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Filed Pursuant to Rule 497(e)
File No. 333-63531
GE Life & Annuity Separate Account 4
Prospectus For
Flexible Premium Variable Deferred Annuity
Policy Form P1151 1/99
issued by:
GE Life and Annuity Assurance Company
Home Office:
6610 West Broad Street
Richmond, Virginia 23230
Telephone: (804) 281-6000
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This Prospectus describes an individual flexible premium variable deferred
annuity policy (the "Policy") for individuals and some qualified and non-
qualified retirement plans. GE Life and Annuity Assurance Company (the
"Company," "we," "us," or "our") issues the Policy.
The Policy offers you the accumulation of Account Value and the payment of
periodic annuity benefits. We may pay these benefits on a variable or fixed
basis or a combination of both.
The minimum amount you need to purchase the Policy is $25,000.
You may allocate your premium payments to Account 4, the Guarantee Account, or
both. Each Investment Subdivision of Account 4 invests in shares of the Funds.
We list the Funds, and their currently available portfolios, below.
The Alger American Fund:
Alger American Growth Portfolio, Alger American Small Capitalization
Portfolio
Federated Insurance Series:
Federated American Leaders Fund II, Federated High Income Bond Fund II,
Federated Utility Fund II
Fidelity Variable Insurance Products Fund (VIP):
VIP Equity-Income Portfolio, VIP Growth Portfolio, VIP Overseas Portfolio
Fidelity Variable Insurance Products Fund II (VIP II):
VIP II Asset Manager Portfolio, VIP II Contrafund(R) Portfolio
Fidelity Variable Insurance Products Fund III (VIP III):
VIP III Growth & Income Portfolio, VIP III Growth Opportunities Portfolio
GE Investments Funds, Inc.:
Income Fund, International Equity Fund, Mid-Cap Value Equity Fund (formerly
Value Equity Fund), Money Market Fund, Premier Growth Equity Fund, Real
Estate Securities Fund, S&P 500(R) Index Fund, Total Return Fund, U.S.
Equity Fund
Goldman Sachs Variable Insurance Trust (VIT):
Goldman Sachs Growth and Income Fund, Goldman Sachs Mid Cap Value Fund
(formerly Mid Cap Equity Fund)
Janus Aspen Series
Aggressive Growth Portfolio, Balanced Portfolio, Capital Appreciation
Portfolio, Flexible Income Portfolio, Global Life Sciences Portfolio, Global
Technology Portfolio, Growth Portfolio, International Growth Portfolio,
Worldwide Growth Portfolio
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Oppenheimer Variable Account Funds:
Oppenheimer Aggressive Growth Fund/VA, Oppenheimer Bond Fund/VA, Oppenheimer
Capital Appreciation Fund/VA, Oppenheimer High Income Fund/VA, Oppenheimer
Multiple Strategies Fund/VA
Salomon Brothers Variable Series Fund Inc:
Salomon Investors Fund, Salomon Strategic Bond Fund, Salomon Total Return
Fund
Not all of these portfolios may be available in all states or markets.
Except for amounts in the Guarantee Account, both the value of a Policy before
the Maturity Date and the amount of monthly income afterward will depend upon
the investment performance of the portfolio(s) you select. You bear the
investment risk of investing in the portfolios.
The Securities and Exchange Commission has not approved these securities or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Your investment in the Policy is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any government
agency.
This Prospectus gives details about Account 4 and our Guarantee Account that
you should know before investing. You should also review the prospectuses for
the Funds and keep all prospectuses for future reference.
We filed a statement of additional information ("SAI"), dated , 2000,
concerning the Policy with the Securities and Exchange Commission ("SEC") and
its terms are made part of this Prospectus. If you would like a free copy, call
us at 1-800-352-9910. The SAI and other information about the Policy is
available on the SEC's internet site at http://www.sec.gov. A table of contents
for the SAI appears on the last page of this Prospectus.
This Prospectus is dated , 2000.
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Table of Contents
<TABLE>
<S> <C>
Definitions................................................................. 1
Expense Table............................................................... 3
Synopsis.................................................................... 8
Investment Results.......................................................... 11
Financial Statements........................................................ 12
GE Life and Annuity Assurance Company....................................... 13
Account 4................................................................... 14
The Guarantee Account....................................................... 24
Charges and Other Deductions................................................ 26
The Policy.................................................................. 28
The Death Benefit........................................................... 36
Income Payments............................................................. 41
Federal Tax Matters......................................................... 45
Voting Rights............................................................... 54
Requesting Payments......................................................... 55
Distribution of the Policies................................................ 56
Additional Information...................................................... 57
Condensed Financial Information............................................. 59
Appendix.................................................................... 60
Table of Contents for Statement of Additional Information................... 64
</TABLE>
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
<PAGE>
Definitions
We have tried to make this Prospectus as understandable as possible. However,
in explaining how the Policy works, we have had to use certain terms that have
special meanings. We define these terms below.
Account 4 -- GE Life & Annuity Separate Account 4, a separate investment
account we established to receive and invest the premiums you pay under the
Policy, and other variable annuity policies we issue.
Account Value -- The value of the Policy equal to the amount allocated to the
Investment Subdivisions of Account 4 and the Guarantee Account.
Accumulation Unit -- An accounting unit of measure we use in calculating the
Account Value in Account 4 before the Maturity Date.
Annuitant -- The Annuitant is the person you named in the Policy upon whose age
and, where appropriate, sex, we determine monthly income benefits.
Annuity Unit -- An accounting unit of measure we use in the calculation of the
amount of the second and each subsequent variable income payment.
Death Benefit -- The benefit provided under a Policy upon the death of an
Annuitant prior to the Maturity Date.
Designated Beneficiary(ies) -- The person(s) designated in the Policy who is
alive (or in existence for non-natural entities) on the date of an Owner's,
Joint Owner's or Annuitant's death and who will be treated as the sole Owner of
the Policy following such a death.
Fund -- Any open-end management investment company or any unit investment trust
in which an Investment Subdivision invests.
General Account -- Our assets that are not segregated in any of our separate
investment accounts.
Guarantee Account -- Part of our General Account that provides a guaranteed
interest rate for a specified interest rate guarantee period. This account is
not part of and does not depend on the investment performance of Account 4.
Investment Subdivision -- A subdivision of Account 4, each of which invests
exclusively in shares of a designated portfolio of one of the Funds. Not all
Investment Subdivisions may be available in all states or markets.
Maturity Date -- The date stated in the Policy on which income payments are
scheduled to commence, if the Annuitant is living on that date.
Owner -- The person or persons (in the case of Joint Owners) entitled to
receive income payments after the Maturity Date. The Owner also is entitled to
the ownership
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rights stated in the Policy during the lifetime of the Annuitant and is shown
on the Policy data pages and in any application. "You" or "your" refers to the
Owner or Joint Owners.
Policy Date -- The date we issue your Policy and your Policy becomes effective.
Your Policy Date is shown in your Policy and we use it to determine Policy
years and anniversaries.
Surrender Value -- The Account Value (after deduction of any policy maintenance
charge) less any applicable premium tax.
Valuation Day -- For each Investment Subdivision, each day on which the New
York Stock Exchange is open for business, except for days that a Fund does not
value its shares.
Valuation Period -- The period that starts at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next succeeding Valuation Day.
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Expense Table
This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Policy. The table reflects expenses
of the Policy, of the Investment Subdivisions of Account 4, and of the
portfolios. For more complete descriptions of the various costs and expenses
involved, see Charges and Other Deductions in this Prospectus, and the Fund
prospectuses. Premium taxes may also be applicable, although they do not appear
in the table.
<TABLE>
<S> <C>
Owner Transaction Expenses:
Surrender Charge..................................................... None
Transfer Charge (for each transfer after the first in a calendar
month)/1/ .......................................................... $10
</TABLE>
<TABLE>
<S> <C>
Annual Expenses (As A Percentage Of Account Value):
Mortality and Expense Risk Charge................................... 1.35%
Administrative Expense Charge....................................... .25%
----
Total Annual Expenses............................................... 1.60%
</TABLE>
<TABLE>
<S> <C>
Other Annual Expenses:
Annual Policy Maintenance Charge/2/ .................................. $25
</TABLE>
/1/We reserve the right to assess a $10 transfer charge after the first
transfer in a calendar month, although we do not currently do so.
/2/We do not assess this charge if your Account Value at the time the charge
is due is at least $25,000.
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Portfolio Annual Expense Table
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):
<TABLE>
<CAPTION>
Other
Expenses
Management (after
Fees (after reimbursement Total
fee waiver 12b-1 as Annual
Portfolio as applicable) Fees applicable) Expenses
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Alger American Fund
Alger American Small
Capitalization Portfolio 0.85% 0.00% 0.05% 0.90%
Alger American Growth Portfolio 0.75 0.00 0.04 0.79
Federated Insurance Series
Federated American Leaders Fund
II 0.75 0.00 0.13 0.88
Federated High Income Bond Fund
II 0.60 0.00 0.19 0.79
Federated Utility Fund II 0.75 0.00 0.19 0.94
Fidelity Variable Insurance
Products Fund (VIP)*/1/
VIP Equity-Income Portfolio 0.48 0.00 0.09 0.57
VIP Growth Portfolio 0.58 0.00 0.08 0.66
VIP Overseas Portfolio 0.73 0.00 0.18 0.91
Fidelity Variable Insurance
Products Fund II (VIP II)*/2/
VIP II Asset Manager Portfolio 0.53 0.00 0.10 0.63
VIP II Contrafund Portfolio 0.58 0.00 0.09 0.67
Fidelity Variable Insurance
Products Fund III (VIP III)*/3/
VIP III Growth & Income Portfolio 0.48 0.00 0.12 0.60
VIP III Growth Opportunities
Portfolio 0.58 0.00 0.11 0.69
GE Investments Funds, Inc./4/
Income Fund 0.50 0.00 0.07 0.57
International Equity Fund 1.00 0.00 0.08 1.08
Mid-Cap Value Equity Fund
(formerly known as Value Equity
Fund) 0.65 0.00 0.06 0.71
Money Market Fund 0.24 0.00 0.06 0.30
Premier Growth Equity Fund 0.65 0.00 0.03 0.68
Real Estate Securities Fund 0.85 0.00 0.09 0.94
S&P 500(R) Index Fund 0.35 0.00 0.04 0.39
Total Return Fund 0.50 0.00 0.06 0.56
U.S. Equity Fund 0.55 0.00 0.06 0.61
Goldman Sachs Variable Insurance
Trust/5/
Goldman Sachs Growth and Income
Fund 0.75 0.00 0.25 1.00
Goldman Sachs Mid Cap Value Fund
(formerly Mid Cap Equity Fund) 0.80 0.00 0.25 1.05
Janus Aspen Series/6/
Aggressive Growth Portfolio --
Institutional Shares 0.65 0.00 0.02 0.67
Balanced Portfolio --
Institutional Shares 0.65 0.00 0.02 0.67
Capital Appreciation Portfolio --
Institutional Shares 0.65 0.00 0.04 0.69
Flexible Income Portfolio --
Institutional Shares 0.65 0.00 0.07 0.72
Global Life Sciences Portfolio --
Service Shares 0.65 0.25 0.19 1.09
Global Technology Portfolio --
Service Shares 0.65 0.25 0.13 1.03
Growth Portfolio -- Institutional
Shares 0.65 0.00 0.02 0.67
International Growth Portfolio --
Institutional Shares 0.65 0.00 0.11 0.76
Worldwide Growth Portfolio --
Institutional Shares 0.65 0.00 0.05 0.70
Oppenheimer Variable Account Funds
Oppenheimer Aggressive Growth
Fund/VA 0.66 0.00 0.01 0.67
Oppenheimer Bond Fund/VA 0.72 0.00 0.01 0.73
Oppenheimer Capital Appreciation
Fund/VA 0.68 0.00 0.02 0.70
Oppenheimer High Income Fund/VA 0.74 0.00 0.01 0.75
Oppenheimer Multiple Strategies
Fund/VA 0.72 0.00 0.01 0.73
</TABLE>
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<TABLE>
<CAPTION>
Other
Expenses
Management (after
Fees (after reimbursement Total
fee waiver 12b-1 as Annual
Portfolio as applicable) Fees applicable) Expenses
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salomon Brothers Variable Series
Funds Inc/7/
Salomon Investors Fund 0.70% 0.00% 0.28% 0.98%
Salomon Strategic Bond Fund 0.80 0.00 0.20 1.00
Salomon Total Return Fund 0.75 0.00 0.25 1.00
</TABLE>
* The fees and expenses reported for the Variable Insurance Products Fund
(VIP), Variable Insurance Products Fund II (VIP II) and Variable Insurance
Products Fund III (VIP III) are prior to any fee waiver and/or reimbursement
as applicable.
/1/A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or FMR 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 expenses of the portfolios of
the Variable Insurance Products Fund during 1999 for the VIP Equity-Income
Portfolio would have been total annual expenses of .56%, consisting of .48%
management fees and .08% other expenses; for VIP Overseas Portfolio total
annual expenses of .87%, consisting of .73% management fees and .14% other
expenses; for VIP Growth Portfolio total annual expenses of .65%, consisting
of .58% management fees and .07% other expenses.
/2/A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or FMR 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 expenses of the portfolios of
the Variable Insurance Products Fund II during 1999 for VIP II Asset Manager
Portfolio would have been total annual expenses of .62%, consisting of .53%
management fees and .09% other expenses; for VIP II Contrafund Portfolio
total annual expenses of .65%, consisting of .58% management fees and .07%
other expenses.
/3/A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or FMR 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 expenses of the portfolios of
the Variable Insurance Products Fund III during 1999 for VIP III Growth &
Income Portfolio would have been total annual expenses of .59%, consisting
of .48% management fees and .11% other expenses; for VIP III Growth
Opportunities Portfolio total annual expenses of .68%, consisting of .58%
management fees and .10% other expenses.
/4/GE Asset Management Incorporated ("GEAM") has voluntarily agreed to waive a
portion of its management fee for the Money Market Fund. Absent this waiver,
the total annual expenses of the Fund would have been 0.50%, consisting of
0.44% in management fees and 0.06% in other expenses. Also, GEAM voluntarily
limited other expenses for the GE Premier Growth Equity Fund for the period
from May 1, 1999 through April 30, 2000, which limitation was discontinued
effective May 1, 2000. Absent that expense limitation, the total annual
expenses of the Fund would have been 0.72%, consisting of 0.65% in
management fees and 0.07% in other expenses.
/5/Absent reimbursement the expenses for Goldman Sachs Variable Insurance Trust
during 1999 for Growth and Income Fund would have been total annual expenses
of 1.22%, consisting of .75% management fees and .47% other expenses; for
Mid Cap Value Fund total annual expenses of 1.22%, consisting of .80%
management fees and .42% other expenses.
/6/The expenses of the portfolios of Janus Aspen Series (except for Global
Technology and Global Life Sciences Portfolios) are based upon expenses for
the fiscal year ended December 31, 1999, restated to reflect a reduction in
the management fees for Growth, Aggressive Growth, Capital Appreciation,
International Growth, Worldwide Growth, Balanced, and Income Portfolios.
Expenses for Global Technology
5
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and Global Life Sciences Portfolios are based on the estimated expenses that
those Portfolios expect to incur in their initial fiscal year. All expenses
are shown without the effect of expense offset arrangements.
The 12b-1 fee deducted for the Janus Aspen Series(Service Shares) covers
certain distribution and shareholder support services provided by the
companies selling variable contracts investing in the Janus Aspen Series
portfolios. The 12b-1 fee assessed against the Janus Aspen Series(Service
Shares) held for the Policies will be remitted to Capital Brokerage
Corporation, the principal underwriter for the Policies.
/7/Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of Salomon Brothers Variable Series Fund Inc during 1999
would have been total annual expenses of 1.15% for Investors Fund,
consisting of .70% management fees and .45% other expenses; for Strategic
Bond Fund total annual expenses of 1.48%, consisting of .75% management fees
and .73% other expenses; for Total Return Fund total annual expenses of
1.65%, consisting of .80% management fees and .85% other expenses.
Not all portfolios may be available in all states or markets.
EXAMPLE
This example shows what your costs would be under certain hypothetical
situations. The example does not represent past or future expenses. Your actual
expenses may be more or less than those shown. The example is based on the
annual expenses of the portfolios of the Funds for the year ended December 31,
1999 (shown above in Portfolio Annual Expenses), and assumes that the
applicable fee waivers and reimbursements will continue (we cannot guarantee
that they will). The examples also assume an average annual policy maintenance
charge of 0.1% of Account Value attributable to the hypothetical investment
(this charge will be waived if the Account Value is at least $25,000 at the
time the charge is due).
An Owner 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:
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> <C> <C> <C>
Alger American Fund
Alger American Growth Portfolio $25.21 $77.55 $132.55 $282.59
Alger American Small Cap Portfolio 26.31 80.85 138.03 293.43
Federated Insurance Series
Federated American Leaders Fund II 26.11 80.25 137.03 291.47
Federated High Income Bond Fund II 25.21 77.55 132.55 282.59
Federated Utility Fund II 26.71 82.04 140.01 297.34
Fidelity Variable Insurance Products Fund
(VIP)
VIP Equity-Income Portfolio 23.01 70.93 121.50 260.53
VIP Growth Portfolio 23.91 73.65 126.04 269.62
VIP Overseas Portfolio 26.41 81.14 138.52 294.41
Fidelity Variable Insurance Products Fund (VIP
II)
VIP II Asset Manager Portfolio 23.61 72.74 124.53 266.60
VIP II Contrafund Portfolio 24.01 73.95 126.54 270.62
</TABLE>
6
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<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Variable Insurance Products Fund (VIP
III)
VIP III Growth & Income Portfolio $23.31 $71.84 $123.02 $263.57
VIP III Growth Opportunities Portfolio 24.21 74.55 127.55 272.63
GE Investments Funds, Inc.
Income Fund 23.01 70.93 121.50 260.53
International Equity Fund 28.11 86.21 146.92 310.89
Mid-Cap Value Equity Fund (formerly Value
Equity Fund) 24.41 75.15 128.55 274.63
Money Market Fund 20.30 62.75 107.78 232.72
Premier Growth Equity Fund 24.11 74.25 127.04 271.63
Real Estate Securities Fund 26.71 82.04 140.01 297.34
S&P 500(R) Index Fund 21.20 65.48 112.37 242.08
Total Return Fund 22.91 70.63 121.00 259.51
U.S. Equity Fund 23.41 72.14 123.52 264.58
Goldman Sachs Variable Insurance Trust
Goldman Sachs Growth and Income Fund 27.31 83.83 142.98 303.18
Goldman Sachs Mid Cap Value Fund 27.81 85.32 145.45 308.01
Janus Aspen Series
Aggressive Growth Portfolio 24.01 73.95 126.54 270.62
Balanced Portfolio 24.01 73.95 126.54 270.62
Capital Appreciation Portfolio 24.21 74.55 127.55 272.63
Flexible Income Portfolio 24.51 75.45 129.05 275.63
Global Life Sciences Portfolio 28.21 86.51 147.41 311.86
Global Technology Portfolio 27.61 84.72 144.46 306.08
Growth Portfolio 24.01 73.95 126.54 270.62
International Growth Portfolio 24.91 76.65 131.05 279.62
Worldwide Growth Portfolio 24.31 74.85 128.05 273.63
Oppenheimer Variable Account Funds
Oppenheimer Aggressive Growth Fund/VA 24.01 73.95 126.54 270.62
Oppenheimer Bond Fund/VA 24.61 75.75 129.55 276.63
Oppenheimer Capital Appreciation Fund/VA 24.31 74.85 128.05 273.63
Oppenheimer High Income Fund/VA 24.81 76.35 130.55 278.62
Oppenheimer Multiple Strategies Fund/VA 24.61 75.75 129.55 276.63
Salomon Brothers Variable Series Fund Inc
Salomon Investors Fund 27.11 83.23 141.99 301.24
Salomon Strategic Bond Fund 27.31 83.83 142.98 303.18
Salomon Total Return Fund 27.31 83.83 142.98 303.18
</TABLE>
* surrender includes annuitization over a period of less than 5 years.
OTHER POLICIES
We offer other variable annuity policies which also may invest in many of the
same portfolios of the Funds offered under the Policy. These policies have
different charges that could affect the value of the Investment Subdivisions,
and they may offer different benefits more suitable to your needs. To obtain
more information about these policies, contact your registered representative,
or call (800) 352-9910.
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Synopsis
What type of Policy am I buying? The Policy is an individual flexible premium
variable deferred annuity policy. We may issue it as a policy qualified
("Qualified Policy") under the Internal Revenue Code of 1986, as amended (the
"Code"), or as a policy that is not qualified under the Code ("Non-Qualified
Policy"). This Prospectus only provides disclosure about the Policy. See The
Policy.
How does the Policy work? Once we approve your application, we will issue the
Policy to you. During the accumulation period, while you are paying in, you can
use your net premium payments (i.e., your premium payments minus any premium
tax), to buy Accumulation Units under Account 4 or interests in the Guarantee
Account. Should you decide to annuitize (that is, change your Policy to a
payout mode rather than an accumulation mode), we will convert your
Accumulation Units to Annuity Units. You can choose a fixed or variable income
payment. If you choose a variable income payment, we will base your periodic
income payment upon the number of Annuity Units to which you became entitled at
the time you decided to annuitize and the value of each unit on that Valuation
Day. See The Policy.
What is Account 4? It is a segregated asset account established under Virginia
insurance law, and registered with the SEC as a unit investment trust. We
allocate the assets of Account 4 to one or more Investment Subdivisions,
according to your investment choice. We do not charge those assets with
liabilities arising out of any other business we may conduct. See Account 4.
What are my variable investment choices? Through its various Investment
Subdivisions, Account 4 uses your net premium payments to purchase shares, at
your direction, in one or more of the portfolios of the Funds. In turn, each
portfolio holds securities consistent with its own particular investment
policy. See Investments of Account 4.
What is the Guarantee Account? We offer fixed investment choices through our
Guarantee Account. The Guarantee Account is part of our General Account and
pays interest at declared rates we guarantee for selected periods of time. We
also guarantee the principal, after deductions. Since the Guarantee Account is
part of the General Account, we assume the risk of investment gain or loss on
this amount. All assets in the General Account are subject to our general
liabilities from business operations. The Guarantee Account may not be
available in all states or all markets.
The Guarantee Account is not part of and does not depend on the investment
performance of Account 4. You may allocate all or a portion of your net premium
payments to the Guarantee Account (see The Guarantee Account), and you may
transfer Account Value between the Guarantee Account and Account 4 subject to
certain restrictions. See Transfers Before the Maturity Date.
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<PAGE>
What charges are associated with this Policy? We assess annual charges in the
aggregate at an effective annual rate of 1.60% against the daily net asset
value of Account 4, including that portion of the account attributable to your
premium payments. These charges consist of .25% as an administrative expense
charge and 1.35% as a mortality and expense risk charge. There is also a $25
annual policy maintenance charge which we will waive if the Account Value is at
least $25,000 at the time the charge is due. For a complete discussion of the
charges associated with the Policy, see Charges and Other Deductions.
If your state assesses a premium tax with respect to your Policy, then at the
time we incur the tax (or at such other time as we may choose), we will deduct
those amounts from premium payments or Account Value, as applicable. See
Charges and Other Deductions and Deductions for Premium Taxes.
There are expenses associated with the portfolios. These include management
fees and other expenses associated with the daily operation of each portfolio.
See Investments of Account 4. These portfolio expenses are more fully described
in the Prospectus for each Fund.
How much must I pay, and how often? Subject to certain minimum and maximum
payments, the amount and frequency of your premium payments are completely
flexible. See The Policy -- Premium Payments.
How will my income payments be calculated? We will pay you a monthly income
beginning on the Maturity Date if the Annuitant is still living. You may also
decide to annuitize under one of the optional payment plans. We will base your
initial payment on maturity value and other factors. See Income Payments.
What happens if I die before the Maturity Date? Before the Maturity Date, if an
Owner, Joint Owner, or Annuitant dies while the Policy is in force, we will
treat the Designated Beneficiary as the sole Owner of the Policy, subject to
certain distribution rules. We may pay a Death Benefit to the Designated
Beneficiary. See Death of the Owner, Joint Owner or Annuitant Before the
Maturity Date.
May I transfer Account Value among portfolios? Yes, but there may be limits on
how often you may do so. The minimum transfer amount is currently $100 or the
entire balance in the Investment Subdivision if the transfer will leave a
balance of less than $100. Transfers from or to the Guarantee Account may be
subject to restrictions described in the Guarantee Account rider. See The
Policy -- Transfers Before the Maturity Date, Income Payments -- Transfers
After the Maturity Date, and The Guarantee Account.
May I surrender the Policy or make a partial surrender? Yes, subject to Policy
requirements and to restrictions imposed under certain retirement plans.
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<PAGE>
On full surrender, we may assess certain charges as discussed above and under
Charges and Other Deductions. In addition, you may be subject to income tax
and, if you are younger than age 59 1/2 at the time of the surrender, a 10%
penalty tax. A surrender or a partial surrender may also be subject to tax
withholding. See Federal Tax Matters. A partial surrender will reduce the Death
Benefit by the proportion that the partial surrender reduces the Account Value.
Do I get a free look at this Policy? Yes. You have the right to return the
Policy to us at our Home Office, and have us cancel the Policy within a certain
number of days (usually 10 days from the date you receive the Policy, but some
states require different periods).
If you exercise this right, we will cancel the Policy as of the day we receive
it and send you a refund equal to your Account Value plus any charges we have
deducted from premium payments prior to their allocation to Account 4 (and
excluding any charges the Portfolios may have deducted) on or before the date
we received the returned Policy. Or, if greater and required by the law of your
state, we will refund your premium payments (less any withdrawals previously
taken). This calculation may change. See Return Privilege.
When are my allocations effective? Within two business days after we receive
all the information necessary to process your purchase order, we will allocate
your initial premium payment directly to the Guarantee Account and/or the
Investment Subdivisions you choose.
Where may I find more information about Accumulation Unit Values? The Condensed
Financial Information section at the end of this Prospectus provides more
information about Accumulation Unit Values.
10
<PAGE>
Investment Results
At times, Account 4 may compare its investment results to various unmanaged
indices or other variable annuities in reports to shareholders, sales
literature and advertisements. We will calculate the results on a total return
basis for various periods. Total returns include the reinvestment of all
distributions of the portfolios, which are reflected in changes in unit value.
Total returns reflect the portfolio charges and expenses, the administrative
expense charge, the mortality and expense risk charge and the annual policy
maintenance charge. Total returns do not reflect the impact of any premium
taxes that may apply. See the Appendix for further information.
11
<PAGE>
Financial Statements
The 1999 financial statements of GE Life and Annuity Assurance Company and GE
Life & Annuity Separate Account 4 are located in the SAI. If you would like a
free copy of the SAI, call 1-800-352-9910. Otherwise, the SAI is available on
the SEC's website at http://www.sec.gov.
12
<PAGE>
GE Life And Annuity Assurance Company
We are a stock life insurance company operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. We principally offer life insurance
and annuity policies. We are admitted to do business in 49 states and the
District of Columbia. Our principal offices are at 6610 West Broad Street,
Richmond, Virginia 23230. 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
("Federal") and Phoenix Group Holdings, 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 Policies and a broker/dealer registered with the
U.S. Securities and Exchange Commission).
We are a member of the Insurance Marketplace Standards Association ("IMSA"). We
may use the IMSA membership logo and language in our advertisements, as
outlined in IMSA's Marketing and Graphics Guidelines. Companies that belong to
IMSA subscribe to a set of ethical standards covering the various aspects of
sales and service for individually sold life insurance and annuities.
13
<PAGE>
Account 4
We established Account 4 as a separate investment account on August 19, 1987.
Account 4 may invest in mutual funds, unit investment trusts, managed separate
accounts, and other portfolios, and we use it to support the Policy as well as
for other purposes permitted by law.
Account 4 currently has 40 Investment Subdivisions available under the Policy,
but that number may change in the future. Each Investment Subdivision invests
exclusively in shares representing an interest in a separate corresponding
portfolio of the Funds described below. We allocate net premium payments, in
accordance with your instructions, among up to ten of the 40 Investment
Subdivisions available under the Policy.
