As filed with the Securities and Exchange Commission on March 12, 1999
File No. 333-63531
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.1
Post-Effective Amendment No.
For Registration Under the Investment Company Act of 1940 X
Amendment No. 39
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. 20004-2415
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
Title of Securities Being Registered:
Interests in a Separate Account Under Flexible Premium Variable Annuity 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 P1151 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 (the "Policy") for individuals and some qualified and
non-qualified retirement plans. GE Life and Annuity Assurance Company (the
"Company," "we," "us," or "our") issues the Policy.
The Policy offers you the accumulation of Account Value and the payment of
periodic annuity benefits. We may pay these benefits on a variable or fixed
basis or a combination of both.
The minimum amount you need to purchase the policy is $25,000.
You may allocate your premium payments to Account 4, the Guarantee Account, or
both. Each Investment Subdivision of Account 4 invests in shares of the Funds.
We list the Funds, and their currently available portfolios, below.
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.
Except for amounts in the Guarantee Account, both the value of a Policy before
the Maturity Date and the amount of monthly income afterward will depend upon
the investment performance of the portfolio(s) you select. You bear the
investment risk of investing in the portfolios.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
YOUR INVESTMENT IN THE POLICY IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT
AGENCY.
<PAGE>
This Prospectus gives details about Account 4 and our Guarantee Account that you
should know before investing. 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>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Definitions...................................................................................
Expense table.................................................................................
Synopsis......................................................................................
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.................................................................................
Condensed Financial Information...............................................................
Table of Contents for Statement of Additional Information.....................................
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
DEFINITIONS
We have tried to make this Prospectus as understandable as possible. However, in
explaining how the 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 the premiums you pay under the Policy, and
other variable annuity policies we issue.
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.
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.
FUND - Any open-end management investment company or investment portfolio
thereof or any unit investment trust in which an Investment Subdivision invests.
GENERAL ACCOUNT -- Our assets that are not segregated in any of our separate
investment accounts.
GUARANTEE ACCOUNT -- Part of our General Account that provides a guaranteed
interest rate for a specified guarantee period. This account is not part of and
does not depend on the investment performance of Account 4.
INVESTMENT SUBDIVISION -- A subdivision of Account 4, each of which invests
exclusively in shares of a designated portfolio of one of the Funds. Not all
Investment Subdivisions may be available in all states or markets.
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 we issue your Policy and your Policy becomes effective.
Your Policy Date is shown in your Policy and we use it to determine Policy years
and anniversaries.
SURRENDER VALUE -- The Account Value less 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 a 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.
1
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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:
Surrender Charge None
Transfer Charge Currently None*
ANNUAL EXPENSES (as a percentage of Account Value):
Mortality and Expense Risk Charge 1.35%
Administrative Expense Charge .25%
Total Annual Expenses 1.60%
OTHER ANNUAL EXPENSES:
Annual Policy Maintenance Charge $25**
* 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 $25,000.
2
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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 WAIVER (AFTER REIMBURSEMENT- TOTAL ANNUAL
FUND AS APPLICABLE) AS APPLICABLE) EXPENSE
<S> <C> <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 Fund (6) 0.80% 0.20% 1.00%
GE Total Return Fund (7) 0.50% 0.15% 0.65%
Oppenheimer Multiple Strategies Fund 0.72% 0.03% 0.75%
AGGRESSIVE GROWTH
Janus Aspen Aggressive Growth 0.73% 0.03% 0.76%
Portfolio (1)
Oppenheimer Aggressive Growth Fund 0.71% 0.02% 0.73%
Alger American Small Capitalization 0.85% 0.04% 0.89%
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 Fund (5) 0.80% 0.15% 0.95%
GE Value Equity Fund (7) 0.37% 0.09% 0.46%
GROWTH & INCOME
Federated American Leaders Fund II (8) 0.66% 0.19% 0.85%
GE U.S. Equity Fund (7) 0.55% 0.25% 0.80%
Goldman Sachs Growth & Income Fund (5) 0.75% 0.15% 0.90%
Salomon Brothers Investors Fund (6) 0.70% 0.30% 1.00%
VIP Equity-Income Portfolio*(2) 0.50% 0.08% 0.58%
VIP III Growth & Income Portfolio* (4) 0.49% 0.21% 0.70%
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
Fund (6) 0.75% 0.25% 1.00%
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
Portfolio (1) 0.65% 0.10% 0.75%
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.
3
<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 Fund, .96% for Real
Estate Securities 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.
4
<PAGE>
Example
This example shows what your costs would be under certain hypothetical
situations. The example does not represent past or future expenses. Your actual
expenses may be more or less than those shown. The example is 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 example assumes an average
policy maintenance charge of 0.1% of Account Value attributable to the
hypothetical investment (this charge will be waived if the Account Value is at
least $25,000 at the time the charge is due).
* * *
5
<PAGE>
EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets and the charges and expenses reflected in the Expense
Table above:
If you surrender or annuitize your Policy at the end of the applicable period,
or do not surrender:
FUND: 1 Year 3 Years
BALANCED
Janus Aspen Balanced Portfolio $25.61 $78.75
VIP II Asset Manager Portfolio 23.81 73.34
Salomon Brothers Total Return Fund 27.31 83.83
GE Investments Total Return Fund 23.81 73.34
Oppenheimer Multiple Strategies Fund 24.81 76.35
AGGRESSIVE GROWTH
Janus Aspen Aggressive Growth Portfolio 24.91 76.65
Oppenheimer Aggressive Growth Fund 24.61 75.75
Alger American Small Capitalization Portfolio 26.21 80.55
GROWTH
Janus Aspen Growth Portfolio 24.31 74.85
Janus Aspen Capital Appreciation Portfolio 29.90 91.55
Alger American Growth Portfolio 25.21 77.55
VIP II Contrafund Portfolio 24.41 75.15
VIP Growth Portfolio 24.21 74.55
Oppenheimer Growth Fund 24.81 76.35
VIP III Growth Opportunities Portfolio 24.71 76.05
Goldman Sachs Mid Cap Equity Fund 26.81 82.34
GE Investments Value Equity Fund 21.91 67.60
GROWTH & INCOME
Federated American Leaders Fund II 25.81 79.35
GE Investments US Equity Fund 25.31 77.85
Goldman Sachs Growth & Income Fund 26.31 80.85
Salomon Brothers Investors Fund 27.31 83.83
VIP Equity-Income Portfolio 23.11 71.23
VIP III Growth & Income Portfolio 24.31 74.85
GE Investments S&P 500 Index Fund 21.91 67.60
INTERNATIONAL STOCK
Janus Aspen International Growth Portfolio 26.91 82.64
VIP Overseas Portfolio 26.51 81.44
GE Investments International Equity Fund 30.70 93.91
CORPORATE BOND
Oppenheimer Bond Fund 25.11 77.25
Salomon Brothers Strategic Bond Fund 27.31 83.83
GE Investments Income Fund 23.21 71.53
HIGH YIELD BOND
Oppenheimer High Income Fund 25.51 78.45
Federated High Income Bond Fund II 25.31 77.85
SPECIALTY
Federated Utility Fund II 25.81 79.35
GE Investments Real Estate Securities Fund 26.81 82.34
DIVERSIFIED BOND
Janus Aspen Flexible Income Portfolio 24.81 76.35
GLOBAL STOCK
Janus Aspen Worldwide Growth Portfolio 24.71 76.05
MONEY MARKET
GE Investments Money Market Fund 20.50 63.35
6
<PAGE>
All of the figures provided under the subheading Fund Annual Expenses and part
of the data used to produce the figures in the example 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? The Policy is an individual flexible premium
variable deferred annuity policy. We may issue it as a policy qualified
("Qualified Policy") under the Internal Revenue Code of 1986, as amended (the
"Code"), or as a policy that is not qualified under the Code ("Non-Qualified
Policy"). This Prospectus only provides disclosure 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), 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 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 we guarantee for selected periods of time. We also
guarantee the principal, after deductions. Since the Guarantee Account is part
of the General Account, we assume the risk of investment gain or loss on this
amount. 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 or all markets.
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 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? We assess annual charges in the
aggregate at an effective annual rate of 1.60% 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
1.35% as a mortality and expense risk charge. There is also a $25 annual policy
maintenance charge which we will waive if the Account Value is at least $25,000
at the time the charge is due. For a complete discussion of the charges
associated with the Policy, SEE Charges and Other Deductions.
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.
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
7
<PAGE>
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 Policy 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. We will base your
initial payment on maturity value and other factors. SEE Income Payments.
WHAT HAPPENS IF I DIE BEFORE THE MATURITY DATE? Before 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 Policy
- - Transfers Before the Maturity Date, Income Payments Transfers After 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.
On full surrender, we may assess certain charges as discussed above and under
Charges and Other Deductions. In addition, you may be subject to a 10% premature
withdrawal penalty tax if you are younger than age 59 1/2 at the time of the
surrender. A surrender or a partial surrender may also be subject to tax
withholding. SEE Federal Tax Matters. A partial surrender will reduce the Death
Benefit by the proportion that the partial surrender reduces the 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 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
initial premiums you allocated to Account 4 to the Money Market Investment
Subdivision until we deem the free look period to have expired. SEE Allocation
of Premium Payments.
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. Total returns include the reinvestment of all distributions of
the portfolios, which are reflected in changes in unit value. Total returns
reflect the Fund charges and expenses, the administrative expense charge, the
mortality and expense risk charge and the policy maintenance charge. Total
returns do not reflect the impact of any premium taxes that may apply. 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
8
<PAGE>
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. Before January 1, 1999, our 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 General Electric Capital Corporation ("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, 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.
We registered Account 4 with the SEC as a unit investment trust under the
Investment Company Act of 1940 ("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
There is a separate Investment Subdivision which corresponds to each portfolio
of a Fund offered in this Policy. You decide the Investment Subdivisions to
which you allocate net premium payments. You may change your allocation without
penalty or charges.
Each Fund is registered with the Securities and Exchange Commission as an
open-end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one portfolio
has no effect on the investment performance of any other portfolio.
Before choosing an Investment Subdivision to allocate your net premium payments
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. We
do not guarantee any minimum value for
9
<PAGE>
the amounts you allocate to Account 4. You bear the investment risk of investing
in the portfolios.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the investment
results of any other portfolio, even if the other portfolio has the same
investment adviser or manager, or if the other portfolio has a similar name.
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> <C> <C>
JANUS ASPEN SERIES Seeks long term growth of capital, consistent Janus Capital
Balanced Portfolio with the preservation of capital and balanced by Corporation
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 Seeks high total return with reduced risk over Fidelity Management &
INSURANCE PRODUCTS FUND the long-term by allocating assets among stocks, Research Company
II bonds and short-term and money market
VIP II Asset Manager instruments.
Portfolio
- ---------------------------- -------------------------------------------------------- -----------------------
SALOMON BROTHERS VARIABLE Seeks to obtain above-average income by Salomon Brothers
SERIES FUNDS primarily investing in a broad variety of Asset Management Inc.
Total Return Fund securities, including stocks, fixed-income
(currently not available securities and short-term obligations.
in California and may not
be available in all
markets)
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of providing the highest total return, GE Investment
Total Return Fund composed of current income and capital Management Incorporated
appreciation, as is consistent with 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 Seeks total investment return (which includes OppenheimerFunds, Inc.
VARIABLE ACCOUNT FUNDS current income and capital appreciation in the
Multiple Strategies Fund values of its shares) from investments in common
stocks and other equity securities, bonds and
other debt securities, and "money market"
securities.
- ---------------------------- -------------------------------------------------------- -----------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUNDS
- ---------------------------- -------------------------------------------------------- -----------------------
<S> <C> <C> <C>
JANUS ASPEN SERIES Non-diversified portfolio pursuing long-term Janus Capital
Aggressive Growth Portfolio growth of capital by normally investing at least Corporation
50% of its assets in equity securities issued by
medium-sized companies.
- ---------------------------- -------------------------------------------------------- -----------------------
OPPENHEIMER Seeks to achieve capital appreciation by OppenheimerFunds, Inc.
VARIABLE ACCOUNT FUNDS investing in "growth-type" companies. Prior
Aggressive Growth Fund to May 1, 1998 this fund was known as Capital
Appreciation Fund.
- ---------------------------- -------------------------------------------------------- -----------------------
THE ALGER AMERICAN FUND Seeks long-term capital appreciation. Except Fred Alger
Alger American during temporary defensive periods, the Management, Inc.
Small Capitalization portfolio invests at least 65% of its total
Portfolio assets in equity securities of companies 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 Seeks 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 Seeks long-term growth of capital by investing Janus Capital
Capital Appreciation primarily in common stocks of companies of any Corporation
Portfolio size.
- ---------------------------- -------------------------------------------------------- -----------------------
THE ALGER AMERICAN FUND Seeks long-term capital appreciation. Except Fred Alger
Alger American Growth during temporary defensive periods, this Management, Inc.
Portfolio portfolio invests at least 65% of its total
assets in equity securities of companies that,
at the time of purchase, have a total market
capitalization of $1 billion or greater.
- ---------------------------- -------------------------------------------------------- -----------------------
FIDELITY VARIABLE Seeks long-term capital appreciation by Fidelity Management &
INSURANCE PRODUCTS FUND II investing mainly in common stocks and in Research Company
VIP II Contrafund Portfolio securities of companies whose value is believed
to have not been fully recognized by the
public. This fund invests in domestic and
foreign issuers. This fund also invests in
"growth" stocks or "value" stocks or both.
- ---------------------------- -------------------------------------------------------- -----------------------
FIDELITY VARIABLE Seeks capital appreciation by investing Fidelity Management &
INSURANCE PRODUCTS FUND primarily in common stocks of companies believed Research Company
VIP Growth Portfolio to have above-average growth potential.
- ---------------------------- -------------------------------------------------------- -----------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------- -------------------------------------------------------- -----------------------
<S> <C> <C> <C>
OPPENHEIMER Seeks capital appreciation normally through OppenheimerFunds, Inc.
VARIABLE ACCOUNT FUNDS purchases in common stocks, although its
Growth Portfolio investments are not restricted to any one type
of security. Capital appreciation may also be
found in other types of securities including
bonds and preferred stocks.
- ---------------------------- -------------------------------------------------------- -----------------------
FIDELITY VARIABLE Seeks to provide capital growth by investing Fidelity Management &
INSURANCE PRODUCTS FUND III primarily in common stock and other types of Research Company
VIP III Growth securities, including bonds which may be
Opportunities Portfolio lower-quality debt securities.
- ---------------------------- -------------------------------------------------------- -----------------------
GOLDMAN SACHS Seeks long-term capital appreciation, primarily Goldman Sachs
VARIABLE INSURANCE TRUST through equity securities of companies with Asset Management
Mid Cap Equity Fund public stock market capitalization between $500
million and $10 billion at the time of
investment.
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of providing long term growth of GE Investment
Value Equity Fund capital by investing primarily in common stock Management
and other equity securities of companies that Incorporated
the investment adviser believes are undervalued (Subadvised by NWQ
by the marketplace at the time of purchase and Investment Management
that offer the potential for above-average Company)
growth of capital.
- ---------------------------- -------------------------------------------------------- -----------------------
GROWTH AND INCOME FUNDS
- ---------------------------- -------------------------------------------------------- -----------------------
FEDERATED INSURANCE SERIES Seeks long-term growth of capital with a Federated Advisors
American Leaders Fund II secondary objective of providing income. Seeks
to achieve its objective by investing, under
normal circumstances, at least 65% of its total
assets in common stock of "blue chip" companies.
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of long-term growth of capital through GE Investment
U.S. Equity Fund investments primarily in equity securities of Management
U.S. companies. Incorporated
- ---------------------------- -------------------------------------------------------- -----------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------- -------------------------------------------------------- -----------------------
<S> <C> <C> <C>
GOLDMAN SACHS VARIABLE Seeks long-term capital growth and growth of Goldman Sachs
INSURANCE TRUST income, primarily through equity securities that Asset Management
Growth and Income Fund are considered to have favorable prospects for
capital appreciation and/or dividend-paying
ability.
- ---------------------------- -------------------------------------------------------- -----------------------
SALOMON BROTHERS VARIABLE Long-term growth of capital with current income Salomon Brothers
SERIES FUNDS as a secondary objective, primarily through Asset Management Inc.
Investors Fund investments in common stocks of well-known
(Currently not available companies.
in California and may not
be available in all
markets)
- ---------------------------- -------------------------------------------------------- -----------------------
FIDELITY VARIABLE Seeks reasonable income and will consider the Fidelity Management &
Insurance PRODUCTS FUND potential for capital appreciation. The fund Research Company
VIP Equity-Income Portfolio also seeks a yield which exceeds the composite
yield on the securities comprising the S&P 500
by investing primarily in income-producing
equity securities and by investing in domestic
and foreign issuers.
- ---------------------------- -------------------------------------------------------- -----------------------
FIDELITY VARIABLE Seeks high total return through a combination of Fidelity Management &
INSURANCE PRODUCTS FUND III current income and capital appreciation by Research Company
VIP III Growth & Income investing a majority of assets incommon stocks
Portfolio with a focus on those that pay current dividends
and show potential for capital appreciation.
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of providing capital appreciation and GE Investment
S&P 500 Index Fund(1) accumulation of income that corresponds to the Management
investment return of the Standard & Poor's 500 Incorporated
Composite Stock Price Index through investment (Subadvised by State
in common stocks comprising the Index. Street Global
Advisors)
- -------------------------------------------------------------------------------------------------------------
INTERNATIONAL STOCK FUNDS
- -------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES Seeks long-term growth of capital primarily Janus Capital
International Growth through investments in common stocks of issuers Corporation
Portfolio 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 Seeks long-term growth of capital by investing Fidelity Management &
INSURANCE at least 65% of total assets in foreign Research Company
PRODUCTS FUND securities, primarily in common stocks.
VIP Overseas Portfolio
- ---------------------------- -------------------------------------------------------- -----------------------
</TABLE>
- --------
(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.
13
<PAGE>
<TABLE>
- ---------------------------- -------------------------------------------------------- -----------------------
<S> <C> <C> <C>
GE INVESTMENTS FUNDS Objective of providing long-term capital growth GE Investment
International Equity Fund of capital by investing primarily in foreign Management
equity and equity-related securities which the Incorporated
Adviser believes have long-term potential for
capital growth.
- ---------------------------- -------------------------------------------------------- -----------------------
CORPORATE BOND FUNDS
- -------------------------------------------------------------------------------------------------------------
OPPENHEIMER Seeks high level of current income and capital, OppenheimerFunds, Inc.
VARIABLE ACCOUNT FUNDS and growth when consistent with its primary
Bond Fund objective. Under normal conditions this fund
will invest at least 65% of its total assets in
investment grade debt securities.
- ---------------------------- -------------------------------------------------------- -----------------------
SALOMON BROTHERS VARIABLE Seeks high level of current income with capital Salomon Brothers
SERIES FUNDS appreciation as a secondary objective, through a Asset Management Inc.
Strategic Bond Fund globally diverse portfolio of fixed-income
(Currently not available investments, including lower-rated fixed income
in California and may not securities commonly known as junk bonds.
be available in all markets)
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of providing maximum income consistent GE Investment
Income Fund with prudent investment management and Management
preservation of capital by investing primarily Incorporated
in income-bearing debt securities and other
income bearing instruments.
- -------------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUNDS
- ---------------------------- -------------------------------------------------------- -----------------------
OPPENHEIMER Seeks high current income from investments in OppenheimerFunds, Inc.
VARIABLE ACCOUNT FUNDS high yield fixed income securities, including
High Income Fund unrated securities or high risk 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 SERIES Seeks high current income by investing primarily Federated Advisers
High Income Bond Fund II in a diversified portfolio of professionally
managed fixed-income 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 and their
high yield potential are described in the
prospectus for the Federated Insurance Series,
which should be read carefully before investing.
- ---------------------------- -------------------------------------------------------- -----------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SPECIALTY FUNDS
- ---------------------------- -------------------------------------------------------- -----------------------
<S> <C> <C> <C>
FEDERATED INSURANCE SERIES Seeks high current income and moderate capital Federated Advisers
Utility Fund II appreciation by investing primarily in equity
and debt securities of utility companies.
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of providing maximum total return GE Investment
Real Estate Securities Fund through current income and capital appreciation Management
by investing primarily in securities of U.S. Incorporated
issuers that are principally engaged in or (Subadvised by Seneca
related to the real estate industry including Capital Management,
those that own significant real estate assets. L.L.C.)
The portfolio will not invest directly in real
estate.
- ---------------------------- -------------------------------------------------------- -----------------------
DIVERSIFIED BOND FUNDS
- -------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES Seeks maximum total return consistent with Janus Capital
Flexible Income Portfolio preservation of capital. Total return is Corporation
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.
- ---------------------------- -------------------------------------------------------- -----------------------
GLOBAL STOCK FUNDS
- -------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES Seeks long-term capital growth in a manner Janus Capital
Worldwide Growth Portfolio consistent with the preservation of capital by Corporation
investing in a diversified portfolio of common
stocks of foreign and domestic issuers of all
sizes. Normally invests in at least five
different countries including the United States.
- ---------------------------- -------------------------------------------------------- -----------------------
MONEY MARKET FUNDS
- ---------------------------- -------------------------------------------------------- -----------------------
GE INVESTMENTS FUNDS Objective of providing highest level of current GE Investment
Money Market Fund income as is consistent with high liquidity and Management
safety of principal by investing in various Incorporated
types of good quality 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 they may also be sold to other insurance companies that
issue variable annuity and variable life insurance policies. In addition, they
may be sold to retirement plans.
15
<PAGE>
When a Fund sells shares in any of its portfolios both to variable annuity and
to variable life insurance separate accounts, it engages in mixed funding. When
a Fund sells shares in any of its portfolios to separate accounts of
unaffiliated life insurance companies, it engages in shared funding.
Each Fund may engage in mixed and shared funding. Therefore, due to differences
in redemption rates or tax treatment, or other considerations, the interests of
various shareholders participating in a Fund could conflict. A Fund's Board of
Directors will monitor for the existence of any material conflicts, and
determine what action, if any, should be taken. SEE the Prospectuses for the
Funds.
We have entered into agreements with either the investment adviser or
distributor of each of the Funds under which the adviser or distributor pays us
a fee ordinarily based upon a percentage of the average aggregate amount we have
invested on behalf of Account 4 and other separate accounts. These percentages
differ, and some investment advisers or distributors pay us a greater percentage
than other advisors or distributors. These agreements reflect administrative
services we provide.
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 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.
You may allocate some or all of your net premium payments 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 or transfer Account Value to the
Guarantee Account, we establish an interest rate guarantee period. For each
interest rate guarantee period, we guarantee an interest rate for a specified
period of time. At the end of an interest rate guarantee period, a new interest
rate will become effective, and a new interest rate 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
16
<PAGE>
LEAST THE GUARANTEED INTEREST RATE SHOWN IN YOUR POLICY.
We will notify Owners in writing at least 10 days before 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. Our administrative services include:
o processing applications for and issuing the Policies;
o processing purchases and redemptions of portfolio shares as required;
o maintaining records;
o administering annuity payouts;
o furnishing accounting and valuation services (including the calculation
and monitoring of daily Investment Subdivision values);
o reconciling and depositing cash receipts;
o providing Policy confirmations and periodic statements;
o providing toll-free inquiry services; and
o furnishing telephone transaction services.
The risks we assume include:
o the risk that the Death Benefit will be greater than the Surrender
Value;
o 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); and
o 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. We may also realize a profit on one or more of the charges. We may use
any
17
<PAGE>
such profits for any corporate purpose, including the payment of sales
expenses.
DEDUCTIONS FROM ACCOUNT 4
We deduct from Account 4 an amount, computed daily, which is equal to an annual
rate of 1.60% 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 1.35%. These
deductions from Account 4 are reflected in your Account Value.
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 $25,000.
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.
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.
In addition, we reserve the right to impose a transfer charge in the amount of
$10 per transfer.
THE POLICY
The Policy is an individual flexible premium variable deferred 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 one of our
authorized sales representatives. The sales representative will send your
completed application to us, and we will decide whether to accept or reject it.
If we accept your application, our legally authorized officers prepare and
execute a 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 we designed the Policies. The Annuitant cannot be
older than age 85, unless we approve a different age.
18
<PAGE>
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 select
(subject to certain restrictions). 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 and in a manner that does not unfairly discriminate against
similarly situated purchasers.
The minimum initial premium payment is $25,000. 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, $50 for IRA
Policies, and $100 for other Qualified 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).
If a Valuation Period contains more than one day, the unit values will be the
same for each day in the Valuation Period.
ALLOCATION OF PREMIUM PAYMENTS
We place net premium payments 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 initial 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.
The percentage of any premium payment which you can put into any one Investment
Subdivision or guarantee period must equal a whole percentage. 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.
VALUATION OF ACCUMULATION UNITS
We value Accumulation Units for each Investment Subdivision separately.
Initially, we arbitrarily set the value of each Accumulation Unit 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
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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
Before 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. We process transfers among the Investment
Subdivisions of Account 4 and between the Investment Subdivisions and the
Guarantee Account 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 interest rate guarantee period
applicable to that particular allocation. We also may limit the amount which you
may transfer from the Guarantee Account 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 to the
Guarantee Account. We reserve the right to prohibit or limit transfers from an
Investment Subdivision to the Guarantee Account during the six month period
following the transfer of any amount from the Guarantee Account to any
Investment Subdivision.
Currently, there is no other 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.
Sometimes, we may not honor your transfer request. We may not honor your
transfer request:
(i) if any Investment Subdivision 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. (See Transfers by Third
Parties.)
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 TRANSACTIONS
We permit certain telephone transactions (including transfers) as described in
this prospectus. We may be liable for losses resulting from unauthorized or
fraudulent telephone transactions if we fail to employ reasonable procedures to
confirm that the telephone instructions that we receive are genuine. Therefore,
we will employ means to prevent unauthorized or fraudulent telephone requests,
such as sending written confirmation, recording telephone requests, and/or
requesting other identifying information. In addition, we may require written
authorization before allowing you to make telephone transactions. We reserve the
right to limit telephone transactions.
To request a telephone transaction, you should call our telephone transaction
line. We will record all telephone transaction 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.
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TRANSFERS BY THIRD PARTIES
As a general rule and as a convenience to you, we allow you to give third
parties the right to effect transfers on your behalf. However, when the same
third party possesses this ability on behalf of 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.
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.
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
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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 $25,000. If your partial surrender request would
reduce Account Value to less than $25,000, we will surrender only that amount of
Account Value that would reduce the remaining Account Value to $25,000.
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 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.
Please remember that a partial surrender will reduce the Death Benefit by the
proportion that the partial surrender 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. 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 this withdrawal,
we will take any Account
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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 once each calendar quarter.
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Account Value to be less than $25,000. If a
systematic withdrawal would cause the Account Value to be less than $25,000,
then we will not process that systematic withdrawal transaction. 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.
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 for the Designated Beneficiary (as defined below) is the Death
Benefit. (This Death Benefit may be referred to as the "Annual EstateProtector"
in our marketing materials.) Upon receipt of due proof of the Annuitant's death
(generally, due proof is a certified copy of the death certificate or a
certified copy of the decree of a court of competent jurisdiction as to the
finding of death), the Death Benefit will constitute the new Surrender Value,
and we will treat this Surrender Value in accordance with the Owner's
instructions, subject to distribution rules and termination of contract
provisions discussed in the Policy and elsewhere in this Prospectus.
We calculate the Death Benefit by adding (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 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, we
will set it.
The definition of the unadjusted Death Benefit varies based on the Annuitant's
age at the time we issued the Policy, the number of Policy years that have
elapsed at the time the death occurs, and/or on the Annuitant's age at the time
the death occurs.
If the Annuitant was age 80 or younger on the Policy Date:
1. If the Annuitant dies during the first Policy year, the unadjusted
Death Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the total amount of premium payments made adjusted by the
proportion that any partial surrender reduced Account Value and less
any applicable premium tax.
2. If the Annuitant dies during any subsequent Policy year, but before
the Policy anniversary the Annuitant reaches age 81, the unadjusted
Death Benefit will be the greatest of:
(i) Account Value as of the date of the Annuitant's death;
(ii) the total amount of premium payments made adjusted by the
proportion that any partial surrender
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reduced Account Value and less any applicable premium tax; and
(iii) the unadjusted Death Benefit on the last day of the preceding
Policy year, plus any premium payments made since then, adjusted by
the proportion that any partial surrender reduced Account Value and
less any applicable premium tax.
3. If the Annuitant dies on or after the Policy anniversary the
Annuitant reaches age 81, the unadjusted Death Benefit will be the
greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the unadjusted Death Benefit on the Policy anniversary the
Annuitant reached age 80, plus any premium payments made since then,
adjusted by the proportion that any partial surrender reduced
Account Value and less any applicable premium tax.
If the Annuitant was age 81 or older on the Policy Date, the unadjusted Death
Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the total amount of premium payments made adjusted by the
proportion that any partial surrender 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 is age 70 on the Policy Date, then:
Policy Account Unadjusted
Anniversary Value Death Benefit
Issue $100,000 $100,000
1 $110,000 $110,000
2 $ 90,000 $110,000
3 $ 80,000 $110,000
4 $120,000 $120,000
5 $130,000 $130,000
6 $150,000 $150,000
7 $160,000 $160,000
8 $130,000 $160,000
9 $ 90,000 $160,000
10 $170,000 $170,000
11 $140,000 $170,000
12 $180,000 $180,000
13 $120,000 $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 depict investment
performance of the Policy.
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:
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(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 a non-natural 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.
(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.
DEATH OF AN OWNER, JOINT OWNER, OR ANNUITANT 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.
INCOME PAYMENTS
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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 otherwise. (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.)
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 you make
another election. You may also choose to receive the maturity value (that is,
the Surrender Value of your Policy on the date immediately preceding the
Maturity Date) 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.
We will make annuity payments monthly unless you elect quarterly, semi-annual or
annual installments. Under the monthly income benefit and all of the optional
payment plans, if any payment made more frequently than annually would be or
becomes less than $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
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guaranteed minimum of 10 years. Each payee must be at least 35 years old when
payments begin. Payments will continue as long as either payee is living. If
both payees die before the end of the minimum period, we will discount the
amount of the remaining payments for the 10-year period at the same rate used in
calculating income payments. We will pay the discounted amount in one sum to the
survivor's estate unless otherwise provided.
If the payee is not a natural person, our consent must be obtained before
selecting an optional payment plan.
Before the Maturity Date, you may change:
o your Maturity Date (however, the Maturity Date cannot be a date later than
the Policy anniversary on which the Annuitant reaches age 90, unless we
approve a later date);
o your optional payment plan;
o the allocation of your investment among the Investment Subdivisions; and
o the Owner, Joint Owner, primary Beneficiary, contingent Beneficiary, and
contingent Annuitant upon written notice to the Home Office if you reserved
this right and the Annuitant is living.
We must receive your request for a change in a form satisfactory to us. The
change will take effect as of the date you sign the request. The change will be
subject to any payment made before we recorded the change.
Fixed income payments 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 plan 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 seven days
before the income payment is due; and then
4. Calculate the value of the Annuity Units for each Investment Subdivision
seven days before the income payment is due for each income payment
thereafter.
To calculate your variable income payments, we need to make an assumption
regarding the investment performance of the Investment Subdivisions you select.
We call this your assumed investment rate. This rate is simply the total return,
after expenses, you need to earn to keep your variable income payments level. We
assume an effective annual rate of 3%. This means that if the annualized
investment performance, after expenses, of your Investment Subdivisions is less
than 3%, then the dollar amount of your variable income payment will decrease.
Conversely, if the annualized investment performance, after expenses, of your
Investment Subdivisions is greater than 3%, then the dollar amount of your
income payments will increase.
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TRANSFERS AFTER THE MATURITY DATE
If we are making variable income payments, the payee may change the Investment
Subdivisions from which we are making the payments once each calendar year. 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 Annuity Unit values. 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.
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
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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 (we only
indirectly control those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
Account 4 will be considered "adequately diversified."
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.
We do not know what limits the Treasury Department may set forth in any guidance
that the Treasury Department may issue or whether any such limits will apply to
existing Policies. We therefore reserve 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: We make 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. 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.
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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." We 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.
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. We 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.
Before 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.
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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.
QUALIFIED RETIREMENT PLANS
We 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." We do not currently offer all of the types of Qualified
Policies described, and may not offer them in the future. Prospective purchasers
should contact our 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, we 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, we are 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 from being provided under the Policies when we issue
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:
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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.
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
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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.
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
We 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, we do not pay tax on investment income
and realized capital gains of Account 4. We do not anticipate that we will incur
any Federal income tax liability on the income and gains earned by Account 4.
We, therefore, do not impose a charge for Federal income taxes. If Federal
income tax law changes and we must pay tax on some or all of the income and
gains earned by Account 4, we 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;
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or (2) the SEC, by order, permits postponement of payment to protect our Owners.
We also may defer making payments attributable to a check that has not cleared
(which may take up to 15 days), and we may defer payment of proceeds from the
Guarantee Account for a withdrawal, surrender, or transfer request for up to six
months from the date we receive the request. The amount deferred will earn
interest at a rate and for a time period not less than the minimum required in
the jurisdiction in which we delivered the Policy.
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). We will offer the Policies in
all states where we are licensed to do business.
COMMISSIONS
Our writing agents will receive commissions based on a commission schedule and
rules. The agents will receive a maximum commission of .65% 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. Our field management
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 our field management and writing
agents. 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 ours. 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,
Annuity New Business, 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. If state law requires that premium payments be returned, the
amount of the refund will equal the greater of (1) the Account Value, plus any
amount deducted from the premium payments prior to allocation to Account 4, and
(2) the premium payments made less any withdrawals you previously made. In
certain states, you 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
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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,
transfers, or partial surrenders, you will receive a written confirmation of
these transactions.
