, provisions for real
estate-related losses and related reserves, other-than-temporary
declines in values for fixed maturities, the valuation allowance for
deferred income taxes and the calculation of fair value disclosures for
certain financial instruments.
Certain 1996 and 1995 amounts have been reclassified to conform to 1997
presentation.
Purchase Accounting Method
Upon acquisition of Life of Virginia by GE Capital, Life of Virginia
restated its financial statements in accordance with the purchase
method of accounting. The net purchase price for Life of Virginia and
its subsidiary of $929.9 million was allocated according to the fair
values of the acquired assets and liabilities, including the estimated
present value of future profits. These allocated values were dependent
upon policies in force and market conditions at the time of closing.
In addition to revaluing all material tangible assets and liabilities
to their respective estimated fair values as of the closing date of the
sale, Life of Virginia also recorded in its consolidated financial
statements the excess of cost over fair value of net assets acquired
(goodwill) as well as the present value of future profits to be derived
from the purchased business. These amounts were determined in
accordance with the purchase method of accounting. This new basis of
accounting resulted in an increase in stockholders' equity of $118
million (net of purchase accounting adjustments of $2.2 million in
1997), reflecting the application of the purchase method of accounting.
The Company's consolidated financial statements subsequent to April 1,
1996 reflect this new basis of accounting.
<PAGE>
(1) Continued
All amounts for periods ended before April 1, 1996 are labeled
"Preacquisition" and are based on the preacquisition historical costs
in accordance with generally accepted accounting principles. The
periods ending after such date are based on fair values at April 1,
1996 (which becomes the new cost basis) and subsequent costs in
accordance with the purchase method of accounting.
Present Value of Future Profits
As of April 1, 1996, Life of Virginia established an intangible asset
which represents the present value of future profits ("PVFP"). PVFP
reflects the estimated fair value of the Company's life insurance
business in-force and represents the portion of the cost to acquire the
Company that is allocated to the value of the right to receive future
cash flows from insurance contracts existing at the date of
acquisition. Such value is the present value of the actuarially
determined projected cash flows for the acquired policies discounted at
an appropriate rate.
PVFP is amortized over the estimated contract life of the business
acquired in relation to the present value of estimated gross profits.
The estimated gross profit streams are periodically reevaluated and the
unamortized balance of PVFP adjusted to the amount that would have
existed had the actual experience and revised estimates been known and
applied since inception. The amortization period is the remaining life
of the policies, which range from 10 to 30 years from the date of
original policy issue. Based on current assumptions, net amortization
of the PVFP asset, expressed as a percentage, is projected to be 12.4%,
11.6%, 10.8%, 9.5% and 8.1% for the years ended December 31, 1998
through 2002, respectively. Actual amortization incurred during these
years may vary as assumptions are modified to incorporate actual
results.
Prior to April 1, 1996, Life of Virginia's PVFP was calculated in a
similar manner as the PVFP discussed above and related to policies
in-force on April 30, 1986, the date the Company was acquired by Aon.
Under purchase accounting this PVFP was removed.
<PAGE>
(1) Continued
The projected ending balance of PVFP will be further adjusted to
reflect the impact of unrealized gains or losses on fixed maturities
classified as available for sale in the investment portfolios. Such
adjustments are not recorded in the Company's net income but rather as
a credit or charge to stockholders' equity, net of applicable income
tax. The components of PVFP are as follows:
<TABLE>
<CAPTION>
Preacquisition
------------------------------
Nine months Three months
Year ended ended ended Year ended,
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
PVFP - beginning of period $ 419.2 - 32.6 48.6
Adjustment related to the purchase
method of accounting - 484.0 - -
Interest accreted at 6.75% for 1997
and 6.25% for 1996 28.4 22.4 0.5 2.1
Gross amortization, excluding interest (81.6) (67.5) (1.1) (5.3)
Dividend of Globe Life Insurance
Company (note 7) - - - (12.8)
Effect of net unrealized
investment (gains) losses (33.4) (19.7) - -
- ---------------------------------------------------------------------------------------------------------------
PVFP - end of period $ 332.6 419.2 32.0 32.6
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Goodwill
Under the purchase method of accounting, Goodwill is the excess of the
purchase price over the fair value of assets and liabilities acquired
and PVFP. The Company has elected to amortize goodwill on the straight
line basis over a 20 year period.
The Company reviews goodwill to determine if events or changes in
circumstances may have affected the recoverability of the outstanding
goodwill as of each reporting period. In the event that the Company
determined that goodwill was not recoverable it would amortize such
amounts as additional goodwill expense in the accompanying consolidated
financial statements. As of December 31, 1997, the Company believes
that no such adjustment is necessary.
<PAGE>
(1) Continued
Deferred Tax Assets and Liabilities
Pursuant to the acquisition on April 1, 1996, GE Capital, and Aon
Corporation, the Company's previous ultimate parent, agreed to file an
election to treat the acquisition of Life of Virginia as an asset
acquisition under the provisions of Internal Revenue Code Section
338(h)(10). As a result of that election, the tax basis of the
Company's assets as of the date of acquisition were revalued based upon
fair market values. The principal effect of the election was to
establish a tax basis of intangibles for the value of the business
acquired that is amortizable for tax purposes over 10-15 years.
Deferred income taxes have been provided for the effects of temporary
differences between financial reporting and tax bases of assets and
liabilities and have been measured using the enacted marginal tax rates
and laws that are currently in effect.
Recognition of Premium Revenue and Related Expenses
For universal life-type and investment products, generally there is no
requirement for the payment of a premium other than to maintain account
values at a level sufficient to pay mortality and expense charges.
Consequently, premiums for universal life-type policies and investment
products are not reported as revenue, but as deposits. Policy fee
revenue for universal life-type policies and investment products
consists of charges for the cost of insurance, policy administration,
and surrenders assessed during the period. Expenses include interest
credited to policy account balances and benefit claims incurred in
excess of policy account balances.
In general, for accident and health products, premiums collected are
reported as earned proportionately over the period covered by the
policies. For all other life products, premiums are recognized as
revenue when due. Benefits and related expenses associated with the
premium revenues are charged to expense proportionately over the lives
of the policies through a provision for future policy benefit
liabilities and through deferral and amortization of deferred policy
acquisition costs.
<PAGE>
(1) Continued
Reinsurance
Reinsurance premiums, commissions, and expense reimbursements on
reinsured business are accounted for on a basis consistent with those
used in accounting for the original policies issued and the terms of
the reinsurance contracts. Premiums and benefits ceded to other
companies have been reported as a reduction of premium revenue and
benefits. Expense reimbursements received in connection with
reinsurance ceded have been accounted for as a reduction of the related
policy acquisition costs or, to the extent such reimbursements exceed
the related acquisition costs, as other revenue. All reinsurance
receivables and prepaid reinsurance premium amounts are reported as
assets.
Investments
Fixed maturities are classified as available for sale and carried at
fair value. The amortized cost of fixed maturities is adjusted for
amortization of premiums and accretion of discounts to maturity that
are included in net investment income. Included in fixed maturities are
investments in mortgage-backed securities. Investment income on
mortgage-backed securities is initially based upon yield, cash flow and
prepayment assumptions at the date of purchase. Subsequent revisions in
those assumptions are recorded using the retrospective method, whereby
the amortized cost of the securities is adjusted to the amount that
would have existed had the revised assumptions been in place at the
date of purchase. The adjustments to amortized cost are recorded as a
charge or credit to investment income.
Short-term investments are carried at amortized cost which approximates
fair value. Equity securities are valued at fair value. Mortgage loans
are carried at their unpaid principal balance, net of allowances for
estimated uncollectible amounts. Real estate is carried generally at
cost less accumulated depreciation. Policy loans are carried at unpaid
principal balance. Other long-term investments are carried generally at
cost.
Changes in the market values of investments available-for-sale, net of
the effect on deferred policy acquisition costs, present value of
future profits and deferred federal income taxes are reflected as
unrealized investment gains or losses in a separate component of
stockholders' interest and accordingly, have no effect on net income.
<PAGE>
(1) Continued
Investments that have declines in fair value below cost, that are
judged to be other than temporary, are written down to estimated fair
value and reported as realized investment losses. Additionally,
reserves for mortgage loans and certain other long-term investments are
established based on an evaluation of the respective investment
portfolio, past credit loss experience, and current economic
conditions. Writedowns and the change in reserves are included in
realized investment gains and losses in the consolidated statements of
income. In general, the Company ceases to accrue investment income when
interest or dividend payments are in arrears.
Impaired loans are loans for which it is probable that the Company will
be unable to collect all amounts due according to terms of the original
contractual terms of the loan agreement. This definition includes,
among other things, leases, or larger groups of small-homogenous loans,
and therefore applies principally to the Company's commercial loans.
Life of Virginia measures impaired loans at the present value of the
loans discounted cash flow using the effective interest rate of the
original loan as the discount rate.
Deferred Policy Acquisition Costs
Costs of acquiring new business, principally commissions, underwriting
and sales expenses that vary with and are primarily related to the
production of new business, are deferred. For non-universal life-type
products, amortization of deferred policy acquisition costs is related
to and based on the present value of expected premium revenues on the
policies. Periodically amortization is adjusted to reflect current
withdrawal experience. Expected premium revenues are estimated by using
the same assumptions used in estimating future policy benefits.
Deferred policy acquisition costs related to universal life-type
policies and investment products are amortized in relation to the
present value of expected gross profits on the policies. Such
amortization is adjusted periodically to reflect differences in actual
and assumed gross profits.
<PAGE>
(1) Continued
To the extent that unrealized gains or losses on available for sale
securities would result in an adjustment to deferred policy acquisition
costs amortization, had those gains or losses actually been realized,
the related deferred policy acquisition cost adjustments are recorded
along with the unrealized gains or losses included in stockholders'
equity with no effect on net income.
The components of deferred policy acquisition costs are as follows:
<TABLE>
<CAPTION>
Preacquisition
-------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Deferred policy acquisition costs - $ 70.3 - 363.9 388.1
beginning of period
Commissions and expenses deferred 112.3 74.9 22.2 76.1
Amortization (10.8) (3.2) (6.0) (39.3)
Dividend of Globe Life Insurance
Company (note 7) - - - (22.8)
Effect of net unrealized investment
(gains) losses (6.8) (1.4) 17.9 (38.2)
- ------------------------------------------------------------------------------------------------------------
Deferred policy acquisition costs - end of period $ 165.0 70.3 398.0 363.9
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Property and Equipment
Property and equipment are generally depreciated using the
straight-line method over their estimated useful lives. As a result of
purchase accounting, fully depreciated property and equipment were
removed.
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate fair values
for financial instruments. The carrying amounts in the consolidated
statements of financial position for cash and short-term investments
approximate their fair values. Fair values for fixed
<PAGE>
(1) Continued
maturity securities and equity securities are based on quoted market
prices or, if they are not actively traded, on estimated values
obtained from independent pricing services or in the case of private
placements, are estimated by discounted expected future cash flows
using a current market rate applicable to the yield credit quality,
call features and maturity of the investments, as applicable. The fair
values for mortgage loans and policy loans are estimated using
discounted cash flow analyses, using interest rates currently being
offered for similar loans to borrowers with similar credit ratings.
Fair values of derivatives are based on quoted prices for
exchange-traded instruments or the cost to terminate or offset with
other contracts.
Fair values for liabilities for investment-type contracts are estimated
using discounted cash flow calculations based on interest rates
currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Separate Account Business
The assets and liabilities of the separate accounts represent
designated funds of group pension, variable life and annuity
policyholders and are not guaranteed or supported by other general
investments of the Company. The Company earns mortality and expense
risk fees from the separate accounts and assesses withdrawal charges in
the event of early withdrawals. The assets are carried at fair value
and are offset by liabilities that represent such policyholders' equity
in those assets. The net investment income generated from these assets
is not included in the consolidated statements of income.
The Company has periodically transferred capital to the separate
accounts to provide for the initial purchase of investments in the new
portfolios. As of December 31, 1997, approximately $44.6 million of the
Company's common stock investment related to its capital investments in
the separate accounts.
Future Policy Benefit Liabilities and Unearned Premiums and Policy and
Contract Claims
Future policy benefit liabilities on non-universal life-type and
accident and health products have been provided on the net level
premium method. The liabilities are calculated based on assumptions as
to investment yield, mortality, morbidity and
<PAGE>
(1) Continued
withdrawal rates that were determined at the date of issue or
acquisition of Life of Virginia by the Parent, and provide for possible
adverse deviations. Interest assumptions are graded and range from 7.4%
to 6.5%.
Withdrawal assumptions are based principally on experience and vary by
plan, year of issue, and duration.
Policyholder liabilities on universal life-type and investment products
are generally based on policy account values. Interest crediting rates
for these products range from 8.6% to 4.5%.
Unearned premiums generally are calculated using the pro rata method
based on gross premiums. However, in the case of credit life and credit
accident and health, the unearned premiums are calculated such that the
premiums are earned over the period of risk in a reasonable
relationship to anticipated claims.
Policy and contract claim liabilities represent estimates for reported
claims, as well as provisions for losses incurred, but not yet
reported. These claim liabilities are based on historical experience
and are estimates of the ultimate amount to be paid when the claims are
settled. Changes in the estimated liability are reflected in income as
the estimates are revised.
Foreign Currency Translation
Foreign revenues and expenses are translated at average exchange rates.
Foreign assets and liabilities are translated at year-end exchange
rates. Unrealized foreign exchange gains or losses on translation are
generally reported in stockholders' equity. No tax effect was taken
into consideration for unrealized losses.
(2) Invested Assets and Related Income
Under purchase accounting, the fair value of Life of Virginia's fixed
maturity investments as of April 1, 1996, became Life of Virginia's new
cost basis in such investments. The difference between the new cost
basis and original par is then amortized against investment income over
the remaining effective lives of the fixed maturity investments.
<PAGE>
(2) Continued
The Company's investments in debt and equity securities are considered
available for sale and are carried at estimated fair value, with the
aggregate unrealized appreciation or depreciation being recorded as a
separate component of stockholders' equity. The carrying value and
amortized cost of investments at December 31, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(millions) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Available for sale:
U.S. government and agencies $ 44.3 1.3 - 45.6
States and political subdivisions 1.8 0.3 - 2.1
Foreign governments 200.1 6.5 (0.3) 206.3
Corporate securities 3,362.1 120.6 (8.1) 3,474.6
Mortgage-backed securities 1,859.8 39.6 (5.4) 1,894.0
- ----------------------------------------------------------------------------------------------------------------
Total fixed maturities 5,468.1 168.3 (13.8) 5,622.6
Total equity securities 130.7 21.5 (0.5) 151.7
- ----------------------------------------------------------------------------------------------------------------
Total available for sale $ 5,598.8 189.8 (14.3) 5,774.3
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(millions) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Available for sale:
U.S. government and agencies $ 65.5 2.1 - 67.6
States and political subdivisions 2.1 - - 2.1
Foreign governments 178.2 5.6 - 183.8
Corporate securities 3,092.1 29.0 (19.6) 3,101.5
Mortgage-backed securities 1,764.3 29.7 (6.3) 1,787.7
- -----------------------------------------------------------------------------------------------------------------
Total fixed maturities 5,102.2 66.4 (25.9) 5,142.7
Total equity securities 155.1 11.2 (0.8) 165.5
- -----------------------------------------------------------------------------------------------------------------
Total available for sale $ 5,257.3 77.6 (26.7) 5,308.2
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
The scheduled maturity distribution of the fixed maturity portfolio at
December 31 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right
to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
1997
---------------------------
Amortized Fair
(millions) Cost Value
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Due in one year or less $ 105.8 106.7
Due after one year through five years 1,196.8 1,224.3
Due after five years through ten years 1,654.9 1,705.3
Due after ten years 650.8 692.3
- -----------------------------------------------------------------------------------------------------------
Subtotals 3,608.3 3,728.6
Mortgage-backed securities 1,859.8 1,894.0
- -----------------------------------------------------------------------------------------------------------
Totals $ 5,468.1 5,622.6
- -----------------------------------------------------------------------------------------------------------
</TABLE>
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders
of $4.7 million and $4.5 million at December 31, 1997 and 1996,
respectively.
At December 31, 1997, approximately 24.8% and 15.9% of the Company's
investment portfolio is comprised of securities issued by the
manufacturing and financial industries, respectively, the vast majority
of which are rated investment grade, and which are senior secured
bonds. No other industry group comprises more than 10% of the Company's
investment portfolio. This portfolio is widely diversified among
various geographic regions in the United States, and is not dependent
on the economic stability of one particular region.
At December 31, 1997, the Company did not hold any fixed maturity
securities, other than securities issued or guaranteed by the U.S.
government, which exceeded 10% of shareholders interest.
<PAGE>
(2) Continued
The credit quality of the fixed maturity portfolio at December 31,
follows. The categories are based on the higher of the ratings
published by Standard & Poors or Moody's.