The assets of Account 4 belong to us. Nonetheless, we do not charge the assets
in Account 4 attributable to the Policies with liabilities arising out of any
other business which we may conduct. The assets of Account 4 shall, however, be
available to cover the liabilities of our General Account to the extent that
the assets of Account 4 exceed its liabilities arising under the Policies
supported by it. Income and both realized and unrealized gains or losses from
the assets of Account 4 are credited to or charged against Account 4 without
regard to the income, gains or losses arising out of any other business we may
conduct.
We registered Account 4 with the SEC as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act"). Account 4 meets the definition of
a separate account under the Federal securities laws. Registration with the SEC
does not involve supervision of the management or investment practices or
policies of Account 4 by the SEC. You assume the full investment risk for all
amounts you allocate to Account 4.
INVESTMENTS OF ACCOUNT 4
There is a separate Investment Subdivision which corresponds to each portfolio
of a Fund offered in this Policy. You decide the Investment Subdivisions to
which you allocate net premium payments. You may change your allocation without
penalty or charges.
Each Fund is registered with the Securities and Exchange Commission as an open-
end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one
portfolio has no effect on the investment performance of any other portfolio.
Before choosing an Investment Subdivision to allocate your net premium payments
and Account Value, carefully read the prospectus for each Fund, along with this
14
<PAGE>
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 Account 4.
You bear the investment risk of investing in the portfolios.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the
investment results of any other portfolio, even if the other portfolio has the
same investment adviser or manager, or if the other portfolio has a similar
name.
INVESTMENT SUBDIVISIONS
The Policy offers you a choice from among 40 Investment Subdivisions, each of
which invests in an underlying portfolio of one of the Funds. You may invest in
up to ten Investment Subdivisions plus the Guarantee Account at any one time.
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
THE ALGER AMERICAN FUND
Alger American Growth Seeks long-term capital Fred Alger
Portfolio appreciation by focusing on Management, Inc.
growing companies that
generally have broad product
lines, markets, financial
resources and depth of
management. Under normal
circumstances, the portfolio
invests primarily in the
equity securities of large
companies. The portfolio
considers a large company to
have a market capitalization
of $1 billion or greater.
-------------------------------------------------------------------------------
Alger American Small Seeks long-term capital Fred Alger
Capitalization Portfolio appreciation by focusing on Management, Inc.
small, fast-growing companies
that offer innovative
products, services or
technologies to a rapidly
expanding marketplace. Under
normal circumstances, the
portfolio invests primarily in
the equity securities of small
capitalization companies. A
small capitalization company
is one that has a market
capitalization within the
range of the Russell 2000
Growth Index or the S&P Small
Cap 600(R) Index.
-------------------------------------------------------------------------------
FEDERATED INSURANCE SERIES
Federated American Leaders Seeks long-term growth of Federated Investment
Fund II capital with a secondary Management Company
objective of providing income.
Seeks to achieve its objective
by investing, under normal
circumstances, at least 65% of
its total assets in common
stock of "blue chip"
companies.
-------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Federated High Income Seeks high current income by Federated Investment
Bond Fund II investing primarily in a Management Company
diversified portfolio of
professionally managed fixed-
income securities. The fixed
income securities in which the
fund intends to invest are
lower-rated corporate debt
obligations, commonly referred
to as "junk bonds". The risks
of these securities and their
high yield potential are
described in the prospectus
for the Federated Insurance
Series, which should be read
carefully before investing.
-------------------------------------------------------------------------------
Federated Utility Fund II Seeks high current income and Federated Investment
moderate capital appreciation Management Company
by investing primarily in
equity and debt securities of
utility companies.
-------------------------------------------------------------------------------
FIDELITY VARIABLE
INSURANCE PRODUCTS FUND
(VIP)
VIP Equity-Income Seeks reasonable income and Fidelity Management
Portfolio will consider the potential & Research Company;
for capital appreciation. The (beginning January
fund also seeks a yield, which 1, 2001, FMR Co.,
exceeds the composite yield on Inc. will subadvise.)
the securities comprising the
S&P 500(R) by investing
primarily in income-producing
equity securities and by
investing in domestic and
foreign issuers.
-------------------------------------------------------------------------------
VIP Growth Portfolio Seeks capital appreciation by Fidelity Management
investing primarily in common & Research Company;
stocks of companies believed (beginning January
to have above-average growth 1, 2001, FMR Co.,
potential. Inc. will subadvise.)
-------------------------------------------------------------------------------
VIP Overseas Portfolio Seeks long-term growth of Fidelity Management
capital by investing at least & Research Company,
65% of total assets in foreign (subadvised by
securities, primarily in Fidelity Management
common stocks. & Research (U.K.)
Inc., Fidelity
Management &
Research (Far East)
Inc., Fidelity
International
Investment Advisors,
Fidelity
International
Investment Advisors
(U.K.) Limited, and
Fidelity Investments
Japan Limited;
beginning January 1,
2001, FMR Co., Inc.
will subadvise.)
-------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
FIDELITY VARIABLE
INSURANCE PRODUCTS FUND II
(VIP II)
VIP II Asset Manager Seeks high total return with Fidelity Management
Portfolio reduced risk over the long- & Research Company
term by allocating assets (subadvised by
among stocks, bonds and short- Fidelity Management
term and money market & Research (U.K.)
instruments. Inc., Fidelity
Management &
Research (Far East)
Inc., Fidelity
Investments Japan
Limited and Fidelity
Investments Money
Management, Inc.;
beginning January 1,
2001, FMR Co., Inc.
will subadvise.)
-------------------------------------------------------------------------------
VIP II Contrafund(R) Seeks long-term capital Fidelity Management
Portfolio appreciation by investing & Research Company,
mainly in common stocks and in (subadvised by
securities of companies whose Fidelity Management
value is believed to have not & Research (U.K.)
been fully recognized by the Inc. and Fidelity
public. This fund invests in Management &
domestic and foreign issuers. Research (Far East)
This fund also invests in Inc.; and Fidelity
"growth" stocks, "value" Investments Japan
stocks, or both. Limited; beginning
January 1, 2001, FMR
Co., Inc. will
subadvise.)
-------------------------------------------------------------------------------
FIDELITY VARIABLE
INSURANCE PRODUCTS FUND
III (VIP III)
VIP III Growth & Income Seeks high total return Fidelity Management
Portfolio through a combination of & Research Company,
current income and capital (subadvised by
appreciation by investing a Fidelity Management
majority of assets in common & Research (U.K.)
stocks with a focus on those Inc., Fidelity
that pay current dividends and Management &
show potential for capital Research (Far East)
appreciation. Inc.; and Fidelity
Investments Japan
Limited; beginning
January 1, 2001, FMR
Co., Inc. will
subadvise.)
-------------------------------------------------------------------------------
VIP III Growth Seeks to provide capital Fidelity Management
Opportunities Portfolio growth by investing primarily & Research Company,
in common stock and other (subadvised by
types of securities, including Fidelity Management
bonds, which may be lower- & Research (U.K.)
quality debt securities. Inc., Fidelity
Management &
Research (Far East)
Inc.; and Fidelity
Investments Japan
Limited; beginning
January 1, 2001, FMR
Co., Inc. will
subadvise.)
-------------------------------------------------------------------------------
GE INVESTMENTS FUNDS, INC.
Income Fund Objective of providing maximum GE Asset Management
income consistent with prudent Incorporated
investment management and
preservation of capital by
investing primarily in income-
bearing debt securities and
other income bearing
instruments.
-------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
--------------------------------------------------------------------------------
<S> <C> <C>
International Equity Fund Objective of providing long- GE Asset Management
term growth of capital by Incorporated
investing primarily in foreign
equity and equity-related
securities which the adviser
believes have long-term
potential for capital growth.
--------------------------------------------------------------------------------
Mid-Cap Value Equity Fund Objective of providing long GE Asset Management
(formerly Value Equity term growth of capital by Incorporated
Fund) investing primarily in common (Subadvised by NWQ
stock and other equity Investment
securities of companies that Management Company)
the investment adviser
believes are undervalued by
the marketplace at the time of
purchase and that offer the
potential for above-average
growth of capital. Although
the current portfolio reflects
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.
--------------------------------------------------------------------------------
Money Market Fund Objective of providing highest GE Asset Management
level of current income as is Incorporated
consistent with high liquidity
and safety of principal by
investing in various types of
good quality money market
securities.
--------------------------------------------------------------------------------
Premier Growth Equity Fund Objective of providing long- GE Asset Management
term growth of capital as well Incorporated
as future (rather than
current) income by investing
primarily in growth-oriented
equity securities.
--------------------------------------------------------------------------------
Real Estate Securities Fund Objective of providing maximum GE Asset Management
total return through current Incorporated
income and capital (Subadvised by
appreciation by investing Seneca Capital
primarily in securities of Management, L.L.C.)
U.S. issuers that are
principally engaged in or
related to the real estate
industry including those that
own significant real estate
assets. The portfolio will not
invest directly in real
estate.
--------------------------------------------------------------------------------
S&P 500(R) Index Fund/1/ Objective of providing capital GE Asset Management
appreciation and accumulation Incorporated
of income that corresponds to (Subadvised by State
the investment return of the Street Global
Standard & Poor's 500 Advisors)
Composite Stock Price Index
through investment in common
stocks comprising the Index.
--------------------------------------------------------------------------------
</TABLE>
/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 Asset Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
or warranty, express or implied, regarding the advisability of investing in
this Fund or the Policy.
18
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Total Return Fund Objective of providing the GE Asset Management
highest total return, composed Incorporated
of current income and capital
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.
-------------------------------------------------------------------------------
U.S. Equity Fund Objective of providing long- GE Asset Management
term growth of capital through Incorporated
investments primarily in
equity securities of U.S.
companies.
-------------------------------------------------------------------------------
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
Goldman Sachs Growth and Seeks long-term capital growth Goldman Sachs Asset
Income Fund and growth of income, Management
primarily through equity
securities that are considered
to have favorable prospects
for capital appreciation
and/or dividend-paying
ability.
-------------------------------------------------------------------------------
Goldman Sachs Mid Cap Value Seeks long-term capital Goldman Sachs Asset
Fund (formerly Mid Cap appreciation, primarily Management
Equity Fund) through equity securities of
companies with public stock
market capitalizations within
the range of the market
capitalization of companies
constituting the Russell
Midcap Index at the time of
investment (currently between
$400 million and $16 billion).
-------------------------------------------------------------------------------
JANUS ASPEN SERIES
Aggressive Growth Portfolio Non-diversified portfolio Janus Capital
pursuing long- term growth of Corporation
capital. Pursues this
objective by normally
investing at least 50% of its
assets in equity securities
issued by medium-sized
companies.
-------------------------------------------------------------------------------
Balanced Portfolio Seeks long term growth of Janus Capital
capital. Pursues this Corporation
objective consistent with the
preservation of capital and
balanced by current income.
Normally invests 40-60% of its
assets in securities selected
primarily for their growth
potential and 40- 60% of its
assets in securities selected
primarily for their income
potential.
-------------------------------------------------------------------------------
Capital Appreciation Non-diversified portfolio Janus Capital
Portfolio pursuing long-term growth of Corporation
capital. Pursues this
objective by investing
primarily in common stocks of
companies of any size.
-------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
------------------------------------------------------------------------------
<S> <C> <C>
Flexible Income Portfolio Seeks maximum total return Janus Capital
consistent with preservation Corporation
of capital. Total return is
expected to result from a
combination of income and
capital appreciation. The
portfolio pursues its
objective primarily by
investing in any type of
income-producing securities.
This portfolio may have
substantial holdings of lower-
rated debt securities or
"junk" bonds. The risks of
investing in junk bonds are
described in the prospectus
for Janus Aspen Series, which
should be read carefully
before investing.
------------------------------------------------------------------------------
Global Life Sciences Seeks long-term growth of Janus Capital
Portfolio capital. The portfolio pursues Corporation
this objective by investing at
least 65% of its total assets
in securities of U.S. and
foreign companies that the
portfolio manager believes
have a life science
orientation. The portfolio
normally invests at least 25%
of its total assets, in the
aggregate, in the following
industry groups: health care;
pharmaceuticals; agriculture;
cosmetics/personal care; and
biotechnology.
------------------------------------------------------------------------------
Global Technology Portfolio Seeks long-term growth of Janus Capital
capital. The portfolio pursues Corporation
this objective by investing at
least 65% of its total assets
in securities of U.S. and
foreign companies that the
portfolio manager believes
will benefit significantly
from advances or improvements
in technology.
------------------------------------------------------------------------------
Growth Portfolio Seeks long-term capital growth Janus Capital
consistent with the Corporation
preservation of capital and
pursues its objective by
investing in common stocks of
companies of any size.
Emphasizes larger, more
established issuers.
------------------------------------------------------------------------------
International Growth Seeks long-term growth of Janus Capital
Portfolio capital. Pursues this Corporation
objective primarily through
investments in common stocks
of issuers located outside the
United States. The portfolio
normally invests at least 65%
of its total assets in
securities of issuers from at
least five different
countries, excluding the
United States.
------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
-----------------------------------------------------------------------------
<S> <C> <C>
Worldwide Growth Portfolio Seeks long-term capital growth Janus Capital
in a manner consistent with Corporation
the preservation of capital.
Pursues this objective by
investing in a diversified
portfolio of common stocks of
foreign and domestic issuers
of all sizes. Normally invests
in at least five different
countries including the United
States.
-----------------------------------------------------------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Aggressive Seeks to achieve capital OppenheimerFunds,
Growth Fund/VA appreciation investing mainly Inc.
in common stocks of companies
in the United States believed
by the fund's investment
manager, OppenheimerFunds
Inc., to have significant
growth potential.
-----------------------------------------------------------------------------
Oppenheimer Bond Fund/VA Seeks high level of current OppenheimerFunds,
income and capital Inc.
appreciation when consistent
with its primary objective of
high income. Under normal
conditions this fund will
invest at least 65% of its
total assets in investment
grade debt securities.
-----------------------------------------------------------------------------
Oppenheimer Capital Seeks capital appreciation OppenheimerFunds,
Appreciation Fund/VA from investments in securities Inc.
of well-known and established
companies. Such securities
generally have a history of
earnings and dividends and are
issued by seasoned companies
(having an operating history
of at least five years,
including predecessors).
-----------------------------------------------------------------------------
Oppenheimer High Income Seeks high current income from OppenheimerFunds,
Fund/VA investments in high yield Inc.
fixed income securities,
including unrated securities
or high-risk securities in
lower rating categories. These
securities may be considered
speculative. This fund may
have substantial holdings of
lower-rated debt securities or
"junk" bonds. The risks of
investing in junk bonds are
described in the prospectus
for the Oppenheimer Variable
Account Funds, which should be
read carefully before
investing.
-----------------------------------------------------------------------------
Oppenheimer Multiple Seeks total investment return OppenheimerFunds,
Strategies Fund/VA (which includes current income Inc.
and capital appreciation in
the values of its shares) from
investments in common stocks
and other equity securities,
bonds and other debt
securities, and "money market"
securities.
-----------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Investment Subdivision Investment Objective applicable)
--------------------------------------------------------------------------------
<S> <C> <C>
SALOMON BROTHERS VARIABLE SERIES FUNDS INC
Salomon Investors Fund Seeks long-term growth of Salomon Brothers
capital with current income as Asset Management Inc
a secondary objective,
primarily through investments
in common stocks of well-known
companies.
--------------------------------------------------------------------------------
Salomon Strategic Bond Fund Seeks high level of current Salomon Brothers
income with capital Asset Management Inc
appreciation as a secondary
objective, through a globally
diverse portfolio of fixed-
income investments, including
lower-rated fixed income
securities commonly known as
junk bonds.
--------------------------------------------------------------------------------
Salomon Total Return Fund Seeks to obtain above-average Salomon Brothers
income by primarily investing Asset Management Inc
in a broad variety of
securities, including stocks,
fixed-income securities and
short-term obligations.
--------------------------------------------------------------------------------
</TABLE>
Not all of these portfolios may be available in all states or in all markets.
We will purchase shares of the portfolios at net asset value and direct them to
the appropriate Investment Subdivisions of Account 4. We will redeem sufficient
shares of the appropriate portfolios at net asset value to pay Death Benefits
and surrender/partial surrender proceeds, to make income payments, or for other
purposes described in the Policy. We automatically reinvest all dividend and
capital gain distributions of the portfolios in shares of the distributing
portfolios at their net asset value on the date of distribution. In other
words, we do not pay portfolio dividends or portfolio distributions out to
Owners as additional units, but instead reflect them in unit values.
Shares of the portfolios 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.
22
<PAGE>
We have entered into agreements with either the investment adviser or
distributor of each of the Funds under which the adviser or distributor pays us
a fee ordinarily based upon a percentage of the average aggregate amount we
have invested on behalf of Account 4 and other separate accounts. These
percentages differ, and some investment advisers or distributors pay us a
greater percentage than other advisors or distributors. These agreements
reflect administrative services we provide. The amounts we receive under these
agreements may be significant. In addition, our affiliate, Capital Brokerage
Corporation, the principal underwriter for the Policies, will receive 12b-1
fees deducted from certain portfolio assets for providing distribution and
shareholder support services to some of the portfolios.
CHANGES TO ACCOUNT 4 AND THE INVESTMENT SUBDIVISIONS
We reserve the right, within the law, to make additions, deletions and
substitutions for the Funds and/or any portfolios within the Funds in which
Account 4 participates. (We may substitute shares of other portfolios for
shares already purchased, or to be purchased in the future, under the Policy.
This substitution might occur if shares of a portfolio should no longer be
available, or if investment in any portfolio's shares should become
inappropriate, in the judgment of our management, for the purposes of the
Policy.) In addition, the new portfolio may have higher fees and charges than
the portfolio it replaced. No substitution of the shares attributable to your
account may take place without prior notice to you and before approval of the
SEC, in accordance with the 1940 Act.
We also reserve the right to establish additional Investment Subdivisions, each
of which would invest in a separate portfolio of a Fund, or in shares of
another investment company, with a specified investment objective. We may also
eliminate one or more Investment Subdivisions if, in our sole discretion,
marketing, tax, or investment conditions warrant. We will not eliminate an
Investment Subdivision without prior notice to you and before approval of the
SEC. Not all Investment Subdivisions may be available to all classes of
policies.
If permitted by law, we may deregister Account 4 under the 1940 Act in the
event such registration is no longer required; manage Account 4 under the
direction of a committee; or combine Account 4 with other separate accounts of
the Company. Further, to the extent permitted by applicable law, we may
transfer the assets of Account 4 to another separate account.
23
<PAGE>
The Guarantee Account
Due to certain exemptive and exclusionary provisions, we have not registered
interests in the Guarantee Account under the Securities Act of 1933 (the "1933
Act"), and we have not registered either the Guarantee Account or our General
Account as an investment company under the 1940 Act. Accordingly, neither the
interests in the Guarantee Account, nor our General Account are generally
subject to regulation under the 1933 Act and the 1940 Act. Disclosures relating
to the interests in the Guarantee Account and the General Account, however, may
be subject to certain generally applicable provisions of the Federal securities
laws relating to the accuracy of statements made in a registration statement.
You may allocate some or all of your net premium payments and transfer some or
all of your Account Value to the Guarantee Account. We credit the portion of
the Account Value allocated to the Guarantee Account with interest (as
described below). Account Value in the Guarantee Account is subject to some,
but not all, of the charges we assess in connection with the Policy. See
Charges and Other Deductions.
Each time you allocate net premium payments or transfer Account Value to the
Guarantee Account, we establish an interest rate guarantee period. For each
interest rate guarantee period, we guarantee an interest rate for a specified
period of time.
At the end of an interest rate guarantee period, a new interest rate will
become effective, and a new interest rate guarantee period will commence for
the remaining portion of that particular allocation.
We determine interest rates in our sole discretion. The determination made will
be influenced by, but not necessarily correspond to, interest rates available
on fixed income investments which we may acquire with the amounts we receive as
premium payments or transfers of Account Value under the Policies. You will
have no direct or indirect interest in these investments. We also will consider
other factors in determining interest rates for a guarantee period including,
but not limited to, regulatory and tax requirements, sales commissions, and
administrative expenses borne by us, general economic trends, and competitive
factors. Amounts you allocate to the Guarantee Account will not share in the
investment performance of our General Account, or any portion thereof. We
cannot predict or guarantee the level of interest rates in future guarantee
periods. However, the interest rates for any interest rate guarantee period
will be at least the guaranteed interest rate shown in your policy.
We will notify Owners in writing at least 10 days before the expiration date of
any interest rate guarantee period about the then currently available interest
rate guarantee periods and the guaranteed interest rates applicable to such
interest rate guarantee periods. A new one year guarantee period will commence
automatically
24
<PAGE>
unless we receive written notice prior to the end of the 30 day period
following the expiration of the interest rate guarantee period ("30 day
window") of your election of a different interest rate guarantee period from
among those being offered by us at that time, or instructions to transfer all
or a portion of the remaining amount to one or more Investment Subdivisions
subject to certain restrictions. (See Transfers Before the Maturity Date.)
During the 30 day window, the allocation will accrue interest at the new
guarantee period's interest rate.
To the extent permitted by law, we reserve the right at any time to offer
interest rate guarantee periods that differ from those available when we issued
the Policy, and to credit bonus interest on premium payments allocated to the
Guarantee Account participating in the Dollar-Cost Averaging Program (See
Dollar-Cost Averaging). (This may not be available to all classes of Policies.)
We also reserve the right, at any time, to stop accepting premium payments or
transfers of Account Value to a particular interest rate guarantee period.
Since the specific interest rate guarantee periods available may change
periodically, please contact our Home Office to determine the interest rate
guarantee periods currently being offered.
25
<PAGE>
Charges And Other Deductions
All of the charges described in this section apply to Account Value allocated
to Account 4. Account Value in the Guarantee Account is subject to all of the
charges described in this section except for the mortality and expense risk
charge and the administrative expense charge.
We will deduct the charges described below to cover our costs and expenses,
services provided and risks assumed under the Policies. We incur certain costs
and expenses for the distribution and administration of the Policies and for
providing the benefits payable thereunder. Our administrative services include:
. processing applications for and issuing the Policies;
. maintaining records;
. administering annuity payouts;
. furnishing accounting and valuation services (including the calculation and
monitoring of daily Investment Subdivision values);
. reconciling and depositing cash receipts;
. providing Policy confirmations and periodic statements;
. providing toll-free inquiry services; and
. furnishing telephone transaction services.
The risks we assume include:
. the risk that the Death Benefit will be greater than the Surrender Value;
. the risk that the actual life-span of persons receiving income payments under
Policy guarantees will exceed the assumptions reflected in our guaranteed
rates (these rates are incorporated in the Policy and cannot be changed); and
. the risk that our costs in providing the services will exceed our revenues
from Policy charges (which cannot be changed by us).
The amount of a charge may not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. We may also 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 ACCOUNT 4
We deduct from Account 4 an amount, computed daily, which is equal to an annual
rate of 1.60% of the daily net asset value. The charge consists of an
administrative expense charge at an effective annual rate of .25% and a
mortality and expense risk charge at an effective annual rate of 1.35%. These
deductions from Account 4 are reflected in your Account Value.
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<PAGE>
OTHER CHARGES
POLICY MAINTENANCE CHARGE
We will deduct an annual charge of $25 from the Account Value of each Policy to
compensate us for certain administrative expenses incurred in connection with
the Policies. We will deduct the charge at each Policy anniversary and at full
surrender. We will waive this charge if your Account Value at the time of
deduction is at least $25,000.
We will allocate the annual policy maintenance charge among the Investment
Subdivisions in the same proportion that the Policy's Account Value in each
Investment Subdivision bears to the total Account Value in all Investment
Subdivisions at the time the charge is made. If there is insufficient Account
Value allocated to Account 4, we will deduct any remaining portion of the
charge from the Guarantee Account proportionally from all monies in the
Guarantee Account. Other allocation methods may be available upon request.
DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the Policies or Account 4 will be deducted from Account Value
when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax generally
ranges from 0.0% to 3%.
OTHER CHARGES AND DEDUCTIONS
There are deductions from and expenses paid out of the assets of each portfolio
that are more fully described in each Fund's Prospectus.
In addition, we reserve the right to impose a transfer charge of up to $10 per
transfer. This charge is at cost with no profit to us.
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<PAGE>
The Policy
The Policy is an individual flexible premium variable deferred annuity Policy.
Your rights and benefits are described below and in the Policy. There may be
differences in your Policy because of requirements of the state where we issued
your Policy. We will include any such differences in your Policy.
PURCHASE OF THE POLICY
If you wish to purchase a Policy, you must apply for it through one of our
authorized sales representatives. The sales representative will send your
completed application to us, and we will decide whether to accept or reject it.
If we accept your application, our legally authorized officers prepare and
execute a Policy. We then send the Policy to you through your sales
representative. See Distribution of the Policies.
If we receive a completed application and all other information necessary for
processing a purchase order, we will apply an initial premium payment no later
than two business days after we receive the order. While attempting to finish
an incomplete application, we may hold the initial premium payment for no more
than five business days. If the incomplete application cannot be completed
within those five days, we will inform you of the reasons, and will return your
premium payment immediately, unless you specifically authorize us to keep it
until the application is complete. Once you complete your application, we must
apply the initial premium payment within two business days. We apply any
additional premium payments as of the Valuation Day we receive them.
To apply for a Policy, you must be of legal age in a state where we may
lawfully sell the Policies and also be eligible to participate in any of the
qualified or non-qualified plans for which we designed the Policies. The
Annuitant cannot be older than age 85, unless we approve a different age.
This Policy may be used with certain tax qualified retirement plans. The Policy
includes attributes such as tax deferral on accumulated earnings. Qualified
retirement plans provide their own tax deferral benefit; the purchase of this
Policy does not provide additional tax deferral benefits beyond those provided
in the qualified retirement plan. Accordingly, if you are purchasing this
Policy through a qualified retirement plan, you should consider purchasing this
Policy for its Death Benefit, income benefits, and other non-tax-related
benefits. Please consult a tax advisor for information specific to your
circumstances in order to determine whether the Policy is an appropriate
investment for you.
OWNERSHIP
As Owner, you have all rights under the Policy, subject to the rights of any
irrevocable beneficiary. According to Virginia law, the assets of Account 4 are
held for the exclusive benefit of all Owners and their Designated
Beneficiaries. Qualified Policies
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<PAGE>
may not be assigned or transferred except as permitted by the Employee
Retirement Income Security Act (ERISA) of 1974 and upon written notification to
us. We assume no responsibility for the validity or effect of any assignment.
Consult your tax advisor about the tax consequences of an assignment.
If you name a Joint Owner in the application, we will treat the Joint Owners as
having equal undivided interests in the Policy. All Owners must together
exercise any ownership rights in this Policy.
PREMIUM PAYMENTS
You may make premium payments to us at a frequency and in the amount you
select, subject to certain restrictions. You must obtain our prior approval
before you make total premium payments for an Annuitant age 79 or younger that
exceed $2,000,000. If the Annuitant is age 80 or older at the time of payment,
the total amount not subject to prior approval is $1,000,000. Payments may be
made or, if stopped, resumed at any time until the Maturity Date, the surrender
of the Policy, or the death of the Owner or Joint Owner, if applicable,
whichever comes first. We reserve the right to refuse to accept a premium
payment for any lawful reason and in a manner that does not unfairly
discriminate against similarly situated purchasers.
The minimum initial premium payment is $25,000. We may accept a lower initial
premium payment in the case of certain group sales. Each additional premium
payment must be at least $1,000 for Non-Qualified Policies, $50 for IRA
Policies, and $100 for other Qualified Policies.
VALUATION DAY
We will value Accumulation and Annuity Units once daily at the close of trading
(currently 4:00 p.m., New York time) on each day the New York Stock Exchange is
open except for days on which a Fund does not value its shares (Valuation Day).
If a Valuation Period contains more than one day, the unit values will be the
same for each day in the Valuation Period.
ALLOCATION OF PREMIUM PAYMENTS
We place net premium payments into Account 4's Investment Subdivisions, each of
which invests in shares of a corresponding portfolio of the Funds, and/or the
Guarantee Account, according to your instructions. You may allocate premium
payments to up to ten Investment Subdivisions at any one time.
