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Filed pursuant to Rule 497
File No. 333-96513
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
VARIABLE DEFERRED ANNUITY CONTRACT
FORM P1153 12/99
ISSUED BY: ADMINISTRATIVE OFFICE:
GE Life and Annuity Assurance Company GE Life and Annuity Assurance Company
6610 West Broad Street P.O. Box 691
Richmond, VA 23230 Leesburg, VA 20178
Telephone: (804) 281-6000
This prospectus describes an individual flexible premium variable deferred
annuity contract (the "Contract") issued by GE Life and Annuity Assurance
Company (the "Company", "GE Life & Annuity," "we," "us," or "our"). Most
transactions involving this Contract may be performed through our Electronic
Service Center.
The Contract offers you the accumulation of Contract Value and payment of
periodic annuity benefits. We pay these benefits on a variable basis.
You may allocate your Purchase Payments to the Separate Account. The Subaccounts
of the Separate Account invest in shares of the Funds. We list the Funds, and
their currently available portfolios, below.
Both the value of a Contract before the Annuity Commencement Date and the amount
of monthly payments afterward will depend upon the investment performance of the
portfolio(s) you select. You bear the investment risk of investing in the
portfolios.
AIM VARIABLE INSURANCE FUNDS, INC.
o AIM V.I. Aggressive Growth Fund o AIM V.I. Government Securities Fund
o AIM V.I. Capital Appreciation Fund o AIM V.I. Growth and Income Fund
o AIM V.I. Capital Development Fund o AIM V.I. Telecommunications Fund
o AIM V.I. Global Utilities Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
o VIP Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
o VIP III Growth & Income Portfolio o VIP III Mid Cap Portfolio
o VIP III Growth Opportunities Portfolio
GE INVESTMENTS FUNDS, INC.
o Income Fund o Real Estate Securities Fund
o International Equity Fund o S&P 500 Index Fund
o Mid Cap Value Fund
(formerly Value Equity Fund) o Total Return Fund
o Money Market Fund o U.S. Equity Fund
o Premier Growth Equity Fund
JANUS ASPEN SERIES
o Capital Appreciation Portfolio o High-Yield Portfolio
o Equity Income Portfolio o International Growth Portfolio
o Flexible Income Portfolio
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Not all of these portfolios may be available in all states or in all markets.
YOUR INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT
AGENCY.
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.
This prospectus details the information regarding the Separate Account that you
should know before investing. Please read it carefully, and it will remain
available through our Electronic Service Center. We have also provided current
prospectuses that contain information about the Funds available under the
Contract. You should read the Fund prospectuses carefully before purchasing a
Contract and they will remain available through our Electronic Service Center.
A Statement of Additional Information (SAI), dated April 14, 2000, concerning
the Separate Account has been filed with the SEC and is incorporated by
reference into this prospectus. A table of contents for the SAI appears on the
last page of this prospectus. A free hard copy of this prospectus and the SAI is
available upon e-mail request through our Electronic Service Center at
http://AnnuityNet.com. or by calling (877) 569-3789. The SAI is also available
through the SEC website at http://www.sec.gov.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
The date of this prospectus is April 14, 2000.
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<TABLE>
<CAPTION>
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TABLE OF CONTENTS
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<S> <C>
DEFINITIONS..............................................................................................1
EXPENSE TABLE............................................................................................2
SYNOPSIS.................................................................................................6
INVESTMENT RESULTS.......................................................................................8
FINANCIAL STATEMENTS.....................................................................................9
GE LIFE AND ANNUITY ASSURANCE COMPANY....................................................................9
SEPARATE ACCOUNT........................................................................................10
THE FUNDS............................................................................................10
SUBACCOUNTS..........................................................................................11
CHANGES TO THE SEPARATE ACCOUNT AND THE SUBACCOUNTS..................................................16
CHARGES AND OTHER DEDUCTIONS............................................................................17
DEDUCTIONS FROM THE SEPARATE ACCOUNT.................................................................18
DEDUCTIONS FOR PREMIUM TAXES.........................................................................18
OTHER CHARGES AND DEDUCTIONS.........................................................................18
THE CONTRACT............................................................................................19
PURCHASE OF THE CONTRACT.............................................................................19
OWNERSHIP............................................................................................19
PURCHASE PAYMENTS....................................................................................20
VALUATION DATE.......................................................................................20
ALLOCATION OF PURCHASE PAYMENTS......................................................................20
VALUATION OF ACCUMULATION UNITS......................................................................21
TRANSFERS...............................................................................................21
TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE.......................................................21
TELEPHONE TRANSACTIONS...............................................................................23
TRANSFERS BY THIRD PARTIES...........................................................................22
TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE........................................................23
SURRENDERS AND WITHDRAWALS..............................................................................23
SYSTEMATIC WITHDRAWALS...............................................................................24
THE DEATH BENEFIT.......................................................................................24
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE...................................................24
DISTRIBUTION RULES...................................................................................25
ANNUITY PAYOUTS.........................................................................................26
ANNUITY PAYMENT OPTIONS..............................................................................27
LIFE ANNUITY WITH PERIOD CERTAIN.....................................................................27
JOINT LIFE ANNUITY...................................................................................27
GENERAL INFORMATION..................................................................................27
ANNUITY PAYOUTS......................................................................................28
FEDERAL TAX MATTERS.....................................................................................29
VOTING RIGHTS...........................................................................................33
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REQUESTING PAYMENTS.....................................................................................34
DISTRIBUTION OF THE CONTRACTS...........................................................................34
COMMISSIONS..........................................................................................35
ADDITIONAL INFORMATION..................................................................................35
OWNER QUESTIONS......................................................................................35
RETURN PRIVILEGE.....................................................................................35
STATE REGULATION.....................................................................................35
RECORDS AND REPORTS..................................................................................35
OTHER INFORMATION....................................................................................36
LEGAL MATTERS........................................................................................36
CONDENSED FINANCIAL INFORMATION.........................................................................36
TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION...........................................37
APPENDIX................................................................................................38
</TABLE>
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DEFINITIONS
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We have tried to make this prospectus as understandable as possible. However, in
explaining how the Contract works, we have had to use certain terms that have
special meanings. We define these terms below.
ACCOUNT OR SEPARATE ACCOUNT -- The segregated investment account, GE Life &
Annuity Separate Account 4, into which GE Life & Annuity sets aside and invests
the assets for the Contract offered in this prospectus, and other variable
annuity contracts that we issue.
ACCUMULATION UNIT -- A measure we use to calculate Contract Value before the
Annuity Commencement Date.
ADMINISTRATIVE OFFICE -- The office designated by the Company to receive written
customer requests. The address is GE Life and Annuity Assurance Company, P.O.
Box 691, Leesburg, VA 20178.
ANNUITANT -- The person upon whose life we will base the annuity benefit
payments made after the Annuity Commencement Date.
ANNUITY COMMENCEMENT DATE - The date when we apply the Contract Value (less any
premium taxes) for payment of annuity benefits under the Annuity Payment Option
selected. This is the date of the first annuity payment and is specified in your
Contract unless changed after issue.
ANNUITY PAYMENT OPTION -- Any of the forms of annuity benefit payments allowed
under the Contract.
ANNUITY PAYOUT -- An amount paid at regular intervals after the Annuity
Commencement Date under one of the Annuity Payment Options available to the
Owner and/or any other payee. The amount paid may vary.
ANNUITY UNIT -- A measure we use to calculate the amount of Annuity Payouts
after the Annuity Commencement Date.
BENEFICIARY -- The person or entity whom the Owner designates to receive the
Death Benefit, if any, in case of the Owner's death.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT -- The person named by the Owner who, at the death
of the Annuitant before the Annuity Commencement Date, may become the Annuitant
in certain circumstances.
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CONTRACT VALUE -- At a given time on or before the Annuity Commencement Date,
the total value of all Accumulation Units for a Contract.
CONTRACT YEAR -- Each one-year period starting with the effective date of the
Contract to the anniversary of that date in the following year.
DEATH BENEFIT -- The amount payable to the Owner's designated Beneficiary if the
Owner dies before the Annuity Commencement Date.
ELECTRONIC SERVICE CENTER -- The electronic site that GE Life & Annuity
maintains specifically for this Contract to provide variable annuity contract
information and other information to current and prospective annuity Contract
Owners and through which various transactions may be performed. Certain of these
transactions may require faxed or mailed signatures. The Universal Resource
Locator (or "URL") for the Electronic Service Center is http://AnnuityNet.com.
FUND - Any open-end management investment company or any unit investment trust,
in which a Subaccount invests.
OWNER - The individual(s) or entity who possesses rights of ownership under the
Contract. "You" and "your" refer to the Owner. An Owner or joint Owner is
entitled to receive Annuity Payouts after the Annuity Commencement Date. Owners
refers to the Owner or joint Owner.
PURCHASE PAYMENTS - A payment received by the Company and applied to this
Contract. When used in connection with this Contract, the term "Purchase
Payment" means the same as the term "premium payment".
SUBACCOUNT -- That portion of the Separate Account which invests in shares of a
portfolio of a particular Fund. A Subaccount corresponds to each portfolio of a
Fund.
VALUATION DATE -- Each day the New York Stock Exchange (NYSE) is open for
regular trading except for days that a Subaccount's corresponding Fund does not
value its shares.
VALUATION PERIOD -- The period commencing at the close of regular trading
(currently 4:00 p.m. New York time) on each day that the NYSE is open for
regular trading (in other words, the Valuation Date) and ending at the close of
such trading on the next succeeding Valuation Date.
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EXPENSE TABLE
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This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Contract. The table reflects
expenses both of the Subaccounts of the Separate Account and of the portfolios.
For more complete descriptions of the various costs and expenses involved, SEE
Charges and Other Deductions in this prospectus and the prospectuses for the
Funds. Premium tax charges also may apply, although they do not appear in the
table. In addition, we reserve the right to impose a $10.00 transfer charge,
although we do not currently do so.
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OWNER TRANSACTION EXPENSES:
None.
SEPARATE ACCOUNT ANNUAL EXPENSES FOR THE SUBACCOUNTS:
(as a percentage of average Contract Value for each Subaccount):
Maximum Annuity Asset Charge
Mortality and expense risk charge .40%
Administrative expense charge .35%
---
Effective annual rate not to exceed .75%
PORTFOLIO ANNUAL EXPENSES:
Annual expenses of the portfolios of the Funds for the year ended December 31,
1999 (as a percentage of each portfolio's average net assets.)
3
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<TABLE>
<CAPTION>
Management Fees Other Expenses
(after fee waiver (after reimbursement Total Annual
Portfolio as applicable) as applicable) Expenses
- -------------------------------------------------- -------------------- ------------------------ ----------------
<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Aggressive Growth Fund/1 .80% .39% 1.19%
AIM V.I. Capital Appreciation Fund/1 .62 .11 .73
AIM V.I. Capital Development Fund/1 .75 .48 1.23
AIM V.I. Global Utilities Fund/1 .65 .49 1.14
AIM V.I. Government Securities Fund/1 .50 .40 .90
AIM V.I. Growth and Income Fund/1 .61 .16 .77
AIM V.I. Telecommunications Fund/1 1.00 .27 1.27
FIDELITY VARIABLE INSURANCE PRODUCTS FUND*
VIP Overseas Portfolio/2 .73 .18 .91
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III*
VIP III Growth & Income Portfolio/3 .48 .12 .60
VIP III Growth Opportunities Portfolio/3 .58 .11 .69
VIP III Mid Cap Portfolio/3 .57 2.77 3.34
GE INVESTMENTS FUNDS
Income Fund/4 .50 .07 .57
International Equity Fund/4 1.00 .08 1.08
Mid Cap Value Fund/4
(formerly Value Equity Fund) .65 .06 .71
Money Market Fund/4 .24 .06 .30
Premier Growth Equity Fund/4 .65 .03 .68
Real Estate Securities Fund/4 .85 .09 .94
S&P 500 Index Fund/4 .35 .04 .39
Total Return Fund/4 .50 .06 .56
U.S. Equity Fund/4 .55 .06 .61
JANUS ASPEN SERIES
Capital Appreciation Portfolio/5 .65 .04 .69
Equity Income Portfolio/5 .62 .63 1.25
Flexible Income Portfolio/5 .65 .07 .72
High-Yield Portfolio/5 .00 1.00 1.00
International Growth Portfolio/5 .65 .11 .76
</TABLE>
*The fees and expense reported for the Variable Insurance Products Fund (VIP)
and Variable Insurance Products Fund III (VIP III) are prior to any fee waiver
and/or reimbursement as applicable.
Not all portfolios may be available in all states or markets.
1. Absent reimbursement, the total annual expenses of the portfolios of AIM
Variable Insurance Funds, Inc. during 1999 would have been 2.42% for
Aggressive Growth Fund and 3.42% for Capital Development Fund.
2. A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or Fidelity Management
Research on behalf of certain funds, have entered into arrangements with
their custodian whereby credits realized as a result of uninvested cash
balances were used to reduce custodian expenses. With reimbursements, the
total annual expenses of the portfolios of Variable Insurance Products Fund
during 1999 would have been .87% for VIP Overseas Portfolio.
3. A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or Fidelity Management
Research on behalf of certain funds, have entered into arrangements with
their custodian whereby credits realized as a result of uninvested cash
balances were used to reduce custodian expenses. With reimbursements, the
total annual expenses of the portfolios of Variable Insurance Products Fund
III during 1999 would have been .59% for VIP III Growth & Income Portfolio,
.68% for VIP III Growth Opportunities Portfolio and .97% for VIP III Mid
Cap Portfolio.
4. GE Asset Management Incorporated currently serves as investment adviser to
GE Investments Funds, Inc. and has voluntarily agreed to waive a portion of
the fee payable by the Fund. Absent this fee waiver, the total annual
expenses during 1999 of the GE Money Market Fund would have been .50% and
.72% for Premier Growth Equity Fund.
5. Absent reimbursements, the total annual expenses of the portfolios of the
Janus Aspen Series during 1999 would have been .69% for Capital
Appreciation Portfolio, 1.28% for Equity Income Portfolio, and 4.92% for
High-Yield Portfolio.
4
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EXAMPLES
These examples show what your costs would be under certain hypothetical
situations. The examples do not represent past or future expenses. Your actual
expenses may be more or less than those shown. The examples are based on the
annual expenses of the portfolios for the year ended December 31, 1999 (shown
above in Portfolio Annual Expenses).
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EXAMPLES: A Policyowner would pay the following expense on a $1,000
investment, assuming a 5% annual return on assets and the charges and expenses
reflected in the Expense Table above:
1. If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
<S> <C>
AIM Variable Insurance Funds, Inc.
Aggressive Growth Fund 23.21 71.53 122.51 262.55
Capital Appreciation Fund 18.59 57.56 99.03 214.79
Capital Development Fund 23.61 72.74 124.53 266.60
Global Utilities Fund 22.71 70.02 119.99 257.48
Government Securities Fund 20.30 62.75 107.78 232.72
Growth & Income Fund 18.99 58.78 101.10 219.04
Telecommunications Fund 24.01 73.95 126.54 270.62
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 20.40 63.05 108.29 233.76
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 17.28 53.57 92.30 200.86
VIP III Growth Opportunities Portfolio 18.19 56.33 96.97 210.52
VIP III Mid Cap Portfolio 44.52 134.32 225.13 456.63
GE Investments Funds, Inc.
Income Fund 16.98 52.65 90.74 197.62
International Equity Fund 22.11 68.21 116.95 251.35
Mid Cap Value Fund
(formerly Value Equity Fund) 18.39 56.94 98.00 212.66
Money Market Fund 14.25 44.31 76.58 167.97
Premier Growth Equity Fund 18.09 56.03 96.45 209.46
Real Estate Securities Fund 20.70 63.96 109.82 236.89
S&P 500 Index Fund 15.16 47.10 81.32 177.95
Total Return Fund 16.88 52.34 90.21 196.54
U.S. Equity Fund 17.38 53.88 92.82 201.94
Janus Aspen Series
Capital Appreciation Portfolio 18.19 56.33 96.97 210.52
Equity Income Portfolio 23.81 73.34 125.54 268.61
Flexible Income Portfolio 18.49 57.25 98.52 213.73
High-Yield Portfolio 21.30 65.78 112.88 243.11
International Growth Portfolio 18.89 58.47 100.58 217.98
</TABLE>
* surrender includes annuitization over a period of less than 5 years
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
<S> <C>
AIM Variable Insurance Funds, Inc.
Aggressive Growth Fund 23.21 71.53 122.51 262.55
Capital Appreciation Fund 18.59 57.56 99.03 214.79
Capital Development Fund 23.61 72.74 124.53 266.60
Global Utilities Fund 22.71 70.02 119.99 257.48
Government Securities Fund 20.30 62.75 107.78 232.72
Growth & Income Fund 18.99 58.78 101.10 219.04
Telecommunications Fund 24.01 73.95 126.54 270.62
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 20.40 63.05 108.29 233.76
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 17.28 53.57 92.30 200.86
VIP III Growth Opportunities Portfolio 18.19 56.33 96.97 210.52
VIP III Mid Cap Portfolio 44.52 134.32 225.13 456.63
GE Investments Funds, Inc.
Income Fund 16.98 52.65 90.74 197.62
International Equity Fund 22.11 68.21 116.95 251.35
Mid Cap Value Fund
(formerly Value Equity Fund) 18.39 56.94 98.00 212.66
Money Market Fund 14.25 44.31 76.58 167.97
Premier Growth Equity Fund 18.09 56.03 96.45 209.46
Real Estate Securities Fund 20.70 63.96 109.82 236.89
S&P 500 Index Fund 15.16 47.10 81.32 177.95
Total Return Fund 16.88 52.34 90.21 196.54
U.S. Equity Fund 17.38 53.88 92.82 201.94
Janus Aspen Series
Capital Appreciation Portfolio 18.19 56.33 96.97 210.52
Equity Income Portfolio 23.81 73.34 125.54 268.61
Flexible Income Portfolio 18.49 57.25 98.52 213.73
High-Yield Portfolio 21.30 65.78 112.88 243.11
International Growth Portfolio 18.89 58.47 100.58 217.98
</TABLE>
* surrender includes annuitization over a period of less than 5 years
* * *
The Funds supplied all of the figures provided under the subheading
Portfolio Annual Expenses and part of the data used to produce the figures in
the examples. We have not independently verified this information. Certain
portfolio expenses are shown net of fee waivers and reimbursements. We cannot
guarantee that the fee waivers and reimbursements will continue.
5
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OTHER CONTRACTS
We offer other variable annuity contracts which may also invest in the same
portfolios offered in the Contract. These contracts have different charges
that could affect their subaccounts' performance and they offer different
benefits.
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SYNOPSIS
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WHAT TYPE OF CONTRACT AM I It is an individual deferred variable annuity
BUYING? contract issued by GE Life & Annuity. This
prospectus only provides disclosure about the
Contract. Certain features described in this
prospectus may vary from your Contract. See The
Contract.
WHAT IS THE ACCOUNT? It is a separate account established under
Virginia insurance law, and registered with the
SEC as a unit investment trust. The assets of
the Separate Account are allocated to one or
more Subaccounts. Those assets are not
chargeable with liabilities arising out of any
other business which GE Life & Annuity may
conduct. See Separate Account.
WHAT ARE MY INVESTMENT Through its various Subaccounts, the Separate
CHOICES? Account uses your Purchase 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 Separate
Account - Subaccounts.
HOW DOES THE CONTRACT WORK? During the accumulation period, while you are
paying in, your Purchase Payments will buy
Accumulation Units under the Contract. When you
annuitize (that is, change your Contract to a
payment mode rather than an accumulation mode),
your Accumulation Units will be converted to
Annuity Units. Your periodic Annuity Payout will
be based upon the number of Annuity Units to
which you became entitled at the time you
annuitized and the value of each unit on the
Valuation Date the payment is calculated. See
The Contract.
WHAT CAN I DO THROUGH THE We maintain the Electronic Service Center to
ELECTRONIC SERVICE CENTER? provide information to you. Also, we perform
various transactions through the Center.
For security, we may issue you a Personal
Identification Number (PIN) or password. You are
responsible for any use of this PIN or password.
Detailed instructions on how to perform various
transactions such as transferring funds from one
Subaccount to another Subaccount, changing the
Beneficiary or making a withdrawal can be found
at the Electronic Service Center. These
procedures must be followed.
6
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For legal reasons, certain transactions require
a document with a signature. Electronic requests
for transactions that require a signature will
not be processed.
WHAT CHARGES ARE We assess annual charges in the aggregate at an
ASSOCIATED WITH THIS effective annual rate of .75% against the daily
CONTRACT? net asset value of the Separate Account,
including that portion of the Account
attributable to your Purchase Payments. These
charges consist of an administrative expense
charge of .35% and a mortality and expense risk
charge of .40%.
If your state assesses a premium tax with
respect to your Contract, we will deduct those
amounts from Purchase Payments or Contract Value
at the time the tax is incurred (or at another
time we choose). See Charges and Other
Deductions.
Finally, each portfolio pays a management fee to
its investment advisers based upon its average
daily net asset value. Each portfolio also has
additional operating expenses associated with
the daily operation of the Funds. See the
Expense Table. These fees and expenses are more
fully described in the prospectuses for the
Funds.
HOW MUCH MUST I PAY, AND You may purchase the contract for $1000.00.
HOW OFTEN? After that, Purchase Payments are flexible,
although some limitations on the amounts may
apply. See The Contract - Purchase Payments.
HOW WILL MY ANNUITY When you annuitize, you elect an Annuity Payment
PAYOUTS BE CALCULATED? Option. Once you have done so, your Annuity
Payout will be based upon a number of factors.
One factor will be the changing values of the
Subaccounts to which you have allocated funds.
Another factor will be your age at the
Annuity Commencement Date. See Annuity Payouts.
WHAT HAPPENS IF I DIE We will pay the Contract Value to your
BEFORE I ANNUITIZE? designated Beneficiary. Your Beneficiary will
have certain options for how we pay the money
out. See the Death Benefit.
MAY I TRANSFER CONTRACT Yes, but there may be limits on how often you
VALUE AMONG SUBACCOUNTS? may do so. Transfers are limited to three times
annually after the Annuity Commencement Date.
See Transfers.
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MAY I SURRENDER THE Yes, subject to Contract requirements. See
CONTRACT OR MAKE A Surrenders and Withdrawals.
WITHDRAWAL?
If you surrender the Contract or make a
withdrawal, certain charges may be assessed, as
discussed above and under Charges and Other
Deductions. In addition, if you take a
distribution before age 59 1/2 the Internal
Revenue Service may assess a 10% premature
withdrawal penalty tax. A surrender or a
withdrawal may be subject to tax withholding.
See Federal Tax Matters.
DO I GET A FREE LOOK AT Yes. If within ten days (or a longer period
THIS CONTRACT? if required by law) of the date you receive the
signed Contract through the Electronic Service
Center, you cancel the Contract through the
Electronic Service Center or return it, postage
prepaid to our Administrative Office, it will be
canceled. We will allocate your Purchase
Payments to the Subaccount investing in GE
Investments Funds' Money Market Fund until we
deem the free look period to have expired.
Solely for this purpose, we deem the free look
period to expire 15 days after we deliver your
Contract to your personal folder.
If you exercise this right, we will cancel the
Contract as of the day we receive your request,
and send you a refund equal to the greater of
(1) your Contract Value plus any charges we have
deducted from your Purchase Payments prior to
the allocation to the Separate Account (and
excluding any charges the portfolios may have
deducted) on or before the date we received the
returned Contract, or (2) we will refund your
Purchase Payments made (less any withdrawals
previously taken). See Additional Information -
Return Privilege.
MAY I RECEIVE MATERIALS IN Yes. You may receive any materials in writing,
WRITING FROM GE LIFE & such as the prospectuses and annual reports, by
ANNUITY? contacting our Administrative Office or by
e-mailing our Electronic Service Center. In
addition, at any time, you may revoke your
consent to receive materials electronically by
writing our Administrative Office.
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INVESTMENT RESULTS
================================================================================
At times, the Separate Account may compare its investment results to various
unmanaged indices or other variable annuities in reports to shareholders,
sales literature, and advertisements. We will calculate the results on a
total return basis for various periods. Total returns include the reinvestment
of all distributions. Total returns reflect portfolio charges and expenses, the
administrative expense charge, and the mortality and expense risk charge.
Total returns do not reflect any premium taxes. See the SAI for further
information.
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FINANCIAL STATEMENTS
================================================================================
The consolidated financial statements of GE Life and Annuity Assurance Company
and subsidiary (formerly The Life Insurance Company of Virginia), and GE Life &
Annuity Separate Account 4 (formerly Life of Virginia Separate Account 4), are
located in the Statement of Additional Information ("SAI"). If you would like a
free hard copy of the SAI, please contact our Electronic Service Center at
http://ww.annuitynet.com. Otherwise, the SAI is available on the SEC's website
at http://www.sec.gov.
================================================================================
GE LIFE AND ANNUITY ASSURANCE COMPANY
================================================================================
We are a stock life insurance company operating under a charter granted
by the Commonwealth of Virginia on March 21, 1871. We principally offer life
insurance and annuity policies. We may 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.
General Electric Capital Assurance Company ("GE Capital Assurance") owns the
majority of our capital stock, and Federal Home Life Insurance Company and
Phoenix Home Group, Inc. own the remainder. GE Capital Assurance and Federal are
indirectly owned by GE Financial Assurance Holdings Inc which is a wholly owned
subsidiary of General Electric Capital Corporation ("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 Contracts 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.
9
<PAGE>
================================================================================
SEPARATE ACCOUNT
================================================================================
We established the Separate Account as a separate investment account on
August 19, 1987. The Separate Account may invest in mutual funds, unit
investment trusts, managed separate accounts, and other portfolios. We use the
Separate Account to support the Contract as well as for other purposes permitted
by law.
The Separate Account currently has 25 Subaccounts that are available under the
Contract, but that number may change in the future. Each Subaccount invests
exclusively in shares representing an interest in a separate corresponding
portfolio of the Funds described below. We allocate net Purchase Payments in
accordance with your instructions after we deem the free look period to have
ended.
The assets of the Separate Account belong to us. Nonetheless, we do not
charge the assets in the Separate Account attributable to the Contracts with
liabilities arising out of any other business which we may conduct. The assets
of the Separate Account shall, however, be available to cover the liabilities of
our general account to the extent that the assets of the Separate Account exceed
its liabilities arising under the Contracts supported by it. Income and both
realized and unrealized gains or losses from the assets of the Separate Account
are credited to or charged against the Separate Account without regard to the
income, gains, or losses arising out of any other business we may conduct.
We registered the Separate Account with the SEC as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"). The Separate Account
meets the definition of a separate account under the federal securities
laws. Registration with the SEC does not involve supervision of the management
or investment practices or policies of the Separate Account by the SEC. You
assume the full investment risk for all amounts you allocate to the Separate
Account.
THE FUNDS There is a separate Subaccount which corresponds
to each portfolio of a Fund offered in this
Contract. You decide the Subaccounts to which
you allocate net Purchase Payments after we deem
the free look period to have ended. 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 distinct 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.
10
<PAGE>
Before allocating your net Purchase Payments and
Contract Value to a Subaccount, 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 the amounts you allocate to
the Separate Account. You bear the investment
risk of investing in the portfolios.
The investment objectives and policies of
certain portfolios may be similar to the
investment objectives and policies of other
portfolios that may be managed by the same
investment adviser or manager, but are not
available under the Contract. The investment
results of the portfolios, however, may be
higher or lower than the results of such other
portfolios. There can be no assurance, and no
representation is made, that the investment
results of any of the portfolios will be
comparable to the investment results of any
other portfolio, even if the other portfolio has
the same investment adviser or manager, or if
the other portfolio has a similar name.
SUBACCOUNTS We offer you a choice from among 25 Subaccounts,
each of which invests in an underlying portfolio
of one of the Funds.
<TABLE>
<S> <C>
- ------------------------- -------------------------------------------------- ----------------------------
SUBACCOUNT INVESTMENT OBJECTIVES ADVISER (AND SUB-
ADVISER, AS APPLICABLE)
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
========================= ================================================== ============================
AIM VARIABLE INSURANCE Objective is to achieve long-term growth of AIM Advisors, Inc.
FUNDS, INC. capital. The fund seeks to meet this objective by (Subadvised by INVESCO
Aggresive Growth Fund investing primarily in common stocks, convertible Asset Management Limited)
bonds, convertible preferred stocks and warrants
of small and medium sized companies whose
earnings the fund's portfolio managers expect to
grow more than 15% per year. The fund may also
invest up 25% of its total assets in foreign
securities.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is growth of capital through investment AIM Advisors, Inc.
FUNDS, INC. in common stocks, with emphasis on medium and (Subadvised by INVESCO
Capital Appreciation small sized growth companies. Asset Management Limited)
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is long-term growth of capital. The AIM Advisors, Inc.
FUNDS, INC. fund seeks to meet this objective by investing (Subadvised by INVESCO
Capital Development Fund primarily in securities, including common stocks, Asset Management Limited)
Convertible securities and bonds, of small and
medium sized companies. The fund may also invest
up to 25% of its total assets in foreign
securities.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective are to achieve a high level of current AIM Advisors, Inc.
FUNDS, INC. income and secondarily, growth of capital, by (Subadvised by INVESCO
Global Utilities Fund investing primarily in the common and preferred Asset Management Limited)
stocks of public utility companies (either
domestic or foreign). The fund seeks to meet
these objectives by investing, normally, at least
65% of its total assets in securities of domestic
and foreign public utility companies.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is to achieve a high level of current AIM Advisors, Inc.
FUNDS, INC. income consistent with reasonable concern for (Subadvised by INVESCO
Government Securities Fund safety of principal by investing in debt Asset Management Limited)
securities issued, guaranteed or otherwise backed
by the United States Government.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is growth of capital with a secondary AIM Advisors, Inc.
FUNDS, INC. objective of current income. The fund seeks to (Subadvised by INVESCO
Growth and Income Fund meet these objectives by investing at least 65% Asset Management Limited)
of its net assets in income producing securities,
including dividend paying common stocks and
convertible securities.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is long-term growth of capital. The AIM Advisors, Inc.
FUNDS, INC. fund seeks to meet this objective by investing (Subadvised by INVESCO
Telecommunications Fund primarily in equity securities of companies Asset Management Limited)
throughout the world engaged in the development,
manufacture or sale of telecommunications
services or equipment. The fund will invest,
normally, at least 65% of its total assets in
common and preferred stocks and warrants to
acquire such stocks issued by
telecommunications companies.