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
Fair Fair
value Percent value Percent
- ------------------------------------------------------------------------------------------------------
<S> <C>
Agencies and treasuries $ 308 5.5% $ 317 6.2%
AAA/Aaa 1,465 26.0 1,437 27.9
AA/Aa 320 5.7 247 4.8
A/A 1,101 19.6 988 19.2
BBB/Baa 1,862 33.1 1,864 36.3
BB/Ba 307 5.5 207 4.0
B/B 77 1.4 13 0.3
Not rated 182 3.2 69 1.3
- -----------------------------------------------------------------------------------------------------
Totals $ 5,622 100.0% $ 5,142. 100.0%
- -----------------------------------------------------------------------------------------------------
</TABLE>
Bonds with earnings ranging from AAA/Aaa to BBB-/Baa3 are generally
regarded as investment grade securities. Some agencies and treasuries
(that is, those securities issued by the United States government or an
agency thereof) are not rated, but all are considered to be investment
grade securities. Finally, some securities, such as private placements,
have not been assigned a rating by any rating service and are therefore
categorized as "not rated." This has neither positive nor negative
implications regarding the value of the security.
<PAGE>
(2) Continued
The Company had $6.4 million and $12.6 million of non-income producing
investments on December 31, 1997 and December 31, 1996, respectively.
"Impaired" loans are defined under generally accepted accounting
principles as loans for which it is probable that the lender will be
unable to collect all amounts due according to the original contractual
terms of the loan agreement. That definition excludes, among other
things, leases or large groups of smaller-balance homogenous loans, and
therefore applies principally to the Company's commercial loans.
Under these principles, the Company has two types of "impaired" loans
as of December 31, 1997 and 1996: loans requiring allowances for losses
and loans expected to be fully recoverable because the carrying amount
has been reduced previously through charge-offs or deferral at income
recognition ($23.0 million and $-, respectively). There was no
allowance for losses on these loans as of December 31, 1997 and 1996.
Average investment in impaired loans during 1997 was $23.0 million and
interest income earned on these loans while they were considered
impaired was $2.0 million. There were no impaired loans nor related
interest income earned on such loans in 1996.
The Company's mortgage and real estate portfolio is distributed by
geographic location and type. However, the Company has concentration
exposures in certain regions and in certain types as shown in the
following two tables.
Geographic distribution as of December 31, 1997:
<TABLE>
<CAPTION>
Mortgage Real estate
- -----------------------------------------------------------------------------------------------------------
<S> <C>
South Atlantic 47.0% 60.3%
East North Central 14.8 2.3
Mountain 14.1 -
West South Central 12.0 37.4
Pacific 6.6 -
Middle Atlantic 3.9 -
East South Central 1.6 -
- ------------------------------------------------------------------------------------------------------------
Total 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
Type distribution as of December 31, 1997:
<TABLE>
<CAPTION>
Mortgage Real estate
- --------------------------------------------------------------------------------------------------------
<S> <C>
Office building 19.8% 51.1%
Retail 23.7 21.3
Industrial 21.2 -
Apartments 21.8 25.3
Other 13.5 2.3
- --------------------------------------------------------------------------------------------------------
Total 100.0% 100.0%
- --------------------------------------------------------------------------------------------------------
</TABLE>
Net unrealized gains and losses on investment securities classified as
available-for-sale are reduced by deferred income taxes and adjustments
to the present value of future profits and deferred policy acquisition
costs that would have resulted had such gains and losses been realized.
Net unrealized gains and losses on available-for-sale investment
securities reflected as a separate component of stockholders' equity
are summarized as follows:
<TABLE>
<CAPTION>
Preacquisition
-------------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Net unrealized gains on available-for-sale investment securities before
adjustments:
Fixed maturities $ 154.5 40.5 2.8 143.8
Equity securities 21.0 10.4 5.8 23.2
- --------------------------------------------------------------------------------------------------------------------
Subtotal 175.5 50.9 8.6 167.0
Adjustments to the present value
of future profits and deferred policy
acquisition costs (61.2) (21.1) 9.9 (8.0)
Deferred income taxes (40.0) (10.4) (6.6) (55.9)
- --------------------------------------------------------------------------------------------------------------------
Net unrealized gains on
available-for-sale investment
securities 74.3 19.4 11.9 103.1
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
The source of investment income of the Company is as follows:
<TABLE>
<CAPTION>
Preacquisition
----------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Fixed maturities $ 398.5 274.4 93.1 332.8
Equity securities 7.3 8.7 4.2 10.8
Mortgage loans on real estate 48.3 41.3 13.5 49.8
Short-term investments 1.0 2.5 0.5 3.5
Other investments 22.3 12.9 3.0 13.2
- --------------------------------------------------------------------------------------------------------------
Gross investment income 477.4 339.8 114.3 410.1
Investment expenses (4.9) (5.4) (2.3) (8.0)
- --------------------------------------------------------------------------------------------------------------
Net investment income $ 472.5 334.4 112.0 402.1
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Gross realized investment gains and losses resulting from the sales of
investment securities were as follows:
<TABLE>
<CAPTION>
Preacquisition
---------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C>
Fixed maturities available for sale:
Gross gains $ 8.3 0.6 0.5 12.9
Gross losses - (0.7) (1.4) (90.2)
Fixed maturities held to maturity:
Gross gains - - - 1.1
Gross losses - - - (13.8)
Equity securities 3.4 6.0 10.3 5.6
Mortgage loans on real estate (0.8) - (0.4) 2.3
Other 2.4 0.1 - 5.6
- ---------------------------------------------------------------------------------------------------
Total before tax 13.3 6.0 9.0 (76.5)
Less applicable tax (4.7) (2.3) (1.9) 26.8
- ----------------------------------------------------------------------------------------------------
Total $ 8.6 3.7 7.1 (49.7)
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
The changes in net unrealized gains (losses) on fixed maturities and
equity security investments are as follows:
<TABLE>
<CAPTION>
Preacquisition
-----------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Fixed maturities:
Available for sale $ 114.0 40.5 (141.0) 298.7
Held to maturity - - - 233.7
Equity securities 10.6 10.4 (17.4) 26.1
- --------------------------------------------------------------------------------------------------------------
Net unrealized investment gains (losses) $ 124.6 50.9 (158.4) 558.5
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(3) Income Tax
Beginning April 1, 1996, Life of Virginia and its subsidiary have been
included in the life insurance company consolidated federal income tax
return of GE Capital Assurance and are also subject to a separate
tax-sharing agreement, as approved by state insurance regulators, the
provisions of which are substantially the same as the tax-sharing
agreement with GE Capital. Prior to April 1, 1996, Life of Virginia was
included in the consolidated federal income tax return of Aon and its
principal domestic subsidiaries and in accordance with intercompany
policy, provided taxes on income based on a separate company basis.
Amounts payable or recoverable related to periods before April 1, 1996,
are subject to an indemnification agreement with Aon. As such the
Company is not at risk for any income taxes nor entitled to recoveries
related to those periods.
<PAGE>
(3) Continued
Income taxes are recorded in the statements of income and directly in
stockholders' equity accounts. Income taxes for the years ending
December 31 was allocated as follows:
<TABLE>
<CAPTION>
Preacquisition
-----------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Statement of income:
Operating income (excluding
realized investment gains
and losses) $ 47.5 29.5 5.1 53.9
Realized investment gains/losses 4.7 2.3 1.9 (26.8)
- --------------------------------------------------------------------------------------------------------
Income tax expense included
in the statement of income 52.2 31.8 7.0 27.1
Stockholders' equity:
Unrealized gains/(losses) on
securities available for sale 29.6 10.4 (49.3) 86.0
- --------------------------------------------------------------------------------------------------------
Total $ 81.8 42.2 (42.3) 113.1
- --------------------------------------------------------------------------------------------------------
</TABLE>
The actual federal income tax expense differed from the expected tax
expense computed by applying the U.S. federal statutory rate to income
before income tax expense. A reconciliation of the income tax
provisions based on the statutory corporate tax rate to the provisions
reflected in the consolidated financial statements is as follows:
<TABLE>
<CAPTION>
Preacquisition
------------------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, December 31, December 31,
1997 1996 1996 1995
--------------------- --------------------- -------------------- ---------------------
<S> <C>
Statutory tax rate ..................... $ 50.1 35.0% $ 30.1 35.0% $ 6.6 35.0% $ 23.2 35.0%
Tax-exempt investment income
deductions ............................ ( 0.9) (0.7) ( 1.0) (1.2) -- (0.1) ( 0.1) (0.1)
Adjustment of prior year taxes ......... -- -- -- -- -- -- 3.5 5.3
Other-net .............................. 3.0 2.2 2.7 3.2 0.4 2.1 0.5 0.7
------- ---- ------- ---- ------ ---- ------- ----
Effective tax rate ..................... $ 52.2 36.5% $ 31.8 37.0% $ 7.0 37.0% $ 27.1 40.9%
======= ==== ======= ==== ====== ==== ======= ====
</TABLE>
Significant compnents of Life of Virginia's deffered tax liabilities and
assets are as follows (in millions):
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
<S> <C>
Deferred tax liabilities:
Present value of future profits ......... $ 79.1 89.9
Unrealized investment gains ............. 40.0 10.4
Other ................................... 2.7 6.5
------ -----
Total deferred tax liabilities ........... 121.8 106.7
------ -----
Deferred tax assets:
Insurance reserve amounts ............... 142.9 120.4
Policy acquisition costs ................ 11.8 34.3
Guaranty fund amounts ................... 9.4 10.8
Other ................................... 15.1 14.1
------ -----
Total deferred tax assets ................ 179.2 179.6
------ -----
Net deferred tax assets .................. $ 57.4 72.9
====== =====
</TABLE>
Deferred taxes are allocated to individual subsidiaries by applying the
asset and liability method of accounting for deferred income taxes.
Intercompany balances are settled annually.
<PAGE>
(3) Continued
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax assets will not be realized.
Management believes the deferred tax assets will be fully realized in
the future based on the expectation of the reversal of existing
temporary differences, anticipated future earnings, and consideration
of all other available evidence. Accordingly, no valuation allowance is
established.
The amount of income taxes paid (refunded) for the year ended December
31, 1997, the nine months ended December 31, 1996, three months ended
March 31, 1996, and the year ended December 31, 1995 was $64.4 million,
$38.6 million, $(2.4) million and $44.9 million, respectively.
(4) Reinsurance and Claim Reserves
Life of Virginia is involved in both the cession and assumption of
reinsurance with other companies. Life of Virginia's reinsurance
consists primarily of long-duration contracts that are entered into
with financial institutions and related party reinsurance. Although
these reinsurance agreements contractually obligate the reinsurers to
reimburse the Company, they do not discharge the Company from its
primary liabilities and the Company remains liable to the extent that
the reinsuring companies are unable to meet their obligations.
A summary of reinsurance activity is as follows:
<TABLE>
<CAPTION>
Preacquisition
---------------------------------
Nine months Three months
Year ended ended ended Year ended
December 31, December 31, March 31, December 31,
1997 1996 1996 1995
--------------- --------------- --------------- ---------------
Earned Earned Earned Earned
--------------- --------------- --------------- ---------------
<S> <C>
Direct $ 337.3 210.5 77.2 261.5
Assumed 20.7 6.6 35.0 4.3
Ceded 84.8 62.4 19.8 86.5
- -------------------------------------------------------------------------------------------------------
Net premiums 273.2 154.7 92.4 179.3
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(4) Continued
Due to the nature of the Company's reinsurance contracts, premiums
earned approximate premiums written.
A significant portion of Life of Virginia's ceded premiums relates to
group life and health premiums. Life of Virginia is the primary carrier
for the State of Virginia employees group life and health plan. By
statute, Life of Virginia must reinsure these risks with other Virginia
domiciled companies who wish to participate.
Incurred losses and loss adjustment expenses are net of reinsurance of
$72.7 million, $60.5 million, $17.2 million and $63.1 million for the
year ended December 31, 1997, the nine months ended December 31, 1996,
three months ended March 31, 1996 and the year ended December 31, 1995,
respectively.
In December 1994, Life of Virginia ceded to CICA $406.6 million of its
guaranteed investment contract liabilities. In conjunction with the
liability cession, Life of Virginia transferred to CICA available for
sale fixed maturities with a fair value of $278.1 million and a cost of
$287.2 million and preferred stock with a fair value of $110.5 million
and a cost of $119.7 million.
In January 1995, Life of Virginia ceded to CICA $600 million of its
single premium deferred annuity liabilities. In conjunction with the
liability cession, Life of Virginia transferred to CICA available for
sale fixed maturities with a fair value of $436.1 million and book
value of $501.4 million and held to maturity fixed maturities with a
fair value of $81.4 million and a book value of $95.1 million. In
addition, $5.5 million of accrued income related to the assets above
was transferred to CICA. This transaction resulted in a deferred
reinsurance gain of $77.0 million, $24 million of which was recognized
in 1995. Additionally, Life of Virginia recognized a $79.0 million
realized investment loss.
<PAGE>
(4) Continued
In connection with the sale of the Company, the following transactions
occurred effective January 1, 1996: single premium deferred annuity
liabilities reinsured with CICA in 1995 were recaptured, guaranteed
investment contract liabilities reinsured with CICA in 1994 were
recaptured, other lines of CICA insurance business inforce were
assumed, and other related liabilities of CICA were assumed. In
conjunction with the recapture and assumption, CICA transferred to Life
of Virginia assets with a fair value totaling $842.6 million. For the
three months ended March 31, 1996, premiums of $33.9 million, benefits
of $46.7 million, commission expense of $10.2 million and a capital
contribution of $69.3 million as a result of various reinsurance
transactions. The $53 million deferred reinsurance gain remaining at
December 31, 1995 from the January 1995 single premium deferred annuity
cession to CICA was recognized as a capital contribution. The tables
below summarize the assets and liabilities transferred from CICA to the
Company.
<TABLE>
<CAPTION>
Millions Fair Value
- -----------------------------------------------------------------------------
<S> <C>
Assets transferred:
Fixed maturity $ 727.4
Preferred stock 88.2
Policy loans 14.2
Accrued investment income 10.0
Cash 2.8
- -----------------------------------------------------------------------------
Total 842.6
- -----------------------------------------------------------------------------
Liabilities recaptured and assumed:
Single premium deferred annuity 410.5
Guaranteed investment contracts 212.6
Universal life contracts 156.6
Individual traditional contracts 33.2
Other lines of business inforce 19.9
Other liabilities 16.5
- -----------------------------------------------------------------------------
Total $ 849.3
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
(5) Employee Benefits
Savings Plan
Beginning April 1, 1996, Life of Virginia's salaried and commissioned
employees participated in a General Electric contributory savings plan.
Provisions made for the savings plan were $.9 million and $.6 million
for the year ended December 31, 1997 and the nine months ended December
31, 1996.
Prior to the acquisition on April 1, 1996, Life of Virginia
participated in Aon's contributory savings plan for the benefit of
salaried and commissioned employees. Provisions made for the savings
plan were $.3 million and $.8 million for the three months ended March
31, 1996, and the year ended December 31, 1995, respectively. This plan
terminated upon the acquisition of Life of Virginia by GE Capital.
Employee Stock Ownership Plan
Prior to the acquisition on April 1, 1996, Life of Virginia
participated in Aon's leveraged ESOP for the benefit of salaried and
certain commissioned employees. Contributions to the ESOP for the three
months ended March 31, 1996 and the year ended December 31, 1995
charged to Life of Virginia's operations amounted to $.1 million and
$.5 million, respectively. This plan terminated upon the acquisition of
Life of Virginia by GE Capital.
Pension Plan
Beginning April 1, 1996, Life of Virginia's salaried and commissioned
employees participated in a General Electric contributory defined
benefit pension plan. Generally, benefits are based on the greater of a
formula recognizing career earnings or a formula recognizing length of
service and final average earnings. Benefit provisions are subject to
collective bargaining. General Electric's funding policy is to
contribute amounts sufficient to meet minimum funding requirements as
set forth in employee benefit and tax laws plus such additional amounts
as determined appropriate. The components of net periodic pension cost
and benefit obligations of the General Electric defined benefit plan
are not separately available for Life of Virginia. In connection with
Life of Virginia's participation in the General Electric contributory
defined benefit pension plan a $.6 million and $.4 million expense were
incurred for the year ended December 31, 1997 and the nine months ended
December 31, 1996.
<PAGE>
(5) Continued
Prior to the acquisition on April 1, 1996, Life of Virginia
participated in Aon's non-contributory defined benefit pension plan
providing retirement benefits for salaried employees and certain
commissioned employees based on years of service and salary. Aon's
funding policy was to contribute amounts to the plan sufficient to meet
the minimum funding requirements set forth in the Employee Retirement
Income Security Act of 1974, plus such additional amounts as Aon
determined to be appropriate from time to time. The components of net
periodic pension cost and benefit obligations of the Aon defined
benefit plan were not separately available for Life of Virginia. In
connection with Life of Virginia's participation in the Aon defined
benefit plan, the Company had net pension credits of $1.2 million and
$3.8 million in the three months ended March 31, 1996 and the year
ended December 31, 1995. This plan terminated upon the acquisition of
Life of Virginia by GE Capital.