The percentage of any premium payment which you can put into any one Investment
Subdivision or guarantee period must equal a whole percentage. Upon allocation
to the appropriate Investment Subdivision, we convert net premium payments into
Accumulation Units. We determine the number of Accumulation Units credited by
dividing the amount allocated to each Investment Subdivision by the value of an
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<PAGE>
Accumulation Unit for that Investment Subdivision on the Valuation Day on which
we receive any additional premium payment at our Home Office if received before
4:00 p.m., New York time. If we receive the additional premium payment at or
after 4:00 p.m., New York time, we will use the Accumulation Unit value
computed on the next Valuation Day. The number of Accumulation Units determined
in this way is not changed by any subsequent change in the value of an
Accumulation Unit. However, the dollar value of an Accumulation Unit will vary
depending not only upon how well the portfolio's investments perform, but also
upon the expenses of Account 4 and the portfolios.
You may change the allocation of subsequent premium payments at any time,
without charge, by sending us acceptable notice in writing or over the phone.
The new allocation will apply to any premium payments made after we receive
notice of the change.
VALUATION OF ACCUMULATION UNITS
We value Accumulation Units for each Investment Subdivision separately.
Initially, we arbitrarily set the value of each Accumulation Unit at $10.00.
Thereafter, the value of an Accumulation Unit in any Investment Subdivision for
a Valuation Period equals the value of an Accumulation Unit in that Investment
Subdivision as of the preceding Valuation Period multiplied by the net
investment factor of that Investment Subdivision for the current Valuation
Period.
The net investment factor is an index used to measure the investment
performance of an Investment Subdivision from one Valuation Period to the next.
The net investment factor for any Investment Subdivision for any Valuation
Period reflects the change in the net asset value per share of the portfolio
held in the Investment Subdivision from one Valuation Period to the next,
adjusted for the daily deduction of the administrative expense and mortality
and expense risk charges from assets in the Investment Subdivision. If any "ex-
dividend" date occurs during the Valuation Period, we take into account the per
share amount of any dividend or capital gain distribution so that the unit
value is not impacted. Also, if any taxes need to be reserved, we take into
account a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the operations of the Investment Subdivision.
TRANSFERS BEFORE THE MATURITY DATE
Before the earlier of the surrender of the Policy, payment of any Death
Benefit, or the Maturity Date, you may transfer all or a portion of your
investment between and among the Investment Subdivisions of Account 4 and the
Guarantee Account subject to certain conditions. We process transfers among the
Investment Subdivisions of Account 4 and between the Investment Subdivisions
and the Guarantee Account as of
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<PAGE>
the end of the Valuation Period that we receive the transfer request at our
Home Office. For this reason, there may be limitations placed on multiple
transfer requests made at different times during the same Valuation Period
involving the same Investment Subdivision of the Separate Account or the
Guarantee Account. We may postpone transfers to, from, or among the Investment
Subdivisions of Account 4 under certain circumstances. See Requesting Payments.
We restrict transfers from any particular allocation of the Guarantee Account
to an Investment Subdivision. Unless you are participating in the Dollar-Cost
Averaging Program (see Dollar-Cost Averaging) you may make such transfers only
during the 30 day period beginning with the end of the preceding interest rate
guarantee period applicable to that particular allocation. We also may limit
the amount which you may transfer from the Guarantee Account to the Investment
Subdivisions. However, for any particular allocation to an Investment
Subdivision, the limited amount will not be less than any accrued interest on
that allocation plus 25% of the original amount of that allocation.
Further, we may restrict certain transfers from an Investment Subdivision to
the Guarantee Account. We reserve the right to prohibit or limit transfers from
an Investment Subdivision to the Guarantee Account during the six month period
following the transfer of any amount from the Guarantee Account to any
Investment Subdivision.
Currently, there is no other limit on the number of transfers between and among
Investment Subdivisions of Account 4 and the Guarantee Account; however, we
reserve the right to limit the number of transfers each calendar year to
twelve, or if it is necessary for the Policy to continue to be treated as an
annuity policy by the Internal Revenue Service, a lower number. Currently, all
transfers under the Policy are free. However, we reserve the right to assess a
charge of up to $10 per transfer. The minimum transfer amount is $100 or the
entire balance in the Investment Subdivision or guarantee period if the
transfer will leave a balance of less than $100.
Sometimes, we may not honor your transfer request. We may not honor your
transfer request:
(i) if any Investment Subdivision that would be affected by the transfer
is unable to purchase or redeem shares of the Fund in which the
Investment Subdivision invests;
(ii) if the transfer is a result of more than one trade involving the same
Investment Subdivision within a 30 day period; or
(iii) if the transfer would adversely affect Accumulation Unit values.
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<PAGE>
We also may not honor transfers made by third parties. (See Transfers by Third
Parties.)
When thinking about a transfer of Account Value, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that you will make a transfer at an inopportune time.
TELEPHONE TRANSACTIONS
We permit certain telephone transactions (including transfers) as described in
this prospectus. We may be liable for losses resulting from unauthorized or
fraudulent telephone transactions if we fail to employ reasonable procedures to
confirm that the telephone instructions that we receive are genuine. Therefore,
we will employ means to prevent unauthorized or fraudulent telephone requests,
such as sending written confirmation, recording telephone requests, and/or
requesting other identifying information. In addition, we may require written
authorization before allowing you to make telephone transactions. We reserve
the right to limit telephone transactions.
To request a telephone transaction, you should call our Home Office. We will
record all telephone transaction requests. We will execute transfer requests
received prior to the close of the New York Stock Exchange that Valuation Day
at that day's prices. We will execute requests received after that time on the
next Valuation Day at that day's prices.
TRANSFERS BY THIRD PARTIES
As a general rule and as a convenience to you, we allow you to give third
parties the right to effect transfers on your behalf. However, when the same
third party possesses this ability on behalf of many Owners, the result can be
simultaneous transfers involving large amounts of Account Value. Such transfers
can disrupt the orderly management of the portfolios underlying the Policy, can
result in higher costs to Owners, and are generally not compatible with the
long-range goals of Owners. We believe that such simultaneous transfers
effected by such third parties are not in the best interests of all
shareholders of the Funds underlying the Policies, and the management of the
Funds share this position. Therefore, as described in your Policy, we may limit
or disallow transfers made by a third party.
ON LINE TRANSFERS
We permit certain transactions using the Internet (including transfers) as
described in this Prospectus to be performed through an electronic process. We
may be liable for losses resulting from unauthorized or fraudulent electronic
transactions if we fail to employ reasonable procedures to confirm that the
electronic instructions that we receive our genuine. Therefore, we will employ
means to prevent unauthorized or fraudulent electronic requests, such as
sending written confirmation, retaining a
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<PAGE>
record of electronic requests, and/or requesting other identifying
information. Unless you notify us in writing not to authorize electronic
transactions, such transaction also will be accepted on your behalf from your
registered representative. We reserve the right to limit electronic
transactions.
To request an electronic transaction, you should go to the Universal Resource
Locator ("URL") established for such purposes, http://GEFinancialService.com.
We will execute transfer requests received before the close of regular trading
on the New York Stock Exchange on a Valuation Day at that day's prices. We
will execute requests received after that time on the next Valuation Day at
that day's prices.
DOLLAR-COST AVERAGING
The dollar-cost averaging program permits you to systematically transfer on a
monthly or quarterly basis a set dollar amount from the Money Market
Investment Subdivision and/or the Guarantee Account to any combination of
other Investment Subdivisions (as long as the total number of Investment
Subdivisions used does not exceed the maximum number allowed under the
Policy). The dollar-cost averaging method of investment is designed to reduce
the risk of making purchases only when the price of units is high, but you
should carefully consider your financial ability to continue the program over
a long enough period of time to purchase Accumulation Units when their value
is low as well as when it is high. Dollar-cost averaging does not assure a
profit or protect against a loss.
You may participate in the dollar-cost averaging program by selecting the
program on the application, completing a dollar-cost averaging agreement, or
calling our Annuity Customer Service Line at (800) 352-9910. To use the
dollar-cost averaging program, you must transfer at least $100 from an
Investment Subdivision or a guarantee period with each transfer. Once elected,
dollar-cost averaging remains in effect from the date we receive your request
until the value of the Investment Subdivision or the guarantee period from
which transfers are being made is depleted, or until you cancel the program by
written request or by telephone if we have your telephone authorization on
file. The dollar-cost averaging program will begin 30 days after we receive
your instructions and your premium unless you specify an earlier date.
With regard to dollar-cost averaging from the Guarantee Account, we reserve
the right to determine the amount of each automatic transfer. We reserve the
right to transfer any remaining portion of an allocation used for dollar-cost
averaging to a new guarantee period upon termination of the dollar-cost
averaging program for that allocation.
There is no additional charge for dollar-cost averaging. We reserve the right
to discontinue offering or to modify the dollar-cost averaging program at any
time and for any reason.
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<PAGE>
PORTFOLIO REBALANCING PROGRAM
Once your money has been allocated among the Investment Subdivisions, the
performance of each Investment Subdivision may cause your allocation to shift.
You may instruct us to automatically rebalance (on a quarterly, semi-annual or
annual basis) your Account Value among the Investment Subdivisions to return to
the percentages specified in your allocation instructions. The program does not
include allocations to the Guarantee Account. You may elect to participate in
the portfolio rebalancing program at any time by completing the portfolio
rebalancing agreement. Your percentage allocations must be in whole
percentages. Subsequent changes to your percentage allocations may be made at
any time by written or telephone instructions to the Home Office. Once elected,
portfolio rebalancing remains in effect from the date we receive your written
request until you instruct us to discontinue portfolio rebalancing. There is no
additional charge for using portfolio rebalancing, and we do not consider a
portfolio rebalancing transfer a transfer for purposes of assessing a transfer
charge or calculating the maximum number of transfers permitted in a calendar
year. We reserve the right to discontinue offering the portfolio rebalancing
program at any time and for any reason. Portfolio rebalancing does not
guarantee a profit or protect against a loss.
SURRENDERS AND PARTIAL SURRENDERS
Subject to the rules discussed below, we will allow the surrender of the Policy
or a withdrawal of the Account Value at any time before the Maturity Date upon
your written request.
We will not permit a partial surrender that is less than $500 or that reduces
Account Value to less than $25,000. If your partial surrender request would
reduce Account Value to less than $25,000, we will surrender only that amount
of Account Value that would reduce the remaining Account Value to $25,000.
The amount payable on full surrender of the Policy is the Surrender Value at
the end of the Valuation Period during which we receive the request. The
Surrender Value equals the Account Value (after deduction of any policy
maintenance charge) on the date we receive a request for surrender less any
applicable premium tax. We may pay the Surrender Value in a lump sum or under
one of the optional payment plans specified in the Policy.
You may indicate, in writing or by calling our Home Office, from which
Investment Subdivisions or interest rate guarantee periods we are to take your
partial surrender. If you do not so specify, we will deduct the amount of the
partial surrender first from the Investment Subdivisions of Account 4 on a pro-
rata basis, in proportion to the Account Value in Account 4. We will deduct any
remaining amount from the Guarantee Account. We will take deductions from the
Guarantee Account from the amounts
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<PAGE>
(including any interest credited to such amounts) which have been in the
Guarantee Account for the longest period of time.
Please remember that a partial surrender will reduce the Death Benefit by the
proportion that the partial surrender reduced Account Value.
RESTRICTIONS ON DISTRIBUTIONS FROM CERTAIN POLICIES
Section 830.105 of the Texas Government Code permits participants in the Texas
Optional Retirement Program ("ORP") to withdraw their interest in a variable
annuity contract issued under the ORP only upon (i) termination of employment
in the Texas public institutions of higher education, (ii) retirement, (iii)
death, or (iv) the participant's attainment of age 70 1/2. Accordingly, before
we distribute any amounts from these Policies, you must furnish us proof that
one of these four events has occurred.
SYSTEMATIC WITHDRAWALS
At any time after 30 days from the Policy Date (unless we allow an earlier
date), you may elect in writing on a form provided by us to take systematic
withdrawals of a specified dollar amount (in equal installments of at least
$100) on a monthly, quarterly, semi-annual or annual basis. You may provide
specific instructions as to how we are to take the systematic withdrawals. If
you have not provided specific instructions, or if your specific instructions
cannot be carried out, we will process the withdrawals by first taking on a
pro-rata basis Accumulation Units from all of the Investment Subdivisions in
which you have an interest. To the extent that your Account Value in Account 4
is not sufficient to accomplish this withdrawal, we will take any Account Value
you have in the Guarantee Account to accomplish the withdrawal.
After your systematic withdrawals begin, you may change the frequency and/or
amount of your payments once each calendar quarter.
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Account Value to be less than $25,000. If
a systematic withdrawal would cause the Account Value to be less than $25,000,
then we will not process that systematic withdrawal transaction. You may
discontinue systematic withdrawals at any time by notifying us in writing at
our Home Office.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to federal income taxes on the taxable portion. In
addition, you may be assessed a 10% penalty tax on systematic withdrawals if
you are under age 59 1/2 at the time of the withdrawal.
We reserve the right to prohibit simultaneous systematic withdrawals and
dollar-cost averaging.
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The Death Benefit
DEATH BENEFIT AT DEATH OF ANNUITANT
If the Annuitant dies before income payments begin, regardless of whether the
Annuitant is also an Owner or Joint Owner of the Policy, the amount of proceeds
available for the Designated Beneficiary (as defined below) is the Death
Benefit. (This Death Benefit may be referred to as the "Annual EstateProtector"
in our marketing materials.) Upon receipt of due proof of the Annuitant's death
(generally, due proof is a certified copy of the death certificate or a
certified copy of the decree of a court of competent jurisdiction as to the
finding of death), the Death Benefit will constitute the new Surrender Value,
and we will treat this Surrender Value in accordance with the Owner's
instructions, subject to distribution rules and termination of contract
provisions discussed in the Policy and elsewhere in this Prospectus.
We calculate the Death Benefit by adding (a) and (b) where:
(a) is the Account Value as of the date we receive due proof of death; and
(b) is the excess, if any, of the unadjusted Death Benefit as of the date of
the Annuitant's death over the Account Value as of the date of the
Annuitant's death, with interest credited on that excess from the date of
the Annuitant's death to the date of distribution. The rate credited may
depend on applicable law or regulation. Otherwise, we will set it.
The definition of the unadjusted Death Benefit varies based on the Annuitant's
age at the time we issued the Policy, the number of Policy years that have
elapsed at the time the death occurs, and/or on the Annuitant's age at the time
the death occurs.
If the Annuitant was age 80 or younger on the Policy Date:
1. If the Annuitant dies during the first Policy year, the unadjusted Death
Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the total amount of premium payments made adjusted by the proportion
that any partial surrender reduced Account Value and less any
applicable premium tax.
2. If the Annuitant dies during any subsequent Policy year, but before the
Policy anniversary the Annuitant reaches age 81, the unadjusted Death
Benefit will be the greatest of:
(i) Account Value as of the date of the Annuitant's death;
(ii) the total amount of premium payments made adjusted by the proportion
that any partial surrender reduced Account Value and less any
applicable premium tax; and
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(iii) the unadjusted Death Benefit on the last day of the preceding Policy
year, plus any premium payments made since then, adjusted by the
proportion that any partial surrender reduced Account Value and less
any applicable premium tax.
3. If the Annuitant dies on or after the Policy anniversary the Annuitant
reaches age 81, the unadjusted Death Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the unadjusted Death Benefit on the Policy anniversary the Annuitant
reached age 80, plus any premium payments made since then, adjusted by
the proportion that any partial surrender reduced Account Value and
less any applicable premium tax.
If the Annuitant was age 81 or older on the Policy Date, the unadjusted Death
Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the total amount of premium payments made adjusted by the proportion that
any partial surrender reduced Account Value and less any applicable
premium tax.
Example: Assuming an Owner: (i) purchases a Policy for $100,000; (ii) makes no
additional premium payments and no partial surrenders; (iii) is not subject to
premium taxes; and (iv) the Annuitant is age 70 on the Policy Date, then:
<TABLE>
<CAPTION>
Unadjusted
Policy Account Death
Anniversary Value Benefit
------------------------------------------------------------------------------------
<S> <C> <C>
Issue $100,000 $100,000
1 $110,000 $110,000
2 $ 90,000 $110,000
3 $ 80,000 $110,000
4 $120,000 $120,000
5 $130,000 $130,000
6 $150,000 $150,000
7 $160,000 $160,000
8 $130,000 $160,000
9 $ 90,000 $160,000
10 $170,000 $170,000
11 $140,000 $170,000
12 $180,000 $180,000
13 $120,000 $170,000
</TABLE>
The purpose of this example is to show how the unadjusted Death Benefit works
based on purely hypothetical values and is not intended to depict investment
performance of the Policy.
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<PAGE>
Partial Surrenders will reduce the Death Benefit by the proportion that the
partial surrender reduced Account Value. For example:
<TABLE>
<CAPTION>
Unadjusted
Purchase Account Death
Date Payment Value Benefit
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3/31/00 $25,000 $25,000 $25,000
3/31/01 50,000 50,000
3/31/02 35,000 50,000
</TABLE>
If a partial surrender of $17,500 is made on March 31, 2002, the unadjusted
Death Benefit immediately after the partial surrender will be $25,000 ($50,000
to $25,000) since the Account Value is reduced 50% by the partial surrender
($35,000 to $17,500). This is true only if the unadjusted Death Benefit
immediately prior to the partial surrender (as calculated above) is not the
Account Value on the date of the Annuitant's death. It also assumes that the
Annuitant is younger than age 80 at the time of death and that no premium tax
applies to the partial surrender. This example is based on purely hypothetical
values and is not intended to depict investment performance of the Policy.
DEATH OF AN OWNER, JOINT OWNER, OR ANNUITANT BEFORE THE MATURITY DATE
General: In certain circumstances, Federal tax law requires that distributions
be made under this Policy upon the first death of:
. an Owner or Joint Owner, or
. the Annuitant if any Owner is a non-natural entity (such as a trust or
corporation).
The discussion below describes the methods available for distributing the value
of the Policy upon death.
Designated Beneficiary: At the death of any Owner (or Annuitant, if any Owner
is a non-natural entity), the person or entity first listed below who is alive
or in existence on the date of that death will become the Designated
Beneficiary:
(1) Owner or Joint Owners;
(2) primary beneficiary;
(3) contingent beneficiary; or
(4) Owner's estate.
The Designated Beneficiary will then be treated as the sole Owner of the
Policy. If there is more than one Designated Beneficiary, each one will be
treated separately in applying the tax law's rules described below.
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<PAGE>
Distribution Rules: The distributions required by Federal tax law differ
depending on whether the Designated Beneficiary is the spouse of the deceased
Owner (or of the Annuitant, if the Policy is owned by a non-natural entity).
. Spouses -- If the Designated Beneficiary is the surviving spouse of the
deceased person, we will continue the Policy in force with the surviving
spouse as the new Owner. If the deceased person was the Annuitant and there
was no surviving contingent Annuitant, the surviving spouse will
automatically become the new Annuitant. At the death of the surviving spouse,
this provision may not be used again, even if the surviving spouse remarries.
In that case, the rules for non-spouses will apply.
The Account Value on the date we receive due proof of death of the Annuitant
will be set equal to the Death Benefit on that date. Any increase in the
Account Value will be allocated to the Investment Subdivisions using the
premium allocation in effect at that time. Any Death Benefit payable
subsequently (at the death of the new Annuitant) will be based on the new
Annuitant's age on the Policy Date, rather than the age of the previously
deceased Annuitant.
. Non-Spouses -- If the Designated Beneficiary is not the surviving spouse of
the deceased person, this Policy cannot be continued in force indefinitely.
Instead, upon the death of any Owner (or Annuitant, if any Owner is a non-
natural entity), payments must be made to (or for the benefit of) the
Designated Beneficiary under one of the following payment choices:
(1) Receive the Surrender Value in one lump sum payment upon receipt of due
proof of death.
(2) Receive the Surrender Value at any time during the five year period
following the date of death. At the end of the five year period, we will
pay in a lump sum payment any Surrender Value still remaining.
(3) Apply the Surrender Value to provide a monthly income benefit under
optional payment plan 1 or 2. The first monthly income benefit payment must
be made no later than one year after the date of death. Also, the monthly
income benefit payment period must be either the lifetime of the Designated
Beneficiary or a period not exceeding the Designated Beneficiary's life
expectancy.
If no choice is made by the Designated Beneficiary within 30 days following
receipt of due proof of death, we will use payment choice 2 (payment of the
Surrender Value within 5 years of the date of death). Due proof of death must
be provided within 90 days of the date of death. No further premium payments
will be accepted after the non-spouse's death. If the Designated Beneficiary
dies before the entire Surrender Value has been distributed, we will pay in a
lump sum payment any Surrender Value
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still remaining to the person named by the Designated Beneficiary. If no person
is so named, payment will be made to the Designated Beneficiary's estate.
Under payment choices 1 or 2, the Policy will terminate upon payment of the
entire Surrender Value. Under payment choice 3, this Policy will terminate when
the Surrender Value is applied to provide a monthly income benefit.
Amount of the proceeds: The proceeds we pay will vary, in part, based on the
person who dies. We show the amount of proceeds we will pay below.
<TABLE>
<CAPTION>
-------------------------------------------
Person who Died Proceeds Paid
-------------------------------------------
<S> <C>
Owner or Joint Owner Surrender Value
(Who is not the Annuitant)
-------------------------------------------
Owner or Joint Owner Death Benefit
(Who is the Annuitant)
-------------------------------------------
Annuitant Death Benefit
-------------------------------------------
</TABLE>
Upon receipt of due proof of death, the Designated Beneficiary will instruct us
how to treat the proceeds subject to the Distribution rules discussed above.
DEATH OF AN OWNER, JOINT OWNER, OR ANNUITANT AFTER INCOME PAYMENTS BEGIN
After the Maturity Date (including after income payments begin), if an Owner,
Joint Owner, Annuitant, or Designated Beneficiary dies while the Policy is in
force, payments that are already being made under the Policy will be made at
least as rapidly as under the method of distribution in effect at the time of
such death, Notwithstanding any other provision of the Policy.
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Income Payments
The Maturity Date is provided in the Policy, unless changed after issue. You
may change the Maturity Date until income payments begin. However, the Maturity
Date cannot be a date later than the Policy anniversary on which the Annuitant
reaches age 90, unless we approve a later date. To make a change, send a
written notice to our Home Office before the Maturity Date then in effect. If
you change the Maturity Date, Maturity Date will then mean the new Maturity
Date you selected. (Please note the following exception: Policies issued under
qualified retirement plans provide for income payments to start at the date and
under the option specified in the plan.)
We will pay a monthly income benefit to the Owner beginning on the Maturity
Date if the Annuitant is still living. We will pay the monthly income benefit
in the form of variable income payments similar to those described in optional
payment plan 1, Life Income with 10 Years Certain (automatic payment plan),
using the sex and settlement age of the Annuitant instead of the payee, unless
you make another election. As described in your Policy, the settlement age may
be less than the Annuitant's age. This means payments may be lower than they
would have been without the adjustment. You may also choose to receive the
maturity value (that is, the Surrender Value of your Policy on the date
immediately preceding the Maturity Date) in one lump sum (in which case we will
cancel the Policy).
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than ten years, payments will continue for his or her life. If the Annuitant
dies before the end of ten years, the remaining payments for the ten year
period will be discounted at the same rate used to calculate the monthly
income. If the remaining payments are variable income payments, the amount of
each payment to be discounted will be assumed equal to the value of the payment
amount on the date we receive due proof of death. We will pay this discounted
amount in one sum.
The Policy also provides optional forms of annuity payments, each of which is
payable on a fixed basis. Optional payment plans 1 and 5 also are available on
a variable basis. The Policy provides that all or part of the Account Value may
be used to purchase an annuity.
If you elect fixed income payments, the guaranteed amount payable will earn
interest at 3% compounded yearly. We may increase the interest rate which will
increase the amount paid to you or the payee.
If you elect variable income payments, your income payments, after the first
payment, will reflect the investment experience of the Investment Subdivisions
to which you allocated Account Value.
We will make annuity payments monthly unless you elect quarterly, semi-annual,
or annual installments. Under the monthly income benefit and all of the
optional
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payment plans, if any payment made more frequently than annually would be or
becomes less than $100, we reserve the right to reduce the frequency of
payments to an interval that would result in each payment being at least $100.
If the annual payment payable at maturity is less than $20, we will pay the
maturity value in a lump sum. Upon making such a payment, we will have no
future obligation under the Policy. Following are explanations of the optional
payment plans available.
OPTIONAL PAYMENT PLANS
Plan 1 -- Life Income With Period Certain. This option guarantees periodic
payments during a designated period. If the payee lives longer than the minimum
period, payments will continue for his or her life. The minimum period can be
10, 15, or 20 years. The payee selects the designated period. If the payee dies
during the minimum period, we will discount the amount of the remaining
guaranteed payments at the same rate used in calculating income payments. We
will pay the discounted amount in one sum to the payee's estate unless
otherwise provided.
Plan 2 -- Income For A Fixed Period. This option provides for periodic payments
to be made for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly, or monthly. If the payee dies, we will discount the
amount of the remaining guaranteed payments to the date of the payee's death at
the same rate used in calculating income payments. We will pay the discounted
amount in one sum to the payee's estate unless otherwise provided.
Plan 3 -- Income Of A Definite Amount. This option provides periodic payments
of a definite amount to be paid. Payments can be annual, semi-annual,
quarterly, or monthly. The amount paid each year must be at least $120 for each
$1,000 of proceeds. Payments will continue until the proceeds are exhausted.
The last payment will equal the amount of any unpaid proceeds. If the payee
dies, we will pay the amount of the remaining proceeds with earned interest in
one sum to the payee's estate unless otherwise provided.
Plan 4 -- Interest Income. This option provides for periodic payments of
interest earned from the proceeds left with us. Payments can be annual, semi-
annual, quarterly, or monthly. If the payee dies, we will pay the amount of
remaining proceeds and any earned but unpaid interest in one sum to the payee's
estate unless otherwise provided. This plan is not available under Qualified
Policies.
Plan 5 -- Joint Life And Survivor Income. This option provides for monthly
payments to be made to two payees for a guaranteed minimum of 10 years. Each
payee must be at least 35 years old when payments begin. Payments will continue
as long as either payee is living. If both payees die before the end of the
minimum period, we will discount the amount of the remaining payments for the
10-year period
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<PAGE>
at the same rate used in calculating income payments. We will pay the
discounted amount in one sum to the survivor's estate unless otherwise
provided.
If the payee is not a natural person, our consent must be obtained before
selecting an optional payment plan.
Before the Maturity Date, you may change:
. your Maturity Date (however, the Maturity Date cannot be a date later than
the Policy anniversary on which the Annuitant reaches age 90, unless we
approve a later date);
. your optional payment plan;
. the allocation of your investment among the Investment Subdivisions; and
. the Owner, Joint Owner, primary beneficiary, contingent beneficiary, and
contingent Annuitant upon written notice to the Home Office if you reserved
this right and the Annuitant is living.
We must receive your request for a change in a form satisfactory to us. The
change will take effect as of the date you sign the request. The change will be
subject to any payment made before we recorded the change.
Fixed income payments will begin on the date we receive due proof of the
Annuitant's death, on surrender, or on the Policy's Maturity Date. Variable
income payments will begin within seven days after the date payments would
begin under the corresponding fixed option. Payments under optional payment
plan 4 (Interest Income) will begin at the end of the first interest period
after the date proceeds are otherwise payable.
VARIABLE INCOME PAYMENTS
Variable income payments will be determined using:
1. The maturity value (which is the Surrender Value of the Policy on the date
immediately preceding the Maturity Date);
2. The annuity tables contained in the Policy including the settlement age
table;
3. The optional payment plan selected; and
4. The investment performance of the portfolios selected.
To determine the amount of payment, we make this calculation:
1. Determine the dollar amount of the first income payment; then
2. Allocate that amount to the Investment Subdivisions according to your
instructions; then
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<PAGE>
3. Determine the number of Annuity Units for each Investment Subdivision by
dividing the amount allocated by the Annuity Unit value seven days before
the income payment is due; and then
4. Calculate the value of the Annuity Units for each Investment Subdivision
seven days before the income payment is due for each income payment
thereafter.
To calculate your variable income payments, we need to make an assumption
regarding the investment performance of the Investment Subdivisions you select.
We call this your assumed investment rate. This rate is simply the total
return, after expenses, you need to earn to keep your variable income payments
level. We assume an effective annual rate of 3%. This means that if the
annualized investment performance, after expenses, of your Investment
Subdivisions is less than 3%, then the dollar amount of your variable income
payment will decrease. Conversely, if the annualized investment performance,
after expenses, of your Investment Subdivisions is greater than 3%, then the
dollar amount of your income payments will increase.