OTHER INFORMATION
We have filed a Registration Statement with the SEC, under the Securities Act of
1933 as amended, for the 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
We, like other life insurance companies, are 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 we cannot predict the outcome of
any litigation with certainty, we believe that at the present time there are no
pending or threatened lawsuits that are reasonably likely to have a material
adverse impact on us or Account 4.
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.
35
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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
Financial Statements
- --------------------------------------------------------------------------------
To GE Life & Annuity
Annuity New Business
6610 W. Broad Street
Richmond, VA 23230
Please mail a copy of the Statement of Additional Information for Separate
Account 4, Policy Form P1151 1/99 to:
Name____________________________________________________________________________
Address_________________________________________________________________________
Street
_________________________________________________________________________
City
State_______________________________________________ Zip _______________________
Signature of Requestor__________________________________________________________
Date
36
<PAGE>
PART B
GE LIFE AND ANNUITY ASSURANCE COMPANY
SEPARATE ACCOUNT 4
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY
FORM P1151 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 ___________
37
<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
Financial Statements
38
<PAGE>
THE POLICIES
TRANSFER OF ANNUITY UNITS
At your 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 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 .004410% for each day in the Valuation Period.
This corresponds to 1.35% 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, 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
1
<PAGE>
Fund or its principal underwriter if the Company decides to make another mutual
fund available as a funding vehicle for its policies.
GE INVESTMENTS FUNDS, INC. . This agreement may be terminated at the option of
any party upon six months' written notice to the other parties, unless a shorter
time is agreed to by the parties.
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 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.
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 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
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.
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-
2
<PAGE>
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.
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, the administrative expense charge, and the policy
maintenance charge (which, for these purposes, is assumed to be equivalent to
.10% of Account Value) are as follows:
Current 3.73%
Effective 3.80%
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, 3 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 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 $25,000 at the
time the charge is due.
3
<PAGE>
3. 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) for the Funds underlying the
available Investment Subdivisions is as follows:
<TABLE>
<CAPTION>
From the
For the For the For the For the Date of Date of
1-year 3-year 5year 10-year Portfolio Portfolio
period period period period Inception Inception
ended ended ended ended to
12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Investment Subdivision
BALANCED
Janus Aspen Balanced Portfolio 20.03 18.92 N/A N/A 14.31 09/13/93
VIP II Asset Manager Portfolio 18.61 15.39 11.03 N/A 10.82 09/06/89
Salomon Brothers Total Return N/A N/A N/A N/A N/A N/A
Fund
GE Investments Total Return Fund 15.98 16.65 12.32 11.73 10.33 07/01/85
Oppenheimer Multiple Strategies 15.24 16.00 11.39 10.84 10.15 02/09/87
Fund
AGGRESSIVE GROWTH
Janus Aspen Aggressive Growth 10.75 13.78 N/A N/A 17.18 09/13/93
Portfolio
Oppenheimer Aggressive Growth 9.78 19.12 13.96 14.25 13.35 08/15/86
Fund
Alger American Small 9.50 16.74 10.74 N/A 17.21 09/21/88
Capitalization Portfolio
GROWTH
Janus Aspen Growth Portfolio 20.67 21.60 N/A N/A 15.66 09/13/93
Janus Aspen Capital Appreciation N/A N/A N/A N/A 25.12 05/01/97
Portfolio
Alger American Growth Portfolio 23.62 22.68 17.26 N/A 17.46 01/09/89
VIP II Contrafund Portfolio 22.04 N/A N/A N/A 26.34 01/03/95
VIP Growth Portfolio 21.39 22.12 16.00 15.20 13.46 10/09/86
Oppenheimer Growth Fund 24.54 27.22 16.60 14.69 13.47 04/03/85
VIP III Growth Opportunities 27.75 N/A N/A N/A 24.67 01/03/95
Portfolio
Goldman Sachs Mid Cap Equity Fund N/A N/A N/A N/A N/A N/A
GE Investments Value Equity Fund N/A N/A N/A N/A 31.01 05/01/97
GROWTH & INCOME
Federated American Leaders Fund 30.09 26.90 N/A N/A 19.48 02/10/94
II
GE Investments U.S. Equity Fund 29.88 N/A N/A N/A 27.53 01/02/95
Goldman Sachs Growth & Income N/A N/A N/A N/A N/A N/A
Fund
Salomon Brothers Investors Fund N/A N/A N/A N/A N/A N/A
VIP Equity-Income Portfolio 25.94 23.39 18.11 14.74 12.57 10/09/86
VIP III Growth & Income Portfolio 27.89 N/A N/A N/A 27.89 12/31/96
GE Investments S&P 500 Index Fund 28.09 28.02 18.37 15.76 13.97 04/14/85
INTERNATIONAL STOCK
Janus Aspen International Growth 16.50 23.15 N/A N/A 17.27 05/02/94
Portfolio
VIP Overseas Portfolio 9.66 9.58 12.16 7.76 6.39 01/28/87
GE Investments International 8.31 N/A N/A N/A 8.38 05/01/95
Equity Fund
CORPORATE BOND
Oppenheimer Bond Fund 7.40 8.36 6.39 7.64 8.01 04/03/85
Salomon Brothers Strategic Bond N/A N/A N/A N/A N/A N/A
Fund
GE Investments Income Fund 7.20 N/A N/A N/A 7.60 01/02/95
HIGH YIELD BOND
Oppenheimer High Income Fund 10.31 13.93 11.82 12.37 11.41 04/30/86
Federated High Income Bond Fund 11.90 14.17 N/A N/A 9.44 03/01/94
II
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPECIALTY
Federated Utility Fund II 24.49 18.56 N/A N/A 12.60 02/10/94
GE Investments Real Estate 17.49 N/A N/A N/A 25.10 05/01/95
Securities Fund
DIVERSIFIED BOND
Janus Aspen Flexible Income 9.87 12.82 N/A N/A 8.15 09/13/93
Portfolio
GLOBAL STOCK
Janus Aspen Worldwide Growth 20.08 24.01 N/A N/A 20.81 09/13/93
Portfolio
MONEY MARKET
GE Investments Money Market Fund 3.60 3.76 2.79 3.58 3.64 06/30/85
</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 adjusted
historical performance 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.
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 the Company's 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.
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.
5
<PAGE>
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.
We will send all notices to the Owner at the last known address on file with the
company.
DISTRIBUTION OF THE POLICIES
6
<PAGE>
The offering is continuous and Capital Brokerage Corporation does not anticipate
discontinuing the offering of the Policies. However, the Company does 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, the Company is subject to the insurance laws and regulations of
other states within which it is licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
determining permissible investments. Presently, the Company is 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
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, 1998 and 1997, and the related consolidated statements of income and
comprehensive income, shareholders' interest and cash flows for the years then
ended, the nine month period ended December 31, 1996 and the preacquisition
three month period ended March 31, 1996, and the statements of assets and
liabilities of Life of Virginia Separate Account 4, now known as GE Life &
Annuity Separate Account 4, as of December 31, 1998 and the related statements
of operations and changes in net assets for each of the years or lesser periods
in the three year period 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 dated January 22, 1999 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 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.
FINANCIAL STATEMENTS
This Statement of Additional Information contains financial statements for the
Company (now known as GE Life and Anniuty Assurance Company) as of December 31,
1998 and 1997 and for each of the years in the three-year period ended December
31, 1998, as well as, financial statements for Life of Virginia Separate Account
4 (now known as GE Life & Annuity Separate Account 4) as of December 31, 1998
and for each of the years or lesser periods in the three year period then ended.
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.
7
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
TABLE OF CONTENTS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report ................... A-3
Financial Statements:
Statements of Assets and Liabilities .......... A-4
Statements of Operations ...................... A-11
Statements of Changes in Net Assets ........... A-22
Notes to Financial Statements .................. A-43
</TABLE>
A-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Contractholders
Life of Virginia Separate Account 4
and
The 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,
Income and U.S. Equity 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 Fund III -- Growth &
Income and Growth Opportunities Portfolios; the Federated Investors Insurance
Series -- American Leaders, High Income Bond and Utility Funds II; the Alger
American Fund -- Small Cap and Growth Portfolios; the PBHG Insurance Series
Fund -- PBHG Large Cap Growth and PBHG Growth II Portfolios; the Janus Aspen
Series -- Aggressive Growth, Growth, Worldwide Growth, Balanced, Flexible
Income, International Growth and Capital Appreciation Portfolios; the Goldman
Sachs Variable Insurance Trust Fund -- Growth and Income and Mid Cap Equity
Funds; and the Salomon Brothers Variable Series Fund -- Strategic Bond,
Investors, and Total Return Funds) as of December 31, 1998 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 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 years or lesser periods in the three year period then ended.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1998,
by correspondence with the underlying mutual funds or their transfer agent. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
portfolios constituting Life of Virginia Separate Account 4 as of December 31,
1998 and the results of their operations and changes in their net assets for
each of the years or lesser periods in the three year period then ended in
conformity with generally accepted accounting principles.
KPMG LLP
Richmond, Virginia
February 12, 1999
A-3
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
----------------------------------
S&P 500 MONEY
INDEX MARKET
FUND FUND
ASSETS ----------------- ----------------
<S> <C> <C>
Investment in GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (12,978,221 shares;
cost -- $264,318,648)................................ $307,713,611 --
Money Market Fund (206,691,464 shares;
cost -- $206,691,474)................................ -- 206,691,464
Total Return Fund (4,513,480 shares;
cost -- $64,971,588)................................. -- --
International Equity Fund (2,342,088; shares;
cost -- $27,101,105)................................. -- --
Real Estate Securities Fund (4,024,961
shares; cost -- $55,753,342)......................... -- --
Global Income Fund (942,716 shares;
cost -- $9,713,591).................................. -- --
Value Equity Fund (2,887,264 shares;
cost -- $38,586,474)................................. -- --
Income Fund (2,792,519 shares;
cost -- $34,717,370)................................. -- --
U.S. Equity Fund (63,724 shares;
cost -- $1,980,988).................................. -- --
Receivable from affiliate .............................. -- 20,944
Receivable for units sold .............................. 1,603,821 12,193,795
------------ -----------
TOTAL ASSETS ........................................ 309,317,432 218,906,203
------------ -----------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ......... 490,032 369,262
Payable for units withdrawn: ........................... -- --
------------ -----------
TOTAL LIABILITIES ................................... 490,032 369,262
------------ -----------
Net assets ............................................. $308,827,400 218,536,941
============ ===========
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders ........... $308,827,400 218,536,941
The Life Insurance Company of Virginia .............. -- --
------------ -----------
Net assets ............................................. $308,827,400 218,536,941
============ ===========
Outstanding units attributable to
contractholders: Type I (note 2) ...................... 1,096,813 5,222,349
============ ===========
Net asset value per unit: Type I ....................... $ 50.24 15.38
============ ============
Outstanding units attributable to
contractholders: Type II (note 2) ..................... 5,187,559 9,232,947
============ ============
Net asset value per unit: Type II ...................... $ 48.91 14.97
============ ============
<CAPTION>
GE INVESTMENTS FUNDS, INC.
-----------------------------------------------
TOTAL INTERNATIONAL REAL ESTATE
RETURN EQUITY SECURITIES
FUND FUND FUND
ASSETS --------------- --------------- ---------------
<S> <C> <C> <C>
Investment in GE Investments Funds, Inc.,
at fair value (note 2):
S&P 500 Index Fund (12,978,221 shares;
cost -- $264,318,648)................................ -- -- --
Money Market Fund (206,691,464 shares;
cost -- $206,691,474)................................ -- -- --
Total Return Fund (4,513,480 shares;
cost -- $64,971,588)................................. $66,167,622 -- --
International Equity Fund (2,342,088; shares;
cost -- $27,101,105)................................. -- 27,847,422 --
Real Estate Securities Fund (4,024,961
shares; cost -- $55,753,342)......................... -- -- 46,649,298
Global Income Fund (942,716 shares;
cost -- $9,713,591).................................. -- -- --
Value Equity Fund (2,887,264 shares;
cost -- $38,586,474)................................. -- -- --
Income Fund (2,792,519 shares;
cost -- $34,717,370)................................. -- -- --
U.S. Equity Fund (63,724 shares;
cost -- $1,980,988).................................. -- -- --
Receivable from affiliate .............................. -- -- --
Receivable for units sold .............................. 34,871 -- --
---------- ---------- ----------
TOTAL ASSETS ........................................ 66,202,493 27,847,422 46,649,298
---------- ---------- ----------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ......... 91,900 23,042 46,746
Payable for units withdrawn: ........................... 2,249 1,004,629 57,007
---------- ---------- ----------
TOTAL LIABILITIES ................................... 94,149 1,027,671 103,753
---------- ---------- ----------
Net assets ............................................. $66,108,344 26,819,751 46,545,545
========== ========== ==========
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders ........... $66,108,344 11,643,666 30,866,087
The Life Insurance Company of Virginia .............. -- 15,176,085 15,679,458
---------- ---------- ----------
Net assets ............................................. $66,108,344 26,819,751 46,545,545
========== ========== ==========
Outstanding units attributable to
contractholders: Type I (note 2) ...................... 584,911 161,533 316,692
========== ========== ==========
Net asset value per unit: Type I ....................... $ 33.52 14.54 15.02
=========== =========== ===========
Outstanding units attributable to
contractholders: Type II (note 2) ..................... 1,425,134 641,918 1,753,483
=========== =========== ===========
Net asset value per unit: Type II ...................... $ 32.63 14.48 14.89
=========== =========== ===========
</TABLE>
A-4
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
--------------------------------------------------------------
GLOBAL VALUE U.S.
INCOME EQUITY INCOME EQUITY
FUND FUND FUND FUND
ASSETS --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Investment in GE Investments Funds, Inc., at fair value
(note 2):
S&P 500 Index Fund (12,978,221 shares;
cost -- $264,318,648)...................................... -- -- -- --
Money Market Fund (206,691,464 shares;
cost -- $206,691,474)...................................... -- -- -- --
Total Return Fund (4,513,480 shares;
cost -- $64,971,588)....................................... -- -- -- --
International Equity Fund (2,342,088; shares;
cost -- $27,101,105)....................................... -- -- -- --
Real Estate Securities Fund (4,024,961 shares;
cost-- $55,753,342)........................................ -- -- -- --
Global Income Fund (942,716 shares;
cost -- $9,713,591)........................................ $ 9,926,798 -- -- --
Value Equity Fund (2,887,264 shares;
cost -- $38,586,474)....................................... -- 39,180,175 -- --
Income Fund (2,792,519 shares; cost -- $34,717,370).......... -- -- 34,459,679 --
U.S. Equity Fund (63,724 shares; cost -- $1,980,988)......... -- -- -- 2,134,742
Receivable from affiliate .................................... -- -- -- --
Receivable for units sold .................................... -- 23,889 1,316 74,672
----------- ---------- ---------- ---------
TOTAL ASSETS .............................................. 9,926,798 39,204,064 34,460,995 2,209,414
----------- ---------- ---------- ---------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ............... 6,646 62,695 129,260 8,434
Payable for units withdrawn: ................................. 249,428 230 7,758 --
----------- ---------- ---------- ---------
TOTAL LIABILITIES ......................................... 256,074 62,925 137,018 8,434
----------- ---------- ---------- ---------
Net assets ................................................... $ 9,670,724 39,141,139 34,323,977 2,200,980
=========== ========== ========== =========
Analysis of net assets:
Attributable to:
Variable deferred annuity contractholders ................. $ 3,810,911 34,898,557 34,323,977 2,200,980
The Life Insurance Company of Virginia .................... 5,859,813 4,242,582 -- --
----------- ---------- ---------- ---------
Net assets ................................................... $ 9,670,724 39,141,139 34,323,977 2,200,980
=========== ========== ========== =========
Outstanding units attributable to contractholders:
Type I (note 2) ............................................. 46,632 385,376 1,332,645 26,127
=========== ========== ========== =========
Net asset value per unit: Type I ............................. $ 11.50 13.87 10.68 10.68
=========== =========== =========== ==========
Outstanding units attributable to contractholders:
Type II (note 2) ............................................ 285,995 2,140,000 1,884,740 180,295
=========== =========== =========== ==========
Net asset value per unit: Type II ............................ $ 11.45 13.81 10.66 10.66
=========== =========== =========== ==========
</TABLE>
A-5
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
----------------------------------
CAPITAL
BOND APPRECIATION
FUND FUND
ASSETS ---------------- ----------------
<S> <C> <C>
Investment in Oppenheimer Variable
Account Funds, at fair value (note 2):
Bond Fund (5,079,562 shares;
cost -- $60,266,701) $ 62,580,210 --
Capital Appreciation Fund (4,869,166 shares;
cost -- $187,683,640).......................... -- 218,284,700
Growth Fund (5,178,151 shares;
cost -- $165,665,597).......................... -- --
High Income Fund (14,906,183 shares;
cost -- $166,811,528).......................... -- --
Multiple Strategies Fund (4,689,609 shares;
cost -- $71,277,962)........................... -- --
Receivable for units sold ....................... 276,761 407,058
------------ -----------
TOTAL ASSETS .................................. 62,856,971 218,691,758
------------ -----------
LIABILITIES
Increase (decrease) in net assets from capital
transactions .................................... 110,911 425,350
Payable for units withdrawn ...................... -- 239,701
------------ -----------
TOTAL LIABILITIES ............................. 110,911 665,051
------------ -----------
Net assets attributable to variable deferred
annuity contractholders ......................... $ 62,746,060 218,026,707
============ ===========
Outstanding units: Type I (note 2) ............... 915,859 2,344,528
============ ===========
Net asset value per unit: Type I ................. $ 22.09 40.56
============ ============
Outstanding units: Type II (note 2) .............. 1,976,510 3,113,007
============ ============
Net asset value per unit: Type II ................ $ 21.51 39.49
============ ============
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
-------------------------------------------------
HIGH MULTIPLE
GROWTH INCOME STRATEGIES
FUND FUND FUND
ASSETS ---------------- ---------------- ---------------
<S> <C> <C> <C>
Investment in Oppenheimer Variable
Account Funds, at fair value (note 2):
Bond Fund (5,079,562 shares;
cost -- $60,266,701) -- -- --
Capital Appreciation Fund (4,869,166 shares;
cost -- $187,683,640).......................... -- -- --
Growth Fund (5,178,151 shares;
cost -- $165,665,597).......................... $189,882,808 -- --
High Income Fund (14,906,183 shares;
cost -- $166,811,528).......................... -- 164,266,132 --
Multiple Strategies Fund (4,689,609 shares;
cost -- $71,277,962)........................... -- -- 79,957,841
Receivable for units sold ....................... -- 55,163 --
----------- ----------- ----------
TOTAL ASSETS .................................. 189,882,808 164,321,295 79,957,841
----------- ----------- ----------
LIABILITIES
Increase (decrease) in net assets from capital
transactions .................................... 310,016 235,959 194,658
Payable for units withdrawn ...................... 206,098 80,754 8,622
----------- ----------- ----------
TOTAL LIABILITIES ............................. 516,114 316,713 203,280
----------- ----------- ----------
Net assets attributable to variable deferred
annuity contractholders ......................... $189,366,694 164,004,582 79,754,561
=========== =========== ==========
Outstanding units: Type I (note 2) ............... 1,173,060 1,658,434 1,344,466
=========== =========== ==========
Net asset value per unit: Type I ................. $ 46.11 31.06 27.87
============ ============ ===========
Outstanding units: Type II (note 2) .............. 3,012,849 3,720,027 1,558,580
============ ============ ===========
Net asset value per unit: Type II ................ $ 44.90 30.24 27.13
============ ============ ===========
</TABLE>
A-6
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUNDS
---------------------------------------------------
EQUITY-
INCOME GROWTH OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS ----------------- ---------------- ----------------
<S> <C> <C> <C>
Investment in Variable Insurance
Products Fund, at fair value
(note 2):
Equity -- Income Portfolio
(27,318,250 shares;
cost -- $571,169,732)..................... $ 694,429,927 -- --
Growth Portfolio (9,326,267 shares;
cost -- $283,201,407)..................... -- 418,469,590 --
Overseas Portfolio (5,683,460
shares; cost -- $108,549,287)............. -- -- 113,953,371
Investment in Variable Insurance
Products Fund II, at fair value
(note 2):
Asset Manager Portfolio
(27,620,799 shares;
cost -- $415,474,554)..................... -- -- --
Contrafund Portfolio (14,085,035
shares; cost -- $248,124,557)............. -- -- --
Investment in Variable Insurance
Products Fund III, at fair value
(note 2):
Growth & Income Portfolio
(3,513,229 shares;
cost -- $48,367,818)...................... -- -- --
Growth Opportunities Portfolio
(2,333,781 shares; cost --
$45,525,614).............................. -- -- --
Receivable for units sold .................. -- 3,264 107,222
------------- ----------- -----------
TOTAL ASSETS ............................. 694,429,927 418,472,854 114,060,593
------------- ----------- -----------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) .................................. 971,345 674,619 336,549
Payable for units withdrawn ................ 1,226,255 231,503 10,260,769
------------- ----------- -----------
TOTAL LIABILITIES ........................ 2,197,600 906,122 10,597,318
------------- ----------- -----------
Net assets attributable to variable
deferred annuity contractholders .......... $ 692,232,327 417,566,732 103,463,275
============= =========== ===========
Outstanding units: Type I (note 2) ......... 5,753,760 3,969,421 2,813,314
============= =========== ===========
Net asset value per unit: Type I ........... $ 41.23 54.32 23.58
============= ============ ============
Outstanding units: Type II (note 2) ........ 11,335,446 3,818,261 1,616,956
============= ============ ============
Net asset value per unit: Type II .......... $ 40.14 52.89 22.96
============= ============ ============
<CAPTION>
VARIABLE INSURANCE VARIABLE INSURANCE
PRODUCTS FUND II PRODUCTS FUND III
--------------------------------- ------------------------------
ASSET GROWTH & GROWTH
MANAGER CONTRAFUND INCOME OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS ---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Investment in Variable Insurance
Products Fund, at fair value
(note 2):
Equity -- Income Portfolio
(27,318,250 shares;
cost -- $571,169,732)..................... -- -- -- --
Growth Portfolio (9,326,267 shares;
cost -- $283,201,407)..................... -- -- -- --
Overseas Portfolio (5,683,460
shares; cost -- $108,549,287)............. -- -- -- --
Investment in Variable Insurance
Products Fund II, at fair value
(note 2):
Asset Manager Portfolio
(27,620,799 shares;
cost -- $415,474,554)..................... $501,593,704 -- -- --
Contrafund Portfolio (14,085,035
shares; cost -- $248,124,557)............. -- 344,238,254 -- --
Investment in Variable Insurance
Products Fund III, at fair value
(note 2):
Growth & Income Portfolio
(3,513,229 shares;
cost -- $48,367,818)...................... -- -- 56,738,647 --
Growth Opportunities Portfolio
(2,333,781 shares; cost --
$45,525,614).............................. -- -- -- 53,396,906
Receivable for units sold .................. -- 20,128 207,349 320,250
----------- ----------- ---------- ----------
TOTAL ASSETS ............................. 501,593,704 344,258,382 56,945,996 53,717,156
----------- ----------- ---------- ----------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) .................................. 758,448 481,460 98,413 73,997
Payable for units withdrawn ................ 348,104 52,956 -- 7,101
----------- ----------- ---------- ----------
TOTAL LIABILITIES ........................ 1,106,552 534,416 98,413 81,098
----------- ----------- ---------- ----------
Net assets attributable to variable
deferred annuity contractholders .......... $500,487,152 343,723,966 56,847,583 53,636,058
=========== =========== ========== ==========
Outstanding units: Type I (note 2) ......... 14,835,158 3,082,088 751,280 595,214
=========== =========== ========== ==========
Net asset value per unit: Type I ........... $ 27.90 26.31 15.86 15.15
============ ============ =========== ===========
Outstanding units: Type II (note 2) ........ 3,176,311 10,085,800 2,843,815 2,958,791
============ ============ =========== ===========
Net asset value per unit: Type II .......... $ 27.26 26.04 15.80 15.08
============ ============ =========== ===========
</TABLE>
A-7
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS
INSURANCE SERIES
------------------------------------------------
AMERICAN HIGH
LEADERS INCOME BOND UTILITY
FUND II FUND II FUND II
---------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments in Federated Investors
Insurance Series, at fair value (note 2):
American Leaders Fund II (3,423,504
shares; cost -- $66,654,672).................. $ 74,221,563 -- --
High Income Bond Fund II (4,748,355
shares; cost -- $50,760,691).................. -- 51,852,041 --
Utility Fund II (3,001,202 shares;
cost -- $38,293,472).......................... -- -- 45,828,348
Investment in Alger American Fund, at
fair value (note 2):
Small Cap Portfolio (2,156,235 shares;
cost -- $88,492,185).......................... -- -- --
Growth Portfolio (2,467,326 shares;
cost -- $100,555,548)......................... -- -- --
PBHG Insurance Series Fund, at fair
value (note 2):
PBHG Large Cap Growth Portfolio
(778,422 shares; cost -- $9,843,865).......... -- -- --
PBHG Growth II Portfolio (942,049
shares; cost -- $10,016,297).................. -- -- --
Receivable for units sold ...................... 105,458 691,832 50,673
------------ ---------- ----------
TOTAL ASSETS ................................. 74,327,021 52,543,873 45,879,021
------------ ---------- ----------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) ...................................... 111,393 77,244 65,560
Payable for units withdrawn .................... 403 -- 1,616
------------ ---------- ----------
TOTAL LIABILITIES ............................ 111,796 77,244 67,176
------------ ---------- ----------
Net assets attributable to variable deferred
annuity contractholders ....................... $ 74,215,225 52,466,629 45,811,845
============ ========== ==========
Outstanding units: Type I (note 2) ............. 480,466 471,675 478,465
============ ========== ==========
Net asset value per unit: Type I ............... $ 16.83 15.34 19.01
============ =========== ===========
Outstanding units: Type II (note 2) ............ 3,955,083 2,977,691 1,950,915
============ =========== ===========
Net asset value per unit: Type II .............. $ 16.72 15.19 18.82
============ =========== ===========
<CAPTION>
ALGER AMERICAN PBHG INSURANCE
FUND SERIES FUND
-------------------------------- -------------------------------
SMALL PBHG LARGE PBHG
CAP GROWTH CAP GROWTH GROWTH II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Investments in Federated Investors
Insurance Series, at fair value (note 2):
American Leaders Fund II (3,423,504
shares; cost -- $66,654,672).................. -- -- -- --
High Income Bond Fund II (4,748,355
shares; cost -- $50,760,691).................. -- -- -- --
Utility Fund II (3,001,202 shares;
cost -- $38,293,472).......................... -- -- -- --
Investment in Alger American Fund, at
fair value (note 2):
Small Cap Portfolio (2,156,235 shares;
cost -- $88,492,185).......................... $94,809,637 -- -- --
Growth Portfolio (2,467,326 shares;
cost -- $100,555,548)......................... -- 131,311,079 -- --
PBHG Insurance Series Fund, at fair
value (note 2):
PBHG Large Cap Growth Portfolio
(778,422 shares; cost -- $9,843,865).......... -- -- 12,018,842 --
PBHG Growth II Portfolio (942,049
shares; cost -- $10,016,297).................. -- -- -- 10,956,027
Receivable for units sold ...................... -- 951,516 25,926 --
---------- ----------- ---------- ----------
TOTAL ASSETS ................................. 94,809,637 132,262,595 12,044,768 10,956,027
---------- ----------- ---------- ----------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) ...................................... 130,000 261,324 42,299 16,704
Payable for units withdrawn .................... 325,378 -- 20,883 4,556
---------- ----------- ---------- ----------
TOTAL LIABILITIES ............................ 455,378 261,324 63,182 21,260
---------- ----------- ---------- ----------
Net assets attributable to variable deferred
annuity contractholders ....................... $94,354,259 132,001,271 11,981,586 10,934,767
========== =========== ========== ==========
Outstanding units: Type I (note 2) ............. 1,733,429 1,161,424 98,043 122,432
========== =========== ========== ==========
Net asset value per unit: Type I ............... $ 12.15 19.64 15.15 11.41
=========== ============ =========== ===========
Outstanding units: Type II (note 2) ............ 6,082,414 5,605,283 696,037 839,596
=========== ============ =========== ===========
Net asset value per unit: Type II .............. $ 12.05 19.48 15.08 11.36
=========== ============ =========== ===========
</TABLE>
A-8
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
---------------------------------------------------
AGGRESSIVE WORLDWIDE
GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS ----------------- ---------------- ----------------
<S> <C> <C> <C>
Investment in Janus Aspen Series,
at fair value (note 2):
Aggressive Growth Portfolio
(4,879,822 shares;
cost -- $94,938,397)................. $ 134,634,295 -- --
Growth Portfolio
(14,233,651 shares;
cost -- $231,936,881)................ -- 335,060,133 --
Worldwide Growth Portfolio
(17,569,116 shares;
cost -- $409,584,897)................ -- -- 511,085,584
Balanced Portfolio
(7,729,369 shares;
cost -- $140,195,868)................ -- -- --
Flexible Income Portfolio
(2,729,903 shares;
cost -- $32,556,570)................. -- -- --
International Growth Portfolio
(3,639,052 shares;
cost -- $74,093,952)................. -- -- --
Capital Appreciation Portfolio
(1,912,067 shares;
cost -- $30,581,552)................. -- -- --
Receivable for units sold ............. -- -- --
------------- ----------- -----------
TOTAL ASSETS ........................ 134,634,295 335,060,133 511,085,584
------------- ----------- -----------
LIABILITIES
Accrued expenses payable to
affiliate (note 3) ................... 211,955 647,926 762,785
Payable for units withdrawn ........... 142,845 27,385 1,506,463
------------- ----------- -----------
354,800 675,311 2,269,248
------------- ----------- -----------
Net assets attributable to variable
deferred annuity contractholders...... $ 134,279,495 334,384,822 508,816,336
============= =========== ===========
Outstanding units: Type I
(note 2) ............................. 1,551,670 4,307,429 4,894,747
============= =========== ===========
Net asset value per unit:
Type I ............................... $ 26.89 25.68 29.44
============= ============ ============
Outstanding units: Type II
(note 2) ............................. 3,488,695 8,827,221 12,554,733
============= ============ ============
Net asset value per unit:
Type II .............................. $ 26.53 25.35 29.05
============= ============ ============
<CAPTION>
JANUS ASPEN SERIES
----------------------------------------------------------------
FLEXIBLE INTERNATIONAL CAPITAL
BALANCED INCOME GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Investment in Janus Aspen Series,
at fair value (note 2):
Aggressive Growth Portfolio
(4,879,822 shares;
cost -- $94,938,397)................. -- -- -- --
Growth Portfolio
(14,233,651 shares;
cost -- $231,936,881)................ -- -- -- --
Worldwide Growth Portfolio
(17,569,116 shares;
cost -- $409,584,897)................ -- -- -- --
Balanced Portfolio
(7,729,369 shares;
cost -- $140,195,868)................ $173,910,792 -- -- --
Flexible Income Portfolio
(2,729,903 shares;
cost -- $32,556,570)................. -- 32,922,626 -- --
International Growth Portfolio
(3,639,052 shares;
cost -- $74,093,952)................. -- -- 77,402,638 --
Capital Appreciation Portfolio
(1,912,067 shares;
cost -- $30,581,552)................. -- -- -- 38,126,625
Receivable for units sold ............. 915,453 170,372 194,104 1,075,836
----------- ---------- ---------- ----------
TOTAL ASSETS ........................ 174,826,245 33,092,998 77,596,742 39,202,461
----------- ---------- ---------- ----------
LIABILITIES
Accrued expenses payable to
affiliate (note 3) ................... 250,096 47,653 115,569 118,990
Payable for units withdrawn ........... -- -- -- --
----------- ---------- ---------- ----------
250,096 47,653 115,569 118,990
----------- ---------- ---------- ----------
Net assets attributable to variable
deferred annuity contractholders...... $174,576,149 33,045,345 77,481,173 39,083,471
=========== ========== ========== ==========
Outstanding units: Type I
(note 2) ............................. 2,916,033 552,225 1,053,424 506,817
=========== ========== ========== ==========
Net asset value per unit:
Type I ............................... $ 19.55 13.50 15.86 19.59
============ =========== =========== ===========
Outstanding units: Type II
(note 2) ............................. 6,060,191 1,911,151 3,856,210 1,494,358
============ =========== =========== ===========
Net asset value per unit:
Type II .............................. $ 19.40 13.39 15.76 19.51
============ =========== =========== ===========
</TABLE>
A-9
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS VARIABLE
INSURANCE TRUST FUND
------------------------------
GROWTH AND MID CAP
INCOME EQUITY
FUND FUND
--------------- --------------
<S> <C> <C>
ASSETS
Investment in Goldman Sachs Variable Insurance Trust Fund,
at fair value (note 2):
Growth and Income Fund (402,157 shares;
cost -- $4,162,464)......................................... $ 4,202,546 --
Mid Cap Equity Fund (428,996 shares;
cost -- $3,663,704)......................................... -- 3,676,492
Investment in Salomon Brothers
Variable Series Fund, at fair value (note 2):
Strategic Bond Fund (12,447 shares; cost -- $130,915)......... -- --
Investors Fund (994 shares; cost -- $10,626).................. -- --
Total Return Fund (32,491 shares; cost -- $340,870)........... -- --
Dividend receivable ........................................... -- --
Receivable from affiliate ..................................... 49,406 3,746
Receivable for units sold ..................................... 15,607 --
----------- ---------
TOTAL ASSETS ............................................... 4,267,559 3,680,238
----------- ---------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................ 4,991 48,760
Payable for units withdrawn ................................... -- 8,287
----------- ---------
TOTAL LIABILITIES .......................................... 4,991 57,047
----------- ---------
Net assets attributable to variable deferred annuity
contractholders .............................................. $ 4,262,568 3,623,191
=========== =========
Outstanding units: Type I (note 2) ............................ 52,650 78,049
=========== =========
Net asset value per unit: Type I .............................. $ 8.86 8.57
=========== ==========
Outstanding units: Type II (note 2) ........................... 428,936 345,533
=========== ==========
Net asset value per unit: Type II ............................. $ 8.85 8.55
=========== ==========
<CAPTION>
SALOMON BROTHERS
VARIABLE SERIES FUND
-----------------------------------
STRATEGIC TOTAL
BOND INVESTOR RETURN
FUND FUND FUND
----------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Investment in Goldman Sachs Variable Insurance Trust Fund,
at fair value (note 2):
Growth and Income Fund (402,157 shares;
cost -- $4,162,464)......................................... -- -- --
Mid Cap Equity Fund (428,996 shares;
cost -- $3,663,704)......................................... -- -- --
Investment in Salomon Brothers
Variable Series Fund, at fair value (note 2):
Strategic Bond Fund (12,447 shares; cost -- $130,915)......... $126,092 -- --
Investors Fund (994 shares; cost -- $10,626).................. -- 10,947 --
Total Return Fund (32,491 shares; cost -- $340,870)........... -- -- 337,911
Dividend receivable ........................................... 6,068 45 5,946
Receivable from affiliate ..................................... -- -- --
Receivable for units sold ..................................... -- -- --
------- ------ -------
TOTAL ASSETS ............................................... 132,160 10,992 343,857
------- ------ -------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................ 138 5 136
Payable for units withdrawn ................................... -- -- --
------- ------ -------
TOTAL LIABILITIES .......................................... 138 5 136
------- ------ -------
Net assets attributable to variable deferred annuity
contractholders .............................................. $132,022 10,987 343,721
======= ====== =======
Outstanding units: Type I (note 2) ............................ 2,799 42 6,299
======= ====== =======
Net asset value per unit: Type I .............................. $ 10.24 12.14 10.67
======== ======= ========
Outstanding units: Type II (note 2) ........................... 10,094 863 25,915
======== ======= ========
Net asset value per unit: Type II ............................. $ 10.24 12.14 10.67
======== ======= ========
</TABLE>
See accompanying notes to financial statements.