Postretirement Benefits Other Than Pensions
Beginning April 1, 1996, Life of Virginia's salaried and commissioned
employees participated in a General Electric retiree health and life
insurance benefit plan. The plans principally provides health and life
insurance benefits to employees who retire under the General Electric
pension plan with 10 or more years of service. Retirees share in the
cost of their health care benefits. The funding policy for retiree
health benefits is generally to pay covered expenses as they are
incurred. Expenses incurred by Life of Virginia for the year ended
December 31, 1997 and the nine months ended December 31, 1996 for the
retiree health and life insurance benefit plan were $1.9 million and
$1.3 million, respectively.
Prior to the acquisition on April 1, 1996, Aon sponsored two defined
benefit postretirement health and welfare plans in which Life of
Virginia participated that cover both salaried and nonsalaried
employees. One plan provided medical benefits, prior to and subsequent
to Medicare eligibility, and the other provided life insurance
benefits. The postretirement health care plan was contributory, with
retiree contributions adjusted annually; the life insurance plan was
noncontributory. Both plans were funded on a pay-as-you-go basis. These
plans terminated upon the acquisition of Life of Virginia by GE
Capital.
<PAGE>
(6) Lease Commitments
Life of Virginia has noncancelable operating leases for certain office
space, equipment and automobiles. Future minimum rental payments
required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year at December 31, 1997
are as follows:
<TABLE>
<CAPTION>
(millions) Minimum lease payments
- ------------------------------------------------------------------------
<S> <C>
1998 $ 1.1
1999 0.8
2000 0.5
2001 0.3
2002 -
Later years -
- ------------------------------------------------------------------------
Total minimum payments required $ 2.7
- ------------------------------------------------------------------------
</TABLE>
Rental expense for all operating leases for the year ended December 31,
1997, for the nine months ended December 31, 1996, the three months
ended March 31, 1996 and the year ended December 31, 1995 amounted to
$1.3 million, $2.5 million, $.8 million and $3.6 million, respectively.
(7) Related Party Transactions
Life of Virginia pays investment advisory fees and other fees to
affiliates. Amounts incurred for these items aggregated $7.6 million,
$3.2 million, $3.5 million and $5.8 million for the year ended December
31, 1997, the nine months ended December 31, 1996, the three months
ended March 31, 1996 and the year ended December 31, 1995,
respectively. Life of Virginia charges affiliates for certain services
and for the use of facilities and equipment which aggregated $4.6
million, $2.0 million, $1.0 million, and $10.0 million for the year
ended December 31, 1997, the nine months ended December 31, 1996, the
three months ended March 31, 1996, and the year ended December 31,
1995, respectively.
<PAGE>
(7) Continued
At December 31, 1997 and 1996, Life of Virginia held investments in
securities of certain affiliates amounting to $2.6 million. Amounts
included in net investment income related to these holdings totaled
$0.1 million, $0.1 million, $0.2 million and $1.0 million for the year
ended December 31, 1997, for the nine months ended December 31, 1996,
the three months ended March 31, 1996 and the year ended December 31,
1995, respectively.
In January 1995, Life of Virginia dividend 100% of its Globe Life
Insurance Company ("Globe") common stock to CICA, a subsidiary of Aon.
At December 31, 1994, Globe had assets of $954.9 million, liabilities
of $765.7 million and stockholders' equity of $189.2 million. The fair
value of this dividend was $193.3 million.
In 1995, Life of Virginia received from CICA, in the form of a capital
contribution, fixed maturities with a fair value of $45.0 million.
In January 1995, Life of Virginia transferred limited partnership
investments with a fair value of $8.0 million and book value of $7.5
million, common stocks with a fair value of $5.6 million and book value
of $3.4 million, and cash of $6.4 million to pay a $20.0 million
dividend declared but not paid in 1994. A $2.7 million realized
investment gain was recorded on this transfer.
(8) Litigation
Life of Virginia is subject to numerous claims and lawsuits that arise
in the ordinary course of business. In some of these cases the remedies
that may be sought or damages claimed are substantial, including cases
that seek punitive or extraordinary damages. Accruals for these
lawsuits have been provided to the extent that losses are deemed
probable and are estimable. Although the ultimate outcome of these
suits cannot be ascertained and liabilities in indeterminate amounts
may be imposed on Life of Virginia, on the basis of present
information, availability of insurance coverage, and advice received
from counsel, it is the opinion of management that the disposition or
ultimate determination of such claims and lawsuits will not have a
material adverse effect on the consolidated financial position or
results of operations of Life of Virginia.
<PAGE>
(9) Financial Instruments
Interest Rate Risk Management
Life of Virginia used interest rate swap agreements to manage asset and
liability durations relating to its capital accumulation annuity
business. As of December 31, 1995, these swap agreements had the net
effect of lengthening liability durations. Variable rates received on
interest rate swap agreements correlate with crediting rates paid on
outstanding liabilities. The net effect of swap payments is settled
periodically and reported in income. There was no settlement of
underlying notional amounts.
Life of Virginia performed frequent analyses to measure the degree of
correlation associated with its derivative program. Life of Virginia
assessed the adequacy of the correlation analyses results in
determining whether the derivatives qualify for hedge accounting.
Realized gains and losses on derivatives that qualify as hedges were
deferred and reported as an adjustment of the cost basis of the hedged
item. Deferred gains and losses were amortized into income over the
life of the hedged item. The fair value of swap agreements hedging
liabilities were not recognized in the consolidated statements of
financial position.
These interest rate swaps gave rise to credit risks due to possible
non-performance by counterparties. The credit risk was generally
limited to the fair value of those contracts that were favorable to
Life of Virginia. Life of Virginia limited its credit risk by
restricting investments in derivative contracts to a diverse group of
highly rated major financial institutions. Life of Virginia closely
monitored the credit worthiness of, and exposure to, its counterparties
and considered its credit risk to be minimal.
Life of Virginia had no interest rate swaps outstanding at December 31,
1997 and 1996.
During the three months ended March 31, 1996 and the year ended
December 31, 1995 Life of Virginia amortized $.6 million and $1.4
million, respectively, of net deferred losses relating to interest rate
swaps into income.
As of December 31, 1995, the principal swaps have maturities ranging
from September 1999 to October 2000 and variable rates based on five
year treasury rates. These swaps were terminated prior to March 31,
1996 resulting in a $1.1 million gain which was deferred.
<PAGE>
(9) Continued
Other Financial Instruments
Life of Virginia has certain investment commitments to provide
fixed-rate loans. The investment commitments, which would be
collateralized by related properties of the underlying investments,
involve varying elements of credit and market risk. Investment
commitments outstanding at December 31, 1997 and December 31, 1996,
totaled $16.7 million and $1.7 million, respectively.
Fair Value of Financial Instruments
Accounting standards require the disclosure of fair values for certain
financial instruments. The fair value disclosures are not intended to
encompass the majority of policy liabilities, various other
non-financial instruments, or other intangible items related to Life of
Virginia's business. Accordingly, care should be exercised in deriving
conclusions about Life of Virginia's business or financial condition
based on the fair value disclosures.
The Company has no derivative financial instruments as defined by SFAS
No. 119 at December 31, 1997, other than mortgage loan commitments of
$67.7 million.
<PAGE>
(9) Continued
The carrying amount and fair value of certain of Life of Virginia's
financial instruments are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------------------------------
Carrying Fair Carrying Fair
(millions) Amount Value Amount Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Fixed maturities and
equity securities
(note 2) $ 5,774.3 5,774.3 5,308.2 5,308.2
Mortgage loans on
real estate 496.2 532.2 585.4 622.6
Policy loans 188.4 188.4 179.5 179.5
Cash, short-term
investments and
receivables 138.6 138.6 186.4 186.4
Assets held in separate accounts 4,066.4 4,066.4 2,762.7 2,762.7
- ------------------------------------------------------------------------------------------------------------
Liabilities:
Investment type
insurance contracts 3,113.8 3,100.7 3,055.0 3,027.6
Commissions and
general expenses 51.1 51.1 46.8 46.8
Liabilities related to separate accounts 4,066.4 4,066.4 2,762.7 2,762.7
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Note 1 regarding the method used to estimate fair values.
<PAGE>
1
(10) Stockholders' Equity
Generally, the capital and surplus of Life of Virginia available for
transfer to the Parent are limited to the amounts that the statutory
capital and surplus exceed minimum statutory capital requirements;
however, payments of the amounts as dividends may be subject to
approval by regulatory authorities. The maximum amount of dividends
which can be paid by the Company without prior approval at December 31,
1997, is $51.8 million.
Statutory net income (loss) and stockholders' equity is summarized
below:
<TABLE>
<CAPTION>
Preacquisition
------------------------------
Nine months Three months
Year ended ended ended
December 31, December 31, March 31, December 31,
(millions) 1997 1996 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Statutory net income $ 73.9 69.7 (8.3) 53.9
Statutory stockholders' equity 522.5 419.1 360.5 364.2
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The National Association of Insurance Commissioners has developed
certain Risk Based Capital (RBC) requirements to help regulators
identify life insurers that may be inadequately capitalized. If
prescribed levels of RBC are not maintained, certain actions may be
required on the part of the Company or its regulators. At December 31,
1997 the Company's Total Adjusted Capital and Authorized Control Level
- RBC were above the calculated minimum regulatory thresholds.
<PAGE>
<TABLE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
September 30, 1998
(in millions)
=================================================================================================
Assets
================================================================================================
<S> <C>
Investments:
Fixed maturities:
Available for sale - at fair value (amortized cost:
September 30, 1998 - $5,588.3) $ 5,797.1
Equity securities - at fair value
Common stocks (cost: September 30, 1998 - $101.5) 105.5
Preferred stocks (cost: September 30, 1998 - $65.8) 77.5
Mortgage loans on real estate (net of reserve for losses:
September 30, 1998 - $17.9) 522.8
Real estate (net) 8.5
Policy loans 194.3
Short-term investments 30.0
================================================================================================
Total investments 6,735.7
================================================================================================
Cash 6.0
Receivables:
Premiums and other 14.1
Reinsurance recoverable 20.2
Accrued investment income 124.1
================================================================================================
Total receivables 158.4
================================================================================================
Deferred policy acquisition costs 217.4
Goodwill (net of accumulated amortization: September 30, 1998 - $15.8) 110.3
Present value of future profits (net) 291.3
Property and equipment at cost (net) 3.2
Deferred income taxes 55.3
Other assets 5.4
Assets held in separate accounts 4,618.1
================================================================================================
Total assets $ 12,201.1
================================================================================================
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Balance Sheets, Continued
(Unaudited)
September 30, 1998
(in millions, except share data)
================================================================================================
Liabilities and Stockholders' Equity
=================================================================================================
<S> <C>
Policy liabilities:
Future policy benefits $ 526.6
Policy and contract claims 116.1
Unearned and advance premiums 0.1
Other policyholder funds 5,418.0
================================================================================================
Total policy liabilities 6,060.8
================================================================================================
General liabilities:
Payable to affiliate, net 17.1
Commissions and general expenses 61.0
Current income taxes 59.6
Other liabilities 147.7
Liabilities related to separate accounts 4,618.1
=================================================================================================
Total liabilities 10,964.3
=================================================================================================
Commitments and Contingent Liabilities
================================================================================================
Stockholders' equity:
Common stock - $1,000 par value:
Authorized, issued and outstanding: 4,000 shares 4.0
Additional paid-in capital 925.9
Net unrealized investment gains 99.2
Retained earnings 207.7
=================================================================================================
Total stockholders' equity 1,236.8
=================================================================================================
Total liabilities and stockholders' equity $ 12,201.1
=================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
For the nine months ended September 30, 1998
(in millions)
===============================================================================-
Nine Months
Ended
September 30, 1998
================================================================================
Revenue
Premiums and policy fees $ 193.5
Separate account fees 44.4
Net investment income 360.1
Realized investment gains (losses) 4.1
Other income 1.5
================================================================================
Total revenue earned 603.6
================================================================================
Benefits and Expenses
Benefits to policyholders 380.4
Commissions and general expenses 69.2
Interest expense 1.7
Amortization of intangibles 40.4
Amortization of deferred policy acquisition
costs 13.0
================================================================================
Total benefits and expenses 504.7
Income Before Income Tax 98.9
Provision for income tax
Current expense (benefit) 46.7
Deferred expense (benefit) (10.4)
===============================================================================-
36.3
================================================================================
Net income $ 62.6
================================================================================
See accompanying notes to consolidated financial statements.
3
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
(Unaudited)
For the nine months ended September 30, 1998
(in millions)
================================================================================
Nine Months
Ended
September 30, 1998
================================================================================
Common stock
$1,000 par value common stock, authorized,
issued and outstanding 4,000 in 1998
================================================================================
Balance at beginning and end of period $ 4.0
================================================================================
Additional Paid-in Capital
Balance at beginning and end of period 925.9
================================================================================
Accumulated Non-Owner Changes in Equity
Balance at beginning of period 74.3
Net unrealized investment gains (losses) 24.9
================================================================================
Balance at end of period 99.2
================================================================================
Retained Earnings (Deficit)
Balance at beginning of period 145.1
Net income 62.6
Balance at end of period 207.7
================================================================================
Stockholders' equity at end of period $ 1,236.8
================================================================================
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended September 30, 1998
(in millions)
<TABLE>
================================================================================
Nine Months
Ended
September 30, 1998
================================================================================
<S> <C>
Cash flows from operating activities:
Net income $ 62.6
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Change in policy liabilities 217.2
Change in accrued investment income (1.0)
Deferred policy acquisition costs (78.0)
Amortization of deferred policy acquisition costs 23.0
Amortization of intangibles 40.4
Other amortization and depreciation 1.3
Premiums and operating receivables, commissions and general
expenses, income taxes and other 27.7
Realized investment (gains) losses (4.0)
=====================================================================================
Cash provided by (used in) operating activities 289.2
=====================================================================================
Cash flows from investing activities:
Sale or maturity of investments
Fixed maturities - available for sale
Sales 618.8
All other investments 131.4
Purchase of investments:
Fixed maturities - available for sale (768.5)
All other investments (134.5)
Purchase of property and equipment (0.3)
=====================================================================================
Cash provided by (used in) investing activities (153.1)
=====================================================================================
Cash flows from financing activities:
Change in cash overdrafts (0.9)
Interest sensitive life, annuity and investment contract deposits 1,347.0
Interest sensitive life, annuity and investment contract withdrawals (1,476.4)
=====================================================================================
Cash provided by (used in) financing activities (130.3)
=====================================================================================
Increase (decrease) in cash 5.8
Cash at beginning of period 0.2
=====================================================================================
Cash at end of period $ 6.0
=====================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(1) Summary of Significant Accounting Principles and Practices
The financial results included in this report are stated in conformity with
generally accepted accounting principles and are unaudited but include
normal recurring adjustments considered necessary for a fair presentation
of the results for such periods. These interim figures are not necessarily
indicative of results for a full year.
Statement of Financial Accounting Standards No. 130, REPORTING COMPREHENSIVE
INCOME, was adopted as of January 1, 1998. This Statement requires reporting of
changes in shareholder's interest that do not result directly from transactions
with shareholders. An analysis of these changes follows:
Nine Months Ended
(in millions) September 30, 1998
------------------
Net income 62.6
Unrealized gains on investments securities - net 24.9
----
Total 87.5
====
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (the "Statement").
The Statement requires that, upon adoption, all derivative instruments
(including certain derivative instruments embedded in other contracts) be
recognized in the balance sheet at fair value, and that changes in such fair
values be recognized in earnings unless specific hedging criteria will
ultimately offset related earnings effects of the hedged items; effects of
certain changes in fair value are recorded in other comprehensive income pending
recognition in earnings. The Company will not adopt the Statement until required
to do so on January 1, 2000.
Refer to the consolidated financial statements and notes in the audited
financial statements for the year ended December 31, 1997 for additional details
of Life of Virginia's financial position, as well as a description of the
accounting policies which have continued without change. The details included in
notes have not changed except as a result of normal transactions in the interim.
6
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this Registration
Statement.