TRANSFERS AFTER THE MATURITY DATE
If we are making variable income payments, the payee may change the Investment
Subdivisions from which we are making the payments once each calendar year. We
will not assess a charge on such transfers. The transfer will be effective as
of the end of the Valuation Period during which we receive written request at
our Home Office. However, we reserve the right to limit the number of transfers
if necessary for the Policy to continue to be treated as an annuity under the
Code. We also reserve the right to refuse to execute any transfer if any of the
Investment Subdivisions that would be affected by the transfer is unable to
purchase or redeem shares of the Fund in which the Investment Subdivision
invests or if the transfer would adversely affect Annuity Unit values. If the
number of Annuity Units remaining in an Investment Subdivision after a transfer
is less than 1, we will transfer the remaining balance in addition to the
amount requested for the transfer. We do not permit transfers between the
Investment Subdivisions and the Guarantee Account after the Maturity Date.
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Federal Tax Matters
INTRODUCTION
This part of the Prospectus discusses the Federal income tax treatment of the
Policy. The Federal income tax treatment of the Policy is complex and sometimes
uncertain. The Federal income tax rules may vary with your particular
circumstances.
This discussion does not address all of the Federal income tax rules that may
affect you and your Policy. This discussion also does not address other Federal
tax consequences, or state or local tax consequences, associated with a Policy.
As a result, you should always consult a tax advisor about the application of
tax rules to your individual situation.
TAXATION OF NON-QUALIFIED POLICIES
This part of the discussion describes some of the Federal income tax rules
applicable to Non-Qualified Policies. A Non-Qualified Policy is a Policy not
issued in connection with a qualified retirement plan receiving special tax
treatment under the Code, such as an individual retirement annuity or a section
401(k) plan.
Tax Deferral on Earnings. The Federal income tax law does not tax any increase
in an Owner's Account Value until there is a distribution from the Policy.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
. An individual must own the Policy (or the tax law must treat the Policy as
owned by an individual);
. The investments of Account 4 must be "adequately diversified" in accordance
with Internal Revenue Service ("IRS") regulations;
. The Owner's right to choose particular investments for a Policy must be
limited; and
. The Policy's Maturity Date must not occur near the end of the Annuitant's
life expectancy.
This part of the Prospectus discusses each of these requirements.
Policies not owned by an individual -- no tax deferral and loss of interest
deduction: As a general rule, the Code does not treat a Policy that is owned by
an entity (rather than an individual) as an annuity contract for Federal income
tax purposes. The entity owning the Policy pays tax currently on the excess of
the Account Value over the premiums paid for the Policy. Policies issued to a
corporation or a trust are examples of Policies where the Owner pays current
tax on the Policy's earnings.
There are several exceptions to this rule. For example, the Code treats a
Policy as owned by an individual if the nominal owner is a trust or other
entity that holds the
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<PAGE>
Policy as an agent for an individual. However, this exception does not apply in
the case of any employer that owns a Policy to provide deferred compensation
for its employees.
In the case of a Policy issued after June 8, 1997 to a taxpayer that is not an
individual, or a Policy held for the benefit of an entity, the entity will lose
its deduction for a portion of its otherwise deductible interest expenses. This
disallowance does not apply if the Owner pays tax on the annual increase in the
Account Value. Entities that are considering purchasing the Policy, or entities
that will benefit from someone else's ownership of a Policy, should consult a
tax advisor.
Investments in Account 4 must be diversified: For a Policy to be treated as an
annuity contract for Federal income tax purposes, the investments of a separate
account such as Account 4 must be "adequately diversified." The IRS has issued
regulations that prescribe standards for determining whether the investments of
Account 4 are adequately diversified. If Account 4 fails to comply with these
diversification standards, the Owner could be required to pay tax currently on
the excess of the Account Value over the premiums paid for the Policy.
Although we do not control the investments of all of the Funds (we only
indirectly control those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
Account 4 will be considered "adequately diversified."
Restrictions on the extent to which an Owner can direct the investment of
Account Values: Federal income tax law limits the Owner's right to choose
particular investments for the Policy. The U.S. Treasury Department stated in
1986 that it expected to issue guidance clarifying those limits, but it has not
yet done so. Thus, the nature of the limits is currently uncertain. As a
result, an Owner's right to allocate Account Values among the portfolios may
exceed those limits. If so, the Owner would be treated as the owner of the
assets of Account 4 and thus subject to current taxation on the income and
gains from those assets.
We do not know what limits the Treasury Department may set forth in any
guidance that the Treasury Department may issue or whether any such limits will
apply to existing Policies. We therefore reserve the right to modify the Policy
without the Owners' consent to attempt to prevent the tax law from considering
the Owners as the owners of the assets of Account 4.
Age at which annuity payouts must begin: Federal income tax rules do not
expressly identify a particular age by which annuity payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through annuity payouts, of the contract's premiums paid and
earnings. If annuity payouts
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<PAGE>
under the Policy begin or are scheduled to begin on a date past the Annuitant's
85th birthday, it is possible that the tax law will not treat the Policy as an
annuity contract for Federal income tax purposes. In that event, the Owner
would be currently taxable on the excess of the Account Value over the premiums
paid for the Policy.
No guarantees regarding tax treatment: We make no guarantees regarding the tax
treatment of any Policy or of any transaction involving a Policy. However, the
remainder of this discussion assumes that your Policy will be treated as an
annuity contract for Federal income tax purposes and that the tax law will not
impose tax on any increase in your Account Value until there is a distribution
from your Policy.
Withdrawals and Surrenders. A withdrawal occurs when you receive less than the
total amount of the Policy's Surrender Value. In the case of a withdrawal, you
will pay tax on the amount you receive to the extent your Account Value before
the withdrawal exceeds your "investment in the contract." (This term is
explained below.) This income (and all other income from your Policy) is
ordinary income. The Code imposes a higher rate of tax on ordinary income than
it does on capital gains.
A surrender occurs when you receive the total amount of the Policy's Surrender
Value. In the case of a surrender, you will pay tax on the amount you receive
to the extent it exceeds your "investment in the contract."
Your "investment in the contract" generally equals the total of your premium
payments under the Policy, reduced by any amounts you previously received from
the Policy that you did not include in your income.
Your Policy imposes mortality charges relating to the Death Benefit. It is
possible that all or a portion of these charges could be treated as withdrawals
from the Policy.
Assignments and Pledges. The Code treats any assignment or pledge of (or
agreement to assign or pledge) any portion of your Account Value as a
withdrawal of such amount or portion.
Gifting a Policy. If you transfer ownership of your Policy--without receiving a
payment equal to your Policy's value--to a person other than your spouse (or to
your former spouse incident to divorce), you will pay tax on your Account Value
to the extent it exceeds your "investment in the contract." In such a case, the
new owner's "investment in the contract" will be increased to reflect the
amount included in your income.
Systematic Withdrawals. In the case of systematic withdrawals, the amount of
each withdrawal should be considered a distribution and taxed in the same
manner as a withdrawal from the Policy.
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Taxation of Annuity Payouts. The Code imposes tax on a portion of each annuity
payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract." We will notify you annually of the
taxable amount of your annuity payout.
Pursuant to IRS regulations, you will pay tax on the full amount of your
annuity payouts once you have recovered the total amount of the "investment in
the contract." If annuity payouts cease because of the death of the Annuitant
and before the total amount of the investment in the contract has been
recovered, the unrecovered amount generally will be deductible.
If proceeds are left with the Company (Optional Payment Plan 4), they are taxed
in the same manner as a surrender. The Owner must pay tax currently on the
interest credited on these proceeds. This treatment could also apply to Plan 3
if the payee is at an advanced age, such as age 80 or older.
Taxation of Death Benefits. We may distribute amounts from your Policy because
of the death of an Owner, a Joint Owner, or an Annuitant. The tax treatment of
these amounts depends on whether the Owner, Joint Owner, or Annuitant dies
before or after the Policy's Maturity Date.
Before the Policy's Maturity Date:
. If received under an annuity payout option, death benefits are taxed in the
same manner as annuity payouts.
. If not received under an annuity payout option, death benefits are taxed in
the same manner as a withdrawal.
After the Policy's Maturity Date:
. If received in accordance with the existing annuity payout option, death
benefits are excludible from income to the extent that they do not exceed the
unrecovered "investment in the contract." All annuity payouts in excess of
the unrecovered "investment in the contract" are includible in income.
. If received in a lump sum, the tax law imposes tax on death benefits to the
extent that they exceed the unrecovered "investment in the contract" at that
time.
Penalty Taxes Payable on Withdrawals, Surrenders, or Annuity Payouts. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
Policy that is included in your gross income. The Code does not impose the 10%
penalty tax if one of several exceptions applies. These exceptions include
withdrawals, surrenders, or annuity payouts that:
. you receive on or after you reach age 59 1/2,
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. you receive because you became disabled (as defined in the tax law),
. a beneficiary receives on or after the death of the Owner, or
. you receive as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer.
It is uncertain whether systematic withdrawals will qualify for this last
exception. If they did, any modification of the systematic withdrawals,
including additional partial withdrawals apart from the systematic withdrawals,
could result in certain adverse tax consequences. In addition, a transfer
between Investment Subdivisions may result in payments not qualifying for this
exception.
Special Rules If You Own More Than One Policy. In certain circumstances, you
must combine some or all of the Non-Qualified Policies you own in order to
determine the amount of an annuity payout, a surrender, or a withdrawal that
you must include in income. For example:
. If you purchase a Policy offered by this Prospectus and also purchase at
approximately the same time an immediate annuity, the IRS may treat the two
contracts as one contract.
. 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:
. the amount of a surrender, a withdrawal or an annuity payout that you must
include in income, and
. the amount that might be subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
We also designed the Policies for use in connection with certain types of
retirement plans that receive favorable treatment under the Code. Policies
issued to or in connection with a qualified retirement plan are called
"Qualified Policies." We do not currently offer all of the types of Qualified
Policies described, and may not offer them in the future. Prospective
purchasers should contact our Home Office to learn the availability of
Qualified Policies at any given time.
The Federal income tax rules applicable to qualified retirement plans are
complex and varied. As a result, this Prospectus makes no attempt to provide
more than general information about use of the Policy with the various types of
qualified retirement plans. Persons intending to use the Policy in connection
with a qualified retirement plan should obtain advice from a competent advisor.
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Types of Qualified Policies. Some of the different types of Qualified Policies
include:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Simplified Employee Pensions ("SEP's")
. Savings Incentive Matched Plan for Employees ("SIMPLE" plans including
"SIMPLE IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit-sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans")
Terms Of Qualified Plans And Qualified Policies. The terms of a qualified
retirement plan may affect your rights under a Qualified Policy. When issued in
connection with a qualified retirement plan, we will amend a Policy as
generally necessary to conform to the requirements of the type of plan.
However, the rights of any person to any benefits under qualified retirement
plans may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Policy. In addition, we are not
bound by the terms and conditions of qualified retirement plans to the extent
such terms and conditions contradict the Policy, unless we consent.
The Death Benefit And Qualified Policies. Pursuant to IRS regulations, IRAs may
not invest in life insurance contracts. We do not believe that these
regulations prohibit the Death Benefit from being provided under the Policies
when we issue the Policies as Traditional IRAs, Roth IRAs or SIMPLE IRAs.
However, the law is unclear and it is possible that the presence of the Death
Benefit under a Policy issued as a Traditional IRA, Roth IRA or SIMPLE IRA
could result in increased taxes to the Owner.
It is also possible that the Death Benefit could be characterized as an
incidental death benefit. If the Death Benefit were so characterized, this
could result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental death benefits that may be provided
under qualified retirement plans, such as in connection with a 403(b) plan.
Even if the Death Benefit under the Policy were characterized as an incidental
death benefit, it is unlikely to violate those limits unless the purchaser also
purchases a life insurance contract in connection with such plan.
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Treatment of Qualified Policies Compared with Non-Qualified Policies. Although
some of the Federal income tax rules are the same for both Qualified and Non-
Qualified Policies, many of the rules are different. For example:
. The Code generally does not impose tax on the earnings under either Qualified
or Non-Qualified Policies until received.
. The Code does not limit the amount of premium payments and the time at which
premium payments can be made under Non-Qualified Policies. However, the Code
does limit both the amount and frequency of premium payments made to
Qualified Policies.
. The Code does not allow a deduction for premium payments made for Non-
Qualified Policies, but sometimes allows a deduction or exclusion from income
for premium payments made to a Qualified Policy.
The Federal income tax rules applicable to qualified retirement plans and
Qualified Policies vary with the type of plan and Policy. For example:
. Federal tax rules limit the amount of premium payments that can be made, and
the tax deduction or exclusion that may be allowed for the premium payments.
These limits vary depending on the type of qualified retirement plan and the
circumstances of the plan participant, e.g., the participant's compensation.
. Under most qualified retirement plans, e.g., 403(b) plans and Traditional
IRAs, the Owner must begin receiving payments from the Policy in certain
minimum amounts by a certain age, typically age 70 1/2. However, these
"minimum distribution rules" do not apply to a Roth IRA.
Amounts Received Under Qualified Policies. Amounts are Generally Subject to
Income Tax: Federal income tax rules generally include distributions from a
Qualified Policy in your income as ordinary income. Premium payments that are
deductible or excludible from income do not create "investment in the
contract." Thus, under many Qualified Policies there will be no "investment in
the contract" and you include the total amount you receive in your income.
There are exceptions. For example, you do not include amounts received from a
Roth IRA if certain conditions are satisfied.
Additional Federal Taxes May Be Payable in Connection With a Qualified
Policy: For example, failure to comply with the minimum distribution rules
applicable to certain qualified retirement plans, such as Traditional IRAs,
will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the qualified retirement plan.
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Federal Penalty Taxes Payable on Distributions: The Code may impose a penalty
tax equal to 10% of the amount of any payment from your Qualified Policy that
is includible in your income. The Code does not impose the penalty tax if one
of several exceptions apply. The exceptions vary depending on the type of
Qualified Policy you purchase. For example, in the case of an IRA, exceptions
provide that the penalty tax does not apply to a withdrawal, surrender, or
annuity payout:
. received on or after the Owner reaches age 59 1/2,
. received on or after the Owner's death or because of the Owner's disability
(as defined in the tax law),
. received as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer, or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified retirement plans. However, the
specific requirements of the exception may vary.
Moving Money From One Qualified Policy or Qualified Plan to Another. Rollovers
And Transfers: In many circumstances you may move money between Qualified
Policies and qualified retirement plans by means of a rollover or a transfer.
Special rules apply to such rollovers and transfers. If you do not follow the
applicable rules, you may suffer adverse Federal income tax consequences,
including paying taxes which you might not otherwise have had to pay. You
should always consult a qualified advisor before you move or attempt to move
funds between any Qualified Policy or plan and another Qualified Policy or
plan.
Direct Rollovers: The direct rollover rules apply to certain payments (called
"eligible rollover distributions") from section 401(a) plans, section 403(a) or
(b) plans, H.R. 10 plans, and Qualified Policies used in connection with these
types of plans. (The direct rollover rules do not apply to distributions from
IRAs or section 457 plans). The direct rollover rules require Federal income
tax equal to 20% of the eligible rollover distribution to be withheld from the
amount of the distribution, unless the Owner elects to have the amount directly
transferred to certain Qualified Policies or plans.
Prior to receiving an eligible rollover distribution from the Company, we will
provide you with a notice explaining these requirements and how you can avoid
20% withholding by electing a direct rollover.
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FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a Policy unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, Federal income tax rules may
require us to withhold tax. At the time you request a withdrawal, surrender, or
annuity payout, we will send you forms that explain the withholding
requirements.
TAX STATUS OF THE COMPANY
Under existing Federal income tax laws, we do not pay tax on investment income
and realized capital gains of Account 4. We do not anticipate that we will
incur any Federal income tax liability on the income and gains earned by
Account 4. We, therefore, do not impose a charge for Federal income taxes. If
Federal income tax law changes and we must pay tax on some or all of the income
and gains earned by Account 4, we may impose a charge against Account 4 to pay
the taxes.
CHANGES IN THE LAW
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this Prospectus. Congress, the IRS, and the courts may
modify these authorities, however, sometimes retroactively.
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Voting Rights
As required by law, we will vote the portfolio shares held in Account 4 at
meetings of the shareholders of the Funds. The voting will be done according to
the instructions of Owners who have interests in any Investment Subdivisions
which invest in the portfolios of the Funds. If the 1940 Act or any regulation
under it should be amended, and if as a result we determine that we are
permitted to vote the portfolios' shares in our own right, we may elect to do
so.
We will determine the number of votes which you have the right to cast by
applying your percentage interest in an Investment Subdivision to the total
number of votes attributable to the Investment Subdivision. In determining the
number of votes, we will recognize fractional shares.
We will vote portfolio shares of a class held in an Investment Subdivision for
which we received no timely instructions in proportion to the voting
instructions which we received for all Policies participating in that
Investment Subdivision. We will apply voting instructions to abstain on any
item to be voted on a pro-rata basis to reduce the number of votes eligible to
be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in an Investment Subdivision will receive proxy voting material,
reports and other materials relating to the relevant portfolio. Since each Fund
may engage in shared funding, other persons or entities besides the Company may
vote Fund shares. See Investments of Account 4.
54
<PAGE>
Requesting Payments
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, partial surrenders, or surrender
proceeds within seven days after receipt at our Home Office of all the
requirements for such a payment. We will determine the amount as of the end of
the Valuation Period during which our Home Office receives all such
requirements.
We may delay making a payment, applying Account Value to a payment plan, or
processing a transfer request if: (1) the disposal or valuation of Account 4's
assets is not reasonably practicable because the New York Stock Exchange is
closed for other than a regular holiday or weekend, trading is restricted by
the SEC, or the SEC declares that an emergency exists; or (2) the SEC, by
order, permits postponement of payment to protect our Owners. We also may defer
making payments attributable to a check that has not cleared (which may take up
to 15 days), and we may defer payment of proceeds from the Guarantee Account
for a partial surrender, surrender, or transfer request for up to six months
from the date we receive the request. The amount deferred will earn interest at
a rate and for a time period not less than the minimum required in the
jurisdiction in which we delivered the Policy.
55
<PAGE>
Distribution of the Policies
DISTRIBUTOR
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New
Mexico, and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is
the distributor and principal underwriter of the Policies. Capital Brokerage, a
Washington corporation and an affiliate of ours, is located at 6630 W. Broad
St., Richmond, Virginia 23230. Properly licensed registered representatives of
both independent and affiliated broker/dealers (including our affiliate, Terra
Securities Corporation) will sell the Policies. These broker/dealers have
selling agreements with Capital Brokerage and have been licensed by state
insurance departments to represent us. Properly licensed registered
representatives of Capital Brokerage will also sell the Policies. Capital
Brokerage is registered with the SEC under the Securities Exchange Act of 1934
as a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). We will offer the Policies in all states where we are
licensed to do business.
COMMISSIONS
We pay commissions and other expenses associated with the promotion and sales
of the Policies to broker/dealers. Broker/dealers may receive aggregate
commissions of up to 1.4% of your aggregate premium payments.
Under certain circumstances and in exchange for lower initial commissions,
certain sellers of the Policies may be paid a persistency trail commission
which will take into account, among other things, the length of time premium
payments have been held under the Policy, and Account Values. A trail
commission is not anticipated to exceed, on an annual basis, 1.00% of the
Account Values considered in connection with the trail commission. We may also
pay override payments, expense allowances, bonuses, wholesaler fees and
training allowances. Registered representatives earn commissions from the
broker/dealer with which they are affiliated and such arrangements may vary. In
addition, registered representatives who meet specified production levels may
qualify, under sales incentive programs adopted by us, to receive non-cash
compensation such as expense-paid trips, expense-paid educational seminars and
merchandise.
Capital Brokerage will receive 12b-1 fees assessed against the Janus Aspen
Series (Service Shares) as compensation for providing certain distribution and
shareholder support services.
56
<PAGE>
Additional Information
OWNER QUESTIONS
The obligations to Owners under the Policies are ours. Please direct your
questions and concerns to us at our Home Office.
RETURN PRIVILEGE
Within the free-look period after you receive the Policy, you may cancel it for
any reason by delivering or mailing it postage prepaid, to our Home Office,
Annuity New Business, 6610 W. Broad Street, Richmond, Virginia 23230. A Policy
canceled under this provision will be void. Unless state law requires that
premium payments be returned as the refund, the amount of the refund will equal
the Account Value. If state law requires that premium payments be returned, the
amount of the refund will equal the greater of (1) the Account Value, plus any
amount deducted from the premium payments prior to allocation to Account 4
(excluding any charges the portfolios may have deducted), and (2) the premium
payments made less any withdrawals you previously made. In certain states, you
may have more than 10 days to return the Policy for a refund.
Once we change our allocation procedure with respect to the free-look period
(see Allocation of Premium Payments), the amount of the refund in states that
require that premium payments be returned will equal the premium payments made
less any withdrawals you previously made.
STATE REGULATION
As a life insurance company organized and operated under the laws of the
Commonwealth of Virginia, we are subject to provisions governing life insurers
and to regulation by the Virginia Commissioner of Insurance.
Our books and accounts are subject to review and examination by the State
Corporation Commission of the Commonwealth of Virginia at all times. That
Commission conducts a full examination of our operations at least every five
years.
RECORDS AND REPORTS
As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to Account 4. At
least once each year, we will send you a report showing information about your
Policy for the period covered by the report. The report will show the Account
Value in each Investment Subdivision. The report also will show premium
payments and charges made during the statement period. We also will send you an
annual and a semi-annual report for each portfolio underlying an Investment
Subdivision to which you have allocated Account Value, as required by the 1940
Act. In addition, when you make premium payments, transfers, or partial
surrenders, you will receive a written confirmation of these transactions.
57
<PAGE>
OTHER INFORMATION
We have filed a registration statement with the SEC, under the Securities Act
of 1933 as amended, for the Policies being offered here. This Prospectus does
not contain all the information in the registration statement, its amendments
and exhibits. Please refer to the registration statement for further
information about Account 4, the Company, and the Policies offered. Statements
in this Prospectus about the content of Policies and other legal instruments
are summaries. For the complete text of those Policies and instruments, please
refer to those documents as filed with the SEC and available on the SEC's
website at http://www.sec.gov.
LEGAL MATTERS
We, like other life insurance companies, are involved in lawsuits, including
class action lawsuits. In some class action and other lawsuits involving
insurance companies, substantial damages have been sought and/or material
settlement payments have been made. Although we cannot predict the outcome of
any litigation with certainty, we believe that at the present time there are no
pending or threatened lawsuits that are reasonably likely to have a material
adverse impact on us or Account 4.
58
<PAGE>
Condensed Financial Information
Financial statements for Account 4 and consolidated financial statements for GE
Life & Annuity (as well as the auditors' reports thereon) are in the Statement
of Additional Information.
The Accumulation Unit Values and the number of accumulation units outstanding
for each Investment Subdivision for the periods shown are as follows:
<TABLE>
<CAPTION>
Accumulation Accumulation No. of
Unit Values Unit Values Units as Accumulation
as of as of of Unit Values
Investment Subdivisions 1/03/00 12/31/99 12/31/99 as of 5/3/99
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Alger American Fund
Alger American Growth
Portfolio 11.88 11.87 231,761 10.00
Alger American Small
Capitalization Portfolio 13.64 13.71 97,659 10.00
Federated Insurance Series
Federated American Leaders
Fund II 9.24 9.42 85,187 10.00
Federated High Income Bond
Fund II 9.59 9.61 55,873 10.00
Federated Utility Fund II 9.80 9.98 36,259 10.00
Fidelity Variable Insurance
Products Fund (VIP)
VIP Equity-Income Portfolio 9.08 9.32 242,696 10.00
VIP Growth Portfolio 12.31 12.34 333,735 10.00
VIP Overseas Portfolio 13.13 13.08 28,190 10.00
Fidelity Variable Insurance
Products Fund II (VIP II)
VIP II Asset Manager Portfolio 10.48 10.57 44,890 10.00
VIP II Contrafund Portfolio 11.11 11.29 336,615 10.00
Fidelity Variable Insurance
Products Fund III (VIP III)
VIP III Growth & Income
Portfolio 9.85 10.03 150,665 10.00
VIP III Growth Opportunities
Portfolio 9.71 9.89 92,620 10.00
GE Investments Funds, Inc.
Income Fund 9.73 9.78 67,078 10.00
International Equity Fund 12.19 12.12 15,200 10.00
Money Market Fund 10.23 10.23 1,214,273 10.00
Premier Growth Equity Fund 11.51 11.73 96,385 10.00
Real Estate Securities Fund 9.00 9.12 10,487 10.00
S&P 500(R) Index Fund 10.70 10.81 543,614 10.00
Total Return Fund 10.40 10.50 78,079 10.00
U.S. Equity Fund 10.37 10.55 100,906 10.00
Value Equity Fund (now known
as Mid-Cap Value Equity Fund) 9.48 9.72 147,340 10.00
Goldman Sachs Variable
Insurance Trust
Goldman Sachs Growth and
Income Fund 9.42 9.53 15,109 10.00
Goldman Sachs Mid Cap Value
Fund 8.71 8.89 42,809 10.00
Janus Aspen Series
Aggressive Growth Portfolio 18.14 18.07 513,109 10.00
Balanced Portfolio 11.19 11.31 347,931 10.00
Capital Appreciation Portfolio 13.23 13.22 428,091 10.00
Flexible Income Portfolio 9.88 9.90 89,213 10.00
Growth Portfolio 12.65 12.77 500,424 10.00
International Growth Portfolio 17.21 16.96 102,381 10.00
Worldwide Growth Portfolio 15.15 14.97 406,948 10.00
Oppenheimer Variable Account
Funds
Oppenheimer Aggressive Growth
Fund/VA 16.64 16.08 24,750 10.00
Oppenheimer Bond Fund/VA 9.68 9.73 41,749 10.00
Oppenheimer Capital
Appreciation Fund/VA 12.61 12.77 81,428 10.00
Oppenheimer High Income
Fund/VA 9.76 9.77 35,858 10.00
Oppenheimer Multiple
Strategies Fund/VA 10.17 10.23 10,366 10.00
Salomon Brothers Variable
Series Funds Inc
Salomon Investors Fund 9.78 9.96 2,865 10.00
Salomon Strategic Bond Fund 9.80 9.81 15,296 10.00
Salomon Total Return Fund 9.52 9.59 16,292 10.00
</TABLE>
59
<PAGE>
Appendix
STANDARDIZED PERFORMANCE DATA
We may advertise the historical total returns for the Investment Subdivisions
according to SEC standards. These standards are discussed in the Statement of
Additional Information. The total return for an Investment Subdivision assumes
that an investment has been held in the Investment Subdivision for various
periods of time including a period measured from the date on which the
particular portfolio was first available in Account 4. When a portfolio has
been available for one, five, and ten years, we will provide the total return
for these periods, adjusted to reflect current Investment Subdivision charges.
The total return quotations represent the average annual compounded rates of
return that an initial investment of $1,000 in that Investment Subdivision
would equal as of the last day of each period.
In Table 1, we show the standardized average annual total returns of the
Investment Subdivisions for periods from the date on which a particular
portfolio was first available in Account 4 to December 31, 1999, and for the
one, five and ten year periods ended December 31, 1999. Although the Policy did
not exist during the periods shown in Table 1 below, the returns of the
Investment Subdivisions shown have been adjusted to reflect current Investment
Subdivision charges imposed under the Policy. The total returns shown in Table
1 reflect the deduction all common fees and charges assessed under the Policy,
that is, the portfolio expenses, the mortality and expense risk charge
(deducted daily at an effective annual rate of 1.35% of Account Value), the
administrative expense charge (deducted daily at an effective annual rate of
.25% of Account Value) and the annual policy maintenance charge of $25. The
returns assume no premium taxes apply.