A-10
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
-----------------------------------------------------------------------------
GOVERNMENT
S&P 500 SECURITIES
FUND FUND
---------------------------------------------- ------------------------------
PERIOD YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31, DECEMBER 11, DECEMBER 31,
1998 1997 1996 1997 1996
-------------- -------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................... $11,434,493 4,001,897 23,435,279 -- 1,309,648
Expenses -- Mortality and expense
risk charges (note 3) ....................... 2,910,483 1,356,740 492,403 147,796 143,919
----------- --------- ---------- ------- ---------
Net investment income (expense) ................ 8,524,010 2,645,157 22,942,876 (147,796) 1,165,729
----------- --------- ---------- -------- ---------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ...................... 8,830,544 (899,446) 1,510,464 (242,895) (68,248)
Unrealized appreciation (depreciation)
on investments .............................. 35,731,485 21,611,136 (16,204,375) 987,049 (995,503)
----------- ---------- ----------- -------- ---------
Net realized and unrealized gain (loss) on
investments ................................... 44,562,029 20,711,690 (14,693,911) 744,154 (1,063,751)
----------- ---------- ----------- -------- ----------
Increase in net assets from operations ......... $53,086,039 23,356,847 8,248,965 596,358 101,978
=========== ========== =========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
---------------------------------------------
MONEY MARKET
FUND
---------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- --------------- ---------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ......................... $9,177,451 5,626,589 5,204,323
Expenses -- Mortality and expense
risk charges (note 3) ..................... 2,260,774 1,421,044 980,270
---------- --------- ---------
Net investment income (expense) .............. 6,916,677 4,205,545 4,224,053
---------- --------- ---------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) .................... 545,381 (4,421,730) 1,686,452
Unrealized appreciation (depreciation) on
investments ............................... (545,381) 4,383,879 (2,984,484)
---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments ................................. -- (37,851) (1,298,032)
---------- ---------- ----------
Increase in net assets from operations ....... $6,916,677 4,167,694 2,926,021
========== ========== ==========
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-------------------------------------------
TOTAL RETURN
FUND
-------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ------------- ---------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ......................... $ 3,360,564 6,098,862 9,319,880
Expenses -- Mortality and expense
risk charges (note 3) ..................... 691,738 496,469 357,589
--------- --------- ---------
Net investment income (expense) .............. 2,668,826 5,602,393 8,962,291
--------- --------- ---------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) .................... (144,205) (454,827) 614,446
Unrealized appreciation (depreciation) on
investments ............................... 5,408,858 657,828 (6,827,262)
--------- --------- ----------
Net realized and unrealized gain (loss) on
investments ................................. 5,264,653 203,001 (6,212,816)
--------- --------- ----------
Increase in net assets from operations ....... $7,933,479 5,805,394 2,749,475
========= ========= ==========
</TABLE>
A-11
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-------------------------------------------
INTERNATIONAL
EQUITY FUND
-------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- --------------- -------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ............ $1,445,436 2,686,699 1,056,063
Expenses -- Mortality
and expense risk
charges (note 3) ............. 150,854 113,987 56,953
---------- --------- ---------
Net investment income ........... 1,294,582 2,572,712 999,110
---------- --------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss) ....................... 441,842 665,649 86,537
Unrealized appreciation
(depreciation) on
investments .................. 2,296,938 (1,565,382) (11,119)
---------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments ................. 2,738,780 (899,733) 75,418
---------- ---------- ---------
Increase (decrease) in net
assets from operations ......... $4,033,362 1,672,979 1,074,528
========== ========== =========
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-------------------------------------------------------------------------
REAL ESTATE GLOBAL INCOME
SECURITIES FUND FUND
-------------------------------------------- ----------------------------
PERIOD FROM
YEAR MAY 1, 1997
ENDED TO
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1998 1997
---------------- --------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............ $3,597,838 5,456,896 1,627,291 555,349 300,672
Expenses -- Mortality
and expense risk
charges (note 3) ............. 461,754 292,230 49,030 29,070 2,982
--------- --------- --------- ------- -------
Net investment income ........... 3,136,084 5,164,666 1,578,261 526,279 297,690
--------- --------- --------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss) ....................... (878,569) 2,710,582 299,159 96,320 2,417
Unrealized appreciation
(depreciation) on
investments .................. (12,908,191) (1,305,117) 4,059,521 337,555 (124,348)
----------- ---------- --------- ------- --------
Net realized and
unrealized gain (loss)
on investments ................. (13,786,760) 1,405,465 4,358,680 433,875 (121,931)
----------- ---------- --------- ------- --------
Increase (decrease) in net
assets from operations ......... $(10,650,676) 6,570,131 5,936,941 960,154 175,759
=========== ========== ========= ======= ========
</TABLE>
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------------------------------------
VALUE EQUITY FUND INCOME FUND U.S. EQUITY FUND
----------------------------- ----------------------------- -----------------
PERIOD FROM PERIOD FROM PERIOD FROM
YEAR MAY 1, YEAR DECEMBER 12, MAY 4, 1998
ENDED 1997 TO ENDED 1997 TO TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998
-------------- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ..................... $1,119,457 142,788 1,901,291 58,034 52,288
Expenses -- Mortality and expense risk
charges (note 3) ...................... 348,877 38,307 329,876 14,197 6,218
---------- ------- --------- ------ ------
Net investment income .................... 770,580 104,481 1,571,415 43,837 46,070
---------- ------- --------- ------ ------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ................ 576,810 357,048 335,927 (6,710) 9,452
Unrealized appreciation (depreciation)
on investments ........................ (292,099) 885,799 (245,492) (12,199) 153,754
---------- ------- --------- ------- -------
Net realized and unrealized gain (loss) on
investments ............................. 284,711 1,242,847 90,435 (18,909) 163,206
---------- --------- --------- ------- -------
Increase (decrease) in net assets from
operations .............................. $1,055,291 1,347,328 1,661,850 24,928 209,276
========== ========= ========= ======= =======
</TABLE>
A-12
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENT OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
-------------------------------------------------------------------------
MONEY FUND BOND FUND
------------------------------ ----------------------------------------
PERIOD YEAR
ENDED ENDED
DECEMBER 11, DECEMBER 31, YEAR ENDED DECEMBER 31,
1997 1996 1998 1997 1996
-------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................... $110,711 175,537 1,310,262 2,260,511 1,774,226
Expenses -- Mortality and expense risk
charges (note 3) ............................ 25,908 40,663 613,418 437,693 336,825
-------- ------- --------- --------- ---------
Net investment income .......................... 84,803 134,874 696,844 1,822,818 1,437,401
-------- ------- --------- --------- ---------
Net realized and unrealized gain (loss) on
investments:
Net realized gain ............................. -- -- 557,479 187,695 106,242
Unrealized appreciation (depreciation) on
investments ................................. -- -- 1,205,533 663,371 (442,815)
-------- ------- --------- --------- ---------
Net realized and unrealized gain (loss) on
investments ................................... -- -- 1,763,012 851,066 (336,573)
-------- ------- --------- --------- ---------
Increase in net assets from operations ......... $ 84,803 134,874 2,459,856 2,673,884 1,100,828
======== ======= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
--------------------------------------------------------------------------------
CAPITAL APPRECIATION FUND GROWTH FUND
----------------------------------------- --------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
--------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ................. $ 5,903,722 8,221,818 6,069,096 14,489,848 4,911,400 3,110,376
Expenses -- Mortality and expense
risk charges (note 3) ............. 2,644,408 2,381,196 1,506,102 2,092,013 1,372,378 599,846
----------- --------- --------- ---------- --------- ---------
Net investment income ................ 3,259,314 5,840,622 4,562,994 12,397,835 3,539,022 2,510,530
----------- --------- --------- ---------- --------- ---------
Net realized and unrealized gain
(loss) on investments:
Net realized gain ................... 19,896,478 6,868,228 6,301,279 19,777,101 5,826,603 1,959,742
Unrealized appreciation
(depreciation) on investments ..... (396,149) 5,927,622 7,478,382 922,343 11,621,155 5,568,726
----------- --------- --------- ---------- ---------- ---------
Net realized and unrealized gain
(loss) on investments ............... 19,500,329 12,795,850 13,779,661 20,699,444 17,447,758 7,528,468
----------- ---------- ---------- ---------- ---------- ---------
Increase in net assets from
operations .......................... $22,759,643 18,636,472 18,342,655 33,097,279 20,986,780 10,038,998
=========== ========== ========== ========== ========== ==========
</TABLE>
A-13
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
---------------------------------------------------------------------------------
HIGH INCOME FUND MULTIPLE STRATEGIES FUND
---------------------------------------- ----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
--------------- ------------ ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ......................... $ 7,439,338 9,138,791 6,387,294 4,756,691 4,485,399 3,343,955
Expenses -- Mortality and expense risk
charges (note 3) .......................... 2,078,631 1,397,317 825,956 957,372 794,598 571,993
------------ --------- --------- --------- --------- ---------
Net investment income ........................ 5,360,707 7,741,474 5,561,338 3,799,319 3,690,801 2,771,962
------------ --------- --------- --------- --------- ---------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) .................... (99,049) 1,298,149 763,575 1,712,582 1,435,981 701,256
Unrealized appreciation (depreciation)
on investments ............................ (7,301,468) 2,089,422 2,079,281 (1,662,556) 4,025,778 2,786,345
------------ --------- --------- ---------- --------- ---------
Net realized and unrealized gain (loss) on
investments ................................. (7,400,517) 3,387,571 2,842,856 50,026 5,461,759 3,487,601
------------ --------- --------- ---------- --------- ---------
Increase (decrease) in net assets from
operations .................................. $ (2,039,810) 11,129,045 8,404,194 3,849,345 9,152,560 6,259,563
============ ========== ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-----------------------------------------------------------
MONEY MARKET PORTFOLIO HIGH INCOME PORTFOLIO
----------------------------- -----------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends .......... $843,023 1,655,033 1,930,318 2,780,632
Expenses -- Mortality
and expense risk
charges (note 3) ........... 212,121 382,911 277,254 332,922
-------- --------- --------- ---------
Net investment income ......... 630,902 1,272,122 1,653,064 2,447,710
-------- --------- --------- ---------
Net realized and unrealized
gain on investments:
Net realized gain ............ -- -- 4,673,705 479,085
Unrealized appreciation
(depreciation) on
investments ................ -- -- (2,814,608) 308,688
-------- --------- ---------- ---------
Net realized and unrealized
gain on investments .......... -- -- 1,859,097 787,773
-------- --------- ---------- ---------
Increase in net assets from
operations ................... $630,902 1,272,122 3,512,161 3,235,483
======== ========= ========== =========
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-------------------------------------------
EQUITY -- INCOME PORTFOLIO
-------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends .......... $40,199,361 42,510,440 12,605,854
Expenses -- Mortality
and expense risk
charges (note 3) ........... 8,478,683 6,650,343 4,253,036
---------- ---------- ----------
Net investment income ......... 31,720,678 35,860,097 8,352,818
---------- ---------- ----------
Net realized and unrealized
gain on investments:
Net realized gain ............ 40,058,923 15,417,526 9,394,625
Unrealized appreciation
(depreciation) on
investments ................ (9,194,909) 65,899,106 23,601,942
---------- ---------- ----------
Net realized and unrealized
gain on investments .......... 30,864,014 81,316,632 32,996,567
---------- ---------- ----------
Increase in net assets from
operations ................... $62,584,692 117,176,729 41,349,385
========== =========== ==========
</TABLE>
A-14
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
-------------------------------------------------------------------------------------
GROWTH PORTFOLIO OVERSEAS PORTFOLIO
---------------------------------------- --------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
-------------- ------------ ------------ --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .................. $ 43,602,357 9,229,913 13,903,188 8,392,807 9,303,257 2,309,161
Expenses -- Mortality and expense
risk charges (note 3) .............. 4,321,431 3,552,903 2,834,086 1,337,177 1,401,167 1,245,263
------------ --------- ---------- --------- --------- ---------
Net investment income ................. 39,280,926 5,677,010 11,069,102 7,055,630 7,902,090 1,063,898
------------ --------- ---------- --------- --------- ---------
Net realized and unrealized gain on
investments:
Net realized gain .................... 17,030,101 14,576,544 9,229,819 12,998,779 6,802,686 2,693,770
Unrealized appreciation
(depreciation) on investments ...... 58,825,099 34,536,532 6,990,625 (6,292,784) (3,387,543) 7,585,836
------------ ---------- ---------- ---------- ---------- ---------
Net realized and unrealized gain on
investments .......................... 75,855,200 49,113,076 16,220,444 6,705,995 3,415,143 10,279,606
------------ ---------- ---------- ---------- ---------- ----------
Increase in net assets from
operations ........................... $115,136,126 54,790,086 27,289,546 13,761,625 11,317,233 11,343,504
============ ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
---------------------------------------------------------------------------------
ASSET MANAGER PORTFOLIO CONTRAFUND PORTFOLIO
---------------------------------------- ----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
-------------- ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .................. $ 61,032,559 52,909,448 27,801,550 14,347,723 4,672,962 634,656
Expenses -- Mortality and expense
risk charges (note 3) .............. 5,632,482 5,474,604 4,059,911 3,674,218 2,588,608 1,322,883
------------ ---------- ---------- ---------- --------- ---------
Net investment income (expense) ....... 55,400,077 47,434,844 23,741,639 10,673,505 2,084,354 (688,227)
------------ ---------- ---------- ---------- --------- ---------
Net realized and unrealized gain
(loss) on investments:
Net realized gain .................... 12,994,733 9,093,636 7,507,674 14,314,697 9,468,307 2,738,082
Unrealized appreciation
(depreciation) on investments ...... (5,404,033) 24,430,304 23,008,153 47,868,379 26,750,686 17,275,767
------------ ---------- ---------- ---------- ---------- ----------
Net realized and unrealized gain on
investments .......................... 7,590,700 33,523,940 30,515,827 62,183,076 36,218,993 20,013,849
------------ ---------- ---------- ---------- ---------- ----------
Increase in net assets from
operations ........................... $ 62,990,777 80,958,784 54,257,466 72,856,581 38,303,347 19,325,622
============ ========== ========== ========== ========== ==========
</TABLE>
A-15
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS
FUND III
----------------------------------------------------------------
GROWTH & INCOME GROWTH OPPORTUNITIES
PORTFOLIO PORTFOLIO
------------------------------- ------------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................... $ 102,863 -- 948,628 --
Expenses -- Mortality and expense risk
charges (note 3) ............................ 420,269 53,296 450,247 69,440
---------- ------ ------- ------
Net investment income (expense) ................ (317,406) (53,296) 498,381 (69,440)
---------- ------- ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain ............................. 983,225 103,153 378,467 67,071
Unrealized appreciation (depreciation) on
investments ................................. 7,912,728 458,100 6,815,534 1,055,758
---------- ------- --------- ---------
Net realized and unrealized gain on
investments ................................... 8,895,953 561,253 7,194,001 1,122,829
---------- ------- --------- ---------
Increase in net assets from operations ......... $8,578,547 507,957 7,692,382 1,053,389
========== ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
----------------------------------------------------------------------------------------
BALANCED BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ----------------------------- ----------------------------
PERIOD YEAR PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996 1997 1996
-------------- -------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ................. $ 1,992,971 5,226,886 550,544 1,231,424 903,849 1,152,528
Expenses -- Mortality and
expense risk charges (note 3) ..... 337,918 381,777 99,586 151,484 132,989 146,484
------------ --------- ------- --------- ------- ---------
Net investment income ................ 1,655,053 4,845,109 450,958 1,079,940 770,860 1,006,044
------------ --------- ------- --------- ------- ---------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) ............ 5,097,861 419,822 12,018 (136,701) 2,304,768 315,046
Unrealized depreciation on
investments ....................... (2,501,835) (3,501,201) (23,525) (646,673) (880,241) (363,320)
------------ ---------- ------- --------- --------- ---------
Net realized and unrealized gain
(loss) on investments ............... 2,596,026 (3,081,379) (11,507) (783,374) 1,424,527 (48,274)
------------ ---------- ------- --------- --------- ---------
Increase in net assets from
operations .......................... $ 4,251,079 1,763,730 439,451 296,566 2,195,387 957,770
============ ========== ======= ========= ========= =========
</TABLE>
A-16
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
-------------------------------------------------------------------------------
AMERICAN LEADERS FUND II HIGH INCOME BOND FUND II
------------------------------------------ ------------------------------------
PERIOD FROM
MAY 6,
1996 TO
YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ------------- -------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ......................... $2,907,843 228,362 15,977 1,241,858 1,129,533 579,337
Expenses -- Mortality and expense risk
charges (note 3) .......................... 753,675 228,448 12,003 591,059 302,211 87,381
---------- ------- ------ --------- --------- -------
Net investment income (expense) .............. 2,154,168 (86) 3,974 650,799 827,322 491,956
---------- ------- ------ --------- --------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain ........................... 1,333,508 544,140 29,680 901,146 630,351 31,769
Unrealized appreciation (depreciation) on
investments ............................... 4,019,536 3,385,309 162,046 (615,798) 1,256,745 424,014
---------- --------- ------- --------- --------- -------
Net realized and unrealized gain on
investments ................................. 5,353,044 3,929,449 191,726 285,348 1,887,096 455,783
---------- --------- ------- --------- --------- -------
Increase in net assets from operations ....... $7,507,212 3,929,363 195,700 936,147 2,714,418 947,739
========== ========= ======= ========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
(CONTINUED)
------------------------------------------
UTILITY
FUND II
------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ----------- ------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ............................................. $2,141,701 1,046,132 766,616
Expenses -- Mortality and expense risk charges (note 3) ......... 482,289 326,253 243,314
---------- --------- -------
Net investment income (expense) .................................. 1,659,412 719,879 523,302
---------- --------- -------
Net realized and unrealized gain (loss) on investments:
Net realized gain ............................................... 1,730,044 731,431 336,527
Unrealized appreciation (depreciation) on investments ........... 1,205,055 4,302,272 1,113,241
---------- --------- ---------
Net realized and unrealized gain on investments .................. 2,935,099 5,033,703 1,449,768
---------- --------- ---------
Increase in net assets from operations ........................... $4,594,511 5,753,582 1,973,070
========== ========= =========
</TABLE>
A-17
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALGER AMERICAN FUND
--------------------------------------------------------------------------------
SMALL CAP PORTFOLIO GROWTH PORTFOLIO
---------------------------------------- ---------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
-------------- ----------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ..................... $10,556,556 2,044,748 105,411 14,231,938 528,437 668,828
Expenses -- Mortality and expense
risk charges (note 3) ................. 1,053,686 799,242 414,206 1,251,175 811,338 358,846
----------- --------- ------- ---------- ------- -------
Net investment income (expense) .......... 9,502,870 1,245,506 (308,795) 12,980,763 (282,901) 309,982
----------- --------- -------- ---------- -------- -------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) ................ 411,066 411,624 (122,299) 4,172,054 3,954,588 315,644
Unrealized appreciation
(depreciation) on investments ......... 2,406,527 4,016,910 (80,937) 20,408,775 8,095,163 2,224,353
----------- --------- -------- ---------- --------- ---------
Net realized and unrealized gain
(loss) on investments ................... 2,817,593 4,428,534 (203,236) 24,580,829 12,049,751 2,539,997
----------- --------- -------- ---------- ---------- ---------
Increase (decrease) in net assets from
operations .............................. $12,320,463 5,674,040 (512,031) 37,561,592 11,766,850 2,849,979
=========== ========= ======== ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
PBHG INSURANCE SERIES FUND
----------------------------------------------------------------
PBHG LARGE CAP GROWTH PORTFOLIO PBHG GROWTH II PORTFOLIO
------------------------------- ------------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ..................... -- -- -- --
Expenses -- Mortality and expense
risk charges (note 3) ................. $ 106,500 17,112 119,244 30,512
------- ------ ------- ------
Net investment income (expense) .......... (106,500) (17,112) (119,244) (30,512)
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) ................ 282,909 13,525 (281,878) 7,643
Unrealized appreciation
(depreciation) on investments ......... 2,025,080 149,898 1,029,558 (89,829)
--------- ------- --------- -------
Net realized and unrealized gain
(loss) on investments ................... 2,307,989 163,423 747,680 (82,186)
--------- ------- ------- --------
Increase (decrease) in net assets from
operations .............................. $2,201,489 146,311 628,436 (112,698)
========= ======= ======= =========
</TABLE>
A-18
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
------------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO GROWTH PORTFOLIO
--------------------------------------------- --------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
--------------- --------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .................... $ -- -- 755,467 17,061,080 5,821,316 3,316,849
Expenses -- Mortality and expense
risk charges (note 3) ................ 1,431,833 1,187,720 880,271 3,390,909 2,533,302 1,496,337
------------ --------- ------- ---------- --------- ---------
Net investment income (expense) ......... (1,431,833) (1,187,720) (124,804) 13,670,171 3,288,014 1,820,512
------------ ---------- -------- ---------- --------- ---------
Net realized and unrealized gain
(loss) on investments:
Net realized gain ...................... 11,413,034 6,675,700 3,422,984 11,096,226 9,346,395 4,286,543
Unrealized appreciation on
investments .......................... 24,333,274 5,540,954 109,555 56,452,101 23,212,981 11,457,707
------------ ---------- --------- ---------- ---------- ----------
Net realized and unrealized gain on
investments ............................ 35,746,308 12,216,654 3,532,539 67,548,327 32,559,376 15,744,250
------------ ---------- --------- ---------- ---------- ----------
Increase in net assets from
operations ............................. $ 34,314,475 11,028,934 3,407,735 81,218,498 35,847,390 17,564,762
============ ========== ========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
--------------------------------------------
WORLDWIDE GROWTH PORTFOLIO
--------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
-------------- ------------ ------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends .................................... $17,147,178 4,490,822 2,094,632
Expenses -- Mortality and expense risk charges
(note 3) ............................................. 5,690,337 3,656,021 1,418,611
---------- ---------- ---------
Net investment income (expense) ......................... 11,456,841 834,801 676,021
Net realized and unrealized gain (loss) on
investments:
Net realized gain ...................................... 46,111,510 11,585,008 5,069,677
Unrealized appreciation on investments ................. 41,481,543 32,530,512 18,944,795
---------- ----------- ----------
Net realized and unrealized gain on investments ......... 87,593,053 44,115,520 24,014,472
---------- ---------- ------------
Increase in net assets from operations .................. 99,049,894 44,950,321 24,690,493
========== ========== ==========
</TABLE>
A-19
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
---------------------------------------------------------------------------------
BALANCED PORTFOLIO FLEXIBLE INCOME PORTFOLIO
------------------------------------------ ------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ----------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .................... $ 5,350,454 1,376,630 283,521 1,625,697 699,223 288,802
Expenses -- Mortality and expense
risk charges (note 3) ................ 1,445,276 445,275 113,425 300,350 120,354 40,424
----------- --------- ------- --------- ------- -------
Net investment income (expense) ......... 3,905,178 931,355 170,096 1,325,347 578,869 248,378
----------- --------- ------- --------- ------- -------
Net realized and unrealized gain
(loss) on investments:
Net realized gain ...................... 3,053,389 1,239,519 122,576 222,001 86,470 4,524
Unrealized appreciation on
investments .......................... 28,743,051 4,013,343 920,620 30,008 269,390 68,898
----------- --------- ------- --------- ------- -------
Net realized and unrealized gain on
investments ............................ 31,796,440 5,252,862 1,043,196 252,009 355,860 73,422
----------- --------- --------- --------- ------- -------
Increase in net assets from
operations ............................. $35,701,618 6,184,217 1,213,292 1,577,356 934,729 321,800
=========== ========= ========= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
-----------------------------------------------------------------------
CAPITAL APPRECIATION
INTERNATIONAL GROWTH PORTFOLIO PORTFOLIO
------------------------------------------ ----------------------------
PERIOD FROM PERIOD FROM
MAY 3, YEAR MAY 2,
1996 TO ENDED 1997 TO
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1998 1997
------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............................ $1,349,473 348,585 54,433 20,652 8,437
Expenses -- Mortality and expense risk
charges (note 3) ............................. 895,918 516,236 45,378 149,815 9,981
---------- ------- ------ ------- -----
Net investment income (expense) ................. 453,555 (167,651) 9,055 (129,163) (1,544)
---------- -------- ------ -------- ------
Net realized and unrealized gain (loss) on
investments:
Net realized gain .............................. 7,205,182 3,329,942 187,391 336,728 31,894
Unrealized appreciation on investments ......... 1,486,427 1,235,644 586,615 7,532,890 12,182
---------- --------- ------- --------- ------
Net realized and unrealized gain on
investments .................................... 8,691,609 4,565,586 774,006 7,869,618 44,076
---------- --------- ------- --------- ------
Increase in net assets from operations .......... $9,145,164 4,397,935 783,061 7,740,455 42,532
========== ========= ======= ========= ======
</TABLE>
A-20
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS SALOMON BROTHERS
VARIABLE INSURANCE VARIABLE SERIES
TRUST FUND FUND
------------------------------- -----------------------------------------------
GROWTH AND MID CAP STRATEGIC TOTAL
INCOME EQUITY BOND INVESTORS RETURN
FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- -------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
MAY 12, MAY 8, OCTOBER 22, NOVEMBER 27, OCTOBER 30,
1998 TO 1998 TO 1998 TO 1998 TO 1998 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1998 1998 1998 1998
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ..................... $ 35,739 27,603 6,068 45 5,946
Expenses -- Mortality and expense
risk charges (note 3) ................. 15,729 15,427 211 5 148
--------- ------ ----- -- -----
Net investment income .................... 20,010 12,176 5,857 40 5,798
--------- ------ ----- -- -----
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) ................ (32,043) (72,641) 322 -- 1
Unrealized appreciation
(depreciation) on investments ......... 40,081 12,789 (4,823) 321 (2,958)
--------- ------- ------ --- ------
Net realized and unrealized gain
(loss) on investments ................... 8,038 (59,852) (4,501) 321 (2,957)
--------- ------- ------ --- ------
Increase (decrease) in net assets from
operations .............................. $ 28,048 (47,676) 1,356 361 2,841
========= ======= ====== === ======
</TABLE>
See accompanying notes to financial statements.
A-21
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
------------------------------------------------------------------------------
S&P 500 GOVERNMENT
INDEX SECURITIES
FUND FUND
----------------------------------------------- ------------------------------
PERIOD YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31, DECEMBER 11, DECEMBER 31,
1998 1997 1996 1997 1996
--------------- -------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) ............... $ 8,524,010 2,645,157 22,942,876 (147,796) 1,165,729
Net realized gain (loss) ...................... 8,830,544 (899,446) 1,510,464 (242,895) (68,248)
Unrealized appreciation
(depreciation) on investments ............... 35,731,485 21,611,136 (16,204,375) 987,049 (995,503)
------------- ---------- ----------- -------- ---------
Increase in net assets from operations ......... 53,086,039 23,356,847 8,248,965 596,358 101,978
------------- ---------- ----------- -------- ---------
From capital transactions:
Net premiums .................................. 53,735,217 40,575,050 18,225,715 1,053,538 3,734,757
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. (1,018,619) (1,735,027) (77,864) (64,230) (76,802)
Surrenders .................................. (11,869,972) (3,415,596) (1,079,082) (666,510) (492,750)
Administrative expense (note 3) ............. (193,962) (102,362) (45,091) (18,501) (21,731)
Transfer gain (loss) and transfer
fees ....................................... 623,320 (4,503) 7,463 (36,688) 8,420
Transfers (to) from the Guarantee
Account (note 1) ............................ 40,155,936 14,747,561 3,139,208 827,432 135,548
Interfund transfers ........................... 20,883,117 24,135,903 5,665,381 (14,821,369) (65,339)
------------- ---------- ----------- ----------- ---------
Increase (decrease) in net assets from
capital transactions .......................... 102,315,037 74,201,026 25,835,730 (13,726,328) 3,222,103
------------- ---------- ----------- ----------- ---------
Increase (decrease) in net assets .............. 155,401,076 97,557,873 34,084,695 (13,129,970) 3,324,081
Net assets at beginning of year ................ 153,426,324 55,868,451 21,783,756 13,129,970 9,805,889
------------- ---------- ----------- ----------- ---------
Net assets at end of year ...................... $ 308,827,400 153,426,324 55,868,451 -- 13,129,970
============= =========== =========== =========== ==========
</TABLE>
A-22
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------
MONEY MARKET FUND
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ....................... $ 6,916,677 4,205,545 4,224,053
Net realized gain (loss) .......... 545,381 (4,421,730) 1,686,452
Unrealized appreciation
(depreciation) on
investments ..................... (545,381) 4,383,879 (2,984,484)
------------- ---------- ----------
Increase in net assets from
operations ........................ 6,916,677 4,167,694 2,926,021
------------- ---------- ----------
From capital transactions:
Net premiums ...................... 103,629,024 107,140,555 153,728,177
Transfers (to) from the
general account of Life of
Virginia:
Death benefits .................. (4,961,886) (1,753,311) (781,386)
Surrenders ...................... (46,255,514) (18,383,973) (8,255,412)
Administrative expense
(note 3) ....................... (222,910) (134,339) (78,769)
Transfer gain (loss) and
transfer fees .................. 6,222,666 (130,614) 28,173
Transfers (to) from the
Guarantee Account
(note 1) ........................ 24,299,736 10,195,112 4,298,099
Interfund transfers ............... 5,214,444 (67,593,593) (93,981,321)
------------- ----------- -----------
Increase (decrease) in net assets
from capital transactions ......... 87,925,560 29,339,837 54,957,561
------------- ----------- -----------
Increase (decrease) in net
assets ............................ 94,842,237 33,507,531 57,883,582
Net assets at beginning of year..... 123,694,704 90,187,173 2,200,980
------------- ----------- -----------
Net assets at end of year .......... $ 218,536,941 123,694,704 60,084,562
============= =========== ===========
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------
TOTAL RETURN FUND
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ....................... 2,668,826 5,602,393 8,962,291
Net realized gain (loss) .......... (144,205) (454,827) 614,446
Unrealized appreciation
(depreciation) on
investments ..................... 5,408,858 657,828 (6,827,262)
--------- --------- ----------
Increase in net assets from
operations ........................ 7,933,479 5,805,394 2,749,475
--------- --------- ----------
From capital transactions:
Net premiums ...................... 7,103,374 5,641,626 8,515,814
Transfers (to) from the
general account of Life of
Virginia:
Death benefits .................. (336,462) (271,179) (153,153)
Surrenders ...................... (3,264,071) (2,558,265) (946,894)
Administrative expense
(note 3) ....................... (63,853) (60,731) (51,588)
Transfer gain (loss) and
transfer fees .................. 76,515 (15,082) (69,616)
Transfers (to) from the
Guarantee Account
(note 1) ........................ 9,157,868 2,622,768 919,901
Interfund transfers ............... 974,377 (231,875) 75,151
---------- ---------- ----------
Increase (decrease) in net assets
from capital transactions ......... 13,647,748 5,127,262 8,289,615
---------- ---------- ----------
Increase (decrease) in net
assets ............................ 21,581,227 10,932,656 11,039,090
Net assets at beginning of year..... 44,527,117 33,594,461 22,555,371
---------- ---------- ----------
Net assets at end of year .......... 66,108,344 44,527,117 33,594,461
========== ========== ==========
</TABLE>
A-23
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND REAL ESTATE SECURITIES FUND
--------------------------------------------- --------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997
--------------- --------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .................. $ 1,294,582 2,572,712 999,110 3,136,084 5,164,666
Net realized gain (loss) ............... 441,842 665,649 86,537 (878,569) 2,710,582
Unrealized appreciation
(depreciation) on
investments .......................... 2,296,938 (1,565,382) (11,119) (12,908,191) (1,305,117)
------------ ---------- ------- ----------- ----------
Increase (decrease) in net assets
from operations ........................ 4,033,362 1,672,979 1,074,528 (10,650,676) 6,570,131
------------ ---------- --------- ----------- ----------
Net premiums ........................... 985,487 1,854,537 2,563,735 5,008,291 10,679,221
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (49,268) (2,360) (3,522) (182,572) (18,462)
Surrenders ........................... (558,600) (349,063) (103,501) (1,142,178) (654,786)
Administrative expense
(note 3) ............................ (13,254) (10,458) (6,060) (30,467) (19,846)
Transfer gain and transfer
fees ................................ (258,988) 49,348 (92,027) (443,138) 122,915
Capital contribution ................. -- -- 10,925,561 -- --
Transfers from the Guarantee
Account (note 1) ..................... 1,469,927 1,095,648 557,466 6,836,059 4,443,497
Interfund transfers .................... (1,665,448) 664,758 1,263,184 (5,533,571) 5,849,780
------------ ---------- ---------- ----------- ----------
Increase (decrease) in net assets
from capital transactions .............. (90,144) 3,302,410 15,104,836 4,512,424 20,402,319
------------ ---------- ---------- ----------- ----------
Increase (decrease) in net assets ....... 3,943,218 4,975,389 16,179,364 (6,138,252) 26,972,450
Net assets at beginning of
period ................................. 22,876,533 17,901,144 1,721,780 52,683,797 25,711,347
------------ ---------- ---------- ----------- ----------
Net assets at end of period ............. $ 26,819,751 22,876,533 17,901,144 46,545,545 52,683,797
============ ========== ========== =========== ==========
<CAPTION>
REAL ESTATE
SECURITIES
FUND
--------------
YEAR ENDED
DECEMBER 31,
1996
--------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income .................. 1,578,261
Net realized gain (loss) ............... 299,159
Unrealized appreciation
(depreciation) on
investments .......................... 4,059,521
---------
Increase (decrease) in net assets
from operations ........................ 5,936,941
---------
Net premiums ........................... 2,949,990
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... --
Surrenders ........................... (41,760)
Administrative expense
(note 3) ............................ (3,136)
Transfer gain and transfer
fees ................................ (107,856)
Capital contribution ................. --
Transfers from the Guarantee
Account (note 1) ..................... 539,647
Interfund transfers .................... 4,063,439
---------
Increase (decrease) in net assets
from capital transactions .............. 7,400,324
---------
Increase (decrease) in net assets ....... 13,337,265
Net assets at beginning of
period ................................. 12,374,082
----------
Net assets at end of period ............. 25,711,347
==========
</TABLE>
A-24
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------------------
GLOBAL INCOME FUND VALUE EQUITY FUND
----------------------------- -----------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............. $ 526,279 $ 297,690 770,580 104,481
Net realized gain (loss) ........... 96,320 2,417 576,810 357,048
Unrealized appreciation
(depreciation) on
investments ...................... 337,555 (124,348) (292,099) 885,799
---------- ----------- -------- -------
Increase (decrease) in net assets
from operations .................... 960,154 175,759 1,055,291 1,347,328
---------- ----------- --------- ---------
Net premiums ....................... 600,772 198,123 9,579,320 3,244,942
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... -- -- (25,562) (1,960)
Surrenders ....................... (63,958) (5,701) (1,731,724) (75,503)
Administrative expense
(note 3) ........................ -- (209) (18,611) (1,938)
Transfer gain and transfer
fees ............................ (1,623) (472) 1,014,745 15,109
Capital contribution ............. 45,130 5,000,000 -- 3,000,000
Transfers from the Guarantee
Account (note 1) ................. 986,575 234,749 8,817,658 2,034,025
Interfund transfers ................ 1,028,376 513,049 4,550,014 6,338,005
---------- ----------- ---------- ---------
Increase (decrease) in net assets
from capital transactions .......... 2,595,272 5,939,539 22,185,840 14,552,680
---------- ----------- ---------- ----------
Increase (decrease) in net
assets ............................. 3,555,426 6,115,298 23,241,131 15,900,008
Net assets at beginning of
period ............................. 6,115,298 -- 15,900,008 --
---------- ----------- ---------- ----------
Net assets at end of period ......... $9,670,724 6,115,298 39,141,139 15,900,008
========== =========== ========== ==========
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-------------------------------------------
U.S.