- ------------------------- -------------------------------------------------- ----------------------------
12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
========================= ================================================== ============================
FIDELITY VARIABLE Seeks long-term growth of capital by investing at Fidelity Management &
INSURANCE least 65% of total assets in foreign securities, Research Company
PRODUCTS FUND primarily in common stocks. (Subadvised by Fidelity
VIP Overseas Portfolio Management & Research (U.K.)
Inc., Fidelity
Management & Research Far
East Inc., Fidelity
International Investment
Advisors and Fidelity
International Investment
Advisors (U.K.) Limited)
- ------------------------- -------------------------------------------------- ----------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
========================= ================================================== ============================
FIDELITY VARIABLE Seeks high total return through a combination of Fidelity Management
INSURANCE current income and capital appreciation by & Research Company
PRODUCTS FUND III investing a majority of assets in common stocks (Subadvised by Fidelity
VIP III Growth & Income with a focus on those that pay current dividends Management & Research
Portfolio and show potential for capital appreciation. (U.K.) Inc. and Fidelity
Management & Research
Far East Inc.)
- ------------------------- -------------------------------------------------- ----------------------------
FIDELITY VARIABLE Seeks to provide capital growth by investing Fidelity Management &
INSURANCE PRODUCTS primarily in common stock and other types of Research Company
FUND III securities, including bonds, which may be (Subadvised by Fidelity
VIP III Growth lower-quality debt securities. Management & Research
Opportunities Portfolio (U.K.) Inc. and Fidelity
Management & Research Far
East Inc.)
- ------------------------- -------------------------------------------------- ----------------------------
FIDELITY VARIABLE Seeks long-term growth of capital investing Fidelity Management & Research
INSURANCE primarily in common stocks and at least 65% of Company (subadvised by
PRODUCTS FUND III total assets in securities of companies Fidelity Management
VIP III Mid-Cap Portfolio with medium market capitalizations. & Research (U.K.), Inc. and
Fidelity Management &
Research Far East, Inc.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS, INC
========================= ================================================== ============================
GE INVESTMENTS FUNDS Objective of providing maximum income consistent GE Asset
Income Fund with prudent investment management and Management Incorporated
preservation of capital by investing primarily
in income-bearing debt securities and other income
bearing instruments.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long-term growth of capital GE Asset
International Equity Fund by investing primarily in foreign equity and Management Incorporated
equity-related securities which the Adviser
believes have long-term potential for capital
growth.
13
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long term growth of capital GE Asset
Mid Cap Value Fund by investing primarily in common stock and other Management
(formerly Value Equity equity securities of companies that the investment Incorporated
Fund) adviser believes are undervalued by the (Subadvised by
marketplace at the time of purchase and that offer NWQ Investment
the potential for above-average growth of capital. Management
Although the current portfolio reflects Company)
investments primarily within the mid cap range,
the Fund is not restricted to investments within
any particular capitalization and may in the
future invest a majority of its assets in another
capitalization range.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing highest level of current GE Asset
Money Market Fund income as is consistent with high liquidity and Management Incorporated
safety of principal by investing in various
types of good quality money market securities.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long-term growth of GE Asset
Premier Growth capital as well as future (rather than current) Management Incorporated
Equity Fund income by investing primarily in growth-oriented
equity securities.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing maximum total return GE Asset
Real Estate Securities through current income and capital appreciation by Management
Fund investing primarily in securities of U.S. issuers Incorporated
that are principally engaged in or related to the (Subadvised by
real estate industry including those that own Seneca Capital
significant real estate assets. The portfolio Management, L.L.C.)
will not invest directly in real estate.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing capital appreciation and GE Asset Management
S&P 500 Index Fund(1) accumulation of income that corresponds to the Incorporated
investment return of the Standard & Poor's 500 (Subadvised by
Composite Stock Price Index through investment State Street Global
in common stocks comprising the Index. Advisors)
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing the highest total return, GE Asset
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.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long-term growth of GE Asset Management
U.S. Equity Fund capital through investments primarily in equity Incorporated
securities of U.S. companies.
- ------------------------- -------------------------------------------------- ----------------------------
(1) "Standard & Poor's", "S&P", and "S&P 500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by GE Investment Management
Incorporated. The S&P 500 Index Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard and Poor's makes no representation
or warranty, express or implied, regarding the advisability of investing in this
Fund of the Policy.
14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
JANUS ASPEN SERIES
========================= ================================================== ============================
JANUS ASPEN SERIES Seeks long-term growth of capital. Pursues this Janus Capital
Capital Appreciation objective by investing primarily in common Corporation
Portfolio stocks of companies of any size.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks current income and long-term growth of Janus Capital
Equity Income Portfolio capital. It pursues its objective by normally Corporation
emphasizing investments in common stock, and
growth potential is a significant investment
consideration.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks maximum total return consistent with Janus Capital
Flexible Income Portfolio preservation of capital. Total return is expected Corporation
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.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks to obtain a high current income. Capital Janus Capital Corporation
High-Yield Portfolio appreciation is secondary objective when
consistent with its primary objective. It pursues
its objectives by normally investing 65% of its
assets in high-yield-risk fixed-income securities,
and may at time invest all of its assets in these
securities.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks long term growth of capital. Normally, the Janus Capital Corporation
International Growth Portfolio pursues its objective by investing at
Portfolio least 65% of its total assets in securities
of issuers from at least five different countries,
excluding the United States. Although the
Portfolio intends to invest substantially all of
its assets in issuers outside of the United States,
it may at times invest in U.S. issuers and
it may at times invest all of its assets in fewer
than five countries or even a single country.
========================= ================================================== ============================
</TABLE>
- --------
Not all of these portfolios may be available in all states or markets.
15
<PAGE>
We will purchase shares of the portfolios at net
asset value and direct them to the appropriate
Subaccounts of the Separate Account. We will
redeem sufficient shares of the appropriate
portfolios at net asset value to pay Death
Benefits and surrender/withdrawal proceeds, to
make Annuity Payouts, or for other purposes
described in the Contract. We automatically
reinvest all dividend and capital gain
distributions of the portfolios in shares of the
distributing portfolios at their net asset value
on the date of distribution. In other words, we
do not pay portfolio dividends or portfolio
distributions out to Owners as additional units,
but instead reflect them in unit values.
Shares of the 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.
When a Fund sells shares in any of its
portfolios both to variable annuity and to
variable life insurance separate accounts, it
engages in mixed funding. When a Fund sells
shares in any of its portfolios to separate
accounts of unaffiliated life insurance
companies, it engages in shared funding.
Each Fund may engage in mixed and shared
funding. Therefore, due to differences in
redemption rates or tax treatment, or other
considerations, the interests of various
shareholders participating in a Fund could
conflict. A Fund's Board of Directors will
monitor for the existence of any material
conflicts, and determine what action, if any,
should be taken. See the prospectuses for the
Funds.
We have entered into agreements with either the
investment adviser or distributor of each of the
Funds under which the adviser or distributor
pays us a fee ordinarily based upon a percentage
of the average aggregate amount we have invested
on behalf of the Separate Account and other
separate accounts. These percentages differ, and
some investment advisers or distributors pay us
a greater percentage than other advisers or
distributors. These agreements reflect
administrative services we provide.
CHANGES TO THE SEPARATE We reserve the right, within the law, to make
ACCOUNT AND THE SUBACCOUNTS additions, deletions and substitutions for the
Funds and/or any portfolios within the Funds in
which the Separate Account participates. We may
substitute shares of other portfolios for shares
already purchased, or to be purchased in the
future, under the Contract. This substitution
might occur if shares of a portfolio should no
longer be available, or if investment in any
Fund's shares 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 for the Contract.
We cannot substitute shares attributable to your
Contact without prior notice to you and before
approval of the SEC, in accordance with the 1940
Act. We will also inform you within fifteen (15)
days after such substitution occurs. We will
notify you before and after the substitution by
placing a notice in your personal folder at the
Electronic Service Center. This notice will also
be sent to your e-mail address on file with us.
16
<PAGE>
We also reserve the right to establish
additional Subaccounts, each of which would
invest in a separate portfolio of a Fund, or in
shares of another investment company, with a
specified investment objective. We may also
eliminate one or more Subaccounts if, in our
sole discretion, marketing, tax, or investment
conditions warrant. We may combine existing
Subaccounts.
If permitted by law, we may deregister the
Separate Account under the 1940 Act in the event
such registration is no longer required, manage
the Separate Account under the direction of a
committee, create new separate accounts, or
combine the Separate Account with other separate
accounts of the Company. Further, to the extent
permitted by applicable law, we may transfer the
assets of the Separate Account to another
separate account.
================================================================================
CHARGES AND OTHER DEDUCTIONS
================================================================================
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the Contracts. We incur certain
costs and expenses for the distribution and administration of the Contracts and
for providing the benefits payable thereunder. Our administrative services
include:
o processing applications for and issuing the Contracts;
o processing purchases and redemptions of portfolio shares as
required;
o maintaining records;
o telephone transfers;
o administering Annuity Payouts;
o furnishing accounting and valuation services (including the
calculation and monitoring of daily Subaccount values);
o reconciling and depositing cash receipts;
o providing Contract confirmations and periodic statements; and
O providing Electronic services.
17
<PAGE>
The risks we assume include:
o the risk that the actual life-span of persons receiving Annuity Payouts
under the Contract will exceed the assumptions reflected in our
guaranteed rates (these rates are incorporated in the Contract and
cannot be changed); and
o the risk that our costs in providing the services will exceed our
revenues from Contract charges (which cannot be changed by us).
The amount of a charge may not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. We also may realize a profit on one or more of the charges. We may use
any such profits for any corporate purpose, including the payment of sales
expenses.
DEDUCTIONS FROM THE We deduct from the Separate Account an amount,
SEPARATE ACCOUNT computed daily, which is equal to an annual rate
of 0.75% of the daily net asset value. This is
our annuity asset charge. This charge consists
of an administrative expense charge of .35% and
a mortality and expense risk charge of .40%. We
will pay an administrative expense charge to
AnnuityNet, P.O. Box 691, Leesburg, VA 20178 for
the services it provides. AnnuityNet maintains
the Electronic Service Center, processes
applications, and performs various other
administrative services. These deductions are
reflected in your Contract Value.
DEDUCTIONS FOR PREMIUM Any premium tax or other tax levied by any
TAXES governmental entity as a result of the existence
of the Contracts or the Separate Account will be
deducted from the Contract Value when incurred,
or at another time of our choosing.
The applicable premium tax rates that states and
other governmental entities impose on the
purchase of an annuity are subject to change by
legislation, by administrative interpretation or
by judicial action. These premium taxes will
vary, generally depending upon the law of your
state of residence. In those states which tax
these premiums, the tax generally ranges from
0% to 3%.
OTHER CHARGES AND There are deductions from and expenses paid out
DEDUCTIONS of the assets of the underlying Funds that are
more fully described in the prospectuses for the
Funds.
In addition, we reserve the right to impose a
$10.00 transfer charge.
18
<PAGE>
================================================================================
THE CONTRACT
================================================================================
The Contract is an individual flexible premium variable deferred annuity
Contract. We describe your rights and benefits below and in the Contract. Your
Contract may differ in certain respects from the description below because of
the requirements of the state where we issued your Contract. In addition, we
reserve the right to amend the Contract to meet the requirements of the 1940 Act
or other applicable federal or state laws or regulations. You will be notified
of any changes, modifications, or waivers through the Electronic Service Center.
PURCHASE OF THE CONTRACT If you wish to purchase the Contract, you must
apply for it by downloading, completing,
signing, and then sending the application to our
Administrative Office. When we receive the
completed application, we decide whether to
accept or reject it. If the application is
accepted, the Contract is prepared and executed
by our legally authorized officers. The Contract
is then provided to you through the Electronic
Service Center. See Distribution of the
Contracts.
Once a completed application and all other
information necessary for processing a purchase
order are received, we will apply your initial
Purchase Payment no later than two business days
after we receive the order. While attempting to
finish an incomplete application, we may hold
the initial Purchase Payment for no more than
five business days. If an incomplete application
cannot be completed within those five days, you
will be informed of the reasons, and the
Purchase Payment will be returned immediately
(unless you specifically authorize us to keep it
until the application is complete). Once the
application is complete, we must apply the
initial Purchase Payment within two business
days.
Purchase Payments can be made electronically by
an electronic fund transfer ("EFT"), wired or
mailed to: GE Life and Annuity Assurance
Company, P. O. Box 691, Leesburg, VA 20178.
To apply for a Contract, you must be of legal
age in a state where we may lawfully sell the
Contract. The Annuitant cannot be older than age
85 at the time of issue.
OWNERSHIP As the Owner, you have all the rights under the
Contract, subject to the rights of any
irrevocable Beneficiary. According to Virginia
law, the assets in the Separate Account equal to
the Contract liabilities are held for the
exclusive benefit of all Owners and their
designated Beneficiaries. You may not assign
your Contract without our permission.
19
<PAGE>
If you name a joint Owner in the application, we
will treat the joint Owners as having equal
undivided interests in the Contract. Either
joint Owner, independently of the other, may
exercise any ownership rights in the Contract.
PURCHASE PAYMENTS You may make Purchase Payments at a frequency
and in the amount you select, subject to certain
limitations. You must obtain our approval before
you make total Purchase Payments for an
Annuitant age 79 or younger that exceed $2
million. If the Annuitant is age 80 or older at
the time of payment, the total amount not
subject to prior approval is $1 million. The
minimum initial Purchase Payment is $1,000.
Subsequent Purchase Payments must be at least
$100. Payments may be made or, if stopped,
resumed at any time until the Annuity
Commencement Date, the surrender of the
Contract, or the death of the Owner (or joint
Owner, if applicable), whichever comes first. We
reserve the right to refuse to accept a Purchase
Payment for any lawful reason.
VALUATION DATE We will value Accumulation Units and Annuity
Units once daily at the close of regular 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 corresponding portfolio does not
value its shares (Valuation Date). If a
Valuation Period contains more than one day, the
unit values will be the same for each day in the
Valuation Period.
ALLOCATION OF PURCHASE After we deem the free look period to end (15
PAYMENTS days after we deliver your Contract to your
personal folder), we place Purchase Payments
into the Separate Account's Subaccounts.
Following your allocation instructions, each
Subaccount invests in shares of the
corresponding portfolios of the Funds.
Upon allocation to the appropriate Subaccount,
we convert net Purchase Payments into
Accumulation Units. We determine the number of
Accumulation Units credited by dividing the
amount allocated to each Subaccount by the value
of an Accumulation Unit for that Subaccount on
the Valuation Date on which we receive the
Purchase Payment at our Administrative Office if
received before 4:00 p.m., New York time. If we
receive the Purchase Payment at or after 4:00
p.m, New York time, we will use the Accumulation
Unit value computed on the next Valuation Date.
The number of Accumulation Units determined in
this way is not changed by any subsequent change
in the value of an Accumulation Unit. However,
the dollar value of an Accumulation Unit will
vary depending not only upon how well the
portfolio's investments perform, but also upon
the charges of the Separate Account and the fees
and expenses of the portfolios.
20
<PAGE>
You may change the allocation of subsequent
Purchase Payments at any time, without charge,
by sending us acceptable notice through our
Electronic Service Center or in writing to our
Administrative Office. The new allocation will
apply to any Purchase Payments made after we
receive notice of the change.
VALUATION OF ACCUMULATION We value Accumulation Units for each Subaccount
UNITS separately. Initially, we arbitrarily set the
value of each Accumulation Unit at $10.00.
Thereafter, the value of an Accumulation Unit in
any Subaccount for a Valuation Period equals the
value of an Accumulation Unit in that Subaccount
as of the preceding Valuation Period multiplied
by the net investment factor of that Subaccount
for the current Valuation Period.
The net investment factor is an index used to
measure the investment performance of a
Subaccount from one Valuation Period to the
next. The net investment factor for any
Subaccount for any Valuation Period reflects the
change in the net asset value per share of the
portfolio held in the Subaccount from one
Valuation Period to the next, adjusted for the
daily deduction of the administrative expense
and mortality and expense risk charges from
assets in the Subaccount. If any "ex-dividend"
date occurs during the Valuation Period, we take
into account the per share amount of any
dividend or capital gain distribution so that
the unit value is not impacted. Also, if we need
to reserve money for taxes, we take into account
a per share charge or credit for any taxes
reserved which we determine to have resulted
from the operations of the Subaccount.
================================================================================
TRANSFERS
================================================================================
TRANSFERS BEFORE THE Before the earliest of the surrender of the
ANNUITY COMMENCEMENT DATE Contract, payment of any Death Benefit, and the
Annuity Commencement Date, you may transfer all
or a portion of your Contract Value between and
among the Subaccounts of the Separate Account,
subject to certain conditions. We process
transfers among the Subaccounts of the Separate
Account as of the end of the Valuation Period
that we receive the transfer request through our
Electronic Service Center or in writing at
our Administrative Office. We may postpone
transfers to, from, or among the Subaccounts
of the Separate Account, under certain
circumstances. See Requesting Payments.
21
<PAGE>
We may restrict certain transfers from the
Subaccounts. Currently, there is no limit on the
number of transfers between and among
Subaccounts of the Separate Account; however,
upon written notice we reserve the right to
limit the number of transfers each calendar
year, if it is necessary for the Contract to
continue to be treated as an annuity contract by
the Code, a lower number. We do not currently
charge for transfers. However, we reserve the
right to assess a charge of $10.00 per transfer.
Any transfer charge will be taken from the
amount transferred. In addition we reserve the
right to revise the transfer privilege at any
time.
Sometimes, we may not honor your transfer
request. We may not honor your transfer
request if:
(1) any Subaccount that would be
affected by the transfer is unable
to purchase or redeem shares of the
portfolio in which the Subaccount
invests; or
(2) the transfer is a result of more
than one trade involving the same
Subaccount within a 30 day
period; or
(3) the transfer would adversely affect
Accumulation Unit values (which may
occur if the transfer would affect
one percent or more of the relevant
portfolio's total assets); or
(4) the transfer would adversely affect
any portfolio affected by the
transfer.
We also may not honor transfers made by third
parties. See Transfers by Third Parties.
When thinking about a transfer of Contract
Value, you should consider the inherent risk
involved. Frequent transfers based on short-term
expectations may increase the risk that you will
make a transfer at an inopportune time.
TRANSFERS BY THIRD PARTIES As a general rule and as a convenience to you,
we allow the use of transfers by third parties
whereby you 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 Contract Value. Such transfers can disrupt
the orderly management of the portfolios
underlying the Contract, can result in higher
costs to Owners, and are generally not
compatible with the long-range goals of Owners.
We believe that such simultaneous transfers
effected by such third parties are not in the
best interests of all shareholders of the Funds
underlying the Contracts, and the managements of
the Funds share this position. Therefore, as
described in your Contract, we may limit
transfers made by a third party.
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TRANSFERS AFTER THE You may transfer all or a portion of your
ANNUITY COMMENCEMENT DATE Annuity Units from one Subaccount to another
Subaccount after the Annuity Commencement Date.
These transfers will be limited to three times
per Contract Year after the Annuity Commencement
Date. If you request a transfer from a
Subaccount, all of the Annuity Units in that
Subaccount must be transferred to a single
different Subaccount. Currently, there is no
charge for these transfers. However, we reserve
the right to impose a charge in the future for
these transfers.
TELEPHONE TRANSFERS In the event that the Electronic Service Center
is unable to accept Subaccount transfer requests
through the Internet, transfer requests will be
accepted by the AnnuityNet.com call center at
its toll free number (1-877-569-3789). We may be
liable for losses resulting from unauthorized or
fraudulent telephone transfers if we fail to
employ reasonable procedures to confirm that the
telephone instructions that we receive are
genuine. Therefore, we will employ means to
prevent unauthorized or fraudulent telephone
requests, such as recording telephone requests
and/or requesting other identifying information.
In addition, we will require written
authorization before allowing you to make
telephone transfers. We reserve the right to
limit telephone transactions. The call center
toll free number can be found in any of your
AnnuityNet.com confirmation emails. We will
process telephone transfer requests as of the
end of the Valuation Period that the call center
receives the request.
================================================================================
SURRENDERS AND WITHDRAWALS
================================================================================
Subject to the rules discussed below, we will allow the surrender of your
Contract in whole or in part at any time before the Annuity Commencement
Date upon your written request through our Electronic Service Center or in
writing to our Administrative Office.
We will not permit a withdrawal that is less than $300 or that reduces
Contract Value to less than $1,000. If your withdrawal request would reduce
Contract Value to less than $1,000, we will pay out only that amount of Contract
Value that would reduce the remaining Contract Value to $1,000.
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The amount payable on full surrender of the Contract is the Contract Value at
the end of the Valuation Period during which we receive the request less any
applicable premium tax charge (the "Contract Surrender Value"). We may
pay the Contract Surrender Value in a lump sum or under one of the Annuity
Payment Options specified in the Contract, based on your instructions.
Unless otherwise requested, we will deduct the amount of the withdrawal
from the Subaccounts on a pro-rata basis.
SYSTEMATIC WITHDRAWALS
You may elect in writing on our form to take systematic withdrawals of a
specified dollar amount (in equal installments of at least $300) on a monthly,
quarterly, semi-annual or annual basis. Payments can begin at any time after 30
days from the Policy Date. We will process the withdrawals by first taking on a
pro-rata basis Accumulation Units from all of the Subaccounts in which you have
an interest. After 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 Contract Value to be less than $1,000. If a
systematic withdrawal would cause the Contract Value to be less than $1,000,
then we will not process that systematic withdrawal transaction. You may
discontinue systematic withdrawals at any time by notifying us through the
Electronic Service Center or in writing to our Administrative Office.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to federal income taxes on any portion considered gain for
tax purposes. In addition, you may be assessed a 10% federal penalty tax on
systematic withdrawals if you are under age 59 1/2 at the time of the
withdrawal.
We also reserve the right to discontinue systematic withdrawals upon 30 days
written notice to Owners. Notice will be provided to you by the Electronic
Service Center or U.S. mail.
================================================================================
THE DEATH BENEFIT
================================================================================
DEATH BENEFIT BEFORE THE Upon due proof of the Owner's death before the
ANNUITY COMMENCEMENT DATE Annuity Commencement Date (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) along with the completed forms described
in your Contract, we will treat the Death
Benefit in accordance with the Beneficiary's
instructions, subject to the distribution rules
and termination of contract provisions described
below. The Death Benefit will be the Contract
Surrender Value at the date of payment.
In certain circumstances, federal tax law
requires that distributions under the Contract
be made 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 Contract
Surrender Value upon death.
At the death of any Owner (or Annuitant, if any
Owner is a non-natural entity), the person or
entity first listed below who is alive or in
existence on the date of that death will become
the designated Beneficiary:
(1) Owner or joint Owners;
(2) Primary Beneficiary;
(3) Contingent Beneficiary; or
(4) Owner's estate.
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We then will treat the designated Beneficiary as
the sole Owner of the Contract. If there is more
than one designated Beneficiary, we will treat
each one separately and apply the tax laws
described below.
DISTRIBUTION RULES The distributions required by federal tax law
differ depending on whether the designated
Beneficiary is the spouse of the deceased Owner
(or of the Annuitant, if the Contract is owned
by a non-natural entity).
o SPOUSES. If the designated Beneficiary is
the surviving spouse of the deceased
person, we will continue the Contract in
force with the surviving spouse as the new
Owner. If the deceased person was 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. Instead, the rules for non-
spouses will apply.
o NON-SPOUSES. If the designated Beneficiary
is not the surviving spouse of the deceased
person, this Contract cannot be continued
in force indefinitely. Instead, upon the
death of any Owner (or 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 Contract Surrender Value in
one lump sum payment.
(2) Receive the Contract 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 a
lump sum payment of any Contract
Surrender Value remaining.
(3) Apply the Contract Surrender Value to
an Annuity Payment Option with certain
restrictions.
If no choice is made by the designated
Beneficiary within 60 days following receipt of
due proof of death, we will use payment choice 2
(payment of the entire value of the Contract
within 5 years of the date of death) if the
Beneficiary is an individual. We will not accept
any Purchase Payments after the non-spouse's
death. If the designated Beneficiary dies before
we have distributed the entire value of the
Contract, including interest accruing after the
date of death, we will pay in a lump sum payment
of any value still remaining to the person named
by the designated Beneficiary. If no person is
so named, we will pay the designated
Beneficiary's estate.
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<PAGE>
Under payment choices 1 or 2, the Contract will
terminate upon payment of the entire value of
the Contract, including interest accruing after
the date of death. Under payment choice 3, this
Contract will terminate when we apply the
Contract Surrender Value to provide Annuity
Payouts.
================================================================================
ANNUITY PAYOUTS
================================================================================
When you apply for a Contract, you may select any Annuity Commencement Date
permitted by law provided that the Annuity Commencement Date occurs before
the Annuitant's (or the elder of the joint Annuitants') 90th birthday.
Unless you elect otherwise, we will pay a monthly annuity benefit to the Owner
beginning on the Annuity Commencement Date if the Annuitant is still living. We
will pay the monthly annuity benefit under the Annuity Payment Option which
provides a life annuity with annuity payments guaranteed for 10 years,
using the gender and settlement age of the Annuitant instead of the payee,
unless you make another election. Under this Option, if the Annuitant lives
longer than ten years, payments will continue for his or her life. If the
Annuitant dies before the end of ten years, we will discount the remaining
payments for the ten year period at the assumed investment rate used to
calculate the initial variable monthly annuity payment (for this purpose, we
assume that the amount of each payment equals the payment amount on the date we
receive due proof of death). We may pay this discounted amount in one sum.
You may select one of the forms of payment of annuities available under the
Contract (described below). Annuity payments under any of the Annuity
Payment Options are made on a monthly basis and, after the first payment, will
reflect the investment experience of the Subaccounts in which you allocated
Annuity Units.
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<PAGE>
ANNUITY PAYMENT OPTIONS
LIFE ANNUITY WITH This option guarantees periodic payments during
PERIOD CERTAIN the lifetime of the Annuitant, with payments
guaranteed for at least a minimum period. The
minimum period is selected by the Owner, and can
be 0, 10 or 20 years. If the Annuitant dies
after payments have begun, but before the end of
the selected minimum period, the person entitled
to the remaining payments may be able to receive
the discounted value of those payments in a lump
sum. The amount of remaining payments for the
minimum period will be discounted at the same
rate used in calculating the initial variable
monthly annuity payment. Discounted means we
will adjust for the fact that, because each
remaining payment is being made early, it does
not earn any additional investment return.
JOINT LIFE ANNUITY This option provides periodic payments during
the joint lifetime of the Annuitant and a
designated joint Annuitant. The payments
continue during the lifetime of the surviving
Annuitant after the death of the first Annuitant
to die, and stop when both Annuitants have died.
GENERAL INFORMATION None of the options listed above currently
provide withdrawal features permitting the Owner
to withdraw commuted values as a lump sum
payment. We may make available other options,
with or without withdrawal features. The annuity
asset charge will be assessed on all variable
Annuity Payouts, including options that may be
offered that do not have a life contingency and
therefore no mortality risk.
Before the Annuity Commencement Date, you may
change:
o your Annuity Commencement Date (but you
must give us at least 14 days' notice
before payments are to begin and the
Annuitant(s) must be no older than 90 years
of age on the Annuity Commencement Date);
o your Annuity Payment Option;
o subject to our approval, the Annuitant (if
you are a natural person);
o the allocation of your Contract Value among
the Subaccounts; and
o the primary Beneficiary, contingent
Beneficiary, and Contingent Annuitant
through our Electronic Service Center or in
writing to our Administrative Office if the
Annuitant is living. This policy may not be
assigned without our permission.
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<PAGE>
You may change any Beneficiary. A person named
irrevocably may be changed only with that
person's written consent. A change of
Beneficiary will revoke any previous
designation.
We must receive your request for a change in a
form acceptable to us. The change will take
effect as of the date we receive the request.
The change will be subject to any payment made
before we recorded the change.
ANNUITY PAYOUTS Variable Annuity Payouts will be determined
using:
1. The Contract Value on the Annuity
Commencement Date;
2. The annuity tables contained in the Contract;
3. The Annuity Payment Option selected; and
4. The investment performance of the Subaccounts
selected or transferred to.
To determine the amount of payment, we make this
calculation:
1. First, we determine the amount of the first
Annuity Payout; then
2. we allocate that amount to the Subaccounts
according to your instructions; then
3. we determine the number of Annuity Units
for each Subaccount by dividing the amount
allocated by the Annuity Unit value on the
day the payment is due; and finally
4. we calculate the value of the Annuity Units
for each Subaccount on the day the payment
is due for each Annuity Payout thereafter.
To calculate your Annuity Payouts, we need to
make an assumption regarding the investment
performance of the Subaccounts you select. We
call this your assumed investment rate. We
assume an investment rate of 5% per year, as
applied to the applicable mortality table. This
means that if the annualized investment
performance, after expenses, of your Subaccounts
is less than 5%, then the dollar amount of your
Annuity Payout will decrease. Conversely, if the
annualized investment performance, after
expenses, of your Subaccounts is greater than
5%, then the dollar amount of your Annuity
Payouts will increase. The age used to determine
the monthly payment amount may be subject to an
adjustment as provided in the Contract, which
could result in a lower Annuity Payout than
without the adjustment.
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================================================================================
FEDERAL TAX MATTERS
================================================================================
INTRODUCTION
This part of the prospectus discusses the federal income tax treatment of the
Contract. The federal income tax treatment of the Contract is complex and
sometimes uncertain. The federal income tax rules may vary with your particular
circumstances. This discussion does not address all of the federal income tax
rules that may affect you or your Contract. This discussion also does not
address other federal tax consequences, or state or local tax consequences,
associated with a Contract. As a result, you should always consult a tax adviser
about the application of tax rules to your individual situation.
TAX DEFERRAL ON EARNINGS. The federal income tax law does not tax any increase
in an Owner's Contract Value until there is a distribution from the Contract.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
o An individual must own the Contract (or the tax law must treat the
Contract as owned by an individual);
o The investments of the Separate Account must be "adequately
diversified" in accordance with Internal Revenue Service ("IRS")
regulations;
o The Owner's right to choose particular investments for a Contract must
be limited; and
o The Contract's Annuity Commencement Date must not occur near the end of
the Annuitant's life expectancy.
This part of the prospectus discusses each of these requirements.
CONTRACTS NOT OWNED BY AN INDIVIDUAL -- NO TAX DEFERRAL AND LOSS OF INTEREST
DEDUCTION. As a general rule, the Code does not treat a Contract that is owned
by an entity (rather than an individual) as an annuity contract for federal
income tax purposes. The entity owning the Contract pays tax currently on the
excess of the Contract Value over the premiums paid for the Contract. Contracts
issued to a corporation or a trust are examples of Contracts where the Owner
pays current tax on the Contract's earnings.