60
<PAGE>
Table 1
Standardized Total Returns
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5- year 10-year Inception Date of
period period period in Separate Inception
ended ended ended Account to In Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
The Alger American Fund
Alger American Growth
Portfolio................. 31.61 28.85 20.93 21.14 01/09/89
Alger American Small
Capitalization Portfolio.. 41.13 20.68 16.33 18.93 09/21/88
Federated Insurance Series
Federated American Leaders
Fund II................... 4.97 20.02 NA 16.35 02/10/94
Federated High Income Bond
Fund II................... 0.67 8.71 NA 6.50 03/01/94
Federated Utility Fund II.. 0.07 13.41 NA 10.37 02/10/94
Fidelity Variable Insurance
Products Fund (VIP)
VIP Equity-Income
Portfolio................. 4.63 16.72 12.66 11.84 10/09/86
VIP Growth Portfolio....... 35.24 27.67 18.02 16.75 10/09/86
VIP Overseas Portfolio..... 40.35 15.50 9.65 9.14 01/28/87
Fidelity Variable Insurance
Products Fund II (VIP II)
VIP II Asset Manager
Portfolio................. 9.32 13.78 11.35 11.00 09/06/89
VIP II Contrafund
Portfolio................. 22.27 NA NA 25.92 01/03/95
Fidelity Variable Insurance
Products Fund III (VIP III)
VIP III Growth & Income
Portfolio................. 7.42 NA NA 20.59 12/31/96
VIP III Growth
Opportunities Portfolio... 2.61 NA NA 19.59 01/03/95
GE Investments Funds, Inc.
Income Fund................ -3.00 NA NA 5.19 01/02/95
International Equity Fund.. 28.25 NA NA 13.99 05/01/95
Mid-Cap Value Equity Fund
(formerly known as Value
Equity Fund).............. 15.39 NA NA 18.94 05/01/97
Money Market Fund.......... 3.32 3.70 3.20 3.71 06/30/85
Premier Growth Equity
Fund...................... NA NA NA NA 12/12/97
Real Estate Securities
Fund...................... -1.81 NA NA 8.30 05/01/95
S&P 500(R) Index Fund...... 18.69 25.81 15.87 15.19 04/14/85
Total Return Fund.......... 11.44 15.37 11.23 10.84 07/01/85
U.S. Equity Fund........... 17.70 NA NA 24.37 01/02/95
Goldman Sachs Variable
Insurance Trust
Goldman Sachs Growth and
Income Fund............... 3.73 NA NA 3.85 01/12/98
Goldman Sachs Mid Cap Value
Fund...................... -2.53 NA NA -10.33 04/30/98
Janus Aspen Series
Aggressive Growth
Portfolio................. 121.82 34.05 NA 32.28 09/13/93
Balanced Portfolio......... 24.73 22.69 NA 18.70 09/13/93
Capital Appreciation
Portfolio................. 64.34 NA NA 54.56 05/01/97
Flexible Income Portfolio.. -0.02 9.10 NA 6.77 09/13/93
Growth Portfolio........... 41.69 27.81 NA 22.30 09/13/93
International Growth
Portfolio................. 79.37 31.12 NA 26.15 05/02/94
Worldwide Growth
Portfolio................. 61.83 31.47 NA 27.65 09/13/93
Oppenheimer Variable Account
Funds
Oppenheimer Aggressive
Growth Fund/VA............ 80.68 27.63 18.50 17.26 08/15/86
Oppenheimer Bond Fund/VA... -3.09 5.39 6.04 7.12 04/03/85
Oppenheimer Capital
Appreciation Fund/VA...... 39.40 28.57 16.57 15.74 04/03/85
Oppenheimer High Income
Fund/VA................... 2.62 8.48 10.85 9.87 04/30/86
Oppenheimer Multiple
Strategies Fund/VA........ 10.01 12.57 9.06 9.82 02/09/87
Salomon Brothers Variable
Series Funds Inc
Salomon Investors Fund..... 9.87 NA NA 10.14 02/17/98
Salomon Strategic Bond
Fund...................... -1.23 NA NA 1.81 02/17/98
Salomon Total Return Fund.. -0.83 NA NA 1.86 02/17/98
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was first available in Account 4. As
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.
** Investment Subdivision has not yet been made available to the Separate
Account.
Past performance is not a guarantee of future results.
61
<PAGE>
NON-STANDARDIZED PERFORMANCE DATA
In addition to the standardized data discussed above, we may also show similar
performance data for other periods.
We may from time to time also advertise or disclose average annual total return
or other performance data in non-standardized formats for the Investment
Subdivisions. The non-standardized performance data may make different
assumptions regarding the amount invested, the time periods shown, or the
effect of partial surrenders or income payments.
All non-standardized performance data will be advertised only if we also
disclose the standardized performance data as shown in Table 1.
Adjusted Historical Performance Data. We may disclose historic performance data
for the portfolios since their inception reduced by some or all of the common
fees and charges under the Policy. Such adjusted historic performance includes
data that precedes the date on which a particular portfolio was first available
in Account 4. This data is designed to show the performance that would have
resulted if the Policy had been in existence during that time, based on the
portfolio's performance. This data assumes that the Investment Subdivisions
available under the Policy were in existence for the same period as the
portfolio with a level of charges equal to those currently assessed under the
Policy. This data is not intended to indicate future performance.
Based on the method of calculation described in the Statement of Additional
Information, the adjusted historic average annual total returns for the
portfolios for periods from a particular portfolio was declared effective by
the SEC to December 31, 1999, and for the one, five and ten year periods ended
December 31, 1999 is shown in Table 2 below. The total returns of the
portfolios have been reduced by all common charges currently assessed under the
Policy, as if the Policy had been in existence since the inception of the
portfolio. In Table 2, adjusted total returns for the portfolios reflect
deductions of all common fees and charges under the Policy, including the
mortality and expense risk charge (deducted daily at an effective annual rate
of 1.35% of Account Value), and the administrative expense charge (deducted
daily at an effective annual rate of .25% of Account Value). The returns assume
no premium taxes apply.
62
<PAGE>
Table 2
Adjusted Historical Performance Data assuming surrender at the end of the
applicable time period.
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Alger American Fund
Alger American Growth Portfolio.......... 31.48 NA NA 10/02/95
Alger American Small Capitalization
Portfolio............................... 40.99 NA NA 10/02/95
Federated Insurance Series
Federated American Leaders Fund II....... 4.86 NA NA 05/01/96
Federated High Income Bond Fund II....... 0.57 NA NA 01/04/95
Federated Utility Fund II................ -0.03 NA NA 01/04/95
Fidelity Variable Insurance Products Fund
(VIP)
VIP Equity-Income Portfolio.............. 4.53 16.60 12.55 05/02/88
VIP Growth Portfolio..................... 35.11 27.54 17.90 05/02/88
VIP Overseas Portfolio................... 40.21 15.38 9.54 05/02/88
Fidelity Variable Insurance Products Fund
II (VIP II)
VIP II Asset Manager Portfolio........... 9.21 13.67 11.24 10/03/89
VIP II Contrafund Portfolio.............. 22.15 NA NA 01/04/95
Fidelity Variable Insurance Products Fund
III (VIP III)
VIP III Growth & Income Portfolio........ 7.32 NA NA 05/01/97
VIP III Growth Opportunities Portfolio... 2.50 NA NA 05/01/97
GE Investments Funds, Inc.
Income Fund.............................. -3.10 NA NA 12/12/97
International Equity Fund................ 28.12 NA NA 05/01/95
Mid-Cap Value Equity Fund (formerly known
as Value Equity Fund)................... 15.28 NA NA 05/01/97
Money Market Fund........................ 3.21 3.60 3.10 05/02/88
Premier Growth Equity Fund............... NA NA NA 05/03/99
Real Estate Securities Fund.............. -1.91 NA NA 05/01/95
S&P 500(R) Index Fund.................... 18.57 25.68 15.75 05/02/88
Total Return Fund........................ 11.33 15.26 11.12 05/02/88
U.S. Equity Fund......................... 17.58 NA NA 05/01/98
Goldman Sachs Variable Insurance Trust
Goldman Sachs Growth and Income Fund..... 3.62 NA NA 05/01/98
Goldman Sachs Mid Cap Value Fund......... -2.63 NA NA 05/01/98
Janus Aspen Series
Aggressive Growth Portfolio.............. 121.59 33.92 NA 09/13/93
Balanced Portfolio....................... 24.61 NA NA 10/02/95
Capital Appreciation Portfolio........... 64.17 NA NA 05/01/97
Flexible Income Portfolio................ -0.12 NA NA 10/02/95
Growth Portfolio......................... 41.55 27.68 NA 09/13/93
International Growth Portfolio........... 79.19 NA NA 05/01/96
Worldwide Growth Portfolio............... 61.67 31.34 NA 09/13/93
Oppenheimer Variable Account Funds
Oppenheimer Aggressive Growth Fund/VA.... 80.50 27.50 18.39 05/02/88
Oppenheimer Bond Fund/VA................. -3.19 5.28 5.94 05/02/88
Oppenheimer Capital Appreciation
Fund/VA................................. 39.26 28.44 16.45 05/02/88
Oppenheimer High Income Fund/VA.......... 2.52 8.37 10.74 05/02/88
Oppenheimer Multiple Strategies Fund/VA.. 9.90 12.46 8.95 05/02/88
Salomon Brothers Variable Series Funds Inc
Salomon Investors Fund................... 9.76 NA NA 10/12/98
Salomon Strategic Bond Fund.............. -1.33 NA NA 10/12/98
Salomon Total Return Fund................ -0.93 NA NA 10/12/98
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc."s Money Market Fund than its total return.
* 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
Account 4. Past performance is not a guarantee of future results. Returns for
a period of less than one year are not annualized.
63
<PAGE>
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
--------------------------------------------------------------------------------
<S> <C>
The Policies............................................................... 3
Transfer of Annuity Units................................................ 3
Net Investment Factor.................................................... 3
Termination of Participation Agreements.................................... 4
Calculation of Performance Data............................................ 4
Money Market Investment Subdivision...................................... 5
Other Investment Subdivisions............................................ 6
Other Performance Data................................................... 7
Federal Tax Matters........................................................ 7
Taxation of GE Life & Annuity............................................ 7
IRS Required Distributions............................................... 8
General Provisions......................................................... 8
Using the Policies as Collateral......................................... 8
The Beneficiary.......................................................... 8
Non-Participating........................................................ 8
Misstatement of Age or Sex............................................... 9
Incontestability......................................................... 9
Statement of Values...................................................... 9
Written Notice........................................................... 9
Distribution of the Policies............................................... 9
Legal Developments Regarding Employment-Related Benefit Plans.............. 9
Legal Matters.............................................................. 9
Experts.................................................................... 10
Financial Statements....................................................... 10
</TABLE>
Dated
GE Life and Annuity Company
6610 West Broad Street
Richmond, Virginia 23230
<PAGE>
A Statement of Additional Information containing more detailed information
about the Policy and Account 4 is available free by writing us at the address
below or by calling (800) 352-9910.
To GE Life & Annuity
Annuity New Business
6610 W. Broad Street
Richmond, VA 23230
Please mail a copy of the Statement of Additional Information for Separate
Account 4, Policy Form P1152 1/99 to:
Name ___________________________________________________________________________
Address ________________________________________________________________________
Street
____________________________________________________________________________
City State Zip
Signature of Requestor _________________________________________________________
Date
<PAGE>
Statement of Additional Information
For The
Flexible Premium Variable Deferred Annuity Policy
Form P1151 1/99
Offered By
GE Life and Annuity Assurance Company
(A Virginia Stock Corporation)
6610 W. Broad Street
Richmond, Virginia 23230
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the above-named flexible premium variable deferred
annuity policy ("Policy") offered by GE Life and Annuity Assurance Company. You
may obtain a copy of the Prospectus dated by calling (800) 352-9910 or
by writing to GE Life and Annuity Assurance Company, 6610 W. Broad Street,
Richmond, Virginia 23230. The SAI is also available on the SEC website at
http://www.sec.gov. Terms used in the current Prospectus for the Policy are
incorporated in this Statement.
This statement of additional information is
not a prospectus and should be read only
in conjunction with the prospectuses for the Policy and the Funds.
Dated
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Policies............................................................... 3
Transfer of Annuity Units................................................ 3
Net Investment Factor.................................................... 3
Termination of Participation Agreements.................................... 3
Calculation of Performance Data............................................ 4
Money Market Investment Subdivision...................................... 4
Other Investment Subdivisions............................................ 6
Other Performance Data................................................... 6
Federal Tax Matters........................................................ 7
Taxation of GE Life & Annuity............................................ 7
IRS Required Distributions............................................... 7
General Provisions......................................................... 7
Using the Policies as Collateral......................................... 7
The Beneficiary.......................................................... 8
Non-Participating........................................................ 8
Misstatement of Age or Sex............................................... 8
Incontestability......................................................... 8
Statement of Values...................................................... 8
Written Notice........................................................... 8
Distribution of the Policies............................................... 8
Legal Developments Regarding Employment-Related Benefit Plans.............. 8
Legal Matters.............................................................. 9
Experts.................................................................... 9
Financial Statements....................................................... 9
</TABLE>
2
<PAGE>
THE POLICIES
Transfer of Annuity Units
At your request, Annuity Units may be transferred once per calendar year
from the Investment Subdivisions in which they are currently held. However,
where permitted by state law, we reserve the right to refuse to execute any
transfer if any of the Investment Subdivisions that would be affected by the
transfer are unable to purchase or redeem shares of the portfolios in which the
Investment Subdivisions invest. The number of Annuity Units to be transferred
is (a) times (b) divided by (c) where: (a) is the number of Annuity Units in
the current Investment Subdivision desired to be transferred; (b) is the
Annuity Unit Value for the Investment Subdivision in which the Annuity Units
are currently held; and (c) is the Annuity Unit Value for the Investment
Subdivision to which the transfer is made.
If the number of Annuity Units remaining in an Investment Subdivision after
the transfer is less than 1, we will transfer the amount remaining in addition
to the amount requested. We will not transfer into any Investment Subdivision
unless the number of Annuity Units of that Investment Subdivision after the
transfer is at least 1. The amount of the income payment as of the date of the
transfer will not be affected by the transfer (however, subsequent variable
income payments will reflect the investment experience of the selected
Investment Subdivisions).
Net Investment Factor
The net investment factor measures investment performance of the Investment
Subdivisions of Account 4 during a Valuation Period. Each Investment
Subdivision has its own net investment factor for a Valuation Period. The net
investment factor of an Investment Subdivision available under the Policies for
a Valuation Period is (a) divided by (b) minus (c) where:
(a) is the result of:
(1) the value of the net assets of that Investment Subdivision at
the end of the preceding Valuation Period, plus
(2) the investment income and capital gains, realized or unrealized,
credited to the net assets of that Investment Subdivision during the
Valuation Period for which the net investment factor is being
determined, minus
(3) the capital losses, realized or unrealized, charged against
those assets during the Valuation Period, minus
(4) any amount charged against that Investment Subdivision for
taxes; this includes any amount we set aside during the Valuation
Period as a provision for taxes attributable to the operation or
maintenance of that Subdivision; and
(b) is the value of the net assets of that Investment Subdivision at the
end of the preceding Valuation Period; and
(c) is a factor for the Valuation Period representing the mortality and
expense charge and the administrative expense charge; this factor is shown
in your Policy.
The values of the assets in Account 4 will be taken at their fair market
value in accordance with generally accepted accounting practices and applicable
laws and regulations.
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares
to Account 4 contain varying provisions regarding termination. The following
summarizes those provisions:
The Alger American Fund. This agreement may be terminated at the option of
any party upon six months' written notice to the other parties, unless a
shorter time is agreed to by the parties.
3
<PAGE>
Federated Insurance Series. This agreement may be terminated by any of the
parties on 180 days written notice to the other parties.
Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, 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.
Goldman Sachs Variable Insurance Trust. This agreement may be terminated at
the option of any party upon six months' written notice to the other parties,
unless a shorter time is agreed to by the parties.
Janus Aspen Series. This agreement may be terminated by the parties on six
months' advance written notice.
Oppenheimer Variable Account Funds. This agreement may be terminated by the
parties on six months' advance written notice.
Salomon Brothers Variable Series Fund 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.
CALCULATION OF PERFORMANCE DATA
From time to time, we may disclose total return, yield, and other
performance data for the Investment Subdivisions pertaining to the Policies.
Such performance data will be computed, or accompanied by performance data
computed, in accordance with the standards defined by the Securities and
Exchange Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Policy. Premium taxes currently range from 0% to 3% of premium payments and are
generally based on the rules of the state in which you reside.
Money Market Investment Subdivision
From time to time, advertisements and sales literature may quote the yield
of the Money Market Investment Subdivision 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 portfolio or on its
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of
securities and unrealized appreciation and depreciation and income other than
investment income) at the end of the seven-day period in the value of a
hypothetical account under a Policy having a balance of one unit in that Money
Market Investment Subdivision at the beginning of the period, dividing such net
change in Account Value by the value of the account at the beginning of the
period to determine the base period return, and annualizing the result on a
365-day basis. The net change in Account Value reflects: 1) net income from the
portfolio attributable to the hypothetical account; and 2) charges and
4
<PAGE>
deductions imposed under the Policy which are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the annual
policy maintenance charge, administrative expense charge, and the mortality and
expense risk charge (the administrative expense charge and the mortality and
expense risk charge combined on an effective annual basis equal to 1.60% of
Account Value). The annual policy maintenance charge is only deducted if
Account Value at the time of deduction is less than $25,000. We assume for the
purposes of the yield calculation that this charge will be waived. Current
Yield will be calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) X ( 365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive
of realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the seven-day period attributable to a hypothetical
account having a balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value on the first day of the seven-day period.
The effective yield of a Money Market Investment Subdivision determined on a
compounded basis for the same seven-day period may also be quoted. The
effective yield is calculated by compounding the base period return according
to the following formula:
Effective Yield = (1 + ((NCP - ES)/UV)) 365/7 - 1
where:
NCP = the net change in the value of the investment portfolio (exclusive
of realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the seven-day period attributable to a hypothetical
account having a balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value for the first day of the seven-day period.
The yield on amounts held in the Money Market Investment Subdivision
normally will fluctuate on a daily basis. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yields
or rates of return. A Money Market Investment Subdivision's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity of the Investment Subdivision's corresponding money market
portfolio, the types and quality of portfolio securities held by that
portfolio, and that investment portfolio's operating expenses. Because of the
charges and deductions imposed under the Policy, the yield for a Money Market
Investment Subdivision will be lower than the yield for its corresponding money
market portfolio.
Yield calculations for the underlying Money Market Fund are less the
administrative charge and the mortality and expense risk charge (the
administrative expense charge and the mortality and expense risk charge
combined equal an annual 1.60% of Account Value). The annual policy maintenance
charge is only deducted if Account Value at the time of deduction is less than
$25,000. We assume for the purposes of the yield calculation that this charge
will be waived. Yield calculations for the GE Investments Money Market Fund as
of December 31, 1999 are as follows:
<TABLE>
<S> <C>
Current Yield 3.95%
Effective Yield 4.02%
</TABLE>
Past performance is not a guarantee of future results.
5
<PAGE>
Other Investment Subdivisions
Total Return. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Investment
Subdivisions for various periods of time including 1 year, 5 years and 10
years, or from inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Policy to the redemption value of that investment as of the last day of
the period. The ending date for each period for which total return quotations
are provided will be for the most recent practicable, considering the type and
media of the communication, and will be stated in the communication.
For periods that begin before the Policy was available, performance data
will be based on the performance of the underlying portfolios, with the level
of Account 4 and Policy charges currently in effect. Average annual total
return will be calculated using Investment Subdivision unit values and
deductions for the annual policy maintenance charge as described below:
1. We calculate unit value for each Valuation Period based on the
performance of the Investment Subdivision's underlying investment portfolio
(after deductions for Fund expenses, the administrative expense charge, and
the mortality and expense risk charge).
2. The annual policy maintenance charge is $25 per year, deducted at the
beginning of each Policy year after the first. For purposes of calculating
average annual total return, an average policy maintenance charge
(currently 0.1% of Account Value attributable to the hypothetical
investment) is used. This charge will be waived if the Account Value is at
least $25,000 at the time the charge is due.
3. 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).
Past performance is not a guarantee of future results.
Other Performance Data
We may disclose cumulative total return in conjunction with the standard
format described above. The cumulative total return will be calculated using
the following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting deductions as described
above) of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
Other non-standard quotations of Investment Subdivision performance may also
be used in sales literature. Such quotations will be accompanied by a
description of how they were calculated. We will accompany any non-standard
quotations of Investment Subdivision performance with standard performance
quotations.
6
<PAGE>
FEDERAL TAX MATTERS
Taxation of GE Life & Annuity
We do not expect to incur any federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Policies. (See Federal Tax Matters section of the Prospectus.) Based upon these
expectations, no charge is being made currently to Account 4 for federal income
taxes which may be attributable to the Account. We will periodically review the
question of a charge to Account 4 for federal income taxes related to the
Account. Such a charge may be made in future years if we believe that we may
incur federal income taxes. This might become necessary if the tax treatment of
the Company is ultimately determined to be other than what we currently believe
it to be, if there are changes made in the federal income tax treatment of
annuities at the corporate level, or if there is a change in the Company's tax
status. In the event that we should incur federal income taxes attributable to
investment income or capital gains retained as part of the reserves under the
Policies, the Account Value would be correspondingly adjusted by any provision
or charge for such taxes.
We may also incur state and local taxes (in addition to premium taxes) in
several states. At present, these taxes, with the exception of premium taxes,
are not significant. If there is a material change in applicable state or local
tax laws causing an increase in taxes other than premium taxes (for which we
currently impose a charge), charges for such taxes attributable to Account 4
may be made.
IRS Required Distributions
In order to be treated as an annuity policy for federal income tax purposes,
section 72(s) of the Code requires any Non-Qualified Policy to provide that (a)
if any Owner dies on or after the Maturity Date but prior to the time the
entire interest in the Policy has been distributed, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Maturity Date, the entire interest in the Policy will
be distributed (1) within five years after the date of that Owner's death, or
(2) as income payments which will begin within one year of that Owner's death
and which will be made over the life of the Owner's "designated beneficiary" or
over a period not extending beyond the life expectancy of that beneficiary. The
"designated beneficiary" generally is the person who will be treated as the
sole Owner of the Policy following the death of the Owner, Joint Owner or, in
certain circumstances, the Annuitant. However, if the "designated beneficiary"
is the surviving spouse of the decedent, these distribution rules will not
apply until the surviving spouse's death (and this spousal exception will not
again be available). If any Owner is not an individual, the death of the
Annuitant will be treated as the death of an Owner for purposes of these rules.
The Non-Qualified Policies contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code section 72(s) when clarified by regulation or otherwise.
Other rules may apply to Qualified Policies.
GENERAL PROVISIONS
Using The Policies As Collateral
A Non-Qualified Policy can be assigned as collateral security. We must be
notified in writing if a Policy is assigned. Any payment made before the
assignment is recorded at our Home Office will not be affected. We are not
responsible for the validity of an assignment. Your rights and the rights of a
Beneficiary may be affected by an assignment.
7
<PAGE>
A Qualified Policy may not be sold, assigned, transferred, discounted,
pledged or otherwise transferred except under such conditions as may be allowed
under applicable law.
The basic benefits of the Policy are assignable. Additional benefits added
by rider may or may not be available/eligible for assignments.
The Beneficiary
You may select one or more primary and contingent Beneficiaries during your
lifetime upon application and by filing a written request with our Home Office.
Each change of Beneficiary revokes any previous designation.
Non-Participating
The Policy is non-participating. No dividends are payable.
Misstatement of Age or Sex
If an Annuitant's age or sex was misstated on the Policy data page, any
Policy benefits or proceeds, or availability thereof, will be determined using
the correct age and sex.
Incontestability
We will not contest the Policy.
Statement of Values
At least once each year, we will send you a statement of values within 30
days after each report date. The statement will show Account Value, premium
payments and charges made during the report period.
Written Notice
Any written notice should be sent to us at our Home Office at 6610 West
Broad Street, Richmond, Virginia 23230. The Policy number and the Annuitant's
full name must be included.
We will send all notices to the Owner at the last known address on file with
the company.
DISTRIBUTION OF THE POLICIES
The offering is continuous and Capital Brokerage Corporation does not
anticipate discontinuing the offering of the Policies. However, the Company
does reserve the right to discontinue the offering of the Policies.
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for
Tax Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964, vary between men and women on
the basis of sex. The Policy contains guaranteed annuity purchase rates for
certain optional payment plans that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of Norris, and Title VII generally,
on any employment-related insurance or benefit program for which a Policy may
be purchased.
8
<PAGE>
In addition, the Company is subject to the insurance laws and regulations of
other states within which it is licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
determining permissible investments. Presently, the Company is licensed to do
business in the District of Columbia and all states, except New York.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to federal securities laws. Donita M. King,
Senior Vice President, General Counsel and Secretary of the Company, has
provided advice on certain legal matters pertaining to the Policy, including
the validity of the Policy and the Company's right to issue the Policies under
Virginia insurance law.
EXPERTS
The consolidated financial statements of GE Life and Annuity Assurance
Company and subsidiary 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 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
contains an explanatory paragraph that states that the Company changed its
method of accounting for insurance-related assessments in 1999.
FINANCIAL STATEMENTS
This Statement of Additional Information contains consolidated financial
statements for GE Life and Annuity Assurance Company and subsidiary (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 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 Policy. 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.
9
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
<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)
=========== =========== ========= ========== ===========
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc., continued
-----------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth
Fund Fund 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
========= ========= ========== ========= =========
</TABLE>
-a) Reflects period covering May 5, 1999 to December 31, 1999.
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>
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 Year ended December
Year ended December 31, 31, 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
Year ended December 31, 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 eligible for up to a 4% bonus
credit and 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 transac-
tions:
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 transac-
tions:
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 transac-
tions:
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
For Type III Unit Contracts, transfers from the Guarantee Account include
approximately $38 million of payments made by GE Life & Annuity in the form of
bonus credits during 1999.
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, 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-60
<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 re-
demption and liquidation value, 200,000 shares autho-
rized, 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-61
<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-62
<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-63
<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 dis-
counts..................................... (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 activi-
ties.................................... 201.5 374.8 233.8
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales and maturities of invest-
ment 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 con-
tracts...................................... 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-64
<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-65
<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-66
<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-67
<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-68
<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-69
<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-70
<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-71
<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-72
<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-73
<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-74
<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-75
<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-76
<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-77
<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-78
<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......................... $19,774.2 $183.1 $19,957.3
========= ====== =========
<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-79
<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-80
<PAGE>
GE Life & Annuity Separate Account 4
Prospectus For
Flexible Premium Variable Deferred Annuity
Policy Form P1151 1/99
issued by:
GE Life and Annuity Assurance Company
Home Office:
6610 West Broad Street
Richmond, Virginia 23230
Telephone: (804) 281-6000
--------------------------------------------------------------------------------
This Prospectus describes an individual flexible premium variable deferred
annuity policy (the "Policy") for individuals and some qualified and non-
qualified retirement plans. GE Life and Annuity Assurance Company (the
"Company," "we," "us," or "our") issues the Policy.
The Policy offers you the accumulation of Account Value and the payment of
periodic annuity benefits. We may pay these benefits on a variable or fixed
basis or a combination of both.
The minimum amount you need to purchase the Policy is $25,000.
You may allocate your premium payments to Account 4, the Guarantee Account, or
both. Each Investment Subdivision of Account 4 invests in shares of the Funds.
We list the Funds, and their currently available portfolios, below.
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund, AIM V.I. Growth Fund, AIM V.I. Value
Fund
Alliance Variable Products Series Fund, Inc.
Growth and Income Portfolio, Premier Growth Portfolio, Quasar Portfolio
Dreyfus
Dreyfus Investment Portfolios-Emerging Markets Fund, The Dreyfus Socially
Responsible Growth Fund, Inc.
The Federated Insurance Series
Federated High Income Bond Fund II, Federated International Small Company
Fund II
Fidelity Variable Insurance Products Fund (VIP)
VIP Equity-Income Portfolio, VIP Growth Portfolio
Fidelity Variable Insurance Products Fund II (VIP II)
VIP II Contrafund(R) Portfolio
Fidelity Variable Insurance Products Fund III (VIP III)
VIP III Growth & Income Portfolio, VIP III Mid Cap Portfolio
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund, Money Market Fund, Premier Growth Equity Fund,
S&P 500(R) Index Fund, Small-Cap Value Equity Fund, U.S. Equity Fund, Value
Equity Fund
Janus Aspen Series
Aggressive Growth Portfolio, Balanced Portfolio, Capital Appreciation
Portfolio, Global Life Sciences Portfolio, Global Technology Portfolio,
Growth Portfolio, International Growth Portfolio, Worldwide Growth Portfolio
<PAGE>
MFS(R) Variable Insurance Trust
MFS(R) Growth Series, MFS(R) Growth With Income Series, MFS(R) New Discovery
Series, MFS(R) Utilities Series
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Growth &
Income Fund/VA
PIMCO Variable Insurance Trust
Foreign Bond Portfolio, High Yield Bond Portfolio, Long-Term U.S. Government
Bond Portfolio, Total Return Bond Portfolio
Rydex Variable Trust
Rydex OTC Fund
Not all of these portfolios may be available in all states or markets.