EQUITY
INCOME FUND FUND
----------------------------- -------------
PERIOD FROM PERIOD FROM
YEAR DECEMBER 12, MAY 4,
ENDED 1997 TO 1998 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998
-------------- -------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............. $ 1,571,415 43,837 46,070
Net realized gain (loss) ........... 335,927 (6,710) 9,452
Unrealized appreciation
(depreciation) on
investments ...................... (245,492) (12,199) 153,754
--------- ------- -------
Increase (decrease) in net assets
from operations .................... 1,661,850 24,928 209,276
--------- ------- -------
Net premiums ....................... 1,921,255 19,521 864,801
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... (145,003) -- --
Surrenders ....................... (1,961,475) (59,137) (8,236)
Administrative expense
(note 3) ........................ (34,884) (2,414) (374)
Transfer gain and transfer
fees ............................ (172,635) (467) 4,703
Capital contribution ............. -- -- --
Transfers from the Guarantee
Account (note 1) ................. 4,132,905 52,096 500,876
Interfund transfers ................ 6,911,104 21,976,333 629,934
---------- ---------- -------
Increase (decrease) in net assets
from capital transactions .......... 10,651,267 21,985,932 1,991,704
---------- ---------- ---------
Increase (decrease) in net
assets ............................. 12,313,117 22,010,860 2,200,980
Net assets at beginning of
period ............................. 22,010,860 -- --
---------- ---------- ---------
Net assets at end of period ......... 34,323,977 22,010,860 2,200,980
========== ========== =========
</TABLE>
A-25
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
------------------------------------------------------------------------------
MONEY FUND BOND FUND
------------------------------ -----------------------------------------------
PERIOD YEAR
ENDED ENDED
DECEMBER 11, DECEMBER 31, YEAR ENDED DECEMBER 31,
1997 1996 1998 1997 1996
-------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ......................... $ 84,803 134,874 696,844 1,822,818 1,437,401
Net realized gain ............................. -- -- 557,479 187,695 106,242
Unrealized appreciation
(depreciation) on investments ............... -- -- 1,205,533 663,371 (442,815)
------------ ------- --------- --------- ---------
Increase in net assets from operations ......... 84,803 134,874 9,138,791 2,673,884 1,100,828
------------ ------- --------- --------- ---------
From capital transactions:
Net premiums .................................. 440 1,000 6,231,291 3,472,666 6,447,661
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. -- (25,650) (410,382) (234,610) (255,232)
Surrenders .................................. -- (248,877) (4,432,337) (2,350,488) (1,174,644)
Administrative expense (note 3) ............. -- (7,741) (55,996) (53,814) (47,633)
Transfer gain (loss) and transfer
fees ....................................... (4,611) (6,711) (86,859) (12,509) 15,212
Transfers (to) from the Guarantee
Account (note 1) ............................ (9,897) (72,686) 8,638,887 3,535,189 1,424,034
Interfund transfers ........................... (2,736,806) (1,858,335) 10,655,917 1,076,424 1,248,636
------------ ---------- ---------- ---------- ----------
Increase (decrease) in net assets from
capital transactions .......................... (2,750,874) (2,219,000) 20,540,521 5,432,858 7,658,034
------------ ---------- ---------- ---------- ----------
Increase (decrease) in net assets .............. (2,666,071) (2,084,126) 29,679,312 8,106,742 8,758,862
Net assets at beginning of year ................ 2,750,676 4,834,802 39,745,683 31,638,941 22,880,079
------------ ---------- ---------- ---------- ----------
Net assets at end of year ...................... $ -- 2,750,676 69,424,995 39,745,683 31,638,941
============ ========== ========== ========== ==========
</TABLE>
A-26
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
--------------------------------------------------------------------------------------------
CAPITAL APPRECIATION FUND GROWTH FUND
---------------------------------------------- ---------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
---------------- -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............. $ 3,259,314 5,840,622 4,562,994 12,397,835 3,539,022 2,510,530
Net realized gain .................. 19,896,478 6,868,228 6,301,279 19,777,101 5,826,603 1,959,742
Unrealized appreciation
(depreciation) on
investments ...................... (396,149) 5,927,622 7,478,382 922,343 11,621,155 5,568,726
------------- --------- --------- ---------- ---------- ---------
Increase in net assets from
operations ......................... 22,759,643 18,636,472 18,342,655 33,097,279 20,986,780 10,038,998
------------- ---------- ---------- ---------- ---------- ----------
From capital transactions:
Net premiums ....................... 9,377,106 25,418,900 35,523,585 17,725,498 31,719,458 15,322,231
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... (796,601) (450,528) (577,949) (894,216) (350,617) (246,052)
Surrenders ....................... (11,332,990) (7,755,383) (5,679,609) (9,299,680) (5,238,134) (1,802,707)
Administrative expense
(note 3) ........................ (280,687) (291,649) (237,053) (184,119) (138,883) (79,593)
Transfer gain (loss) and
transfer fees ................... (1,028,582) (53,714) (234,268) (3,882) (28,403) (9,390)
Transfers (to) from the
Guarantee Account
(note 1) ......................... 11,708,764 13,461,161 5,093,547 17,267,813 12,928,357 2,323,647
Interfund transfers ................ (20,227,182) 37,796 16,982,928 (7,357,815) 11,277,889 8,265,699
------------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets
from capital transactions .......... (12,580,172) 30,366,583 50,871,181 17,253,599 50,169,667 23,773,835
------------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net
assets ............................. 10,179,471 49,003,055 69,213,836 50,350,878 71,156,447 33,812,833
Net assets at beginning
of year ............................ 207,847,236 158,844,181 89,630,345 139,015,816 67,859,369 34,046,536
------------- ----------- ---------- ----------- ---------- ----------
Net assets at end of year ........... $ 218,026,707 207,847,236 158,844,181 189,366,694 139,015,816 67,859,369
============= =========== =========== =========== =========== ==========
</TABLE>
A-27
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
----------------------------------------------
HIGH INCOME FUND
---------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- -------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ................... $ 5,360,707 7,741,474 5,561,338
Net realized gain (loss) ................ (99,049) 1,298,149 763,575
Unrealized appreciation
(depreciation) on investments ......... (7,301,468) 2,089,422 2,079,281
------------- --------- ---------
Increase (decrease) in net assets from
operations .............................. (2,039,810) 11,129,045 8,404,194
------------- ---------- ---------
From capital transactions:
Net premiums ............................ 13,886,757 21,931,355 22,356,655
Transfers (to) from the general
account of Life of Virginia:
Death benefits ........................ (1,060,654) (689,590) (693,092)
Surrenders ............................ (10,775,891) (5,920,831) (2,655,530)
Administrative expense (note 3) ....... (189,819) (139,006) (100,320)
Transfer gain (loss) and transfer
fees ................................. (612,294) (112,330) (25,953)
Transfers (to) from the Guarantee
Account (note 1) ...................... 20,861,727 12,750,648 3,777,050
Interfund transfers ..................... (4,351,060) 23,573,698 9,730,803
------------- ---------- ----------
Increase in net assets from capital
transactions ............................ 17,758,766 51,393,944 32,389,613
------------- ---------- ----------
Increase in net assets ................... 15,718,956 62,522,989 40,793,807
Net assets at beginning of year .......... 148,285,626 85,762,637 44,968,830
------------- ---------- ----------
Net assets at end of year ................ $ 164,004,582 148,285,626 85,762,637
============= =========== ==========
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
-----------------------------------------------
MULTIPLE STRATEGIES FUND
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ................... 3,799,319 3,690,801 2,771,962
Net realized gain (loss) ................ 1,712,582 1,435,981 701,256
Unrealized appreciation
(depreciation) on investments ......... (1,662,556) 4,025,778 2,786,345
---------- --------- ---------
Increase (decrease) in net assets from
operations .............................. 3,849,345 9,152,560 6,259,563
---------- --------- ---------
From capital transactions:
Net premiums ............................ 5,911,134 9,089,218 8,520,761
Transfers (to) from the general
account of Life of Virginia:
Death benefits ........................ (527,685) (332,263) (389,751)
Surrenders ............................ (6,115,145) (4,493,985) (2,097,537)
Administrative expense (note 3) ....... (118,214) (119,442) (104,392)
Transfer gain (loss) and transfer
fees ................................. (298,427) (8,995) (27,395)
Transfers (to) from the Guarantee
Account (note 1) ...................... 8,281,940 4,101,390 1,507,791
Interfund transfers ..................... (3,251,940) 516,158 198,943
---------- ---------- ----------
Increase in net assets from capital
transactions ............................ 3,881,663 8,752,081 7,608,420
---------- ---------- ----------
Increase in net assets ................... 7,731,008 17,904,641 13,867,983
Net assets at beginning of year .......... 72,023,553 54,118,912 40,250,929
---------- ---------- ----------
Net assets at end of year ................ 79,754,561 72,023,553 54,118,912
========== ========== ==========
</TABLE>
A-28
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------------------------------------------
MONEY MARKET PORTFOLIO HIGH INCOME PORTFOLIO
----------------------------------- ----------------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ............................ $ 630,902 1,272,122 1,653,064 2,447,710
Net realized gain ................................ -- -- 4,673,705 479,085
Unrealized appreciation (depreciation) on
investments .................................... -- -- (2,814,608) 308,688
------------- --------- ---------- ---------
Increase in net assets from operations ............ 630,902 1,272,122 3,512,161 3,235,483
------------- --------- ---------- ---------
From capital transactions:
Net premiums ..................................... (28,472) 117,921 8,207 (248,987)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................. (193,170) (458,667) (66,792) (33,131)
Surrenders ..................................... (1,206,916) (2,213,343) (2,281,288) (1,859,776)
Administrative expense (note 3) ................ (39,130) (65,257) (46,012) (54,571)
Transfer gain (loss) and transfer fees ......... 86,971 (204,381) (18,007) (14,545)
Transfers (to) from the Guarantee Account
(note 1) ....................................... (27,901) (661,457) (23,044) (109,624)
Interfund transfers .............................. (21,205,932) (23,959,305) (25,886,326) (7,008,575)
------------- ----------- ----------- ----------
Increase (decrease) in net assets from capital
transactions ..................................... (22,614,550) (27,444,489) (28,313,262) (9,329,209)
------------- ----------- ----------- ----------
Increase (decrease) in net assets ................. (21,983,648) (26,172,367) (24,801,101) (6,093,726)
Net assets at beginning of year ................... 21,983,648 48,156,015 24,801,101 30,894,827
------------- ----------- ----------- ----------
Net assets at end of year ......................... $ -- 21,983,648 -- 24,801,101
============= =========== =========== ==========
</TABLE>
A-29
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
-------------------------------------------------
EQUITY-INCOME PORTFOLIO
-------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
---------------- ---------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............. $ 31,720,678 $ 35,860,097 8,352,818
Net realized gain .................. 40,058,923 15,417,526 9,394,625
Unrealized appreciation
(depreciation) on
investments ...................... (9,194,909) 65,899,106 23,601,942
------------- -------------- ----------
Increase in net assets from
operations ......................... 62,584,692 117,176,729 41,349,385
------------- -------------- ----------
From capital transactions:
Net premiums ....................... 46,774,052 78,673,490 91,217,558
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... (3,800,272) (3,144,602) (2,317,929)
Surrenders ....................... (39,388,010) (22,544,378) (12,923,609)
Administrative expense
(note 3) ........................ (787,804) (744,663) (565,181)
Transfer gain (loss) and
transfer fees ................... (4,002,591) (156,609) (81,577)
Transfers (to) from the
Guarantee Account
(note 1) ......................... 49,734,168 34,236,802 14,669,920
Interfund transfers ................ (32,464,680) 4,787,401 12,688,430
------------- -------------- -----------
Increase (decrease) in net assets
from capital transactions .......... 16,064,863 91,107,441 102,687,612
------------- -------------- -----------
Increase (decrease) in net
assets ............................. 78,649,555 208,284,170 144,036,997
Net assets at beginning
of year ............................ 613,582,772 405,298,602 261,261,605
------------- -------------- -----------
Net assets at end of year ........... $ 692,232,327 613,582,772 405,298,602
============= ============== ===========
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
-----------------------------------------------
GROWTH PORTFOLIO
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............. 39,280,926 5,677,010 11,069,102
Net realized gain .................. 17,030,101 14,576,544 9,229,819
Unrealized appreciation
(depreciation) on
investments ...................... 58,825,099 34,536,532 6,990,625
---------- ---------- ----------
Increase in net assets from
operations ......................... 115,136,126 54,790,086 27,289,546
----------- ---------- ----------
From capital transactions:
Net premiums ....................... 15,214,848 19,742,111 40,351,417
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... (2,191,698) (1,127,415) (1,395,457)
Surrenders ....................... (23,927,419) (15,488,583) (8,362,725)
Administrative expense
(note 3) ........................ (510,394) (502,085) (441,506)
Transfer gain (loss) and
transfer fees ................... (1,467,259) (84,076) (243,398)
Transfers (to) from the
Guarantee Account
(note 1) ......................... 9,000,692 9,277,787 7,334,280
Interfund transfers ................ (8,701,771) (3,139,585) (3,259,632)
----------- ----------- ----------
Increase (decrease) in net assets
from capital transactions .......... (12,583,001) 8,678,154 33,982,979
----------- ----------- ----------
Increase (decrease) in net
assets ............................. 102,553,125 63,468,240 61,272,525
Net assets at beginning
of year ............................ 315,013,607 251,545,367 190,272,842
----------- ----------- -----------
Net assets at end of year ........... 417,566,732 315,013,607 251,545,367
=========== =========== ===========
</TABLE>
A-30
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
----------------------------------------------
OVERSEAS PORTFOLIO
----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) .......................... $ 7,055,630 7,902,090 1,063,898
Net realized gain ................... 12,998,779 6,802,686 2,693,770
Unrealized appreciation
(depreciation) on investments....... (6,292,784) (3,387,543) 7,585,836
------------- ---------- ---------
Increase in net assets from
operations .......................... 13,761,625 11,317,233 11,343,504
------------- ---------- ----------
From capital transactions:
Net premiums ........................ 1,843,855 5,009,263 11,020,984
Transfers (to) from the general
account of Life of Virginia:
Death benefits ..................... (439,740) (527,674) (528,522)
Surrenders ......................... (6,306,537) (5,102,924) (3,972,175)
Administrative expense
(note 3) ......................... (183,116) (220,173) (214,759)
Transfer gain (loss) and
transfer fees .................... (1,416,329) (38,435) (85,300)
Transfers (to) from Guarantee
Account (note 1) .................. 2,209,192 3,378,950 3,116,987
Interfund transfers ................. (14,310,296) (12,846,872) (4,620,473)
------------- ----------- ----------
Increase (decrease) in net assets
from capital transactions ........... (18,602,971) (10,347,865) 4,716,742
------------- ----------- ----------
Increase (decrease) in net assets .... (4,841,346) 969,368 16,060,246
Net assets at beginning of period .... 108,304,621 107,335,253 91,275,007
------------- ----------- ----------
Net assets at end of period .......... $ 103,463,275 108,304,621 107,335,253
============= =========== ===========
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
-----------------------------------------------
ASSET MANAGER PORTFOLIO
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) .......................... 55,400,077 47,434,844 23,741,639
Net realized gain ................... 12,994,733 9,093,636 7,507,674
Unrealized appreciation
(depreciation) on investments....... (5,404,033) 24,430,304 23,008,153
---------- ---------- ----------
Increase in net assets from
operations .......................... 62,990,777 80,958,784 54,257,466
---------- ---------- ----------
From capital transactions:
Net premiums ........................ 10,264,331 12,956,133 15,580,792
Transfers (to) from the general
account of Life of Virginia:
Death benefits ..................... (2,712,196) (2,389,147) (3,090,108)
Surrenders ......................... (43,729,546) (26,860,066) (23,863,347)
Administrative expense
(note 3) ......................... (1,091,339) (1,170,300) (1,159,170)
Transfer gain (loss) and
transfer fees .................... (6,077,325) (5,281,252) (2,150,299)
Transfers (to) from Guarantee
Account (note 1) .................... 9,427,060 4,580,560 2,112,849
Interfund transfers ................. (12,459,422) (14,758,069) (31,512,425)
----------- ----------- -----------
Increase (decrease) in net assets
from capital transactions ........... (46,378,437) (32,922,141) (44,081,708)
----------- ----------- -----------
Increase (decrease) in net assets .... 16,612,340 48,036,643 10,175,758
Net assets at beginning of period .... 483,874,812 435,838,169 425,662,411
----------- ----------- -----------
Net assets at end of period .......... 500,487,152 483,874,812 435,838,169
=========== =========== ===========
</TABLE>
A-31
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND II (CONTINUED)
----------------------------------------------
CONTRAFUND PORTFOLIO
----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
---------------- -------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ........................... $ 10,673,505 2,084,354 (688,227)
Net realized gain .................... 14,314,697 9,468,307 2,738,082
Unrealized appreciation
(depreciation) on
investments ......................... 47,868,379 26,750,686 17,275,767
------------- ---------- ----------
Increase in net assets from
operations ........................... 72,856,581 38,303,347 19,325,622
------------- ---------- ----------
From capital transactions:
Net premiums ......................... 25,285,801 39,049,020 41,520,289
Transfers (to) from the general
account of Life of Virginia:
Death benefits ...................... (1,246,412) (778,781) (569,391)
Surrenders .......................... (13,148,361) (7,578,528) (3,409,236)
Administrative expense
(note 3) .......................... (296,892) (239,385) (139,550)
Transfer gain (loss) and
transfer fees ..................... (122,549) (1,813) (6,491)
Transfers (to) from Guarantee
Account (note 1) .................... 25,805,412 20,874,655 8,894,897
Interfund transfers .................. (7,547,010) 9,642,188 15,486,630
------------- ---------- ----------
Increase (decrease) in net assets
from capital transactions ............ 28,729,989 60,967,356 61,777,148
------------- ---------- ----------
Increase (decrease) in net assets ..... 101,586,570 99,270,703 81,102,770
Net assets at beginning
of period ............................ 242,137,396 142,866,693 61,763,923
------------- ----------- ----------
Net assets at end of period ........... $ 343,723,966 242,137,396 142,866,693
============= =========== ===========
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND II (CONTINUED)
----------------------------------------------------------
GROWTH & GROWTH
INCOME PORTFOLIO OPPORTUNITIES PORTFOLIO
----------------------------- ----------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ........................... (317,406) (53,296) 498,381 (69,440)
Net realized gain .................... 983,225 103,153 378,467 67,071
Unrealized appreciation
(depreciation) on
investments ......................... 7,912,728 458,100 6,815,534 1,055,758
--------- ------- --------- ---------
Increase in net assets from
operations ........................... 8,578,547 507,957 7,692,382 1,053,389
--------- ------- --------- ---------
From capital transactions:
Net premiums ......................... 13,303,380 5,782,503 10,151,968 6,759,512
Transfers (to) from the general
account of Life of Virginia:
Death benefits ...................... (688,026) (2,062) (104,398) (11,218)
Surrenders .......................... (1,264,908) (116,741) (1,515,091) (178,411)
Administrative expense
(note 3) .......................... (29,641) (3,046) (29,463) (4,370)
Transfer gain (loss) and
transfer fees ..................... 732,615 358,955 483,076 734
Transfers (to) from Guarantee
Account (note 1) .................... 10,185,026 2,665,501 10,705,328 2,684,605
Interfund transfers .................. 10,322,368 6,515,155 9,164,481 6,783,534
---------- --------- ---------- ---------
Increase (decrease) in net assets
from capital transactions ............ 32,560,814 15,200,265 28,855,901 16,034,386
---------- ---------- ---------- ----------
Increase (decrease) in net assets ..... 41,139,361 15,708,222 36,548,283 17,087,775
Net assets at beginning
of period ............................ 15,708,222 -- 17,087,775 --
---------- ---------- ---------- ----------
Net assets at end of period ........... 56,847,583 15,708,222 53,636,058 17,087,775
========== ========== ========== ==========
</TABLE>
A-32
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
-------------------------------
BALANCED PORTFOLIO
-------------------------------
PERIOD YEAR
ENDED ENDED
DECEMBER 11, DECEMBER 31,
1997 1996
---------------- --------------
<S> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ..................... $ 1,655,053 4,845,109
Net realized gain (loss) .................. 5,097,861 419,822
Unrealized (depreciation) on
investments ............................. (2,501,835) (3,501,201)
-------------- ----------
Increase in net assets from operations ..... 4,251,079 1,763,730
-------------- ----------
From capital transactions:
Net premiums .............................. (6,001) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits .......................... (126,435) (191,199)
Surrenders .............................. (2,675,228) (2,074,244)
Administrative expense (note 3) ......... (71,576) (82,124)
Transfer gain (loss) and transfer
fees ................................... (78,959) (12,205)
Capital contribution .................... (629,209) --
Transfers (to) from the Guarantee
Account (note 1) ........................ (185,078) (37,694)
Interfund transfers ....................... (31,241,057) (3,810,712)
-------------- ----------
Decrease in net assets from capital
transactions .............................. (35,013,543) (6,208,178)
-------------- ----------
Decrease in net assets ..................... (30,762,464) (4,444,448)
Net assets at beginning of year ............ 30,762,464 35,206,912
-------------- ----------
Net assets at end of year .................. $ -- 30,762,464
============== ==========
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
----------------------------------------------------------------
BOND PORTFOLIO GROWTH PORTFOLIO
------------------------------- --------------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996
---------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ..................... 450,958 1,079,940 770,860 1,006,044
Net realized gain (loss) .................. 12,018 (136,701) 2,304,768 315,046
Unrealized (depreciation) on
investments ............................. (23,525) (646,673) (880,241) (363,320)
------- --------- --------- ---------
Increase in net assets from operations ..... 439,451 296,566 2,195,387 957,770
------- --------- --------- ---------
From capital transactions:
Net premiums .............................. 1,800 -- 6,456 4,370
Transfers (to) from the general
account of Life of Virginia:
Death benefits .......................... (196,037) (225,838) (58,098) (56,431)
Surrenders .............................. (508,821) (366,908) (247,815) (415,296)
Administrative expense (note 3) ......... (15,911) (24,278) (22,353) (25,172)
Transfer gain (loss) and transfer
fees ................................... (11,476) (9,665) (2,057) (10,420)
Capital contribution .................... -- -- -- --
Transfers (to) from the Guarantee
Account (note 1) ........................ (86,454) (92,797) -- (14,970)
Interfund transfers ....................... (9,344,589) (5,700,964) (12,373,616) (3,652,818)
---------- ---------- ----------- ----------
Decrease in net assets from capital
transactions .............................. (10,161,488) (6,420,450) (12,697,483) (4,170,737)
----------- ---------- ----------- ----------
Decrease in net assets ..................... (9,722,037) (6,123,884) (10,502,096) (3,212,967)
Net assets at beginning of year ............ 9,722,037 15,845,921 10,502,096 13,715,063
----------- ---------- ----------- ----------
Net assets at end of year .................. -- 9,722,037 -- 10,502,096
=========== ========== =========== ==========
</TABLE>
A-33
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
------------------------------------------------------------------------------------------
AMERICAN LEADERS FUND II HIGH INCOMEBOND FUND II
-------------------------------------------- ---------------------------------------------
PERIOD FROM
MAY 6,
1996 TO
YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
--------------- -------------- ------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ........................ $ 2,154,168 (86) 3,974 650,799 827,322 491,956
Net realized gain .................. 1,333,508 544,140 29,680 901,146 630,351 31,769
Unrealized appreciation
(depreciation) on
investments ...................... 4,019,536 3,385,309 162,046 (615,798) 1,256,745 424,014
------------ --------- ------- -------- --------- -------
Increase in net assets from
operations ......................... 7,507,212 3,929,363 195,700 936,147 2,714,418 947,739
------------ --------- ------- -------- --------- -------
From capital transactions:
Net premiums ....................... 17,174,298 13,540,849 2,249,062 7,609,375 9,254,617 4,468,263
Transfers (to) from the
general account of
Life of Virginia:
Death benefits ................... (702,585) (91,917) -- (420,052) (120,443) (42,084)
Surrenders ....................... (2,256,129) (423,567) (28,376) (3,031,255) (861,128) (428,701)
Administrative expense
(note 3) ........................ (47,545) (11,789) (522) (34,940) (18,435) (5,233)
Transfer gain (loss) and
transfer fees ................... 404,576 791 4,221 650,014 (2,424) (43)
Transfers from the Guarantee
Account (note 1) ................. 15,132,233 4,966,466 146,563 12,815,682 4,882,888 670,397
Interfund transfers ................ 2,109,439 9,208,512 1,208,370 (1,253,689) 5,675,771 6,113,878
------------ ---------- --------- ---------- --------- ---------
Increase in net assets from
capital transactions ............... 31,814,287 27,189,345 3,579,318 16,335,135 18,810,846 10,776,477
------------ ---------- --------- ---------- ---------- ----------
Increase in net assets .............. 39,321,499 31,118,708 3,775,018 17,271,282 21,525,264 11,724,216
Net assets at beginning of
period ............................. 34,893,726 3,775,018 -- 35,195,347 13,670,083 1,945,867
------------ ---------- --------- ---------- ---------- ----------
Net assets at end of period ......... $ 74,215,225 34,893,726 3,775,018 52,466,629 35,195,347 13,670,083
============ ========== ========= ========== ========== ==========
</TABLE>
A-34
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES (CONTINUED)
UTILITY FUND II
--------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) ............................... $ 1,659,412 719,879 523,302
Net realized gain ............................................. 1,730,044 731,431 336,527
Unrealized appreciation (depreciation) on investments ......... 1,205,055 4,302,272 1,113,241
Increase in net assets from operations ......................... 4,594,511 5,753,582 1,973,070
From capital transactions:
Net premiums .................................................. 5,300,423 3,510,754 7,032,730
Transfers (to) from the general account of Life of Virginia:
Death benefits .............................................. (295,533) (63,646) (172,666)
Surrenders .................................................. (1,872,219) (1,420,075) (708,499)
Administrative expense (note 3) ............................. (36,851) (32,050) (25,376)
Transfer gain (loss) and transfer fees ...................... (738,016) (1,043) 11,752
Transfers from the Guarantee Account (note 1) ................. 5,791,377 1,540,929 1,313,211
Interfund transfers ........................................... 2,670,259 (1,399,267) 830,436
Increase in net assets from capital transactions ............... 10,819,440 2,135,602 8,281,588
Increase in net assets ......................................... 15,413,951 7,889,184 10,254,658
Net assets at beginning of period .............................. 30,397,894 22,508,710 12,254,052
Net assets at end of period .................................... $45,811,845 30,397,894 22,508,710
</TABLE>
A-35
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALGER AMERICAN
-------------------------------------------------------------------------------------------
SMALL CAP PORTFOLIO GROWTH PORTFOLIO
--------------------------------------------- ---------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
--------------- -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ........................ $ 9,502,870 1,245,506 (308,795) 12,980,763 (282,901) 309,982
Net realized gain (loss) ........... 411,066 411,624 (122,299) 4,172,054 3,954,588 315,644
Unrealized appreciation
(depreciation) on
investments ...................... 2,406,527 4,016,910 (80,937) 20,408,775 8,095,163 2,224,353
------------ --------- -------- ---------- --------- ---------
Increase (decrease) in net assets
from operations .................... 12,320,463 5,674,040 (512,031) 37,561,592 11,766,850 2,849,979
------------ --------- -------- ---------- ---------- ---------
From capital transactions:
Net premiums ....................... 6,622,636 12,048,925 25,934,981 11,725,922 13,470,987 21,518,317
Transfers (to) from the
general account of
Life of Virginia:
Death benefits ................... (459,998) (296,448) (167,439) (663,235) (317,671) (22,815)
Surrenders ....................... (3,709,013) (1,974,869) (837,016) (5,345,156) (2,065,182) (539,265)
Administrative expense
(note 3) ........................ (83,804) (69,752) (32,819) (89,422) (68,206) (26,996)
Transfer gain (loss) and
transfer fees ................... 246,716 20,656 (18,410) (10,013) (390,379) (32,858)
Transfers from the Guarantee
Account (note 1) ................. 8,384,117 9,339,897 5,067,731 9,961,009 6,594,835 3,628,084
Interfund transfers ................ (2,794,548) 1,782,889 10,297,239 6,706,761 (1,557,814) 11,823,073
------------ ---------- ---------- ---------- ---------- ----------
Increase in net assets from
capital transactions ............... 8,206,106 20,851,298 40,244,267 22,285,866 15,666,570 36,347,540
------------ ---------- ---------- ---------- ---------- ----------
Increase in net assets .............. 20,526,569 26,525,338 39,732,236 59,847,458 27,433,420 39,197,519
Net assets at beginning of
period ............................. 73,827,690 47,302,352 7,570,116 72,153,813 44,720,393 5,522,874
------------ ---------- ---------- ---------- ---------- ----------
Net assets at end of period ......... $ 94,354,259 73,827,690 47,302,352 132,001,271 72,153,813 44,720,393
============ ========== ========== =========== ========== ==========
</TABLE>
A-36
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PBHG INSURANCE SERIES FUND
----------------------------------------------------------------
PBHG LARGE CAP PORTFOLIO PBHG GROWTH II PORTFOLIO
------------------------------- ------------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .......................... $ (106,500) (17,112) (119,244) (30,512)
Net realized gain (loss) ................................. 282,909 13,525 (281,878) 7,643
Unrealized appreciation (depreciation) on
investments ............................................ 2,025,080 149,898 1,029,558 (89,829)
--------- ------- --------- -------
Increase (decrease) in net assets from operations ......... 2,201,489 146,311 628,436 (112,698)
--------- ------- --------- --------
From capital transactions:
Net premiums ............................................. 2,342,871 1,239,113 1,855,144 3,502,382
Transfers (to) from the general account of
Life of Virginia:
Death benefits ......................................... (42,994) (715) (117,890) --
Surrenders ............................................. (588,848) (12,383) (409,105) (53,142)
Administrative expense (note 3) ........................ (7,464) (684) (8,868) (1,455)
Transfer gain (loss) and transfer fees ................. 40,495 865 27,528 787
Transfers from the Guarantee Account
(note 1) ............................................... 2,026,921 610,146 2,485,422 1,108,447
Interfund transfers ...................................... 1,290,849 2,735,614 (477,840) 2,507,619
--------- --------- --------- ---------
Increase in net assets from capital transactions .......... 5,061,830 4,571,956 3,354,391 7,064,638
--------- --------- --------- ---------
Increase in net assets .................................... 7,263,319 4,718,267 3,982,827 6,951,940
Net assets at beginning of period ......................... 4,718,267 -- 6,951,940 --
--------- --------- --------- ---------
Net assets at end of period ............................... $11,981,586 4,718,267 10,934,767 6,951,940
========== ========= ========== =========
</TABLE>
A-37
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
-----------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
---------------- --------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ........................ $ (1,431,833) (1,187,720) (124,804)
Net realized gain .................. 11,413,034 6,675,700 3,422,984
Unrealized appreciation on
investments ...................... 24,333,274 5,540,954 109,555
------------ ---------- ---------
Increase in net assets from
operations ....................... 34,314,475 11,028,934 3,407,735
------------ ---------- ---------
Increase in net assets from
operations .........................