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<PAGE>
There are several exceptions to this rule. For example, the Code treats a
Contract as owned by an individual if the nominal Owner is a trust or other
entity that holds the Contract as an agent for an individual. However, this
exception does not apply in the case of any employer that owns a Contract to
provide deferred compensation for its employees.
In the case of a Contract issued to a taxpayer that is not an individual, or a
Contract held for the benefit of an entity, the entity will lose its deduction
for a portion of its otherwise deductible interest expenses. This disallowance
does not apply if the Owner pays tax on the annual increase in the Contract
Value. Entities that are considering purchasing the Contract, or entities that
will benefit from someone else's ownership of a Contract, should consult a tax
adviser.
INVESTMENTS IN THE SEPARATE ACCOUNT MUST BE DIVERSIFIED. For a Contract to be
treated as an annuity contract for federal income tax purposes, the investments
of a separate account such as the Separate Account must be "adequately
diversified". The IRS has issued regulations that prescribe standards for
determining whether the investments of the Separate Account are adequately
diversified. If the Separate Account fails to comply with these diversification
standards, the Owner could be required to pay tax currently on the excess of the
Contract Value over the Purchase Payments made under the Contract.
Although we do not control the investments of all of the Funds (we only
indirectly control those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
the Separate Account will be considered "adequately diversified".
RESTRICTIONS ON THE EXTENT TO WHICH AN OWNER CAN DIRECT THE INVESTMENT OF
CONTRACT VALUES: Federal income tax law limits the Owner's right to choose
particular investments for the Contract. The U.S. Treasury Department stated in
1986 that it expected to issue guidance clarifying those limits, but it has not
yet done so. Thus, the nature of the limits is currently uncertain. As a result,
an Owner's right to allocate Contract Values among the portfolios may exceed
those limits. If so, the Owner would be treated as the owner of the assets of
the Separate Account and thus subject to current taxation on the income and
gains from those assets.
We do not know what limits the Treasury Department may set forth in any guidance
that the Treasury Department may issue or whether any such limits will apply to
existing Contracts. We therefore reserve the right to modify the Contract
without the Owners' consent to attempt to prevent the tax law from considering
the Owners as the owners of the assets of the Separate Account.
AGE AT WHICH ANNUITY PAYOUTS MUST BEGIN. Federal income tax rules do not
expressly identify a particular age by which Annuity Payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through Annuity Payouts, of the contract's premiums paid and
earnings. If Annuity Payouts under the Contract begin or are scheduled to begin
on a date that is near the end of the Annuitant's life expectancy, it is
possible that the tax law will not treat the Contract as an annuity contract for
federal income tax purposes. In that event, the Owner would be currently taxable
on the excess of the Contract Value over the Purchase Payments made under the
Contract.
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<PAGE>
NO GUARANTEES REGARDING TAX TREATMENT: We make no guarantees regarding the tax
treatment of any Contract or of any transaction involving a Contract. However,
the remainder of this discussion assumes that your Contract will be treated as
an annuity contract for federal income tax purposes and that the tax law will
not impose tax on any increase in your Contract Value until there is a
distribution from your Contract.
WITHDRAWALS AND SURRENDERS. A withdrawal occurs when you receive less than the
total amount of the Contract's Contract Surrender Value. In the case of a
withdrawal, you will pay tax on the amount you receive to the extent your
Contract Surrender Value before the withdrawal exceeds your "investment in the
contract". (This term is explained below.) This income (and all other income
from your Contract) is ordinary income. The Code imposes a higher rate of tax on
ordinary income than it does on capital gains.
A surrender occurs when you receive the total amount of the Contract's Contract
Surrender Value. In the case of a surrender, you will pay tax on the amount you
receive to the extent it exceeds your "investment in the contract".
Your "investment in the contract" generally equals the total of your Purchase
Payments under the Contract, reduced by any amounts you previously received from
the Contract that you did not include in your income.
ASSIGNMENTS AND PLEDGES. The Code treats any assignment or pledge of (or
agreement to assign or pledge) any portion of your Contract Value as a
withdrawal.
GIFTING A CONTRACT. If you transfer ownership of your Contract -- without
receiving a payment equal to your Contract's value -- to a person other than
your spouse (or to your former spouse incident to divorce), you will pay tax on
your Contract Value to the extent it exceeds your "investment in the contract".
In such a case, the new Owner's "investment in the contract" will be increased
to reflect the amount included in your income.
TAXATION OF ANNUITY PAYOUTS. The Code imposes tax on a portion of each Annuity
Payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract". The Company will notify you
annually of the taxable amount of your Annuity Payout.
Pursuant to the Code, you will pay tax on the full amount of your Annuity
Payouts once you have recovered the total amount of the "investment in the
contract". If Annuity Payouts cease because of the death of the Annuitant and
before the total amount of the investment in the contract has been recovered,
the unrecovered amount generally will be deductible.
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TAXATION OF DEATH BENEFITS. We may distribute amounts from your Contract because
of the death of an Owner, a joint Owner, or an Annuitant. The tax treatment of
these amounts depends on whether the Owner, joint Owner, or Annuitant dies
before or after the Contract's Annuity Commencement Date. BEFORE THE CONTRACT'S
ANNUITY COMMENCEMENT DATE:
o If received under an Annuity Payment Option, Death Benefits are taxed
in the same manner as Annuity Payouts.
o If not received under an Annuity Payment Option, Death Benefits are
taxed in the same manner as a withdrawal.
AFTER THE CONTRACT'S ANNUITY COMMENCEMENT DATE:
o If received in accordance with the existing Annuity Payment Option,
Death Benefits are excludible from income to the extent that they do
not exceed the unrecovered "investment in the contract". Death
Benefits in excess of the unrecovered "investment in the contract"
are includable 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 PAYMENTS. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
Contract that is included in your gross income. The Code does not impose the 10%
penalty tax if one of several exceptions applies. These exceptions include
withdrawals, surrenders, or Annuity Payouts that:
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 taxpayer.
SPECIAL RULES IF YOU OWN MORE THAN ONE CONTRACT. In certain circumstances, you
must combine some or all of the annuity contracts you own in order to determine
the amount of an Annuity Payout, a surrender, or a withdrawal that you must
include in income. For example:
o If you purchase a Contract offered by this prospectus and also
purchase at approximately the same time an immediate annuity, the IRS
may treat the two contracts as one contract.
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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.
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a Contract unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, federal income tax rules may require
us to withhold tax. At the time you request a withdrawal, surrender, or Annuity
Payout, we will provide you forms that explain the withholding requirements.
TAX STATUS OF THE COMPANY
Under existing federal income tax laws, we do not pay tax on investment income
and realized capital gains of the Separate Account. We do not anticipate that we
will incur any federal income tax liability on the income and gains earned by
the Separate Account. The Company, therefore, does not impose a charge for
federal income taxes. If federal income tax law changes and we must pay tax on
some or all of the income and gains earned by the Separate Account, we may
impose a charge against the Separate Account to pay the taxes.
CHANGES IN THE LAW
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this prospectus. Congress, the IRS, and the courts may
modify these authorities.
================================================================================
VOTING RIGHTS
================================================================================
As required by law, we will vote the portfolio shares held in the Separate
Account at meetings of the shareholders of the various Funds. The voting will
be done according to the instructions of Owners who have interests in any
Subaccounts which invest in the portfolios of the Funds. If the 1940 Act
or any regulation under it should be amended, and if as a result we determine
that we are permitted to vote the portfolios' shares in our own right, we may
elect to do so.
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The number of votes which you have the right to cast will be determined
by applying your percentage interest in a Subaccount to the total number of
votes attributable to the Subaccount. In determining the number of votes, we
will recognize fractional shares.
We will vote portfolio shares of a class held in a Subaccount for which
we received no timely instructions in proportion to the voting instructions
which we received for all Contracts participating in that Subaccount. We will
apply voting instructions to abstain on any item to be voted on a pro-rata basis
to reduce the number of votes eligible to be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in a Subaccount will receive proxy voting material, reports, and
other materials relating to the relevant portfolio. Since each Fund may engage
in shared funding, other persons or entities besides the Company may vote Fund
shares. See Separate Account - Subaccounts.
================================================================================
REQUESTING PAYMENTS
================================================================================
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, withdrawal, or surrender proceeds
within seven days after receipt through our Electronic Service Center or in
writing at our Administrative Office of all the requirements for such a payment.
We will determine the amount of the payment as of the end of the Valuation
Period during which our Electronic Service Center or Administrative Office
receives all such requirements.
We may delay making a payment, applying Contract Value to a payment option, or
processing a transfer request if: (1) the disposal or valuation of the Separate
Account's assets is not reasonably practicable because the New York Stock
Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the SEC, or the SEC declares that an emergency exists; or (2) the
SEC, by order, permits postponement of payment to protect our Owners. We also
may defer making payments attributable to a check that has not cleared (not to
exceed 30 days).
================================================================================
DISTRIBUTION OF THE CONTRACTS
================================================================================
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New Mexico,
and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is the
principal underwriter of the Contracts. Capital Brokerage, a Washington
corporation and an affiliate of ours, is located at 6630 W. Broad St., Richmond,
Virginia 23230. 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"). Independent
broker-dealers will sell the Contracts. These broker-dealers have selling
agreements with Capital Brokerage and have been licensed by state insurance
departments to represent us. We will offer the Contracts in all states where we
are licensed to do business.
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COMMISSIONS
We may pay commissions to broker-dealers of up to 1.40% of Purchase Payments.
Commission payments will not result in increased charges and other expenses, and
thus will not affect your Contract Value.
================================================================================
ADDITIONAL INFORMATION
================================================================================
OWNER QUESTIONS The obligations to Owners under the Contracts
are ours. Please direct your questions and
concerns to us through our Electronic Service
Center or in writing to our Administrative
Office.
RETURN PRIVILEGE Within the free look period (usually 10 days)
after you receive the Contract, you may cancel
the Contract for any reason through the
Electronic Service Center or return it, postage
prepaid, to our Administrative Office, P.O. Box
691, Leesburg, VA 20178. If you cancel your
Contract, it will be void. Upon cancellation, we
will send you a refund equal to the greater of
(1) your contract value plus any charges we have
deducted from your Purchase Payments prior to
the allocation to the Separate Account (and
excluding any charges the portfolios may have
deducted) on or before the date we received the
returned contract, or (2) your Purchase Payments
made (less any withdrawals previously taken). In
certain states, you may have more than 10 days
to return a Contract 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 once every five years.
RECORDS AND REPORTS As presently required by the 1940 Act and
applicable regulations, we are responsible for
maintaining all records and accounts relating to
the Separate Account. At least once each year,
we will provide you with a report showing
information about your Contract for the period
covered by the report. The report will show the
Contract Value in each Subaccount. The report
also will show Purchase Payments and charges
made during the statement period. We will also
provide you with an annual and a semi-annual
report for each portfolio underlying a
Subaccount to which you have allocated Contract
Value, as required by the 1940 Act. In addition,
when you make Purchase Payments, transfers, or
withdrawals, you will be provided with a
confirmation of these transactions.
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OTHER INFORMATION A registration statement has been filed with the
SEC, under the Securities Act of 1933 as
amended, for the Contracts being offered here.
This prospectus does not contain all the
information in the registration statement, its
amendments and exhibits. Please refer to the
registration statement for further information
about the Separate Account, the Company, and the
Contracts offered. Statements in this prospectus
about the content of Contracts and other legal
instruments are summaries. For the complete text
of these Contracts and instruments, please refer
to these documents as filed with the SEC and
available on the SEC's website at
http://www.sec.gov.
LEGAL The Company, like other life insurance
MATTERS companies, is involved in lawsuits, including
class action lawsuits. In some class action and
other lawsuits involving insurance companies,
substantial damages have been sought and/or
material settlement payments have been made.
Although the Company cannot predict the outcome
of any litigation with certainty, the Company
believes that at the present time there are no
pending or threatened lawsuits that are
reasonably likely to have a material adverse
impact on it or the Separate Account.
================================================================================
CONDENSED FINANCIAL INFORMATION
================================================================================
Because the Subaccounts which are available under this Contract did not begin
operation before the date of this prospectus, we did not include financial
information for the Subaccounts in the prospectus or in the SAI.
36
<PAGE>
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
================================================================================
TABLE OF CONTENTS
Page
The Contracts..................................................................1
Transfer of Annuity Units...................................................1
Net Investment Factor.......................................................1
Termination of Participation Agreements........................................2
Calculation of Performance Data................................................2
Money Market Subaccount.....................................................3
Other Subaccounts...........................................................4
Tax Matters....................................................................6
Taxation of The Company.....................................................6
IRS Required Distributions..................................................6
General Provisions.............................................................7
Designation of Beneficiaries................................................7
Ownership...................................................................7
Non-Participating...........................................................7
Misstatement of Age or Gender...............................................7
Incontestability............................................................7
Statement of Values.........................................................7
Written Notice..............................................................7
Distribution of the Contracts..................................................8
Legal Developments Regarding Employment-Related Benefit Plans..................8
Legal Matters..................................................................8
Experts........................................................................8
Financial Statements...........................................................9
Dated ____, 2000
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, Virginia 23230
If you would like a printed copy of this prospectus, or the SAI (Statement of
Additional Information), please email us at [email protected].
<PAGE>
APPENDIX
We compute standard performance according to SEC standards. These standards are
discussed in our Statement of Additional Information. We show periods of one,
three, five and ten years or from inception in the Separate Account and deduct
all fees and charges (reflecting all portfolio expenses, the administrative
expense charge and the mortality and expense risk charge (the administrative
expense charge and the mortality and expense risk charge combined equal .75% of
Contract Value) percentage of .75% of Contract Value)) under the Contract.
Annual standard performance is shown in Table 1. Although the Contract did not
exist during the periods shown, the returns of subaccounts shown have been
adjusted to reflect this Contract's fees and charges.
Standard performance for the Subaccounts is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------ ------------ ------------ ----------- ------------ ------------- ----------------
For the For the For the For the From the Date of
1-year 3-year 5-year 10-year Inception Inception*
period period period period in Separate in Separate
ended ended ended ended Account to Account
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------ ------------ ------------ ----------- ------------ ------------- ----------------
<S> <C>
AIM Variable Insurance Funds
AIM V.I. Aggressive Growth Fund n/a n/a n/a n/a n/a **
AIM V.I. Capital Appreciation Fund n/a n/a n/a n/a n/a **
AIM V.I. Capital Development Fund n/a n/a n/a n/a n/a **
AIM V.I. Global Utilities Fund n/a n/a n/a n/a n/a **
AIM V.I. Government Securities Fund n/a n/a n/a n/a n/a **
AIM V.I. Growth & Income Fund n/a n/a n/a n/a n/a **
AIM V.I. Telecommunications Fund n/a n/a n/a n/a n/a **
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 41.56 20.60 16.49 10.59 11.30 05/02/88
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 8.35 n/a n/a n/a 22.81 05/01/97
VIP III Growth Opportunities Portfolio 3.49 n/a n/a n/a 18.65 05/01/97
VIP III Mid Cap Portfolio n/a n/a n/a n/a n/a **
GE Investments Funds
Income Fund -2.17 n/a n/a n/a 2.39 12/12/97
International Equity Fund 29.35 18.14 n/a n/a 14.98 05/01/95
Mid Cap Value Fund
(formerly Value Equity Fund) 16.39 n/a n/a n/a 19.96 05/01/97
Money Market Fund 4.20 4.44 4.60 4.09 4.51 05/02/88
Premier Growth Equity Fund n/a n/a n/a n/a 17.96 05/03/99
Real Estate Securities Fund -0.97 -1.36 n/a n/a 9.23 05/01/95
S&P 500 Index Fund 19.71 25.37 26.89 16.87 17.06 05/02/88
Total Return Fund 12.40 15.22 16.37 12.19 12.45 05/02/88
U.S. Equity Fund 18.71 n/a n/a n/a 15.45 05/01/98
Janus Aspen Series Service Shares
Capital Appreciation Portfolio 65.75 n/a n/a n/a 55.89 05/01/97
Equity Income Portfolio n/a n/a n/a n/a n/a **
Flexible Income Portfolio .84 6.60 n/a n/a 7.87 10/25/95
High Yield Portfolio n/a n/a n/a n/a n/a **
International Growth Portfolio 80.91 35.28 n/a n/a 33.69 05/01/96
- ------------------------------------------------ ------------ ------------ ----------- ------------ ------------- ----------------
</TABLE>
* Date on which a particular portfolio was first available in Separate Account
4. As Separate Account 4 is also used for other variable annuities offered by GE
Life & Annuity, this date may be different from the date the portfolio was first
available in this product.
** Subaccount has not yet been made available to the Separate Account.
38
<PAGE>
Past performance is not a guarantee of future results.
Not all of the Subaccounts have commenced operations as of the date of the
Prospectus; therefore, standard performance data for all of the Subaccounts is
not available. Some of the portfolios that underlie certain of the Subaccounts
have not been in operation for one year. For these Subaccounts, no performance
will be shown.
However, certain of the underlying portfolios have been in operation for a year
or more. For the Subaccounts that invest in these portfolios, non-standard
adjusted historical performance data (reflecting all portfolio expenses, the
administrative expense charge and the mortality and expense risk charge
(the administrative expense charge and the mortality and expense risk charge
combined equal .75% of Contract Value).
Non Standard performance is shown in Table 2.
<TABLE>
<CAPTION>
- ------------------------------------------------ ------------ ------------ ----------- ----------- ------------
For the For the For the For the Date of
1-year 3-year 5-year 10-year Portfolio
period period period period Inception*
ended ended ended ended
12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------ ------------ ------------ ----------- ----------- ------------
<S> <C>
AIM Variable Insurance Funds
AIM V.I. Aggressive Growth Fund 43.59 n/a n/a n/a 05/01/98
AIM V.I. Capital Appreciation Fund 43.53 24.17 24.65 n/a 05/05/93
AIM V.I. Capital Development Fund 28.13 n/a n/a n/a 05/01/98
AIM V.I. Global Utilities Fund 32.56 22.76 20.95 n/a 05/02/94
AIM V.I. Government Securities Fund -2.06 3.98 5.53 n/a 05/05/93
AIM V.I. Growth & Income Fund 33.24 28.20 27.22 n/a 05/02/94
AIM V.I. Telecommunications Fund 104.97 41.35 32.64 n/a 10/18/93
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 41.56 20.60 16.49 10.59 01/28/87
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 8.35 21.63 n/a n/a 12/31/96
VIP III Growth Opportunities Portfolio 3.49 18.19 n/a n/a 01/03/95
VIP III Mid Cap Portfolio 47.92 n/a n/a n/a 12/29/98
GE Investments Funds
Income Fund -2.17 4.29 n/a n/a 01/02/95
International Equity Fund 29.35 18.14 n/a n/a 05/01/95
Mid Cap Value Fund
(formerly Value Equity Fund) 16.39 n/a n/a n/a 05/01/97
Money Market Fund 4.20 4.44 4.60 4.09 06/30/85
Premier Growth Equity Fund 35.24 n/a n/a n/a 12/12/97
Real Estate Securities Fund -0.97 -1.36 n/a n/a 05/01/95
S&P 500 Index Fund 19.71 25.37 26.89 16.87 04/14/85
Total Return Fund 12.40 15.22 16.37 12.19 07/01/85
U.S. Equity Fund 18.71 24.00 n/a n/a 01/02/95
Janus Aspen Series
Capital Appreciation Portfolio 65.75 n/a n/a n/a 05/01/97
Equity Income Portfolio 39.70 n/a n/a n/a 05/01/97
Flexible Income Portfolio 0.84 6.60 10.04 n/a 09/13/93
High Yield Portfolio -4.41 3.41 n/a n/a 05/01/96
International Growth Portfolio 80.91 35.28 32.25 n/a 05/02/94
- ------------------------------------------------ ------------ ------------ ----------- ----------- ------------
</TABLE>
* Date on which a particular portfolio was declared effective by the SEC; this
date may be different from the date the portfolio was first available in the
Separate Account.
Past performance is not a guarantee of future results.
Returns for period of less than one year are not annualized.
39
<PAGE>
PART B
GE LIFE AND ANNUITY ASSURANCE COMPANY
SEPARATE ACCOUNT 4
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY CONTRACT
FORM P1153 12/99
OFFERED BY
GE LIFE AND ANNUITY ASSURANCE COMPANY
(A Virginia Stock Corporation)
6610 W. Broad Street
Richmond, Virginia 23230
ADMINISTRATIVE OFFICE:
GE LIFE AND ANNUITY ASSURANCE COMPANY
P.O. Box 691
Leesburg, VA 20178
This Statement of Additional Information expands upon subjects discussed in the
current prospectus for the above-named flexible premium variable deferred
annuity contract (the "Contract") offered by GE Life and Annuity Assurance
Company. You may obtain a hard copy of the Statement of Additional Information
dated April 14, 2000 by calling (877) 369-3789 or through our Electronic Service
Center at http://www.annuitynet.com.The Statement of Additional Information is
also available on the SEC's website at http://www.sec.gov. Terms used in the
current prospectus for the Contract are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUSES FOR THE CONTRACT AND THE FUNDS.
Dated April 14, 2000
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
THE CONTRACTS................................................................1
Transfer of Annuity Units.................................................1
Net Investment Factor.....................................................1
TERMINATION OF PARTICIPATION AGREEMENTS......................................2
CALCULATION OF PERFORMANCE DATA..............................................2
Money Market Subaccount...................................................3
Other Subaccounts.........................................................4
TAX MATTERS..................................................................6
Taxation of The Company...................................................6
IRS Required Distributions................................................6
GENERAL PROVISIONS...........................................................7
Designation of Beneficiaries..............................................7
Ownership.................................................................7
Non-Participating.........................................................7
Misstatement of Age or Gender.............................................7
Incontestability..........................................................7
Statement of Values.......................................................7
Written Notice............................................................7
DISTRIBUTION OF THE CONTRACTS................................................8
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS................8
LEGAL MATTERS................................................................8
EXPERTS......................................................................8
FINANCIAL STATEMENTS.........................................................9
<PAGE>
THE CONTRACTS
TRANSFER OF ANNUITY UNITS
Annuity Units may be transferred upon request, but not more than three times in
a Contract Year. If a transfer is requested from a Subaccount, all of the
Annuity Units in that Subaccount must be transferred to a single different
Subaccount.
The number of Annuity Units for the new Subaccount will be (a) times (b),
divided by (c), where:
(a) is the number of Annuity Units for the current Subaccount;
(b) is the value of an Annuity Unit for the current Subaccount; and
(c) is the value of an Annuity Unit for the new Subaccount.
The values of (a), (b) and (c) are all determined as of the date we receive the
transfer request.
The amount of the Annuity Payout as of the date of the transfer will not be
affected by the transfer (however, subsequent Annuity Payouts will reflect the
investment experience of the selected Subaccounts).
NET INVESTMENT FACTOR
The Net Investment Factor measures investment performance of the Subaccounts of
the Separate Account during a Valuation Period. Each Subaccount has its own Net
Investment Factor for a Valuation Period. The Net Investment Factor of a
Subaccount available under the Contracts for a Valuation Period is (a) divided
by (b) minus (c) where:
(a) is the result of
(1) the value of the net assets of that Subaccount at the end of the
preceding Valuation Period; plus
(2) the investment income and capital gains, realized or unrealized,
credited to those assets of that Subaccount 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 that Separate Account for taxes, or any
amount set aside during the Valuation Period by the Company as a
provision for taxes attributable to the operation or maintenance of
that Separate Account; and
(b) is the value of the assets of that Subaccount at the end of the preceding
Valuation Period; and
(c) is a charge no greater than .002063% for each day in the Valuation
Period. This corresponds to a total of .75% per year of the net assets of
1
<PAGE>
that Subaccount and consists of a .40% mortality and expense risk charge and
a .35% administrative expense charge.
We will value the assets 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
the Separate Account contain varying provisions regarding termination. The
following summarizes those provisions:
AIM VARIABLE INSURANCE FUNDS, INC. This agreement may be terminated by the
parties on six months' advance written notice.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND AND FIDELITY VARIABLE INSURANCE
PRODUCTS FUND III ("THE FUND"). These agreements provide for termination
(1) on one year's advance notice by either party, (2) at the Company's option
if shares of the Fund are not reasonably available to meet requirements of the
policies, (3) at the option of either party if certain enforcement proceedings
are instituted against the other, (4) upon vote of the policyowners to
substitute shares of another mutual fund, (5) at the Company's option if shares
of the Fund are not registered, issued, or sold in accordance with applicable
laws, if the Fund ceases to qualify as a regulated investment company under the
Code, (6) at the option of the Fund or its principal underwriter if it
determines that the Company has suffered material adverse changes in its
business or financial condition or is the subject of material adverse publicity,
(7) at the option of the Company if the Fund has suffered material adverse
changes in its business or financial condition or is the subject of material
adverse publicity, or (8) at the option of the Fund or its principal underwriter
if the Company decides to make another mutual fund available as a funding
vehicle for its policies.
GE INVESTMENTS FUNDS, INC. This agreement may be terminated at the option of any
party upon six months' written notice to the other parties, unless a shorter
time is agreed to by the parties.
JANUS ASPEN SERIES. This agreement may be terminated by the parties on six
months' advance written notice.
CALCULATION OF PERFORMANCE DATA
From time to time, the Company may disclose total return, yield, and other
performance data for the Subaccounts pertaining to the Contracts. Such
performance data will be computed, or accompanied by performance data computed,
in accordance with the standards defined by the Securities and Exchange
Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Contract. Premium taxes will vary, generally depending on the law of your state
or residence. In those states which tax these premiums, the tax generally ranges
from 0.0% to 3.0%.
2
<PAGE>
MONEY MARKET SUBACCOUNT
From time to time, advertisements and sales literature may quote the yield of
the Money Market Subaccount for a seven-day period, in a manner which does not
take into consideration any realized or unrealized gains or losses on shares of
the corresponding money market investment portfolio or on its portfolio
securities. This current annualized yield is computed by determining the net
change (exclusive of unrealized gains and losses on the sale of securities and
unrealized appreciation and depreciation and income other than investment
income) at the end of the seven-day period in the value of a hypothetical
account under a Contract having a balance of one unit in the Money Market
Subaccount at the beginning of the period, dividing such net change in Contract
Value by the value of the account at the beginning of the period to determine
the base period return, and annualizing the result on a 365-day basis. The net
change in Contract Value reflects: 1) net income from the investment portfolio
attributable to the hypothetical account; and 2) charges and deductions imposed
under the Contract which are attributable to the hypothetical account. The
charges and deductions include the per unit charges for the administrative
expense charge and the mortality and expense risk charge. 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 Subaccount unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value on the first day of the seven-day period.
The effective yield of the Money Market Subaccount determined on a compounded
basis for the same seven-day period may also be quoted. The effective yield
is calculated by compounding the base period return according to the
following formula:
Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income) for
the seven-day period attributable to a hypothetical account having a balance
of one Subaccount unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
3
<PAGE>
The yield on amounts held in the Money Market Subaccount normally will fluctuate
on a daily basis. Therefore, the disclosed yield for any given past period is
not an indication or representation of future yields or rates of return. The
Money Market Subaccount's actual yield is affected by changes in interest rates
on money market securities, average portfolio maturity of the Subaccount's
corresponding money market 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 Contract, the yield for the Money Market Subaccount will be lower than
the yield for its corresponding money market investment portfolio.
OTHER SUBACCOUNTS
TOTAL RETURN. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Subaccounts for
various periods of time including 1 year, 5 years and 10 years, or from
inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of the period. The ending date for each period for which total return quotations
are provided will be for the most recent practicable, considering the type and
media of the communication, and will be stated in the communication.
For periods that begin before the Contract was available, performance data will
be based on the performance of the underlying portfolios, restated with the
level of Separate Account and Contract charges used in this Contract. Average
annual total return will be calculated using Subaccount unit values as
described below:
1. The Company calculates unit value for each Valuation Period based on
the performance of the Subaccount's underlying investment portfolio
(after deductions for portfolio expenses, the administrative expense
charge, and the mortality and expense risk charge).
2. 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).
4
<PAGE>
The available Subaccounts have not yet commenced operations; therefore, standard
performance data for the available Subaccounts is not available at this time.
However, non-standard adjusted historical performance data (reflects all
Separate Account and Contract fees and charges) for the portfolios underlying
the available Subaccounts will be shown.
5
<PAGE>
The Funds have provided the price information used to calculate the total return
of the Subaccounts for periods prior to the inception of the Subaccounts. While
we have no reason to doubt the accuracy of the figures provided by the Funds, we
have not independently verified such information.
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 Subaccount performance may also be used in
sales literature. Such quotations will be accompanied by a description of how
they were calculated.
TAX MATTERS
TAXATION OF THE COMPANY
We may incur state and local taxes (in addition to premium taxes) in several
states. At present, these taxes, with the exception of premium taxes, are not
significant. If there is a material change in applicable state or local tax laws
causing an increase in taxes other than premium taxes (for which we currently
impose a charge), charges for such taxes attributable to Account 4 may be made.
IRS REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for federal income tax purposes,
section 72(s) of the Code requires the Contract to provide that (a) if any Owner
dies on or after the Annuity Commencement Date but prior to the time the entire
interest in the Contract has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Annuity Commencement Date, the entire interest in the
Contract will be distributed (1) within five years after the date of that
Owner's death, or (2) as Annuity Payouts which will begin within one year of
that Owner's death and which will be made over the life of the Owner's
6
<PAGE>
"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 Contracts contain provisions which are intended to comply with the
requirements of section 72(s) of the Code, although no regulations interpreting
these requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the requirements of
Code section 72(s) when clarified by regulation or otherwise.
GENERAL PROVISIONS
DESIGNATION OF BENEFICIARIES
You may designate a Beneficiary during your lifetime and, unless prohibited by a
previous designation, change the Beneficiary by filing a written request with
our Administrative Office, or through our Electronic Service Center. Each change
of Beneficiary revokes any previous designation.
OWNERSHIP
You may not assign your Contract without our permission. Your rights and the
rights of a Beneficiary may be affected by an assignment.
NON-PARTICIPATING
The Contract is non-participating. No dividends are payable.
MISSTATEMENT OF AGE OR GENDER
If an Annuitant's age or gender was misstated on the Contract data pages, any
Contract benefits or proceeds, or availability thereof, will be determined using
the correct age and gender.
INCONTESTABILITY
We will not contest the Contract.
STATEMENT OF VALUES
At least once each year, we will provide you a statement of values within 30
days after each report date. The statement will show Contract Value, Purchase
Payments and charges made during the report period.
WRITTEN NOTICE
Any written notice should be sent to us at our Administrative Office at P.O. Box
691, Leesburg, VA 20178. The Contract number and the Annuitant's full name must
be included.