(b) Exhibits
<TABLE>
<S> <C>
(1)(a) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of Separate Account 4. 12/
(1)(b) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of additional investment subdivisions of Separate
Account 4, investing in shares of the Asset Manager Portfolio of the
Fidelity Variable Insurance Products Fund II and the Balanced
Portfolio of the Advisers Management Trust. 12/
(1)(c) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of additional investment subdivisions of Separate
Account 4, investing in shares of the Growth Portfolio, the
Aggressive Growth Portfolio, and the Worldwide Growth Portfolio of
the Janus Aspen Series. 12/
(1)(d) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of twenty-two (22) additional subdivisions of Separate
Account 4, investing in shares of Money Market Portfolio, High Income
Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas
Portfolio of the Fidelity Variable Insurance Products Fund; Asset
Manager Portfolio of the Fidelity Variable Insurance Products Fund
II; Money Market Portfolio, Government Securities Portfolio, Common
Stock Index Portfolio, Total Return Portfolio of the Life of Virginia
Series Fund, Inc.; Limited Maturity Bond Portfolio, Growth Portfolio
and Balanced Portfolio of the Neuberger & Berman Advisers Management
Trust; Growth Portfolio, Aggressive Growth Portfolio, and Worldwide
Growth Portfolio of the Janus Aspen Series; Money Fund, High Income
Fund, Bond Fund, Capital Appreciation Fund, Growth Fund, Multiple
Strategies Fund of the Oppenheimer Variable Account Funds. 12/
(1)(e) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of three additional investment subdivisions of Separate
Account 4, investing in shares of the Utility Fund and Corporate Bond
Fund of the Insurance Management Series, and the Contrafund Portfolio
of the Variable Insurance Products Fund II. 12/
(1)(f) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivisions of Separate
Account 4, investing in shares of the International Equity Portfolio
and the Real Estate Securities Portfolio of Life of Virginia Series
Fund. 12/
(1)(g) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of four additional investment subdivisions of Separate
Account 4, investing in shares of the American Growth Portfolio and
the American Small Capitalization Portfolio of The Alger American
Fund, and the Growth Portfolio and Flexible Income Portfolio of the
Janus Aspen Series. 8/
(1)(h) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivisions of Separate
Account 4, investing in shares of the Federated American Leaders Fund
II of the Federated Insurance Series, and the International Growth
Portfolio of the Janus Aspen Series. 9/
(1)(i) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of twelve additional investment subdivisions of
Separate Account 4, investing in shares of the Growth & Income
Portfolio and Growth opportunities Portfolio of Variable Insurance
Products Fund III; Growth II Portfolio and Large Cap Growth Portfolio
of the PBHG Insurance Series Fund, Inc.; Global Income Fund and Value
Equity Fund of GE Investments Funds, Inc.11/
(1)(j) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional investment subdivisions of Separate
Account 4, investing in shares of the Capital Appreciation Portfolio
of the Janus Aspen Series. 11/
(1)(k) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of six additional investment subdivisions of Separate
Account 4, investing in shares of the U.S. Equity Fund of the GE
Investments Funds, Inc., Growth and Income Fund of the Goldman Sachs
Variable Insurance Trust Fund and Mid Cap Equity Fund of Goldman
Sachs Variable Insurance Trust. Further a name change for Oppenheimer
Variable Account Fund Capital Appreciation fund to Oppenheimer
Variable Account Fund Aggressive Growth Fund. 12/
(1)(l) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of Investment Subdivisions investing in shares of the
Salomon Brothers Variable Series Funds, Inc.14/
(l)(m) Resolution of Board of Directors of GE Life & Annuity authorizing the
establishment of ninety-six additional investment subdivisions of
Separate Account 4. 15/
(2) Not applicable.
(3)(a) Underwriting Agreement dated December 12, 1997 between The Life
Insurance Company of Virginia and Capital Brokerage Corporation.12/
(b) Dealer Sales Agreement dated December 13, 1997.12/
(4)(a) Form of Policy. 15/
(b) Endorsements to Policy.
(i) IRA Endorsement 12/
(ii) Pension Endorsement 12/
(iii) Section 403(b) Endorsement 12/
(iv) Guaranteed Minimum Death Benefit Rider 13/
(v) Optional Death Benefit at Death of Annuitant Endorsement 12/
(vi) Endorsement for Waiver of Surrender Charges 13/
(vii) Optional Death Benefit Rider 15/
(5)(a) Form of Application. 12/
(6)(a) Certificate of Incorporation of The Life Insurance Company of
Virginia. 12/
(b) By-Laws of The Life Insurance Company of Virginia. 12/
(7) Not Applicable.
(8)(a) Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation, and The Life Insurance Company of
Virginia. 12/
(b) (i)Amendment to Participation Agreement Referencing Policy Form
Numbers. 12/
(b) (ii)Amendment to Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors Corporation, and The Life
Insurance Company of Virginia. 9/
(b) (iii) Amendment to Participation Agreement among Variable
Insurance Products Fund, Fidelity Distributors Corporation, and The
Life Insurance Company of Virginia. 9/
(c) Agreement between Oppenheimer Variable Account Funds, Oppenheimer
Management Corporation, and The Life Insurance Company of Virginia.
12/
(c)(i) Amendment to Agreement between Oppenheimer Variable Account Funds,
Oppenheimer Management Corporation, and The Life Insurance Company of
Virginia. 12/
(d) Participation Agreement among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and The Life Insurance Company of
Virginia. 12/
(e) Participation Agreement between Janus Capital Corporation and The
Life Insurance Company of Virginia. 12/
(f) Participation Agreement between Insurance Management Series,
Federated Securities Corp., and The Life Insurance Company of
Virginia. 12/
(g) Participation Agreement between The Alger American Fund, Fred Alger and
Company, Inc., and The Life Insurance Company of Virginia. 8/
(h) Participation Agreement between Variable Insurance Products Fund III
and The Life Insurance Company of Virginia. 11/
(i) Participation Agreement between Goldman Sachs Variable Insurance
Trust and The Life Insurance Company of Virginia.11/
(j) Participation Agreement between Salomon Brothers Variable Series
Funds and The Life Insurance Company of Virginia.14/
(k) Participation Agreement between GE Investments Funds, Inc. and The Life
Insurance Company of Virginia. 14/
(9) Opinion and Consent of Counsel.15/
(10)(a) Consent of Counsel.15/
(b) Consent of Independent Auditors.15/
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14) Power of Attorney dated April 16, 1997.11/
</TABLE>
8/Incorporated herein by reference to post-effective amendment number 3 to the
Registrant's registration statement on Form N-4, File No. 33-76334, filed
with the Securities and Exchange Commission on September 28, 1995.
9/Incorporated herein by reference to post-effective amendment number 4 to the
Registrant's registration statement on Form N-4, File No. 33-76334, filed
with the Securities and Exchange Commission on April 30, 1996.
10/Incorporated herein by reference to post-effective amendment number 6 to the
Registrant's registration statement on Form N-4, File No. 33-76334, filed
with the Securities and Exchange Commission on March 24, 1997.
11/Incorporated herein by reference to post-effective amendment number 7 to the
Registrant's registration statement on Form N-4, File No. 33-76334 filed with
the Securities and Exchange Commission on May 1, 1997.
12/Incorporated herein by reference to post-effective amendment number 9 to the
Registrant's registration statement on Form N-4, File No. 33-76334 filed with
the Securities and Exchange Commission on May 1, 1998.
13/Incorporated herein by reference to post-effective amendment number 11 to
the Registrant's registration statement on Form N-4, File No. 33-76334 filed
with the Securities and Exchange Commission on July 17, 1998.
14/Incorporated herein by reference to pre-effective amendment number 1 to the
Registrant's registration statement on Form N-4, File No. 333-62695 filed
with the Securities and Exchange Commission on December 18, 1998.
15/Incorporated herein
Item 25. Directors and Officers of GE Life & Annuity
<TABLE>
<CAPTION>
Positions and Offices with
Name Address Depositor
<S> <C> <C>
Ronald V. Dolan First Colony Life Director and Chairman of the
700 Main Street Board
Lynchburg, VA 24505
Pamela S. Schutz GE Life & Annuity Director and President
6610 W. Broad Street
Richmond, VA 23230
Selwyn L. Flournoy, Jr GE Life & Annuity Director and Senior Vice
6610 W. Broad Street President
Richmond, VA 23230
Robert D. Chinn GE Life & Annuity Director and Senior Vice
6610 W. Broad Street President - Agency
Richmond, VA 23230
Elliot Rosenthal GE Life & Annuity Senior Vice President -
6610 W. Broad Street Investment Products
Richmond, VA 23230
Victor C. Moses GE Financial Assurance Director
601 Union Street, Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff GE Life & Annuity Director
6610 W. Broad Street
Richmond, VA 23230
</TABLE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
<PAGE>
ORGANIZATIONAL CHART
---- GENERAL ELECTRIC
| COMPANY
Other Subsidiaries
(100%)
|
GENERAL ELECTRIC
CAPITAL SERVICES, INC.
|
(100%)
|
GENERAL ELECTRIC
CAPITAL CORPORATION
|
(100%)
|
----- GE FINANCIAL ASSURANCE
| HOLDINGS, INC.
| |
| (100%)
| |
| GNA CORPORATION
| |
|
20% (100%)
| |
| GENERAL ELECTRIC
| CAPITAL ASSURANCE COMPANY
| |
| (80%)
| |
| GE LIFE AND ANNUITY
----- ASSURANCE COMPANY
Item 27. Number of Policyowners
Not applicable.
Item 28. Indemnification
Section 13.1-698 and 13.1-702 of the Code of Virginia, in brief, allow a
corporation to indemnify any person made party to a proceeding because such
person is or was a director, officer, employee, or agent of the corporation,
against liability incurred in the proceeding if: (1) he conducted himself in
good faith; and (2) he believed that (a) in the case of conduct in his official
capacity with the corporation, his conduct was in its best interests; and (b) in
all other cases, his conduct was at least not opposed to the corporation's best
interests and (3) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. The termination of a proceeding by
judgment, order, settlement or conviction is not, of itself, determinative that
the director, officer, employee, or agent of the corporation did not meet the
standard of conduct described. A corporation may not indemnify a director,
officer, employee, or agent of the corporation in connection with a proceeding
by or in the right of the corporation, in which such person was adjudged liable
to the corporation, or in connection with any other proceeding charging improper
personal benefit to such person, whether or not involving action in his official
capacity, in which such person was adjudged liable on the basis that personal
benefit was improperly received by him. Indemnification permitted under these
sections of the Code of Virginia in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
Section 5 of the By-Laws of The Life Insurance Company of Virginia further
provides that:
(a) The Corporation shall indemnify each director, officer and employee of
this Company who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he is or was
a director, officer or employee of the Corporation, or is or was serving at
the request of the Corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgements [sic], fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Corporation, and with
respect to any criminal action, had no cause to believe his conduct unlawful.
The termination of any action, suit or proceeding by judgement [sic], order,
settlement, conviction, or upon a plea of nolo contendere, shall not of itself
create a presumption that the person did not act in good faith, or in a manner
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, believed his conduct unlawful.
<PAGE>
(b) The Corporation shall indemnify each director, officer or employee of the
Corporation who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgement [sic] in its favor by reason of the fact
that he is or was a director, officer or employee of the Corporation, or is or
was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(c) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer or
employee is proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b). Such determination
shall be made (1) by the Board of Directors of the Corporation by a majority
vote of a quorum consisting of the directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders of the
Corporation.
(d) Expenses (including attorneys' fees) incurred in defending an action, suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in subsection (c) upon receipt of an undertaking by or on behalf of
the director, officer or employee to repay such amount to the Corporation
unless it shall ultimately be determined that he is entitled to be indemnified
by the Corporation as authorized in this Article.
(e) The Corporation shall have the power to make any other or further
indemnity to any person referred to in this section except an indemnity
against gross negligence or willful misconduct.
(f) Every reference herein to director, officer or employee shall include
every director, officer or employee, or former director, officer or employee
of the Corporation and its subsidiaries and shall enure to the benefit of the
heirs, executors and administrators of such person.
(g) The foregoing rights and indemnification shall not be exclusive of any
other rights and indemnification to which the directors, officers and
employees of the Corporation may be entitled according to law.
* * *
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to the foregoing provisions, or otherwise, the depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the depositor of expenses incurred
or paid by a director, officer or controlling person of the depositor in
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the depositor will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
(a) Capital Brokerage Corporation is the principal underwriter of the Policies
as defined in the Investment Company Act of 1940, and is also the principal
underwriter for flexible premium variable life insurance policies issued
through GE Life & Annuity Separate Accounts I, II, III and V.
<PAGE>
(b)
<TABLE>
<CAPTION>
Positions and Offices
Name Address with Underwriter
<S> <C> <C>
Scott A. Curtis GE Financial Assurance President and Chief
6610 W. Broad St. Executive Officer
Richmond, VA 23230
Charles A. Kaminski GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Victor C. Moses GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff GE Financial Assurance Senior Vice President
6610 W. Broad St.
Richmond, VA 23230
Mary Catherine Yeagley GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Jeffrey I. Hugunin GE Financial Assurance Treasurer
6604 W. Broad St.
Richmond, VA 23230
John W. Attey GE Financial Assurance Vice President,
7125 W. Jefferson Ave., Counsel
Ste. 200 & Assistant Secretary
Lakewood, CO 80235
Thomas W. Casey GE Financial Assurance Vice President & Chief
6604 W. Broad St. Financial Officer
Richmond, VA 23230
Stephen N. DeVos GE Financial Assurance Vice President &
6604 W. Broad St. Controller
Richmond, VA 23230
Scott A. Reeks GE Financial Assurance Vice President &
6610 W. Broad St. Assistant Treasurer
Richmond, VA 23230
Edward J. Wiles, Jr. GE Financial Assurance Vice President,
777 Long Ridge Rd., Bldg. "B" Counsel & Secretary
Stamford, CT 06927
</TABLE>
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules under it are maintained by GE Life
& Annuity at its executive offices.
Item 31. Management Services
All management contracts are discussed in Part A or Part B of this Registration
Statement.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to this
Registration Statement as frequently as necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16
months old for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
<PAGE>
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to GE Life & Annuity at the address or
phone number listed in the Prospectus.
STATEMENT PURSUANT TO RULE 6c-7
GE Life & Annuity offers and will offer Policies to participants in the Texas
Optional Retirement Program. In connection therewith, GE Life & Annuity and
Account 4 rely on 17 C.F.R. Section 270.6c-7 and represent that the provisions
of paragraphs (a)-(d) of the Rule have been or will be complied with.
SECTION 403(b) REPRESENTATIONS
GE Life & Annuity represents that in connection with its offering of Policies
as funding vehicles for retirement plans meeting the requirements of Section
403(b) of the Internal Revenue Code of 1986, it is relying on a no-action
letter dated November 28, 1988, to the American Council of Life Insurance
(Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the
Investment Company Act of 1940, and that paragraphs numbered (1) through (4)
of that letter will be complied with.
SECTION 26(e)(2)(A) REPRESENTATION
GE Life & Annuity hereby represents that the fees and charges deducted under
the Policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by GE
Life & Annuity .
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, GE Life & Annuity Separate Account 4, has duly caused this
registration statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, in the County
of Henrico in the Commonwealth of Virginia, on the 25th of January, 1999.
GE Life & Annuity Separate Account 4
(Registrant)
By: /s/SELWYN L. FLOURNOY, JR.
---------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
GE Life and Annuity Assurance Company
(Depositor)
By: /s/SELWYN L. FLOURNOY, JR.
---------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
<PAGE>
As required by the Securities Act of 1933, this registration statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
/s/ RONALD V. DOLAN Director, Chairman of the Board 01/22/99
- -------------------
Ronald V. Dolan
/s/PAMELA S. SCHUTZ Director and President 01/22/99
- -------------------
Pamela S. Schutz
/s/SELWYN L. FLOURNOY, JR. Director, Senior Vice President 01/22/99
- --------------------------
Selwyn L. Flournoy, Jr.
/s/ROBERT D. CHINN Director, Senior Vice President 01/22/99
- -------------------
Robert D. Chinn
/s/VICTOR C. MOSES Director 01/22/99
- -----------------
Victor C. Moses
/s/GEOFFREY S. STIFF Director 01/22/99
- --------------------
Geoffrey S. Stiff
By /s/SELWYN L. FLOURNOY, JR, pursuant to Power of Attorney executed on April
16, 1997.
<PAGE>
LIST OF EXHIBITS
(1)(m) Resolution of Board of Directors of GE Life & Annuity authorizing
the establishment of ninety-six additional investment subdivisions
of Separate Account 4.
(4)(a) Form of Policy
(4)(b)(vii) Optional Death Benefit Rider
(9) Opinion and Consent of Counsel
(10)(a) Consent of Counsel
(10)(b) Consent of Auditors
UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF
GE LIFE AND ANNUITY ASSURANCE COMPANY
The undersigned, being all of the members of the Board of Directors of GE Life
and Annuity Assurance Company, a Virginia corporation, in lieu of a meeting held
for the purpose and pursuant to the provisions of Section 13.1-685 of the Code
of Virginia do hereby approve the following resolutions:
WHEREAS, The Board of Directors of the Company, pursuant to the Provisions of
Section 38.2-3113 of the Code of Virginia, adopted resolutions establishing Life
of Virginia Separate Account 4 ("Separate Account 4") on August 19, 1987; and
WHEREAS, The Board of Directors of the Company adopted resolutions changing the
name of the company to GE Life and Annuity Assurance Company and the name of the
separate account to GE Life & Annuity Separate Account 4 on January 1, 1999; and
WHEREAS, The Company wishes to establish ninety-six additional investment
subdivisions of Separate Account 4 which will invest in the shares of Alger
American Small Capitalization Portfolio and American Growth Portfolio of the
Alger American Fund; Equity-Income Portfolio, Growth Portfolio and Overseas
Portfolio of Fidelity Variable Insurance Products Fund; Asset Manager Portfolio
and Contrafund Portfolio of Fidelity Variable Insurance Products Fund II; Growth
& Income Portfolio and Growth Opportunities Portfolio of Fidelity Variable
Insurance Products Fund III; Federated Utility Fund II, Federated High Income
Bond Fund II and Federated American Leaders Fund II of Federated Insurance
Series; Balanced Portfolio, Flexible Income Portfolio, Growth Portfolio,
Aggressive Growth Portfolio, Worldwide Growth Portfolio, International Growth
Portfolio and Capital Appreciation Portfolio of Janus Aspen Series; Money Market
Fund, Income Fund, S&P 500 Index Fund, Total Return Fund, International Equity
Fund, Real Estate Securities Fund, Value Equity Fund and U.S. Equity Fund of GE
Investments Funds, Inc.; Oppenheimer High Income Fund, Oppenheimer Bond Fund,
Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund, and Oppenheimer
Multiple Strategies Fund of Oppenheimer Variable Account Funds; Goldman Sachs
Growth and Income Fund and Goldman Sachs Mid Cap Equity Fund of Goldman Sachs
Assets Management, Inc.