Except for amounts in the Guarantee Account, both the value of a Policy before
the Maturity Date and the amount of monthly income afterward will depend upon
the investment performance of the portfolio(s) you select. You bear the
investment risk of investing in the portfolios.
The Securities and Exchange Commission has not approved these securities or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Your investment in the Policy is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any government
agency.
This Prospectus gives details about Account 4 and our Guarantee Account that
you should know before investing. You should also review the prospectuses for
the Funds and keep all prospectuses for future reference.
We filed a statement of additional information ("SAI"), dated , concerning
the Policy with the Securities and Exchange Commission ("SEC") and its terms
are made part of this Prospectus. If you would like a free copy, call us at 1-
800-352-9910. The SAI and other information about the Policy is available on
the SEC's internet site at http://www.sec.gov. A table of contents for the SAI
appears on the last page of this Prospectus.
This Prospectus is dated .
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Definitions................................................................. 1
Expense Table............................................................... 3
Synopsis.................................................................... 10
Investment Results.......................................................... 13
Financial Statements........................................................ 14
GE Life and Annuity Assurance Company....................................... 15
Account 4................................................................... 16
The Guarantee Account....................................................... 25
Charges and Other Deductions................................................ 27
The Policy.................................................................. 30
The Death Benefit........................................................... 38
Income Payments............................................................. 45
Federal Tax Matters......................................................... 49
Voting Rights............................................................... 58
Requesting Payments......................................................... 59
Distribution of the Policies................................................ 60
Additional Information...................................................... 61
Condensed Financial Information............................................. 63
Appendix.................................................................... A-1
</TABLE>
Table of Contents for Statement of Additional Information
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
<PAGE>
Definitions
We have tried to make this Prospectus as understandable as possible. However,
in explaining how the Policy works, we have had to use certain terms that have
special meanings. We define these terms below.
Account 4 -- GE Life & Annuity Separate Account 4, a separate investment
account we established to receive and invest the premiums you pay under the
Policy, and other variable annuity policies we issue.
Account Value -- The value of the Policy equal to the amount allocated to the
Investment Subdivisions of Account 4 and the Guarantee Account.
Accumulation Unit -- An accounting unit of measure we use in calculating the
Account Value in Account 4 before the Maturity Date.
Annuitant -- The Annuitant is the person you named in the Policy upon whose age
and, where appropriate, sex, we determine monthly income benefits.
Annuity Unit -- An accounting unit of measure we use in the calculation of the
amount of the second and each subsequent variable income payment.
Death Benefit -- The benefit provided under a Policy upon the death of an
Annuitant prior to the Maturity Date.
Designated Beneficiary(ies) -- The person(s) designated in the Policy who is
alive (or in existence for non-natural entities) on the date of an Owner's,
Joint Owner's or Annuitant's death and who will be treated as the sole Owner of
the Policy following such a death.
Fund -- Any open-end management investment company or any unit investment trust
in which an Investment Subdivision invests.
General Account -- Our assets that are not segregated in any of our separate
investment accounts.
Guarantee Account -- Part of our General Account that provides a guaranteed
interest rate for a specified interest rate guarantee period. This account is
not part of and does not depend on the investment performance of Account 4.
Investment Subdivision -- A subdivision of Account 4, each of which invests
exclusively in shares of a designated portfolio of one of the Funds. Not all
Investment Subdivisions may be available in all states or markets.
Maturity Date -- The date stated in the Policy on which income payments are
scheduled to commence, if the Annuitant is living on that date.
1
<PAGE>
Owner -- The person or persons (in the case of Joint Owners) entitled to
receive income payments after the Maturity Date. The Owner also is entitled to
the ownership rights stated in the Policy during the lifetime of the Annuitant
and is shown on the Policy data pages and in any application. "You" or "your"
refers to the Owner or Joint Owners.
Policy Date -- The date we issue your Policy and your Policy becomes effective.
Your Policy Date is shown in your Policy and we use it to determine Policy
years and anniversaries.
Surrender Value -- The Account Value (after deduction of any policy maintenance
charge) less any applicable premium tax.
Valuation Day -- For each Investment Subdivision, each day on which the New
York Stock Exchange is open for business, except for days that a Fund does not
value its shares.
Valuation Period -- The period that starts at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next succeeding Valuation Day.
2
<PAGE>
Expense Table
This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Policy. The table reflects expenses
of the Policy, of the Investment Subdivisions of Account 4, and of the
portfolios. For more complete descriptions of the various costs and expenses
involved, see Charges and Other Deductions in this Prospectus, and the Fund
prospectuses. Premium taxes may also be applicable, although they do not appear
in the table.
<TABLE>
<S> <C>
Owner Transaction Expenses:
Surrender Charge........................................................ None
Transfer Charge (for each transfer after the first in a calendar
month)/1/ ............................................................. $10
Annual Expenses (As A Percentage Of Account Value):
Mortality and Expense Risk Charge....................................... 1.35%
Administrative Expense Charge........................................... .25%
----
Total Annual Expenses................................................... 1.60%
Other Annual Expenses:
Annual Policy Maintenance Charge/2/ .................................... $ 25
Maximum Optional Enhanced Death Benefit Charge (OEDB)
(as a percentage of Account Value)/3/ ................................. .35%
</TABLE>
/1/We reserve the right to assess a $10 transfer charge after the first
transfer in a calendar month, although we do not currently do so.
/2/We do not assess this charge if your Account Value at the time the charge
is due is at least $25,000.
/3/If the Optional Enhanced Death Benefit applies. We are currently charging
.20%.
3
<PAGE>
Portfolio Annual Expense Table
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):
<TABLE>
<CAPTION>
Management Other Expenses
Fees (after (after Total
fee waiver, 12b-1 Service reimbursement, Annual
Portfolio as applicable) Fees* Fees** as applicable) Expenses
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance
Funds
AIM V.I. Capital
Appreciation Fund 0.62 -- -- 0.11 0.73
AIM V.I. Growth Fund 0.63 -- -- 0.10 0.73
AIM V.I. Value Fund 0.61 -- -- 0.15 0.76
Alliance Variable Products
Series Fund, Inc./1/
Growth and Income
Portfolio -- Class B
Shares 0.63 0.25 -- 0.09 0.97
Premier Growth
Portfolio -- Class B
Shares 1.00 0.25 -- 0.04 1.29
Quasar Portfolio -- Class
B Shares 0.81 0.25 -- 0.14 1.20
Dreyfus
Dreyfus Investment
Portfolios-Emerging
Markets Fund 1.25 -- -- 0.25 1.50
The Dreyfus Socially
Responsible Growth
Portfolio, Inc. 0.75 -- -- 0.04 0.79
Federated Insurance
Series/2/
Federated High Income
Bond Fund II --Service
Shares 0.60 -- 0.10 0.19 0.89
Federated International
Small Company Fund II 0.40 -- 0.10 1.00 1.50
Fidelity Variable
Insurance Products Fund
(VIP)/3/
VIP Equity-Income
Portfolio -- Service
Class 2 Shares 0.48 0.25 -- 0.10 0.83
VIP Growth Portfolio --
Service Class 2 Shares 0.58 0.25 -- 0.10 0.93
Fidelity Variable
Insurance Products Fund
(VIP II)/4/
VIP II Contrafund
Portfolio -- Service
Class 2 Shares 0.58 0.25 -- 0.12 0.95
Fidelity Variable
Insurance Products Fund
(VIP III)/5/
VIP III Growth & Income
Portfolio -- Service
Class 2 Shares 0.48 0.25 -- 0.13 0.86
VIP III Mid Cap
Portfolio -- Service
Class 2 Shares 0.57 0.25 -- 0.43 1.25
GE Investments Funds,
Inc./6/
Mid-Cap Value Equity Fund 0.65 -- -- 0.06 0.71
Money Market Fund 0.24 -- -- 0.06 0.30
Premier Growth Equity
Fund 0.65 -- -- 0.03 0.68
S&P 500(R) Index Fund 0.35 -- -- 0.04 0.39
Small-Cap Value Equity
Fund 0.80 -- -- 0.13 0.93
U.S. Equity Fund 0.55 -- -- 0.06 0.61
Value Equity Fund 0.65 -- -- 0.13 0.78
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Management Other Expenses
Fees (after (after Total
fee waiver, 12b-1 Service reimbursement, Annual
Portfolio as applicable) Fees* Fees** as applicable) Expenses
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Series/7/
Aggressive Growth
Portfolio -- Service
Shares 0.65 0.25 -- 0.02 0.92
Balanced Portfolio --
Service Shares 0.65 0.25 -- 0.02 0.92
Capital Appreciation
Portfolio -- Service
Shares 0.65 0.25 -- 0.04 0.94
Global Life Sciences
Portfolio -- Service
Shares 0.65 0.25 -- 0.19 1.09
Global Technology
Portfolio -- Service
Shares 0.65 0.25 -- 0.13 1.03
Growth Portfolio --
Service Shares 0.65 0.25 -- 0.02 0.92
International Growth
Portfolio -- Service
Shares 0.65 0.25 -- 0.11 1.01
Worldwide Growth
Portfolio -- Service
Shares 0.65 0.25 -- 0.05 0.95
MFS(R) Variable Insurance
Trust/8/
MFS(R) Growth Series --
Service Class Shares 0.75 0.20 -- 0.16 1.11
MFS(R) Growth with Income
Series -- Service Class
Shares 0.75 0.20 -- 0.13 1.08
MFS(R) New Discovery
Series -- Service Class
Shares 0.90 0.20 -- 0.17 1.27
MFS(R) Utilities
Series -- Service Class
Shares 0.75 0.20 -- 0.16 1.11
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA --
Service Shares 0.67 0.15 -- 0.02 0.84
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares 0.73 0.15 -- 0.05 0.93
PIMCO Variable Insurance
Trust/9/
Foreign Bond Portfolio --
Administrative Shares 0.25 -- 0.15 0.70 1.10
High Yield Bond
Portfolio --
Administrative Shares 0.25 -- 0.15 0.35 0.75
Long-Term U.S. Government
Bond Portfolio --
Administrative Shares 0.25 -- 0.15 0.25 0.65
Total Return Bond
Portfolio --
Administrative Shares 0.25 -- 0.15 0.25 0.65
Rydex Variable Trust
Rydex OTC Fund 0.75 -- 0.25 0.55 1.55
</TABLE>
* The 12b-1 fees deducted from the 12b-1 classes of these portfolios cover
certain distribution and shareholder support services provided by the
companies selling contracts investing in those portfolios. The portion of
the 12b-1 fees assessed against the Separate Account's assets related to the
portfolios will be remitted to Capital Brokerage Corporation, the principal
underwriter for the Contracts.
** The Service Share fees deducted from the service shares of these portfolios
cover certain administrative services provided by companies selling
contracts investing in those portfolios. The portion of the Service Share
fees assessed against the Separate Account's assets related to the
portfolios will be remitted to GE Life & Annuity.
/1/Alliance Variable Products Series Fund, Inc. has voluntarily agreed to
reduce or limit certain other expenses. Absent these waivers total annual
expenses during 1999 would have been 1.44% for the Quasar Portfolio,
consisting of 1.00% management fees, .25% 12b-1 fee and .19% other expenses.
5
<PAGE>
/2/ Federated Insurance Series, Inc. has voluntarily agreed to reduce or limit
certain other expenses. Absent these waivers total annual expenses during
1999 would have been 1.04% for the High Income Bond Fund II, consisting of
.60% management fees, .25% service fees and .19% other expenses; total
annual expenses of 2.50% for International Small Company Fund II,
consisting of 1.25% management fee, 1.00% service fee and .25% other
expenses.
/3/ The expenses of the portfolios of the Variable Insurance Products Fund
(VIP) -- Service Class 2, are based on the estimated expenses that those
portfolios expect to incur in their initial fiscal year.
/4/ The expenses of the portfolios of the Variable Insurance Products Fund II
(VIP II) -- Service Class 2, are based on the estimated expenses that those
portfolios expect to incur in their initial fiscal year.
/5/ The expenses of the portfolios of the Variable Insurance Products Fund III
(VIP III) -- Service Class 2, are based on the estimated expenses that
those portfolios expect to incur in their initial fiscal year.
/6/ GE Asset Management Incorporated currently serves as investment advisor to
GE Investments Funds, Inc. (except for GE Small-Cap Value and Value Equity
Funds) and has agreed to waive a portion of the fee payable by the Fund.
Absent this fee waiver, the total annual expenses of the GE Money Market
Fund would have been .50%, consisting of .44% management fees and .06%
other expenses; GE Premier Growth Equity Fund would have been .72% total
annual expenses, consisting of .65% management fees and .07% other
expenses. Expenses for the Small-Cap Value Equity and the Value Equity
Funds are estimated due to the portfolios being in existence for less than
10 months.
/7/ Janus Aspen Series expenses (except for Global Technology and Global Life
Sciences Portfolios) are based upon expenses for the fiscal year ended
December 31, 1999, restated to reflect a reduction in the management fees
for Growth, Aggressive Growth, Capital Appreciation, International Growth,
Worldwide Growth and Balanced. Expenses for Global Technology and Global
Life Sciences Portfolios are based on the estimated expenses that those
portfolios expect to incur in their initial fiscal year. All expenses are
shown without the effect of expense offset arrangements.
/8/ Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of MFS Variable Insurance Trust during 1999 would have been
total annual expenses of 1.66% for the Growth Series, consisting of .75%
management fees, .20% 12b-1 fee and .71% other expenses; total annual
expenses of 2.69% for the New Discovery Series, consisting of .90%
management fees, .20% 12b-1 fees and 1.59% other expenses.
/9/ Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of the PIMCO Variable Insurance Trust during 1999 would have
been total annual expenses of 1.25% for the Foreign Bond Portfolio,
consisting of .25% management fees, .15% service fee and .85% other
expenses; total annual expenses of .71% for the Long-Term U.S. Government
Bond Portfolio, consisting of .25% management fees, .15% service fees and
.31% other expenses; total annual expenses of .69% for Total Return Bond
Portfolio, consisting of .25% management fees, .15% service fees and .29%
other expenses.
PIMCO Foreign Bond Portfolio has contractually agreed to reduce total
annual portfolio operating expenses for the Administrative Class shares to
the extent they would exceed, due to the payment of organizational expenses
and Trustees' fee, 0.90% of average daily net assets. Under the Expense
Limitation Agreement, PIMCO may recoup these waivers and reimbursements in
future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit.
Not all portfolios may be available in all states or markets.
6
<PAGE>
EXAMPLE
This example shows what your costs would be under certain hypothetical
situations. The example does not represent past or future expenses. Your actual
expenses may be more or less than those shown. The example is based on the
annual expenses of the portfolios of the Funds for the year ended December 31,
1999 (shown above in Portfolio Annual Expenses), and assumes that the
applicable fee waivers and reimbursements will continue (we cannot guarantee
that they will). The Janus Global Life Sciences portfolio and Global Technology
portfolio did not exist as of December 31, 1999; therefore the expenses for
these portfolios are based on the estimated expenses that the portfolios expect
to incur in their initial fiscal year. The examples also assume an average
annual policy maintenance charge of 0.1% of Account Value attributable to the
hypothetical investment (this charge will be waived if the Account Value is at
least $25,000 at the time the charge is due). To the extent the examples
reflect charges for the optional enhanced Death Benefit, the examples assume
that the maximum charges (of the average Account Value at the beginning of the
previous Policy year and at the end of the previous policy year) apply.
An Owner 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:
If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
Without OEDB Rider
-------------------------------
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund............ 24.61 75.75 129.55 276.33
AIM V.I. Growth Fund.......................... 24.61 75.75 129.55 276.63
AIM V.I. Value Fund........................... 24.91 76.65 131.05 279.62
Alliance Variable Products Series Fund, Inc.
Growth and Income Portfolio................... 27.01 82.94 141.50 300.27
Premier Growth Portfolio...................... 30.20 92.43 157.20 330.84
Quasar Portfolio.............................. 29.30 89.77 152.81 322.35
Dreyfus
Dreyfus Investment Portfolios-Emerging Markets
Fund......................................... 32.29 98.62 167.36 350.33
The Dreyfus Socially Responsible Growth Fund,
Inc.......................................... 25.21 77.55 132.55 282.59
Federated Insurance Series
Federated High Income Bond Fund II............ 26.21 80.55 137.53 292.45
Federated International Small Company Fund
II........................................... 32.29 98.62 167.36 350.33
Fidelity Variable Insurance Products Fund (VIP)
VIP Equity-Income Portfolio................... 25.61 78.75 134.55 286.55
VIP Growth Portfolio.......................... 26.61 81.74 139.52 296.37
Fidelity Variable Insurance Products Fund II
(VIP II)
VIP II Contrafund Portfolio................... 26.81 82.34 140.51 298.32
Fidelity Variable Insurance Products Fund III
(VIP III)
VIP III Growth & Income Portfolio............. 25.91 79.65 136.04 289.51
VIP III Mid Cap Portfolio..................... 29.80 91.25 155.25 327.07
GE Investments Funds, Inc.
Mid Cap Value Fund............................ 24.41 75.15 128.55 274.63
Money Market Fund............................. 20.30 62.75 107.78 232.72
Premier Growth Equity Fund.................... 24.11 74.25 127.04 271.63
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S&P 500(R) Index Fund.......................... 21.20 65.48 112.37 242.08
Small Cap Value Fund........................... 26.61 81.74 139.52 296.37
U.S. Equity Fund............................... 23.41 72.14 123.52 264.58
Value Equity Fund.............................. 25.11 77.25 132.05 281.60
Janus Aspen Series
Aggressive Growth Portfolio.................... 26.51 81.44 139.02 295.39
Balanced Portfolio............................. 26.51 81.44 139.02 295.39
Capital Appreciation Portfolio................. 26.71 82.04 140.04 297.34
Global Life Sciences Portfolio................. 28.21 86.51 147.41 311.86
Global Technology Portfolio.................... 27.61 84.72 144.46 306.08
Growth Portfolio............................... 26.51 81.44 139.02 295.39
International Growth Portfolio................. 27.41 84.13 143.47 304.15
Worldwide Growth Portfolio..................... 26.81 82.34 140.51 298.32
MFS Variable Insurance Trust
MFS Growth Series.............................. 28.41 87.10 148.40 313.77
MFS Growth with Income Series.................. 28.11 86.21 146.92 310.89
MFS New Discovery Series....................... 30.00 91.84 156.22 328.96
MFS Utilities Series........................... 28.41 87.10 148.40 313.77
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA.......... 25.71 79.05 135.04 287.54
Oppenheimer Main Street Growth & Income
Fund/VA....................................... 26.61 81.74 139.52 296.37
PIMCO Variable Insurance Trust
Foreign Bond Portfolio......................... 28.31 86.81 147.91 312.81
High Yield Portfolio........................... 24.81 76.35 130.55 278.62
Long-Term U.S. Government Bond Portfolio....... 23.81 73.34 125.54 268.61
Total Return Portfolio......................... 23.81 73.34 125.54 268.61
Rydex Variable Trust
Rydex OTC Fund................................. 32.78 100.08 169.76 354.90
</TABLE>
* surrender includes annuitization over a period of less than 5 years
If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
With OEDB Rider
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds, Inc.
Capital Appreciation........................... 24.61 82.75 143.49 307.52
Growth......................................... 24.61 82.75 143.49 307.52
Value.......................................... 24.91 83.64 144.97 310.42
Alliance
Growth & Income................................ 27.01 89.90 155.30 330.45
Premier Growth................................. 30.20 99.35 170.82 360.10
Quasar......................................... 29.30 96.70 166.48 351.87
Dreyfus
Emerging Markets............................... 32.29 105.51 190.86 379.00
Socially Responsible Growth.................... 25.21 94.54 146.46 313.31
Federated
High Income.................................... 26.21 87.52 151.38 322.87
International Small Company.................... 32.29 105.51 180.86 379.00
Fidelity Variable Insurance Products Fund III
Contrafund..................................... 26.81 89.30 154.32 328.56
Equity-Income.................................. 25.61 85.73 148.43 317.15
Growth & Income................................ 25.91 86.63 149.91 320.02
Growth......................................... 26.61 88.71 153.34 326.67
Mid Cap........................................ 29.80 98.18 168.89 356.45
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE Investments Funds, Inc.
Mid Cap Value.................................. 24.41 82.15 142.50 305.58
Money Market................................... 20.30 69.80 121.96 264.92
Premier Growth Equity.......................... 24.11 81.25 141.01 302.67
S&P 500 Index.................................. 21.20 72.53 126.51 274.00
Small Cap Value................................ 26.61 88.71 153.34 326.67
U.S. Equity Fund............................... 23.41 79.15 137.53 295.83
Value Equity................................... 25.11 84.24 145.96 312.35
Janus Aspen Series
Aggressive Growth.............................. 26.51 88.41 152.85 325.72
Balanced....................................... 26.51 88.41 152.85 325.72
Capital Appreciation........................... 26.71 89.01 153.83 327.62
Global Technology.............................. 27.61 91.68 158.23 336.09
Growth......................................... 26.51 88.41 152.85 325.72
International Growth........................... 27.41 91.08 157.25 334.21
Life Sciences.................................. 28.21 93.45 161.15 341.69
Worldwide Growth............................... 26.81 89.30 154.32 328.56
MFS
Utilities...................................... 28.41 94.05 162.12 343.55
Growth......................................... 28.41 94.05 162.12 343.55
Growth with Income............................. 28.11 93.16 160.66 340.76
New Discovery.................................. 30.00 98.76 169.86 358.28
Oppenheimer
Global Securities.............................. 25.71 86.03 148.92 318.11
Main Street Growth & Income.................... 26.61 88.71 153.34 326.67
PIMCO
Foreign Bond................................... 28.31 93.75 161.64 342.62
Government Bond................................ 23.81 80.35 139.52 299.75
High Yield..................................... 24.81 83.34 144.48 309.46
Total Return................................... 23.81 80.35 139.52 299.75
Rydex
Rydex OTC...................................... 32.78 106.97 183.24 383.44
</TABLE>
OTHER POLICIES
We offer other variable annuity policies which also may invest in many of the
same portfolios of the Funds offered under the Policy. These policies have
different charges that could affect the value of the Investment Subdivisions,
and they may offer different benefits more suitable to your needs. To obtain
more information about these policies, contact your registered representative,
or call (800) 352-9910.
9
<PAGE>
Synopsis
What type of Policy am I buying? The Policy is an individual flexible premium
variable deferred annuity policy. We may issue it as a policy qualified
("Qualified Policy") under the Internal Revenue Code of 1986, as amended (the
"Code"), or as a policy that is not qualified under the Code ("Non-Qualified
Policy"). This Prospectus only provides disclosure about the Policy. See The
Policy.
How does the Policy work? Once we approve your application, we will issue the
Policy to you. During the accumulation period, while you are paying in, you can
use your net premium payments (i.e., your pemium payments minus any premium
tax), to buy Accumulation Units under Account 4 or interests in the Guarantee
Account. Should you decide to annuitize (that is, change your Policy to a
payout mode rather than an accumulation mode), we will convert your
Accumulation Units to Annuity Units. You can choose a fixed or variable income
payment. If you choose a variable income payment, we will base your periodic
income payment upon the number of Annuity Units to which you became entitled at
the time you decided to annuitize and the value of each unit on that Valuation
Day. See The Policy.
What is Account 4? It is a segregated asset account established under Virginia
insurance law, and registered with the SEC as a unit investment trust. We
allocate the assets of Account 4 to one or more Investment Subdivisions,
according to your investment choice. We do not charge those assets with
liabilities arising out of any other business we may conduct. See Account 4.
What are my variable investment choices? Through its various Investment
Subdivisions, Account 4 uses your net premium payments to purchase shares, at
your direction, in one or more of the portfolios of the Funds. In turn, each
portfolio holds securities consistent with its own particular investment
policy. See Investments of Account 4.
What is the Guarantee Account? We offer fixed investment choices through our
Guarantee Account. The Guarantee Account is part of our General Account and
pays interest at declared rates we guarantee for selected periods of time. We
also guarantee the principal, after deductions. Since the Guarantee Account is
part of the General Account, we assume the risk of investment gain or loss on
this amount. All assets in the General Account are subject to our general
liabilities from business operations. The Guarantee Account may not be
available in all states or all markets.
The Guarantee Account is not part of and does not depend on the investment
performance of Account 4. You may allocate all or a portion of your net premium
payments to the Guarantee Account (see The Guarantee Account), and you may
transfer Account Value between the Guarantee Account and Account 4 subject to
certain restrictions. See Transfers Before the Maturity Date.
10
<PAGE>
What charges are associated with this Policy? We assess annual charges in the
aggregate at an effective annual rate of 1.60% against the daily net asset
value of Account 4, including that portion of the account attributable to your
premium payments. These charges consist of .25% as an administrative expense
charge and 1.35% as a mortality and expense risk charge. There is a $25 annual
policy maintenance charge which we will waive if the Account Value is at least
$25,000 at the time the charge is due. We also charge for the Optional Enhanced
Death Benefit. For a complete discussion of the charges associated with the
Policy, see Charges and Other Deductions.
If your state assesses a premium tax with respect to your Policy, then at the
time we incur the tax (or at such other time as we may choose), we will deduct
those amounts from premium payments or Account Value, as applicable. See
Charges and Other Deductions and Deductions for Premium Taxes.
There are expenses associated with the portfolios. These include management
fees and other expenses associated with the daily operation of each portfolio.
See Investments of Account 4. These portfolio expenses are more fully described
in the Prospectus for each Fund.
How much must I pay, and how often? Subject to certain minimum and maximum
payments, the amount and frequency of your premium payments are completely
flexible. See The Policy -- Premium Payments.
How will my income payments be calculated? We will pay you a monthly income
beginning on the Maturity Date if the Annuitant is still living. You may also
decide to annuitize under one of the optional payment plans. We will base your
initial payment on maturity value and other factors. See Income Payments.
What happens if I die before the Maturity Date? Before the Maturity Date, if an
Owner, Joint Owner, or Annuitant dies while the Policy is in force, we will
treat the Designated Beneficiary as the sole Owner of the Policy, subject to
certain distribution rules. We may pay a Death Benefit to the Designated
Beneficiary. See Death of the Owner, Joint Owner or Annuitant Before the
Maturity Date.
May I transfer Account Value among portfolios? Yes, but there may be limits on
how often you may do so. The minimum transfer amount is currently $100 or the
entire balance in the Investment Subdivision if the transfer will leave a
balance of less than $100. Transfers from or to the Guarantee Account may be
subject to restrictions described in the Guarantee Account rider. See The
Policy -- Transfers Before the Maturity Date, Income Payments -- Transfers
After the Maturity Date, and The Guarantee Account.
11
<PAGE>
May I surrender the Policy or make a partial surrender? Yes, subject to Policy
requirements and to restrictions imposed under certain retirement plans.
On full surrender, we may assess certain charges as discussed above and under
Charges and Other Deductions. In addition, you may be subject to income tax
and, if you are younger than age 59 1/2 at the time of the surrender, a 10%
penalty tax. A surrender or a partial surrender may also be subject to tax
withholding. See Federal Tax Matters. A partial surrender will reduce the Death
Benefit by the proportion that the partial surrender reduces the Account Value.
Do I get a free look at this Policy? Yes. You have the right to return the
Policy to us at our Home Office, and have us cancel the Policy within a certain
number of days (usually 10 days from the date you receive the Policy, but some
states require different periods).
If you exercise this right, we will cancel the Policy as of the day we receive
it and send you a refund equal to your Account Value plus any charges we have
deducted from premium payments prior to their allocation to Account 4 (and
excluding any charges the Portfolios may have deducted) on or before the date
we received the returned Policy. Or, if greater and required by the law of your
state, we will refund your premium payments (less any withdrawals previously
taken). This calculation may change. See Return Privilege.
When are my allocations effective? Within two business days after we receive
all the information necessary to process your purchase order, we will allocate
your initial premium payment directly to the Guarantee Account and/or the
Investment Subdivisions you choose.
Where may I find more information about Accumulation Unit Values? The Condensed
Financial Information section at the end of this Prospectus provides more
information about Accumulation Unit Values.