We will send all notices to the Owner to the last known email address on file
with the company.
7
<PAGE>
DISTRIBUTION OF THE CONTRACTS
Capital Brokerage Corporation, the principal underwriter of the Contracts, is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc.
The Contracts are sold to the public through brokers licensed under the federal
securities laws and state insurance laws and have entered into selling
agreements with Capital Brokerage Corporation. The offering is continuous and
Capital Brokerage Corporation does not anticipate discontinuing the offering of
the Contracts. However, the Company does reserve the right to discontinue the
offering of the Contracts.
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 Contracts 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 Contract,
including the validity of the Contract and the Company's right to issue the
Contracts under Virginia insurance law.
EXPERTS
The consolidated financial statements of GE Life and Annuity Assurance Company
and subsidiary (formerly The Life Insurance Company of Virginia) as of December
31, 1999 and 1998, and for each of the years in the three-year period ended
December 31, 1999, and the financial statements of GE Life & Annuity Separate
Account 4, formerly Life of Virginia Separate Account 4, as of December 31, 1999
and for each of the years or lesser periods in the two-year period ended
December 31, 1999, have been included herein in reliance upon the reports of
KPMG LLP, independent certified public accountants, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG LLP dated January 21, 2000 with respect to the consolidated
financial statements of GE Life and Annuity Assurance Company and subsidiary,
contains an explanatory paragraph that states that the Company changed its
method of accounting for insurance-related assessments in 1999.
8
<PAGE>
FINANCIAL STATEMENTS
This Statement of Additional Information contains consolidated financial
statements for GE Life and Annuity Assurance Company and subsidiary, formerly
The Life Insurance Company of Virginia, (the Company) as of December 31, 1999
and 1998, and for each of the years in the three-year period ended December 31,
1999, and GE Life & Annuity Separate Account 4, formerly Life of Virginia
Separate Account 4, as of December 31, 1999 and for each of the years or lesser
periods in the two-year period ended December 31, 1999. The consolidated
financial statements of the Company included herein should be distinguished from
the financial statements of GE Life & Annuity Separate Account 4 and should be
considered only as bearing on the ability of the Company to meet its
obligations under the Contract. Such consolidated financial statements of the
Company should not be considered as bearing on the investment performance of the
assets held in Separate Account 4.
Because the Subaccounts which are available under this Contract did not begin
operation before the date of this prospectus, the historical financial
statements of GE Life & Annuity Separate Account 4 do not reflect the the new
type of units to be issued under this policy form.
9
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
(formerly Life of Virginia Separate Account 4)
Financial Statements
Year ended December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Table of Contents
Year ended December 31, 1999
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities....................................... F-2
Statements of Operations................................................... F-12
Statements of Changes in Net Assets........................................ F-17
Notes to Financial Statements.............................................. F-34
</TABLE>
<PAGE>
Independent Auditors' Report
Contractholders
GE Life & Annuity Separate Account 4
and
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying statements of assets and liabilities of GE
Life & Annuity Separate Account 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, U.S. Equity and
Premier Growth Equity Funds; the Oppenheimer Variable Account Funds--Bond/VA,
Capital Appreciation/VA, Aggressive Growth/VA, High Income/VA and Multiple
Strategies/VA Funds; the Variable Insurance Products Fund--Equity-Income, Growth
and Overseas Portfolios; the Variable Insurance Products Fund II--Asset Manager
and Contrafund Portfolios; the Variable Insurance Products III--Growth & Income
and Growth Opportunities Portfolios; the Federated Insurance Series-- American
Leaders, High Income Bond and Utility Funds II; the Alger American Fund--Small
Capitalization and Growth Portfolios; the PBHG Insurance Series Fund, Inc.--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--Growth and Income and Mid Cap Value Funds; and the
Salomon Brothers Variable Series Fund Inc.--Strategic Bond, Investors, and Total
Return Funds) as of December 31, 1999, the related statements of operations for
the aforementioned funds of GE Life & Annuity Separate Account 4 for the year or
lesser period ended December 31, 1999 and the related statements of changes in
net assets for the aforementioned funds of GE Life & Annuity Separate Account 4
for each of the years or lesser periods in the two-year period ended December
31, 1999. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the underlying mutual funds or their transfer agent. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
portfolios constituting GE Life & Annuity Separate Account 4 as of December 31,
1999, the results of their operations for the year or lesser period then ended,
and changes in their net assets for each of the years or lesser periods in the
two-year period ended December 31, 1999 in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
Richmond, Virginia
February 11, 2000
F-1
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------
Real
S&P 500 Money Total International Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Assets ------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Investment in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(22,215,478 shares;
cost --
$533,600,551)......... $624,254,935 -- -- -- --
Money Market Fund
(441,032,754 shares;
cost --
$441,032,754)........ -- 441,032,754 -- -- --
Total Return Fund
(6,493,333 shares;
cost -- $96,506,872).. -- -- 102,984,256 -- --
International Equity
Fund (2,726,755
shares; cost --
$33,751,159)......... -- -- -- 39,456,150 --
Real Estate Securities
Fund (3,748,156
shares; cost --
$48,639,416)......... -- -- -- -- 40,742,452
Receivable from
affiliate.............. -- 232,035 -- 1 --
Receivable for units
sold................... 345,348 6,011,576 154,310 25,071 --
------------ ----------- ----------- ---------- ----------
Total assets........... 624,600,283 447,276,365 103,138,566 39,481,222 40,742,452
------------ ----------- ----------- ---------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 571,063 340,766 83,321 17,115 26,319
Payable for units
withdrawn.............. 56,938 2,493,447 16,499 42 15,060
------------ ----------- ----------- ---------- ----------
Total liabilities...... 628,001 2,834,213 99,820 17,157 41,379
------------ ----------- ----------- ---------- ----------
Net assets.............. $623,972,282 444,442,152 103,038,746 39,464,065 40,701,073
------------ ----------- ----------- ---------- ----------
Analysis of net assets:
Attributable to:
Variable deferred
annuity
contractholders...... $623,972,282 444,442,152 103,038,746 19,905,813 25,055,708
GE Life and Annuity
Assurance Company.... -- -- -- 19,558,252 15,645,365
------------ ----------- ----------- ---------- ----------
Net assets.............. $623,972,282 444,442,152 103,038,746 39,464,065 40,701,073
============ =========== =========== ========== ==========
Outstanding units: Type
I (note 2)............. 1,079,890 5,265,274 513,721 203,538 218,219
============ =========== =========== ========== ==========
Net asset value per
unit: Type I........... $ 59.90 15.96 37.52 18.74 14.82
============ =========== =========== ========== ==========
Outstanding units: Type
II (note 2)............ 7,955,210 13,992,458 1,884,184 735,974 1,409,644
============ =========== =========== ========== ==========
Net asset value per
unit: Type II.......... $ 58.17 15.50 36.44 18.60 14.65
============ =========== =========== ========== ==========
Outstanding units: Type
III (note 2)........... 7,821,903 12,703,804 1,305,705 179,463 107,802
============ =========== =========== ========== ==========
Net asset value per
unit: Type III......... $ 11.59 10.32 10.94 12.36 9.97
============ =========== =========== ========== ==========
Outstanding units: Type
IV (note 2)............ 543,614 1,214,273 78,079 15,200 10,487
============ =========== =========== ========== ==========
Net asset value per
unit: Type IV.......... $ 10.81 10.23 10.50 12.12 9.12
============ =========== =========== ========== ==========
</TABLE>
F-2
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
-------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth
Fund Fund Fund Fund Equity Fund
Assets ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investment in GE
Investments Funds,
Inc.,
at fair value (note 2):
Global Income Fund
(938,940 shares;
cost -- $9,506,906).. $9,004,438 -- -- -- --
Value Equity Fund
(4,711,803 shares;
cost --
$68,652,601).......... -- 74,399,373 -- -- --
Income Fund (3,907,281
shares;
cost --
$47,902,723).......... -- -- 44,972,802 -- --
U.S. Equity Fund
(1,029,660 shares;
cost -- $38,053,766).. -- -- -- 39,024,108 --
Premier Growth Equity
Fund (305,976 shares;
cost --
$25,075,237).......... -- -- -- -- 27,124,734
Receivable from affili-
ate.................... -- -- -- -- --
Receivable for units
sold................... -- 56,630 27,145 95,306 201,431
---------- ---------- ---------- ---------- ----------
Total assets........... 9,004,438 74,456,003 44,999,947 39,119,414 27,326,165
---------- ---------- ---------- ---------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 4,330 66,736 118,416 50,811 14,969
Payable for units with-
drawn.................. -- 84,855 31,497 -- --
---------- ---------- ---------- ---------- ----------
Total liabilities...... 4,330 151,591 149,913 50,811 14,969
---------- ---------- ---------- ---------- ----------
Net assets.............. $9,000,108 74,304,412 44,850,034 39,068,603 27,311,196
---------- ---------- ---------- ---------- ----------
Analysis of net assets:
Attributable to:
Variable deferred an-
nuity
contractholders...... $3,579,380 69,329,399 44,850,034 39,068,603 27,311,196
GE Life and Annuity
Assurance Company.... 5,420,728 4,975,013 -- -- --
---------- ---------- ---------- ---------- ----------
Net assets.............. $9,000,108 74,304,412 44,850,034 39,068,603 27,311,196
========== ========== ========== ========== ==========
Outstanding units: Type
I (note 2)............. 50,781 419,746 1,124,188 82,891 46,603
========== ========== ========== ========== ==========
Net asset value per
unit: Type I........... $ 10.51 16.08 10.41 12.62 11.76
========== ========== ========== ========== ==========
Outstanding units: Type
II (note 2)............ 291,731 3,011,792 2,729,732 1,613,261 802,961
========== ========== ========== ========== ==========
Net asset value per
unit: Type II.......... $ 10.44 15.97 10.36 12.57 11.75
========== ========== ========== ========== ==========
Outstanding units: Type
III (note 2)........... -- 1,168,256 433,696 1,442,844 1,380,434
========== ========== ========== ========== ==========
Net asset value per
unit: Type III......... $ -- 11.17 9.71 11.56 11.73
========== ========== ========== ========== ==========
Outstanding units: Type
IV (note 2)............ -- 147,340 67,078 100,906 96,385
========== ========== ========== ========== ==========
Net asset value per
unit: Type IV.......... $ -- 9.72 9.78 10.55 11.73
========== ========== ========== ========== ==========
</TABLE>
F-3
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Assets ----------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investment in Oppen-
heimer Variable Account
Funds, at fair value
(note 2):
Bond Fund/VA (6,645,197
shares;
cost --
$78,301,554).......... $76,552,671 -- -- -- --
Capital Appreciation
Fund/VA (5,652,831
shares;
cost --
$192,587,611)........ -- 281,737,110 -- -- --
Aggressive Growth
Fund/VA (4,341,360
shares;
cost --
$205,932,019)......... -- -- 357,337,373 -- --
High Income Fund/VA
(15,645,970 shares;
cost --
$172,131,067)........ -- -- -- 167,724,795 --
Multiple Strategies
Fund/VA (4,649,496
shares;
cost -- $72,251,157).. -- -- -- -- 81,180,209
Receivable from affili-
ate.................... -- 6 234 -- --
Receivable for units
sold................... 24,846 375,005 1,533,710 3,506 4,203
----------- ----------- ----------- ----------- ----------
Total assets........... 76,577,517 282,112,121 358,871,317 167,728,301 81,184,412
----------- ----------- ----------- ----------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 86,300 299,509 538,204 155,738 167,256
Payable for units with-
drawn.................. 24,695 142,929 -- 94,390 179,862
----------- ----------- ----------- ----------- ----------
Total liabilities...... 110,995 442,438 538,204 250,128 347,118
----------- ----------- ----------- ----------- ----------
Net assets attributable
to variable deferred
annuity
contractholders........ $76,466,522 281,669,683 358,333,113 167,478,173 80,837,294
=========== =========== =========== =========== ==========
Outstanding units: Type
I (note 2)............. 768,244 957,458 1,804,530 1,245,529 1,051,087
=========== =========== =========== =========== ==========
Net asset value per
unit: Type I........... $ 21.51 64.57 73.61 32.02 30.80
=========== =========== =========== =========== ==========
Outstanding units: Type
II (note 2)............ 2,531,310 3,232,987 2,933,967 3,792,914 1,504,814
=========== =========== =========== =========== ==========
Net asset value per
unit: Type II.......... $ 20.88 62.71 71.49 31.09 29.91
=========== =========== =========== =========== ==========
Outstanding units: Type
III (note 2)........... 690,965 1,214,374 894,256 923,199 305,825
=========== =========== =========== =========== ==========
Net asset value per
unit: Type III......... $ 9.67 13.23 17.17 10.10 10.95
=========== =========== =========== =========== ==========
Outstanding units: Type
IV (note 2)............ 41,749 81,428 24,750 35,858 10,366
=========== =========== =========== =========== ==========
Net asset value per
unit: Type IV.......... $ 9.73 12.77 16.08 9.77 10.23
=========== =========== =========== =========== ==========
</TABLE>
F-4
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance
Products Fund
------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Assets
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (26,903,305
shares; cost -- $591,595,226).......... $691,683,976 -- --
Growth Portfolio (12,260,801 shares;
cost -- $454,460,571).................. -- 673,485,783 --
Overseas Portfolio (4,713,302 shares;
cost -- $107,086,440).................. -- -- 129,332,995
Receivable from affiliate................ -- 25 63
Receivable for units sold................ 164,930 862,358 669,332
------------ ----------- -----------
Total assets............................ 691,848,906 674,348,166 130,002,390
------------ ----------- -----------
Liabilities
Accrued expenses payable to affiliate
(note 3)................................ 749,836 911,873 325,471
Payable for units withdrawn.............. 352,267 299,787 71,531
------------ ----------- -----------
Total liabilities...................... 1,102,103 1,211,660 397,002
------------ ----------- -----------
Net assets attributable to variable de-
ferred annuity contractholders.......... $690,746,803 673,136,506 129,605,388
============ =========== ===========
Outstanding units: Type I (note 2)....... 4,454,619 3,310,123 2,244,272
============ =========== ===========
Net asset value per unit: Type I......... $ 43.33 73.80 33.25
============ =========== ===========
Outstanding units: Type II (note 2)...... 10,963,577 4,760,717 1,525,527
============ =========== ===========
Net asset value per unit: Type II........ $ 42.08 71.67 32.29
============ =========== ===========
Outstanding units: Type III (note 2)..... 3,203,653 6,561,710 388,067
============ =========== ===========
Net asset value per unit: Type III....... $ 10.65 12.73 13.80
============ =========== ===========
Outstanding units: Type IV (note 2)...... 242,696 333,735 28,190
============ =========== ===========
Net asset value per unit: Type IV........ $ 9.32 12.34 13.08
============ =========== ===========
</TABLE>
F-5
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<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 In-
surance Products Fund II,
at fair value (note 2):
Asset Manager Portfolio
(25,602,717 shares;
cost -- $394,723,593).... $478,002,728 -- -- --
Contrafund Portfolio
(17,879,468 shares;
cost -- $369,622,889).... -- 521,186,482 -- --
Investment in Variable In-
surance Products Fund III,
at fair value (note 2):
Growth & Income Portfolio
(6,951,626 shares;
cost -- $109,077,377).... -- -- 120,263,132 --
Growth Opportunities Port-
folio (4,348,199 shares;
cost -- $93,193,775)..... -- -- -- 100,660,801
Receivable from affiliate.. 1 14 -- --
Receivable for units sold.. 14,591 897,435 96,740 155,275
------------ ----------- ----------- -----------
Total assets.............. 478,017,320 522,083,931 120,359,872 100,816,076
------------ ----------- ----------- -----------
Liabilities
Accrued expenses payable to
affiliate (note 3)........ 655,233 451,120 98,967 87,841
Payable for units with-
drawn..................... 895,805 99,744 51,767 150
------------ ----------- ----------- -----------
Total liabilities......... 1,551,038 550,864 150,734 87,991
------------ ----------- ----------- -----------
Net assets attributable to
variable deferred annuity
contractholders........... $476,466,282 521,533,067 120,209,138 100,728,085
============ =========== =========== ===========
Outstanding units: Type I
(note 2).................. 11,988,811 2,650,253 618,815 525,381
============ =========== =========== ===========
Net asset value per unit:
Type I.................... $ 30.63 32.31 17.12 15.61
============ =========== =========== ===========
Outstanding units: Type II
(note 2).................. 3,361,601 11,622,130 5,051,739 4,766,024
============ =========== =========== ===========
Net asset value per
unit:Type II.............. $ 29.86 31.91 17.00 15.51
============ =========== =========== ===========
Outstanding units: Type III
(note 2).................. 777,512 5,211,986 2,078,979 1,709,162
============ =========== =========== ===========
Net asset value per unit:
Type III.................. $ 10.80 11.75 10.69 10.35
============ =========== =========== ===========
Outstanding units: Type IV
(note 2).................. 44,890 336,615 150,665 92,620
============ =========== =========== ===========
Net asset value per unit:
Type IV................... $ 10.57 11.29 10.03 9.89
============ =========== =========== ===========
</TABLE>
F-6
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Federated Insurance Series
-----------------------------------
American High
Leaders Income Bond Utility
Fund II Fund II Fund II
------------ ----------- ----------
<S> <C> <C> <C>
Assets
Investments in Federated Insurance
Series, at fair value (note 2):
American Leaders Fund II (4,849,330 shares;
cost -- $97,644,443)...................... $100,963,047 -- --
High Income Bond Fund II (6,565,038 shares;
cost -- $68,083,286)...................... -- 67,225,993 --
Utility Fund II (4,131,452 shares; cost --
$55,525,888)............................. -- -- 59,286,336
Receivable from affiliate................... -- -- --
Receivable for units sold................... 108,314 42,829 84,008
------------ ---------- ----------
Total assets............................... 101,071,361 67,268,822 59,370,344
------------ ---------- ----------
Liabilities
Accrued expenses payable to affiliate (note
3)......................................... 87,229 56,158 49,394
Payable for units withdrawn................. 3,018 58,978 --
------------ ---------- ----------
Total liabilities.......................... 90,247 115,136 49,394
------------ ---------- ----------
Net assets attributable to variable deferred
annuity contractholders.................... $100,981,114 67,153,686 59,320,950
============ ========== ==========
Oustanding units: Type I (note 2)........... 474,111 450,443 363,909
============ ========== ==========
Net asset value per unit: Type I............ $ 17.75 15.52 19.11
============ ========== ==========
Outstanding units: Type II (note 2)......... 4,554,700 3,376,105 2,483,985
============ ========== ==========
Net asset value per unit: Type II........... $ 17.58 15.32 18.87
============ ========== ==========
Oustanding units: Type III (note 2)......... 1,114,543 799,186 491,571
============ ========== ==========
Net asset value per unit: Type III.......... $ 10.49 9.89 10.44
============ ========== ==========
Outstanding units: Type IV (note 2)......... 85,187 55,873 36,259
============ ========== ==========
Net asset value per unit: Type IV........... $ 9.42 9.61 9.98
============ ========== ==========
</TABLE>
F-7
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Fund Series Fund, Inc.
-------------------------- ---------------------
Small PBHG Large PBHG
Capitalization Growth Cap Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Investment in Alger American
Fund, at fair value (note 2):
Small Capitalization Portfo-
lio (2,611,114 shares;
cost -- $112,026,784)....... $144,002,930 -- -- --
Growth Portfolio (5,007,682
shares; cost --
$257,438,791).............. -- 322,394,581 -- --
PBHG Insurance Series Fund,
Inc. at fair value (note 2):
PBHG Large Cap Growth Portfo-
lio (911,524 shares; cost --
$13,938,008)............... -- -- 23,252,983 --
PBHG Growth II Portfolio
(1,412,242 shares; cost --
$20,551,081)............... -- -- -- 32,552,176
Receivable from affiliate..... 141 9 -- --
Receivable for units sold..... 183,401 610,966 10,833 136,648
------------ ----------- ---------- ----------
Total assets................. 144,186,472 323,005,556 23,263,816 32,688,824
============ =========== ========== ==========
Liabilities
Accrued expenses payable to
affiliate (note 3)........... 120,119 336,052 60,138 24,223
Payable for units withdrawn... 7,840 55,581 22 16,350
------------ ----------- ---------- ----------
Total liabilities............ 127,959 391,633 60,160 40,573
------------ ----------- ---------- ----------
Net assets attributable to
variable deferred annuity
contractholders.............. $144,058,513 322,613,923 23,203,656 32,648,251
============ =========== ========== ==========
Oustanding units: Type I (note
2)........................... 1,090,003 1,237,526 132,343 226,702
============ =========== ========== ==========
Net asset value per unit: Type
I............................ $ 17.22 25.97 24.74 22.35
============ =========== ========== ==========
Outstanding units: Type II
(note 2)..................... 6,310,836 8,583,493 811,131 1,242,408
============ =========== ========== ==========
Net asset value per unit: Type
II........................... $ 17.04 25.69 24.57 22.20
============ =========== ========== ==========
Oustanding units: Type III
(note 2)..................... 1,160,756 5,377,154 -- --
============ =========== ========== ==========
Net asset value per unit: Type
III.......................... $ 14.14 12.50 -- --
============ =========== ========== ==========
Outstanding units: Type IV
(note 2)..................... 97,659 231,761 -- --
============ =========== ========== ==========
Net asset value per unit: Type
IV........................... $ 13.71 11.87 -- --
============ =========== ========== ==========
</TABLE>
F-8
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series
------------------------------------
Aggressive Worldwide
Growth Growth Growth
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Assets
Investment in Janus Aspen Series, at fair
value (note 2):
Aggressive Growth Portfolio (8,745,708
shares; cost -- $318,342,552)........... $522,031,288 -- --
Growth Portfolio (20,512,483 shares;
cost -- $444,244,607)................... -- 690,245,038 --
Worldwide Growth Portfolio (20,673,754
shares; cost -- $575,985,214)........... -- -- 987,171,753
Receivable from affiliate................. 1,301 30 1,440
Receivable for units sold................. 749,946 866,106 1,663,028
------------ ----------- -----------
Total assets............................. 522,782,535 691,111,174 988,836,221
============ =========== ===========
Liabilities
Accrued expenses payable to affiliate
(note 3)................................. 524,669 912,334 912,014
Payable for units withdrawn............... 6,749,277 21,844 67,703
------------ ----------- -----------
Total liabilities........................ 7,273,946 934,178 979,717
------------ ----------- -----------
Net assets attributable to variable
deferred annuity contractholders......... $515,508,589 690,176,996 987,856,504
============ =========== ===========
Outstanding units: Type I (note 2)........ 1,789,828 4,139,512 4,314,377
============ =========== ===========
Net asset value per unit: Type I.......... $ 59.91 36.56 47.86
============ =========== ===========
Outstanding units: Type II (note 2)....... 5,067,599 11,701,274 14,578,854
============ =========== ===========
Net asset value per unit: Type II......... $ 58.97 35.98 47.11
============ =========== ===========
Outstanding units: Type III (note 2)...... 4,781,470 8,278,915 5,789,831
============ =========== ===========
Net asset value per unit: Type III........ $ 20.95 13.46 15.28
============ =========== ===========
Outstanding units: Type IV (note 2)....... 513,109 500,424 406,948
============ =========== ===========
Net asset value per unit: Type IV......... $ 18.07 12.77 14.97
============ =========== ===========
</TABLE>
F-9
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------------------
Flexible International Capital
Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio
------------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Assets
Investment in Janus Aspen
Series, at fair value
(note 2):
Balanced Portfolio
(16,485,224 shares;
cost -- $370,790,126).... $460,267,444 -- -- --
Flexible Income Portfolio
(4,942,920 shares;
cost -- $58,455,980)..... -- 56,448,148 -- --
International Growth
Portfolio (4,758,145
shares; cost --
$111,821,732)........... -- -- 183,997,451 --
Capital Appreciation
Portfolio (11,148,082
shares; cost --
$273,871,408)........... -- -- -- 369,781,874
Receivable from affiliate.. -- -- 478 313
Receivable for units sold.. 388,151 102,588 489,862 949,581
------------ ---------- ----------- -----------
Total assets.............. 460,655,595 56,550,736 184,487,791 370,731,768
------------ ---------- ----------- -----------
Liabilities
Accrued expenses payable to
affiliate (note 3)........ 373,020 51,802 161,387 373,639
Payable for units
withdrawn................. 55,319 46,493 126,477 781,247
------------ ---------- ----------- -----------
Total liabilities......... 428,339 98,295 287,864 1,154,886
------------ ---------- ----------- -----------
Net assets attributable to
variable deferred annuity
contractholders........... $460,227,256 56,452,441 184,199,927 369,576,882
============ ========== =========== ===========
Outstanding units: Type I
(note 2).................. 2,796,176 514,641 949,972 1,124,173
============ ========== =========== ===========
Net asset value per unit:
Type I.................... $ 24.50 13.56 28.58 32.35
============ ========== =========== ===========
Outstanding units: Type II
(note 2).................. 12,451,725 3,172,870 4,728,347 6,407,884
============ ========== =========== ===========
Net asset value per unit:
Type II................... $ 24.24 13.41 28.32 32.13
============ ========== =========== ===========
Outstanding units: Type III
(note 2).................. 7,205,031 606,070 1,251,115 8,073,338
============ ========== =========== ===========
Net asset value per unit:
Type III.................. $ 11.93 9.97 17.11 15.07
============ ========== =========== ===========
Outstanding units: Type IV
(note 2).................. 347,931 89,213 102,381 428,091
============ ========== =========== ===========
Net asset value per unit:
Type IV................... $ 11.31 9.90 16.96 13.22
============ ========== =========== ===========
</TABLE>
F-10
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Concluded
December 31, 1999
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Fund Inc.
---------------------- ------------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets
Investment in Goldman
Sachs Variable
Insurance Trust,
at fair value (note 2):
Growth and Income Fund
(935,608 shares;
cost -- $9,933,309)... $10,188,769 -- -- -- --
Mid Cap Value Fund
(1,952,623 shares;
cost -- $17,214,626).. -- 16,441,086 -- -- --
Investment in Salomon
Brothers Variable
Series Fund Inc., at
fair value (note 2):
Strategic Bond Fund
(553,648 shares;
cost -- $5,558,043)... -- -- 5,348,241 -- --
Investors Fund (308,001
shares; cost --
$3,686,841).......... -- -- -- 3,766,850 --
Total Return Fund
(317,951 shares;
cost -- $3,363,898)... -- -- -- -- 3,252,640
Receivable from
affiliate.............. -- -- -- -- --
Receivable for units
sold................... 17,081 109,340 26,541 37,265 --
----------- ---------- ---------- --------- ---------
Total assets........... 10,205,850 16,550,426 5,374,782 3,804,115 3,252,640
----------- ---------- ---------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 7,156 10,490 3,220 12,176 1,941
Payable for units
withdrawn.............. 4 26,440 43,562 32 --
----------- ---------- ---------- --------- ---------
Total liabilities...... 7,160 36,930 46,782 12,208 1,941
----------- ---------- ---------- --------- ---------
Net assets attributable
to variable deferred
annuity
contractholders........ $10,198,690 16,513,496 5,328,000 3,791,907 3,250,699
=========== ========== ========== ========= =========
Outstanding units: Type
I (note 2)............. 80,699 195,348 46,435 15,929 6,185
=========== ========== ========== ========= =========
Net asset value per
unit: Type I........... $ 9.23 8.39 10.16 13.40 10.63
=========== ========== ========== ========= =========
Outstanding units: Type
II (note 2)............ 779,766 1,156,388 245,779 111,934 175,544
=========== ========== ========== ========= =========
Net asset value per
unit: Type II.......... $ 9.20 8.35 10.13 13.36 10.60
=========== ========== ========== ========= =========
Outstanding units: Type
III (note 2)........... 204,598 482,846 223,881 187,111 117,856
=========== ========== ========== ========= =========
Net asset value per
unit: Type III......... $ 10.44 10.02 9.90 10.98 9.91
=========== ========== ========== ========= =========
Outstanding units: Type
IV (note 2)............ 15,109 42,809 15,296 2,865 16,292
=========== ========== ========== ========= =========
Net asset value per
unit: Type IV.......... $ 9.53 8.89 9.81 9.96 9.59
=========== ========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations
Year ended December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------------
S&P 500 Money International Real Estate
Index Market Total Return Equity Securities
Fund Fund Fund Fund Fund
----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 4,410,071 15,088,188 2,067,235 46,113 1,381,537
Expenses -- Mortality
& expense risk charges
and administrative
expenses -- Type I
(note 3).............. 704,948 950,843 220,301 30,656 43,767
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 4,907,040 2,464,886 799,585 148,148 322,329
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. 460,991 701,862 85,952 8,603 7,954
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type IV
(note 3).............. 21,523 57,198 3,143 449 224
----------- ----------- ---------- ---------- -----------
Net investment income
(expense).............. (1,684,431) 10,913,399 958,254 (141,743) 1,007,263
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... 30,003,910 (10) 1,021,209 2,767,291 (2,823,490)
Unrealized
appreciation
(depreciation) on
investments.......... 47,259,421 10 5,281,350 4,958,674 1,207,080
Capital gain
distribution......... 6,090,099 -- 2,426,755 1,106,722 72,712
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments......... 83,353,430 -- 8,729,314 8,832,687 (1,543,698)
----------- ----------- ---------- ---------- -----------
Increase (decrease) in
net assets from
operations............. $81,668,999 10,913,399 9,687,568 8,690,944 (536,435)
=========== =========== ========== ========== ===========
<CAPTION>
GE Investments Funds, Inc., continued
-------------------------------------------------------------------
Premier
Global Value U.S. Equity Growth
Income Fund Equity Fund Income Fund Fund Equity Fund-a)
----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 55,082 512,848 2,343,057 200,089 23,826
Expenses -- Mortality
& expense risk charges
and administrative
expenses -- Type I
(note 3).............. 6,916 72,657 151,247 7,322 1,847
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 44,108 547,672 337,337 130,281 28,109
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. -- 71,148 21,574 67,105 42,760
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type IV
(note 3).............. -- 6,988 3,666 3,951 2,973
----------- ----------- ---------- ---------- -----------
Net investment income
(expense).............. 4,058 (185,617) 1,829,233 (8,570) (51,863)
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... (134,013) 1,440,840 (265,204) 288,484 559,025
Unrealized
appreciation
(depreciation) on
investments.......... (715,675) 5,153,071 (2,672,230) 816,588 2,049,497
Capital gain
distribution......... 4,146 -- 72,466 1,800,801 770,369
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments......... (845,542) 6,593,911 (2,864,968) 2,905,873 3,378,891
----------- ----------- ---------- ---------- -----------
Increase (decrease) in
net assets from
operations............. $ (841,484) 6,408,294 (1,035,735) 2,897,303 3,327,028
=========== =========== ========== ========== ===========
- -a) Reflects period covering May 5, 1999 to December 31, 1999.