NOW, THEREFORE, BE IT RESOLVED, That the Executive Committee of the Board of
Directors of the Company does hereby establish and create ninety-six additional
investment subdivisions of Separate Account 4. Each of the new subdivisions
shall invest in shares of a single mutual fund portfolio as set forth below:
<TABLE>
<CAPTION>
INVESTMENT SUBDIVISIONS: TO BE INVESTED IN:
<S> <C>
THE ALGER AMERICAN FUND
AAF Small Capitalization - C Alger American Small Capitalization Portfolio
AAF Small Capitalization - D Alger American Small Capitalization Portfolio
AAF Small Capitalization - E Alger American Small Capitalization Portfolio
AAF Growth - C Alger American Growth Portfolio
AAF Growth - D Alger American Growth Portfolio
AAF Growth E Alger American Growth Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FID Equity-Income - C Equity-Income Portfolio
FID Equity-Income - D Equity-Income Portfolio
FID Equity-Income - E Equity-Income Portfolio
</TABLE>
<PAGE>
<TABLE>
<S> <C>
FID Growth - C Growth Portfolio
FID Growth - D Growth Portfolio
FID Growth - E Growth Portfolio
FID Overseas - C Overseas Portfolio
FID Overseas - D Overseas Portfolio
FID Overseas - E Overseas Portfolio
</TABLE>
<PAGE>
<TABLE>
<S> <C>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
FID Asset Manager - C Asset Manager Portfolio
FID Asset Manager - D Asset Manager Portfolio
FID Asset Manager - E Asset Manager Portfolio
FID Contrafund - C Contrafund Portfolio
FID Contrafund - D Contrafund Portfolio
FID Contrafund - E Contrafund Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
FID Growth and Income - C Growth & Income Portfolio
FID Growth and Income - D Growth & Income Portfolio
FID Growth and Income - E Growth & Income Portfolio
FID Growth Opportunities - C Growth Opportunities Portfolio
FID Growth Opportunities - D Growth Opportunities Portfolio
FID Growth Opportunities - E Growth Opportunities Portfolio
FEDERATED INSURANCE SERIES
FED Utility II - C Federated Utility Fund II
FED Utility II - D Federated Utility Fund II
FED Utility II - E Federated Utility Fund II
FED High Income Bond II - C Federated High Income Bond Fund II
FED High Income Bond II - D Federated High Income Bond Fund II
FED High Income Bond II - E Federated High Income Bond Fund II
FED American Leaders II - C Federated American Leaders Fund II
FED American Leaders II - D Federated American Leaders Fund II
FED American Leaders II - E Federated American Leaders Fund II
JANUS ASPEN SERIES
JAN Balanced - C Balanced Portfolio
JAN Balanced - D Balanced Portfolio
JAN Balanced - E Balanced Portfolio
JAN Flexible Income - C Flexible Income Portfolio
JAN Flexible Income - D Flexible Income Portfolio
JAN Flexible Income - E Flexible Income Portfolio
JAN Growth - C Growth Portfolio
JAN Growth - D Growth Portfolio
JAN Growth - E Growth Portfolio
JAN Aggressive Growth - C Aggressive Growth Portfolio
JAN Aggressive Growth - D Aggressive Growth Portfolio
JAN Aggressive Growth - E Aggressive Growth Portfolio
JAN Worldwide Growth - C Worldwide Growth Portfolio
JAN Worldwide Growth - D Worldwide Growth Portfolio
JAN Worldwide Growth - E Worldwide Growth Portfolio
JAN International Growth - C International Growth Portfolio
JAN International Growth - D International Growth Portfolio
JAN International Growth - E International Growth Portfolio
</TABLE>
<PAGE>
<TABLE>
<S> <C>
JAN Capital Appreciation - C Capital Appreciation Portfolio
JAN Capital Appreciation - D Capital Appreciation Portfolio
JAN Capital Appreciation - E Capital Appreciation Portfolio
GE INVESTMENTS FUNDS, INC.
GEI Money Market - C Money Market Fund
GEI Money Market - D Money Market Fund
GEI Money Market - E Money Market Fund
GEI Income Fund - C Income Fund
GEI Income Fund - D Income Fund
GEI Income Fund - E Income Fund
GEI S&P 500 Index - C S&P 500 Index Fund
GEI S&P 500 Index - D S&P 500 Index Fund
GEI S&P 500 Index - E S&P 500 Index Fund
GEI Total Return - C Total Return Fund
GEI Total Return - D Total Return Fund
GEI Total Return - E Total Return Fund
GEI International Equity - C International Equity Fund
GEI International Equity - D International Equity Fund
GEI International Equity - E International Equity Fund
G
GEI Real Estate Securities - C Real Estate Securities Fund
GEI Real Estate Securities - D Real Estate Securities Fund
GEI Real Estate Securities - E Real Estate Securities Fund
GEI Value Equity - C Value Equity Fund
GEI Value Equity - D Value Equity Fund
GEI Value Equity - E Value Equity Fund
GEI U.S. Equity - C U.S. Equity Fund
GEI U.S. Equity - D U.S. Equity Fund
GEI U.S. Equity - E U.S. Equity Fund
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPP High Income - C Oppenheimer High Income Fund
OPP High Income - D Oppenheimer High Income Fund
OPP High Income - E Oppenheimer High Income Fund
OPP Bond - C Oppenheimer Bond Fund
OPP Bond - D Oppenheimer Bond Fund
OPP Bond - E Oppenheimer Bond Fund
OPP Aggressive Growth - C Oppenheimer Aggressive Growth Fund
OPP Aggressive Growth - D Oppenheimer Aggressive Growth Fund
OPP Aggressive Growth - E Oppenheimer Aggressive Growth Fund
OPP Growth - C Oppenheimer Growth Fund
OPP Growth - D Oppenheimer Growth Fund
OPP Growth - E Oppenheimer Growth Fund
</TABLE>
<PAGE>
<TABLE>
<S> <C>
OPP Multi Strategies - C Oppenheimer Multiple Strategies Fund
OPP Multi Strategies - D Oppenheimer Multiple Strategies Fund
OPP Multi Strategies - E Oppenheimer Multiple Strategies Fund
GOLDMAN SACHS ASSET MANAGEMENT, INC.
GSF Growth and Income - C Goldman Sachs Growth and Income Fund
GSF Growth and Income - D Goldman Sachs Growth and Income Fund
GSF Growth and Income - E Goldman Sachs Growth and Income Fund
GSF Mid Cap Equity - C Goldman Sachs Mid Cap Equity Fund
GSF Mid Cap Equity - D Goldman Sachs Mid Cap Equity Fund
GSF Mid Cap Equity - E Goldman Sachs Mid Cap Equity Fund
</TABLE>
FURTHER RESOLVED, That the President, or any Senior Vice President, and each of
them, with full power to act without the others, are hereby severally authorized
to execute whatever agreement or agreements may be necessary or appropriate to
enable such investments to be made, and the Board of Directors hereby ratifies
of any such officer in executing any such agreement prior to the date of these
resolutions; and
FURTHER RESOLVED, That the President or any Senior Vice President, and each of
them, with full power to act without the others, are hereby severally authorized
to execute and deliver such other documents and do such acts and things as each
or any of them may deem necessary or desirable to carry out the foregoing
resolutions and the intent and purposes thereof.
FURTHER RESOLVED, That these resolutions shall take effect as of January ____,
1999.
- ------------------------- ----------------------------
Robert D. Chinn Ronald V. Dolan
- ------------------------- ----------------------------
Selwyn L. Flournoy, Jr. Victor C. Moses
- ------------------------- ----------------------------
Pamela S. Schutz Geoffrey S. Stiff
Exhibit 4(a)
Form of Policy
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
[LIFE OF
VIRGINIA
LOGO]
To the policyowner:
Please read your policy carefully. This policy is a legal contract between
you and the Company. You, the owner, have benefits and rights described
in this policy. The annuitant is named in the policy. We will make income
payments beginning on the Maturity Date, if the annuitant is still living
on that date.
THIS POLICY'S INCOME PAYMENTS DEPEND ON THE ACCOUNT VALUE. ACCOUNT VALUE
MAY BE ALLOCATED TO THE SEPARATE ACCOUNT, AND THE GUARANTEE ACCOUNT, IF
AVAILABLE. THE ACCOUNT VALUE IN THE SEPARATE ACCOUNT IS BASED ON THE
INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND MAY INCREASE OR DECREASE DAILY.
IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT. ACCOUNT VALUE IN THE GUARANTEE
ACCOUNT, IF AVAILABLE, IS GUARANTEED BY THE COMPANY AS TO DOLLAR AMOUNT.
RIGHT TO CANCEL. You may return this policy to our home office within 10
days after its delivery for a refund. The amount of the refund will equal
the account value with any adjustments required by applicable law or
regulation.
For The Life Insurance Company of Virginia
/s/ Ronald U. Dolan /s/ Pamela S. Schutz
-------------------------- ---------------------------
CHAIRMAN PRESIDENT
o Flexible Premium Variable Deferred Annuity
o Income payments beginning at maturity
o No Dividends
o Some benefits reflect investment results
THE LIFE INSURANCE
COMPANY OF VIRGINIA
6610 West Broad Street, Richmond, Virginia 23230
A Stock Company
<PAGE>
P0LICY DATA
SCHEDULE OF BENEFITS SCHEDULE OF PURCHASE PAYMENTS
AMOUNT PAYABLE
ANNUITY $70,000.00 INITIAL PURCHASE PAYMENT
INITIAL PURCHASE PAYMENT: $70,000.00
MINIMUM ADDITIONAL PURCHASE PAYMENT: $1,000.00
MINIMUM PARTIAL SURRENDER: $500.00 WITH AN ACCOUNT VALUE AFTER THE
SURRENDER OF NO LESS THAN $10,000.00
MINIMUM ACCOUNT VALUE ALLOWED TO REMAIN IN AN INVESTMENT OPTION AFTER A TRANSFER
FROM THAT INVESTMENT OPTION IS $100.00.
ENHANCED PREMIUM RATE: 3%
DEATH BENEFIT PERIOD:
INITIAL: FIRST POLICY YEAR
SUBSEQUENT: EACH SUCCESSIVE POLICY YEAR PERIOD FOLLOWING THE
INITIAL PERIOD
GUARANTEED MINUMUM DEATH BENEFIT (RIDER FORM P5103)
ANNUAL RATE: 6%
ANNUAL OPTIONAL DEATH BENEFIT CHARGE: 0.25%
CHARGES:
PREMIUM TAX RATE: 0.00%
MORTALITY AND EXPENSE CHARGE: 1.30% ANNUALLY (.003585% DAILY)
ADMINISTRATIVE EXPENSE CHARGE: 0.25% ANNUALLY (.000686% DAILY)
ANNUAL POLICY MAINTENANCE CHARGE: $25.00
WAIVED IF TOTAL PURCHASE PAYMENTS EXCEED $10,000 OR GREATER AT TIME THE
CHARGE IS DUE.
TRANSFER CHARGE: $10.00
FOR BASE POLICY EXCLUDING ANY RIDERS
OWNER THE ANNUITANT
ANNUITANT JANE DOE FEMALE 78 AGE LAST BIRTHDAY
POLICY NUMBER 000000000
POLICY DATE NOVEMBER 1, 1998 NOVEMBER 1, 2053 MATURITY DATE
PLAN FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
<PAGE>
POLICY NUMBER [0000000]
SEPARATE ACCOUNT 4
INVESTMENT OPTIONS
INVESTMENT SUBDIVISIONS ARE INVESTED IN
AAF SMALL CAPITALIZATION-C THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION
PORTFOLIO
AAF GROWTH-C ALGER AMERICAN GROWTH PORTFOLIO
[FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FID EQUITY-INCOME-C EQUITY-INCOME PORTFOLIO
FID GROWTH-C GROWTH PORTFOLIO
FID OVERSEAS-C OVERSEAS PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
FID ASSET MANAGER-C ASSET MANAGER PORTFOLIO
FID CONTRAFUND-C CONTRAFUND PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
FID GROWTH AND INCOME-C GROWTH & INCOME PORTFOLIO
FID GROWTH OPPORTUNITIES-C GROWTH OPPORTUNITIES PORTFOLIO
FEDERATED INSURANCE SERIES
FED UTILITY II-C FEDERATED UTILITY FUND II
FED HIGH INCOME BOND II-C FEDERATED HIGH INCOME BOND FUND II
FED AMERICAN LEADERS II-C FEDERATED AMERICAN LEADERS FUND II
JANUS ASPEN SERIES
JAN BALANCED-C BALANCED PORTFOLIO
JAN FLEXIBLE INCOME-C FLEXIBLE INCOME PORTFOLIO
JAN GROWTH-C GROWTH PORTFOLIO
JAN AGGRESSIVE GROWTH-C AGGRESSIVE GROWTH PORTFOLIO
JAN WORLDWIDE GROWTH-C WORLDWIDE GROWTH PORTFOLIO
JAN INTERNATIONAL GROWTH-C INTERNATIONAL GROWTH PORTFOLIO
JAN CAPITAL APPRECIATION-C CAPITAL APPRECIATION PORTFOLIO
GE INVESTMENTS FUNDS, INC.
GEI MONEY MARKET-C MONEY MARKET FUND
GEI INCOME FUND-C INCOME FUND
GEI S&P 500 INDEX-C* S&P 500 INDEX FUND
GEI TOTAL RETURN-C TOTAL RETURN FUND
GEI INTERNATIONAL EQUITY-C INTERNATIONAL EQUITY FUND
GEI REAL ESTATE SECURITIES-C REAL ESTATE SECURITIES FUND
GEI VALUE EQUITY-C VALUE EQUITY FUND
GEI U.S. EQUITY-C U.S. EQUITY FUND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPP HIGH INCOME-C OPPENHEIMER HIGH INCOME FUND
OPP BOND-C OPPENHEIMER BOND FUND
OPP AGGRESSIVE GROWTH-C OPPENHEIMER AGGRESSIVE GROWTH FUND
OPP GROWTH-C OPPENHEIMER GROWTH FUND
OPP MULTI STRATEGIES-C OPPENHEIMER MULTIPLE STRATEGIES FUND
GOLDMAN SACHS ASSET MANAGEMENT, INC.
GSF GROWTH AND INCOME-C GOLDMAN SACHS GROWTH AND INCOME FUND
GSF MID CAP EQUITY-C GOLDMAN SACHS MID CAP EQUITY FUND
<PAGE>
INVESTMENT SUBDIVISIONS ARE INVESTED IN
SALOMON BROTHERS FUND
SAL INVESTORS-C SALOMON BROTHERS VARIABLE INVESTORS FUND
SAL TOTAL RETURN-C SALOMON BROTHERS VARIABLE TOTAL RETURN
FUND
SAL STRATEGIC BOND-C SALOMON BROTHERS VARIABLE STRATEGIC BOND
FUND]
GUARANTEE ACCOUNT:
MINIMUM GUARANTEED INTEREST RATE: [3%]
THE PORTION OF EACH PURCHASE PAYMENT AND EACH ENHANCED PREMIUM AMOUNT ALLOCATED
TO ANY PARTICULAR INVESTMENT OPTION MUST BE AT LEAST [1%].
YOU MAY ALLOCATED YOUR ACCOUNT VALUE TO AS MANY AS [TEN] INVESTMENT
SUBDIVISIONS. CONSULT THE PROSPECTUS FOR INVESTMENT DETAILS.
* "STANDARD & POOR'S," "S&P," "S&P 500," "STANDARD & POOR'S 500," AND "500"
ARE TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR
USE BY GE INVESTMENT MANAGEMENT INCORPORATED. THE S&P 500 INDEX FUND IS NOT
SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S
MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE FUND.
<PAGE>
POLICY NUMBER: [0000000]
TABLE OF SURRENDER CHARGES
YEARS SURRENDER CHARGE PERCENTAGE
1 [8]
2 [8]
3 [7]
4 [6]
5 [5]
6 [4]
7 [3]
8 [2]
YEARS 9 AND LATER [0]
[THE UNADJUSTED DEATH BENEFIT WILL BE ADJUSTED FOR PARTIAL SURRENDERS
PROPORTIONALLY BY THE SAME PERCENTAGE THAT THE SURRENDER REDUCED THE
ACCOUNT VALUE.]
<PAGE>
TABLE OF CONTENTS
Policy Date..................................................
Definitions..................................................
Introduction.................................................
Owner, Annuitant and Beneficiary Provisions..................
Death Provisions.............................................
Purchase Payments............................................
Monthly Income Benefit.......................................
Separate Account.............................................
Account Value Benefits.......................................
General Information..........................................
Optional Payment Plans.......................................
Copies of any application, riders and endorsements follow page.