From capital transactions:
Net premiums ....................... 4,886,885 11,681,150 17,880,226
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... (815,476) (427,386) (394,284)
Surrenders ....................... (5,681,643) (2,997,601) (2,851,517)
Administrative expense
(note 3) ........................ (120,730) (120,078) (112,813)
Transfer gain (loss) and
transfer fees ................... (352,260) (19,458) (40,003)
Transfers (to) from the
Guarantee Account
(note 1) ......................... 4,693,626 4,987,441 3,328,781
Interfund transfers ................ (8,460,504) (2,281,417) 8,025,078
------------ ---------- ----------
Increase (decrease) in net assets
from capital transactions .......... (5,850,102) 10,822,651 25,835,468
------------ ---------- ----------
Increase in net assets .............. 28,464,373 21,851,585 29,243,203
Net assets at beginning of year...... 105,815,122 83,963,537 54,720,334
------------ ---------- ----------
Net assets at end of year ........... $134,279,495 105,815,122 83,963,537
============ =========== ==========
<CAPTION>
JANUS ASPEN SERIES
----------------------------------------------
GROWTH PORTFOLIO
----------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) ........................ 13,670,171 3,288,014 1,820,512
Net realized gain .................. 11,096,226 9,346,395 4,286,543
Unrealized appreciation on
investments ...................... 56,452,101 23,212,981 11,457,707
---------- ---------- ----------
Increase in net assets from
operations ....................... 81,218,498 35,847,390 17,564,762
---------- ---------- ----------
Increase in net assets from
operations .........................
From capital transactions:
Net premiums ....................... 19,968,429 30,338,859 35,456,497
Transfers (to) from the
general account of Life of
Virginia:
Death benefits ................... (1,360,596) (1,849,634) (483,092)
Surrenders ....................... (11,799,421) (9,041,380) (3,747,509)
Administrative expense
(note 3) ........................ (317,146) (280,500) (199,595)
Transfer gain (loss) and
transfer fees ................... (691,664) (152,642) (208,664)
Transfers (to) from the
Guarantee Account
(note 1) ......................... 19,406,972 16,216,500 7,027,293
Interfund transfers ................ 3,890,833 1,293,752 11,381,396
----------- ---------- ----------
Increase (decrease) in net assets
from capital transactions .......... 29,097,407 36,524,955 49,226,326
----------- ---------- ----------
Increase in net assets .............. 110,315,905 72,372,345 66,791,088
Net assets at beginning of year...... 224,068,917 151,696,572 84,905,484
----------- ----------- ----------
Net assets at end of year ........... 334,384,822 224,068,917 151,696,572
=========== =========== ===========
</TABLE>
A-38
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
--------------------------------------------------
WORLDWIDE GROWTH PORTFOLIO
--------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- --------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................................... 11,456,841 834,801 676,021
Net realized gain .................................................. 46,111,510 11,585,008 5,069,677
Unrealized appreciation on investments ............................. 41,481,543 32,530,512 18,944,795
---------- ---------- ----------
Increase in net assets from operations ........................... 99,049,894 44,950,321 24,690,493
---------- ---------- ----------
Increase in net assets from operations ..............................
From capital transactions:
Net premiums ....................................................... 44,526,187 77,908,754 45,862,046
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................................... (1,373,901) (916,155) (407,146)
Surrenders ....................................................... (19,617,340) (9,754,795) (2,394,900)
Administrative expense (note 3) .................................. (469,515) (346,218) (172,873)
Transfer gain (loss) and transfer fees ........................... 125,152 (116,774) (183,599)
Transfers (to) from the Guarantee Account (note 1) ................. 41,574,483 30,845,279 8,313,366
Interfund transfers ................................................ (124,706) 25,144,972 42,049,450
----------- ---------- ----------
Increase (decrease) in net assets from capital transactions ......... 64,640,360 122,765,063 93,066,344
----------- ----------- ----------
Increase in net assets .............................................. 163,690,254 167,715,384 117,756,837
Net assets at beginning of year ..................................... 345,126,082 177,410,698 59,653,861
----------- ----------- -----------
Net assets at end of year ........................................... $ 508,816,336 345,126,082 177,410,698
============= =========== ===========
</TABLE>
A-39
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
---------------------------------------------
BALANCED PORTFOLIO
---------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- -------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .......... $ 3,905,178 931,355 170,096
Net realized gain ........................ 3,053,389 1,239,519 122,576
Unrealized appreciation on
investments ............................ 28,743,051 4,013,343 920,620
------------ --------- -------
Increase in net assets from operations..... 35,701,618 6,184,217 1,213,292
------------ --------- ---------
Net premiums ............................. 24,644,401 15,654,806 8,643,527
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... (857,556) (98,529) (37,496)
Surrenders ............................. (9,165,787) (1,560,191) (271,087)
Administrative expense (note 3) ........ (138,515) (34,113) (7,301)
Transfer gain (loss) and transfer
fees .................................. 1,031,515 (11,920) 5,413
Transfer (to) from the Guarantee
Account (note 1) ....................... 24,485,481 6,551,408 1,091,622
Interfund transfers ...................... 21,236,757 34,492,843 3,850,513
------------ ---------- ---------
Increase in net assets from capital
transactions ............................. 61,236,296 54,994,304 13,275,191
------------ ---------- ----------
Increase in net assets .................... 96,937,914 61,178,521 14,488,483
Net assets at beginning of period ......... 77,638,235 16,459,714 1,971,231
------------ ---------- ----------
$174,576,149 77,638,235 16,459,714
============ ========== ==========
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
------------------------------------------
FLEXIBLE INCOME PORTFOLIO
------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
-------------- -------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .......... 1,325,347 578,869 248,378
Net realized gain ........................ 222,001 86,470 4,524
Unrealized appreciation on
investments ............................ 30,008 269,390 68,898
--------- ------- -------
Increase in net assets from operations..... 1,577,356 934,729 321,800
--------- ------- -------
Net premiums ............................. 4,066,867 3,465,715 2,591,080
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... (36,188) (55,866) --
Surrenders ............................. (813,459) (425,891) (29,518)
Administrative expense (note 3) ........ (21,644) (8,897) (2,717)
Transfer gain (loss) and transfer
fees .................................. 453,024 1,786 (413)
Transfer (to) from the Guarantee
Account (note 1) ....................... 7,043,148 3,010,637 345,536
Interfund transfers ...................... 6,439,490 2,406,219 992,086
--------- --------- ---------
Increase in net assets from capital
transactions ............................. 17,131,238 8,393,703 3,896,054
---------- --------- ---------
Increase in net assets .................... 18,708,594 9,328,432 4,217,854
Net assets at beginning of period ......... 14,336,751 5,008,319 790,465
---------- --------- ---------
33,045,345 14,336,751 5,008,319
========== ========== =========
</TABLE>
A-40
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
--------------------------------------------------------------------------
CAPITAL
INTERNATIONAL GROWTH PORTFOLIO APPRECIATION PORTFOLIO
--------------------------------------------- ----------------------------
PERIOD FROM PERIOD FROM
MAY 3, YEAR MAY 2,
1996 TO ENDED 1997 TO
YEAR ENDED DECEMBER 31 DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1998 1997
--------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................... $ 453,555 (167,651) 9,055 (129,163) (1,544)
Net realized gain .................................. 7,205,182 3,329,942 187,391 336,728 31,894
Unrealized appreciation on investments ............. 1,486,427 1,235,644 586,615 7,532,890 12,182
------------ --------- ------- --------- ------
Increase in net assets from operations ............. 9,145,164 4,397,935 783,061 7,740,455 42,532
------------ --------- ------- --------- ------
Net premiums ....................................... 7,538,624 19,031,016 4,654,797 8,764,540 720,613
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................... (372,667) (197,552) -- (52,380) --
Surrenders ....................................... (2,368,354) (1,293,141) (51,116) (765,563) (37,177)
Administrative expense (note 3) .................. (70,684) (39,068) (3,441) (11,745) (826)
Transfer gain (loss) and transfer fees ........... 74,891 24,476 3,766 485,206 (33,752)
Transfer (to) from the Guarantee Account
(note 1) ......................................... 10,288,178 8,279,728 935,954 4,797,081 446,414
Interfund transfers ................................ (1,419,705) 10,950,154 7,189,157 15,456,302 1,531,771
------------ ---------- --------- ---------- ---------
Increase in net assets from capital transactions .... 13,670,283 36,755,613 12,729,117 28,673,441 2,627,043
------------ ---------- ---------- ---------- ---------
Increase in net assets .............................. 22,815,447 41,153,548 13,512,178 36,413,896 2,669,575
Net assets at beginning of period ................... 54,665,726 13,512,178 -- 2,669,575 --
------------ ---------- ---------- ---------- ---------
$ 77,481,173 54,665,726 13,512,178 39,083,471 2,669,575
============ ========== ========== ========== =========
</TABLE>
A-41
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS SALOMON BROTHERS
VARIABLE INSURANCE VARIABLE SERIES
TRUST FUND FUND
----------------------------- -------------------------------------------
GROWTH AND MID CAP STRATEGIC TOTAL
INCOME EQUITY BOND INVESTORS RETURN
FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- -------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
MAY 12, MAY 8, OCTOBER 22, NOVEMBER 27, OCTOBER 30,
1998 TO 1998 TO 1998 TO 1998 TO 1998 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1998 1998 1998 1998
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ............................... $ 20,010 12,176 5,857 40 5,798
Net realized gain (loss) ............................ (32,043) (72,641) 322 -- 1
Unrealized appreciation (depreciation) on
investments ....................................... 40,081 12,789 (4,823) 321 (2,958)
---------- ------- ------ ---- ------
Increase (decrease) in net assets from operations..... 28,048 (47,676) 1,356 361 2,841
---------- ------- ------ ---- ------
From capital transactions:
Net premiums ........................................ 1,873,044 1,653,452 19,355 9,900 168,401
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................
Surrenders ........................................ (42,593) (42,773) -- -- (16)
Administrative expense (note 3) ................... (447) (527) (17) (3) --
Transfer gain (loss) and transfer fees ............ 89,687 (48,872) (48) 123 140
Transfer (to) from the Guarantee Account
(note 1) .......................................... 1,085,095 1,327,515 14,903 606 14,269
Interfund transfers ................................. 1,229,734 782,072 96,473 -- 158,086
---------- --------- ------ ------- -------
Increase in net assets from capital transactions ..... 4,234,520 3,670,867 130,666 10,626 340,880
---------- --------- ------- ------- -------
Increase in net assets ............................... 4,262,568 3,623,191 132,022 10,987 343,721
Net assets at beginning of period .................... -- -- -- -- --
---------- --------- ------- ------- -------
Net assets at end of period .......................... $4,262,568 3,623,191 132,022 10,987 343,721
========== ========= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
A-42
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(1) DESCRIPTION OF ENTITY
Life of Virginia Separate Account 4 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 Company. The remaining 20% is owned by GE Financial Assurance
Holdings, Inc. General Electric Capital Assurance Company and GE Financial
Assurance Holdings, Inc. are indirect, 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 October 1998, three new investment subdivisions were added to the
Account for both Type I and Type II policies (see note 2). The Investors Fund,
Strategic Bond Fund, and the Total Return Fund each invest solely in a
designated portfolio of the Salomon Brothers Variable Series Fund. All
designated portfolios described above are series type mutual funds.
In May 1998, three new investment subdivisions were added to the Account,
for both Type I and Type II policies. The U.S. Equity Fund invests solely in a
designated portfolio of the GE Investments Funds, Inc. The Mid Cap Equity and
Growth and Income Funds each invest solely in a designated portfolio of the
Goldman Sachs Variable Insurance Trust Fund. All designated portfolios
described above are series type mutual funds.
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.
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:
<TABLE>
<CAPTION>
BEFORE THE SUBSTITUTION AFTER THE SUBSTITUTION
<S> <C>
Shares of Money Market Portfolio -- Variable Shares of Money Market Fund -- GE Investments
Insurance Products Fund Funds, Inc.
Shares of Money Fund -- Oppenheimer Variable Shares of Money Market Fund -- GE Investments
Account Funds Funds, Inc.
Shares of Bond Portfolio -- Neuberger & Berman Shares of Income Fund -- GE Investments Funds, Inc.
Advisers Management Trust
Shares of High Income Portfolio -- Variable Shares of High Income Fund -- Oppenheimer Variable
Insurance Products Fund Account Funds
Shares of Growth Portfolio -- Neuberger & Berman Shares of Growth Portfolio -- Variable Insurance
Advisers Management Trust Products Fund
Shares of Balanced Portfolio -- Neuberger & Shares of Balanced Portfolio -- Janus Aspen Series
Berman Advisers Management Trust
</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.
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
A-43
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(1) DESCRIPTION OF ENTITY -- Continued
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.
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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) 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, under policy form P1152, began to be sold in the first quarter
of 1999. Effective in early April, 1999, type IV units will be sold under
policy form P1151 1/99.
(B) INVESTMENTS
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income distributions
are recorded on the ex-dividend date. Realized gains and losses on investments
are determined on the average cost basis. The units and unit values are
disclosed as of the last business day in the applicable year or period.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the year or period ended December 31, 1998 were:
<TABLE>
<CAPTION>
COST OF PROCEEDS
SHARES FROM
FUND/PORTFOLIO ACQUIRED SHARES SOLD
- ------------------------------------- ---------------- ----------------
<S> <C> <C>
GE Investment Funds, Inc.:
S&P 500 Index ..................... $ 193,261,666 83,496,621
Money Market ...................... 1,701,557,815 1,613,202,928
Total Return ...................... 26,506,347 10,123,616
International Equity .............. 18,787,547 16,652,515
Real Estate Securities ............ 23,523,854 15,842,661
Global Income ..................... 5,328,295 1,861,939
Value Equity ...................... 36,535,340 13,367,625
Income ............................ 22,275,922 10,257,184
U.S. Equity ....................... 2,590,882 619,346
Oppenheimer Variable Account Funds:
Bond .............................. 39,193,414 18,132,323
Capital Appreciation .............. 210,297,462 219,809,641
Growth ............................ 181,186,893 150,922,416
High Income ....................... 83,189,744 59,635,187
Multiple Strategies ............... 26,261,850 18,472,877
Variable Insurance Products Fund:
Equity-Income ..................... 313,726,699 264,067,806
Growth ............................ 108,443,495 81,040,342
Overseas .......................... 438,953,070 443,302,750
Variable Insurance Products Fund II:
Asset Manager ..................... 113,236,992 104,285,552
Contrafund ........................ 117,285,371 77,197,982
</TABLE>
A-44
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
COST OF PROCEEDS
SHARES FROM
FUND/PORTFOLIO ACQUIRED SHARES SOLD
- --------------------------------------------- -------------- --------------
<S> <C> <C>
Variable Insurance Products Fund III:
Growth & Income ........................... $ 50,925,747 18,711,891
Growth Opportunities ...................... 37,316,604 8,146,041
Federated Insurance Series:
American Leaders Fund II .................. 54,772,449 20,590,197
High Income Bond Fund II .................. 58,149,198 41,800,853
Utility Fund II ........................... 24,432,674 11,930,573
The Alger American Fund:
Small Cap ................................. 201,507,490 183,477,163
Growth .................................... 71,107,311 36,713,398
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth ..................... 9,540,607 4,578,565
PBHG Growth II ............................ 9,729,001 6,287,519
Janus Aspen Series:
Aggressive Growth ......................... 84,770,544 91,715,895
Growth .................................... 93,618,465 50,237,631
Worldwide Growth .......................... 300,106,080 221,933,327
Balanced .................................. 93,484,668 29,012,283
Flexible Income ........................... 27,608,056 9,290,765
International Growth ...................... 173,185,303 162,321,859
Capital Appreciation ...................... 38,542,550 10,997,547
Goldman Sachs Variable Insurance Trust Fund:
Growth and Income ......................... 4,676,147 481,640
Mid Cap Equity ............................ 5,145,437 1,409,093
Salomon Brothers Variable Series Fund:
Strategic Bond ............................ 210,700 80,107
Investors ................................. 10,629 3
Total Return .............................. 341,040 171
</TABLE>
A-45
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
(C) 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, 1998, 1997 and
1996 are as follows:
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
---------------------------------------------------------------------
S&P 500 GOVERNMENT MONEY TOTAL INTERNATIONAL
INDEX SECURITIES MARKET RETURN EQUITY
FUND FUND FUND FUND FUND
TYPE I UNITS ------------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 .................... 479,021 428,950 893,974 745,501 115,562
------- ------- ------- ------- -------
Net premiums ............................................. 34,082 36,100 706,581 33,745 22,527
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)
Administrative expenses ................................ (1,347) (1,204) (4,925) (2,175) (446)
Transfers (to)/from the Guarantee Account ................ 37,400 4,534 358,505 1,905 22,249
Interfund transfers ...................................... 54,702 62,264 1,023,952 (32,962) 52,528
------- ------- --------- ------- -------
Net increase (decrease) in units from capital transactions 101,236 75,647 1,655,185 (37,436) 91,850
------- ------- --------- ------- -------
Units outstanding at December 31, 1996 .................... 580,257 504,597 2,549,159 708,065 207,412
------- ------- --------- ------- -------
Net premiums ............................................. 43,467 2,027 273,183 24,404 3,946
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) (12,742)
Administrative expenses ................................ (1,886) (938) (6,382) (1,805) (522)
Transfers (to)/from the Guarantee Account ................ 41,669 9,540 304,035 5,882 18,965
Interfund transfers ...................................... 292,720 (484,051) 1,254,694 (42,593) (35,529)
------- -------- --------- ------- -------
Net increase (decrease) in units from capital transactions 338,590 (504,597) 963,101 (76,237) (25,882)
------- -------- --------- ------- -------
Units outstanding at December 31, 1997 .................... 918,847 -- 3,512,260 631,828 181,530
------- -------- --------- ------- -------
Net premiums ............................................. 43,692 -- 3,088,601 8,156 37,608
Transfers (to) from the general account of Life
of Virginia:
Death benefits ......................................... (4,853) -- (89,832) (2,466) (463)
Surrenders ............................................. (75,788) -- (2,689,646) (56,739) (24,253)
Cost of insurance ...................................... (2,222) -- (13,914) (1,299) (767)
Transfers (to) from the Guarantee Account ................ 44,702 -- 269,329 8,553 14,103
Interfund transfers ...................................... 172,435 -- 1,145,551 (3,122) (46,225)
------- -------- ---------- ------- -------
Net increase (decrease) in units from capital transactions 177,966 -- 1,710,089 (46,917) (19,997)
------- -------- ---------- ------- -------
Units outstanding at December 31, 1998 .................... 1,096,813 -- 5,222,349 584,911 161,533
========= ======== ========== ======= =======
</TABLE>
A-46
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
---------------------------------------------------------------
REAL ESTATE GLOBAL U.S.
SECURITIES INCOME VALUE EQUITY INCOME EQUITY
FUND FUND FUND FUND FUND
TYPE I UNITS ------------- ---------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ...................... 23,643 -- -- -- --
------ -- -- -- --
Net premiums ............................................... 14,587 -- -- -- --
Transfers (to) from the general account of Life of Virginia:
Death benefits ........................................... -- -- -- -- --
Surrenders ............................................... (1,361) -- -- -- --
Administrative expenses .................................. (192) -- -- -- --
Transfers (to)/from the Guarantee Account .................. 21,124 -- -- -- --
Interfund transfers ........................................ 147,118 -- -- -- --
------- -- -- -- --
Net increase (decrease) in units from capital transactions .. 181,276 -- -- -- --
------- -- -- -- --
Units outstanding at December 31, 1996 ...................... 204,919 -- -- -- --
------- -- -- -- --
Net premiums ............................................... 27,070 392 11,097 595 --
Transfers (to) from the general account of Life of Virginia:
Death benefits ........................................... -- -- -- -- --
Surrenders ............................................... (14,199) (72) (731) (5,500) --
Administrative expenses .................................. (719) (12) (128) (199) --
Transfers (to)/from the Guarantee Account .................. 26,266 3,303 12,467 -- --
Interfund transfers ........................................ 110,113 9,339 154,506 1,300,742 --
------- ----- ------- --------- --
Net increase (decrease) in units from capital transactions .. 148,531 12,950 177,211 1,295,638 --
------- ------ ------- --------- --
Units outstanding at December 31, 1997 ...................... 353,450 12,950 177,211 1,295,638 --
------- ------ ------- --------- --
Net premiums ............................................... 139,356 3,542 73,340 14,672 2,951
Transfers (to) from the general account of Life of Virginia:
Death benefits ........................................... (1,816) -- (261) (5,419) --
Surrenders ............................................... (85,757) (3,547) (33,659) (93,554) (67)
Cost of insurance ........................................ (3,200) (80) (1,036) (1,780) (24)
Transfers (to) from the Guarantee Account .................. 112,800 8,901 54,595 34,085 660
Interfund transfers ........................................ (198,141) 24,866 115,186 89,003 22,607
-------- ------ ------- --------- ------
Net increase (decrease) in units from capital transactions .. (36,758) 33,682 208,165 37,007 26,127
-------- ------ ------- --------- ------
Units outstanding at December 31, 1998 ...................... 316,692 46,632 385,376 1,332,645 26,127
======== ====== ======= ========= ======
</TABLE>
A-47
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
----------------------------------------
CAPITAL
MONEY BOND APPRECIATION
FUND FUND FUND
TYPE I UNITS ------------ ------------ --------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 .......... 282,462 952,700 2,647,993
------- ------- ---------
Net premiums ................................... -- (4,744) (181,755)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (1,782) 2,016 44,441
Surrenders ................................... (16,283) 7,728 332,700
Administrative expenses ...................... (531) 407 14,718
Transfers (to)/from the Guarantee Account ...... (4,896) (7,110) (185,173)
Interfund transfers ............................ (96,465) (9,728) 53,131
------- ------- ---------
Net increase (decrease) in units from capital
transactions ................................... (119,957) (11,431) 78,062
-------- ------- ---------
Units outstanding at December 31, 1996 .......... 162,505 941,269 2,726,055
-------- ------- ---------
Net premiums ................................... -- 12,729 48,378
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... -- (4,708) (2,476)
Surrenders ................................... -- (114,775) (146,760)
Administrative expenses ...................... (298) (2,868) (6,721)
Transfers (to)/from the Guarantee Account ...... -- 30,993 33,837
Interfund transfers ............................ (156,841) 66,990 (60,894)
-------- -------- ---------
Net increase (decrease) in units from capital
transactions ................................... (157,139) (11,639) (134,636)
-------- -------- ---------
Units outstanding at December 31, 1997 .......... -- 929,630 2,591,419
-------- -------- ---------
Net premiums ................................... 74,703 19,338
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... -- (15,395) (5,238)
Surrenders ................................... -- (407,204) (170,429)
Cost of insurance ............................ -- (5,618) (5,190)
Transfers (to) from the Guarantee Account ...... -- 81,767 15,924
Interfund transfers ............................ -- 257,976 (101,296)
-------- -------- ---------
Net increase (decrease) in units from capital
transactions ................................... -- (13,771) (246,891)
-------- -------- ---------
Units outstanding at December 31, 1998 .......... -- 915,859 2,344,528
======== ======== =========
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
-----------------------------------------
HIGH MULTIPLE
GROWTH INCOME STRATEGIES
FUND FUND FUND
TYPE I UNITS ------------- ------------- -------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 .......... 986,685 1,263,712 1,762,762
------- --------- ---------
Net premiums ................................... 267,359 15,693 26,028
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (29,174) (411) (15,299)
Surrenders ................................... (364,042) (23,047) (88,160)
Administrative expenses ...................... (16,121) (1,163) (4,615)
Transfers (to)/from the Guarantee Account ...... 105,286 13,792 26,304
Interfund transfers ............................ 240,629 89,651 (66,358)
-------- --------- ---------
Net increase (decrease) in units from capital
transactions ................................... 203,937 94,515 (122,100)
-------- --------- ---------
Units outstanding at December 31, 1996 .......... 1,190,622 1,358,227 1,640,662
--------- --------- ---------
Net premiums ................................... 50,650 44,846 26,455
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (1,990) (6,846) (7,589)
Surrenders ................................... (99,247) (87,976) (127,118)
Administrative expenses ...................... (2,955) (3,299) (4,137)
Transfers (to)/from the Guarantee Account ...... 40,477 54,141 17,555
Interfund transfers ............................ 114,256 510,750 7,721
--------- --------- ---------
Net increase (decrease) in units from capital
transactions ................................... 101,191 511,616 (87,113)
--------- --------- ---------
Units outstanding at December 31, 1997 .......... 1,291,813 1,869,843 1,553,549
--------- --------- ---------
Net premiums ................................... 34,584 31,959 40,822
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (2,748) (10,837) (8,380)
Surrenders ................................... (110,751) (182,095) (161,263)
Cost of insurance ............................ (2,659) (4,385) (3,584)
Transfers (to) from the Guarantee Account ...... 19,698 51,660 19,533
Interfund transfers ............................ (56,877) (97,711) (96,211)
--------- --------- ---------
Net increase (decrease) in units from capital
transactions ................................... (118,753) (211,409) (209,083)
--------- --------- ---------
Units outstanding at December 31, 1998 .......... 1,173,060 1,658,434 1,344,466
========= ========= =========
</TABLE>
A-48
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------------------------------------------
MONEY HIGH
MARKET INCOME EQUITY-INCOME GROWTH OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
TYPE I UNITS --------------- ------------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ................ 2,433,065 958,295 6,942,107 5,187,186 4,508,746
--------- ------- --------- --------- ---------
Net premiums ......................................... 8,114 (11,013) 209,607 133,676 102,472
Transfers (to) from the general account of Life of
Virginia:
Death benefits ..................................... (26,867) -- (39,084) (25,152) (17,537)
Surrenders ......................................... (136,342) (64,247) (314,228) (232,300) (188,428)
Administrative expenses ............................ (4,247) (2,193) (16,695) (13,593) (11,116)
Transfers (to)/from the Guarantee Account ............ (46,251) (1,584) 129,570 60,757 48,453
Interfund transfers .................................. (1,024,299) (147,328) (63,823) (278,909) (373,467)
---------- -------- --------- --------- ---------
Net increase (decrease) in units from capital
transactions ......................................... (1,229,892) (226,365) (94,653) (355,521) (439,623)
---------- -------- --------- --------- ---------
Units outstanding at December 31, 1996 ................ 1,203,173 731,930 6,847,454 4,831,665 4,069,123
---------- -------- --------- --------- ---------
Net premiums ......................................... (2,769) -- 132,909 46,481 33,637
Transfers (to) from the general account of Life of
Virginia:
Death benefits ..................................... (3,458) (2,224) (25,251) (14,556) (15,035)
Surrenders ......................................... (72,594) (65,456) (376,813) (325,620) (189,716)
Administrative expenses ............................ (2,380) (1,503) (17,119) (12,146) (9,227)
Transfers (to)/from the Guarantee Account ............ (1,822) (257) 81,689 26,348 10,283
Interfund transfers .................................. (1,110,150) (662,490) (53,531) (84,347) (500,805)
---------- -------- --------- --------- ---------
Net increase (decrease) in units from capital
transactions ......................................... (1,193,173) (731,930) (258,116) (363,840) (670,863)
---------- -------- --------- --------- ---------
Units outstanding at December 31, 1997 ................ -- -- 6,589,338 4,467,825 3,398,260
---------- -------- --------- --------- ---------
Net premiums ......................................... -- -- 92,608 28,017 20,092
Transfers (to) from the general account of Life of
Virginia:
Death benefits ..................................... -- -- (21,942) (20,703) (8,411)
Surrenders ......................................... -- -- (584,254) (406,572) (201,390)
Cost of insurance .................................. -- -- (14,640) (9,624) (6,558)
Transfers (to) from the Guarantee Account ............ -- -- 51,832 6,585 16,016
Interfund transfers .................................. -- -- (359,182) (96,107) (404,695)
---------- -------- --------- --------- ---------
Net increase (decrease) in units from capital
transactions ......................................... -- -- (835,578) (498,404) (584,946)
---------- -------- --------- --------- ---------
Units outstanding at December 31, 1998 ................ -- -- 5,753,760 3,969,421 2,813,314
========== ======== ========= ========= =========
</TABLE>
A-49
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS VARIABLE INSURANCE PRODUCTS
FUND II FUND III
------------------------------- ----------------------------
ASSET GROWTH & GROWTH
MANAGER CONTRAFUND INCOME OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
TYPE I UNITS --------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ............. 21,993,362 2,434,885 -- --
---------- --------- -- --
Net premiums ...................................... 164,394 191,853 -- --
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. (142,857) (14,740) -- --
Surrenders ...................................... (1,189,857) (156,723) -- --
Administrative expenses ......................... (60,017) (7,215) -- --
Transfers (to)/from the Guarantee Account ......... (9,338) 168,994 -- --
Interfund transfers ............................... (1,775,712) 480,447 -- --
---------- --------- -- --
Net increase (decrease) in units from capital
transactions ...................................... (3,013,387) 662,616 -- --
---------- --------- -- --
Units outstanding at December 31, 1996 ............. 18,979,975 3,097,501 -- --
---------- --------- -- --
Net premiums ...................................... 152,156 110,477 41,831 30,072
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. (89,850) (9,932) -- --
Surrenders ...................................... (1,096,143) (211,184) (813) (5,989)
Administrative expenses ......................... (52,182) (7,854) (183) (318)
Transfers (to)/from the Guarantee Account ......... 25,895 101,581 19,562 24,545
Interfund transfers ............................... (818,341) 215,612 233,932 293,107
---------- --------- ------- -------
Net increase (decrease) in units from capital
transactions ...................................... (1,878,465) 198,700 294,329 341,417
---------- --------- ------- -------
Units outstanding at December 31, 1997 ............. 17,101,510 3,296,201 294,329 341,417
---------- --------- ------- -------
Net premiums ...................................... 71,298 74,775 36,361 51,350
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. (86,711) (3,720)
Surrenders ...................................... (1,581,072) (275,339) (33,956) (51,341)
Cost of insurance ............................... (41,759) (6,747) (1,229) (1,181)
Transfers (to) from the Guarantee Account ......... 16,975 48,507 44,357 39,391
Interfund transfers ............................... (645,083) (51,589) 411,418 215,578
---------- --------- ------- -------
Net increase (decrease) in units from capital
transactions ...................................... (2,266,352) (214,113) 456,951 253,797
---------- --------- ------- -------
Units outstanding at December 31, 1998 ............. 14,835,158 3,082,088 751,280 595,214
========== ========= ======= =======
</TABLE>
A-50
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
ADVISERS
MANAGEMENT TRUST (CONTINUED)
-------------------------------------------
BALANCED BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
TYPE I UNITS --------------- ------------- -------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 ......... 2,025,936 939,243 756,501
--------- ------- -------
Net premiums .................................. -- 692 --
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. (13,542) (625) (7,106)
Surrenders .................................. (19,441) (46,729) (82,100)
Administrative expenses ..................... (1,491) (2,782) (3,304)
Transfers (to)/from the Guarantee
Account ..................................... (6,661) (1,863) (1,563)
Interfund transfers ........................... (300,225) (348,334) (131,122)
-------- --------
Net increase (decrease) in units from
capital transactions .......................... (341,360) (399,641) (225,195)
-------- --------
Units outstanding at December 31, 1996 ......... 1,684,576 539,602 531,306
--------- -------- --------
Net premiums .................................. (343) 141 348
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. (4,573) (13,722) (3,133)
Surrenders .................................. (131,590) (27,704) (10,160)
Administrative expenses ..................... (3,702) (1,043) (1,125)
Transfers (to)/from the Guarantee
Account ..................................... (9,256) (144) --
Interfund transfers ........................... 1,535,112) (497,130) (517,236)
-------- --------
Net increase (decrease) in units from
capital transactions .......................... (1,684,576) (539,602) (531,306)
-------- --------
Units outstanding at December 31, 1997 ......... -- -- --
---------- -------- --------
Net premiums .................................. -- -- --
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. -- -- --
Surrenders .................................. -- -- --
Cost of insurance ........................... -- -- --
Transfers (to) from the Guarantee
Account ..................................... -- -- --
Interfund transfers ........................... -- -- --
---------- -------- --------
Net increase (decrease) in units from
capital transactions .......................... -- -- --
---------- -------- --------
Units outstanding at December 31, 1998 ......... -- -- --
========== ======== ========
<CAPTION>
FEDERATED INVESTORS
INSURANCE SERIES
----------------------------------------
AMERICAN
LEADERS HIGH
PORTFOLIO INCOME UTILITY
FUND II BONDS FUND II FUND II
TYPE I UNITS ----------- --------------- ------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 ......... -- 40,814 539,628
-- ------ -------
Net premiums .................................. 6,132 11,997 34,892
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. -- (1,489) (13,689)
Surrenders .................................. (234) (8,472) (35,752)
Administrative expenses ..................... (47) (273) (1,868)
Transfers (to)/from the Guarantee
Account ..................................... 1,547 23,451 31,866
Interfund transfers ........................... 68,264 145,478 (9,854)
------ ------- -------
Net increase (decrease) in units from
capital transactions .......................... 75,662 170,692 5,595
------ ------- -------
Units outstanding at December 31, 1996 ......... 75,662 211,506 545,223
------ ------- -------
Net premiums .................................. 35,396 49,848 7,670
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. -- (469) (853)
Surrenders .................................. (1,961) (14,353) (38,555)
Administrative expenses ..................... (502) (718) (1,375)
Transfers (to)/from the Guarantee
Account ..................................... 24,074 50,940 9,699
Interfund transfers ........................... 228,950 159,370 (36,477)
------- ------- -------
Net increase (decrease) in units from
capital transactions .......................... 285,957 244,618 (59,891)
------- ------- -------
Units outstanding at December 31, 1997 ......... 361,619 456,124 485,332
------- ------- -------
Net premiums .................................. 49,226 (16,663) (2,080)
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. -- 1,444 816
Surrenders .................................. (38,733) 22,376 6,445
Cost of insurance ........................... (1,089) 466 179
Transfers (to) from the Guarantee
Account ..................................... 23,362 (25,648) (2,909)
Interfund transfers ........................... 86,081 33,576 (9,318)
------- ------- -------
Net increase (decrease) in units from
capital transactions .......................... 118,847 15,551 (6,867)
------- ------- -------
Units outstanding at December 31, 1998 ......... 480,466 471,675 478,465
======= ======= =======
</TABLE>
A-51
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
ALGER AMERICAN
-----------------------------
SMALL CAP GROWTH
PORTFOLIO PORTFOLIO
TYPE I UNITS --------------- -------------
<S> <C> <C>
Units outstanding at December 31, 1995 ......... 405,791 261,225
------- -------
Net premiums .................................. 260,309 140,387
Transfers (to) from the general account of
Life of Virginia:
Death benefits .............................. (10,458) --
Surrenders .................................. (35,446) (31,027)
Administrative expenses ..................... (2,659) (2,129)
Transfers (to)/from the Guarantee Account ..... 150,713 122,150
Interfund transfers ........................... 571,403 700,068
------- -------
Net increase (decrease) in units from capital
transactions .................................. 933,862 929,449
------- -------
Units outstanding at December 31, 1996 ......... 1,339,653 1,190,674
--------- ---------
Net premiums .................................. 694,521 66,490
Transfers (to) from the general account of
Life of Virginia:
Death benefits .............................. (42,319) (2,907)