</TABLE>
F-12
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
----------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary Div-
idends................ $ 3,095,204 647,295 -- 11,617,048 2,750,715
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type I (note
3).................... 211,534 610,992 1,107,841 525,530 397,035
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type II
(note 3).............. 684,021 2,181,875 1,965,558 1,624,725 609,540
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type III
(note 3).............. 37,302 71,673 44,712 74,133 15,762
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type IV
(note 3).............. 2,616 2,934 913 1,234 367
----------- ---------- ----------- ---------- ---------
Net investment income
(expense).............. 2,159,731 (2,220,179) (3,119,024) 9,391,426 1,728,011
----------- ---------- ----------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (367,634) 8,028,813 43,460,518 (2,467,228) 1,998,615
Unrealized appreciation
(depreciation) on
investments........... (4,062,392) 64,932,288 120,804,294 (1,860,876) 249,173
Capital gain distribu-
tion.................. 306,119 7,443,892 -- -- 3,958,345
----------- ---------- ----------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments......... (4,123,907) 80,404,993 164,264,812 (4,328,104) 6,206,133
----------- ---------- ----------- ---------- ---------
Increase (decrease) in
net assets from opera-
tions.................. $(1,964,176) 78,184,814 161,145,788 5,063,322 7,934,144
=========== ========== =========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Fund
-------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
------------ ----------- ----------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary Dividends............ $ 10,155,685 956,132 1,571,786
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type I (note 3)....................... 2,492,600 2,538,686 777,904
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type II (note 3)...................... 6,522,445 3,548,591 559,606
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type III (note 3)..................... 186,038 405,119 21,330
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type IV (note 3)...................... 10,576 11,944 1,011
------------ ----------- ----------
Net investment income (expense).......... 944,026 (5,548,208) 211,935
------------ ----------- ----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)................ 32,608,373 40,501,315 22,135,968
Unrealized appreciation (depreciation)
on investments......................... (23,171,445) 83,757,029 16,842,471
Capital gain distribution............... 22,604,590 46,850,486 2,564,494
------------ ----------- ----------
Net realized and unrealized gain (loss)
on investments.......................... 32,041,518 171,108,830 41,542,933
------------ ----------- ----------
Increase (decrease) in net assets from
operations.............................. $ 32,985,544 165,560,622 41,754,868
============ =========== ==========
</TABLE>
F-13
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year ended December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------ ------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends................. $ 16,324,271 1,703,921 387,131 567,056
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3).......... 4,367,086 941,924 161,230 107,137
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3)......... 1,287,699 4,240,466 951,315 852,938
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)........ 41,993 286,944 137,297 99,378
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3)......... 1,982 13,783 5,408 3,459
------------ ---------- --------- ---------
Net investment income
(expense).................. 10,625,511 (3,779,196) (868,119) (495,856)
------------ ---------- --------- ---------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)... 16,067,053 24,922,273 3,957,786 2,346,277
Unrealized appreciation
(depreciation) on
investments............... (2,840,015) 55,449,896 2,814,926 (404,266)
Capital gain distribution.. 20,776,345 12,495,419 785,993 1,053,105
------------ ---------- --------- ---------
Net realized and unrealized
gain (loss) on
investments................ 34,003,383 92,867,588 7,558,705 2,995,116
------------ ---------- --------- ---------
Increase (decrease) in net
assets from operations..... $ 44,628,894 89,088,392 6,690,586 2,499,260
============ ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Federated Insurance Series
------------------------------------
American High Income
Leaders Bond Utility
Fund II Fund II Fund II
----------- ----------- ----------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary Dividends............. $ 704,366 4,281,850 1,190,082
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type I (note 3)............. 95,183 83,957 88,850
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type II (note 3)............ 1,047,440 681,714 588,434
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type III (note 3)........... 72,076 45,805 29,308
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type IV (note 3)............ 2,887 3,002 1,836
----------- ---------- ----------
Net investment income (expense)........... (513,220) 3,467,372 481,654
----------- ---------- ----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)................. 1,360,681 (1,194,670) 1,236,132
Unrealized appreciation (depreciation) on
investments............................. (4,248,287) (1,948,643) (3,774,428)
Capital gain distribution................ 7,121,918 372,335 2,310,160
----------- ---------- ----------
Net realized and unrealized gain (loss) on
investments.............................. 4,234,312 (2,770,978) (228,136)
----------- ---------- ----------
Increase (decrease) in net assets from op-
erations................................. $ 3,721,092 696,394 253,518
=========== ========== ==========
</TABLE>
F-14
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year ended December 31, 1999
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------- ---------------------
PBHG
Small Large Cap PBHG
Capitalization Growth Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary Divi-
dends...................... $ -- 165,319 -- --
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3)........... 192,915 338,789 20,933 27,493
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3).......... 1,098,622 2,152,122 162,402 183,640
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)......... 53,181 347,936 -- --
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3).......... 4,140 8,392 -- --
----------- ---------- --------- ----------
Net investment income (ex-
pense)...................... (1,348,858) (2,681,920) (183,335) (211,133)
----------- ---------- --------- ----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss).... 4,496,020 16,000,254 1,293,989 2,553,635
Unrealized appreciation (de-
preciation) on invest-
ments...................... 25,658,694 34,200,259 7,139,998 11,061,365
Capital gain distribution... 11,288,748 16,366,607 -- --
----------- ---------- --------- ----------
Net realized and unrealized
gain (loss) on investments.. 41,443,462 66,567,120 8,433,987 13,615,000
----------- ---------- --------- ----------
Increase (decrease) in net
assets from operations...... $40,094,604 63,885,200 8,250,652 13,403,867
=========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
--------------------------------------
Aggressive Worldwide
Growth Growth Growth
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary Dividends......... $ 2,881,876 1,107,540 1,115,148
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type I
(note 3)............................ 677,194 1,417,071 1,769,864
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type II
(note 3)............................ 2,051,000 4,084,205 6,316,146
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type III
(note 3)............................ 308,490 483,682 361,048
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type IV
(note 3)............................ 20,061 19,248 18,635
------------ ----------- -----------
Net investment income (expense)....... (174,869) (4,896,666) (7,350,545)
------------ ----------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)............. 62,362,096 35,813,367 59,273,825
Unrealized appreciation (deprecia-
tion) on investments................ 163,992,838 142,877,179 309,685,852
Capital gain distribution............ 4,906,978 2,247,871 --
------------ ----------- -----------
Net realized and unrealized gain
(loss) on investments................ 231,261,912 180,938,417 368,959,677
------------ ----------- -----------
Increase (decrease) in net assets from
operations........................... $231,087,043 176,041,751 361,609,132
============ =========== ===========
</TABLE>
F-15
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year ended December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------------------
Flexible International Capital
Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends................. $ 7,970,337 3,387,191 230,552 79,084
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3).......... 724,446 84,668 201,248 280,059
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3)......... 2,795,494 492,939 1,061,078 1,375,897
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)........ 489,490 41,297 67,763 546,887
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3)......... 15,454 5,523 4,306 15,737
----------- ---------- ---------- -----------
Net investment income
(expense).................. 3,945,453 2,762,764 (1,103,843) (2,139,496)
----------- ---------- ---------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)... 13,526,836 (288,141) 6,798,898 12,257,740
Unrealized appreciation
(depreciation) on
investments............... 55,762,394 (2,373,888) 68,867,033 88,365,393
Capital gain distribution.. -- 146,515 -- 909,471
----------- ---------- ---------- -----------
Net realized and unrealized
gain (loss) on
investments................ 69,289,230 (2,515,514) 75,665,931 101,532,604
----------- ---------- ---------- -----------
Increase (decrease) in net
assets from operations..... $73,234,683 247,250 74,562,088 99,393,108
=========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------- -----------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
---------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends................. 112,074 116,838 266,587 19,120 78,025
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3).......... 7,339 13,312 7,088 1,561 1,042
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3)......... 78,696 79,328 16,165 7,237 16,090
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)........ 9,532 30,093 13,973 10,004 6,754
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3)......... 497 2,096 1,648 174 711
-------- -------- -------- ------- --------
Net investment income
(expense).................. 16,010 (7,991) 227,713 144 53,428
-------- -------- -------- ------- --------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)... 9,945 40,722 1,001 (45,705) 1,801
Unrealized appreciation
(depreciation) on
investments............... 215,378 (786,328) (204,979) 79,688 (108,299)
Capital gain distribution.. -- -- -- -- --
-------- -------- -------- ------- --------
Net realized and unrealized
gain (loss) on
investments................ 225,323 (745,606) (203,978) 33,983 (106,498)
-------- -------- -------- ------- --------
Increase (decrease) in net
assets from operations..... $241,333 (753,597) 23,735 34,127 (53,070)
======== ======== ======== ======= ========
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------------------------
S&P 500
Index Money Market Total Return
Fund Fund Fund
------------------------- ------------------------- -------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------- -------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income
(expense)............. $ (1,684,431) (394,895) 10,913,399 6,916,677 958,254 2,668,826
Net realized gain
(loss)................ 30,003,910 8,830,544 (10) 545,381 1,021,209 (144,205)
Unrealized appreciation
(depreciation) on
investments........... 47,259,421 35,731,485 10 (545,381) 5,281,350 5,408,858
Capital gain distribu-
tion.................. 6,090,099 8,918,905 -- -- 2,426,755 --
------------ ----------- ------------ ----------- ------------ -----------
Increase (decrease) in
net assets from oper-
ations............... 81,668,999 53,086,039 10,913,399 6,916,677 9,687,568 7,933,479
------------ ----------- ------------ ----------- ------------ -----------
From capital
transactions:
Net premiums........... 150,605,950 53,735,217 455,850,801 103,629,024 20,100,592 7,103,374
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (1,914,921) (1,018,619) (6,110,039) (4,961,886) (782,405) (336,462)
Surrenders........... (23,948,873) (11,869,972) (119,079,947) (46,255,514) (5,649,875) (3,264,071)
Administrative
expense (note 3).... (346,732) (193,962) (308,122) (222,910) (83,454) (63,853)
Transfer gain (loss)
and transfer fees... 957,648 623,320 5,822,636 6,222,666 67,204 76,515
Capital contribution
(withdrawal)........ -- -- -- -- -- --
Transfers (to) from the
Guarantee Account
(note 1).............. 89,343,041 40,155,936 19,221,784 24,299,736 13,514,725 9,157,868
Interfund transfers.... 18,779,770 20,883,117 (140,405,301) 5,214,444 76,047 974,377
------------ ----------- ------------ ----------- ------------ -----------
Increase (decrease) in
net assets from capital
transactions........... 233,475,883 102,315,037 214,991,812 87,925,560 27,242,834 13,647,748
------------ ----------- ------------ ----------- ------------ -----------
Increase (decrease) in
net assets............. 315,144,882 155,401,076 225,905,211 94,842,237 36,930,402 21,581,227
Net assets at beginning
of year................ 308,827,400 153,426,324 218,536,941 123,694,704 66,108,344 44,527,117
------------ ----------- ------------ ----------- ------------ -----------
Net assets at end of
year................... $623,972,282 308,827,400 444,442,152 218,536,941 103,038,746 66,108,344
============ =========== ============ =========== ============ ===========
</TABLE>
F-17
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
----------------------------------------------------
International Real Estate
Equity Securities
Fund Fund
------------------------- -------------------------
Year ended December 31, Year ended December 31,
------------------------- -------------------------
1999 1998 1999 1998
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (141,743) 1,294,582 1,007,263 1,409,122
Net realized gain
(loss)................ 2,767,291 441,842 (2,823,490) (878,569)
Unrealized appreciation
(depreciation) on
investments........... 4,958,674 2,296,938 1,207,080 (12,908,191)
Capital gain
distribution.......... 1,106,722 -- 72,712 1,726,962
------------ ----------- ----------- ------------
Increase (decrease) in
net assets from
operations............. 8,690,944 4,033,362 (536,435) (10,650,676)
------------ ----------- ----------- ------------
From capital
transactions:
Net premiums........... 2,858,308 985,487 2,212,512 5,008,291
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits....... (66,512) (49,268) (124,447) (182,572)
Surrenders........... (545,373) (558,600) (2,167,345) (1,142,178)
Administrative
expense (note 3).... (12,619) (13,254) (24,242) (30,467)
Transfer gain (loss)
and transfer fees... 108,529 (258,988) (129,406) (443,138)
Capital contribution
(withdrawal)........ (198,516) -- -- --
Transfers (to) from the
Guarantee Account
(note 1).............. 1,447,720 1,469,927 2,498,480 6,836,059
Interfund transfers.... 361,833 (1,665,448) (7,573,589) (5,533,571)
------------ ----------- ----------- ------------
Increase (decrease) in
net assets from capital
transactions........... 3,953,370 (90,144) (5,308,037) 4,512,424
------------ ----------- ----------- ------------
Increase (decrease) in
net assets............. 12,644,314 3,943,218 (5,844,472) (6,138,252)
Net assets at beginning
of year................ 26,819,751 22,876,533 46,545,545 52,683,797
------------ ----------- ----------- ------------
Net assets at end of
year................... $ 39,464,065 26,819,751 40,701,073 46,545,545
============ =========== =========== ============
</TABLE>
F-18
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
--------------------------------------------------
Global Income Fund Value Equity Fund
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)................... $ 4,058 504,065 (185,617) (158,569)
Net realized gain (loss).. (134,013) 96,320 1,440,840 576,810
Unrealized appreciation
(depreciation) on invest-
ments.................... (715,675) 337,555 5,153,071 (292,099)
Capital gain distribu-
tion..................... 4,146 22,214 -- 929,149
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from operations.... (841,484) 960,154 6,408,294 1,055,291
------------ ---------- ----------- -----------
From capital transactions:
Net premiums.............. 298,133 600,772 21,173,356 9,579,320
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........... -- -- (219,644) (25,562)
Surrenders............... (230,326) (63,958) (3,878,411) (1,731,724)
Administrative expense
(note 3)................ (2,504) -- (39,635) (18,611)
Transfer gain (loss) and
transfer fees........... 41,185 (1,623) (24,010) 1,014,745
Capital contribution
(withdrawal)............ -- 45,130 -- --
Transfers (to) from the
Guarantee Account (note
1)....................... 1,130,309 986,575 9,162,615 8,817,658
Interfund transfers....... (1,065,929) 1,028,376 2,580,708 4,550,014
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions.............. 170,868 2,595,272 28,754,979 22,185,840
------------ ---------- ----------- -----------
Increase (decrease) in net
assets.................... (670,616) 3,555,426 35,163,273 23,214,131
Net assets at beginning of
year...................... 9,670,724 6,115,298 39,141,139 15,900,008
------------ ---------- ----------- -----------
Net assets at end of year.. $ 9,000,108 9,670,724 74,304,412 39,114,139
============ ========== =========== ===========
</TABLE>
F-19
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
------------------------------------------------------------------------
U.S. Premier
Income Equity Growth
Fund Fund Equity Fund
------------------------- ---------------------------- ---------------
Period from Period from
Year ended December 31, Year ended May 4, 1998 May 5, 1999
------------------------- December 31, to December 31, to December 31,
1999 1998 1999 1998 1999
------------ ----------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 1,829,233 1,286,221 (8,570) 9,991 (51,863)
Net realized gain
(loss)................ (265,204) 335,927 288,484 9,452 559,025
Unrealized appreciation
(depreciation) on
investments........... (2,672,230) (245,492) 816,588 153,754 2,049,497
Capital gain distribu-
tion.................. 72,466 285,194 1,800,801 36,079 770,369
------------ ----------- ---------- --------- ----------
Increase (decrease) in
net assets from
operations............. (1,035,735) 1,661,850 2,897,303 209,276 3,327,028
------------ ----------- ---------- --------- ----------
From capital
transactions:
Net premiums........... 6,923,805 1,921,255 22,445,779 864,801 14,174,762
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits....... (489,017) (145,003) (45,279) -- (3,881)
Surrenders........... (2,870,344) (1,961,475) (528,852) (8,236) (153,976)
Administrative ex-
pense (note 3)...... (44,669) (34,884) (5,653) (374) (1,218)
Transfer gain (loss)
and transfer fees... 62,981 (172,635) 129,249 4,703 205,591
Capital contribution
(withdrawal)........ -- -- -- -- --
Transfers (to) from the
Guarantee Account
(note 1).............. 8,054,862 4,132,905 6,635,234 500,876 1,787,824
Interfund transfers.... (75,826) 6,911,104 5,339,842 629,934 7,975,066
------------ ----------- ---------- --------- ----------
Increase (decrease) in
net assets from capital
transactions........... 11,561,792 10,651,267 33,970,320 1,991,704 23,984,168
------------ ----------- ---------- --------- ----------
Increase (decrease) in
net assets............. 10,526,057 12,313,117 36,867,623 2,200,980 27,311,196
Net assets at beginning
of year................ 34,323,977 22,010,860 2,200,980 -- --
------------ ----------- ---------- --------- ----------
Net assets at end of
year................... $ 44,850,034 34,323,977 39,068,603 2,200,980 27,311,196
============ =========== ========== ========= ==========
</TABLE>
F-20
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Capital
Bond Appreciation
Fund/VA Fund/VA
------------------------- -------------------------
Year ended December 31, Year ended December 31,
------------------------- -------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense).............. $ 2,159,731 67,918 (2,220,179) (932,825)
Net realized gain
(loss)................. (367,634) 557,479 8,028,813 19,777,101
Unrealized appreciation
(depreciation) on
investments............ (4,062,392) 1,205,533 64,932,288 922,343
Capital gain
distribution........... 306,119 628,926 7,443,892 13,330,660
------------ ----------- ------------ -----------
Increase (decrease) in
net assets from
operations.............. (1,964,176) 2,459,856 78,184,814 33,097,279
------------ ----------- ------------ -----------
From capital
transactions:
Net premiums............ 12,174,256 6,231,291 23,530,758 17,725,498
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits........ (689,793) (410,382) (1,199,344) (894,216)
Surrenders............ (5,269,460) (4,432,337) (14,095,955) (9,299,680)
Administrative expense
(note 3)............. (69,547) (55,996) (221,476) (184,119)
Transfer gain (loss)
and transfer fees.... (235,556) (86,859) 87,768 (3,882)
Transfers (to) from the
Guarantee Account (note
1)..................... 13,999,173 8,638,887 14,646,072 17,267,813
Interfund transfers..... (4,224,435) 10,655,917 (8,629,648) (7,357,815)
------------ ----------- ------------ -----------
Increase (decrease) in
net assets from capital
transactions............ 15,684,638 20,540,521 14,118,175 17,253,599
------------ ----------- ------------ -----------
Increase (decrease) in
net assets.............. 13,720,462 23,000,377 92,302,989 50,350,878
Net assets at beginning
of year................. 62,746,060 39,745,683 189,366,694 139,015,816
------------ ----------- ------------ -----------
Net assets at end of
year.................... $ 76,466,522 62,746,060 281,669,683 189,366,694
============ =========== ============ ===========
</TABLE>
F-21
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
------------------------------------------------------------------------------
Aggressive High Multiple
Growth Income Strategies
Fund/VA Fund/VA Fund/VA
-------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
-------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (3,119,024) (2,113,073) 9,391,426 1,269,071 1,728,011 (243,868)
Net realized gain
(loss)................ 43,460,518 19,896,478 (2,467,228) (99,049) 1,998,615 1,712,582
Unrealized appreciation
(depreciation) on
investments........... 120,804,294 (396,149) (1,860,876) (7,301,468) 249,173 (1,662,556)
Capital gain
distribution.......... -- 5,372,387 -- 4,091,636 3,958,345 4,043,187
------------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 161,145,788 22,759,643 5,063,322 (2,039,810) 7,934,144 3,849,345
------------- ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 13,548,977 9,377,106 14,520,822 13,886,757 5,277,206 5,911,134
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (1,088,159) (796,601) (1,064,649) (1,060,654) (560,764) (527,685)
Surrenders........... (20,015,823) (11,332,990) (13,777,348) (10,775,891) (7,655,266) (6,115,145)
Administrative ex-
pense
(note 3)............ (320,865) (280,687) (181,388) (189,819) (112,560) (118,214)
Transfer gain (loss)
and
transfer fees....... 978,941 (1,028,582) (340,605) (612,294) (334,258) (298,427)
Transfers (to) from the
Guarantee Account
(note 1).............. 5,300,960 11,708,764 13,711,757 20,861,727 4,683,850 8,281,940
Interfund transfers.... (19,243,413) (20,227,182) (14,458,320) (4,351,060) (8,149,619) (3,251,940)
------------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... (20,839,382) (12,580,172) (1,589,731) 17,758,766 (6,851,411) 3,881,663
------------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. 140,306,406 10,179,471 3,473,591 15,718,956 1,082,733 7,731,008
Net assets at beginning
of year................ 218,026,707 207,847,236 164,004,582 148,285,626 79,754,561 72,023,553
------------- ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $ 358,333,113 218,026,707 167,478,173 164,004,582 80,837,294 79,754,561
============= =========== =========== =========== =========== ===========
</TABLE>
F-22
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund
-----------------------------------------------------------------------------
Equity-Income Portfolio Growth Portfolio Overseas Portfolio
------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 944,026 365,176 (5,548,208) (2,577,337) 211,935 761,025
Net realized gain
(loss)................ 32,608,373 40,058,923 40,501,315 17,030,101 22,135,968 12,998,779
Unrealized appreciation
(depreciation) on
investments........... (23,171,445) (9,194,909) 83,757,029 58,825,099 16,842,471 (6,292,784)
Capital gain
distribution.......... 22,604,590 31,355,502 46,850,486 41,858,263 2,564,494 6,294,605
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 32,985,544 62,584,692 165,560,622 115,136,126 41,754,868 13,761,625
------------ ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 55,451,274 46,774,052 102,689,652 15,214,848 5,626,757 1,843,855
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (3,558,664) (3,800,272) (2,182,323) (2,191,698) (566,490) (439,740)
Surrenders........... (58,264,096) (39,388,010) (50,608,296) (23,927,419) (11,598,256) (6,306,537)
Administrative
expense (note 3).... (810,775) (787,804) (662,552) (510,394) (182,204) (183,116)
Transfer gain (loss)
and transfer fees... (463,678) (4,002,591) (193,058) (1,467,259) 691,511 (1,416,329)
Transfers (to) from the
Guarantee Account
(note 1).............. 32,482,731 49,734,168 27,141,802 9,000,692 1,257,466 2,209,192
Interfund transfers.... (59,307,860) (32,464,680) 13,823,927 (8,701,771) (10,841,539) (14,310,296)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... (34,471,068) 16,064,863 90,009,152 (12,583,001) (15,612,755) (18,602,971)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. (1,485,524) 78,649,555 255,569,774 102,553,125 26,142,113 (4,841,346)
Net assets at beginning
of year................ 692,232,327 613,582,772 417,566,732 315,013,607 103,463,275 108,304,621
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $690,746,803 692,232,327 673,136,506 417,566,732 129,605,388 103,463,275
============ =========== =========== =========== =========== ===========
</TABLE>
F-23
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund II
---------------------------------------------------
Asset Manager Portfolio Contrafund Portfolio
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ 10,625,511 9,625,658 (3,779,196) (1,952,491)
Net realized gain (loss)
........................ 16,067,053 12,994,733 24,922,273 14,314,697
Unrealized appreciation
(depreciation) on
investments............. (2,840,015) (5,404,033) 55,449,896 47,868,379
Capital gain
distribution............ 20,776,345 45,774,419 12,495,419 12,625,996
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from operations... 44,628,894 62,990,777 89,088,392 72,856,581
------------ ----------- ----------- -----------
From capital transactions:
Net premiums............. 14,653,091 10,264,331 82,802,444 25,285,801
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits.......... (2,929,710) (2,712,196) (1,793,088) (1,246,412)
Surrenders.............. (65,155,121) (43,729,546) (26,567,889) (13,148,361)
Administrative expense
(note 3)............... (1,071,066) (1,091,339) (379,551) (296,892)
Transfer gain (loss) and
transfer fees.......... (2,618,892) (6,077,325) (2,525,155) (122,549)
Transfers (to) from
Guarantee Account
(note 1)................ 9,583,071 9,427,060 32,522,703 25,805,412
Interfund transfers...... (21,111,137) (12,459,422) 4,661,245 (7,547,010)
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. (68,649,764) (46,378,437) 88,720,709 28,729,989
------------ ----------- ----------- -----------
Increase (decrease) in net
assets................... (24,020,870) 16,612,340 177,809,101 101,586,570
Net assets at beginning of
year..................... 500,487,152 483,874,812 343,723,966 242,137,396
------------ ----------- ----------- -----------
Net assets at end of
year..................... $476,466,282 500,487,152 521,533,067 343,723,966
============ =========== =========== ===========
</TABLE>
F-24
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund III
---------------------------------------------------
Growth & Income Growth Opportunities
Portfolio Portfolio
------------------------ -------------------------
Year ended December 31, Year ended December 31,
------------------------ -------------------------
1999 1998 1999 1998
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (868,119) (420,269) (495,856) (241,549)
Net realized gain
(loss).................. 3,957,786 983,225 2,346,277 378,467
Unrealized appreciation
(depreciation) on
investments............. 2,814,926 7,912,728 (404,266) 6,815,534
Capital gain
distribution............ 785,993 102,863 1,053,105 739,930
------------ ---------- ------------ -----------
Increase (decrease) in net
assets from operations... 6,690,586 8,578,547 2,499,260 7,692,382
------------ ---------- ------------ -----------
From capital transactions:
Net premiums............. 37,343,267 13,303,380 31,843,565 10,151,968
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits.......... (452,650) (688,026) (291,426) (104,398)
Surrenders.............. (4,513,761) (1,264,908) (4,617,789) (1,515,091)
Administrative expense
(note 3)............... (71,973) (29,641) (57,526) (29,463)
Transfer gain (loss) and
transfer fees.......... 351,485 732,615 253,392 483,076
Transfers (to) from
Guarantee Account (note
1)...................... 24,539,942 10,185,026 15,970,057 10,705,328
Interfund transfers...... (525,341) 10,322,368 1,492,494 9,164,481
------------ ---------- ------------ -----------
Increase (decrease) in net
assets from capital
transactions............. 56,670,969 32,560,814 44,592,767 28,855,901
------------ ---------- ------------ -----------
Increase (decrease) in net
assets................... 63,361,555 41,139,361 47,092,027 36,548,283
Net assets at beginning of
year..................... 56,847,583 15,708,222 53,636,058 17,087,775
------------ ---------- ------------ -----------
Net assets at end of
year..................... $120,209,138 56,847,583 100,728,085 53,636,058
============ ========== ============ ===========
</TABLE>
F-25
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Federated Insurance Series
------------------------------------------------------------------------
American High Income
Leaders Bond Utility
Fund II Fund II Fund II
------------------------ ---------------------- ----------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------ ---------------------- ----------------------
1999 1998 1999 1998 1998 1996
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (513,220) (550,126) 3,467,372 377,590 481,654 (182,451)
Net realized gain
(loss)................ 1,360,681 1,333,508 (1,194,670) 901,146 1,236,132 1,730,044
Unrealized appreciation
(depreciation) on
investments........... (4,248,287) 4,019,536 (1,948,643) (615,798) (3,774,428) 1,205,055
Capital gain
distribution.......... 7,121,918 2,704,294 372,335 273,209 2,310,160 1,841,863
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from
operations............. 3,721,092 7,507,212 696,394 936,147 253,518 4,594,511
------------ ---------- ---------- ---------- ---------- ----------
From capital
transactions:
Net premiums........... 21,419,498 17,174,298 12,914,758 7,609,375 9,759,421 5,300,423
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (221,728) (702,585) (245,085) (420,052) (562,420) (295,533)
Surrenders........... (5,313,269) (2,256,129) (3,914,221) (3,031,255) (3,154,249) (1,872,219)
Administrative
expense (note 3).... (77,785) (47,545) (43,801) (34,940) (45,364) (36,851)
Transfer gain (loss)
and transfer fees... (56,238) 404,576 989 650,014 (154,923) (738,016)
Transfers (to) from the
Guarantee Account
(note 1).............. 15,009,686 15,132,233 11,169,833 12,815,682 10,141,825 5,791,377
Interfund transfers.... (7,715,367) 2,109,439 (5,891,810) (1,253,689) (2,728,703) 2,670,259
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from capital
transactions........... 23,044,797 31,814,287 13,990,663 16,335,135 13,255,587 10,819,440
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets............. 26,765,889 39,321,499 14,687,057 17,271,282 13,509,105 15,413,951
Net assets at beginning
of year................ 74,215,225 34,893,726 52,466,629 35,195,347 45,811,845 30,397,894
------------ ---------- ---------- ---------- ---------- ----------
Net assets at end of
year................... $100,981,114 74,215,225 67,153,686 52,466,629 59,320,950 45,811,845
============ ========== ========== ========== ========== ==========
</TABLE>
F-26
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Alger American Fund
--------------------------------------------------
Small Capitalization
Portfolio Growth Portfolio
------------------------ ------------------------
Year ended December 31, Year ended December 31,
------------------------ ------------------------
1999 1998 1999 1998
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (1,348,858) (1,053,686) (2,681,920) (966,536)
Net realized gain
(loss).................. 4,496,020 411,066 16,000,254 4,172,054
Unrealized appreciation
(depreciation) on in-
vestments............... 25,658,694 2,406,527 34,200,259 20,408,775
Capital gain distribu-
tion.................... 11,288,748 10,556,556 16,366,607 13,947,299
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from operations... 40,094,604 12,320,463 63,885,200 37,561,592
------------ ---------- ----------- -----------
From capital transactions:
Net premiums............. 18,801,609 6,622,636 92,259,433 11,725,922
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits......... (420,284) (459,998) (1,648,447) (663,235)
Surrenders............. (7,370,878) (3,709,013) (13,584,719) (5,345,156)
Administrative expense
(note 3).............. (95,877) (83,804) (148,219) (89,422)
Transfer gain (loss)
and transfer fees..... 339,009 246,716 622,265 (10,013)
Transfers (to) from the
Guarantee Account (note
1)...................... 7,500,439 8,384,117 26,764,387 9,961,009
Interfund transfers...... (9,144,368) (2,794,548) 22,462,752 6,706,761
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. 9,609,650 8,206,106 126,727,452 22,285,866
------------ ---------- ----------- -----------
Increase (decrease) in net
assets................... 49,704,254 20,526,569 190,612,652 59,847,458
Net assets at beginning of
year..................... 94,354,259 73,827,690 132,001,271 72,153,813
------------ ---------- ----------- -----------
Net assets at end of
year..................... $144,058,513 94,354,259 322,613,923 132,001,271
============ ========== =========== ===========
</TABLE>
F-27
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Fund, Inc.