DEFINITIONS
ACCOUNT VALUE - The sum of the values allocated to each Investment Option.
ACCUMULATION UNIT - Unit of measure used in calculating the Account Value in the
Separate Account prior to the Maturity Date.
AGE - The Age of the Annuitant as of the Policy Date as shown on the policy data
pages.
ANNUITANT - The person named on the policy data pages whose Age and, where
appropriate, sex are used in determining the amount of the monthly income
benefits.
ANNUITY UNIT - Unit of measure used in determining the amount of the second and
each subsequent Variable income payment.
ASSUMED INTEREST RATE - Interest rate used in calculating the Variable Income
Payment amounts.
BENEFICIARY - The person(s) or entity named in any application.
THE COMPANY - The Life Insurance Commpany of Virginia. "We", "us" or "our"
refers to the Company.
CONTINGENT ANNUITANT - The person named by the Owner who at the death of the
Annuitant prior to the Maturity Date may become the Annuitant in certain
circumstances. (See Death Provisions.)
DEATH BENEFIT - The benefit provided under the Policy upon the death of an
Annuitant prior to the Maturity Date.
DESIGNATED BENEFICIARY - The person or entity designated in the Policy who on
the date of an Owner's, Joint Owner's or Annuitant's death will be thereafter
as the sole Owner of the Policy. (See Death Benefits section.)
ENHANCED PREMIUM AMOUNT - An amount equal to the enhanced premium rate as shown
on the policy data pages applied to any Purchase Payment.
FIXED INCOME PAYMENTS - Income payments that are supported by the General
Account and which do not vary in amount based on the investment experience of
the Separate Account.
FUND - Any open-end management investment company or investment portfolio
thereof, or unit investment trust or series thereof, in which an Investment
Subdivision invests.
GENERAL ACCOUNT - Assets of the Company other than those allocated to the
Separate Account or any other separate account of the Company.
GUARANTEE ACCOUNT - If available by rider, amounts allocated under this Policy
to be held in our General Account.
HOME OFFICE - The Company's offices at 6610 West Broad Street, Richmond,
Virginia 23230.
<PAGE>
INCOME PAYMENT - One of a series of payments made under either the Monthly
Income Benefit or one of the Optional Payment Plans.
INVESTMENT OPTIONS - Any available Guarantee Account and the Separate Account
Investment Subdivision(s) shown on the policy data pages.
INVESTMENT SUBDIVISION - A subdivision of the Separate Account, the assets of
which are invested exclusively in a corresponding Fund.
MATURITY DATE - The date stated on the policy data pages, unless changed after
issue, on which income payments are scheduled to commence, if the Annuitant is
living on that date.
MATURITY VALUE - The Surrender Value on the day immediately preceding the
Maturity Date.
OPTIONAL PAYMENT PLAN - A plan whereby any part of a Death Benefit, Surrender
Value or Maturity Value can be left with us to provide income payments to a
Payee.
OWNER/JOINT OWNERS - The person(s) or entity entitled to receive income payments
after the Maturity Date. The Owner or Joint Owners are also entitled to the
ownership rights stated in the Policy during the lifetime of the Annuitant and
are shown on the policy data pages and in any application. "You" or "your"
refers to the Owner or Joint Owners.
PAYEE - Person or entity entitled to receive income payments under an
Optional Payment Plan.
POLICY - This contract with any attached application and any riders and
endorsements.
POLICY DATE - Date the Policy is issued and becomes effective. The Policy Date
is shown on the policy data pages and is used to determine policy years and
anniversaries.
PURCHASE PAYMENT - A payment received by the Company and applied to this Policy.
When used in connection with this Policy, the term "Purchase Payment" means the
same as the term "premium payment".
SEPARATE ACCOUNT - The segregated asset account of the Company shown on the
policy data pages.
SURRENDER VALUE - The Account Value on the date we receive written request for
surrender in our Home Office less any surrender charge and any applicable
premium tax.
VALUATION DAY - For each Investment Subdivision, each day on which the New York
Stock Exchange is open for business except for days that the Investment
Subdivision's corresponding Fund does not value its shares.
VALUATION PERIOD - Period that starts at the close of regular trading on the
New York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next succeeding Valuation Day.
VARIABLE INCOME PAYMENTS - Income payments that vary in amount from one income
payment to the next based on the investment experience of one or more
Investment Subdivisions.
INTRODUCTION
This is a flexible premium variable deferred annuity policy. The initial
Purchase Payment is due on the Policy Date. Additional Purchase Payments may be
paid at any time before the Maturity Date. In return for these Purchase Payments
and any application, we provide certain benefits.
The Policy provides a monthly income beginning on the Maturity Date. The amount
of monthly income will depend on:
o the Maturity Value;
o the amount of any applicable premium tax;
o the Annuitant's sex, where appropriate, and settlement age on the
Maturity Date; and
o the payment plan chosen.
See Optional Payment Plans section for the payout plans available. See
conditions described in the Death Provisions section for details regaring
payment or the continuation of the Policy at the death of the Owner, Joint Owner
or Annuitant prior to the Maturity Date.
<PAGE>
The Policy and Its Parts
This Policy is a legal contract. It is the entire contract between you and us.
An agent cannot change this contract. Any change to it must be in writing and
approved by us. Only an authorized officer can give our approval. READ THIS
POLICY CAREFULLY.
All statements in any application are considered representations and not
warranties.
We reserve the right to amend this Policy as needed to maintain its status
as an annuity under the Internal Revenue Code. If the Policy is amended, we will
send you a copy of the amendment complying with the requirements imposed by the
Internal Revenue Service ("IRS"). This Policy is intended to constitute an
annuity within the meaning of the Internal Revenue Code, and its provisions
should be interpreted consistently with this intent.
OWNER, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
The Owner
You have rights while this Policy is in force, subject to the rights of any
Beneficiary named irrevocably, and any assignee under an assignment filed with
us.
Joint Owners own the Policy equally with the right of survivorship. Right of
survivorship means that if a Joint Owner dies, his or her interest in the Policy
will pass to the surviving Joint Owner. Disposition of the Policy upon death of
an Owner is subject to the Death Provisions.
The Annuitant
The Policy names you or someone else as the Annuitant. The Contingent Annuitant
can be named in the application, if any, for this Policy or by sending a written
request to our Home Office. At the death of the Annuitant prior to the Maturity
Date, the Contingent Annuitant, if any, may become the Annuitant in certain
circumstances. (See Death Provisions). If no Contingent Annuitant is alive, the
Owner (if a natural person, otherwise, the Joint Owner, if a natural person)
will be the Contingent Annuitant.
The Beneficiary
The primary beneficiary and any contingent beneficiary can be named in the
application, if any, for this Policy or by sending a written request to our Home
Office.
Changing the Owner, Contingent Annuitant or Beneficiary
During the Annuitant's life, you can change the Owner, the Contingent Annuitant
and any Beneficiary if you reserved this right. A person named irrevocably may
be changed only with that person's written consent. To make a change, send a
written request to our Home Office. The request and the change must be in a form
satisfactory to us. The change will take effect as of the date you sign the
request. The change will be subject to any transaction we execute before we
record the change. Except as described above, the Annuitant cannot be changed.
Using the Policy as Collateral for a Loan
This Policy may be assigned as collateral security for a loan. We must be
notified in writing if you assign the Policy. Any payment we make before we
record the assignment at our Home Office will not be affected. We are not
responsible for the validity of an assignment. Your rights and the rights of a
Beneficiary may be affected by an assignment. The basic benefits of the Policy
are assignable. Additional benefits added by any rider may or may not be
available/eligible for assignment.
Trustee
If a trustee is named as the Owner or Beneficiary of this Policy and
subsequently exercises ownership rights or claims benefits hereunder, we will
have no obligation to verify that a trust is in effect or that the trustee is
acting within the scope of his/her authority. Payment of policy benefits to the
trustee will release us from all obligations under the Policy to the extent of
the payment. When we make a payment to the trustee, we will have no obligation
to ensure that such payment is applied according to the terms of the trust
agreement.
6
<PAGE>
DEATH PROVISIONS
- --------------------------------------------------------------------------------
When a Distribution Is Required
In certain circumstances, federal tax law requires that distributions be made
under this Policy. Except as described below, a distribution is required at the
first death of:
(a) an Owner or Joint Owner; or
(b) the Annuitant if any Owner is a non-natural entity.
The amount of proceeds available upon death and the methods available for
distributing such proceeds are also described in this section.
Designated Beneficiary
At the first death of a) an Owner or Joint Owner, or b) the Annuitant if any
Owner is a non-natural entity, the person or entity first listed below who is
alive or in existence on the date of that death will become the Designated
Beneficiary:
(1) Owner or Joint Owners
(2) primary beneficiary
(3) contingent beneficiary
(4) Owner's estate
The Designated Beneficiary will be treated thereafter as the sole Owner of the
Policy and may choose one of the Payment Choices below, subject to the
distribution rules stated below. For purposes of this section, if there is more
than one Designated Beneficiary, each one will be treated separately with
respect to their portion of the Policy.
Distribution Rules When Death Occurs Before Income Payments Begin
If the Designated Beneficiary is the surviving spouse of the deceased person, we
will continue the Policy in force with the surviving spouse as the new Owner. If
the deceased person was the Annuitant and there was no surviving Contingent
Annuitant, the surviving spouse will automatically become the new Annuitant. At
the death of the surviving spouse, this provision may not be used again. The
provision below regarding If the Designated Beneficiary is not the surviving
spouse must be used instead.
If the Designated Beneficiary is not the surviving spouse of the deceased
person, this Policy cannot be continued in force indefinitely. Instead, after
the date of death:
o No further Purchase Payments will be accepted.
o Payments must be made to, or for the benefit of, the Designated
Beneficiary under one of the Payment Choices listed below.
o If no choice is made by the Designated Beneficiary within 30 days
following receipt of due proof of death, we will use Payment Choice 2.
o If the Designated Beneficiary dies before the entire Surrender Value has
been distributed, we will pay in a lump sum payment any Surrender Value
still remaining to the person named by the Designated Beneficiary or, if
no person is so named, to the Designated Beneficiary's estate.
Payment Choices:
(1) Receive the Surrender Value in one lump sum payment upon receipt of due
proof of death;
(2) Receive the Surrender Value at any time during the five year period
following the date of death by partially or totally surrendering the
Policy. At the end of that five year period, we will pay in a lump sum
payment any Surrender Value still remaining;
(3) Apply the Surrender Value to provide an income under Optional Payment
Plan 1 or 2. The first income payment must be made no later than one
year after the date of death. The income payment period must be either
(1) the lifetime of the Designated Beneficiary, or (2) a period not
exceeding the Designated Beneficiary's life expectancy.
Under Payment Choices (1) and (2), this Policy will terminate upon payment of
the entire Surrender Value. Under Payment Choice (3), this Policy will terminate
when the Surrender Value is applied to the Optional Payment Plan. Due proof of
death must be provided within 90 days of death.
7
<PAGE>
Proceeds When Death Occurs Before Income Payments Begin
If an Owner or Joint Owner dies and that person is someone other than the
Annuitant, the amount of proceeds available is the Surrender Value. We will
distribute the Surrender Value to, or for the benefit of, the Designated
Beneficiary as described previously in this section.
If the Annuitant dies, regardless of whether he/she is also an Owner or Joint
Owner of the Policy, the amount of proceeds available is the Death Benefit. Upon
receipt of due proof of the Annuitant's death, the Death Benefit will constitute
the new Surrender Value and will be treated in accordance with instructions
provided by the Owner, subject to distribution rules and termination of contract
provisions described above.
Death Benefit Available at Death of Annuitant
The Death Benefit will equal the amount of proceeds available as calculated
below.
Actual Amount of Proceeds Payable. The actual amount of proceeds payable will
equal the Death Benefit. The Death Benefit is calculated as of the date we
receive a request for distribution by adding (a) and (b) where:
(a) is the Account Value as of the date we receive the request for
distribution of proceeds or the date we receive due proof of death, if
later; and
(b) is the excess, if any, of the Unadjusted Death Benefit as of the date
of the Annuitant's death over the Account Value as of the date of the
Annuitant's death, with interest credited on that excess from the date
of the Annuitant's death to the date of distribution.
Unadjusted Death Benefit Calculation
If the death occurs prior to the policy anniversary the Annuitant reaches age
81,
o During the initial death benefit period, as shown on the policy data
pages, the Unadjusted Death Benefit will be the greater of items (1)
and (2) defined below.
o During any subsequent death benefit period, as shown on the policy data
pages, the Unadjusted Death Benefit will be the greatest of items (1),
(2) and (3) defined below.
If the death occurs on or after the policy anniversary the Annuitant reaches age
81,
o the Unadjusted Death Benefit will be the Account Value as of the
Annuitant's date of death.
As used in calculating the Unadjusted Death Benefit described above, items (1),
(2) and (3) are defined as:
(1) The Account Value of the Policy as of the Annuitant's date of death.
(2) The total of Purchase Payments paid adjusted for any applicable premium
tax and any partial surrenders.
(3) The Unadjusted Death Benefit on the last day of the preceding death
benefit period, plus any Purchase Payments paid since then, adjusted
for any applicable premium tax and any partial surrenders. As used in
this provision, the death benefit period is defined as the period of
time commencing with the Policy Date through the end of the initial
death benefit period and every subsequent death benefit period
thereafter.
The adjustment for partial surrenders is described on the policy data pages.
Distribution Rules When Death Occurs After Income Payments Begin
If an Owner, Joint Owner, Annuitant, or Payee dies after income payments have
begun, the entire interest remaining in the Policy will be distributed at least
as rapidly as under the method of distribution being used on the date of death.
Under this scenario, "entire interest" means any guaranteed payments remaining
under the payment plan in effect on the date of death.
PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
The initial Purchase Payment is due on the Policy Date.
Additional Purchase Payments
You may make additional Purchase Payments at any time before the Maturity Date.
The minimum
8
<PAGE>
amount allowed as an additional Purchase Payment is defined on the policy data
pages.
When and Where to Send Purchase Payments
Each Purchase Payment is payable in advance. Send each Purchase Payment to our
Home Office. Make any checks or money orders payable to The Life Insurance
Company of Virginia.
Allocations
You may allocate Purchase Payments and your Enhanced Premium Amount to one or
more Investment Options. The maximum number of Investment Option allocations
allowed is shown on the policy data pages. The minimum percentage of each
Purchase Payment and each Enhanced Premium Amount that may be allocated to any
particular Investment Option is also provided on the policy data pages.
Allocations will be made in accordance with your instructions we have on file.
You may change the allocation of later Purchase Payments and Enhanced Premium
Amounts at any time, without charge, by sending a notice to us at our Home
Office. The notice must be in writing or in any form acceptable to us. The
allocation will apply to Purchase Payments received and Enhanced Premium Amounts
credited after we receive the change.
We add an Enhanced Premium Amount to each Purchase Payment we receive. This
amount is funded from our General Account and is provided at no cost to you. For
each Purchase Payment you make, we will add a percentage (shown on the policy
data pages) of that Purchase Payment to your Account Value. The Enhanced Premium
Amount is applied when your Purchase Payment is applied to your Account Value,
and is allocated on a prorata basis to the Investment Options you selected in
the same ratio as the applicable Purchase Payment.
MONTHLY INCOME BENEFIT
- --------------------------------------------------------------------------------
We will pay you a monthly income for a guaranteed minimum period beginning on
the Maturity Date if the Annuitant is still living. The monthly income will be a
Variable income payment similar to that described in the provision titled
"Variable Income Options" under the Optional Payment Plans section. Payments
will be made automatically under a Life Income with 10 Years Certain plan,
unless you choose otherwise.
Under the Life Income 10 Years Certain plan, if the Annuitant lives longer than
10 years, payments will continue for his or her life. If the Annuitant dies
before the end of ten years, the remaining payments for the ten year period will
be discounted at the same rate used to calculate the monthly income. The
discounted amount will be paid in one sum to you.
At any time, while the Annuitant is living, and before the Maturity Date, you
may choose to change the payment plan by written request. If you do choose a
different plan, the monthly income will reflect the plan chosen. Payment plans
which base payment on the life or lives of one or more individuals will base
such payment on the life of the Annuitant or the Annuitant and an additional
individual. You may elect to receive the Maturity Value in a lump sum instead of
receiving a monthly income. If we pay the Maturity Value, in a lump sum, we will
have no further obligation under the Policy.
The initial income payment under the automatic payment plan, payable monthly, is
calculated by multiplying (a) times (b), divided by (c) where:
(a) is the monthly payment rate per $1000, shown under the Optional Payment
Plans for Life Income 10 years Certain, using the sex, if appropriate,
and settlement age of the Annuitant, instead of the Payee, on the
Maturity Date;
(b) is the Maturity Value; and
(c) is $1000.
Income payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by written request. However, if any payment made more
frequently than annually would be or becomes less than $100, we reserve the
right to reduce the frequency of payments to an interval that would result in
each payment being at least $100. If the annual payment payable at maturity is
less than $20, we will pay the Maturity Value and the Policy will terminate
effective as of the Maturity Date.