Surrenders .................................. (1,148,701) (80,029)
Administrative expenses ..................... (36,907) (3,546)
Transfers (to)/from the Guarantee Account ..... 749,029 2,066
Interfund transfers ........................... (230,206) (150,234)
---------- ---------
Net increase (decrease) in units from capital
transactions .................................. (14,583) (168,160)
---------- ---------
Units outstanding at December 31, 1997 ......... 1,325,070 1,022,514
---------- ---------
Net premiums .................................. 429,477 25,796
Transfers (to) from the general account of
Life of Virginia:
Death benefits .............................. (384) (6,748)
Surrenders .................................. (28,813) (101,948)
Cost of insurance ........................... (1,249) (2,260)
Transfers (to) from the Guarantee Account ..... 27,106 20,996
Interfund transfers ........................... (17,778) 203,074
---------- ---------
Net increase (decrease) in units from capital
transactions .................................. 408,359 138,910
---------- ---------
Units outstanding at December 31, 1998 ......... 1,733,429 1,161,424
========== =========
<CAPTION>
PBHG INSURANCE
SERIES FUND JANUS ASPEN SERIES
----------------------- -----------------------------
LARGE CAP AGGRESSIVE
GROWTH GROWTH II GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
TYPE I UNITS ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ......... -- -- 1,965,737 4,432,726
-- -- --------- ---------
Net premiums .................................. -- -- 1,581 1,661,740
Transfers (to) from the general account of
Life of Virginia:
Death benefits .............................. -- -- -- (181,059)
Surrenders .................................. -- -- (429) (2,320,448)
Administrative expenses ..................... -- -- (22) (113,310)
Transfers (to)/from the Guarantee Account ..... -- -- 1,256 1,066,999
Interfund transfers ........................... -- -- 7,695 217,761
-- -- --------- ----------
Net increase (decrease) in units from capital
transactions .................................. -- -- 10,081 331,683
-- -- --------- ----------
Units outstanding at December 31, 1996 ......... -- -- 1,975,818 4,764,409
-- -- --------- ----------
Net premiums .................................. 1,019 17,111 55,368 109,351
Transfers (to) from the general account of
Life of Virginia:
Death benefits .............................. -- -- (1,972) (66,404)
Surrenders .................................. (92) (49) (87,614) (321,901)
Administrative expenses ..................... (32) (101) (4,772) (11,195)
Transfers (to)/from the Guarantee Account ..... 2,432 1,623 29,407 64,006
Interfund transfers ........................... 52,670 58,027 (148,659) (32,501)
------ ------ --------- ----------
Net increase (decrease) in units from capital
transactions .................................. 55,997 76,611 (158,242) (258,644)
------ ------ --------- ----------
Units outstanding at December 31, 1997 ......... 55,997 76,611 1,817,576 4,505,765
------ ------ --------- ----------
Net premiums .................................. 12,832 43,391 16,545 85,570
Transfers (to) from the general account of
Life of Virginia:
Death benefits .............................. -- -- (8,425) (16,960)
Surrenders .................................. (13,525) (2,223) (137,584) (306,115)
Cost of insurance ........................... (192) (222) (3,687) (10,854)
Transfers (to) from the Guarantee Account ..... 8,053 7,385 13,161 60,329
Interfund transfers ........................... 34,878 (2,510) (145,916) (10,306)
------- ------ --------- ----------
Net increase (decrease) in units from capital
transactions .................................. 42,046 45,821 (265,906) (198,336)
------- ------ --------- ----------
Units outstanding at December 31, 1998 ......... 98,043 122,432 1,551,670 4,307,429
======= ======= ========= ==========
</TABLE>
A-52
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
---------------------------------------------------------------------
FLEXIBLE INTERNATIONAL CAPITAL
WORLDWIDE BALANCED INCOME GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
TYPE I UNITS ------------- ------------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ............. 2,757,216 111,972 39,079 -- --
--------- ------- ------ -- --
Net premiums ...................................... 880,684 49,343 4,021 34,924 --
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. (51,566) (2,953) -- -- --
Surrenders ...................................... (739,842) (15,986) (1,075) (1,689) --
Administrative expenses ......................... (48,025) (1,541) (194) (301) --
Transfers (to)/from the Guarantee Account ......... 455,640 26,519 11,223 37,626 --
Interfund transfers ............................... 916,700 191,453 64,966 403,878 --
--------- ------- ------ ------- --
Net increase (decrease) in units from capital
transactions ...................................... 1,413,591 246,835 78,941 474,438 --
--------- ------- ------ ------- --
Units outstanding at December 31, 1996 ............. 4,170,807 358,807 118,020 474,438 --
--------- ------- ------- ------- --
Net premiums ...................................... 257,478 32,492 8,506 99,898 2,452
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. (7,323) -- -- -- --
Surrenders ...................................... (229,991) (34,024) (17,779) (40,170) (1,327)
Administrative expenses ......................... (12,079) (1,430) (403) (2,200) (58)
Transfers (to)/from the Guarantee Account ......... 148,276 55,427 78,205 64,693 344
Interfund transfers ............................... 611,104 2,070,280 94,329 408,010 47,846
--------- --------- ------- ------- ------
Net increase (decrease) in units from capital
transactions ...................................... 767,465 2,122,745 162,858 530,231 49,257
--------- --------- ------- ------- ------
Units outstanding at December 31, 1997 ............. 4,938,272 2,481,552 280,878 1,004,669 49,257
--------- --------- ------- --------- ------
Net premiums ...................................... 235,218 127,113 37,137 55,993 124,428
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. (17,077) (16,246) (1,939) (2,564) --
Surrenders ...................................... (371,035) (424,576) (20,362) (67,352) (9,789)
Cost of insurance ............................... (11,204) (6,797) (928) (2,002) (416)
Transfers (to) from the Guarantee Account ......... 69,943 102,984 62,318 28,874 11,707
Interfund transfers ............................... 50,630 652,003 195,121 35,806 331,630
--------- --------- ------- --------- -------
Net increase (decrease) in units from capital
transactions ...................................... (43,525) 434,481 271,347 48,755 457,560
--------- --------- ------- --------- -------
Units outstanding at December 31, 1998 ............. 4,894,747 2,916,033 552,225 1,053,424 506,817
========= ========= ======= ========= =======
</TABLE>
A-53
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GOLDMAN SACHS VARIABLE SALOMON BROTHERS
INSURANCE TRUST FUND VARIABLE SERIES FUND
------------------------- -----------------------------------
GROWTH AND MID CAP
INCOME EQUITY STRATEGIC INVESTORS TOTAL
FUND FUND FUND FUND RETURN
------------ ---------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C>
TYPE I UNITS
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 ...................................... -- -- -- -- --
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, 1997 ............. -- -- -- -- --
-- -- ---- -- --
Net premiums ...................................... 10,233 2,260 1,927 42 --
Transfers (to) from the general account of Life of
Virginia:
Death benefits .................................. -- -- -- -- --
Surrenders ...................................... (273) (720) -- -- --
Cost of insurance ............................... (43) (49) (2) -- --
Transfers (to) from the Guarantee Account ......... 22,381 5,400 -- -- --
Interfund transfers ............................... 20,352 71,158 874 -- 6,299
------ ------ ------ -- -----
Net increase (decrease) in units from capital
transactions ...................................... 52,650 78,049 2,799 42 6,299
------ ------ ------ -- -----
Units outstanding at December 31, 1998 ............. 52,650 78,049 2,799 42 6,299
====== ====== ====== == =====
</TABLE>
A-54
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
---------------------------------------------------------------------
S&P 500 GOVERNMENT MONEY TOTAL INTERNATIONAL
INDEX SECURITIES MARKET RETURN EQUITY
FUND FUND FUND FUND FUND
------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 .............. 400,009 153,756 1,508,360 252,584 47,044
------- ------- --------- ------- ------
Net premiums ....................................... 647,438 194,563 10,719,294 345,169 204,787
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)
Administrative expenses .......................... (290) (130) (792) (196) (80)
Transfers (to) from the Guarantee Account .......... 78,749 3,809 (49,295) 38,959 26,698
Interfund transfers ................................ 155,417 (66,854) (8,053,173) 35,026 58,323
------- ------- ---------- ------- -------
Net increase (decrease) in units from capital
transactions ....................................... 862,493 122,440 2,385,019 406,667 285,359
------- ------- ---------- ------- -------
Units outstanding at December 31, 1996 .............. 1,262,502 276,196 3,893,379 659,251 332,403
--------- ------- ---------- ------- -------
Net premiums ....................................... 1,106,640 58,332 7,321,970 188,455 143,803
Transfers (to) from the general account of Life of
Virginia:
Death benefits ................................... (46,669) -- (31,824) (4,811) (188)
Surrenders ....................................... (61,683) (10,472) (497,702) (40,510) (16,180)
Loans ............................................ -- -- -- -- --
Administrative expenses .......................... (1,001) (115) (2,877) (508) (358)
Transfers (to) from the Guarantee Account .......... 376,140 37,807 406,500 93,000 69,865
Interfund transfers ................................ 389,211 (361,748) (6,108,959) 33,268 85,065
--------- -------- ---------- ------- -------
Net increase (decrease) in units from capital
transactions ....................................... 1,762,638 (276,196) 1,087,108 268,894 282,007
--------- -------- ---------- ------- -------
Units outstanding at December 31, 1997 .............. 3,025,140 -- 4,980,487 928,145 614,410
--------- -------- ---------- ------- -------
Net premiums ....................................... 1,191,108 -- 4,686,359 224,832 71,002
Transfers (to) from the general account of Life of
Virginia:
Death benefits ................................... (18,705) -- (269,042) (8,405) (4,372)
Surrenders ....................................... (199,459) -- (1,083,395) (46,133) (38,542)
Cost of insurance ................................ (2,313) -- (4,489) (698) (803)
Transfers (to) from the Guarantee Account .......... 878,507 -- 1,448,793 291,977 130,273
Interfund transfers ................................ 313,281 -- (525,766) 35,416 (130,050)
--------- -------- ---------- ------- --------
Net increase (decrease) in units from capital
transactions ..................................... 2,162,419 -- 4,252,460 496,989 27,508
--------- -------- ---------- ------- --------
Units outstanding at December 31, 1998 ............. 5,187,559 -- 9,232,947 1,425,134 641,918
========= ======== ========== ========= ========
</TABLE>
A-55
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GE INVESTMENT FUNDS, INC.
---------------------------
REAL ESTATE GLOBAL
SECURITIES INCOME
FUND FUND
------------- -------------
<S> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 ........................ 34,477 --
------ ----
Net premiums ................................................. 214,051 --
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. -- --
Surrenders ................................................. (1,826) --
Administrative expenses .................................... (43) --
Transfers (to) from the Guarantee Account .................... 19,914 --
Interfund transfers .......................................... 162,396 --
------- ----
Net increase (decrease) in units from capital transactions .... 394,492 --
------- ----
Units outstanding at December 31, 1996 ........................ 428,969 --
------- ----
Net premiums ................................................. 604,427 19,022
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (1,092) --
Surrenders ................................................. (24,343) (487)
Loans ...................................................... -- --
Administrative expenses .................................... (445) (8)
Transfers (to) from the Guarantee Account .................... 236,279 19,733
Interfund transfers .......................................... 234,452 41,030
------- --------
Net increase (decrease) in units from capital transactions .... 1,049,278 79,290
--------- --------
Units outstanding at December 31, 1997 ........................ 1,478,247 79,290
--------- --------
Net premiums ................................................. 242,837 52,447
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (9,506) --
Surrenders ................................................. (44,578) (2,877)
Cost of insurance .......................................... (1,006) (81)
Transfers (to) from the Guarantee Account .................... 346,955 83,494
Interfund transfers .......................................... (259,466) 73,722
--------- --------
Net increase (decrease) in units from capital transactions ... 275,236 206,705
--------- --------
Units outstanding at December 31, 1998 ....................... 1,753,483 285,995
========= ========
<CAPTION>
GE INVESTMENT FUNDS, INC.
----------------------------------------
US
VALUE EQUITY INCOME EQUITY
FUND FUND FUND
-------------- ------------- -----------
<S> <C> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 ........................ -- -- --
-- -- --
Net premiums ................................................. -- 162,212 --
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 ................................................. 242,987 1,357 --
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (153) -- --
Surrenders ................................................. (5,196) (415) --
Loans ...................................................... -- -- --
Administrative expenses .................................... (28) (42) --
Transfers (to) from the Guarantee Account .................... 146,978 5,210 --
Interfund transfers .......................................... 346,028 897,139 --
------- ------- --
Net increase (decrease) in units from capital transactions .... 730,616 903,249 --
------- ------- --
Units outstanding at December 31, 1997 ........................ 730,616 903,249 --
------- ------- --
Net premiums ................................................. 651,133 162,212 86,729
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (1,696) (5,856) --
Surrenders ................................................. (104,573) (49,209) (787)
Cost of insurance .......................................... (689) (703) (16)
Transfers (to) from the Guarantee Account .................... 607,675 345,204 51,261
Interfund transfers .......................................... 257,534 529,843 43,108
-------- ------- ------
Net increase (decrease) in units from capital transactions ... 1,409,384 981,491 180,295
--------- ------- -------
Units outstanding at December 31, 1998 ....................... 2,140,000 1,884,740 180,295
========= ========= =======
</TABLE>
A-56
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT
FUNDS
----------------------------
MONEY BOND
FUND FUND
--------------- ------------
<S> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 .......... 58,163 275,480
-------- -------
Net premiums ................................... 70 307,614
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... -- (3,625)
Surrenders ................................... (1,020) (13,875)
Administrative expenses ...................... (6) (160)
Transfers (to) from the Guarantee Account ...... (156) 32,015
Interfund transfers ............................ (33,183) 109,648
--------- -------
Net increase (decrease) in units from
capital transactions ........................... (34,295) 431,617
--------- -------
Units outstanding at December 31, 1996 .......... 23,868 707,097
--------- -------
Net premiums ................................... 30 167,289
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... -- (8,306)
Surrenders ................................... (202) (30,599)
Loans ........................................ -- --
Administrative expenses ...................... (5) (513)
Transfers (to) from the Guarantee Account ...... -- 156,266
Interfund transfers ............................ (23,691) 2,783
--------- -------
Net increase (decrease) in units from capital
transactions ................................... (23,868) 286,920
--------- -------
Units outstanding at December 31, 1997 .......... -- 994,017
--------- -------
Net premiums ................................... -- 270,558
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... -- (14,333)
Surrenders ................................... -- (74,631)
Cost of insurance ............................ -- (785)
Transfers (to) from the Guarantee Account ...... -- 382,347
Interfund transfers ............................ -- 419,337
--------- -------
Net increase (decrease) in units from capital
transactions ................................... -- 982,493
--------- -------
Units outstanding at December 31, 1998 .......... -- 1,976,510
========= =========
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
--------------------------------------------------------
CAPITAL HIGH MULTIPLE
APPRECIATION GROWTH INCOME STRATEGIES
FUND FUND FUND FUND
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 .......... 582,579 423,764 561,144 256,681
------- ------- ------- -------
Net premiums ................................... 1,152,800 440,344 922,316 383,300
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (23,778) (2,446) (14,183) (3,190)
Surrenders ................................... (34,224) (9,335) (24,799) (11,252)
Administrative expenses ...................... (668) (213) (520) (329)
Transfers (to) from the Guarantee Account ...... 169,506 50,413 94,808 45,770
Interfund transfers ............................ 275,079 189,075 176,989 77,022
--------- ------- ------- -------
Net increase (decrease) in units from
capital transactions ........................... 1,538,715 667,838 1,154,611 491,321
--------- ------- --------- -------
Units outstanding at December 31, 1996 .......... 2,121,294 1,091,602 1,715,755 748,002
--------- --------- --------- -------
Net premiums ................................... 713,649 880,279 703,696 349,189
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (10,958) (8,211) (16,328) (5,971)
Surrenders ................................... (79,872) (48,836) (109,043) (55,647)
Loans ........................................ -- -- -- --
Administrative expenses ...................... (1,748) (951) (1,245) (701)
Transfers (to) from the Guarantee Account ...... 369,347 337,722 379,179 151,804
Interfund transfers ............................ 64,736 210,754 262,960 13,450
--------- --------- --------- -------
Net increase (decrease) in units from capital
transactions ................................... 1,055,154 1,370,757 1,219,219 452,124
--------- --------- --------- -------
Units outstanding at December 31, 1997 .......... 3,176,448 2,462,359 2,934,974 1,200,126
--------- --------- --------- ---------
Net premiums ................................... 267,347 407,290 416,094 182,920
Transfers (to) from the general account of
Life of Virginia:
Death benefits ............................... (18,426) (19,533) (24,017) (11,769)
Surrenders ................................... (147,815) (120,149) (177,425) (74,629)
Cost of insurance ............................ (2,506) (1,908) (2,036) (993)
Transfers (to) from the Guarantee Account ...... 343,625 410,907 621,713 292,547
Interfund transfers ............................ (505,666) (126,117) (49,276) (29,622)
--------- --------- --------- ---------
Net increase (decrease) in units from capital
transactions ................................... (63,441) 550,490 785,053 358,454
--------- --------- --------- ---------
Units outstanding at December 31, 1998 .......... 3,113,007 3,012,849 3,720,027 1,558,580
========= ========= ========= =========
</TABLE>
A-57
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS
FUND
---------------------------
MONEY HIGH
MARKET INCOME
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 ........................ 980,344 495,562
------- -------
Net premiums ................................................. 138 --
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (5,285) (1,518)
Surrenders ................................................. (18,734) (18,658)
Administrative expenses .................................... (323) (228)
Transfers (to) from the Guarantee Account .................... (31) (3,382)
Interfund transfers .......................................... (659,500) (168,501)
-------- --------
Net increase (decrease) in units from capital transactions .... (683,735) (192,287)
-------- --------
Units outstanding at December 31, 1996 ........................ 296,609 303,275
-------- --------
Net premiums ................................................. 931 306
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (9,387) (206)
Surrenders ................................................. (6,379) (17,828)
Loans ...................................................... -- --
Administrative expenses .................................... (179) (172)
Transfers (to) from the Guarantee Account .................... -- (595)
Interfund transfers .......................................... (281,595) (284,780)
-------- --------
Net increase (decrease) in units from capital transactions .... (296,609) (303,275)
-------- --------
Units outstanding at December 31, 1997 ........................ -- --
-------- --------
Net premiums ................................................. -- --
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. -- --
Surrenders ................................................. -- --
Cost of insurance .......................................... -- --
Transfers (to) from the Guarantee Account .................... -- --
Interfund transfers .......................................... -- --
-------- --------
Net increase (decrease) in units from capital transactions .... -- --
-------- --------
Units outstanding at December 31, 1998 ........................ -- --
======== ========
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-----------------------------------------
EQUITY-
INCOME GROWTH OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------
<S> <C> <C> <C>
TYPE II UNITS
Units outstanding at December 31, 1995 ........................ 3,119,975 1,525,015 829,371
--------- --------- -------
Net premiums ................................................. 3,158,538 1,222,269 521,600
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (43,181) (21,919) (11,961)
Surrenders ................................................. (134,965) (50,499) (31,329)
Administrative expenses .................................... (2,658) (1,349) (733)
Transfers (to) from the Guarantee Account .................... 402,673 186,018 127,385
Interfund transfers .......................................... 541,485 167,039 123,110
--------- --------- -------
Net increase (decrease) in units from capital transactions .... 3,921,892 1,501,559 728,072
--------- --------- -------
Units outstanding at December 31, 1996 ........................ 7,041,867 3,026,574 1,557,443
--------- --------- ---------
Net premiums ................................................. 2,260,371 504,224 230,215
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (70,511) (17,520) (11,283)
Surrenders ................................................. (310,722) (121,652) (59,094)
Loans ...................................................... -- -- --
Administrative expenses .................................... (5,614) (2,437) (1,374)
Transfers (to) from the Guarantee Account .................... 959,930 232,691 169,290
Interfund transfers .......................................... 198,852 (7,282) (122,609)
--------- --------- ---------
Net increase (decrease) in units from capital transactions .... 3,032,306 588,024 205,145
--------- --------- ---------
Units outstanding at December 31, 1997 ........................ 10,074,173 3,614,598 1,762,588
---------- --------- ---------
Net premiums ................................................. 1,114,775 299,241 60,690
Transfers (to) from the general account of Life of
Virginia:
Death benefits ............................................. (77,675) (28,379) (10,651)
Surrenders ................................................. (485,863) (150,297) (67,437)
Cost of insurance .......................................... (7,075) (2,366) (1,208)
Transfers (to) from the Guarantee Account .................... 1,227,043 185,849 81,221
Interfund transfers .......................................... (509,932) (100,385) (208,247)
---------- --------- ---------
Net increase (decrease) in units from capital transactions .... 1,261,273 203,663 (145,632)
---------- --------- ---------
Units outstanding at December 31, 1998 ........................ 11,335,446 3,818,261 1,616,956
========== ========= =========
</TABLE>
A-58
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
VARIABLE INSURANCE VARIABLE INSURANCE
PRODUCTS FUND II PRODUCTS FUND III
--------------------------- -----------------------------
ASSET GROWTH & GROWTH
MANAGER CONTRFUND INCOME OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
TYPE II UNITS
Units outstanding at
December 31, 1995 ...................... 1,469,667 2,007,948 -- --
--------- --------- -- --
Net premiums ........................... 640,444 2,595,994 -- --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (19,704) (23,500) -- --
Surrenders ........................... (67,829) (72,281) -- --
Administrative expenses .............. (1,135) (2,159) -- --
Transfers (to) from the Guarantee
Account .............................. 117,636 428,333 -- --
Interfund transfers .................... 109,440 559,664 -- --
--------- --------- -- --
Net increase (decrease) in units from
capital transactions ................... 778,852 3,486,051 -- --
--------- --------- -- --
Units outstanding at
December 31, 1996 ...................... 2,248,519 5,493,999 -- --
--------- --------- -- --
Net premiums ........................... 317,380 2,003,590 452,458 553,737
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (14,483) (32,105) (176) (968)
Surrenders ........................... (101,528) (196,054) (9,166) (9,539)
Loans ................................ -- -- -- --
Administrative expenses .............. (1,272) (4,990) (79) (66)
Transfers (to) from the Guarantee
Account .............................. 132,093 1,027,864 208,287 207,607
Interfund transfers .................... 98,224 303,373 324,762 298,769
--------- --------- ------- -------
Net increase (decrease) in units from
capital transactions ................... 430,414 3,101,678 976,086 1,049,540
--------- --------- ------- ---------
Units outstanding at
December 31, 1997 ...................... 2,678,933 8,595,677 976,086 1,049,540
--------- --------- ------- ---------
Net premiums ........................... 252,836 1,051,752 918,372 716,944
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (17,250) (51,811) (49,171) (7,825)
Surrenders ........................... (134,438) (317,883) (60,159) (69,582)
Cost of insurance .................... (1,548) (6,665) (1,024) (1,197)
Transfers (to) from the Guarantee
Account .............................. 283,280 1,100,294 688,392 768,665
Interfund transfers .................... 114,498 (285,564) 371,319 502,246
--------- --------- ------- ---------
Net increase (decrease) in units from
capital transactions ................... 497,378 1,490,123 1,867,729 1,909,251
--------- --------- --------- ---------
Units outstanding at December 31,
1998 ................................... 3,176,311 10,085,800 2,843,815 2,958,791
========= ========== ========= =========
<CAPTION>
ADVISERS MANAGEMENT TRUST
----------------------------------------
BALANCED BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------
<S> <C> <C> <C>
TYPE II UNITS
Units outstanding at
December 31, 1995 ...................... 191,438 398,276 209,909
------- ------- -------
Net premiums ........................... -- (252) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (1,089) (8,981) (1,419)
Surrenders ........................... (2,814) (3,959) (6,733)
Administrative expenses .............. (103) (315) (174)
Transfers (to) from the Guarantee
Account .............................. -- 120 --
Interfund transfers .................... (44,480) (127,260) (46,447)
------- -------- -------
Net increase (decrease) in units from
capital transactions ................... (48,486) (140,647) (54,773)
------- -------- -------
Units outstanding at
December 31, 1996 ...................... 142,952 257,629 155,136
------- -------- -------
Net premiums ........................... 25 -- --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (2,194) (1,620) --
Surrenders ........................... (10,921) (12,250) (3,242)
Loans ................................ -- -- --
Administrative expenses .............. (108) (204) (81)
Transfers (to) from the Guarantee
Account .............................. (601) (6,721) --
Interfund transfers .................... (129,153) (236,834) (151,813)
-------- -------- --------
Net increase (decrease) in units from
capital transactions ................... (142,952) (257,629) (155,136)
-------- -------- --------
Units outstanding at
December 31, 1997 ...................... -- -- --
-------- -------- --------
Net premiums ........................... -- -- --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... -- -- --
Surrenders ........................... -- -- --
Cost of insurance .................... -- -- --
Transfers (to) from the Guarantee
Account .............................. -- -- --
Interfund transfers .................... -- -- --
-------- -------- --------
Net increase (decrease) in units from
capital transactions ................... -- -- --
-------- -------- --------
Units outstanding at December 31,
1998 ................................... -- -- --
======== ======== ========
</TABLE>
A-59
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE
SERIES
--------------------------------------------
AMERICAN HIGH
LEADERS INCOME
PORTFOLIO BONDS UTILITY
FUND II FUND II FUND II
---------------- ------------- -------------
<S> <C> <C> <C>
TYPE II UNITS
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
---------- --------- ---------
Net premiums ........................... 1,050,794 473,760 292,385
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (44,621) (24,952) (12,603)
Surrenders ........................... (111,859) (152,690) (73,103)
Cost of insurance .................... (2,136) (1,284) (1,163)
Transfers (to) from the Guarantee
Account .............................. 942,089 803,434 316,103
Interfund transfers .................... 64,125 (7,464) 103,595
---------- --------- ---------
Net increase (decrease) in units from
capital transactions ................... 1,898,392 1,090,804 625,214
---------- --------- ---------
Units outstanding at December 31,
1998 ................................... 3,955,083 2,977,691 1,950,915
========== ========= =========
<CAPTION>
PBHG INSURANCE
ALGER AMERICAN SERIES FUND
--------------------------- ------------------------
LARGE CAP
SMALL CAP GROWTH GROWTH GROWTH II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
TYPE II UNITS
Units outstanding at
December 31, 1995 ...................... 401,258 312,011 -- --
------- ------- -- --
Net premiums ........................... 2,385,857 1,979,744 -- --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (6,505) (2,249) -- --
Surrenders ........................... (49,583) (21,913) -- --
Administrative expenses .............. (658) (517) -- --
Transfers (to) from the Guarantee
Account .............................. 364,980 234,626 -- --
Interfund transfers .................... 472,803 460,475 -- --
--------- --------- -- --
Net increase (decrease) in units from
capital transactions ................... 3,166,894 2,650,166 -- --
--------- --------- -- --
Units outstanding at
December 31, 1996 ...................... 3,568,152 2,962,177 -- --
--------- --------- -- --
Net premiums ........................... 1,139,813 1,030,593 108,061 306,146
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (25,827) (23,277) (63) --
Surrenders ........................... (95,915) (104,485) (998) (4,853)
Loans ................................ -- -- -- --
Administrative expenses .............. (3,710) (2,759) (28) (35)
Transfers (to) from the Guarantee
Account .............................. 865,037 527,894 51,297 100,624
Interfund transfers .................... 197,908 (9,957) 188,564 174,128
--------- --------- ------- -------
Net increase (decrease) in units from
capital transactions ................... 2,077,306 1,418,009 346,833 576,010
--------- --------- ------- -------
Units outstanding at
December 31, 1997 ...................... 5,645,458 4,380,186 346,833 576,010
--------- --------- ------- -------
Net premiums ........................... 543,439 690,044 168,982 126,932
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... (35,528) (33,911) (3,311) (11,165)
Surrenders ........................... (238,113) (227,269) (33,291) (36,248)
Cost of insurance .................... (4,762) (3,266) (404) (590)
Transfers (to) from the Guarantee
Account .............................. 719,382 587,070 148,909 227,092
Interfund transfers .................... (547,462) 212,429 68,319 (42,435)
--------- --------- ------- -------
Net increase (decrease) in units from
capital transactions ................... 436,956 1,225,097 349,204 263,586
--------- --------- ------- -------
Units outstanding at December 31,
1998 ................................... 6,082,414 5,605,283 696,037 839,596
========= ========= ======= =======
</TABLE>
A-60
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
--------------------------------------------
AGGRESSIVE
GRWOTH GROWTH WORLDWIDE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------- --------------
<S> <C> <C> <C>
TYPE II UNITS
Units outstanding at
December 31, 1995 ................ 1,251,004 1,875,640 1,227,070
--------- --------- ---------
Net premiums ..................... 1,109,539 1,939,884 2,853,570
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................. (5,075) (28,847) (26,212)
Surrenders ..................... (20,314) (111,109) (94,535)
Administrative expenses ........ (141) (2,321) (2,275)
Transfers (to) from the
Guarantee Account .............. 99,771 288,072 475,568
Interfund transfers .............. 227,267 921,603 713,001
--------- --------- ---------
Net increase (decrease) in units
from capital transactions ........ 1,411,047 3,007,282 3,919,117
--------- --------- ---------
Units outstanding at
December 31, 1996 ................ 2,662,051 4,882,922 5,146,187
--------- --------- ---------
Net premiums ..................... 608,750 1,633,216 3,372,062
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................. (22,328) (36,365) (35,456)
Surrenders ..................... (80,725) (180,611) (228,974)
Loans .......................... -- -- --
Administrative expenses ........ (1,935) (4,325) (4,300)
Transfers (to) from the
Guarantee Account .............. 253,985 867,094 1,289,775
Interfund transfers .............. 22,869 108,967 572,391
--------- --------- ---------
Net increase (decrease) in units
from capital transactions ........ 780,616 2,387,976 4,965,498
--------- --------- ---------
Units outstanding at
December 31, 1997 ................ 3,442,667 7,270,898 10,111,685
--------- --------- ----------
Net premiums ..................... 8,584,230 859,963 1,450,914
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................. (1,210,219) (49,261) (36,063)
Surrenders ..................... (5,336,460) (293,814) (402,150)
Cost of insurance .............. (83,426) (5,694) (7,564)
Transfers (to) from the
Guarantee Account .............. 8,351,873 854,937 1,487,450
Interfund transfers .............. (10,259,970) 190,192 (49,539)
----------- --------- ----------
Net increase (decrease) in units
from capital transactions ........ 46,028 1,556,323 2,443,048
----------- --------- ----------
Units outstanding at
December 31, 1998 ................ 3,488,695 8,827,221 12,554,733
=========== ========= ==========
<CAPTION>
JANUS ASPEN SERIES
-----------------------------------------------------------
FLEXIBLE INTERNATIONAL CAPITAL
BALANCED INCOME GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
TYPE II UNITS
Units outstanding at
December 31, 1995 ................ 73,538 36,272 -- --
------ ------ -- ----
Net premiums ..................... 547,525 240,317 388,753 --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................. (1,525) -- -- --
Surrenders ..................... (10,808) (1,714) (2,959) --
Administrative expenses ........ (267) (63) (11) --
Transfers (to) from the
Guarantee Account .............. 75,940 21,420 47,466 --
Interfund transfers .............. 308,093 28,937 249,356 --
------- ------- ------- ----
Net increase (decrease) in units
from capital transactions ........ 918,958 288,897 682,605 --
------- ------- ------- ----
Units outstanding at
December 31, 1996 ................ 992,496 325,169 682,605 --
------- ------- ------- ----
Net premiums ..................... 1,117,148 284,347 1,372,823 55,458
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................. (7,246) (4,723) (15,267) --
Surrenders ..................... (78,945) (17,933) (60,571) (1,630)
Loans .......................... -- -- -- --
Administrative expenses ........ (1,005) (342) (863) (7)
Transfers (to) from the
Guarantee Account .............. 423,506 175,029 576,462 35,560
Interfund transfers .............. 358,481 107,542 446,411 74,169
--------- ------- --------- --------
Net increase (decrease) in units
from capital transactions ........ 1,811,939 543,920 2,518,995 163,550
--------- ------- --------- ---------
Units outstanding at
December 31, 1997 ................ 2,804,435 869,089 3,001,600 163,550
--------- ------- --------- ---------
Net premiums ..................... 1,375,800 279,606 441,888 430,714
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................. (37,836) (1,075) (22,070) (3,280)
Surrenders ..................... (191,342) (44,562) (83,852) (38,646)
Cost of insurance .............. (2,568) (846) (2,512) (341)
Transfers (to) from the
Guarantee Account .............. 1,386,720 485,989 655,579 289,248
Interfund transfers .............. 724,982 322,950 (134,423) 653,113
--------- ------- --------- ---------
Net increase (decrease) in units
from capital transactions ........ 3,255,756 1,042,062 854,610 1,330,808
--------- --------- --------- ----------
Units outstanding at
December 31, 1998 ................ 6,060,191 1,911,151 3,856,210 1,494,358
========= ========= ========= ==========
</TABLE>
A-61
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GOLDMAN SACHS VARIABLE SALOMON BROTHERS
INSURANCE TRUST FUND VARIABLE SERIES FUND
-------------------------- ------------------------------------
GROWTH AND MID CAP
INCOME EQUITY STRATEGIC INVESTORS TOTAL
FUND FUND FUND FUND RETURN
------------ ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
TYPE II UNITS
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 ............................................... -- -- -- -- --
Transfers (to) from the general account of Life of Virginia:
Death benefits ........................................... -- -- -- -- --
Surrenders ............................................... -- -- -- -- --
Loans .................................................... -- -- -- -- --
Administrative expenses .................................. -- -- -- -- --
Transfers (to) from the Guarantee Account .................. -- -- -- -- --
Interfund transfers ........................................ -- -- -- -- --
-- ---- -- -- ----
Net increase (decrease) in units from capital transactions .. -- -- -- -- --
-- ---- -- -- ----
Units outstanding at December 31, 1997 ...................... -- -- -- -- --
-- ---- -- -- ----
Net premiums ............................................... 205,860 187,855 -- 811 15,933
Transfers (to) from the general account of Life of Virginia:
Death benefits ........................................... -- -- -- -- --
Surrenders ............................................... (4,646) (4,160) -- -- (2)
Cost of insurance ........................................ (13) (9) 1,466
Transfers (to) from the Guarantee Account .................. 104,669 147,037 8,628 52 1,350
Interfund transfers ........................................ 123,066 14,810 -- -- 8,634
------- -------- ----- --- -------
Net increase (decrease) in units from capital transactions .. 428,936 345,533 10,094 863 25,915
------- -------- ------ --- -------
Units outstanding at December 31, 1998 ...................... 428,936 345,533 10,094 863 25,915
======= ======== ====== === =======
</TABLE>
A-62
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT 4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
(D) 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. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains of the
Account.