12
<PAGE>
Investment Results
At times, Account 4 may compare its investment results to various unmanaged
indices or other variable annuities in reports to shareholders, sales
literature and advertisements. We will calculate the results on a total return
basis for various periods. Total returns include the reinvestment of all
distributions of the portfolios, which are reflected in changes in unit value.
Total returns reflect the portfolio charges and expenses, the administrative
expense charge, the mortality and expense risk charge and the annual policy
maintenance charge. Total returns do not reflect the optional enhanced Death
Benefit charge. Total returns do not reflect the impact of any premium taxes
that may apply. See the Appendix for further information.
13
<PAGE>
Financial Statements
The 1999 financial statements of GE Life and Annuity Assurance Company and GE
Life & Annuity Separate Account 4 are located in the SAI. If you would like a
free copy of the SAI, call 1-800-352-9910. Otherwise, the SAI is available on
the SEC's website at http://www.sec.gov.
14
<PAGE>
GE Life and Annuity Assurance Company
We are a stock life insurance company operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. We principally offer life insurance
and annuity policies. We are admitted to do business in 49 states and the
District of Columbia. Our principal offices are at 6610 West Broad Street,
Richmond, Virginia 23230. 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
("Federal") and Phoenix Group Holdings, 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 Policies and a broker/dealer registered with the
U.S. Securities and Exchange Commission).
We are a member of the Insurance Marketplace Standards Association ("IMSA"). We
may use the IMSA membership logo and language in our advertisements, as
outlined in IMSA's Marketing and Graphics Guidelines. Companies that belong to
IMSA subscribe to a set of ethical standards covering the various aspects of
sales and service for individually sold life insurance and annuities.
15
<PAGE>
Account 4
We established Account 4 as a separate investment account on August 19, 1987.
Account 4 may invest in mutual funds, unit investment trusts, managed separate
accounts, and other portfolios, and we use it to support the Policy as well as
for other purposes permitted by law.
Account 4 currently has 41 Investment Subdivisions available under the Policy,
but that number may change in the future. Each Investment Subdivision invests
exclusively in shares representing an interest in a separate corresponding
portfolio of the Funds described below. We allocate net premium payments, in
accordance with your instructions, among up to ten of the 41 Investment
Subdivisions available under the Policy.
The assets of Account 4 belong to us. Nonetheless, we do not charge the assets
in Account 4 attributable to the Policies with liabilities arising out of any
other business which we may conduct. The assets of Account 4 shall, however, be
available to cover the liabilities of our General Account to the extent that
the assets of Account 4 exceed its liabilities arising under the Policies
supported by it. Income and both realized and unrealized gains or losses from
the assets of Account 4 are credited to or charged against Account 4 without
regard to the income, gains or losses arising out of any other business we may
conduct.
We registered Account 4 with the SEC as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act"). Account 4 meets the definition of
a separate account under the Federal securities laws. Registration with the SEC
does not involve supervision of the management or investment practices or
policies of Account 4 by the SEC. You assume the full investment risk for all
amounts you allocate to Account 4.
INVESTMENTS OF ACCOUNT 4
There is a separate Investment Subdivision which corresponds to each portfolio
of a Fund offered in this Policy. You decide the Investment Subdivisions to
which you allocate net premium payments. You may change your allocation without
penalty or charges.
Each Fund is registered with the Securities and Exchange Commission as an open-
end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one
portfolio has no effect on the investment performance of any other portfolio.
Before choosing an Investment Subdivision to allocate your net premium payments
and Account Value, carefully read the prospectus for each Fund, along with this
16
<PAGE>
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 Account 4.
You bear the investment risk of investing in the portfolios.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the
investment results of any other portfolio, even if the other portfolio has the
same investment adviser or manager, or if the other portfolio has a similar
name.
INVESTMENT SUBDIVISIONS
The Policy offers you a choice from among 41 Investment Subdivisions, each of
which invests in an underlying portfolio of one of the Funds. You may invest in
up to ten Investment Subdivisions plus the Guarantee Account at any one time.
<TABLE>
<CAPTION>
Adviser (and Sub-
Investment Subdivision Adviser, as
Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital The fund's investment A I M Advisors,
Appreciation Fund objective is growth of Inc.
capital. Invests principally
in common stocks, with
emphasis on medium and small-
sized growth companies. This
fund may invest up to 25% of
the value of the total assets
in foreign securities.
-------------------------------------------------------------------------------
AIM V.I. Growth Fund The fund's investment A I M Advisors,
objective is to seek growth of Inc.
capital. Invests principally
in seasoned and better
capitalized companies
considered to have strong
earnings momentum. This fund
may invest up to 25% of the
value of the total assets in
foreign securities.
-------------------------------------------------------------------------------
AIM V.I. Value Fund Seeks to achieve long-term A I M Advisors,
growth of capital. Income is a Inc.
secondary objective. Invests
principally in equity
securities judged by the
investment advisor of the fund
to be undervalued. This fund
may invest up to 25% of the
value of the total assets in
foreign securities.
-------------------------------------------------------------------------------
ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
Growth and Income Seeks reasonable current Alliance Capital
Portfolio income and reasonable Management, L.P.
opportunity for appreciation
through investments primarily
in dividend- paying common
stocks of good quality. May
also invest in fixed-income
securities and convertible
securities.
-------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Investment Subdivision Adviser, as
Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Premier Growth Portfolio Seeks long term growth of Alliance Capital
capital by investing Management, L.P.
predominantly in the equity
securities of a limited number
of large, carefully selected,
high quality U.S. companies
judged likely to achieve
superior earnings growth.
-------------------------------------------------------------------------------
Quasar Portfolio Seeks growth of capital by Alliance Capital
pursuing aggressive investment Management, L.P.
policies. This fund invests
based upon the potential for
capital appreciation and only
incidentally for current
income. The investment
policies are aggressive.
-------------------------------------------------------------------------------
DREYFUS
Dreyfus Emerging Markets Seeks long-term capital growth The Dreyfus
Fund by investing primarily in the Corporation
stocks of companies organized,
or with a majority of its
assets or business, in
emerging market countries.
-------------------------------------------------------------------------------
The Dreyfus Socially Seeks to provide capital The Dreyfus
Responsible Growth Fund, growth, with current income as Corporation
Inc. a secondary goal by investing
primarily in the common stock
of companies that in the
opinion of the Fund's
management, meet traditional
investment standards and
conduct their business in a
manner that contributes to the
enhancement of the quality of
life in America.
-------------------------------------------------------------------------------
FEDERATED INSURANCE SERIES
Federated High Income Seeks high current income by Federated
Bond Fund II investing primarily in a Investment
professionally managed, Management Company
diversified portfolio of fixed
income securities. Pursues
this objective by investing in
a diversified portfolio of
high- yield, lower-rated
corporate bonds (also known as
"junk bonds").
-------------------------------------------------------------------------------
Federated International Seeks to provide long-term Federated Global
Small Company Fund II growth of capital. Purses this Investment
objective by investing at Management Corp.
least 65% of its assets in
equity securities of foreign
companies that have a market
capitalization at the time of
purchase of $1.5 billion or
less.
-------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND (VIP)
Equity-Income Portfolio Seeks reasonable income and Fidelity Management
will consider the potential & Research Company;
for capital appreciation. The (beginning January
fund also seeks a yield, which 1, 2001, FMR Co.,
exceeds the composite yield on Inc. will
the securities comprising the subadvise.)
S&P 500 by investing primarily
in income-producing equity
securities and by investing in
domestic and foreign issuers.
-------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Investment Subdivision Adviser, as
Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Growth Portfolio Seeks capital appreciation by Fidelity Management
investing primarily in common & Research Company;
stocks of companies believed (beginning January
to have above-average growth 1, 2001, FMR Co.,
potential. Inc. will
subadvise.)
-------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND II (VIP II)
Contrafund(TM) Portfolio Seeks long-term capital Fidelity Management
appreciation by investing & Research Company
primarily in common stocks and (subadvised by
securities of companies whose Fidelity Management
value it believes to have not & Research (U.K.)
fully been recognized by the Inc. and Fidelity
public. This fund invests in Management &
domestic and foreign issuers Research (Far East)
and also invests in "growth" Inc., and Fidelity
stocks or "value" stocks or Investments Japan
both. Limited; beginning
January 1, 2001,
FMR Co., Inc. will
subadvise.)
-------------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND III (VIP III)
Growth & Income Portfolio Seeks high total return Fidelity Management
through a combination of & Research Company
current income and capital (subadvised by
appreciation by investing a Fidelity Management
majority of assets in common & Research (U.K.)
stocks with a focus on those Inc. and Fidelity
that pay current dividends and Management &
show potential for capital Research (Far East)
appreciation. Inc. and Fidelity
Investments Japan
Limited; beginning
January 1, 2001,
FMR Co., Inc. will
subadvise.)
-------------------------------------------------------------------------------
Mid Cap Portfolio Seeks long-term growth of Fidelity Management
capital by investing primarily & Research Company
in common stocks and at least (subadvised by
65% of total assets in Fidelity Management
securities of companies with & Research (U.K.),
medium market capitalizations. Inc. and Fidelity
Management &
Research Far East
Inc.)
-------------------------------------------------------------------------------
GE INVESTMENTS FUNDS, INC.
Mid-Cap Value Equity Fund Objective of providing long GE Asset Management
term growth of capital by Incorporated
investing primarily in common (Subadvised by NWQ
stock and other equity Investment
securities of companies that Management Company)
the investment adviser
believes are undervalued by
the marketplace at the time of
purchase and that offer the
potential for above-average
growth of capital. Although
the current portfolio reflects
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.
-------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Investment Subdivision Adviser, as
Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Money Market Fund Objective of providing highest GE Asset Management
level of current income as is Incorporated
consistent with high liquidity
and safety of principal by
investing in various types of
good quality money market
securities.
-------------------------------------------------------------------------------
Premier Growth Equity Objective of providing long- GE Asset Management
Fund term growth of capital as well Incorporated
as future (rather than
current) income by investing
primarily in growth-oriented
equity securities.
-------------------------------------------------------------------------------
S&P 500(R) Index Objective of providing capital GE Asset Management
Fund(/1/) appreciation and accumulation Incorporated
of income that corresponds to (Subadvised by
the investment return of the State Street Global
Standard & Poor's 500 Advisers)
Composite Stock Price Index
through investment in common
stocks comprising the Index.
-------------------------------------------------------------------------------
Small-Cap Value Equity Objective of providing long- GE Asset Management
Fund term growth of capital by Incorporated
investing primarily in equity (Subadvised by
securities of small cap Palisade Capital
undervalued U.S. companies Management, L.L.C.)
that have solid growth
prospects.
-------------------------------------------------------------------------------
U.S. Equity Fund Objective of providing long- GE Asset Management
term growth of capital through Incorporated
investments primarily in
equity securities of U.S.
companies.
-------------------------------------------------------------------------------
Value Equity Fund Objective of providing long- GE Asset Management
term growth of capital and Incorporated
future income. Pursues
investments in equity
securities of large
undervalued U.S. companies
that have solid growth
prospects.
-------------------------------------------------------------------------------
JANUS ASPEN SERIES
Aggressive Growth Non-diversified portfolio Janus Capital
Portfolio pursuing long- term growth of Corporation
capital. Pursues this
objective by normally
investing at least 50% of its
assets in equity securities
issued by medium-sized
companies.
-------------------------------------------------------------------------------
Balanced Portfolio Seeks long term growth of Janus Capital
capital. Pursues this Corporation
objective consistent with the
Preservation of capital and
balanced by current income.
Normally invests 40-60% of its
assets in securities selected
primarily for their growth
potential and 40- 60% of its
assets in securities selected
primarily for their income
potential.
-------------------------------------------------------------------------------
Capital Appreciation Non-diversified portfolio Janus Capital
Portfolio pursuing long-term growth of Corporation
capital. Pursues this
objective by investing
primarily in common stocks of
companies of any size.
-------------------------------------------------------------------------------
</TABLE>
(/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 Asset Management
Incorporated. The S&P 500 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 or the Contract.
20
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Investment Subdivision Adviser, as
Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Global Life Sciences Invests primarily in equity Janus Capital
Portfolio securities of U.S. and foreign Corporation
companies selected for their
growth potential. Normally
invests at least 65% of its
total assets in securities of
companies that the portfolio
manager believes have a life
science orientation.
-------------------------------------------------------------------------------
Global Technology Invests primarily in equity Janus Capital
Portfolio securities of U.S. and foreign Corporation
companies selected for their
growth potential. Under normal
circumstances, it invests at
least 65% of its total assets
in securities of companies
that the portfolio manager
believes will benefit
significantly from advances or
improvements in technology.
-------------------------------------------------------------------------------
Growth Portfolio Seeks long-term capital growth Janus Capital
consistent with the Corporation
preservation of capital and
pursues its objective by
investing in common stocks of
companies of any size.
Emphasizes larger, more
established issuers.
-------------------------------------------------------------------------------
International Growth Seeks long-term growth of Janus Capital
Portfolio capital. Pursues this Corporation
objective primarily through
investments in common stocks
of issuers located outside the
United States. The portfolio
normally invests at least 65%
of its total assets in
securities of issuers from at
least five different
countries, excluding the
United States.
-------------------------------------------------------------------------------
Worldwide Growth Seeks long-term capital growth Janus Capital
Portfolio in a manner consistent with Corporation
the preservation of capital.
Pursues this objective by
investing in a diversified
portfolio of common stocks of
foreign and domestic issuers
of all sizes. Normally invests
in at least five different
countries including the United
States.
-------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
MFS(R) Growth Series Seeks to provide long-term Massachusetts
growth of capital and future Financial Services
income rather than current Company ("MFS")
income.
-------------------------------------------------------------------------------
MFS(R) Growth With Income Seeks to provide reasonable Massachusetts
Series current income and long-term Financial Services
growth of capital and income. Company ("MFS")
-------------------------------------------------------------------------------
MFS(R) New Discovery Seeks capital appreciation. Massachusetts
Series Pursues this objective by Financial Services
investing at least 65% of its Company ("MFS")
total assets in equity
securities of emerging growth
companies.
-------------------------------------------------------------------------------
MFS(R) Utilities Series Seeks capital growth and Massachusetts
current income. Purses this Financial Services
objective by investing at Company ("MFS")
least 65% of its total assets
in equity and debt securities
of domestic and foreign
companies in the utilities
industry.
-------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Investment Subdivision Adviser, as
Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
OPPENHEIMER VARIABLE ACCOUNT
FUNDS
Global Securities Fund/VA Seeks long-term capital OppenheimerFunds,
appreciation by investing a Inc.
substantial portion of assets
in securities of foreign
issuers, "growth- type"
companies, cyclical industries
and special situations that
are considered to have
appreciation possibilities. It
invests mainly in common
stocks of U.S. and foreign
issuers.
-------------------------------------------------------------------------------
Main Street Growth & Seeks high total return, which OppenheimerFunds,
Income Fund/VA includes growth in the value Inc.
of its shares as well as
current income, from equity
and debt securities. The Fund
invests mainly in common
stocks of U.S. companies.
-------------------------------------------------------------------------------
PIMCO VARIABLE INSURANCE
TRUST
Foreign Bond Portfolio Non-diversified portfolio Pacific Investment
seeking to maximize total Management Company
return, consistent with
preservation of capital and
prudent investment management.
This fund primarily invests in
intermediate maturity hedged
foreign fixed income
securities.
-------------------------------------------------------------------------------
High Yield Bond Portfolio Seeks to maximize total Pacific Investment
return, consistent with Management Company
preservation of capital and
prudent investment management.
Primarily invests in higher
yielding fixed income
securities (also known as
"junk bonds.")
-------------------------------------------------------------------------------
Long-Term U.S. Government Seeks to maximize total Pacific Investment
Bond Portfolio return, consistent with the Management Company
preservation of capital and
prudent investment management.
Primarily invests in long-
term maturity fixed income
securities.
-------------------------------------------------------------------------------
Total Return Bond Seeks to maximize total return Pacific Investment
Portfolio consistent with preservation Management Company
of capital and prudent
investment management.
Primarily invests in
intermediate maturity fixed
income securities.
-------------------------------------------------------------------------------
RYDEX VARIABLE TRUST
OTC Fund(/2/) Non-diversified fund seeks to Rydex Global
provide investment results Advisors
that correspond to a benchmark
for over-the-counter
securities that invest
primarily in securities of
companies included in NASDAQ
100 Index(TM).
-------------------------------------------------------------------------------
</TABLE>
(/2/)THE NASDAQ 100 Index(TM) is an unmanaged index that is a widely recognized
indicator of OTC Market performance.
Not all of these portfolios may be available in all states or in all markets.
We will purchase shares of the portfolios at net asset value and direct them to
the appropriate Investment Subdivisions of Account 4. We will redeem sufficient
shares of the appropriate portfolios at net asset value to pay Death Benefits
and
22
<PAGE>
surrender/partial surrender proceeds, to make income payments, or for other
purposes described in the Policy. We automatically reinvest all dividend and
capital gain distributions of the portfolios in shares of the distributing
portfolios at their net asset value on the date of distribution. In other
words, we do not pay portfolio dividends or portfolio distributions out to
Owners as additional units, but instead reflect them in unit values.
Shares of the portfolios 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.
CHANGES TO ACCOUNT 4 AND THE INVESTMENT SUBDIVISIONS
We have entered into agreements with either the investment adviser or
distributor of each of the Funds under which the adviser or distributor pays us
a fee ordinarily based upon a percentage of the average aggregate amount we
have invested on behalf of Account 4 and other separate accounts. These
percentages differ, and some investment advisers or distributors pay us a
greater percentage than other advisors or distributors. These agreements
reflect administrative services we provide. The amounts we receive under these
agreements may be significant. In addition, our affiliate, Capital Brokerage
Corporation, the principal underwriter for the Policies, will receive 12b-1
fees deducted from certain portfolio assets for providing distribution and
shareholder support services to some of the portfolios.
We reserve the right, within the law, to make additions, deletions and
substitutions for the Funds and/or any portfolios within the Funds in which
Account 4 participates. (We may substitute shares of other portfolios for
shares already purchased, or to be purchased in the future, under the Policy.
This substitution might occur if shares of a portfolio should no longer be
available, or if investment in any portfolio's shares should become
inappropriate, in the judgment of our management, for the purposes of the
Policy.) In addition, the new portfolio may have higher fees and charges than
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the portfolio it replaced. No substitution of the shares attributable to your
account may take place without prior notice to you and before approval of the
SEC, in accordance with the 1940 Act.
We also reserve the right to establish additional Investment Subdivisions, each
of which would invest in a separate portfolio of a Fund, or in shares of
another investment company, with a specified investment objective. We may also
eliminate one or more Investment Subdivisions if, in our sole discretion,
marketing, tax, or investment conditions warrant. We will not eliminate an
Investment Subdivision without prior notice to you and before approval of the
SEC. Not all Investment Subdivisions may be available to all classes of
policies.
If permitted by law, we may deregister Account 4 under the 1940 Act in the
event such registration is no longer required; manage Account 4 under the
direction of a committee; or combine Account 4 with other separate accounts of
the Company. Further, to the extent permitted by applicable law, we may
transfer the assets of Account 4 to another separate account.
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The Guarantee Account
Due to certain exemptive and exclusionary provisions, we have not registered
interests in the Guarantee Account under the Securities Act of 1933 (the "1933
Act"), and we have not registered either the Guarantee Account or our General
Account as an investment company under the 1940 Act. Accordingly, neither the
interests in the Guarantee Account, nor our General Account are generally
subject to regulation under the 1933 Act and the 1940 Act. Disclosures relating
to the interests in the Guarantee Account and the General Account, however, may
be subject to certain generally applicable provisions of the Federal securities
laws relating to the accuracy of statements made in a registration statement.
You may allocate some or all of your net premium payments and transfer some or
all of your Account Value to the Guarantee Account. We credit the portion of
the Account Value allocated to the Guarantee Account with interest (as
described below). Account Value in the Guarantee Account is subject to some,
but not all, of the charges we assess in connection with the Policy. See
Charges and Other Deductions.
Each time you allocate net premium payments or transfer Account Value to the
Guarantee Account, we establish an interest rate guarantee period. For each
interest rate guarantee period, we guarantee an interest rate for a specified
period of time.
At the end of an interest rate guarantee period, a new interest rate will
become effective, and a new interest rate guarantee period will commence for
the remaining portion of that particular allocation.
We determine interest rates in our sole discretion. The determination made will
be influenced by, but not necessarily correspond to, interest rates available
on fixed income investments which we may acquire with the amounts we receive as
premium payments or transfers of Account Value under the Policies. You will
have no direct or indirect interest in these investments. We also will consider
other factors in determining interest rates for a guarantee period including,
but not limited to, regulatory and tax requirements, sales commissions, and
administrative expenses borne by us, general economic trends, and competitive
factors. Amounts you allocate to the Guarantee Account will not share in the
investment performance of our General Account, or any portion thereof. We
cannot predict or guarantee the level of interest rates in future guarantee
periods. However, the interest rates for any interest rate guarantee period
will be at least the guaranteed interest rate shown in your policy.
We will notify Owners in writing at least 10 days before the expiration date of
any interest rate guarantee period about the then currently available interest
rate guarantee periods and the guaranteed interest rates applicable to such
interest rate guarantee periods. A new one year guarantee period will commence
automatically unless we receive written notice prior to the end of the 30 day
period following the
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expiration of the interest rate guarantee period ("30 day window") of your
election of a different interest rate guarantee period from among those being
offered by us at that time, or instructions to transfer all or a portion of the
remaining amount to one or more Investment Subdivisions subject to certain
restrictions. (See Transfers Before the Maturity Date.) During the 30 day
window, the allocation will accrue interest at the new guarantee period's
interest rate.
To the extent permitted by law, we reserve the right at any time to offer
interest rate guarantee periods that differ from those available when we issued
the Policy, and to credit bonus interest on premium payments allocated to the
Guarantee Account participating in the Dollar-Cost Averaging Program (See
Dollar-Cost Averaging). (This may not be available to all classes of Policies.)
We also reserve the right, at any time, to stop accepting premium payments or
transfers of Account Value to a particular interest rate guarantee period.
Since the specific interest rate guarantee periods available may change
periodically, please contact our Home Office to determine the interest rate
guarantee periods currently being offered.
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Charges and Other Deductions
All of the charges described in this section apply to Account Value allocated
to Account 4. Account Value in the Guarantee Account is subject to all of the
charges described in this section except for the mortality and expense risk
charge and the administrative expense charge.
We will deduct the charges described below to cover our costs and expenses,
services provided and risks assumed under the Policies. We incur certain costs
and expenses for the distribution and administration of the Policies and for
providing the benefits payable thereunder. Our administrative services include:
. processing applications for and issuing the Policies;
. maintaining records;
. administering annuity payouts;
. furnishing accounting and valuation services (including the calculation and
monitoring of daily Investment Subdivision values);
. reconciling and depositing cash receipts;
. providing Policy confirmations and periodic statements;
. providing toll-free inquiry services; and
. furnishing telephone transaction services.
The risks we assume include:
. the risk that the Death Benefit will be greater than the Surrender Value;
. the risk that the actual life-span of persons receiving income payments
under Policy guarantees will exceed the assumptions reflected in our
guaranteed rates (these rates are incorporated in the Policy and cannot be
changed); and
. the risk that our costs in providing the services will exceed our revenues
from Policy charges (which cannot be changed by us).
The amount of a charge may not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. We may also 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 ACCOUNT 4
We deduct from Account 4 an amount, computed daily, which is equal to an annual
rate of 1.60% of the daily net asset value. The charge consists of an
administrative expense charge at an effective annual rate of .25% and a
mortality and expense risk charge at an effective annual rate of 1.35%. These
deductions from Account 4 are reflected in your Account Value.
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OTHER CHARGES
CHARGE FOR OPTIONAL ENHANCED DEATH BENEFIT
We charge you for expenses related to the optional enhanced Death Benefit. At
the beginning of each Policy year after the first, we deduct this charge
against the average of the Account Value at the beginning of the previous
Policy year and the Account Value at the end of the previous Policy year. At
surrender, the charge is made against the average of the Account Value at the
beginning of the current Policy year and the Account Value at surrender. The
charge at surrender will be a pro rata portion of the annual charge. We
currently charge 0.20% times the average Account Value. However, we guarantee
that this charge will never exceed an annual rate of .35% times the Account
Value. We will allocate the annual charge among the Investment Subdivisions in
the same proportion that the Account Value in each Investment Subdivision bears
to the total Account Value in all Investment Subdivision at the time we make
the charge. If the Guarantee Account is available under the Policy and the
Account Value in the Separate Account is not sufficient to cover the charge, we
will deduct the charge first from the Account Value in the Separate Account, if
any, and then from the Guarantee Account.
POLICY MAINTENANCE CHARGE
We will deduct an annual charge of $25 from the Account Value of each Policy to
compensate us for certain administrative expenses incurred in connection with
the Policies. We will deduct the charge at each Policy anniversary and at full
surrender. We will waive this charge if your Account Value at the time of
deduction is at least $25,000.
We will allocate the annual policy maintenance charge among the Investment
Subdivisions in the same proportion that the Policy's Account Value in each
Investment Subdivision bears to the total Account Value in all Investment
Subdivisions at the time the charge is made. If there is insufficient Account
Value allocated to Account 4, we will deduct any remaining portion of the
charge from the Guarantee Account proportionally from all monies in the
Guarantee Account. Other allocation methods may be available upon request.
DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the Policies or Account 4 will be deducted from Account Value
when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax generally
ranges from 0.0% to 3%.
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OTHER CHARGES AND DEDUCTIONS
There are deductions from and expenses paid out of the assets of each portfolio
that are more fully described in each Fund's Prospectus.
In addition, we reserve the right to impose a transfer charge of up to $10 per
transfer. This charge is at cost with no profit to us.
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The Policy
The Policy is an individual flexible premium variable deferred annuity Policy.
Your rights and benefits are described below and in the Policy. There may be
differences in your Policy because of requirements of the state where we issued
your Policy. We will include any such differences in your Policy.
PURCHASE OF THE POLICY
If you wish to purchase a Policy, you must apply for it through one of our
authorized sales representatives. The sales representative will send your
completed application to us, and we will decide whether to accept or reject it.
If we accept your application, our legally authorized officers prepare and
execute a Policy. We then send the Policy to you through your sales
representative. See Distribution of the Policies.
If we receive a completed application and all other information necessary for
processing a purchase order, we will apply an initial premium payment no later
than two business days after we receive the order. While attempting to finish
an incomplete application, we may hold the initial premium payment for no more
than five business days. If the incomplete application cannot be completed
within those five days, we will inform you of the reasons, and will return your
premium payment immediately, unless you specifically authorize us to keep it
until the application is complete. Once you complete your application, we must
apply the initial premium payment within two business days. We apply any
additional premium payments as of the Valuation Day we receive them.
To apply for a Policy, you must be of legal age in a state where we may
lawfully sell the Policies and also be eligible to participate in any of the
qualified or non-qualified plans for which we designed the Policies. The
Annuitant cannot be older than age 85, unless we approve a different age.
This Policy may be used with certain tax qualified retirement plans. The Policy
includes attributes such as tax deferral on accumulated earnings. Qualified
retirement plans provide their own tax deferral benefit; the purchase of this
Policy does not provide additional tax deferral benefits beyond those provided
in the qualified retirement plan. Accordingly, if you are purchasing this
Policy through a qualified retirement plan, you should consider purchasing this
Policy for its Death Benefit, income benefits, and other non-tax-related
benefits. Please consult a tax advisor for information specific to your
circumstances in order to determine whether the Policy is an appropriate
investment for you.
OWNERSHIP
As Owner, you have all rights under the Policy, subject to the rights of any
irrevocable beneficiary. According to Virginia law, the assets of Account 4 are
held for the exclusive benefit of all Owners and their Designated
Beneficiaries. Qualified Policies
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may not be assigned or transferred except as permitted by the Employee
Retirement Income Security Act (ERISA) of 1974 and upon written notification to
us. We assume no responsibility for the validity or effect of any assignment.
Consult your tax advisor about the tax consequences of an assignment.
If you name a Joint Owner in the application, we will treat the Joint Owners as
having equal undivided interests in the Policy. All Owners must together
exercise any ownership rights in this Policy.