-----------------------------------------------
PBHG PBHG
Large Cap Growth II
Growth Portfolio Portfolio
----------------------- ----------------------
Year ended December Year ended December
31, 31,
----------------------- ----------------------
1999 1998 1999 1998
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)...................... $ (183,335) (106,500) (211,133) (119,244)
Net realized gain (loss)..... 1,293,989 282,909 2,553,635 (281,878)
Unrealized appreciation (de-
preciation) on investments.. 7,139,998 2,025,080 11,061,365 1,029,558
Capital gain distribution.... -- -- -- --
----------- ---------- ---------- ----------
Increase (decrease) in net
assets from operations....... 8,250,652 2,201,489 13,403,867 628,436
----------- ---------- ---------- ----------
From capital transactions:
Net premiums................. 1,893,719 2,342,871 2,634,384 1,855,144
Transfers (to) from the gen-
eral account of GE Life and
Annuity:
Death benefits.............. (120,414) (42,994) (31,216) (117,890)
Surrenders.................. (2,112,511) (588,848) (1,282,939) (409,105)
Administrative expense (note
3)......................... (13,054) (7,464) (13,646) (8,868)
Transfer gain (loss) and
transfer fees.............. 8,735 40,495 92,029 27,528
Transfers (to) from the
Guarantee Account (note 1) 2,244,446 2,026,921 1,647,321 2,485,422
Interfund transfers.......... 1,070,497 1,290,849 5,263,684 (477,840)
----------- ---------- ---------- ----------
Increase (decrease) in net
assets from capital
transactions................. 2,971,418 5,061,830 8,309,617 3,354,391
----------- ---------- ---------- ----------
Increase (decrease) in net
assets....................... 11,222,070 7,263,319 21,713,484 3,982,827
Net assets at beginning of
year......................... 11,981,586 4,718,267 10,934,767 6,951,940
----------- ---------- ---------- ----------
Net assets at end of year..... $23,203,656 11,981,586 32,648,251 10,934,767
=========== ========== ========== ==========
</TABLE>
F-28
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (174,869) (1,431,833) (4,896,666) 6,056,709
Net realized gain
(loss).................. 62,362,096 11,413,034 35,813,367 11,096,226
Unrealized appreciation
(depreciation) on
investments............. 163,992,838 24,333,274 142,877,179 56,452,101
Capital gain
distribution............ 4,906,978 -- 2,247,871 7,613,462
------------ ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 231,087,043 34,314,475 176,041,751 81,218,498
------------ ----------- ----------- -----------
From capital transactions:
Net premiums............. 82,694,488 4,886,885 129,921,095 19,968,429
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits......... (693,006) (815,476) (2,337,901) (1,360,596)
Surrenders............. (14,862,560) (5,681,643) (28,100,426) (11,799,421)
Administrative expense
(note 3).............. (206,645) (120,730) (458,087) (317,146)
Transfer gain (loss)
and transfer fees..... (5,761,812) (352,260) 893,020 (691,664)
Transfers (to) from the
Guarantee Account (note
1)...................... 14,163,240 4,693,626 37,755,657 19,406,972
Interfund transfers...... 74,808,346 (8,460,504) 42,077,065 3,890,833
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. 150,142,051 (5,850,102) 179,750,423 29,097,407
------------ ----------- ----------- -----------
Increase (decrease) in net
assets................... 381,229,094 28,464,373 355,792,174 110,315,905
Net assets at beginning of
year..................... 134,279,495 105,815,122 334,384,822 224,068,917
------------ ----------- ----------- -----------
Net assets at end of
year..................... $515,508,589 134,279,495 690,176,996 334,384,822
============ =========== =========== ===========
</TABLE>
F-29
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-----------------------------------------------------------------------------
Worldwide Flexible
Growth Balanced Income
Portfolio Portfolio Portfolio
------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (7,350,545) 6,523,226 3,945,453 3,182,878 2,762,764 1,259,217
Net realized gain
(loss)................ 59,273,825 46,111,510 13,526,836 3,053,389 (288,141) 222,001
Unrealized appreciation
(depreciation) on
investments........... 309,685,852 41,481,543 55,762,394 28,743,051 (2,373,888) 30,008
Capital gain
distribution.......... -- 4,933,615 -- 722,300 146,515 66,130
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 361,609,132 99,049,894 73,234,683 35,701,618 247,250 1,577,356
------------ ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 103,924,205 44,526,187 123,717,725 24,644,401 12,258,667 4,066,867
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (2,973,664) (1,373,901) (1,474,438) (857,556) (202,784) (36,188)
Surrenders........... (40,772,035) (19,617,340) (20,730,548) (9,165,787) (2,936,151) (813,459)
Administrative
expense (note 3).... (619,954) (469,515) (267,776) (138,515) (34,631) (21,644)
Transfer gain (loss)
and transfer fees... 934,945 125,152 456,442 1,031,515 (128,719) 453,024
Transfers (to) from the
Guarantee Account
(note 1).............. 51,917,924 41,574,483 78,194,170 24,485,481 13,890,840 7,043,148
Interfund transfers.... 5,019,615 (124,706) 32,520,849 21,236,757 312,624 6,439,490
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... 117,431,036 64,640,360 212,416,424 61,236,296 23,159,846 17,131,238
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. 479,040,168 163,690,254 285,651,107 96,937,914 23,407,096 18,708,594
Net assets at beginning
of year................ 508,816,336 345,126,082 174,576,149 77,638,235 33,045,345 14,336,751
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $987,856,504 508,816,336 460,227,256 174,576,149 56,452,441 33,045,345
============ =========== =========== =========== =========== ===========
</TABLE>
F-30
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-------------------------------------------------
International Growth Capital Appreciation
Portfolio Portfolio
------------------------ -----------------------
Year ended December 31, Year ended December 31,
------------------------ -----------------------
1999 1998 1999 1998
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................. $ (1,103,843) 285,215 (2,139,496) (129,163)
Net realized gain (loss)... 6,798,898 7,205,182 12,257,740 336,728
Unrealized appreciation
(depreciation) on
investments............... 68,867,033 1,486,427 88,365,393 7,532,890
Capital gain distribution.. -- 168,340 909,471 --
------------ ---------- ----------- ----------
Increase (decrease) in net
assets from operations... 74,562,088 9,145,164 99,393,108 7,740,455
------------ ---------- ----------- ----------
From capital transactions:
Net premiums............... 19,686,581 7,538,624 136,931,557 8,764,540
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits............ (397,836) (372,667) (1,194,716) (52,380)
Surrenders................ (5,164,544) (2,368,354) (7,042,061) (765,563)
Administrative expense
(note 3)................. (84,094) (70,684) (94,871) (11,745)
Transfer gain (loss) and
transfer fees............ 96,657 74,891 280,719 485,206
Transfer (to) from the
Guarantee Account (note
1)........................ 8,757,358 10,288,178 34,911,459 4,797,081
Interfund transfers........ 9,262,544 (1,419,705) 67,308,216 15,456,302
------------ ---------- ----------- ----------
Increase (decrease) in net
assets from capital
transactions............... 32,156,666 13,670,283 231,100,303 28,673,441
------------ ---------- ----------- ----------
Increase (decrease) in net
assets..................... 106,718,754 22,815,447 330,493,411 36,413,896
Net assets at beginning of
year....................... 77,481,173 54,665,726 39,083,471 2,669,575
------------ ---------- ----------- ----------
Net assets at end of year... $184,199,927 77,481,173 369,576,882 39,083,471
============ ========== =========== ==========
</TABLE>
F-31
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance
Trust
----------------------------------------------------
Growth and Mid Cap
Income Value
Fund Fund
-------------------------- -------------------------
Period from Period from
May 12, May 8,
Year ended 1998 to Year ended 1998 to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................ $ 16,010 20,010 (7,991) 12,176
Net realized gain (loss).. 9,945 (32,043) 40,722 (72,641)
Unrealized appreciation
(depreciation) on
investments.............. 215,378 40,081 (786,328) 12,789
Capital gain
distribution............. -- -- -- --
----------- --------- ---------- ---------
Increase (decrease) in net
assets from operations.... 241,333 28,048 (753,597) (47,676)
----------- --------- ---------- ---------
From capital transactions:
Net premiums.............. 3,188,933 1,873,044 7,662,493 1,653,452
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........... -- -- (44,741) --
Surrenders............... (312,406) (42,593) (399,418) (42,773)
Administrative expense
(note 3)................ (5,657) (447) (6,665) (527)
Transfer gain (loss) and
transfer fees........... (17,014) 89,687 129,599 (48,872)
Transfer (to) from the
Guarantee Account (note
1)....................... 2,602,797 1,085,095 3,097,131 1,327,515
Interfund transfers....... 238,136 1,229,734 3,205,503 782,072
----------- --------- ---------- ---------
Increase (decrease) in net
assets from capital
transactions.............. 5,694,789 4,234,520 13,643,902 3,670,867
----------- --------- ---------- ---------
Increase (decrease) in net
assets.................... 5,936,122 4,262,568 12,890,305 3,623,191
Net assets at beginning of
year...................... 4,262,568 -- 3,623,191 --
----------- --------- ---------- ---------
Net assets at end of year.. $10,198,690 4,262,568 16,513,496 3,623,191
=========== ========= ========== =========
</TABLE>
F-32
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Salomon Brothers Variable Series Fund Inc.
--------------------------------------------------------------------------------------
Strategic Total
Bond Investors Return
Fund Fund Fund
--------------------------- ------------------------- -------------------------
Period from Period from Period from
October 22, November 27, October 30,
Year ended 1998 to Year ended 1998 to Year ended 1998 to
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 227,713 5,736 144 40 53,428 4,787
Net realized gain
(loss)................ 1,001 322 (45,705) -- 1,801 1
Unrealized appreciation
(depreciation) on
investments........... (204,979) (4,823) 79,688 321 (108,299) (2,958)
Capital gain
distribution.......... -- 121 -- -- -- 1,011
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets from
operations............. 23,735 1,356 34,127 361 (53,070) 2,841
---------- ------- --------- ------ --------- -------
From capital
transactions:
Net premiums........... 2,763,150 19,355 2,330,816 9,900 1,867,404 168,401
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........ (10,950) -- -- -- -- --
Surrenders............ (107,247) -- (29,589) -- (26,394) (16)
Administrative expense
(note 3)............. (1,739) (17) (405) (3) (1,097) --
Transfer gain (loss)
and transfer fees.... (3,392) (48) 39,941 123 741 140
Transfer (to) from the
Guarantee Account
(note 1).............. 1,179,490 14,903 425,716 606 1,001,197 14,269
Interfund transfers.... 1,352,931 96,473 980,314 -- 118,197 158,086
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets from capital
transactions........... 5,172,243 130,666 3,746,793 10,626 2,960,048 340,880
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets............. 5,195,978 132,022 3,780,920 10,987 2,906,978 343,721
Net assets at beginning
of year................ 132,022 -- 10,987 -- 343,721 --
---------- ------- --------- ------ --------- -------
Net assets at end of
year................... $5,328,000 132,022 3,791,907 10,987 3,250,699 343,721
========== ======= ========= ====== ========= =======
</TABLE>
See accompanying notes to financial statements.
F-33
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements
December 31, 1999
(1) Description of Entity
GE Life & Annuity Separate Account 4 (the Account), formerly Life of Virginia
Separate Account 4, is a separate investment account established in 1987 by GE
Life and Annuity Assurance Company (GE Life & Annuity), formerly The Life
Insurance Company of Virginia, under the laws of the Commonwealth of Virginia.
The Account operates as a unit investment trust under the Investment Company Act
of 1940. The Account is used to fund certain benefits for flexible premium
variable deferred annuity life insurance policies issued by GE Life & Annuity.
GE Life and Annuity Assurance Company is a stock life insurance company
operating under a charter granted by the Commonwealth of Virginia on March 21,
1871. A majority of the capital stock of GE Life & Annuity is owned by General
Electric Capital Assurance Company. General Electric Capital Assurance Company
and its parent, GE Financial Assurance Holdings, Inc. are indirectly,
wholly-owned subsidiaries of General Electric Capital Corporation (GE Capital).
GE Capital, a diversified financial services company, is a wholly-owned
subsidiary of General Electric Company (GE), a New York corporation.
In June 1999, a new investment subdivision was added to the Account for all
types of units (see Note 2). The Premier Growth Equity Fund invests solely in a
designated portfolio of the GE Investment Funds, Inc. and is a series type
mutual fund. Between 1997 and 1999, the Oppenheimer Variable Account Capital
Appreciation Fund changed its name to the Oppenheimer Variable Account
Aggressive Growth Fund/VA and the Oppenheimer Variable Account Growth Fund
changed its name to the Oppenheimer Variable Account Capital Appreciation
Fund/VA.
In October 1998, three new investment subdivisions were added to the Account.
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
Inc.
In May 1998, three new investment subdivisions were added to the Account. The
U.S. Equity Portfolio invests solely in a designated portfolio of the GE
Investments Funds, Inc. The Mid Cap Value Fund (formerly known as the Mid Cap
Equity Fund) and Growth and Income Fund each invest solely in a designated
portfolio of the Goldman Sachs Variable Insurance Trust. All designated
portfolios described above are series type mutual funds.
Policyowners may transfer cash values between the Account's portfolios and the
Guarantee Account that is part of the general account of GE Life & Annuity.
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 four 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 III units are sold under policy form P1152 and
began sales in the first quarter of 1999. Type IV unit sales are sold under
Policy Form P1151 and began sales in the second quarter of 1999.
F-34
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(b) Investments
Investments are stated at fair value which is based on the underlying net asset
value per share of the respective portfolios or funds. Purchases and sales of
investments are recorded on the trade date and income distributions are recorded
on the ex-dividend date. Realized gains and losses on investments are determined
on the average cost basis. The units and unit values are disclosed as of the
last business day in the applicable year.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the year ended December 31, 1999 were:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- -------------- --------------
<S> <C> <C>
GE Investment Funds, Inc.:
S&P 500 Index Fund............................... $ 479,953,109 240,675,116
Money Market Fund................................ 2,709,722,205 2,475,380,915
Total Return Fund................................ 51,675,569 21,161,494
International Equity Fund........................ 58,643,467 54,760,704
Real Estate Securities Fund...................... 10,713,861 15,004,297
Global Income Fund............................... 6,954,217 7,026,889
Value Equity Fund................................ 54,346,586 25,721,299
Income Fund...................................... 29,457,972 16,007,415
U.S. Equity Fund................................. 43,581,601 7,797,307
Premier Growth Equity Fund....................... 38,883,748 14,367,536
Oppenheimer Variable Account Funds:
Bond Fund/VA..................................... 45,060,045 26,657,558
Aggressive Growth Fund/VA........................ 197,174,231 222,386,370
Capital Appreciation Fund/VA..................... 71,654,277 52,761,076
High Income Fund/VA.............................. 92,366,718 84,579,951
Multiple Strategies Fund/VA...................... 23,029,714 24,055,134
Variable Insurance Products Fund:
Equity-Income Portfolio.......................... 179,598,082 191,780,961
Growth Portfolio................................. 297,222,394 166,464,545
Overseas Portfolio............................... 631,917,400 655,516,215
Variable Insurance Products Fund II:
Asset Manager Portfolio.......................... 89,283,720 126,101,734
Contrafund Portfolio............................. 201,949,816 105,373,757
Variable Insurance Products Fund III:
Growth & Income Portfolio........................ 101,691,761 44,939,988
Growth Opportunties Portfolio.................... 74,653,003 29,331,119
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund........................... 8,838,178 3,077,278
Mid Cap Value Fund............................... 24,173,203 10,663,003
Janus Aspen Series:
Aggressive Growth Portfolio...................... 407,424,565 246,382,506
Growth Portfolio................................. 297,235,227 120,740,868
Worldwide Growth Portfolio....................... 352,769,148 245,642,656
Balanced Portfolio............................... 308,476,408 91,408,986
Flexible Income Portfolio........................ 50,727,756 24,540,205
</TABLE>
F-35
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ------------ -----------
<S> <C> <C>
International Growth Portfolio........................ $104,597,851 73,668,969
Capital Appreciation Portfolio........................ 342,016,654 110,984,538
Federated Insurance Series:
Utility Fund II....................................... 32,061,371 16,065,087
High Income Bond Fund II.............................. 100,193,253 81,675,988
American Leaders Fund II.............................. 61,138,187 31,509,097
The Alger American Fund:
Small Capitalization Portfolio........................ 206,574,736 187,536,157
Growth Portfolio...................................... 278,969,806 138,086,817
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio....................... 10,200,499 7,400,345
PBHG Growth II Portfolio.............................. 19,335,309 11,354,160
Salomon Brothers Variable Series Fund Inc.:
Strategic Bond Fund................................... 6,599,848 1,173,721
Investors Fund........................................ 5,284,092 1,562,172
Total Return Fund..................................... 4,562,928 1,541,701
</TABLE>
F-36
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(c) Capital Transactions
The increase (decrease) in outstanding units for Types I, II, III and IV from
capital transactions for the years or periods ended December 31, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Type I Units: --------- ---------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 918,847 3,512,260 631,828 181,530 353,450
--------- ---------- ------- ------- --------
From capital
transactions:
Net premiums........... 43,692 3,088,601 8,156 37,608 139,356
Transfers (to) from the
general account
of GE Life & Annuity:
Death benefits....... (4,853) (89,832) (2,466) (463) (1,816)
Surrenders........... (75,788) (2,689,646) (56,739) (24,253) (85,757)
Cost of insurance and
administrative
expenses............ (2,222) (13,914) (1,299) (767) (3,200)
Transfers (to) from the
Guarantee Account..... 44,702 269,329 8,553 14,103 112,800
Interfund transfers.... 172,435 1,145,551 (3,122) (46,225) (198,141)
--------- ---------- ------- ------- --------
Net increase (decrease)
in units from capital
transactions........... 177,966 1,710,089 (46,917) (19,997) (36,758)
--------- ---------- ------- ------- --------
Units outstanding at
December 31, 1998...... 1,096,813 5,222,349 584,911 161,533 316,692
--------- ---------- ------- ------- --------
From capital
transactions:
Net premiums........... 26,703 759,952 3,914 4,903 4,743
Transfers (to) from the
general account
of GE Life & Annuity:
Death benefits...... (2,575) (38,073) (6,637) (820) (798)
Surrenders.......... (92,539) (2,984,885) (69,560) (18,356) (28,756)
Cost of insurance
and administrative
expenses........... (1,912) (9,559) (1,381) (453) (656)
Transfers (to) from the
Guarantee Account..... 16,215 158,666 11,706 2,536 5,966
Interfund transfers.... 37,185 2,156,824 (9,232) 54,195 (78,972)
--------- ---------- ------- ------- --------
Net increase (decrease)
in units from capital
transactions........... (16,923) 42,925 (71,190) 42,005 (98,473)
--------- ---------- ------- ------- --------
Units outstanding at
December 31, 1999...... 1,079,890 5,265,274 513,721 203,538 218,219
========= ========== ======= ======= ========
</TABLE>
F-37
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
---------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
Type I Units: ------- ------- --------- ------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997......... 12,950 177,211 1,295,638 -- --
------- ------- --------- ------- ------
From capital transactions:
Net premiums.............. 3,542 73,340 14,672 2,951 --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........... -- (261) (5,419) -- --
Surrenders............... (3,547) (33,659) (93,554) (67) --
Cost of insurance and
administrative
expenses................ (80) (1,036) (1,780) (24) --
Transfers (to) from the
Guarantee Account........ 8,901 54,595 34,085 660 --
Interfund transfers....... 24,866 115,186 89,003 22,607 --
------- ------- --------- ------- ------
Net increase (decrease) in
units from capital
transactions.............. 33,682 208,165 37,007 26,127 --
------- ------- --------- ------- ------
Units outstanding at
December 31, 1998......... 46,632 385,376 1,332,645 26,127 --
------- ------- --------- ------- ------
From capital transactions:
Net premiums.............. 316 59,988 7,628 19,691 1,385
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........... -- (5,314) (28,458) -- --
Surrenders............... (11,174) (63,009) (154,718) (12,593) (2,995)
Cost of insurance and
administrative
expenses................ (106) (667) (2,892) (127) (39)
Transfers (to) from the
Guarantee Account........ (322) 11,639 33,529 2,525 3,139
Interfund transfers....... 15,435 31,733 (63,546) 47,268 45,113
------- ------- --------- ------- ------
Net increase (decrease) in
units from capital
transactions.............. 4,149 34,370 (208,457) 56,764 46,603
------- ------- --------- ------- ------
Units outstanding at
December 31, 1999......... 50,781 419,746 1,124,188 82,891 46,603
======= ======= ========= ======= ======
</TABLE>
F-38
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
--------------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type I Units: -------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 929,630 2,591,419 1,291,813 1,869,843 1,553,549
-------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 74,703 19,338 34,584 31,959 40,822
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (15,395) (5,238) (2,748) (10,837) (8,380)
Surrenders........... (407,204) (170,429) (110,751) (182,095) (161,263)
Cost of insurance and
administrative
expenses............ (5,618) (5,190) (2,659) (4,385) (3,584)
Transfers (to) from the
Guarantee Account..... 81,767 15,924 19,698 51,660 19,533
Interfund transfers.... 257,976 (101,296) (56,877) (97,711) (96,211)
-------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (13,771) (246,891) (118,753) (211,409) (209,083)
-------- --------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 915,859 2,344,528 1,173,060 1,658,434 1,344,466
-------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 16,723 8,891 9,743 6,374 5,456
Loan interest.......... -- -- -- -- --
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (1,308) (5,005) (5,270) (15,916) (12,309)
Surrenders........... (131,944) (252,917) (131,083) (219,777) (185,583)
Cost of insurance and
administrative
expenses............ (2,123) (4,988) (2,494) (3,586) (2,994)
Transfers (to) from
the Guarantee
Account.............. 31,638 (1,082) 4,151 8,252 4,406
Interfund transfers... (60,601) (284,897) (90,649) (188,252) (102,355)
-------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (147,615) (539,998) (215,602) (412,905) (293,379)
-------- --------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 768,244 1,804,530 957,458 1,245,529 1,051,087
======== ========= ========= ========= =========
</TABLE>
F-39
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
-------------------------------- ---------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type I Units ---------- --------- --------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 6,589,338 4,467,825 3,398,260 17,101,510 3,296,201 294,329 341,417
---------- --------- --------- ---------- --------- -------- --------
From capital
transactions:
Net premiums........... 92,608 28,017 20,092 71,298 74,775 36,361 51,350
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (21,942) (20,703) (8,411) (86,711) (3,720) -- --
Surrenders........... (584,254) (406,572) (201,390) (1,581,072) (275,339) (33,956) (51,341)
Cost of insurance and
administrative
expenses............ (14,640) (9,624) (6,558) (41,759) (6,747) (1,229) (1,181)
Transfers (to) from the
Guarantee Account..... 51,832 6,585 16,016 16,975 48,507 44,357 39,391
Interfund transfers.... (359,182) (96,107) (404,695) (645,083) (51,589) 411,418 215,578
---------- --------- --------- ---------- --------- -------- --------
Net increase (decrease)
in units from capital
transactions........... (835,578) (498,404) (584,946) (2,266,352) (214,113) 456,951 253,797
---------- --------- --------- ---------- --------- -------- --------
Units outstanding at
December 31, 1998...... 5,753,760 3,969,421 2,813,314 14,835,158 3,082,088 751,280 595,214
---------- --------- --------- ---------- --------- -------- --------
From capital
transactions:
Net premiums........... 32,040 21,432 6,715 55,870 34,968 18,249 62,572
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (32,919) (19,611) (10,390) (83,836) (15,176) (4,731) (538)
Surrenders........... (740,369) (578,929) (309,058) (2,113,665) (367,961) (73,634) (116,547)
Cost of insurance and
administrative
expenses............ (12,151) (8,612) (5,175) (36,211) (6,633) (1,662) (1,314)
Transfers (to) from the
Guarantee Account..... (9,305) 6,821 (324) (19,440) 11,652 36,628 14,682
Interfund transfers.... (536,437) (80,399) (250,810) (649,065) (88,685) (107,315) (28,688)
---------- --------- --------- ---------- --------- -------- --------
Net increase (decrease)
in units from capital
transactions........... (1,299,141) (659,298) (569,042) (2,846,347) (431,835) (132,465) (69,833)
---------- --------- --------- ---------- --------- -------- --------
Units outstanding at
December 31, 1999...... 4,454,619 3,310,123 2,244,272 11,988,811 2,650,253 618,815 525,381
========== ========= ========= ========== ========= ======== ========
</TABLE>
F-40
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
PBHG Insurance
Federated Insurance Series Alger American Fund Series Fund, Inc.
------------------------------ ------------------------ --------------------
American High Small PBHG Large PBHG
Leaders Income Bond Utility Capitalization Growth Cap Growth Growth II
Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
Type I Units: -------- ----------- -------- -------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 361,619 456,124 485,332 1,325,070 1,022,514 55,997 76,611
------- ------- -------- --------- --------- ------- -------
From capital
transactions:
Net premiums........... 49,226 (16,663) (2,080) 429,477 25,796 12,832 43,391
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- 1,444 816 (384) (6,748) -- --
Surrenders........... (38,733) 22,376 6,445 (28,813) (101,948) (13,525) (2,223)
Cost of insurance and
administrative
expenses............ (1,089) 466 179 (1,249) (2,260) (192) (222)
Transfers (to) from the
Guarantee Account..... 23,362 (25,648) (2,909) 27,106 20,996 8,053 7,385
Interfund transfers.... 86,081 33,576 (9,318) (17,778) 203,074 34,878 (2,510)
------- ------- -------- --------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... 118,847 15,551 (6,867) 408,359 138,910 42,046 45,821
------- ------- -------- --------- --------- ------- -------
Units outstanding at
December 31, 1998...... 480,466 471,675 478,465 1,733,429 1,161,424 98,043 122,432
------- ------- -------- --------- --------- ------- -------
From capital
transactions:
Net premiums........... (22,424) 23,352 8,540 8,057 65,273 4,242 4,265
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... 642 -- (616) (333) (7,424) -- --
Surrenders........... 61,366 (66,408) (58,803) (168,826) (220,228) (11,876) (13,149)
Cost of insurance and
administrative
expenses............ 1,380 (837) (1,105) (2,952) (3,876) (229) (390)
Transfers (to) from the
Guarantee Account..... (21,326) 5,873 1,829 6,564 21,695 1,395 2,631
Interfund transfers.... (25,993) 16,788 (64,401) (485,936) 220,662 40,768 110,913
------- ------- -------- --------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... (6,355) (21,232) (114,556) (643,426) 76,102 34,300 104,270
------- ------- -------- --------- --------- ------- -------
Units outstanding at
December 31, 1999...... 474,111 450,443 363,909 1,090,003 1,237,526 132,343 226,702
======= ======= ======== ========= ========= ======= =======
</TABLE>
F-41
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type I Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 1,817,576 4,505,765 4,938,272 2,481,552 280,878 1,004,669 49,257
--------- --------- --------- --------- ------- --------- ---------
From capital
transactions:
Net premiums........... 16,545 85,570 235,218 127,113 37,137 55,993 124,428
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (8,425) (16,960) (17,077) (16,246) (1,939) (2,564) --
Surrenders........... (137,584) (306,115) (371,035) (424,576) (20,362) (67,352) (9,789)
Cost of insurance and
administrative
expenses............ (3,687) (10,854) (11,204) (6,797) (928) (2,002) (416)
Transfers (to) from the
Guarantee Account..... 13,161 60,329 69,943 102,984 62,318 28,874 11,707
Interfund transfers.... (145,916) (10,306) 50,630 652,003 195,121 35,806 331,630
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (265,906) (198,336) (43,525) 434,481 271,347 48,755 457,560
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1998...... 1,551,670 4,307,429 4,894,747 2,916,033 552,225 1,053,424 506,817
--------- --------- --------- --------- ------- --------- ---------
From capital
transactions:
Net premiums........... 16,117 66,898 87,098 41,784 38,041 20,440 112,397
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (5,060) (24,078) (19,731) (10,763) -- (5,129) (829)
Surrenders........... (154,266) (441,863) (536,289) (398,768) (87,684) (170,441) (110,831)
Cost of insurance and
administrative
expenses............ (3,157) (9,579) (10,670) (6,116) (2,017) (2,552) (2,368)
Transfers (to) from the
Guarantee Account..... 6,581 22,989 9,986 47,747 67,950 14,917 18,113
Interfund transfers.... 377,943 217,716 (110,764) 206,259 (53,874) 39,313 600,874
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 238,158 (167,917) (580,370) (119,857) (37,584) (103,452) 617,356
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 1,789,828 4,139,512 4,314,377 2,796,176 514,641 949,972 1,124,173
========= ========= ========= ========= ======= ========= =========
</TABLE>
F-42
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable
Insurance Salomon Brothers Variable
Trust Series Fund Inc.