(E) USE OF ESTIMATES
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts and disclosures reported therein. Actual results could differ
from those estimates.
(3) RELATED PARTY TRANSACTIONS
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 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 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. 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.
(4) SUBSEQUENT EVENT
Effective January 1, 1999 The Life Insurance Company of Virginia merged
with The Harvest Life Insurance Company to form GE Life and Annuity Assurance
Company. Concurrently, the Account changed its name to GE Life & Annuity
Separate Account 4. Neither of these events have an impact on net assets or
unit values.
A-63
<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, 1998 and 1997,
and the related consolidated statements of income and comprehensive income,
shareholders' interest, and cash flows for the years then ended, and the nine
months ended December 31, 1996. We have also audited the pre-acquisition
statements of income and comprehensive income, shareholders' interest 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.
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, 1998 and 1997, and the
results of their operations and their cash flows for the years then ended, the
nine months ended December 31, 1996 and the pre-acquisition three months 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 22, 1999
<PAGE>
<TABLE>
<CAPTION>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions, except per share amounts)
December 31,
------------
ASSETS 1998 1997
- ------ ---------- ----------
<S> <C> <C>
Investments:
Fixed maturities available-for-sale, at fair value $ 6,077.2 $ 5,622.6
Equity securities available-for-sale, at fair value:
Common stocks 6.1 9.6
Preferred stocks, non-redeemable 48.3 95.1
Investment in subsidiary 2.6 2.6
Mortgage loans, net of valuation allowance of $20.0 and $17.2
at December 31, 1998 and 1997, respectively 528.1 496.2
Policy loans 198.3 188.4
Real estate owned 2.5 6.9
Other invested assets 130.8 49.5
----- ----
Total investments 6,993.9 6,470.9
------- -------
Cash 9.6 0.2
Accrued investment income 122.8 123.1
Deferred acquisition costs 242.0 165.0
Intangible assets 390.0 449.7
Reinsurance recoverable 15.3 8.7
Deferred income tax asset 41.1 57.4
Other assets 42.5 23.3
Separate account assets 5,528.7 4,066.4
------- -------
Total assets $ 13,385.9 $ 11,364.7
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
------------
LIABILITIES AND SHAREHOLDERS' INTEREST 1998 1997
---- ----
Liabilities:
<S> <C> <C>
Future annuity and contract benefits $ 6,455.3 $ 5,889.8
Liability for policy and contract claims 119.6 83.0
Other policyholder liabilities 86.4 75.2
Accounts payable and accrued expenses 108.8 101.0
Separate account liabilities 5,528.7 4,066.4
------- -------
Total liabilities 12,298.8 10,215.4
-------- --------
Shareholders' interest:
Net unrealized investment gains 49.8 74.3
-------- --------
Accumulated non-owner changes in equity 49.8 74.3
Preferred stock, Series A ($1,000 par value,
$1,000 redemption and liquidation value; 200,000
authorized, 120,000 shares issued and outstanding) 120.0 -
Common stock ($1,000 par value, 50,000
authorized, 4,000 shares issued and outstanding) 4.0 4.0
Common stock declared but not issued ($1,000
par value, 18,641 shares declared, 50,000 authorized) 18.6 -
Additional paid-in capital 917.6 925.9
Retained earnings (22.9) 145.1
----- -----
Total shareholders' interest 1,087.1 1,149.3
------- -------
Total liabilities and shareholders' interest $ 13,385.9 $ 11,364.7
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Preacquisition
--------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Net investment income $ 482.7 $ 472.5 $ 334.4 $ 112.0
Net realized investment gains 26.3 13.3 6.0 9.0
Premiums 99.9 104.4 65.4 60.0
Cost of insurance 128.5 127.2 78.3 28.9
Variable product fees 60.8 44.4 23.1 5.9
Other income 17.6 18.5 11.6 4.5
--- ---- ---- ---
Total revenues 815.8 780.3 518.8 220.3
----- ----- ----- -----
Benefits and expenses:
Interest credited 329.6 323.4 226.0 76.1
Benefits & other changes in policy reserves 172.4 160.8 100.4 89.9
Commissions 99.2 117.3 78.5 35.7
General expenses 98.5 77.5 49.6 15.3
Amortization of intangibles, net 49.0 59.6 50.1 0.6
Change in deferred acquisition costs, net (76.2) (101.5) (71.7) (16.2)
Interest expense 2.0 - - -
--- ----- ----- -----
Total benefits and expenses 674.5 637.1 432.9 201.4
----- ----- ----- -----
Income before income taxes 141.3 143.2 85.9 18.9
Provision for income taxes 50.7 52.2 31.8 7.0
---- ---- ---- ---
Net income 90.6 91.0 54.1 11.9
---- ---- ---- ----
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities, net (24.5) 54.9 19.4 (91.2)
----- ---- ---- -----
Comprehensive income (loss) $ 66.1 $ 145.9 $ 73.5 $ (79.3)
====== ======= ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INTEREST
(Dollar amounts in millions, except share amounts)
<TABLE>
<CAPTION>
Common Stock
Declared
Preferred Stock Common Stock but not Issued
--------------- ------------ --------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995 - $ - 4,000 $ 4.0 - $ -
Comprehensive income:
Net income - - - - - -
Other comprehensive income, net of tax
Unrealized loss on securities, net - - - - - -
------ ------ ------ ------ ------ ------
Total comprehensive income - - - - - -
Capital contribution from parents - - - - - -
BALANCES AT MARCH 31, 1996 - - 4,000 4.0 - -
Comprehensive income:
Net income - - - - - -
Other comprehensive income, net of tax
Unrealized gain on securities, net - - - - - -
------ ------ ------ ------ ------ ------
Total comprehensive income - - - - - -
Adjustment to reflect purchase method - - - - - -
BALANCES AT DECEMBER 31, 1996 - - 4,000 4.0 - -
Comprehensive income:
Net income - - - - - -
Other comprehensive income, net of tax
Unrealized gain on securities, net - - - - - -
------ ------ ------ ------ ------ ------
Total comprehensive income - - - - - -
Adjustment to reflect purchase method - - - - - -
BALANCES AT DECEMBER 31, 1997 - - 4,000 4.0 - -
Comprehensive income:
Net income - - - - - -
Other comprehensive income, net of tax
Unrealized loss on securities, net - - - - - -
------ ------ ------ ------ ------ ------
Total comprehensive income - - - - - -
Cash dividend declared and paid - - - - - -
Preferred stock dividend 120,000 120.0 - - - -
Common stock dividend declared but not issued - - - - 18,641 18.6
Adjustment to reflect purchase method - - - - - -
BALANCES AT DECEMBER 31, 1998 120,000 $120.0 4,000 $ 4.0 18,641 $ 18.6
======= ====== ===== ===== ====== ======
Accumulated
Additional Non-owner Retained Total
Paid-In Changes Earnings Shareholders'
Capital in Equity (Deficit) Interest
------- --------- --------- --------
BALANCES AT DECEMBER 31, 1995 $749.1 $103.1 $(34.3) $ 821.9
Comprehensive income:
Net income - - 11.9 11.9
Other comprehensive income, net of tax
Unrealized loss on securities, net - (91.2) - (91.2)
------- --------- -------- --------
Total comprehensive income - (91.2) 11.9 (79.3)
Capital contribution from parents 69.3 - - 69.3
BALANCES AT MARCH 31, 1996 818.4 11.9 (22.4) 811.9
Comprehensive income:
Net income - - 54.1 54.1
Other comprehensive income, net of tax
Unrealized gain on securities, net - 19.4 - 19.4
------- --------- -------- --------
Total comprehensive income - 19.4 54.1 73.5
Adjustment to reflect purchase method 109.7 (11.9) 22.4 120.2
BALANCES AT DECEMBER 31, 1996 928.1 19.4 54.1 1,005.6
Comprehensive income:
Net income - - 91.0 91.0
Other comprehensive income, net of tax
Unrealized gain on securities, net - 54.9 - 54.9
------- --------- -------- -------
Total comprehensive income - 54.9 91.0 145.9
Adjustment to reflect purchase method (2.2) - - (2.2)
BALANCES AT DECEMBER 31, 1997 925.9 74.3 145.1 1,149.3
Comprehensive income:
Net income - - 90.6 90.6
Other comprehensive income, net of tax
Unrealized loss on securities, net - (24.5) - (24.5)
------- --------- -------- -------
Total comprehensive income - (24.5) 90.6 66.1
Cash dividend declared and paid - - (120.0) (120.0)
Preferred stock dividend - - (120.0) -
Common stock dividend declared but not issued - - (18.6) -
Adjustment to reflect purchase method (8.3) - - (8.3)
BALANCES AT DECEMBER 31, 1998 $ 917.6 $ 49.8 $ (22.9) $1,087.1
======== ========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Preacquisition
--------------
Nine months Three months
ended ended
Years ended December 31, December 31, March 31,
1998 1997 1996 1996
---- ---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net income $ 90.6 $ 91.0 $ 54.1 $ 11.9
------ ------ ------ ------
Adjustments to reconcile net income to net cash by
operating activities:
Cost of insurance and surrender fees (169.6) (168.8) (89.3) (32.5)
Increase in future policy benefits 420.4 405.0 277.8 (4.9)
Net realized investment gains (26.3) (13.3) (6.0) (9.0)
Amortization of investment premiums and discounts 1.9 7.2 6.5 0.7
Amortization of intangibles 49.5 59.6 50.1 0.6
Deferred income tax expense (benefit) 29.5 (12.6) (7.9) 10.8
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income 0.3 (5.3) (37.6) 4.1
Deferred acquisition costs (76.2) (101.5) (71.7) (16.2)
Other assets, net (19.2) (9.3) 28.5 (55.9)
Increase (decrease) in:
Policy and contract claims 30.8 37.0 29.9 4.6
Other policyholder liabilites 11.3 (3.6) 71.4 9.8
Accounts payable and accrued expenses 24.7 (99.9) (15.7) 87.5
---- ----- ----- ----
Total adjustments 277.1 94.5 236.0 (0.4)
----- ---- ----- ----
Net cash provided by operating activities 367.7 185.5 290.1 11.5
----- ----- ----- ----
Cash flows from investing activities:
Proceeds from investment securities and other invested assets 1,901.6 788.6 1,123.1 299.5
Principal collected on mortgage loans 116.5 87.1 46.4 8.3
Purchase of investment securities and other invested assets (2,410.4) (1,115.7) (1,280.5) (169.2)
Mortgage loan originations and increase in policy loan balance (161.0) (13.7) (23.7) (40.4)
------ ----- ----- -----
Net cash provided by (used in) investing activities (553.3) (253.7) (134.7) 98.2
------ ------ ------ ----
Cash flows from financing activities:
Proceeds from issue of investment contracts 2,224.8 1,894.2 1,098.5 301.9
Redemption and benefit payments on investment contracts (1,909.8) (1,874.6) (1,304.0) (358.8)
Cash dividend to shareholders (120.0) - - (40.0)
Capital contribution - - 2.8
--- --- --- ---
Net cash provided by (used in) financing activities 195.0 19.6 (205.5) (94.1)
----- ---- ------ -----
Net increase (decrease) in cash and cash equivalents 9.4 (48.6) (50.1) 15.6
Cash and cash equivalents at beginning of year 0.2 48.8 98.9 83.3
--- ---- ---- ----
Cash and cash equivalents at end of year $ 9.6 $ 0.2 $ 48.8 $ 98.9
===== ===== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the
historical operations and accounts of The Life Insurance Company of Virginia and
its subsidiary, Assigned Settlements Inc. (collectively the "Company" or "Life
of Virginia"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
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" or "GECA"). On December
31, 1996, the remaining 20% was contributed to GE Financial Assurance Holdings,
Inc. ("GEFAHI"). GECA is an indirect wholly-owned subsidiary of GEFAHI.
(b) Basis of Presentation
The accompanying consolidated financial statements have been prepared
on the basis of generally accepted accounting principles ("GAAP") for insurance
companies, which vary in several respects from accounting practices prescribed
or permitted by the Insurance Commissioner of the state where the Company is
domiciled. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and related disclosures. Actual results could differ from those
estimates.
Certain prior year amounts have been reclassified to conform to current
year presentation.
(c) Products
The Company primarily sells variable annuities and universal life
insurance to customers throughout most of the United States. The Company
distributes variable annuities primarily through intermediaries such as
stockbrokers and universal life insurance primarily through career agents and
independent brokers. The Company is also engaged in the sale of traditional
individual and group life products and guaranteed investment contracts.
Approximately 21%, 29%, and 31% of premium and annuity consideration collected,
in 1998, 1997, and 1996, respectively, came from customers residing in the South
Atlantic region of the United States, and approximately 28%, 13%, and 9% of
premium and annuity consideration collected, in 1998, 1997, and 1996,
respectively, came from customers residing in the Mid-Atlantic region of the
United States.
Although the Company markets its products through numerous
distributors, approximately 23%, 22%, and 21% of the Company's sales in 1998,
1997, and 1996,
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
respectively, have been through two specific national stockbrokerage firms. Loss
of all or a substantial portion of the business provided by these stockbrokerage
firms 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.
(d) 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
$921.6 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 shareholders' equity of
$109.7 (net of purchase accounting adjustments of $8.3 and $2.2 in 1998 and
1997, respectively), 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.
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.
(e) Revenues
Investment income is recorded when earned. Realized investment gains
and losses are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or, in the
case of life contingent immediate annuities, when the contracts are issued.
Premiums received under annuity contracts without significant mortality risk and
premiums received on universal life products are not reported as revenues but as
future annuity and contract benefits. Cost of insurance is charged to universal
life policyholders based upon at risk amounts, and is recognized as revenue when
due. Variable product fees are charged to variable annuity and variable life
policyholders based upon the daily net assets of the policyholders' account
values, and are recognized as revenue when charged.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
Other income consists primarily of surrender charges on certain policies.
Surrender charges are recognized as income when the policy is surrendered.
(f) Statements of Cash Flows
Certificates and other time deposits are classified as short-term
investments on the consolidated balance sheets and considered cash equivalents
on the consolidated statements of cash flows.
(g) Investments
The Company has designated its fixed maturities (bonds, notes,
mortgage-backed securities, and redeemable preferred stock) and equity
securities (common and non-redeemable preferred stock) as available-for-sale.
The fair value for fixed maturities and equity securities is based on individual
quoted market prices, where available. For fixed maturities not actively traded,
fair values are estimated using values obtained from independent pricing
services or, in the case of private placements, are estimated by discounting
expected future cash flows using a current market rate applicable to the credit
quality, call features and maturity of the investments, as applicable.
Changes in the 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 shareholders' interest and, accordingly,
have no effect on net income but are shown as a component of other comprehensive
income (loss). Unrealized losses that are considered other than temporary are
recognized in earnings through an adjustment to the amortized cost basis of the
underlying securities. 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
and comprehensive income. In general, the Company ceases to accrue investment
income when interest or dividend payments are in arrears.
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. Realized gains and losses are accounted for on the
specific identification method.
Mortgage loans and policy loans are carried at their unpaid principal
balance, net of allowances for estimated uncollectible amounts. Short-term
investments are carried at amortized cost which approximates fair value. Equity
securities are carried at fair value. Investments in limited partnerships are
accounted for under the equity method of accounting. Real estate is
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
carried generally at cost less accumulated depreciation. Other long-term
investments are carried generally at amortized cost.
Under certain securities lending transactions, the Company requires the
borrower provide collateral, consisting primarily of cash and government
securities, on a daily basis, in amounts equal to or exceeding 102% of the
market value of the applicable securities loaned.
(h) Deferred Acquisition Costs
Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts.
Deferred acquisition costs include first-year commissions in excess of
recurring renewal commissions, certain solicitation and printing costs, and
certain support costs such as underwriting and policy issue expenses. For
investments and universal life type contracts, amortization is based on the
present value of anticipated gross profits from investments, interest credited,
surrender and other policy charges, and mortality and maintenance expenses.
Amortization is adjusted retroactively when current or estimates of future gross
profits to be realized are revised. For other long-duration insurance contracts,
the acquisition costs are amortized in relation to the estimated benefit
payments or the present value of expected future premiums.
Deferred acquisition costs are reviewed to determine if they are
recoverable from future income, including investment income, and, if not
considered recoverable, are charged to expense.
(i) Intangible Assets
Present Value of Future Profits-In conjunction with the acquisition of
the Company, a portion of the purchase price was assigned to the right to
receive future gross profits arising from existing insurance and investment
contracts. This intangible asset, called present value of future profits (PVFP),
represents the actuarially determined present value of the projected future cash
flows from the acquired policies.
Goodwill-Goodwill is amortized over a period of 20 years on the
straight-line method. Goodwill in excess of associated expected operating cash
flows is considered to be impaired and is written down to fair value. No such
write-downs have occurred.
(j) Federal Income Taxes
Pursuant to the acquisition on April 1, 1996, GE Capital, and AON, 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.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
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.
(k) Reinsurance
Premium revenue, benefits, underwriting, acquisition and insurance
expenses are reported net of the amounts relating to reinsurance ceded to other
companies. Amounts due from reinsurers for incurred future claims are reflected
in the reinsurance recoverable asset. The cost of reinsurance is accounted for
over the terms of the related treaties using assumptions consistent with those
used to account for the underlying reinsured policies.
(l) Future Annuity and Contract Benefits
Future annuity and contract benefits consist of the liability for
investment contracts, insurance contracts and accident and health contracts.
Investment contract liabilities are generally equal to the policyholder's
current account value. The liability for insurance and accident and health
contracts is calculated based upon actuarial assumptions as to mortality,
morbidity, interest, expense and withdrawals, with experience adjustments for
adverse deviation where appropriate.
(m) Liability for Policy and Contract Claims
The liability for policy and contract claims represents the amount
needed to provide for the estimated ultimate cost of settling claims relating to
insured events that have occurred on or before the end of the respective
reporting period. The estimated liability includes requirements for future
payments of (a) claims that have been reported to the insurer, and (b) claims
related to insured events that have occurred but that have not been reported to
the insurer as of the date the liability is estimated.
(n) Separate Account Assets and Liabilities
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life contract owners.
The Company receives mortality risk fees and administration charges from the
variable mutual fund portfolios. The separate account assets are carried at fair
value and are equivalent to the liabilities that represent the policyholders'
equity in those assets.
The Company has periodically transferred capital to the separate
accounts to provide for the initial purchase of investments in new mutual fund
portfolios. As of December 31, 1998, approximately $41.8 of the Company's other
invested assets related to its capital investments in the separate accounts.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
(o) INTEREST RATE RISK MANAGEMENT
As a matter of policy, the Company does not engage in derivatives
trading, market-making or other speculative activities.
The Company uses interest rate floors primarily to minimize risk on
investment contracts with minimum guaranteed interest rates. The Company
requires all interest rate floors to be designated and accounted for as hedges
of specific assets, liabilities or committed transactions; resulting payments
and receipts are recognized contemporaneously with effects of hedged
transactions. A payment or receipt arising from early termination of an
effective hedge is accounted for as an adjustment to the basis of the hedged
transaction.
Instruments used as hedges must be effective at reducing the risk
associated with the exposure being hedged and must be designated as a hedge at
the inception of the contract. Accordingly, changes in market values of hedged
instruments must be highly correlated with changes in market values of
underlying hedges items both at inception of the hedge and over the life of the
hedge contract. Any instrument designated but ineffective as a hedge is marked
to market and recognized in operations immediately.
(2) INVESTMENTS
(a) General
<TABLE>
<CAPTION>
The sources of investment income of the Company were as follows:
Preacquisition
--------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Fixed maturities $ 415.3 $ 399.5 $ 276.9 $ 93.6
Equity securities 4.9 7.3 8.7 4.2
Mortgage loans 46.5 48.3 41.3 13.5
Policy loan interest 14.0 13.3 9.6 2.9
Other investments 6.7 9.0 3.3 0.1
------------- ------------- -------------- --------------
Gross investment income 487.4 477.4 339.8 114.3
Investment expenses (4.7) (4.9) (5.4) (2.3)
------------- ------------- -------------- --------------
Net investment income $ 482.7 $ 472.5 $ 334.4 $ 112.0
============= ============= ============== ==============
</TABLE>
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
Sales proceeds and gross realized investment gains and losses resulting
from the sales of investment securities available-for-sale were as follows:
<TABLE>
<CAPTION>
Preacquisition
--------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales proceeds $ 1,232.5 $ 387.1 $ 818.4 $ 262.9
============== =============== ============== ==============
Gross realized investment:
Gains 40.0 18.2 10.0 10.8
Losses (13.7) (4.9) (4.0) (1.8)
-------------- --------------- -------------- --------------
Net realized investment gains $ 26.3 $ 13.3 $ 6.0 $ 9.0
============== =============== ============== ==============
</TABLE>
The additional proceeds from the investments presented in the
consolidated statements of cash flows result from principal collected on
mortgage-backed securities, maturities, calls and sinking payments.
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 shareholders' interest as of December 31, are summarized as
follows:
<TABLE>
<CAPTION>
1998 1997
------------- --------------
<S> <C> <C>
Net unrealized gains on available-for-sale investment securities before
adjustments:
Fixed maturities $ 112.5 $ 154.5
Equity securities 5.5 14.6
Other invested assets 2.3 6.4
------------- --------------
Subtotal 120.3 175.5
------------- --------------
Adjustments to the present value of future profits and deferred acquisition costs: (43.7) (61.2)
Deferred income taxes (26.8) (40.0)
------------- --------------
Net unrealized gains on available-for-sale investment securities: $ 49.8 $ 74.3
============= ==============
</TABLE>
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
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.
At December 31, the amortized cost, gross unrealized gains and losses,
and fair values of the Company's fixed maturities and equity securities
available-for-sale were as follows:
<TABLE>
<CAPTION>
Gross Gross
1998 Amortized unrealized unrealized Fair
- -------------
cost gains losses value
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. government and agencies $ 36.7 $ 1.3 $ (0.1) $ 37.9
States and municipal 1.6 0.4 - 2.0
Non-U.S. government 3.0 - (0.4) 2.6
U.S. corporate 3,765.9 126.7 (51.8) 3,840.8
Non-U.S. corporate 291.6 5.9 (7.2) 290.3
Mortgage-backed 1,865.9 47.3 (9.6) 1,903.6
----------- ----------- ---------- -----------
Total fixed maturities 5,964.7 181.6 (69.1) 6,077.2
Common stocks and non-redeemable preferred stocks 48.9 5.8 (0.3) 54.4
----------- ----------- ---------- -----------
Total available-for-sale securities $ 6,013.6 $ 187.4 $ (69.4) $ 6,131.6
=========== =========== ========== ===========
Gross Gross
1997 Amortized unrealized unrealized Fair
- ------------
cost gains losses value
------------ ---------- ---------- ------------
Fixed maturites:
U.S. government and agencies $ 44.3 $ 1.3 $ - $ 45.6
State and municipal 1.8 0.3 - 2.1
Non-U.S. government - - - -
U.S. corporate 3,362.1 120.6 (8.1) 3,474.6
Non-U.S. corporate 200.1 6.5 (0.3) 206.3
Mortgage-backed 1,859.8 39.6 (5.4) 1,894.0
------------ ---------- ---------- ------------
Total fixed maturities 5,468.1 168.3 (13.8) 5,622.6
Common stocks and non-redeemable preferred stocks 90.1 14.6 - 104.7
------------ ---------- ---------- ------------
Total available-for-sale securities $5,558.2 $ 182.9 $ (13.8) $ 5,727.3
============ ========== ========== ============
</TABLE>
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
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.
1998
-------------------------
Amortized Fair
Cost Value
----------- ------------
Due in one year or less $ 119.6 $ 120.2
Due one year through five years 1,895.0 1,941.1
Due five years through ten years 1,299.4 1,304.5
Due after ten years 784.8 807.8
----------- ------------
Subtotals 4,098.8 4,173.6
Mortgage-backed securities 1,865.9 1,903.6
----------- ------------
Totals $ 5,964.7 $ 6,077.2
=========== ============
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders of $4.0
and $4.7 as of December 31, 1998 and 1997, respectively.
As of December 31, 1998, approximately 26.6% and 14.8% 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.
As of December 31, 1998, the Company did not hold any fixed maturity
securities which exceeded 10% of shareholders' interest.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
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>
1998 1997
------------------------- --------------------------
Fair Fair
value Percent value Percent
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Agencies and treasuries $ 270.5 4.5 % $ 308.4 5.5 %
AAA/Aaa 1,518.7 25.0 1,464.5 26.0
AA/Aa 376.6 6.2 320.4 5.7
A/A 1,201.4 19.8 1,101.4 19.6
BBB/Baa 1,762.2 29.0 1,862.3 33.1
BB/Ba 378.3 6.2 306.8 5.5
B/B 187.4 3.1 76.7 1.4
Not rated 382.1 6.3 182.1 3.2
------------ ---------- ------------ -----------
Totals $ 6,077.2 100.0 % $ 5,622.6 100.0 %
============ ========== ============ ===========
</TABLE>
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa3 are generally
regarded as investment grade securities. Some agencies and treasuries (that is,
those securities issued by the United States government or an agency thereof)
are not rated, but all are considered to be investment grade securities.
Finally, some securities, such as private placements, have not been 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.
(b) Mortgage and Real Estate Portfolio
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, 1998:
Mortgage Real Estate
------------ ------------
South Atlantic 38.4 % 100.0 %
Pacific 16.2 -
East North Central 14.7 -
West South Central 10.8 -
Mountain 10.5 -
Other 9.3 -
------------ ------------
Totals 100.0 % 100.0 %
============ ============
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
Type distribution as of December 31, 1998:
Mortgage Real Estate
------------- ------------
Office Building 23.6 % - %
Retail 23.3 100.0
Industrial 22.4 -
Apartments 21.2 -
Other 9.5 -
------------- ------------
Totals 100.0 % 100.0 %
============= ============
"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 definitions, the Company has two types of "impaired" loans
as of December 31, 1998 and 1997: 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 ($11.3
and $23.0, respectively). There was no allowance for losses on these loans as of
December 31, 1998 and 1997. Average investment in impaired loans during 1998 and
1997 was $20.0 and $23.0 and interest income earned on these loans while they
were considered impaired was $1.8 and $2.0 for the years ended 1998 and 1997,
respectively. There were no impaired loans nor related interest income earned on
such loans in 1996.
The following table shows the activity in the allowance for losses
during the years ended December 31:
1998 1997
--------------- ---------------
Balance on January 1 $ 17.2 $ 20.8
Provision charged to operations 1.1 1.1
Amounts written off, net of recoveries 1.7 (4.7)
--------------- ---------------
Balance at December 31 $ 20.0 $ 17.2
=============== ===============
The allowance for losses on mortgage loans at December 31, 1998 and
1997 represented 3.6% and 3.4% of gross mortgage loans, respectively.
The Company had $5.6 and $6.4 of non-income producing mortgage loan
investments as of December 31, 1998 and December 31, 1997, respectively.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
(3) Deferred Acquisition Costs
<TABLE>
<CAPTION>
Activity impacting deferred policy acquisition costs was as follows:
Preacquisition
----------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Unamortized balance - beginning of period $ 173.2 $ 71.7 $ - $ 363.9
Costs deferred 93.6 112.3 74.9 22.2
Amortization, net (17.4) (10.8) (3.2) (6.0)
--------------- --------------- --------------- ----------------
Unamortized balance - end of period 249.4 173.2 71.7 380.1
Cumulative effect of net unrealized
investment (gains) losses (7.4) (8.2) (1.4) 17.9
--------------- --------------- --------------- ----------------
Recorded balance $ 242.0 $ 165.0 $ 70.3 $ 398.0
=============== =============== =============== ================
</TABLE>
(4) Intangibles
(a) Present Value of Future Profits (PVFP)
As of April 1, 1996, Life of Virginia established an intangible asset
that 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, net of accreted interest, in a manner similar to the
amortization of deferred acquisition costs. Interest accretes at rates credited
to policyholders on underlying contracts. Recoverability of PVFP is evaluated
periodically by comparing the current estimate of expected future gross profits
to the unamortized asset balance. If such a comparison indicates that the
expected gross profits will not be sufficient to recover PVFP, the difference is
charged to expense.
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.