9
<PAGE>
Maturity Date
The Maturity Date is provided on the policy data pages, unless changed after
issue. You may change the Maturity Date to any date at least ten years after the
date of the last Purchase Payment. The Maturity Date cannot be a date later than
the policy anniversary on which the Annuitant reaches age 90, unless a later
date is approved by the Company. To make a change, send us written notice before
the Maturity Date then in effect. If you change the Maturity Date, Maturity Date
will then mean the new Maturity Date you selected.
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
The Separate Account named on the policy data pages supports the operation of
this Policy and certain other variable annuity policies we may offer. We will
not allocate assets to the Separate Account to support the operation of any
contracts or policies that are not variable annuities.
We own the assets in the Separate Account. These assets are held separately from
our other assets and are not part of our General Account.
The Separate Account is registered with the Securities and Exchange Commission
("SEC") as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to laws of the Commonwealth of Virginia which
regulate the operations of insurance companies incorporated in Virginia. The
investment policies of the Separate Account will not be changed without the
approval of the Insurance Commissioner of the Commonwealth of Virginia.
Insulation of Assets
The portion of the assets of the Separate Account which equals the reserves and
other policy liabilities of the policies which are supported by the Separate
Account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our General Account any assets of the
Separate Account which are in excess of such reserves and other policy
liabilities.
Investment Subdivisions
The Separate Account is divided into Investment Subdivisions. The income, gains
and losses, realized or unrealized, from the assets allocated to an Investment
Subdivision are credited to or charged against such Investment Subdivision,
without regard to other income, gains or losses of the Company or any other
Investment Subdivision.
The Investment Subdivisions available under this Policy are shown on the policy
data pages. Each Investment Subdivision invests exclusively in shares of a
corresponding Fund. Shares of a Fund are purchased and redeemed for an
Investment Subdivision at their net asset value per share. Any amounts of
income, dividends and gains distributed from the shares of a Fund are reinvested
in additional shares of that Fund at its net asset value.
Changes To The Separate Account And Investment Subdivisions
Where permitted by applicable law, the Company may:
o create new separate accounts;
o combine separate accounts, including the Separate Account;
o transfer assets of the Separate Account, which we determine to be
associated with the class of policies to which this Policy belongs,
to another separate account;
o add new Investment Subdivisions to or remove existing Investment
Subdivisions from the Separate Account or combine Investment
Subdivisions;
o make Investment Subdivisions (including new Investment Subdivisions)
available to such classes of policies as we may determine;
o add new Funds or remove existing Funds;
o substitute new Funds for any existing Fund whose shares are no longer
available for investment;
o substitute new Funds for any existing Fund which we determine is no
longer appropriate in
10
<PAGE>
light of the purposes of the Separate Account;
o deregister the Separate Account under the Investment Company Act of 1940;
and
o operate the Separate Account under the direction of a committee or in any
other form permitted by law.
In the event of any substitution or change, we may, by appropriate endorsement,
make such changes in this and other policies as may be necessary or appropriate
to reflect the substitution or change.
Valuation of Separate Account Assets
We will value the assets of the Separate Account each Valuation Day at their
fair market value in accordance with accepted accounting practices and
applicable laws and regulations.
Accumulation Units
Purchase payment(s) allocated to an Investment Subdivision or amounts
transferred to an Investment Subdivision are converted into Accumulation Units.
The number of Accumulation Units is determined by dividing the dollar amount
allocated to each Investment Subdivision by the value of the Accumulation Unit
for that Investment Subdivision for the Valuation Day on which the Purchase
Payment(s) or transferred amount is invested in the Investment Subdivision.
Therefore, Purchase Payment(s) allocated to or amounts transferred to an
Investment Subdivision increase the number of Accumulation Units of that
Investment Subdivision.
The events which will reduce the number of Accumulation Units of an Investment
Subdivision are as follows:
(1) surrenders or transfers of Account Value from an Investment
Subdivision;
(2) surrender of the Policy;
(3) payment of a Death Benefit;
(4) application of Account Value to an income payment option; and
(5) applicable Policy and/or rider fees and charges.
Accumulation Units are canceled as of the end of the Valuation Period in which
the Company receives notice regarding the event.
Accumulation Unit Value
The value of an Accumulation Unit for each Investment Subdivision was
arbitrarily set when the Investment Subdivision began operations. Thereafter,
the value of an Accumulation Unit at the end of every Valuation Day is the value
of the Accumulation Unit at the end of the previous Valuation Day multiplied by
the net investment factor, as described below. On any day that is a Valuation
Day, the Account Value in an Investment Subdivision is determined by multiplying
the number of Accumulation Units attributable to the Policy in that Investment
Subdivision by the value of the Accumulation Unit for that Investment
Subdivision.
Net Investment Factor
The net investment factor is used to measure the investment performance of an
Investment Subdivision. The net investment factor for any Investment
Subdivision for any Valuation Period is determined by (a) divided by (b), minus
(c), where:
(a) is the result of:
(1) the value of the assets in the Investment Subdivision at the end
of the preceding Valuation Period; plus
(2) the investment income and capital gains, realized or unrealized,
credited to those assets at the end of the Valuation Period for
which the net investment factor is being determined; minus
(3) the capital losses, realized or unrealized, charged against those
assets during the Valuation Period; minus
(4) any amount charged against the Separate Account for taxes, or any
amount we set aside during the Valuation Period as a provision for
taxes attributable to the operation or maintenance of the Separate
Account; and
(b) is the value of the assets in the Investment Subdivision at the end of
the preceding Valuation Period; and
11
<PAGE>
(c) is a factor for the Valuation Period representing the charge for
mortality and expense risks we assume and for administrative
expenses deducted from the Investment Subdivision. The annual rate
for these charges is shown on the policy data pages.
Transfers Before Income Payments Begin
You may transfer amounts among the Investment Options by sending a request to us
at our Home Office. Transfers involving the Guarantee Account, if available, are
subject to limitations defined in the Guarantee Account rider. Transfer requests
must be in writing or in any form acceptable to us. Transfers will be made
without a transfer charge; however, we reserve the right to impose a transfer
charge.
The amount of any transfer charge, if applicable, is provided on the policy data
pages. When we perform transfers, the Account Value on the date of the transfer
will not be affected by the transfer except to the extent of any transfer
charge. Any transfer charge will be taken from the amount transferred.
We reserve the right to limit, upon written notice, the number of transfers each
calendar year to twelve or, if it is necessary for the Policy to continue to be
treated as an annuity policy by the IRS, a lower number. Also, we reserve the
right to refuse to execute any transfer:
(1) if any of the Investment Subdivisions that would be affected by the
transfer is unable to purchase or redeem shares of the Fund in which
the Investment Subdivision invests; or
(2) if the transfer is a result of more than one trade involving the
same Investment Subdivision within a 30 day period; or
(3) if the transfer would adversely affect accumulation unit values
(which may occur if the transfer would affect one percent or more of
the relevant Fund's total assets).
Transfers will be effective as of the end of the Valuation Period during which
we receive your request at our Home Office. If the amount of your Account Value
remaining in an Investment Option after the transfer is less than the minimum
balance stated on the policy data pages, we will transfer the remaining balance
in addition to the amount requested for transfer. We will not allow a transfer
into any Investment Option unless the Account Value of that Investment Option
after the transfer is at least equal to the amount stated on the policy data
pages.
Where permitted by law, we may accept your authorization of third party
transfers on your behalf. We may restrict the Investment Subdivisions that will
be available to you for transfers of Purchase Payments during any period in
which you authorize such third party to act on your behalf. We will give you
prior notice of any such restrictions. However, we will not enforce such
restrictions if you provide us with satisfactory evidence that (1) such third
party has been appointed by a court of competent jurisdiction to act on your
behalf, or (2) such third party has been appointed by you to act on your behalf
for all your financial affairs.
Transfers After Variable Income Payments Begin
If Variable Income Payments are being made, you may transfer Annuity Units among
the Investment Subdivisions of the Separate Account by sending a request to us
at our Home Office. This request must be in writing or in any form acceptable to
us. You may make one transfer in each calendar year. We reserve the right to
limit the number of transfers if necessary for the Policy to continue to be
treated as an annuity policy by the IRS. Also, we reserve the right to refuse to
execute any transfer if any of the Investment Subdivisions that would be
affected by the transfer is unable to purchase or redeem shares of the Fund in
which the Investment Subdivision invests. If the number of Annuity Units
remaining in an Investment Subdivision after a transfer is less than 1, we will
transfer the remaining balance in addition to the amount requested for
transfer. We will not allow a transfer into any Investment Subdivision unless
the number of Annuity Units of that Investment Subdivision after the transfer is
at least 1. No transfer charge is imposed for transfers of Annuity Units. The
amount of the income payment as of the date of the transfer will not be affected
by the transfer.
ACCOUNT VALUE BENEFITS
- --------------------------------------------------------------------------------
On the date the initial Purchase Payment is received and accepted, the Account
Value equals the initial Purchase Payment and the initial Enhanced Premium
Amount. At the end of each Valuation Period after such date, the Account Value
12
<PAGE>
allocated to each Investment Subdivision of the Separate Account is (a) plus (b)
plus (c) minus (d) minus (e) minus (f), where:
(a) is the Account Value allocated to the Investment Subdivision at the
end of the preceding Valuation Period, multiplied by the Investment
Subdivision's net investment factor for the current Valuation
Period;
(b) is Purchase Payments and the Enhanced Premium Amounts allocated to
the Investment Subdivision during the current Valuation Period;
(c) is any other amounts transferred out of the Investment Subdivision
during the current Valuation Period;
(d) is Account Value transferred out of the Investment Subdivision
during the current Valuation Period;
(e) is any surrender made from the Investment Subdivision during the
current Valuation Period; and
(f) is any premium tax deductions.
Annual Policy Maintenance Charge
There will be a charge made each year for maintenance of the Policy. This charge
is made once for each policy year against the Account Value allocated to the
Separate Account. The charge for a policy year will be deducted at the earlier
of the next policy anniversary or the date the Policy is surrendered. The amount
of this charge is shown on the policy data pages. We will waive this charge if
the total Purchase Payments at the time the charge is due exceeds the amount
shown on the policy data pages.
Annual Death Benefit Charge
There may be a charge made each year for the Death Benefit of the Policy. Any
charge is made in arrears at the beginning of each policy year after the first,
and at surrender, against the Account Value in the Separate Account. The maximum
charge will be the rate shown on the policy data pages times the Account Value
at the time of deduction. The actual charge will never be greater than the
maximum annual charge. The charge at surrender will be a prorata portion of the
annual charge.
Surrender
You can fully or partially surrender this Policy by sending a written request to
our Home Office. We must receive the request before income payments begin. You
may be required to pay a surrender charge and any applicable premium tax. (see
Premium Tax). These charges will be deducted from the amount surrendered.
Full Surrender. You must send us your Policy with your request for full
surrender. The amount payable is the Surrender Value. The Surrender Value of
this Policy is the Account Value on the date we receive your written request for
surrender in our Home Office, less any surrender charge and applicable premium
tax. See Deferred Premium TAx.
Partial Surrender. You may make a partial surrender from the Account Value of
this Policy at any time. The allowable partial surrender amount is subject to
limitations as defined on the policy data pages. The amount payable will be the
amount of the partial surrender, less any surrender charge and any applicable
premium tax. See Deferred Premium Tax.
You may tell us how to deduct the partial surrender from the Investment Options.
If you do not, the partial surrender will be deducted first from each Investment
Subdivision in the same proportion that the Policy's Account Value in that
Investment Subdivision bears to the total Account Value in all Investment
Subdivisions on the date we receive the request in our Home Office. If this
amount of the partial surrender exceeds the Account Value in the Investment
Subdivision(s), any remaining deductions will be made from the available
Guarantee Account Investment Options. The amounts deducted from the Guarantee
Account Investment Options will be taken on a first-in, first-out basis.
"First-in, first-out" means the order in which Purchase Payments and transferred
amounts were allocated to that Guarantee Account Investment Option.
Deferred Premium Tax. If we paid a tax on a Purchase Payment and we did not
previously deduct the tax, then we may deduct it at the time of surrender. See
Premium Tax.
13
<PAGE>
Surrender Charge
All or part of the amount surrendered may be subject to a surrender charge. The
surrender charge is a percentage of each Purchase Payment. The applicable
percentage for each Purchase Payment is shown in the Table of Surrender Charges
on the policy data pages. The number of years shown in the table represents the
number of full and partially completed years since the Purchase Payment was
received.
Order of withdrawal. Amounts surrendered will be deducted first from any gain in
the Policy. Surrender charges are not assessed on amounts surrendered which
represent gain. For purposes of this section, "gain" is calculated as (a) plus
(b) minus (c) minus (d), but not less than zero where:
(a) is the Account Value on the date we receive your surrender request;
(b) is the total of any partial surrenders previously taken;
(c) is the total of Purchase Payments made; and
(d) is the total of any gain previously surrendered.
In addition to any gain, an amount equal to 10% of the total Purchase Payments
made through the date of surrender can also be withdrawn during each policy year
without a surrender charge (the "10% free withdrawal amount"). The 10% free
withdrawal amount is not cumulative from policy year to policy year. Any amount
surrendered in excess of (1) the gain on the date of surrender, plus (2) 10% of
the total Purchase Payments, will be the amount subject to a surrender charge.
For purposes of determining the applicable surrender charge, the amount subject
to a surrender charge will be deducted from Purchase Payments on a first-in,
first-out basis. Amounts surrendered which are not subject to surrender charge
may be taken as a series of periodic payments instead of a lump sum.
There will be no surrender charge if you choose one of the following Optional
Payment Plans:
o Plan 1;
o Plan 2 for a period of 5 or more years;
o Plan 5.
Postponement of Payments
We will usually pay any amounts payable as a result of full or partial
surrenders within seven days after we receive a request in our Home Office. The
request must be in writing or in a form satisfactory to us. We will usually pay
any proceeds payable as a result of death within seven days after we receive due
proof of death. Payment of any amount payable on surrender, partial surrender
or death may be postponed whenever:
o the New York Stock Exchange is closed other than customary weekend
and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the SEC; or
o the SEC by order permits postponement for the protection of
policyowners; or
o an emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practical or it is not
reasonably practical to determine the value of net assets of the
Separate Account.
We have the right to defer payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank on which it is drawn.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Statement of Values
At least once each year, we will send you a Policy statement. The statement will
be mailed within 30 days of the statement date. The statement date will be on at
least one of the following dates: March 31st, June 30th, September 30th and
December 31st. The statement will show the Account Value, Purchase Payments
made, number of Accumulation Units, accumulation unit values, and charges
deducted during the statement period.
Evidence of Death, Age, Sex or Survival
We will require proof of death before we act on policy provisions relating to
death of any person or persons. We may also require proof of the Age, sex, where
appropriate, or survival of any person or persons before we act on any policy
provision dependent upon Age, sex or survival.
14
<PAGE>
Incontestability
We will not contest this Policy.
Misstatement of Age or Sex
If the Annuitant's Age or sex, where appropriate, is misstated on the policy
data page, any Policy benefits or proceeds, or the availability thereof, will be
determined using the correct Age and sex.
Premium Tax
Premium tax rules vary by state and change from time to time. Some states assess
a tax against us upon receipt of Purchase Payments and some states upon
annuitization of proceeds.
Tax assessed upon receipt of Purchase Payments: The premium tax rate shown on
the policy data pages is the rate that was in effect in your state at Policy
issue. To calculate any applicable premium tax in effect on the date we receive
the Purchase Payment, multiply the Purchase Payment by the premium tax rate.
This is the amount of any state and/or local premium tax charged to us for this
Policy. We reserve the right to deduct any such tax either from your Purchase
Payment(s) when received, or from proceeds later when paid. (Proceeds includes
benefits from surrender, maturity and death.)
Tax assessed upon annuitization of proceeds: Since some states assess a premium
tax on proceeds used to purchase income payments, we reserve the right to deduct
from such proceeds any premium tax paid by us. Because state premium tax rules
change from time to time, the tax rate, if any, applicable to proceeds used to
purchase income payments is now shown in your Policy. You may request
notification of the amount of this tax before income payments begin.
Nonparticipating
This Policy is nonparticipating. No dividends are payable.
Written Notice
Any written notice to us should be sent to our Home Office. Please include the
Policy number and the Annuitant's full name.
Any notice we send you will be sent to the last known address on file with us.
You should request an address change form if you move.
OPTIONAL PAYMENT PLANS
- --------------------------------------------------------------------------------
Death Benefit and Surrender Value proceeds will be paid in one lump sum, and
Maturity Value will be paid as described in the Monthly Income Benefit section.
Subject to the rules stated below, however, any part of the Death Benefit or
Surrender Value proceeds can be left with us and paid under an Optional Payment
Plan. If you choose to leave the proceeds with us and receive payments under an
Optional Payment Plan, the proceeds less any applicable premium tax will be
applied to calculate your income payment. During the Annuitant's life you (or
the Designated Beneficiary at your death) can choose a plan. If a plan has not
been chosen at the death of the Annuitant, the Designated Beneficiary can choose
a plan if the Death Benefit is to be paid.