--------------- ---------------------------
Growth
and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type I Units: ------ ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31,
1997............................ -- -- -- -- --
------ ------- ------ ------ -------
From capital transactions:
Net premiums.................... -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................. -- -- -- -- --
Surrenders..................... -- -- -- -- --
Cost of insurance and
administrative expenses....... -- -- -- -- --
Transfers (to) from the
Guarantee Account.............. -- -- -- -- --
Interfund transfers............. -- -- -- -- --
------ ------- ------ ------ -------
Net increase (decrease) in units
from capital transactions....... -- -- -- -- --
------ ------- ------ ------ -------
Units outstanding at December 31,
1998............................ -- -- -- -- --
------ ------- ------ ------ -------
From capital transactions:
Net premiums.................... 54,553 87,322 3,309 1,543 2,537
Loan interest................... -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................. -- -- -- -- --
Surrenders..................... (1,073) (11,503) (908) (171) 369
Cost of insurance and
administrative expenses....... (141) (314) (133) (23) 161
Transfers (to) from the
Guarantee Account.............. 8,811 1,315 11,419 66 (34,628)
Interfund transfers............. 18,549 118,528 32,748 14,514 37,746
------ ------- ------ ------ -------
Net increase (decrease) in units
from capital transactions....... 80,699 195,348 46,435 15,929 6,185
------ ------- ------ ------ -------
Units outstanding at December 31,
1999............................ 80,699 195,348 46,435 15,929 6,185
====== ======= ====== ====== =======
</TABLE>
F-43
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
----------------------------------------------------------
Real
S&P 500 Money Total Estate
Index Market Return International Securities
Fund Fund Fund Equity Fund Fund
Type II Units: --------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 3,025,140 4,980,487 928,145 614,410 1,478,247
--------- ---------- --------- -------- ---------
From capital
transactions:
Net premiums........... 1,191,108 4,686,359 224,832 71,002 242,837
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (18,705) (269,042) (8,405) (4,372) (9,506)
Surrenders........... (199,459) (1,083,395) (46,133) (38,542) (44,578)
Cost of insurance and
administrative
expenses............ (2,313) (4,489) (698) (803) (1,006)
Transfers (to) from the
Guarantee Account..... 878,507 1,448,793 291,977 130,273 346,955
Interfund transfers.... 313,281 (525,766) 35,416 (130,050) (259,466)
--------- ---------- --------- -------- ---------
Net increase (decrease)
in units from capital
transactions........... 2,162,419 4,252,460 496,989 27,508 275,236
--------- ---------- --------- -------- ---------
Units outstanding at
December 31, 1998...... 5,187,559 9,232,947 1,425,134 641,918 1,753,483
--------- ---------- --------- -------- ---------
From capital
transactions:
Net premiums........... 1,370,969 10,416,167 205,390 75,458 76,678
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (30,271) (277,340) (16,416) (3,637) (7,735)
Surrenders........... (313,331) (4,042,604) (90,526) (19,183) (118,250)
Cost of insurance and
administrative
expenses............ (3,902) (8,097) (1,063) (429) (1,038)
Transfers (to) from the
Guarantee Account..... 1,648,875 1,088,704 382,126 89,711 159,941
Interfund transfers.... 95,311 (2,417,319) (20,461) (47,864) (453,435)
--------- ---------- --------- -------- ---------
Net increase (decrease)
in units from capital
transactions........... 2,767,651 4,759,511 459,050 94,056 (343,839)
--------- ---------- --------- -------- ---------
Units outstanding at
December 31, 1999...... 7,955,210 13,992,458 1,884,184 735,974 1,409,644
========= ========== ========= ======== =========
</TABLE>
F-44
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
-------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
Type II Units: ------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 79,290 730,616 903,249 -- --
------- --------- --------- --------- -------
From capital
transactions:
Net premiums........... 52,447 651,133 162,212 86,729 --
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (1,696) (5,856) -- --
Surrenders........... (2,877) (104,573) (49,209) (787) --
Cost of insurance and
administrative
expenses............ (81) (689) (703) (16) --
Transfers (to) from the
Guarantee Account..... 83,494 607,675 345,204 51,261 --
Interfund transfers.... 73,722 257,534 529,843 43,108 --
------- --------- --------- --------- -------
Net increase (decrease)
in units from capital
transactions........... 206,705 1,409,384 981,491 180,295 --
------- --------- --------- --------- -------
Units outstanding at
December 31, 1998...... 285,995 2,140,000 1,884,740 180,295 --
------- --------- --------- --------- -------
From capital
transactions:
Net premiums........... 21,353 458,276 312,773 715,249 386,311
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (2,410) (15,900) (3,000) (383)
Surrenders........... (6,818) (146,114) (111,572) (22,241) (5,342)
Cost of insurance and
administrative
expenses............ (88) (1,590) (1,338) (359) (82)
Transfers (to) from the
Guarantee Account..... 82,304 546,156 729,550 557,143 145,917
Interfund transfers.... (91,015) 17,474 (68,521) 186,174 276,540
------- --------- --------- --------- -------
Net increase (decrease)
in units from capital
transactions........... 5,736 871,792 844,992 1,432,966 802,961
------- --------- --------- --------- -------
Units outstanding at
December 31, 1999...... 291,731 3,011,792 2,729,732 1,613,261 802,961
======= ========= ========= ========= =======
</TABLE>
F-45
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
---------------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type II Units: --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at De-
cember 31, 1997........ 994,017 3,176,448 2,462,359 2,934,974 1,200,126
--------- --------- --------- --------- ---------
From capital transactions:
Net premiums........... 270,558 267,347 407,290 416,094 182,920
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (14,333) (18,426) (19,533) (24,017) (11,769)
Surrenders........... (74,631) (147,815) (120,149) (177,425) (74,629)
Cost of insurance and
administrative
expenses............ (785) (2,506) (1,908) (2,036) (993)
Transfers (to) from the
Guarantee Account..... 382,347 343,625 410,907 621,713 292,547
Interfund transfers.... 419,337 (505,666) (126,117) (49,276) (29,622)
--------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 982,493 (63,441) 550,490 785,053 358,454
--------- --------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 1,976,510 3,113,007 3,012,849 3,720,027 1,558,580
--------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 261,544 114,559 235,472 187,738 66,844
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (20,072) (17,306) (18,769) (20,088) (7,328)
Surrenders........... (114,443) (173,315) (149,959) (247,870) (82,238)
Cost of insurance and
administrative
expenses............ (1,229) (1,900) (1,972) (2,515) (972)
Transfers (to) from the
Guarantee Account..... 611,535 110,666 286,238 480,849 153,230
Interfund transfers.... (182,535) (211,744) (130,872) (325,227) (183,302)
--------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 554,800 (179,040) 220,138 72,887 (53,766)
--------- --------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 2,531,310 2,933,967 3,232,987 3,792,914 1,504,814
========= ========= ========= ========= =========
</TABLE>
F-46
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
-------------------------------- --------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type II Units: ---------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at De-
cember 31, 1997........ 10,074,173 3,614,598 1,762,588 2,678,933 8,595,677 976,086 1,049,540
---------- --------- --------- --------- ---------- --------- ---------
From capital transactions:
Net premiums........... 1,114,775 299,241 60,690 252,836 1,051,752 918,372 716,944
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (77,675) (28,379) (10,651) (17,250) (51,811) (49,171) (7,825)
Surrenders........... (485,863) (150,297) (67,437) (134,438) (317,883) (60,159) (69,582)
Cost of insurance and
administrative
expenses............ (7,075) (2,366) (1,208) (1,548) (6,665) (1,024) (1,197)
Transfers (to) from the
Guarantee Account..... 1,227,043 185,849 81,221 283,280 1,100,294 688,392 768,665
Interfund transfers.... (509,932) (100,385) (208,247) 114,498 (285,564) 371,319 502,246
---------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,261,273 203,663 (145,632) 497,378 1,490,123 1,867,729 1,909,251
---------- --------- --------- --------- ---------- --------- ---------
Units outstanding at
December 31, 1998...... 11,335,446 3,818,261 1,616,956 3,176,311 10,085,800 2,843,815 2,958,791
---------- --------- --------- --------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 508,048 671,122 32,780 212,839 1,125,622 1,010,227 984,520
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (52,314) (14,943) (6,271) (20,795) (42,873) (21,323) (17,744)
Surrenders........... (641,881) (252,347) (52,978) (208,601) (526,069) (166,818) (170,732)
Cost of insurance and
administrative
expenses............ (7,133) (2,405) (621) (2,033) (6,316) (2,437) (2,365)
Transfers (to) from the
Guarantee Account..... 782,737 434,475 31,394 356,995 1,034,910 1,417,083 988,048
Interfund transfers.... (961,326) 106,554 (95,733) (153,115) (48,944) (28,808) 25,506
---------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (371,869) 942,456 (91,429) 185,290 1,536,330 2,207,924 1,807,233
---------- --------- --------- --------- ---------- --------- ---------
Units outstanding at
December 31, 1999...... 10,963,577 4,760,717 1,525,527 3,361,601 11,622,130 5,051,739 4,766,024
========== ========= ========= ========= ========== ========= =========
</TABLE>
F-47
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
PBHG Insurance Series
Federated Insurance Series Alger American Fund Fund, Inc.
-------------------------------- ------------------------ ------------------------
American High Small PBHG Large PBHG
Leaders Income Bond Utility Capitalization Growth Cap Growth Growth II
Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
Type II Units: --------- ----------- --------- -------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 2,056,691 1,886,887 1,325,701 5,645,458 4,380,186 346,833 576,010
--------- --------- --------- --------- --------- --------- -----------
From capital
transactions:
Net premiums............ 1,050,794 473,760 292,385 543,439 690,044 168,982 126,932
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (44,621) (24,952) (12,603) (35,528) (33,911) (3,311) (11,165)
Surrenders........... (111,859) (152,690) (73,103) (238,113) (227,269) (33,291) (36,248)
Cost of insurance and
administrative
expenses............ (2,136) (1,284) (1,163) (4,762) (3,266) (404) (590)
Transfers (to) from the
Guarantee Account..... 942,089 803,434 316,103 719,382 587,070 148,909 227,092
Interfund transfers.... 64,125 (7,464) 103,595 (547,462) 212,429 68,319 (42,435)
--------- --------- --------- --------- --------- --------- -----------
Net increase (decrease)
in units from capital
transactions........... 1,898,392 1,090,804 625,214 436,956 1,225,097 349,204 263,586
--------- --------- --------- --------- --------- --------- -----------
Units outstanding at
December 31, 1998...... 3,955,083 2,977,691 1,950,915 6,082,414 5,605,283 696,037 839,596
--------- --------- --------- --------- --------- --------- -----------
From capital
transactions:
Net premiums........... 435,360 341,570 266,112 402,251 1,791,980 90,269 153,521
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (12,111) (15,026) (29,633) (26,201) (52,245) (5,995) (1,861)
Surrenders........... (247,366) (162,671) (112,310) (332,834) (428,283) (93,949) (65,505)
Cost of insurance and
administrative
expenses............ (3,320) (1,784) (1,448) (3,705) (3,739) (434) (487)
Transfers (to) from the
Guarantee Account..... 814,778 708,367 535,523 475,632 1,181,832 110,416 96,030
Interfund transfers.... (387,724) (472,042) (125,174) (286,721) 488,665 14,787 221,114
--------- --------- --------- --------- --------- --------- -----------
Net increase (decrease)
in units from capital
transactions........... 599,617 398,414 533,070 228,422 2,978,210 115,094 402,812
--------- --------- --------- --------- --------- --------- -----------
Units outstanding at
December 31, 1999...... 4,554,700 3,376,105 2,483,985 6,310,836 8,583,493 811,131 1,242,408
========= ========= ========= ========= ========= ========= ===========
</TABLE>
F-48
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Janus Aspen Series
--------------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type II Units: ----------- ---------- ---------- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 3,442,667 7,270,898 10,111,685 2,804,435 869,089 3,001,600 163,550
----------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums........... 8,584,230 859,963 1,450,914 1,375,800 279,606 441,888 430,714
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (1,210,219) (49,261) (36,063) (37,836) (1,075) (22,070) (3,280)
Surrenders........... (5,336,460) (293,814) (402,150) (191,342) (44,562) (83,852) (38,646)
Cost of insurance and
administrative
expenses............ (83,426) (5,694) (7,564) (2,568) (846) (2,512) (341)
Transfers (to) from the
Guarantee Account..... 8,351,873 854,937 1,487,450 1,386,720 485,989 655,579 289,248
Interfund transfers.... (10,259,970) 190,192 (49,539) 724,982 322,950 (134,423) 653,113
----------- ---------- ---------- ---------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 46,028 1,556,323 2,443,048 3,255,756 1,042,062 854,610 1,330,808
----------- ---------- ---------- ---------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 3,488,695 8,827,221 12,554,733 6,060,191 1,911,151 3,856,210 1,494,358
----------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums........... 638,515 1,601,777 1,366,984 2,443,910 407,985 403,321 2,091,905
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (7,927) (51,477) (70,333) (56,072) (15,328) (13,648) (26,724)
Surrenders........... (177,407) (468,271) (691,964) (481,019) (152,834) (118,139) (153,401)
Cost of insurance and
administrative
expenses............ (1,613) (5,722) (8,181) (5,586) (1,366) (2,208) (1,683)
Transfers (to) from the
Guarantee Account..... 304,246 1,198,630 1,538,151 3,543,222 1,004,702 411,856 1,373,095
Interfund transfers.... 823,090 599,116 (110,536) 947,079 18,560 190,955 1,630,334
----------- ---------- ---------- ---------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,578,904 2,874,053 2,024,121 6,391,534 1,261,719 872,137 4,913,526
----------- ---------- ---------- ---------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 5,067,599 11,701,274 14,578,854 12,451,725 3,172,870 4,728,347 6,407,884
=========== ========== ========== ========== ========= ========= =========
</TABLE>
F-49
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Salomon Brothers Variable
Insurance Trust Series Fund Inc.
------------------ ---------------------------
Growth
and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type II Units: ------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1997..................... -- -- -- -- --
------- --------- ------- ------- -------
From capital transactions:
Net premiums................. 205,860 187,855 -- 811 15,933
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- -- -- -- --
Surrenders.................. (4,646) (4,160) -- -- (2)
Cost of insurance and
administrative expenses.... (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
------- --------- ------- ------- -------
From capital transactions:
Net premiums................. 136,381 275,911 87,824 38,147 63,047
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- (1,270) (1,085) -- --
Surrenders.................. (29,344) (30,281) (3,421) (962) (1,857)
Cost of insurance and
administrative expenses.... (460) (479) (43) (6) (80)
Transfers (to) from the
Guarantee Account........... 265,191 332,699 101,045 24,576 86,095
Interfund transfers.......... (20,938) 234,275 51,365 49,316 2,424
------- --------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 350,830 810,855 235,685 111,071 149,629
------- --------- ------- ------- -------
Units outstanding at December
31, 1999..................... 779,766 1,156,388 245,779 111,934 175,544
======= ========= ======= ======= =======
</TABLE>
F-50
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------
S&P 500 Total Real Estate
Index Money Market Return International Securities
Fund Fund Fund Equity Fund Fund
Type III Units: --------- ------------ --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
--------- ----------- --------- ------- -------
From capital
transactions:
Net premiums........... 6,802,805 26,606,289 1,215,947 145,060 95,069
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (12,776) (144,732) -- -- --
Surrenders........... (58,579) (148,000) (18,907) (644) (3,611)
Transfers (to) from the
Guarantee Account..... 150,344 82,774 21,136 4,164 6,696
Interfund transfers.... 940,109 (13,692,527) 87,529 30,883 9,648
--------- ----------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... 7,821,903 12,703,804 1,305,705 179,463 107,802
--------- ----------- --------- ------- -------
Units outstanding at
December 31, 1999...... 7,821,903 12,703,804 1,305,705 179,463 107,802
========= =========== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
--------------------------------------------
Value U.S. Premier
Equity Income Equity Growth Equity
Fund Fund Fund Fund
Type III Units: --------- ------- --------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998............................. -- -- -- --
--------- ------- --------- ---------
From capital transactions:
Net premiums..................... 1,036,116 314,012 1,220,973 936,093
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits.................. (6,042) (2,147) (973) --
Surrenders...................... (17,768) (6,141) (11,217) (6,629)
Transfers (to) from the Guarantee
Account......................... 22,379 6,119 13,194 26,808
Interfund transfers.............. 133,571 121,853 220,867 424,162
--------- ------- --------- ---------
Net increase (decrease) in units
from capital transactions........ 1,168,256 433,696 1,442,844 1,380,434
--------- ------- --------- ---------
Units outstanding at December 31,
1999............................. 1,168,256 433,696 1,442,844 1,380,434
========= ======= ========= =========
</TABLE>
F-51
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type III Units: ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998........ -- -- -- -- --
------- ------- --------- ------- -------
From capital transactions:
Net premiums............. 598,416 593,660 986,033 879,869 293,357
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits......... (24,269) (3,451) (1,032) (1,416) --
Surrenders............. (13,660) (10,533) (15,060) (8,322) (2,950)
Transfers (to) from the
Guarantee Account....... 30,987 12,469 29,811 23,655 5,153
Interfund transfers...... 99,491 302,111 214,622 29,413 10,265
------- ------- --------- ------- -------
Net increase (decrease) in
units from capital
transactions............. 690,965 894,256 1,214,374 923,199 305,825
------- ------- --------- ------- -------
Units outstanding at
December 31, 1999........ 690,965 894,256 1,214,374 923,199 305,825
======= ======= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
------------------------------- -------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type III Units: --------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
--------- --------- ------- ------- --------- --------- ---------
From capital
transactions:
Net premiums........... 2,911,113 5,455,784 342,131 655,968 4,350,101 1,863,827 1,517,495
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (1,168) (10,565) -- -- (7,525) (1,287) (1,320)
Surrenders............ (35,105) (64,018) (7,322) (11,671) (25,586) (35,107) (10,269)
Transfers (to) from the
Guarantee Account..... 76,560 94,771 1,189 13,510 129,791 66,596 72,775
Interfund transfers.... 252,253 1,085,738 52,069 119,705 765,205 184,950 130,481
--------- --------- ------- ------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 3,203,653 6,561,710 388,067 777,512 5,211,986 2,078,979 1,709,162
--------- --------- ------- ------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 3,203,653 6,561,710 388,067 777,512 5,211,986 2,078,979 1,709,162
========= ========= ======= ======= ========= ========= =========
</TABLE>
F-52
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Federated Insurance Series Alger American Fund
------------------------------ ------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Fund II Fund II Fund II Portfolio Portfolio
Type III Units: --------- ----------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
--------- ------- ------- --------- ---------
From capital
transactions:
Net premiums........... 1,215,352 684,526 421,560 998,630 4,680,722
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (2,079) (120) (1,650) (35,922)
Surrenders........... (9,777) (12,146) (8,023) (4,078) (43,905)
Transfers (to) from the
Guarantee Account..... 38,379 45,896 15,150 18,113 66,471
Interfund transfers.... (129,411) 82,989 63,004 149,741 709,788
--------- ------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,114,543 799,186 491,571 1,160,756 5,377,154
--------- ------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 1,114,543 799,186 491,571 1,160,756 5,377,154
========= ======= ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type III Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
--------- --------- --------- --------- ------- --------- ---------
From capital transactions:
Net premiums........... 3,433,215 6,733,050 4,679,934 6,431,170 572,513 863,953 6,946,766
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (8,849) (7,911) (2,840) (2,310) -- (3,678) (45,793)
Surrenders........... (31,999) (80,226) (40,954) (74,010) (18,968) (11,168) (66,978)
Transfers (to) from the
Guarantee Account..... 44,684 140,668 134,338 185,544 2,662 21,060 97,938
Interfund transfers.... 1,344,419 1,493,334 1,019,353 664,637 49,863 380,948 1,141,405
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 4,781,470 8,278,915 5,789,831 7,205,031 606,070 1,251,115 8,073,338
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 4,781,470 8,278,915 5,789,831 7,205,031 606,070 1,251,115 8,073,338
========= ========= ========= ========= ======= ========= =========
</TABLE>
F-53
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------ ---------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type III Units: ---------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1998..................... -- -- -- -- --
------- ------- ------- ------- -------
From capital transactions:
Net premiums................. 179,877 448,554 166,205 164,131 100,325
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- (3,176) -- -- --
Surrenders.................. (3,320) (4,186) (6,562) (1,317) (577)
Transfers (to) from the
Guarantee Account........... 9,236 20,162 4,931 9,264 2,093
Interfund transfers.......... 18,805 21,492 59,307 15,033 16,015
------- ------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 204,598 482,846 223,881 187,111 117,856
------- ------- ------- ------- -------
Units outstanding at December
31, 1999..................... 204,598 482,846 223,881 187,111 117,856
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Type IV Units: ------- ---------- ------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
------- ---------- ------ ------ ------
From capital
transactions:
Net premiums........... 436,947 2,333,947 58,534 11,080 3,519
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (1,506) (30,516) (465) -- --
Transfers (to) from the
Guarantee Account..... 5,872 -- 1,056 -- --
Interfund transfers.... 102,301 (1,089,158) 18,954 4,120 6,968
------- ---------- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 543,614 1,214,273 78,079 15,200 10,487
------- ---------- ------ ------ ------
Units outstanding at
December 31, 1999...... 543,614 1,214,273 78,079 15,200 10,487
======= ========== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(continued)
---------------------------------------
Value U.S. Premier
Equity Income Equity Growth Equity
Fund Fund Fund Fund
Type IV Units: ------- ------ ------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998.................................. -- -- -- --
------- ------ ------- ------
From capital transactions:
Net premiums.......................... 130,022 53,541 76,072 61,341
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits....................... -- -- -- --
Surrenders........................... (527) (216) (213) (194)
Transfers (to) from the Guarantee Ac-
count................................ 2,195 -- 385 105
Interfund transfers................... 15,650 13,753 24,662 35,583
------- ------ ------- ------
Net increase (decrease) in units from
capital transactions.................. 147,340 67,078 100,906 96,835
------- ------ ------- ------
Units outstanding at December 31,
1999.................................. 147,340 67,078 100,906 96,835
======= ====== ======= ======
</TABLE>
F-54
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type IV Units: ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998.......... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums............... 47,460 17,619 78,714 28,067 9,815
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits............ -- -- -- -- --
Surrenders................ (245) (66) (899) (48) --
Transfers (to) from the
Guarantee Account......... -- 168 -- -- 152
Interfund transfers........ (5,466) 7,029 3,613 7,839 399
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............... 41,749 24,750 81,428 35,858 10,366
------ ------ ------ ------ ------
Units outstanding at
December 31, 1999.......... 41,749 24,750 81,428 35,858 10,366
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Variable Insurance Products Fund Products Fund II Products Fund III
-------------------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type IV Units: ----------- ----------- ---------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
----------- ----------- ---------- ------ ------- ------- ------
From capital
transactions:
Net premiums........... 216,084 270,338 25,780 34,594 269,745 134,288 65,370
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- -- -- --
Surrenders........... (756) (1,836) (2) (134) (1,607) (368) (519)
Transfers (to) from the
Guarantee Account..... 3,774 2,002 -- 358 2,732 4,476 165
Interfund transfers.... 23,594 63,231 2,412 10,072 65,745 12,269 27,604
----------- ----------- ---------- ------ ------- ------- ------
Net increase (decrease)
in units from capital
transactions........... 242,696 333,735 28,190 44,890 336,615 150,665 92,620
----------- ----------- ---------- ------ ------- ------- ------
Units outstanding at
December 31, 1999...... 242,696 333,735 28,190 44,890 336,615 150,665 92,620
=========== =========== ========== ====== ======= ======= ======
</TABLE>
F-55
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Federated Insurance Series Alger American Fund
---------------------------- ------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Fund II Fund II Fund II Portfolio Portfolio
Type IV Units: -------- ----------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998....... -- -- -- -- --
------ ------ ------ ------ -------
From capital
transactions:
Net premiums............ 76,520 55,116 33,820 97,052 188,807
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (68) (345) (210) (852) (828)
Transfers (to) from the
Guarantee Account...... -- 846 -- 45 3,434
Interfund transfers..... 8,735 256 2,649 1,414 40,348
------ ------ ------ ------ -------
Net increase (decrease)
in units from capital
transactions............ 85,187 55,873 36,259 97,659 231,761
------ ------ ------ ------ -------
Units outstanding at
December 31, 1999....... 85,187 55,873 36,259 97,659 231,761
====== ====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type IV Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------- -------
From capital
transactions:
Net premiums........... 290,801 414,640 334,265 302,041 86,807 79,968 343,133
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- -- -- --
Surrenders........... (971) (1,895) (1,705) (1,671) (692) (353) (1,763)
Transfers (to) from the
Guarantee Account..... 767 1,935 4,641 6,715 1,497 41 3,287
Interfund transfers.... 222,512 85,744 69,747 40,846 1,601 22,725 83,434
------- ------- ------- ------- ------ ------- -------
Net increase (decrease)
in units from capital
transactions........... 513,109 500,424 406,948 347,931 89,213 102,381 428,091
------- ------- ------- ------- ------ ------- -------
Units outstanding at
December 31, 1999...... 513,109 500,424 406,948 347,931 89,213 102,381 428,091
======= ======= ======= ======= ====== ======= =======
</TABLE>
F-56
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Fund Inc.
------------------ --------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type IV Units: ---------- ------- --------- --------- ------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1998....................... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums................... 10,321 42,856 20,339 6,921 17,669
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................ -- -- -- -- --
Surrenders.................... -- (88) -- (44) --
Transfers (to) from the
Guarantee Account............. -- -- -- -- --
Interfund transfers............ 4,788 41 (5,043) (4,012) (1,377)
------ ------ ------ ------ ------
Net increase (decrease) in units
from capital transactions...... 15,109 42,809 15,296 2,865 16,292
------ ------ ------ ------ ------
Units outstanding at December
31, 1999....................... 15,109 42,809 15,296 2,865 16,292
====== ====== ====== ====== ======
</TABLE>
(d) Federal Income Taxes
The Account is not taxed separately because the operations of the Account are
part of the total operations of GE Life & Annuity. GE Life & Annuity is taxed as
a life insurance company under the Internal Revenue Code (the Code). GE Life &
Annuity is included in the General Electric Capital Assurance Company
consolidated federal income tax return. The Account will not be taxed as a
regulated investment company under subchapter M of the Code. Under existing
federal income tax law, no taxes are payable on the investment income or on the
capital gains of the Account.
(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 GE Life & Annuity to the Account represent gross
premiums recorded by GE Life & Annuity 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 GE Life & Annuity
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
for Type I policies, seven years for certain Type II policies, and eight years
for Type III policies. These surrender charges are assessed 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 for Type I and Type II
policies and 8% (or less) for Type III policies, depending on the time between
premium payment and surrender. There is no surrender charge for Type IV
policies.
GE Life & Annuity will deduct the following charges from the policy account
values to cover certain administrative expenses incurred: $30 per year for Type
I policies, $25 plus 0.15% per year for Type II policies, and $25 plus 0.25% per
year for both Type III and Type IV policies. For Type II, III and IV policies,
the $25 charge may be waived if the account value is greater than $75,000,
$10,000, and $25,000, respectively. In addition, GE Life & Annuity charges the
Account for the mortality and expense risk that GE Life & Annuity assumes based
on the following rates: Type I--1.15%, Type II--1.25%, Type III--1.3%, and Type
IV--1.35%. Administrative expenses as well as mortality and risk charges are
deducted daily and reflect the effective annual rates.
F-57
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(3) Related Party Transactions -- Continued
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company.
Capital Brokerage Corporation, an affiliate of GE Life & Annuity, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation also
serves as principal underwriter for variable life insurance policies issued by
GE Life & Annuity.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid an
investment advisory fee by the Fund based on the average daily net assets at an
effective annual rate of .35% for the S&P 500 Index Fund, .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 and Premier Growth Equity Funds, and .55% for the U.S.
Equity Fund.
Certain officers and directors of GE Life & Annuity are also officers and
directors of Capital Brokerage Corporation.
F-58
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying consolidated balance sheets of GE Life and
Annuity Assurance Company, formerly The Life Insurance Company of Virginia,
(an indirect wholly-owned subsidiary of General Electric Capital Corporation)
and subsidiary as of December 31, 1999 and 1998, and the related consolidated
statements of income, shareholders' interest, and cash flows for each of the
years in the three-year period ended December 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion of 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 GE Life
and Annuity Assurance Company and subsidiary as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
As discussed in note 15 to the consolidated financial statements, the
Company changed its method of accounting for insurance-related assessments in
1999.
/s/ KPMG LLP
Richmond, Virginia
January 21, 2000
F-2
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Assets
Investments:
Fixed maturities available-for-sale, at fair value....... $ 8,033.7 $ 7,022.8
Equity securities available-for-sale, at fair value:
Common stocks........................................... 9.2 6.1
Preferred stocks, non-redeemable........................ 23.9 48.3
Investment in subsidiary................................. 2.6 2.6
Mortgage loans, net of valuation allowance of $23.3 and
$20.9 at December 31, 1999 and 1998, respectively....... 810.5 745.8
Policy loans............................................. 58.5 204.4
Real estate owned........................................ 2.5 2.5
Other invested assets.................................... 141.5 130.8
--------- ---------
Total investments....................................... 9,082.4 8,163.3
--------- ---------
Cash...................................................... 21.2 11.1
Accrued investment income................................. 190.2 141.5
Deferred acquisition costs................................ 482.5 282.8
Intangible assets......................................... 472.8 458.3
Reinsurance recoverable................................... 72.4 68.9
Deferred income tax asset................................. 120.3 42.1
Other assets.............................................. 269.7 64.2
Separate account assets................................... 9,245.8 5,528.7
--------- ---------
Total Assets............................................ $19,957.3 $14,760.9
========= =========
Liabilities and Shareholders' Interest
Liabilities:
Future annuity and contract benefits..................... $ 9,063.0 $ 7,538.1
Liability for policy and contract claims................. 110.7 154.2
Other policyholder liabilities........................... 138.8 118.9
Accounts payable and accrued expenses.................... 193.3 127.2
Separate account liabilities............................. 9,245.8 5,528.7
--------- ---------
Total liabilities....................................... 18,751.6 13,467.1
--------- ---------
Shareholders' interest:
Net unrealized investment gains (losses)................. (134.2) 57.8
--------- ---------
Accumulated non-owner changes in equity.................. (134.2) 57.8
Preferred stock, Series A ($1,000 par value, $1,000
redemption and liquidation value, 200,000 shares
authorized, 120,000 shares issued and outstanding)...... 120.0 120.0
Common stock ($1,000 par value, 50,000 authorized, 25,651
shares issued and outstanding in 1999; 7,010 issued and
outstanding, 18,641 declared but not issued in 1998).... 25.6 25.6
Additional paid-in capital............................... 1,050.7 1,050.1
Retained earnings........................................ 143.6 40.3
--------- ---------
Total shareholders' interest............................ 1,205.7 1,293.8
--------- ---------
Total Liabilities and Shareholders' Interest............ $19,957.3 $14,760.9
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Net investment income............................. $ 638.2 $ 574.7 $ 562.7
Net realized investment gains..................... 12.0 29.6 19.0
Premiums.......................................... 123.9 123.1 171.8
Cost of insurance................................. 129.0 128.5 127.2
Variable product fees............................. 90.2 60.8 44.4
Other income...................................... 24.6 22.3 23.7
-------- ------- -------
Total revenues................................... 1,017.9 939.0 948.8
-------- ------- -------
Benefits and expenses:
Interest credited................................. 440.8 378.4 373.7
Benefits and other changes in policy reserves..... 214.7 178.4 217.2
Commissions....................................... 192.1 112.8 139.1
General expenses.................................. 124.7 111.0 92.2
Amortization of intangibles, net.................. 58.3 64.8 69.7
Change in deferred acquisition costs, net......... (179.1) (74.7) (112.6)
Interest expense.................................. 1.9 2.2 --
-------- ------- -------
Total benefits and expenses...................... 853.4 772.9 779.3
-------- ------- -------
Income before income taxes and cumulative effect
of accounting change............................ 164.5 166.1 169.5
Provision for income taxes......................... 56.6 60.3 62.1
-------- ------- -------
Income before cumulative effect of accounting
change.......................................... 107.9 105.8 107.4
-------- ------- -------
Cumulative effect of accounting change, net of
tax............................................... 5.0 -- --
-------- ------- -------
Net Income....................................... $ 112.9 $ 105.8 $ 107.4
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INTEREST
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Common Stock
Preferred Declared Accumulated
Stock Common Stock but not Issued Additional Non-owner Total
-------------- ------------- --------------- Paid-In Changes Retained Shareholders'
Shares Amount Shares Amount Shares Amount Capital in Equity Earnings Interest
------- ------ ------ ------ ------- ------ ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1996................... -- -- 7,010 7.0 -- -- 1,060.6 25.8 85.7 1,179.1
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 107.4 107.4
Net unrealized gains on
investment securities
(a)................... -- -- -- -- -- -- -- 61.9 -- 61.9
-------
Total changes other
than transactions with
shareholders.......... 169.3
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (2.2) -- -- (2.2)
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1997................... -- -- 7,010 7.0 -- -- 1,058.4 87.7 193.1 1,346.2
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 105.8 105.8
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (29.9) -- (29.9)
-------
Total changes other
than transactions with
shareholders.......... 75.9
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (120.0) (120.0)
Preferred stock
dividend............... 120,000 120.0 -- -- -- -- -- -- (120.0) --
Common stock dividend
declared but not
issued................. -- -- -- -- 18,641 18.6 -- -- (18.6) --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (8.3) -- -- (8.3)
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1998................... 120,000 120.0 7,010 7.0 18,641 18.6 1,050.1 57.8 40.3 1,293.8
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 112.9 112.9
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (192.0) -- (192.0)
-------
Total changes other
than transactions with
shareholders.......... (79.1)
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (9.6) (9.6)
Common stock issued..... -- -- 18,641 18.6 (18,641) (18.6) -- -- -- --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- 0.6 -- -- 0.6
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1999................... 120,000 120.0 25,651 25.6 -- -- 1,050.7 (134.2) 143.6 1,205.7
======= ===== ====== ==== ======= ===== ======= ====== ====== =======
</TABLE>
- -------
(a) Presented net of deferred taxes of $72.2, $(31.1) and $(47.2) in 1999,
1998, and 1997, respectively.