PVFP is 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 shareholders' interest, net of applicable income
tax. The components of PVFP are as follows:
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Preacquisition
----------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
------------ ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Unamortized bal. - beginning of period $ 385.7 $ 438.9 $ - $ 32.6
Purchase accounting adjustments - - 484.0 -
Interest accrued at 6.25%, 6.75% and 6.25%
for 1998, 1997, and 1996, respectively 24.0 28.4 22.4 0.5
Amortization (70.4) (81.6) (67.5) (1.1)
------------ ------------- ------------- ----------------
Unamortized balance - end of period 339.3 385.7 438.9 32.0
Cumulative effect of net unrealized
investment (gains) losses (36.3) (53.1) (19.7) -
------------ ------------- ------------- ----------------
Recorded balance $ 303.0 $ 332.6 $ 419.2 $ 32.0
============ ============= ============= ================
</TABLE>
The estimated percentage of the December 31, 1998 balance, before the
effect of unrealized investment gains or losses, to be amortized over each of
the next five years is as follows:
1999 11.4 %
2000 8.3
2001 7.3
2002 6.0
2003 5.0
(b) Goodwill
At December 31, 1998 and 1997, total unamortized goodwill was $87.0 and
$117.1, respectively, which is shown net of accumulated amortization and
adjustments of $41.4 and $13.2 for the years ended December 31, 1998 and 1997,
respectively. Goodwill amortization was $2.6, $6.4, and $5.0 for the years
ending December 31, 1998 and 1997, and for the nine month period ending December
31, 1996, respectively. Cumulative adjustments to goodwill totaled $(27.6),
($1.9) and $11.2 for the years ending December 31, 1998 and 1997, and for the
nine month period ending December 31, 1996, respectively. Adjustments relate
primarily to the settlement of purchase price with AON.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
(5) 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.
In order to limit to amount of loss retention, certain policy risks are
reinsured with other insurance companies. The maximum of individual ordinary
life insurance normally retained by the Company on any one life policy is $1.
The Company does not have significant reinsurance contracts with any one
reinsurer that could have a material impact on its results of operations.
A summary of reinsurance activity is as follows:
<TABLE>
<CAPTION>
Preacquisition
---------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Direct $ 333.0 $ 321.3 $ 94.7 $ 73.7
Assumed 19.2 20.7 59.0 35.0
Ceded (123.8) (110.4) (10.0) (19.8)
--------------- --------------- --------------- ---------------
Net premiums earned $ 228.4 $ 231.6 $ 143.7 $ 88.9
--------------- --------------- --------------- ---------------
Percentage of amount assumed to net 8% 9% 41% 39%
=============== =============== =============== ===============
</TABLE>
Due to the nature of the Company's reinsurance contracts, premiums
earned approximate premiums written. The above premium amounts include cost of
insurance charges on universal life policies.
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
$82.3, $72.7, $60.5, and $17.2 for the years ended December 31, 1998 and 1997,
the nine months ended December 31, 1996, and the three months ended March 31,
1996, respectively.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
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. For the three
months ended March 31, 1996, premiums of $33.9, benefits of $46.7, commission
expense of $10.2 and a capital contribution of $69.3 as a result of various
reinsurance transactions.
(6) Future Annuity and Contract Benefits
(a) Investment Contracts
Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment contracts are recognized by providing a liability equal to the
current account value of the policyholder's contracts. Interest rates credited
to investment contracts are guaranteed for the initial policy term with renewal
rates determined as necessary by management.
(b) Insurance Contracts
Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future benefits
of insurance contracts is the present value of such benefits based on mortality,
morbidity, and other assumptions which were appropriate at the time the policies
were issued or acquired. These assumptions are periodically evaluated for
potential premium deficiencies. Reserves for cancelable accident and health
insurance are based upon unearned premiums, claims incurred but not reported,
and claims in the process of settlement. This estimate is based on the
experience of the insurance industry and the Company, adjusted for current
trends. Any changes in the estimated liability are reflected in income as the
estimates are revised.
<PAGE>
The following chart summarizes the major assumptions underlying the
Company's recorded liabilities for future annuity and contract benefits:
<TABLE>
<CAPTION>
Mortality/
Withdrawal Morbidity Interest Rate December 31,
----------------------------
Assumption Assumption Assumption 1998 1997
-------------- --------------- -------------- ------------ -------------
<S> <C> <C>
Investment Contracts N/A N/A N/A $ 4,463.3 $ 3,951.4
Limited-payment Contracts None (a) 3.8-9.3% 14.4 14.0
Traditional life insurance contracts Company (b) 7.2% 369.0 363.7
Experience
Universal life-type contracts N/A N/A N/A 1,605.7 1,557.4
Accident & Health Company (c) 7.2% 2.9 3.3
Experience
------------ -------------
Total future annuity and contract benefits $ 6,455.3 $ 5,889.8
============ =============
</TABLE>
a) Either the United States Population Table, 1983 Group Annuitant Mortality
Table or 1983 Individual Annuitant Mortality Table.
b) Principally modifications of the 1965-70 or 1975-80 Select and Ultimate
Tables.
c) The 1958 Commissioner's Standard Ordinary Table and 1964 modified and 1987
Commissioner's Disability Tables.
(7) Income Taxes
Beginning April 1, 1996, Life of Virginia and its subsidiary have been
included in the life insurance company consolidated federal income tax return of
GECA 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
income taxes nor entitled to recoveries related to those periods.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
The total provision for income taxes consisted of the following
components:
<TABLE>
<CAPTION>
Preacquisition
---------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Current federal income tax provision (benefit) $ 19.9 $ 62.4 $ 38.1 $ (3.6)
Deferred federal income tax provision (benefit) 28.7 (12.4) (7.6) 10.3
------------- -------------- --------------- ---------------
Subtotal-federal provision 48.6 50.0 30.5 6.7
Current state income tax provision (benefit) 1.3 2.4 1.6 (0.2)
Deferred state income tax provision (benefit) 0.8 (0.2) (0.3) 0.5
------------- -------------- --------------- ---------------
Subtotal-state provision 2.1 2.2 1.3 0.3
------------- -------------- --------------- ---------------
Total income tax provision $ 50.7 $ 52.2 $ 31.8 $ 7.0
============= ============== =============== ===============
</TABLE>
The reconciliation of the federal statutory rate to the effective
income tax rate is as follows:
<TABLE>
<CAPTION>
Preacquisition
-----------------
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % 35.0 %
State income tax 0.5 0.5 0.5 0.5
Non-deductible goodwill amortization 0.7 1.6 2.0 0.0
Other, net (0.3) (0.6) (0.5) 1.5
------------- --------------- --------------- ---------------
Effective rate 35.9 % 36.5 % 37.0 % 37.0 %
============= =============== =============== ===============
</TABLE>
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
The components of the net deferred income tax asset (liability) at
December 31 are as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Assets:
Insurance reserve amounts $ 147.1 $ 142.9
Deferred acquisition costs - 11.8
Other 5.9 24.5
----------------- -----------------
Total deferred tax assets 153.0 179.2
----------------- -----------------
Liabilities:
Net unrealized investment gains on investment securities 26.8 40.0
Investments 3.5 2.7
Present value of future profits 67.1 79.1
Deferred acquisition costs 14.5 -
----------------- -----------------
Total deferred tax liabilities 111.9 121.8
----------------- -----------------
Net deferred income tax asset $ 41.1 $ 57.4
================= =================
</TABLE>
Based on an analysis of the Company's tax position, management believes
it is more likely than not that the results of future operations and
implementation of tax planning strategies will generate sufficient taxable
income enabling the Company to realize remaining deferred tax assets.
Accordingly, no valuation allowance for deferred tax assets is deemed necessary.
The Company paid (refunded) $19.2, $64.4, $38.6, and $(2.4), for
federal and state income taxes for the year ended December 31, 1998, 1997, the
nine months ended December 31, 1996, and three months ended March 31, 1996,
respectively.
(8) Related Party Transactions
Life of Virginia pays investment advisory fees and other fees to
affiliates. Amounts incurred for these items aggregated $11.5, $11.9, $3.2, and
$3.5 for the years ended December 31, 1998 and 1997, the nine months ended
December 31, 1996, and the three months ended March 31, 1996, respectively. Life
of Virginia charges affiliates for certain services and for the use of
facilities and equipment which aggregated $19.1, $4.6, $2.0, and $1.0, for the
years ended December 31, 1998 and 1997, the nine months ended December 31, 1996,
and the three months ended March 31, 1996, respectively.
Life of Virginia pays interest on outstanding amounts under a credit
funding agreement with GNA Corporation, the parent company of GECA. Interest
expense under this agreement was $2.0 and $0.0 with outstanding borrowings of
$53.9 and $0.0 as of December 31, 1998 and 1997, respectively.
At December 31, 1998 and 1997, Life of Virginia held investments in
securities of certain affiliates amounting to $2.6. Amounts included in net
investment income related to these holdings totaled $0.1, $0.1, $0.1, and $0.2
for the years ended December 31, 1998 and 1997, for the nine months ended
December 31, 1996, and the three months ended March 31, 1996, respectively.
During 1998, Life of Virginia sold $18.5 of third-party preferred stock
investments to an affiliate. This resulted in a gain on sale of $3.9, which is
included in net realized investment gains.
<PAGE>
(9) Commitments and Contingencies
(a) Mortgage Loan Commitments
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 as of December 31,
1998 and 1997, totaled $72.0 and $16.7, respectively.
(B) Guaranty Association Assessments
The Company is required by law to participate in the guaranty
associations of the various states in which they do business. The state guaranty
associations ensure payment of guaranteed benefits, with certain restrictions,
to policyholders of impaired or insolvent insurance companies by assessing all
other companies involved in similar lines of business.
There are currently several unrelated insurance companies which had
substantial amounts of annuity business in the process of liquidation or
rehabilitation. The Company paid assessments of $2.9, $3.8, $0.2 and $1.4 to
various state guaranty associations during 1998, 1997, the nine month period
ended December 31, 1996, and the three month period ended March 31, 1996,
respectively. At December 31, 1998 and 1997, accounts payable and accrued
expenses include $15.4 and $18.2, respectively, related to estimated future
payments.
(c) Leases
The Company has noncancelable operating leases for certain office
space, equipment and automobiles. Rental expense for all operating leases for
the years ended December 31, 1998 and 1997, for the nine months ended December
31, 1996, and the three months ended March 31, 1996 amounted to $1.4, $1.3,
$2.5, and $.8, respectively.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
Future minimum commitments under operating leases that have initial or
remaining noncancelable lease terms in excess of one year at December 31, 1998
are summarized as follows:
Minimum lease payments
1999 $ 1.2
2000 0.8
2001 0.5
2002 0.3
2003 -
Later years -
-----
Total minimum payments required $ 2.8
=====
(d) Litigation
There is no pending litigation to which the Company is a party
or of which any of the Company's property is the subject which management
believes will have an adverse material impact on the Company's financial
condition or results of operations. In addition, there are no legal
proceedings contemplated by any governmental authorities against the Company of
which management has any knowledge.
(10) Fair Value of Financial Instruments
The Company has adopted SFAS No. 119, Disclosures About Derivative
Financial Instruments and Fair Value of Financial Instruments. This statement
requires disclosures about the amounts, nature and terms of derivative financial
instruments and modifies existing disclosure requirements for other financial
instruments.
The Company has no derivative financial instruments as defined by SFAS
No. 119 as of December 31, 1998 other than mortgage loan commitments of $77.2
and interest rate floors of $17.2. The notional value of the interest rate
floors at December 31, 1998 was $1,800 and the floors expire from September 2003
to October 2003.
The fair values of financial instruments presented in the applicable
notes to the Company's consolidated financial statements are estimates of the
fair values at a specific point in time using available market information and
valuation methodologies considered appropriate by management. These estimates
are subjective in nature and involve uncertainties and significant judgment in
the interpretation of current market data. Therefore, the fair values presented
are not necessarily indicative of amounts the Company could realize or settle
currently. The Company does not necessarily intend to dispose of or liquidate
such instruments prior to maturity.
Financial instruments that, as a mater of accounting policy, are reflected
in the accompanying consolidated financial statements at fair value are not
included in the following disclosures. Such items include fixed maturities,
equity securities and certain other invested assets. The carrying value of
policy loans and short-term investments approximate fair value at both
December 31, 1998 and 1997.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions, except per share amounts)
At December 31, the carrying amounts and fair value of the Company's
financial instruments were as follows:
1998 1997
------------------ -------------------
Carrying Fair Carrying Fair
amount value amount value
------------------ -------------------
Mortgage Loans $528.1 $590.1 $496.2 $532.2
Investment type insurance contracts 4,463.3 4,462.6 3,951.4 3,909.0
Interest rate floors 17.2 12.5 -- --
The fair value of mortgage loans is estimated by discounting the
estimated future cash flows using interest rates applicable to current loan
origination, adjusted for credit risk.
The estimated fair value of investment contracts is the amount payable
on demand (cash surrender value) for deferred annuities and the net present
value based on interest rates currently offered on similar contracts for
non-life contingent immediate annuities. Fair value disclosures are not required
for insurance contracts.
(11) Restrictions On Dividends
Insurance companies are restricted by states as to the aggregate amount
of dividends they may pay to their parent in any consecutive twelve-month period
without regulatory approval. Generally, dividends may be paid out of earned
surplus without approval with thirty days prior written notice within certain
limits. The limits are generally based on 10% of the prior year surplus (net of
adjustments in some cases) and prior year statutory income (net gain from
operations, net income adjusted for realized capital gains, or net investment
income). Dividends in excess of the prescribed limits or the Company's earned
surplus require formal state insurance commission approval. The maximum dividend
payout which may be made without prior approval in 1999 is $47.9.
On December 3, 1998, the Company received approval from the
Commonwealth of Virginia for, and declared, a dividend payable in cash,
preferred stock and/or common stock at the election of each shareholder. GEFAHI
elected to receive cash and preferred stock and GECA elected to receive common
stock. A cash dividend of $120 was paid and a Series A preferred stock dividend
of $120 was issued to GEFAHI on December 15, 1998. The Series A preferred stock
has a par value of $1,000 per share, is redeemable at par at the Company's
election, and is not subject to call penalties. Dividends on the preferred stock
are cumulative and payable semi-annually at the annual rate of 8.0% of the par
value. The Series A preferred stock is not convertible into any other security
of the Company, and the holders thereof have no voting rights except with
respect to any proposed changes in the preferences and special rights of such
stock. GECA will receive its dividend in the form of 18,641 shares of newly
issued common stock in 1999.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners (NAIC) that
are prepared on an accounting basis prescribed by such authorities (statutory
basis). Statutory accounting practices differ from generally accepted accounting
principles (GAAP) in several respects, causing differences in reported net
income and shareholders' interest. Permitted statutory accounting practices
encompass all accounting practices not so prescribed but that have been
specifically allowed by state insurance authorities. The Company has no
significant permitted accounting practices.
Statutory net income and statutory capital and surplus is summarized
below:
<TABLE>
<CAPTION>
Preacquisition
Nine months Three months
Year ended Year ended ended ended
December 31, December 31, December 31, March 31,
1998 1997 1996 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Statutory net income $ 52.2 $ 73.9 $ 69.7 $ (8.3)
Statutory capital and surplus $ 481.1 $ 522.5 $ 419.1 $ 360.5
</TABLE>
The NAIC adopted Risk Based Capital (RBC) requirements to evaluate the
adequacy of statutory capital and surplus in relation to risks associated with
(i) asset quality, (ii) insurance risk, (iii) interest rate risk, and (iv) other
business factors. The RBC formula is designated as an early warning tool for the
states to identify possible under-capitalized companies for the purpose of
initiating regulatory action. In the course of operations, the Company
periodically monitors its RBC level. At December 31, 1998 and 1997, the Company
exceeded the minimum required RBC levels.
(13) Operating Segment Information
At year-end 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 131, Disclosures About Segments of an Enterprise and
Related Information, which requires segment data to be measured and analyzed on
a basis that is consistent with how business activities are reported internally
to management. Life of Virginia and its affiliated companies, which are
subsidiaries of GEFAHI, conduct operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase the
policyholder's wealth, transfer wealth to beneficiaries or provide a means for
replacing the income of the insured in the event of premature death, and (2)
Wealth and Lifestyle Protection, comprised of products intended to protect
accumulated wealth and income from the financial drain of unforeseen events. As
Life of Virginia sells primarily variable annuity and universal life policies,
it operates in the Wealth Accumulation and Transfer Segment. Accordingly, no
segment data is provided.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
(14) Accounting Pronouncements Not Yet Adopted
During 1998, The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities. This 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 are met. Changes in the values of derivatives
that meet these hedging criteria will ultimately offset related earnings effects
of the hedged items; effects of certain changes in fair value are recorded in
equity pending recognition in earnings. As required in SFAS No. 133, the Company
will adopt the Statement by January 1, 2000. The impact of adoption will be
determined by several factors, including the specific hedging instruments in
place and their relationships to hedged items, as well as market conditions.
Management has not estimated the effects of adoption as it believes that such
determination will not be meaningful until closer to the adoption date.
In December 1997, the American Institute of Certified Public
Accountants issued a new Statement of Position (SOP) 97-3, Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments. This SOP
provides guidance on accounting by insurance and other enterprises for
guaranty-fund and certain other insurance related assessments. The SOP requires
enterprises to recognize (1) a liability for assessments when (a) an assessment
has been asserted or information available prior to issuance of the financial
statements indicates it is probable that an assessment will be asserted, (b) the
underlying cause of the asserted or probable assessment has occurred on or
before the date of the financial statements, and (c) the amount of the loss can
be reasonably estimated and (2) an asset for an amount when it is probable that
a paid or accrued assessment will result in an amount that is recoverable from
premium tax offsets or policy surcharges from in-force policies. This SOP is
effective for financial statements for fiscal years beginning after December 15,
1998 and will be reported in a manner similar to a cumulative effect of a change
in accounting principle in the initial year of adoption. As a result of the
adoption of this SOP, the Company expects to record an asset of approximately
$4, net of tax.
(15) Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income. This
statement establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Comprehensive income includes all changes in equity from non-owner sources,
investments by and distributions to owners are excluded. Prior year consolidated
financial statements have been restated to conform to the requirements of SFAS
130.
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
Components of other comprehensive income and related tax effects are
shown below:
<TABLE>
<CAPTION>
Year Ended
----------
December 31, 1998 December 31, 1997
---------------------------- ------------------------------
Before-Tax Tax Net-of-Tax Before-Tax Tax Net-of-Tax
Amount Effect Amount Amount Effect Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising
during period $ (11.4) $ 4.0 $ (7.4) $ 97.7 $ (34.2) $ 63.5
Less: reclassification adjustment for gains
realized in net income (26.3) 9.2 (17.1) (13.3) 4.7 (8.6)
----- --- ----- ----- --- ----
Net unrealized gains (losses) on securities (37.7) 13.2 (24.5) 84.4 (29.5) 54.9
----- ---- ----- ---- ----- ----
Total other comprehensive income (loss) $ (37.7) $ 13.2 $ (24.5) $ 84.4 $ (29.5) $ 54.9
======= ====== ======= ====== ======= ======
Preacquisition
--------------
Nine Months Ended Three Months Ended
----------------- ------------------
December 31, 1996 March 31, 1996
------------------------------------- --------------------------------------
Before-Tax Tax Net-of-Tax Before-Tax Tax Net-of-Tax
Amount Effect Amount Amount Effect Amount
------ ------ ------ ------ ------ ------
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising
during period $ 35.8 $ (12.5) $ 23.3 $ (131.3) $ 46.0 $ (85.3)
Less: reclassification adjustment for gains
realized in net income (6.0) 2.1 (3.9) (9.0) 3.1 (5.9)
---- --- ---- ---- --- ----
Net unrealized gains (losses) on securities 29.8 (10.4) 19.4 (140.3) 49.1 (91.2)
---- ----- ---- ------ ---- -----
Total other comprehensive income (loss) $ 29.8 $ (10.4) $ 19.4 $ (140.3) $ 49.1 $ (91.2)
====== ======= ====== ======== ====== =======
</TABLE>
<PAGE>
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(Dollar amounts in millions)
Components of accumulated non-owner changes in equity are shown below:
<TABLE>
<CAPTION>
Adjustment Accumulated
Unrealized To Reflect Non-owner
Gains (losses) Purchase Changes in
on Securities Method Equity
--------------- ------------- ----------------
Preacquisition
- ---------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1995 $ 103.1 $ - $ 103.1
Changes for the three months ended March 31, 1996 (91.2) - (91.2)
--------------- ------------- ----------------
Balance March 31, 1996 11.9 - 11.9
Postacquisition
- ---------------
Changes for the nine months ended December 31, 1996 19.4 (11.9) 7.5
--------------- ------------- ----------------
Balance December 31, 1996 31.3 (11.9) 19.4
Changes for the year ended December 31, 1997 54.9 - 54.9
--------------- ------------- ----------------
Balance December 31, 1997 86.2 (11.9) 74.3
Changes for the year ended December 31, 1998 (24.5) - (24.5)
--------------- ------------- ----------------
Balance December 31, 1998 $ 61.7 $ (11.9) $ 49.8
=============== ============= ================
</TABLE>
(16) Subsequent Event
Effective January 1, 1999, The Harvest Life Insurance Company
("Harvest") merged into The Life Insurance Company of Virginia with the merged
Company renamed GE Life and Annuity Assurance Company ("GELAAC"). Harvest's
former parent, Federal Home Life Insurance Company ("FHLIC"), will receive
common stock of GELAAC in exchange for its interest in Harvest. FHLIC is an
indirect wholly-owned subsidiary of GEFAHI. Following are the proforma results
of operations for the Company for the year ended December 31, 1998 and 1997 as
if Harvest had been a part of Life of Virginia as of January 1, 1997.
Proforma Results
------------------------------------------
as of or for the year ending December 31,
------------------------------------------
1998 1997
-------------------- --------------------
Total assets $ 14,785.4 $ 12,735.2
Revenues 939.1 974.4
Net income 105.8 107.3
<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
(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/
<PAGE>
(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 of Salomon Brothers
Variable Series Funds, Inc. 14/
(1)(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.
(i) Original Form of Policy. 16/
(b) Endorsements to Policy.
(i) IRA Endorsement 12/
(ii) Pension Endorsement 12/
(iii)Section 403(b) Endorsement 12/
(iv) Form of Optional Death Benefit Rider 16/
(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) Stock Sale Agreement between The Life Insurance Company of Virginia
and The Life of Virginia Series Fund, Inc. 12/
(b) 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/
<PAGE>
(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 Insurance and The Life Insurance Company of Virginia.11/
(j) Form of Participation Agreement between Salomon Brothers Variable
Series Funds and The Life Insurance Company of Virginia.14/
(k) Form of Participation Agreement between GE Investments Funds, Inc.
and The Life Insurance Company of Virginia. 14/
(9) Opinion and Consent of Counsel.16/
(10)(a) Consent of Counsel.16/
(b) Consent of Independent Auditors.16/
(11) Not Applicable.
(12) Not Applicable.
(13) Schedule showing computation for Performance Data 12/
(14) Power of Attorney dated April 16, 1997.11/
--------------------------
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.
<PAGE>
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 by reference to pre-effective amendment number 2 to the
Registrant's registration statement on Form N-4, File No. 333-62695 filed
with the Securities and Exchange Commission on January 27, 1999.
16/ Incorporated herein.
ITEM 25. DIRECTORS AND OFFICERS OF GE LIFE & ANNUITY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Positions and Offices with
Name Address Depositor
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
ORGANIZATIONAL CHART
--------------- GENERAL ELECTRIC COMPANY
| |
OTHER SUBSIDIARIES
(100%)
|
GENERAL ELECTRIC
CAPITAL SERVICES, INC.
|
(100%)
|
GENERAL ELECTRIC
<PAGE>
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 Life 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.
(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
<PAGE>
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, and III.
<PAGE>
<TABLE>
<CAPTION>
(b)
<S> <C> <C> <C>
Positions and Offices
Name Address with Depositor
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 Street
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, Counsel
7125 W. Jefferson Ave., 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, Counsel
777 Long Ridge Rd., Bldg. "B" & 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 12th of March, 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
GE Life and Annuity Assurance Company
(Depositor)
By: /s/ Selwyn L. Flournoy, Jr.
-------------------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
GE Life and Annuity Assurance Company
<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.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C> <C>
/s/ RONALD V. DOLAN Director, Chairman of the Board 03/12/99
- ----------------------
Ronald V. Dolan
/s/ PAMELA S. SCHUTZ
- ---------------------- Director and President 03/12/99
Pamela S. Schutz
/s/ SELWYN L. FLOURNOY, JR.
- -----------------------------
Selwyn L. Flournoy, Jr. Director, Senior Vice President 03/12/99
/s/ROBERT D. CHINN Director, Senior Vice President 03/12/99
- -------------------
Robert D. Chinn
/s/VICTOR C. MOSES Director 03/12/99
- --------------------
Victor C. Moses
/s/GEOFFREY S. STIFF Director, Senior Vice President 03/12/99
- ---------------------
Geoffrey S. Stiff
</TABLE>
By /s/ Selwyn L. Flournoy, Jr., pursuant to Power of Attorney executed on
---------------------------
April 16, 1997.
<PAGE>
LIST OF EXHIBITS
(4)(a)(i) Policy Form
(4)(b)(vi) Form of Optional Death Benefit Rider P5118
(9) Opinion and Consent of Counsel
(10)(a) Consent of Counsel
(10)(b) Consent of Auditors
Exhibit 4(a)(i) Policy Form
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
[logo]
LIFE OF
VIRGINIA
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 the 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
Selwyn L. Flourney Jr.
------------------- --------------------
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
<PAGE>
POLICY DATA
SCHEDULE OF BENEFITS SCHEDULE OF PURCHASE PAYMENTS
AMOUNT PAYABLE
ANNUITY [$5,000.00] INITIAL PURCHASE PAYMENT
INITIAL PURCHASE PAYMENT: [$5.000.00]
[IRA INITIAL PURCHASE PAYMENT: $2,000.00]
MINIMUM ADDITIONAL PURCHASE PAYMENT: [$1.000.0]
MINIMUM PARTIAL SURRENDER: [$250.00 WITH AN ACCOUNT VALUE AFTER
THE SURRENDER OF NO LESS THAN $5,000.00]
SYSTEMATIC WITHDRAWAL PROGRAM:
MINIMUM ACCOUNT VALUE TO COMMENCE: [$25,000]
MINIMUM SYSTEMATIC WITHDRAWAL AMOUNT: [$250.00]
CHARGES:
PREMIUM TAX RATE: [0.00%]
MORTALITY AND EXPENSE CHARGE: [1.25% ANNUALLY (.003446% DAILY)]
ADMINISTRATIVE EXPENSE CHARGE: [0.15% ANNUALLY (.000411% DAILY)]
ANNUAL POLICY FEE: [$30.00]
[WAIVED IF ACCOUNT VALUE EXCEEDS $30,000 AT TIME THE
CHARGE IS DUE.]
TRANSFER CHARGE: [$25.00]
[MINIMUM TRANSFER AMOUNT IS $250.00 OR ENTIRE AMOUNT IN THE
INVESTMENT SUBDIVISION IF THE BALANCE IN THE INVESTMENT
SUBDIVISION AFTER THE TRANSFER WILL BE LESS THAN $250.00]
OWNER [THE ANNUITANT]
ANNUITANT [JOHN DOE] [MALE][35] AGE [LAST] BIRTHDAY
POLICY NUMBER [0000000]
POLICY DATE [JANUARY 1, 1998] [JANUARY 1, 2063] MATURITY DATE
PLAN FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
<PAGE>
POLICY NUMBER [0000000]
INVESTMENT OPTIONS
SEPARATE ACCOUNT #
INVESTMENT SUBDIVISIONS ARE INVESTED IN
TO BE ANNOUNCED
[GUARANTEE ACCOUNT:
MINIMUM GUARANTEED INTEREST RATE: [3%]]
THE PORTION OF EACH PURCHASE PAYMENT ALLOCATED TO ANY PARTICULAR INVESTMENT
OPTION MUST BE AT LEAST [1%].
YOU MAY ALLOCATE YOUR ACCOUNT VALUE TO AS MANY AS [TENT] INVESTMENT
SUBDIVISIONS. CONSULT THE PROSPECTUS FOR INVESTMENT DETAILS.
EFFECTIVE XX/XX/98
<PAGE>
TABLE OF CONTENTS
Policy Data..........................................................
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 18
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.
THE COMPANY - The Life Insurance Company 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 optional 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 treated
thereafter as the sole Owner of the Policy.
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.
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
4
<PAGE>
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 your written request
for surrender in our Home Office less 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 regarding
payment or the continuation of the Policy at the death of the Owner, Joint Owner
or Annuitant prior to the Maturity Date.
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 our President or one of our Vice Presidents 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
<PAGE>
5
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 payment we make 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.
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.
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 the Owner is a non-natural entity.
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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 the
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.
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 be treated
in accordance with instructions provided by the Owner, subject to distribution
rules and termination of contract provisions described above.
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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; 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 Annuitant was age 80 or younger on the Policy Date, and death occurs: a)
prior to the policy anniversary the Annuitant reaches 81,
o During the first five policy years, the Unadjusted Death Benefit will be the
greater of items 1 ) and 2) defined below.
o During any subsequent five year period, the Unadjusted Death Benefit will be
the greatest of items 1), 2) and 3) defined below.
b) on or after the policy anniversary the Annuitant reaches age 81,
o the Unadjusted Death Benefit will be the greater of items 1) and 2) defined
below.
If the Annuitant was age 81 or older on the Policy Date, 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 withdrawals.
3) The greatest Unadjusted Death Benefit on the last day of any previous five
year period, plus any purchase payments paid since then adjusted for any
applicable premium tax and any withdrawals. As used in this provision, five
year period is defined as the period of time commencing with the Policy Date
through the end of the fifth policy year and every subsequent quinquennial
policy year thereafter.
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 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.
Allocation of Purchase Payments
You may allocate purchase payments 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 that may be
allocated to any particular Investment Option is also provided
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on the policy data pages. Purchase payments will be allocated in accordance with
your instructions we have on file.
You may change the allocation of later purchase payments at any time, without
charge, by sending a written notice to us at our Home Office. The allocation
will apply to purchase payments received after we receive the change.
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.
Maturity Date
The Maturity Date is provided on the policy data pages, unless changed after
issue. You may change the Maturity Date. 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. The Company reserves the right
to establish a maximum maturity age.
If you change the Maturity Date, Maturity Date will then mean the new Maturity
Date you selected. You may pay purchase payments until the Maturity Date unless
that right has been terminated by the provisions of this Policy.
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
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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:
1. create new separate accounts;
2. combine separate accounts, including the Separate Account;
3. 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;
4. add new Investment Subdivisions to or remove existing Investment
Subdivisions from the Separate Account or combine Investment Subdivisions;
5. make Investment Subdivisions (including new Investment Subdivisions)
available to such classes of policies as we may determine;
6. add new Funds or remove existing Funds;
7. substitute new Funds for any existing Fund whose shares are no longer
available for investment;
8. substitute new Funds for any existing Fund which we determine is no longer
appropriate in light of the purposes of the Separate Account;
9. deregister the Separate Account under the Investment Company Act of 1940;
and
10. 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
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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
(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. The first twelve transfers
in each calendar year will be made without a transfer charge. A transfer charge
may be imposed for each subsequent transfer in a calendar year.
The amount of the 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. The 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
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lower number. Also, we reserve the right to refuse to execute any transfer if
any of the Investment Subdivisions which would be affected by the transfer is
unable to purchase or redeem shares of the Fund in which the Investment
Subdivision invests. The transfer 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.
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. At the end of each Valuation Period
after such date, the Account Value 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 allocated to the Investment Subdivision during the
current Valuation Period:
(c) is any other amounts transferred into 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 Account Value at the time the charge is due exceeds the minimum Account
Value shown on the policy data pages.
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 applicable premium tax. (see Premium Tax). Premium tax
will be deducted from the amount surrendered.
Full Surrender. You must send us your Policy with your request for full
surrender. The amount pay-
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able 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 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 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.
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.
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.
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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 not 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
o 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.
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
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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.
<PAGE>
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. 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.
Plan 1 Table
Monthly payment rates for each $1,000 of proceeds under Plan 1.
<TABLE>
<CAPTION>
Male Payee Female Payee Male Payee Female Payee
-------------------------- -------------------------- -------------------------- --------------------------
Settlement 10 Years 15 Years 20 Years 10 Years 15 Years 20 Years Settlement 10 Years 15 Years 20 Years 10 Years 15 Years 20 Years
Age Certain Certain Certain Certain Certain Certain Age Certain Certain Certain Certain Certain Certain
- ---------- -------- -------- -------- -------- -------- -------- ---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 S2.90 S2.90 S2.89 S2.81 S2.81 S2.81 65 S5.51 S5.22 S4.86 $4.91 S4.77 $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.
16
<PAGE>
17
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Years
Payable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Years
Payable 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
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.
Plan 5 Table
Monthly payment rates for each $1000 of proceeds under Plan 5.
<TABLE>
<CAPTION>
Male Female Settlement Age
Settlement ------------------------------------------------------------------------------
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 $3.35 $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.
<PAGE>
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
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY POLICY
-----------------------------------------------
o Income payments beginning at maturity
o No Dividends
o Some benefits reflect investment results
-----------------------------------------------
THE LIFE INSURANCE
COMPANY OF VIRGINIA
Exhibit (4)(b)(vi) Form of Optional Death Benefit Rider
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY
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 adjustment 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 GE Life and Annuity Assurance Company,
President
Exhibit (9) Opinion and Consent of Counsel
<PAGE>
March 12, 1999
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, VA 23230
Ladies and Gentlemen:
With reference to Pre-Effective Amendment No. 1 to Form N-4 (File Number
333-63531) 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 Amendment No. 1 to the Registration Statement on Form N-4 (File
Number 333-63531) 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
(10)(a)
Consent of Counsel
<PAGE>
Stephen E. Roth
Direct Line: (202) 383-0158
Internet: [email protected]
March 12, 1999
GE Life and Annuity Assurance
Company
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
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4 filed
by GE Life & Annuity Separate Account 4 for certain variable annuity policies
(File No. 333-63531). 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
Exhibit (10)(b)
Consent of Independent Auditors
<PAGE>
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 22, 1999, 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
March 9, 1999