There are several important Optional Payment Plan rules:
o Our consent must be obtained prior to selecting an Optional Payment
Plan if the Payee is not a natural person.
o Payment made under an Optional Payment Plan at the death of the
Owner, Joint Owner or Annuitant must conform with the rules in the
Death Provisions section.
o If you change a Beneficiary, your plan selection will no longer be in
effect unless you request that it continue.
o Any choice or change of a plan must be sent in writing to our Home
Office.
o The amount of each payment under a plan must be at least $100.
15
<PAGE>
o Fixed income payments will begin on the date we receive proof of the
Annuitant's death, on surrender, or on the Policy's Maturity Date.
o Variable income payments will begin within seven days after the date
payments would begin under the corresponding fixed option.
o Payments under Plan 4 will begin at the end of the first interest
period after the date proceeds are otherwise payable.
Fixed Income Options
Optional Payment Plans 1 through 5 are available as fixed income options. Any
amount left with us under a fixed income option will be transferred to our
General Account. Payments made will equal or exceed those required by the state
where this Policy is delivered.
Variable Income Options
Optional Payment Plans 1 and 5 are available as variable income options. This
means that income payments, after the first, will reflect the investment
experience of the Investment Subdivisions of the Separate Account.
Proceeds may be allocated to one or more Investment Subdivisions of the Separate
Account. The first income payment is determined based upon the plan chosen and
the amount of proceeds applied to the plan. The dollar amount of subsequent
income payments is determined by means of Annuity Units.
The number of Annuity Units will be determined at the time income payments begin
and will remain fixed unless transferred (as described below). The number of
Annuity Units for an Investment Subdivision is (a) divided by (b), where:
(a) is the portion of the first income payment attributable to that
Investment Subdivision; and
(b) is the Annuity Unit value for that Investment Subdivision seven days
before that income payment is due.
After the first income payment, each subsequent income payment is a dollar
amount equal to the sum of the income payment amounts for each Investment
Subdivision. The income payment amount for an Investment Subdivision is the
number of Annuity Units for that Investment Subdivision times the Annuity Unit
value for that Investment Subdivision seven days before the payment is due.
Annuity Unit Value: The Annuity Unit value of each Investment Subdivision for
any Valuation Period is equal to (a) multiplied by (b) divided by (c) where:
(a) is the net investment factor for the Valuation Period for which the
Annuity Unit value is being calculated;
(b) is the Annuity Unit value for the preceding Valuation Period; and
(c) is a daily Assumed Interest Rate factor adjusted for the number of
days in the Valuation Period.
The Assumed Interest Rate factor is equal to one plus the Assumed Interest Rate.
The Assumed Interest Rate is the interest rate used to calculate the initial
variable payment. Plan 1 and Plan 5 tables shown under the Payment Plans section
use an Assumed Interest Rate of 3%.
Annuity Units may be transferred upon request. The number of Annuity Units for
the new Investment Subdivision is (a) times (b), divided by (c), where:
(a) is the number of Annuity Units for the current Investment
Subdivision;
(b) is the value of the Annuity Unit for the current Investment
Subdivision; and
(c) is the value of the Annuity Unit for the new Investment Subdivision.
Payment Plans
The fixed income options are shown below. Variable income options, with an
Assumed Interest Rate of 3%, have the same monthly payment rate per $1000 as the
fixed income options shown in the Plan 1 and Plan 5 Tables. The monthly payment
rate is based on the 1983 Table `a', using 3% interest. Other plans may be
available upon request.
Plan 1. Life Income with Period Certain. We will make monthly payments for a
guaranteed minimum period. If the Payee lives longer than the minimum period,
payments will continue for his or her life. The minimum period can be 10, 15 or
20 years. Payments will be according to the table below.
16
<PAGE>
Guaranteed amounts payable under this plan will earn interest at 3% compounded
yearly. We may increase the interest rate and the amount of any payment. If the
Payee dies before the end of the guaranteed period, the amount of remaining
payments for the minimum period will be discounted at the same rate used in
calculating income payments. Discounted means we will deduct the amount of
interest each remaining payment would have earned had it not been paid out
early. The discounted amounts will be paid in one sum to the Payee's estate
unless otherwise provided.
<TABLE>
<CAPTION>
Plan 1 Table
Monthly payment rates for each $1,000 of proceeds under Plan 1.
- ----------------------------------------------------------------------------------------------------------------------------------
Settlement Male Payee Female Payee Settlement Male Payee Female Payee
---------------------------- ------------------------ -------------------------- --------------------------
Age 10 Years 15 Years 20 Years 10 Years 15 Years 20 Years Age 10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 $2.90 $2.90 $2.89 $2.81 $2.81 $2.81 65 $5.51 $5.22 $4.86 $4.91 $4.77 $4.58
25 3.00 2.99 2.99 2.88 2.88 2.88 66 5.66 5.33 4.92 5.03 4.88 4.65
30 3.11 3.11 3.10 2.97 2.97 2.97 67 5.81 5.43 4.99 5.17 4.99 4.73
35 3.26 3.25 3.24 3.09 3.08 3.08 68 5.97 5.54 5.05 5.31 5.10 4.80
40 3.45 3.43 3.41 3.23 3.23 3.22 69 6.13 5.65 5.10 5.46 5.21 4.88
45 3.68 3.66 3.62 3.42 3.41 3.39 70 6.30 5.75 5.16 5.62 5.33 4.95
50 3.98 3.94 3.88 3.65 3.64 3.61 71 6.48 5.85 5.21 5.79 5.45 5.02
51 4.05 4.00 3.93 3.71 3.69 3.66 72 6.66 5.95 5.25 5.97 5.57 5.08
52 4.12 4.07 3.99 3.77 3.74 3.71 73 6.84 6.05 5.29 6.15 5.69 5.14
53 4.20 4.14 4.05 3.83 3.80 3.76 74 7.02 6.14 5.33 6.34 5.81 5.20
54 4.28 4.21 4.11 3.89 3.86 3.82 75 7.20 6.23 5.36 6.54 5.92 5.25
55 4.36 4.29 4.18 3.96 3.93 3.88 76 7.39 6.31 5.39 6.74 6.03 5.29
56 4.45 4.37 4.24 4.03 3.99 3.94 77 7.57 6.39 5.41 6.95 6.13 5.33
57 4.55 4.45 4.31 4.11 4.07 4.00 78 7.75 6.46 5.43 7.15 6.23 5.36
58 4.65 4.53 4.38 4.19 4.14 4.07 79 7.93 6.52 5.45 7.36 6.32 5.39
59 4.75 4.62 4.45 4.28 4.22 4.13 80 8.09 6.58 5.47 7.57 6.41 5.42
60 4.86 4.72 4.52 4.37 4.30 4.20 81 8.26 6.63 5.48 7.78 6.48 5.44
61 4.98 4.81 4.59 4.46 4.39 4.27 82 8.41 6.67 5.49 7.97 6.55 5.46
62 5.10 4.91 4.65 4.56 4.48 4.35 83 8.56 6.71 5.49 8.16 6.60 5.47
63 5.23 5.01 4.72 4.67 4.57 4.42 84 8.69 6.74 5.50 8.34 6.65 5.48
64 5.37 5.11 4.79 4.79 4.67 4.50 85&over 8.81 6.77 5.50 8.50 6.70 5.49
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Values for ages not shown will be furnished upon request.
Plan 2. Income for a Fixed Period. We will make periodic payments for a fixed
period, not longer than 30 years. Payments can be annual, semi-annual, quarterly
or monthly. Payments will be made according to the table below. Guaranteed
amounts payable under this plan will earn interest at 3% compounded yearly. We
may increase the interest and the amount of any payment. If the Payee dies, the
amount of the remaining guaranteed payments will be discounted to the date of
the Payee's death at the same rate used in calculating income payments. The
discounted amount will be paid in one sum to the Payee's estate unless otherwise
provided.
<TABLE>
<CAPTION>
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years
Payable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly
Payment $84.47 $42.86 $28.99 $22.06 $17.91 $15.14 $13.16 $11.68 $10.53 $9.61 $8.86 $8.24 $7.71 $7.26 $6.87
====================================================================================================================================
Years
Payable 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly
Payment $6.53 $6.23 $5.96 $5.73 $5.51 $5.32 $5.15 $4.99 $4.84 $4.71 $4.59 $4.47 $4.37 $4.27 $4.18
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annual, semi-annual or quarterly payments are determined by multiplying the
monthly payment by 11.838, 5.963 or 2.992, respectively.
Plan 3. Income of a Definite Amount. We will make periodic payments of a
definite amount. Payments can be annual, semi-annual, quarterly or monthly. The
amount paid each year must be at least $120 for each $1,000 of proceeds.
Payments will continue until the proceeds are exhausted. The last payment will
equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at
17
<PAGE>
3% compounded yearly. We may increase the interest rate. If we do, the payment
period will be extended. If the Payee dies, the amount of the remaining proceeds
with earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4. Interest Income. We will make periodic payments of interest earned from
the proceeds left with us. Payments can be annual, semi-annual, quarterly or
monthly, and will begin at the end of the first period chosen. Proceeds left
under this plan will earn interest at 3% compounded yearly. We may increase the
interest rate and the amount of any payment. If the Payee dies, the amount of
remaining proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided.
Plan 5. Joint Life and Survivor Income. We will make monthly payments to two
Payees for a guaranteed minimum of 10 years. Each Payee must be at least 35
years old when payments begin. The guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. We may increase the interest rate
and the amount of any payment. Payments will continue as long as either Payee is
living. If both Payees die before the end of the minimum period, the amount of
the remaining payments for the 10 year period will be discounted at the same
rate used in calculating the monthly income. The discounted amount will be paid
in one sum to the survivor's estate unless otherwise provided.
<TABLE>
<CAPTION>
Plan 5 Table
Monthly payment rates for each $1000 of proceeds under Plan 5.
- ------------------------------------------------------------------------------------------------------
Male Settlement Female Settlement Age
---------------------------------------------------------------------------------------
Age 35 40 45 50 55 60 65 70 75 80 85&over
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $2.95 $3.02 $3.07 $3.12 $3.16 $3.19 $3.21 $3.23 $3.24 $3.25 $3.26
40 2.99 3.07 3.15 3.22 3.28 3.33 3.37 3.40 3.42 3.43 3.44
45 3.02 3.11 3.21 3.31 3.41 3.49 3.55 3.60 3.64 3.66 3.68
50 3.04 3.15 3.27 3.40 3.53 3.65 3.76 3.84 3.90 3.94 3.97
55 3.05 3.18 3.32 3.48 3.65 3.82 3.98 4.12 4.22 4.29 4.33
60 3.07 3.20 3.35 3.54 3.75 3.97 4.21 4.42 4.60 4.73 4.80
65 3.07 3.21 3.38 3.58 3.82 4.11 4.42 4.74 5.03 5.25 5.39
70 3.08 3.22 3.39 3.61 3.88 4.21 4.60 5.04 5.47 5.84 6.09
75 3.08 3.22 3.40 3.63 3.92 4.28 4.74 5.28 5.87 6.42 6.82
80 3.09 3.23 3.41 3.64 3.94 4.33 4.82 5.45 6.18 6.91 7.50
85&over 3.09 3.23 3.41 3.65 3.95 4.35 4.87 5.55 6.37 7.26 8.00
- ------------------------------------------------------------------------------------------------------
</TABLE>
Figures for intermediate ages, for two males or two females will be furnished
upon request.
Settlement Age: The settlement age is the Payee's age last birthday on the date
payments begin, minus an age adjustment from the table below. The age adjustment
cannot exceed the age of the Payee.
---------------------------------------------------------------------
Year Payments Begin Age
After Prior To Adjustment
---------------------------------------------------------------------
---- 2001 0
2000 2026 3
2025 2051 7
2050 ---- 10
---------------------------------------------------------------------
18
THE LIFE INSURANCE COMPANY OF VIRGINIA
OPTIONAL DEATH BENEFIT RIDER
This rider provides for an Optional Death Benefit which is coordinated with the
Optional Death Benefit at Death of Annuitant provision in the policy. While this
Rider is in effect, the amount payable at the death of the Annuitant will be the
greater of:
o The Death Benefit provided for under the Death Provisions section in the
policy; or
o The minimum death benefit described below.
Minimum Death Benefit
During the first policy year, the minimum death benefit is the total premiums
paid, less adjustments for any partial surrenders.
After the first policy year and until the policy anniversary that the Annuitant
reaches age 81, the minimum death benefit is the policy's greatest Death Benefit
on any previous policy anniversary, plus the total premiums paid since then,
less adjustments for any partial surrenders since that date.
Beginning on the policy anniversary that the Annuitant reaches age 81, the
minimum death benefit is the policy's minimum Death Benefit on the policy
anniversary that the annuitant reaches age 80, plus the total premiums paid
since then, less adjustments for any partial surrenders since that date.
Annual Death Benefit Charge
This provision is added to the Account Value Benefits section of the policy.
There will be a charge made for this rider for each period it is in effect. This
charge is made in arrears at the beginning of each policy year after the first,
and at surrender, against the Account Value in the Separate Account. The Maximum
Charge will be the rate shown on page 3 times the Account Value at the time of
deduction. The actual charge will never be greater than the Maximum Annual
Charge. The charge at surrender will be a pro rata portion of the annual charge.
If the Guarantee Account applies and if the account value in the Separate
Account is insufficient to cover the Annual Death Benefit Charge, then the
deduction will be made first from the account value in the Separate Account. The
excess of the charges over the account value in the Separate Account will then
be deducted from the account value in the Guarantee Account. Deductions from the
Guarantee Account will be taken from the amounts which have been in the
Guarantee Account for the longest period of time.
When this Rider is Effective
This rider becomes effective on the policy date unless another effective date is
shown on the policy data pages. It will remain in effect while this policy is in
force and before income payments begin, or until the policy anniversary
following the date of receipt of your request to terminate the rider. If your
request is received within 30 days of any policy anniversary, you may request
that the rider terminate as of that anniversary.
For The Life Insurance Company of Virginia,
/s/ Paul E. Rutledge III
--------------------------------
President
Exhibit 9
Opinion and Consent of Counsel
January 22, 1999
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, VA 23230
Gentlemen:
With reference to Pre-Effective Amendment No. 2 to Form N-4 (File Number
333-62696) filed by GE Life and Annuity Assurance Company and GE Life & Annuity
Separate Account 4 with the Securities and Exchange Commission covering flexible
premium variable deferred annuity policies, I have examined such documents and
such law as I considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:
1. GE Life and Annuity Assurance Company is duly organized and validly existing
under the laws of the Commonwealth of Virginia and has been duly authorized
to issue individual flexible premium variable deferred annuity policies by
the Bureau of Insurance of the State Corporation Commission of the
Commonwealth of Virginia.
2. GE Life & Annuity Separate Account 4 is a duly authorized and existing
separate account established pursuant to the provisions of Section 38.2-3113
of the Code of Virginia.
3. The flexible premium variable deferred annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute legal,
validly issued and binding obligations of GE Life and Annuity Assurance
Company.
I hereby consent to the use of this letter, or copy thereof, as an exhibit to
Pre-Effective Effective Amendment No. 2 to the Registration Statement on Form
N-4 (File Number 333-62695) and the reference to me under the caption "Legal
Matters" in the Statement of Additional Information contained in said
Pre-Effective Amendment.
Sincerely,
/s/PATRICIA L. DYSART
- ----------------------
Patricia L. Dysart
Assistant Vice President and
Associate General Counsel
Law Department
[Sutherland Asbill & Brennan LLP Letterhead]
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
January 22, 1998
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, VA 23230
Re GE Life & Annuity Separate Account 4
Gentlemen:
We hereby consent to the reference to our name under the caption
"Legal Matters" in the Statement of Additional Information filed as part of the
Pre-Effective Amendment No. 2 to the Registration Statement on Form N-4 filed by
GE Life & Annuity Separate Account 4 for certain variable annuity policies (File
No. 333-62695). In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
--------------------------------
Stephen E. Roth
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" and "Change
in Auditors" and to the use of our reports dated February 8, 1996, with respect
to the consolidated financial statements and the related financial statement
schedules of GE Life and Annuity Assurance Company (formerly The Life Insurance
Company of Virginia and subsidiaries) and GE Life & Annuity Separate Account 4
(formerly Life of Virginia Separate Account 4), in the Pre-Effective Amendment
No. 2 to the Registration Statement (Form N-4 No. 333-62695) and related
Statement of Additional Information of GE Life & Annuity Separate Account 4 for
the registration of an indefinite amount of securities.
/s/ Ernst & Young LLP
Richmond, Virginia
January 22, 1999
Independent Auditors' Consent
The Board of Directors
GE Life and Annuity Assurance Company
(formerly The Life Insurance Company of Virginia)
GE Life & Annuity Separate Account 4
(formerly Life of Virginia Separate Account 4):
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the Statement of Additional Information.
Our report dated January 6, 1998 contains an explanatory paragraph that states
that effective April 1, 1996, General Electric Capital Corporation acquired all
of the outstanding stock of The Life Insurance Company of Virginia in a business
combination accounted for as a purchase. As a result of the acquisition, the
consolidated financial information for the periods after acquisition is
presented on a different cost basis than that for the periods before the
acquisition and, therefore, is not comparable.
/s/ KPMG LLP
Richmond, VA
January 22, 1999