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 112.9 $ 105.8 $ 107.4
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Cost of insurance and surrender fees........ (169.5) (171.6) (170.7)
Increase in future policy benefits.......... 565.5 440.6 461.2
Net realized investment gains............... (12.0) (29.6) (19.0)
Amortization of investment premiums and
discounts.................................. (1.3) (1.3) 4.7
Amortization of intangibles................. 58.3 64.8 69.7
Deferred income tax expense (benefit)....... 25.0 29.5 (9.6)
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income................. (48.6) 1.5 (5.7)
Deferred acquisition costs................ (179.1) (74.7) (112.6)
Other assets, net......................... (200.1) (30.3) (14.3)
Increase (decrease) in:
Policy and contract claims................ (43.4) 18.0 36.4
Other policyholder liabilities............ 20.0 2.5 (0.4)
Accounts payable and accrued expenses..... 73.8 19.6 (113.3)
--------- --------- ---------
Total adjustments........................ 88.6 269.0 126.4
--------- --------- ---------
Net cash provided by operating
activities.............................. 201.5 374.8 233.8
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales and maturities of
investment securities and other invested
assets...................................... 1,702.2 2,238.0 992.3
Principal collected on mortgage loans........ 103.3 138.3 91.8
Proceeds collected from securitization....... 145.1 -- --
Purchase of investment securities and other
invested assets............................. (3,086.2) (2,685.4) (1,232.6)
Mortgage loans originations and increase in
policy loans................................ (170.4) (212.3) (121.5)
--------- --------- ---------
Net cash used in investing activities.... (1,306.0) (521.4) (270.0)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of investment
contracts................................... 4,717.6 2,280.0 1,961.9
Redemption and benefit payments on investment
contracts................................... (3,593.4) (2,016.2) (1,973.4)
Cash dividend to shareholders................ (9.6) (120.0) --
--------- --------- ---------
Net cash provided by (used in) financing
activities.............................. 1,114.6 143.8 (11.5)
--------- --------- ---------
Net increase (decrease) in cash and
equivalents............................. 10.1 (2.8) (47.7)
Cash and cash equivalents at beginning of
year......................................... 11.1 13.9 61.6
--------- --------- ---------
Cash and cash equivalents at end of year...... $ 21.2 $ 11.1 $ 13.9
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the historical
operations and accounts of GE Life and Annuity Assurance Company and its
subsidiary, Assigned Settlements Inc. (collectively the "Company" or
"GELAAC"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Effective January 1, 1999, an affiliated company, The Harvest Life
Insurance Company ("Harvest") merged into The Life Insurance Company of
Virginia ("LOV") with the merged Company renamed GE Life and Annuity Assurance
Company ("GELAAC"). Harvest's former parent, Federal Home Life Insurance
Company ("FHLIC"), received common stock of GELAAC in exchange for its
interest in Harvest. FHLIC is an indirect wholly-owned subsidiary of GE
Financial Assurance Holdings, Inc. ("GEFAHI"). As the merged entities were
under common control, the transaction has been accounted for similar to a
pooling of interests. Accordingly, the GELAAC consolidated financial
statements have been restated for the years ended December 31, 1998 and 1997
as if Harvest had been a part of LOV as of January 1, 1997.
The majority of GELAAC's outstanding common stock is owned by General
Electric Capital Assurance Company ("GECA"). GECA is a wholly-owned subsidiary
of GEFAHI, which is an indirect wholly-owned subsidiary of General Electric
Capital Corporation ("GECC"). GECC is an indirect wholly-owned subsidiary of
General Electric Company.
(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.
(c) Products
The Company's product offerings are divided along two major segments of
consumer needs: (i) Wealth Accumulation and Transfer and (ii) Lifestyle
Protection and Enhancement.
The Company's principal product lines under the Wealth Accumulation and
Transfer segment are (i) annuities (deferred and immediate; either fixed or
variable); (ii) life insurance (universal, ordinary and group), (iii)
guaranteed investment contracts ("GICs") including funding agreements and (iv)
mutual funds. Wealth Accumulation and Transfer products are used by customers
as vehicles for accumulating wealth, often on a tax-deferred basis,
transferring wealth to beneficiaries, or providing a means to replace the
insured's income in the event of premature death. The Company's distribution
of Wealth Accumulation and Transfer products is accomplished through two
distribution methods: (i) intermediaries and (ii) career or dedicated sales
forces.
The Company's principal product lines under the Lifestyle Protection and
Enhancement segment are (i) long-term care insurance and (ii) supplemental
accident and health insurance. Lifestyle Protection and Enhancement products
are used by customers as vehicles to protect their income and assets from the
adverse economic impacts of significant health care costs or other
unanticipated events that cause temporary or permanent loss of earnings
capabilities (including the ability to repay certain indebtedness). The
Company's distribution of Lifestyle Protection and Enhancement products is
accomplished through two distribution methods: (i) intermediaries and (ii)
career or dedicated sales forces.
Approximately 17%, 20% and 27% of premium and annuity consideration
collected, in 1999, 1998, and 1997, respectively, came from customers residing
in the South Atlantic region of the United States, and approximately 17%, 27%
and 13% of premium and annuity consideration collected, in 1999, 1998, and
1997, respectively, came from customers residing in the Mid-Atlantic region of
the United States.
F-7
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
Although the Company markets its products through numerous distributors,
approximately 28%, 20% and 19% of the Company's sales in 1999, 1998, and 1997,
respectively, have been through two specific national stockbrokerage firms
(part of the Wealth Accumulation and Transfer segment.) 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) 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.
Other income consists primarily of surrender charges on certain policies.
Surrender charges are recognized as income when the policy is surrendered.
(e) Investments
The Company has designated its fixed maturities (bonds, notes, mortgage-
backed securities, asset-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 and, accordingly, have no effect on net income, but are shown as a
separate component of accumulated non-owner changes in equity in the
consolidated statements of shareholders' interest. 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. In
general, the Company ceases to accrue investment income when interest or
dividend payments are 90 days in arrears.
Investment income on mortgage-backed and asset-backed securities is
initially based upon yield, cash flow and prepayment assumptions at the date
of purchase. Subsequent revisions in those assumptions are recorded using the
retrospective method, whereby the amortized cost of the securities is adjusted
to the amount that would have existed had the revised assumptions been in
place at the date of purchase. The adjustments to amortized cost are recorded
as a charge or credit to investment income. 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 carried generally at cost less accumulated depreciation. Other long-
term investments are carried generally at amortized cost.
F-8
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
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.
(f) 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
investment 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.
(g) 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.
(h) Federal Income Taxes
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.
(i) 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.
(j) 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.
F-9
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
(k) 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.
(l) 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, 1999, approximately $44.3 of the Company's
other invested assets related to its capital investments in the separate
accounts.
(m) 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
The sources of investment income of the Company for the years ended
December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Fixed maturities..................................... $560.1 $489.8 $477.2
Equity securities.................................... -- 4.9 7.3
Mortgage loans....................................... 66.9 64.2 61.0
Policy loans......................................... 14.0 14.4 13.7
Other investments.................................... 2.5 6.7 9.0
------ ------ ------
Gross investment income.............................. 643.5 580.0 568.2
Investment expenses.................................. (5.3) (5.3) (5.5)
------ ------ ------
Net investment income................................ $638.2 $574.7 $562.7
====== ====== ======
</TABLE>
F-10
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
For the years ended December 31, sales proceeds and gross realized
investment gains and losses from the sales of investment securities available-
for-sale were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ -------- ------
<S> <C> <C> <C>
Sales proceeds..................................... $590.3 $1,330.0 $483.6
====== ======== ======
Gross realized investment:
Gains............................................. 28.6 43.8 24.5
Losses............................................ (16.6) (14.2) (5.5)
------ -------- ------
Net realized investment gains...................... $ 12.0 $ 29.6 $ 19.0
====== ======== ======
</TABLE>
The additional proceeds from the investments presented in the consolidated
statements of cash flows result from principal collected on mortgage-backed
securities, asset-backed securities, maturities, calls and sinking fund
payments.
Net unrealized gains and losses on investment securities and other invested
assets 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 and other invested assets reflected as a separate component of
shareholders' interest as of December 31, are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Net unrealized gains/(losses) on available-for-sale
investment securities and other invested assets
before adjustments:
Fixed maturities.................................... $(245.0) $138.2 $192.2
Equity securities................................... (0.4) 5.5 14.6
Other invested assets............................... (4.1) 2.3 6.4
------- ------ ------
Subtotal........................................... (249.5) 146.0 213.2
------- ------ ------
Adjustments to the present value of future profits
and deferred acquisition costs 43.1 (57.1) (78.3)
Deferred income taxes................................ 72.2 (31.1) (47.2)
------- ------ ------
Net unrealized gains/(losses)...................... $(134.2) $ 57.8 $ 87.7
======= ====== ======
</TABLE>
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
Amortized unrealized unrealized Fair
1999 cost gains losses value
- ---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. government and agency........... $ 9.8 $ 0.1 $ (0.2) $ 9.7
State and municipal.................. 1.5 -- -- 1.5
Non-U.S. government.................. 3.0 -- (0.2) 2.8
U.S. corporate....................... 4,936.3 21.4 (227.6) 4,730.1
Non-U.S. corporate................... 624.6 8.1 (17.8) 614.9
Mortgage-backed...................... 1,696.5 16.9 (27.4) 1,686.0
Asset-backed......................... 1,007.0 1.5 (19.8) 988.7
-------- ----- ------- --------
Total fixed maturities............. 8,278.7 48.0 (293.0) 8,033.7
Common stocks and non-redeemable
preferred stocks.................... 33.5 1.3 (1.7) 33.1
-------- ----- ------- --------
Total available-for-sale securities.. $8,312.2 $49.3 $(294.7) $8,066.8
======== ===== ======= ========
</TABLE>
F-11
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Fair
1998 cost gains losses value
- ---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturites:
U.S. government and agency........... $ 66.3 $ 2.2 $ (0.1) $ 68.4
State and municipal.................. 1.6 0.4 -- 2.0
Non-U.S. government.................. 3.0 -- (0.4) 2.6
U.S. corporate....................... 4,223.8 142.2 (54.6) 4,311.4
Non-U.S. corporate................... 314.3 6.4 (9.0) 311.7
Mortgage-backed...................... 1,665.0 58 (9) 1,714.0
Asset-backed......................... 610.6 7.8 (5.7) 612.7
-------- ------ ------ --------
Total fixed maturities............. 6,884.6 217.0 (78.8) 7,022.8
Common stocks and non-redeemable
preferred stocks.................... 48.9 5.8 (0.3) 54.4
-------- ------ ------ --------
Total available-for-sale securities.. $6,933.5 $222.8 $(79.1) $7,077.2
======== ====== ====== ========
</TABLE>
The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 1999 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- --------
<S> <C> <C>
Due in one year or less.................................. $ 332.4 $ 329.7
Due one year through five years.......................... 2,222.5 2,170.0
Due five years through ten years......................... 1,663.2 1,565.5
Due after ten years...................................... 1,357.1 1,293.8
-------- --------
Subtotals.............................................. 5,575.2 5,359.0
Mortgage-backed securities............................... 1,696.5 1,686.0
Asset-backed securities.................................. 1,007.0 988.7
-------- --------
Totals................................................. $8,278.7 $8,033.7
======== ========
</TABLE>
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders of $5.9
and $10.8 as of December 31, 1999 and 1998, respectively.
As of December 31, 1999, approximately 26.1% and 16.1% 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, 1999 the Company did not hold any fixed maturity
securities which exceeded 10% of shareholders' interest.
F-12
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
The credit quality of the fixed maturity portfolio at December 31, follows.
The categories are based on the higher of the ratings published by Standard &
Poors or Moody's.
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
Fair Fair
value Percent value Percent
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Agencies and treasuries.................... $ 284.7 3.5% $ 536.0 7.6%
AAA/Aaa.................................... 2,080.7 25.9 1,696.1 24.2
AA/Aa...................................... 461.7 5.7 415.2 5.9
A/A........................................ 1,807.5 22.5 1,388.8 19.8
BBB/Baa.................................... 2,078.2 25.9 1,980.8 28.2
BB/Ba...................................... 368.2 4.6 401.5 5.7
B/B........................................ 191.6 2.4 188.5 2.7
CCC/Ca..................................... 0.7 0.0 -- --
CC/Ca...................................... 0.1 0.0 -- --
Not rated.................................. 760.3 9.5 415.9 5.9
-------- ----- -------- -----
Totals..................................... $8,033.7 100.0% $7,022.8 100.0%
======== ===== ======== =====
</TABLE>
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa 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.
At December 31, 1999 and 1998, there were fixed maturities in default with
a fair value of $1.0 and $4.5, respectively.
(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, 1999:
<TABLE>
<CAPTION>
Mortgage Real Estate
-------- -----------
<S> <C> <C>
South Atlantic.......................................... 30.0% 100.0%
Pacific................................................. 26.0 --
East North Central...................................... 15.0 --
West South Central...................................... 10.0 --
Mountain................................................ 5.0 --
Other................................................... 14.0 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
</TABLE>
F-13
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
Type distribution as of December 31, 1999:
<TABLE>
<CAPTION>
Mortgage Real Estate
-------- -----------
<S> <C> <C>
Office Building......................................... 22.0% --%
Retail.................................................. 30.0 100.0
Industrial.............................................. 23.0 --
Apartments.............................................. 15.0 --
Other................................................... 10.0 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
</TABLE>
"Impaired" loans are defined under generally accepted accounting principles
as loans for which it is probable that the lender will be unable to collect
all amounts due according to the original contractual terms of the loan
agreement. That definition excludes, among other things, leases or large
groups of smaller-balance homogenous loans, and therefore applies principally
to the Company's commercial loans.
Under these principles, the Company has two types of "impaired" loans as of
December 31, 1999 and 1998: 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 of income recognition ($12.5 and
$11.3, respectively). There was no allowance for losses on these loans as of
December 31, 1999 or 1998. Average investment in impaired loans during 1999,
1998 and 1997 was $15.0, $20.0 and $23.0 and interest income earned on these
loans while they were considered impaired was $2.6, $1.8 and $2.0 for the
years ended 1999, 1998 and 1997, respectively.
The following table shows the activity in the allowance for losses during
the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Balance on January 1...................................... $20.9 $17.7 $21.0
Provision charged to operations........................... 1.6 1.5 1.4
Amounts written off, net of recoveries.................... 0.8 1.7 (4.7)
----- ----- -----
Balance at December 31.................................... $23.3 $20.9 $17.7
===== ===== =====
</TABLE>
The allowance for losses on mortgage loans at December 31, 1999 and 1998
represented 2.8% and 2.7% of gross mortgage loans, respectively.
The Company had $4.5 and $5.6 of non-income producing mortgage loan
investments as of December 31, 1999 and 1998 respectively.
(3) Deferred Acquisition Costs
Activity impacting deferred policy acquisition costs for the years ended
December 31, was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unamortized balance -- at January 1................ $296.1 $221.4 $108.8
Costs deferred..................................... 218.9 107.0 130.6
Amortization, net.................................. (39.8) (32.3) (18.0)
------ ------ ------
Unamortized balance -- at December 31.............. 475.2 296.1 221.4
Cumulative effect of net unrealized investment
(gains) losses.................................... 7.3 (13.3) (14.8)
------ ------ ------
Balance at December 31............................. $482.5 $282.8 $206.6
====== ====== ======
</TABLE>
F-14
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(4) Intangibles
(a) Present Value of Future Profits
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 investment and 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.
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:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unamortized balance -- at January 1................ $367.0 $426.9 $487.9
Interest accreted at 7.19%, 6.25% and 6.75% for
1999, 1998, and 1997, respectively................ 21.9 24.0 28.4
Amortization....................................... (74.1) (83.9) (89.4)
------ ------ ------
Unamortized balance -- at December 31.............. 314.8 367.0 426.9
Cumulative effect of net unrealized investment
(gains) losses.................................... 35.8 (43.8) (63.5)
------ ------ ------
Balance at December 31............................. $350.6 $323.2 $363.4
====== ====== ======
</TABLE>
The estimated percentage of the December 31, 1999 balance, before the
effect of unrealized investment gains or losses, to be amortized over each of
the next five years is as follows:
<TABLE>
<S> <C>
2000................................... 14.7%
2001................................... 12.4
2002................................... 10.2
2003................................... 8.5
2004................................... 7.2
</TABLE>
(b) Goodwill
Goodwill represents the excess of purchase price over the fair value of the
assets acquired, less the fair value of the liabilities assumed which has been
pushed-down to the consolidated financial statements by the Company's parent.
Adjustments to the purchase price related to pre-acquisition contingencies are
recorded as adjustments to goodwill in the period in which they are resolved.
At December 31, 1999 and 1998, total unamortized goodwill was $121.4 and
$134.2, respectively, which is shown net of accumulated amortization and
adjustments of $36.1 and $50.9 for the years ended December 31, 1999 and 1998,
respectively. Goodwill amortization was $6.0, $4.9, and $8.7 for the years
ending December 31, 1999, 1998 and 1997, respectively. Adjustments to goodwill
totaled ($6.8), ($27.6) and ($1.9) for the years ending December 31, 1999,
1998 and 1997, respectively.
(5) Reinsurance and Claim Reserves
GELAAC is involved in both the cession and assumption of reinsurance with
other companies. Although these reinsurance agreements contractually obligate
the reinsurers to reimburse the Company, they do not discharge the
F-15
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(5) Reinsurance and Claim Reserves -- Continued
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 the 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>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Direct............................................... $348.0 $427.5 $412.7
Assumed.............................................. 17.9 19.2 20.7
Ceded................................................ (113.0) (195.1) (134.4)
------ ------ ------
Net premiums earned.................................. $252.9 $251.6 $299.0
------ ------ ------
Percentage of amount assumed to net.................. 7% 8% 7%
====== ====== ======
</TABLE>
Due to the nature of the Company's insurance contracts, premiums earned
approximate premiums written. The above premium amounts include cost of
insurance charges on universal life policies.
During 1998 and 1997, a significant portion of GELAAC's ceded premiums
related to group life and health premiums. During 1998 and 1997, GELAAC was
the primary carrier for the State of Virginia employees group life and health
plan. By statute, GELAAC had to reinsure these risks with other Virginia
domiciled companies who wished to participate.
Incurred losses and loss adjustment expenses are net of reinsurance of
$68.2, $112.4 and $85.6 for the years ended December 31, 1999, 1998 and 1997,
respectively.
(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.
F-16
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(6) Future Annuity and Contract Benefits -- Continued
The following chart summarizes the major assumptions underlying the
Company's recorded liabilities for future annuity and contract benefits:
<TABLE>
<CAPTION>
Mortality/ December 31,
Withdrawal Morbidity Interest Rate -----------------
Assumption Assumption Assumption 1999 1998
------------------ ---------- ------------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Contracts.... N/A N/A N/A $6,891.1 $5,416.2
Limited-payment
Contracts.............. None (a) 4.0-9.3% 16.3 14.4
Traditional life
insurance contracts.... Company Experience (b) 7.1% 380.8 381.5
Universal life-type
contracts.............. N/A N/A N/A 1,730.2 1,684.7
Accident & Health....... Company Experience (c) 3.5-7.5% 44.6 41.3
-------- --------
Total future annuity and
contract benefits...... $9,063.0 $7,538.1
======== ========
</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
GELAAC 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. As such the Company is not at risk for income taxes nor
entitled to recoveries related to post-acquisition periods.
The total provision for income taxes at December 31, consisted of the
following components:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Current federal income tax provision ..................... $29.3 $29.2 $69.1
Deferred federal income tax provision (benefit)........... 24.9 28.7 (9.5)
----- ----- -----
Subtotal-federal provision.............................. 54.2 57.9 59.6
Current state income tax provision ....................... 2.3 1.6 2.6
Deferred state income tax provision (benefit)............. 0.1 0.8 (0.1)
----- ----- -----
Subtotal-state provision................................ 2.4 2.4 2.5
----- ----- -----
Total income tax provision.............................. $56.6 $60.3 $62.1
===== ===== =====
</TABLE>
The reconciliation of the federal statutory rate to the effective income
tax rate at December 31, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal income tax rate..................... 35.0% 35.0% 35.0%
State income tax........................................... 0.5 0.5 0.5
Non-deductible goodwill amortization....................... 1.2 1.0 1.7
Dividends received deduction............................... (1.1) (0.2) --
Other, net................................................. (1.2) -- (0.5)
---- ---- ----
Effective rate........................................... 34.4% 36.3% 36.7%
==== ==== ====
</TABLE>
F-17
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(7) Income Taxes -- Continued
The components of the net deferred income tax asset at December 31 are as
follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Assets:
Insurance reserve amounts.................................... $149.0 $159.5
Investments.................................................. 10.7 --
Net unrealized investment losses on investment securities.... 72.2 --
Other........................................................ 22.2 7.7
------ ------
Total deferred tax assets................................... 254.1 167.2
------ ------
Liabilities:
Net unrealized investment gains on investment securities..... -- 31.1
Investments.................................................. -- 15.9
Present value of future profits.............................. 59.6 67.1
Deferred acquisition costs................................... 74.2 11.0
------ ------
Total deferred tax liabilities.............................. 133.8 125.1
------ ------
Net deferred income tax asset............................... $120.3 $ 42.1
====== ======
</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 $41.8, $25.6 and $70.6, for federal and state income taxes
for the years ended December 31, 1999, 1998 and 1997, respectively.
(8) Related Party Transactions
GELAAC pays investment advisory fees and other fees to affiliates. Amounts
incurred for these items aggregated $14.8, $11.5 and $11.9 for the years ended
December 31, 1999, 1998 and 1997, respectively. GELAAC charges affiliates for
certain services and for the use of facilities and equipment which aggregated
$45.1, $19.1 and $4.6, for the years ended December 31, 1999, 1998 and 1997,
respectively.
GELAAC pays interest on outstanding amounts under a credit funding
agreement with GNA Corporation, the parent company of GECA. Interest expense
under this agreement was $1.9 and $2.2 with no outstanding borrowings at
December 31, 1999 and $64.3 outstanding at December 31, 1998.
During 1998, GELAAC 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.
(9) Commitments and Contingencies
(a) Mortgage Loan Commitments
GELAAC 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, 1999 and 1998,
totaled $30.8 and $75.9, 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.
F-18
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(9) Commitments and Contingencies -- Continued
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 $.1, $3.1, and $4.6 to various
state guaranty associations during 1999, 1998 and 1997, respectively. At
December 31, 1999 and 1998, accounts payable and accrued expenses include $4.1
and $17.8, respectively, related to estimated future payments.
(c) Litigation
The Company and its subsidiary are defendants in various cases of
litigation considered to be in the normal course of business. The Company
believes that the outcome of such litigation will not have a material effect
on its financial position or results of operations.
(10) Fair Value of Financial Instruments
The Company has no derivative financial instruments as of December 31, 1999
and 1998 other than mortgage loan commitments of $53.0 and $83.8 and interest
rate floors of $13.9 and $17.2, respectively. The notional value of the
interest rate floors at December 31, 1999 and 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 matter 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, 1999 and 1998.
At December 31, the carrying amounts and fair value of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
Carrying Fair Carrying Fair
amount value amount value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Mortgage loans.......................... $ 810.5 $ 819.4 $ 745.8 $ 828.3
Investment type insurance contracts..... 6,891.1 6,849.8 5,416.2 5,441.8
Interest rate floors.................... 13.9 1.2 17.2 12.5
</TABLE>
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.
F-19
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(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 2000 is $54.2.
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 received its dividend in the form of 18,641 shares of newly issued
common stock in 1999.
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners ("NAIC")
that are prepared on an accounting basis prescribed by such authorities
(statutory basis). Statutory accounting practices differ from 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.
At December 31, statutory net income and statutory capital and surplus is
summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Statutory net income................................... $ 70.8 $ 70.1 $ 80.9
Statutory capital and surplus.......................... $542.5 $577.5 $600.0
</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, 1999 and 1998,
the Company exceeded the minimum required RBC levels.
(13) Operating Segment Information
The Company conducts its operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase
the policyholder's wealth, transfer wealth to beneficiaries or provide a means
for replacing the income of the insured in the event of premature death, and
(2) Lifestyle Protection and Enhancement, comprised of products intended to
protect accumulated wealth and income from the financial drain of unforeseen
events. See Note (1)(c) for further discussion of the Company's principal
product lines within these two segments.
F-20
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(13) Operating Segment Information -- Continued
The following is a summary of industry segment activity for 1999, 1998 and
1997:
<TABLE>
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1999 -- Segment Data Transfer & Enhancement Consolidated
- -------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ 634.2 4.0 638.2
Net realized investment gains........ 12.0 -- 12.0
Premiums............................. 67.8 56.1 123.9
Other revenues....................... 243.6 0.2 243.8
-------- ----- --------
Total revenues..................... 957.6 60.3 1,017.9
-------- ----- --------
Interest credited, benefits, and
other changes in policy reserves.... 617.0 38.5 655.5
Commissions.......................... 179.7 12.4 192.1
Amortization of intangibles.......... 56.2 2.1 58.3
Other operating costs and expenses... (55.1) 2.6 (52.5)
-------- ----- --------
Total benefits and expenses........ 797.8 55.6 853.4
-------- ----- --------
Income before income taxes and
cumulative effect of accounting
change............................ 159.8 4.7 164.5
======== ===== ========
Total Assets......................... 19,790.9 183.1 19,974.0
======== ===== ========
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1998 -- Segment Data Transfer & Enhancement Consolidated
- -------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ 569.4 5.3 574.7
Net realized investment gains........ 29.6 -- 29.6
Premiums............................. 101.4 21.7 123.1
Other revenues....................... 211.1 0.5 211.6
-------- ----- --------
Total revenues..................... 911.5 27.5 939.0
-------- ----- --------
Interest credited, benefits, and
other changes in policy reserves.... 560.7 (3.9) 556.8
Commissions.......................... 106.2 6.6 112.8
Amortization of intangibles.......... 55.1 9.7 64.8
Other operating costs and expenses... 26.0 12.5 38.5
-------- ----- --------
Total benefits and expenses........ 748.0 24.9 772.9
-------- ----- --------
Income before income taxes and
cumulative effect of accounting
change............................ 163.5 2.6 166.1
======== ===== ========
Total Assets......................... 14,661.1 99.8 14,760.9
======== ===== ========
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1997 -- Segment Data Transfer & Enhancement Consolidated
- -------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ 555.7 7.0 562.7
Net realized investment gains........ 19.0 -- 19.0
Premiums............................. 105.6 66.2 171.8
Other revenues....................... 195.1 0.2 195.3
-------- ----- --------
Total revenues..................... 875.4 73.4 948.8
-------- ----- --------
Interest credited, benefits, and
other changes in policy reserves.... 548.4 42.5 590.9
Commissions.......................... 125.2 13.9 139.1
Amortization of intangibles.......... 66.6 3.1 69.7
Other operating costs and expenses... (24.5) 4.1 (20.4)
-------- ----- --------
Total benefits and expenses........ 715.7 63.6 779.3
-------- ----- --------
Income before income taxes and
cumulative effect of accounting
change............................ 159.7 9.8 169.5
======== ===== ========
Total Assets......................... 12,699.0 47.9 12,746.9
======== ===== ========
</TABLE>
F-21
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(14) Accounting Pronouncements Not Yet Adopted
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities (Statement No. 133), effective for GELAAC
on January 1, 2001 (as amended by Statement of Financial Accounting Standards
No. 137, Deferral of the Effective Date of Statement No. 133.) Upon adoption,
all derivative instruments (including certain derivative instruments embedded
in other contracts) will be recognized in the balance sheets at fair value,
and changes in such fair values must be recognized immediately in earnings
unless specific hedging criteria are met. Changes in the values of derivatives
meeting these hedging criteria will ultimately offset related earnings effects
of the hedged items; effects of qualifying changes in fair value are to be
recorded in equity pending recognition in earnings. Certain significant
refinements and interpretations of Statement 133 are being deliberated by the
FASB, and the effects on accounting for GELAAC financial instruments will
depend to some degree on the results of such deliberations. Management has not
determined the total probable effects of adopting Statement 133, and does not
believe that an estimate of such effects would be meaningful at this time.
(15) Cumulative Effect of Accounting Change
The American Institute of Certified Public Accountants has issued Statement
of Position ("SOP") No. 97-3, Accounting by Insurance and Other Enterprises
for Insurance-Related Assessments. This SOP provided 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.
Effective January 1, 1999, the Company adopted SOP No. 97-3 and has
reported the favorable impact of this adoption as a cumulative effect of a
change in accounting principle resulting in an increase to net income of $5
(net of income taxes of $2.8).
F-22