PREMIUM PAYMENTS
You may make premium payments to us at a frequency and in the amount you
select, subject to certain restrictions. You must obtain our prior approval
before you make total premium payments for an Annuitant age 79 or younger that
exceed $2,000,000. If the Annuitant is age 80 or older at the time of payment,
the total amount not subject to prior approval is $1,000,000. Payments may be
made or, if stopped, resumed at any time until the Maturity Date, the surrender
of the Policy, or the death of the Owner or Joint Owner, if applicable,
whichever comes first. We reserve the right to refuse to accept a premium
payment for any lawful reason and in a manner that does not unfairly
discriminate against similarly situated purchasers.
The minimum initial premium payment is $25,000. We may accept a lower initial
premium payment in the case of certain group sales. Each additional premium
payment must be at least $1,000 for Non-Qualified Policies, $50 for IRA
Policies, and $100 for other Qualified Policies.
VALUATION DAY
We will value Accumulation and Annuity Units once daily at the close of trading
(currently 4:00 p.m., New York time) on each day the New York Stock Exchange is
open except for days on which a Fund does not value its shares (Valuation Day).
If a Valuation Period contains more than one day, the unit values will be the
same for each day in the Valuation Period.
ALLOCATION OF PREMIUM PAYMENTS
We place net premium payments into the Separate Account's Investment
Subdivisions, each of which invests in shares of a corresponding portfolio of
the Funds, and/or the Guarantee Account, according to your instructions. You
may allocate premium payments to up to ten Investment Subdivisions at any one
time.
The percentage of any premium payment which you can put into any one Investment
Subdivision or guarantee period must equal a whole percentage. Upon allocation
to the appropriate Investment Subdivision, we convert net premium payments into
Accumulation Units. We determine the number of Accumulation Units credited by
dividing the amount allocated to each Investment Subdivision by the value of an
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Accumulation Unit for that Investment Subdivision on the Valuation Day on which
we receive any additional premium payment at our Home Office if received before
4:00 p.m., New York time. If we receive the additional premium payment at or
after 4:00 p.m., New York time, we will use the Accumulation Unit value
computed on the next Valuation Day. The number of Accumulation Units determined
in this way is not changed by any subsequent change in the value of an
Accumulation Unit. However, the dollar value of an Accumulation Unit will vary
depending not only upon how well the portfolio's investments perform, but also
upon the expenses of Account 4 and the portfolios.
You may change the allocation of subsequent premium payments at any time,
without charge, by sending us acceptable notice in writing or over the phone.
The new allocation will apply to any premium payments made after we receive
notice of the change.
VALUATION OF ACCUMULATION UNITS
We value Accumulation Units for each Investment Subdivision separately.
Initially, we arbitrarily set the value of each Accumulation Unit at $10.00.
Thereafter, the value of an Accumulation Unit in any Investment Subdivision for
a Valuation Period equals the value of an Accumulation Unit in that Investment
Subdivision as of the preceding Valuation Period multiplied by the net
investment factor of that Investment Subdivision for the current Valuation
Period.
The net investment factor is an index used to measure the investment
performance of an Investment Subdivision from one Valuation Period to the next.
The net investment factor for any Investment Subdivision for any Valuation
Period reflects the change in the net asset value per share of the portfolio
held in the Investment Subdivision from one Valuation Period to the next,
adjusted for the daily deduction of the administrative expense and mortality
and expense risk charges from assets in the Investment Subdivision. If any "ex-
dividend" date occurs during the Valuation Period, we take into account the per
share amount of any dividend or capital gain distribution so that the unit
value is not impacted. Also, if any taxes need to be reserved, we take into
account a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the operations of the Investment Subdivision.
TRANSFERS BEFORE THE MATURITY DATE
Before the earlier of the surrender of the Policy, payment of any Death
Benefit, or the Maturity Date, you may transfer all or a portion of your
investment between and among the Investment Subdivisions of Account 4 and the
Guarantee Account subject to certain conditions. We process transfers among the
Investment Subdivisions of Account 4 and between the Investment Subdivisions
and the Guarantee Account as of
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the end of the Valuation Period that we receive the transfer request at our
Home Office. For this reason, there may be limitations placed on multiple
transfer requests made at different times during the same Valuation Period
involving the same Investment Subdivisions of the Separate Account or the
Guarantee Account. We may postpone transfers to, from, or among the Investment
Subdivisions of Account 4 under certain circumstances. See Requesting Payments.
We restrict transfers from any particular allocation of the Guarantee Account
to an Investment Subdivision. Unless you are participating in the Dollar-Cost
Averaging Program (see Dollar-Cost Averaging) you may make such transfers only
during the 30 day period beginning with the end of the preceding interest rate
guarantee period applicable to that particular allocation. We also may limit
the amount which you may transfer from the Guarantee Account to the Investment
Subdivisions. However, for any particular allocation to an Investment
Subdivision, the limited amount will not be less than any accrued interest on
that allocation plus 25% of the original amount of that allocation.
Further, we may restrict certain transfers from an Investment Subdivision to
the Guarantee Account. We reserve the right to prohibit or limit transfers from
an Investment Subdivision to the Guarantee Account during the six month period
following the transfer of any amount from the Guarantee Account to any
Investment Subdivision.
Currently, there is no other limit on the number of transfers between and among
Investment Subdivisions of Account 4 and the Guarantee Account; however, we
reserve the right to limit the number of transfers each calendar year to
twelve, or if it is necessary for the Policy to continue to be treated as an
annuity policy by the Internal Revenue Service, a lower number. Currently, all
transfers under the Policy are free. However, we reserve the right to assess a
charge of up to $10 per transfer. The minimum transfer amount is $100 or the
entire balance in the Investment Subdivision or guarantee period if the
transfer will leave a balance of less than $100.
Sometimes, we may not honor your transfer request. We may not honor your
transfer request:
(i) if any Investment Subdivision that would be affected by the transfer is
unable to purchase or redeem shares of the Fund in which the Investment
Subdivision invests;
(ii) if the transfer is a result of more than one trade involving the same
Investment Subdivision within a 30 day period; or
(iii) if the transfer would adversely affect Accumulation Unit values.
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We also may not honor transfers made by third parties. (See Transfers by Third
Parties.)
When thinking about a transfer of Account Value, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that you will make a transfer at an inopportune time.
TELEPHONE TRANSACTIONS
We permit certain telephone transactions (including transfers) as described in
this prospectus. We may be liable for losses resulting from unauthorized or
fraudulent telephone transactions if we fail to employ reasonable procedures to
confirm that the telephone instructions that we receive are genuine. Therefore,
we will employ means to prevent unauthorized or fraudulent telephone requests,
such as sending written confirmation, recording telephone requests, and/or
requesting other identifying information. In addition, we may require written
authorization before allowing you to make telephone transactions. We reserve
the right to limit telephone transactions.
To request a telephone transaction, you should call our Home Office. We will
record all telephone transaction requests. We will execute transfer requests
received prior to the close of the New York Stock Exchange that Valuation Day
at that day's prices. We will execute requests received after that time on the
next Valuation Day at that day's prices.
TRANSFERS BY THIRD PARTIES
As a general rule and as a convenience to you, we allow you to give third
parties the right to effect transfers on your behalf. However, when the same
third party possesses this ability on behalf of many Owners, the result can be
simultaneous transfers involving large amounts of Account Value. Such transfers
can disrupt the orderly management of the portfolios underlying the Policy, can
result in higher costs to Owners, and are generally not compatible with the
long-range goals of Owners. We believe that such simultaneous transfers
effected by such third parties are not in the best interests of all
shareholders of the Funds underlying the Policies, and the management of the
Funds share this position. Therefore, as described in your Policy, we may limit
or disallow transfers made by a third party.
ON LINE TRANSFERS
We permit certain transactions using the Internet (including transfers) as
described in this Prospectus to be performed through an electronic process. We
may be liable for losses resulting from unauthorized or fraudulent electronic
transactions if we fail to employ reasonable procedures to confirm that the
electronic instructions that we receive our genuine. Therefore, we will employ
means to prevent unauthorized or fraudulent electronic requests, such as
sending written confirmation, retaining a
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record of electronic requests, and/or requesting other identifying information.
Unless you notify us in writing not to authorize electronic transactions, such
transaction also will be accepted on your behalf from your registered
representative. We reserve the right to limit electronic transactions.
To request an electronic transaction, you should go to the Universal Resource
Locator ("URL") established for such purposes, http://GEFinancialService.com.
We will execute transfer requests received before the close of regular trading
on the New York Stock Exchange on a Valuation Day at that day's prices. We will
execute requests received after that time on the next Valuation Day at that
day's prices.
DOLLAR-COST AVERAGING
The dollar-cost averaging program permits you to systematically transfer on a
monthly or quarterly basis a set dollar amount from the Money Market Investment
Subdivision and/or the Guarantee Account to any combination of other Investment
Subdivisions (as long as the total number of Investment Subdivisions used does
not exceed the maximum number allowed under the Policy). The dollar-cost
averaging method of investment is designed to reduce the risk of making
purchases only when the price of units is high, but you should carefully
consider your financial ability to continue the program over a long enough
period of time to purchase Accumulation Units when their value is low as well
as when it is high. Dollar-cost averaging does not assure a profit or protect
against a loss.
You may participate in the dollar-cost averaging program by selecting the
program on the application, completing a dollar-cost averaging agreement, or
calling our Annuity Customer Service Line at (800) 352-9910. To use the dollar-
cost averaging program, you must transfer at least $100 from an Investment
Subdivision or a guarantee period with each transfer. Once elected, dollar-cost
averaging remains in effect from the date we receive your request until the
value of the Investment Subdivision or the guarantee period from which
transfers are being made is depleted, or until you cancel the program by
written request or by telephone if we have your telephone authorization on
file. The dollar-cost averaging program will begin 30 days after we receive
your instructions and your premium unless you specify an earlier date.
With regard to dollar-cost averaging from the Guarantee Account, we reserve the
right to determine the amount of each automatic transfer. We reserve the right
to transfer any remaining portion of an allocation used for dollar-cost
averaging to a new guarantee period upon termination of the dollar-cost
averaging program for that allocation.
There is no additional charge for dollar-cost averaging. We reserve the right
to discontinue offering or to modify the dollar-cost averaging program at any
time and for any reason.
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PORTFOLIO REBALANCING PROGRAM
Once your money has been allocated among the Investment Subdivisions, the
performance of each Investment Subdivision may cause your allocation to shift.
You may instruct us to automatically rebalance (on a quarterly, semi-annual or
annual basis) your Account Value among the Investment Subdivisions to return to
the percentages specified in your allocation instructions. The program does not
include allocations to the Guarantee Account. You may elect to participate in
the portfolio rebalancing program at any time by completing the portfolio
rebalancing agreement. Your percentage allocations must be in whole
percentages. Subsequent changes to your percentage allocations may be made at
any time by written or telephone instructions to the Home Office. Once elected,
portfolio rebalancing remains in effect from the date we receive your written
request until you instruct us to discontinue portfolio rebalancing. There is no
additional charge for using portfolio rebalancing, and we do not consider a
portfolio rebalancing transfer a transfer for purposes of assessing a transfer
charge or calculating the maximum number of transfers permitted in a calendar
year. We reserve the right to discontinue offering the portfolio rebalancing
program at any time and for any reason. Portfolio rebalancing does not
guarantee a profit or protect against a loss.
SURRENDERS AND PARTIAL SURRENDERS
Subject to the rules discussed below, we will allow the surrender of the Policy
or a withdrawal of the Account Value at any time before the Maturity Date upon
your written request.
We will not permit a partial surrender that is less than $500 or that reduces
Account Value to less than $25,000. If your partial surrender request would
reduce Account Value to less than $25,000, we will surrender only that amount
of Account Value that would reduce the remaining Account Value to $25,000.
The amount payable on full surrender of the Policy is the Surrender Value at
the end of the Valuation Period during which we receive the request. The
Surrender Value equals the Account Value (after deduction of any policy
maintenance charge) on the date we receive a request for surrender less any
applicable premium tax. We may pay the Surrender Value in a lump sum or under
one of the optional payment plans specified in the Policy.
You may indicate, in writing or by calling our Home Office, from which
Investment Subdivisions or interest rate guarantee periods we are to take your
partial surrender. If you do not so specify, we will deduct the amount of the
partial surrender first from the Investment Subdivisions of Account 4 on a pro-
rata basis, in proportion to the Account Value in Account 4. We will deduct any
remaining amount from the Guarantee Account. We will take deductions from the
Guarantee Account from the amounts
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(including any interest credited to such amounts) which have been in the
Guarantee Account for the longest period of time.
Please remember that a partial surrender will reduce the Death Benefit by the
proportion that the partial surrender reduced Account Value.
RESTRICTIONS ON DISTRIBUTIONS FROM CERTAIN POLICIES
Section 830.105 of the Texas Government Code permits participants in the Texas
Optional Retirement Program ("ORP") to withdraw their interest in a variable
annuity contract issued under the ORP only upon (i) termination of employment
in the Texas public institutions of higher education, (ii) retirement, (iii)
death, or (iv) the participant's attainment of age 70 1/2. Accordingly, before
we distribute any amounts from these Policies, you must furnish us proof that
one of these four events has occurred.
SYSTEMATIC WITHDRAWALS
At any time after 30 days from the Policy Date (unless we allow an earlier
date), you may elect in writing on a form provided by us to take systematic
withdrawals of a specified dollar amount (in equal installments of at least
$100) on a monthly, quarterly, semi-annual or annual basis. You may provide
specific instructions as to how we are to take the systematic withdrawals. If
you have not provided specific instructions, or if your specific instructions
cannot be carried out, we will process the withdrawals by first taking on a
pro-rata basis Accumulation Units from all of the Investment Subdivisions in
which you have an interest. To the extent that your Account Value in Account 4
is not sufficient to accomplish this withdrawal, we will take any Account Value
you have in the Guarantee Account to accomplish the withdrawal.
After your systematic withdrawals begin, you may change the frequency and/or
amount of your payments once each calendar quarter.
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Account Value to be less than $25,000. If
a systematic withdrawal would cause the Account Value to be less than $25,000,
then we will not process that systematic withdrawal transaction. You may
discontinue systematic withdrawals at any time by notifying us in writing at
our Home Office.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to federal income taxes on the taxable portion. In
addition, you may be assessed a 10% penalty tax on systematic withdrawals if
you are under age 59 1/2 at the time of the withdrawal.
We reserve the right to prohibit simultaneous systematic withdrawals and
dollar-cost averaging.
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The Death Benefit
DEATH BENEFIT AT DEATH OF ANNUITANT
If the Annuitant dies before income payments begin, regardless of whether the
Annuitant is also an Owner or Joint Owner of the Policy, the amount of proceeds
available for the Designated Beneficiary (as defined below) is the Death
Benefit. (This Death Benefit may be referred to as the "Annual EstateProtector"
in our marketing materials.) Upon receipt of due proof of the Annuitant's death
(generally, due proof is a certified copy of the death certificate or a
certified copy of the decree of a court of competent jurisdiction as to the
finding of death), the Death Benefit will constitute the new Surrender Value,
and we will treat this Surrender Value in accordance with the Owner's
instructions, subject to distribution rules and termination of contract
provisions discussed in the Policy and elsewhere in this Prospectus.
We calculate the Death Benefit by adding (a) and (b) where:
(a) is the Account Value as of the date we receive due proof of death; and
(b) is the excess, if any, of the unadjusted Death Benefit as of the date of
the Annuitant's death over the Account Value as of the date of the
Annuitant's death, with interest credited on that excess from the date of
the Annuitant's death to the date of distribution. The rate credited may
depend on applicable law or regulation. Otherwise, we will set it.
The definition of the unadjusted Death Benefit varies based on the Annuitant's
age at the time we issued the Policy, the number of Policy years that have
elapsed at the time the death occurs, and/or on the Annuitant's age at the time
the death occurs.
If the Annuitant was age 80 or younger on the Policy Date:
1. If the Annuitant dies during the first Policy year, the unadjusted Death
Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the total amount of premium payments made adjusted by the proportion
that any partial surrender reduced Account Value and less any
applicable premium tax.
2. If the Annuitant dies during any subsequent Policy year, but before the
Policy anniversary the Annuitant reaches age 81, the unadjusted Death
Benefit will be the greatest of:
(i) Account Value as of the date of the Annuitant's death;
(ii) the total amount of premium payments made adjusted by the proportion
that any partial surrender reduced Account Value and less any
applicable premium tax; and
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<PAGE>
(iii) the unadjusted Death Benefit on the last day of the preceding Policy
year, plus any premium payments made since then, adjusted by the
proportion that any partial surrender reduced Account Value and less
any applicable premium tax.
3. If the Annuitant dies on or after the Policy anniversary the Annuitant
reaches age 81, the unadjusted Death Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the unadjusted Death Benefit on the Policy anniversary the Annuitant
reached age 80, plus any premium payments made since then, adjusted by
the proportion that any partial surrender reduced Account Value and
less any applicable premium tax.
If the Annuitant was age 81 or older on the Policy Date, the unadjusted Death
Benefit will be the greater of:
(i) Account Value as of the date of the Annuitant's death; and
(ii) the total amount of premium payments made adjusted by the proportion
that any partial surrender reduced Account Value and less any
applicable premium tax.
Example: Assuming an Owner: (i) purchases a Policy for $100,000; (ii) makes no
additional premium payments and no partial surrenders; (iii) is not subject to
premium taxes; and (iv) the Annuitant is age 70 on the Policy Date, then:
<TABLE>
<CAPTION>
Unadjusted
Policy Account Death
Anniversary Value Benefit
-----------------------------------------------------------------------------------
<S> <C> <C>
Issue $100,000 $100,000
1 $110,000 $110,000
2 $ 90,000 $110,000
3 $ 80,000 $110,000
4 $120,000 $120,000
5 $130,000 $130,000
6 $150,000 $150,000
7 $160,000 $160,000
8 $130,000 $160,000
9 $ 90,000 $160,000
10 $170,000 $170,000
11 $140,000 $170,000
12 $180,000 $180,000
13 $120,000 $170,000
</TABLE>
39
<PAGE>
The purpose of this example is to show how the unadjusted Death Benefit works
based on purely hypothetical values and is not intended to depict investment
performance of the Policy.
Partial Surrenders will reduce the Death Benefit by the proportion that the
partial surrender reduced Account Value. For example:
<TABLE>
<CAPTION>
Unadjusted
Purchase Account Death
Date Payment Value Benefit
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3/31/00 $25,000 $25,000 $25,000
3/31/01 50,000 50,000
3/31/02 35,000 50,000
</TABLE>
If a partial surrender of $17,500 is made on March 31, 2002, the unadjusted
Death Benefit immediately after the partial surrender will be $25,000 ($50,000
to $25,000) since the Account Value is reduced 50% by the partial surrender
($35,000 to $17,500). This is true only if the unadjusted Death Benefit
immediately prior to the partial surrender (as calculated above) is not the
Account Value on the date of the Annuitant's death. It also assumes that the
Annuitant is younger than age 80 at the time of death and that no premium tax
applies to the partial surrender. This example is based on purely hypothetical
values and is not intended to depict investment performance of the Policy.
DEATH OF AN OWNER, JOINT OWNER, OR ANNUITANT BEFORE THE MATURITY DATE
General: In certain circumstances, Federal tax law requires that distributions
be made under this Policy upon the first death of:
. an Owner or Joint Owner, or
. the Annuitant if any Owner is a non-natural entity (such as a trust or
corporation).
The discussion below describes the methods available for distributing the value
of the Policy upon death.
Designated Beneficiary: At the death of any Owner (or Annuitant, if any Owner
is a non-natural entity), the person or entity first listed below who is alive
or in existence on the date of that death will become the Designated
Beneficiary:
(1) Owner or Joint Owners;
(2) primary beneficiary;
(3) contingent beneficiary; or
(4) Owner's estate.
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<PAGE>
The Designated Beneficiary will then be treated as the sole Owner of the
Policy. If there is more than one Designated Beneficiary, each one will be
treated separately in applying the tax law's rules described below.
Distribution Rules: The distributions required by Federal tax law differ
depending on whether the Designated Beneficiary is the spouse of the deceased
Owner (or of the Annuitant, if the Policy is owned by a non-natural entity).
. Spouses -- If the Designated Beneficiary is the surviving spouse of the
deceased person, we will continue the Policy in force with the surviving
spouse as the new Owner. If the deceased person was an Annuitant, the
surviving spouse will automatically become the new sole Annuitant. Any joint
Annuitant will be removed from the Policy. At the death of the surviving
spouse, this provision may not be used again, even if the surviving spouse
remarries. In that case, the rules for non-spouses will apply. The Account
Value on the date we receive due proof of death of the Annuitant will be set
equal to the Death Benefit, including any optional enhanced Death Benefit on
that date. Any increase in the Account Value will be allocated to the
Investment Subdivisions using the premium payment allocation in effect at
that time. Any Death Benefit payable subsequently (at the death of the new
Annuitant) will be calculated as if the spouse had purchased a Policy for
the new Account Value on the date we received due proof of death. It will be
based on the new Annuitant's age on the Policy Date, rather than the age of
the previously deceased Annuitant. All other provisions, including any
surrender charges, will continue as if your spouse had purchased the Policy
on the original Policy Date.
. Non-Spouses -- If the Designated Beneficiary is not the surviving spouse of
the deceased person, this Policy cannot be continued in force indefinitely.
Instead, upon the death of any Owner (or Annuitant, if any Owner is a non-
natural entity), payments must be made to (or for the benefit of) the
Designated Beneficiary under one of the following payment choices:
(1) Receive the Surrender Value in one lump sum payment upon receipt of due
proof of death.
(2) Receive the Surrender Value at any time during the five year period
following the date of death. At the end of the five year period, we will
pay in a lump sum payment any Surrender Value still remaining.
(3) Apply the Surrender Value to provide a monthly income benefit under
optional payment plan 1 or 2. The first monthly income benefit payment
must be made no later than one year after the date of death. Also, the
monthly income benefit payment period must be either the lifetime of the
Designated Beneficiary or a period not exceeding the Designated
Beneficiary's life expectancy.
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<PAGE>
If no choice is made by the Designated Beneficiary within 30 days following
receipt of due proof of death, we will use payment choice 2 (payment of the
Surrender Value within 5 years of the date of death). Due proof of death must
be provided within 90 days of the date of death. No further premium payments
will be accepted after the non-spouse's death. If the Designated Beneficiary
dies before the entire Surrender Value has been distributed, we will pay in a
lump sum payment any Surrender Value still remaining to the person named by the
Designated Beneficiary. If no person is so named, payment will be made to the
Designated Beneficiary's estate.
Under payment choices 1 or 2, the Policy will terminate upon payment of the
entire Surrender Value. Under payment choice 3, this Policy will terminate when
the Surrender Value is applied to provide a monthly income benefit.
Amount of the proceeds: The proceeds we pay will vary, in part, based on the
person who dies. We show the amount of proceeds we will pay below.
<TABLE>
<CAPTION>
-------------------------------------------
Person who Died Proceeds Paid
-------------------------------------------
<S> <C>
Owner or Joint Owner Surrender Value
(who is not the Annuitant)
-------------------------------------------
Owner or Joint Owner Death Benefit
(who is the Annuitant)
-------------------------------------------
Annuitant Death Benefit
-------------------------------------------
</TABLE>
Upon receipt of due proof of death, the Designated Beneficiary will instruct us
how to treat the proceeds subject to the Distribution rules discussed above.
DEATH OF AN OWNER, JOINT OWNER, OR ANNUITANT AFTER INCOME PAYMENTS BEGIN
After the Maturity Date (including after income payments begin), if an Owner,
Joint Owner, Annuitant, or Designated Beneficiary dies while the Policy is in
force, payments that are already being made under the Policy will be made at
least as rapidly as under the method of distribution in effect at the time of
such death, Notwithstanding any other provision of the Policy.
OPTIONAL ENHANCED DEATH BENEFIT
The optional enhanced Death Benefit (which may be referred to as "GE Pricipal
ProtectorSM" in our marketing materials) adds an extra feature and coordinates
with the basic Death Benefit and, if applicable, the optional Death Benefit.
The optional enhanced Death Benefit varies based on the age of the Annuitant at
issue. However, the optional enhanced Death Benefit will never be less than
zero.
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<PAGE>
If the Annuitant is, or if there is a joint Annuitant, both the Annuitant and
Joint Annuitant are age 70 or younger at issue, the optional enhanced Death
Benefit equal to 40% of (a) minus (b), where:
(a) is the Account Value as of the date of death; and
(b) is the sum of premiums paid and not previously withdrawn.
The optional enhanced Death Benefit cannot exceed 70% of premiums paid as
adjusted for withdrawals.
If the Annuitant or the joint Annuitant, if applicable, is older than age 70 at
issue, the optional enhanced Death Benefit is equal to 25% of (a) minus (b),
where:
(a) is the Account Value as of the date of death; and
(b) is the sum of premiums paid and not previously withdrawn.
The optional enhanced Death Benefit cannot exceed 40% of premiums paid as
adjusted for withdrawals.
Under both age scenarios listed above, withdrawals are taken first from gain.
For purposes of this benefit, gain is calculated as (a) plus (b) minus (c)
minus (d), but not less than zero where:
(a) is the Account Value on the date we receive your withdrawal or surrender
request:
(b) is the total of any withdrawals or surrenders, excluding surrender charges,
previously taken;
(c) is the total of premiums paid; and
(d) is the total of any gain previously withdrawn.
You may only elect the optional enhanced Death Benefit when you apply for a
Policy. Once elected, the benefit will remain in effect while your Policy is in
force until Income Payments begin. This benefit cannot otherwise be terminated.
We charge you an additional amount for the optional enhanced Death Benefit.
Currently this amount is .20% times the average Account Value at the beginning
of the previous Policy year and at the end of the previous Policy year. We
guarantee that this charge will not exceed .35% times the average Account
Value, as described above. See Charges for the Optional Enhanced Death Benefit
The optional enhanced Death Benefit may not be available in all states or
markets. In addition, to be eligible for this rider, the Annuitant or Joint
Annuitant, if applicable, cannot be older than age 75 at the time of issue
unless we approve a different age.
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<PAGE>
The purpose of this example is show how the optional enhanced Death Benefit
works based on purely hypothetical values and is not intended to depict
investment performance of the Policy. Assume a Policy is purchased with an
Annuitant age 65 at the time of issue. No withdrawals are made prior to the
death of the Annuitant.
<TABLE>
<CAPTION>
Premium Account Death Optional Enhanced
Date Payments Value Gain Benefit Death Benefit
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/01/00 100,000 100,000 0 100,000 0
8/01/15 300,000 200,000 300,000 70,000
</TABLE>
If the Annuitant's death and notification of that death occurs on 8/01/15, the
optional enhanced Death Benefit will equal $70,000. This amount is determined
by multiplying the "gain" ($200,000) by 40%, which results in an amount of
$80,000. However since the optional enhanced Death Benefit cannot exceed 70% of
the premiums paid ($100,000), the payment in the scenario will be $70,000.
There are important things you should consider before you purchase the optional
enhanced Death Benefit. These include:
. The optional enhanced Death Benefit does not guarantee that any amounts under
the rider will become payable at death. Market declines resulting in your
Contract Value being less than your purchase payments made and not previously
withdrawn may result in no enhanced Death Benefit being payable.
. Once you purchase the optional enhanced Death Benefit, you cannot cancel it.
This means that even if the investment performance of the portfolios is such
that as would result in a Death Benefit that is sufficient to meet your
needs, we still will assess the optional enhanced Death Benefit charges.
. Please take advantage of the guidance of a qualified financial adviser in
evaluating the optional enhanced Death Benefit option, as well as other
aspects of the Contract.
44
<PAGE>
Income Payments
The Maturity Date is provided in the Policy, unless changed after issue. You
may change the Maturity Date until income payments begin. However, the Maturity
Date cannot be a date later than the Policy anniversary on which the Annuitant
reaches age 90, unless we approve a later date. To make a change, send a
written notice to our Home Office before the Maturity Date then in effect. If
you change the Maturity Date, Maturity Date will then mean the new Maturity
Date you selected. (Please note the following exception: Policies issued under
qualified retirement plans provide for income payments to start at the date and
under the option specified in the plan.)
We will pay a monthly income benefit to the Owner beginning on the Maturity
Date if the Annuitant is still living. We will pay the monthly income benefit
in the form of variable income payments similar to those described in optional
payment plan 1, Life Income with 10 Years Certain (automatic payment plan),
using the sex and settlement age of the Annuitant instead of the payee, unless
you make another election. As described in your Policy, the settlement age may
be less than the Annuitant's age. This means payments may be lower than they
would have been without the adjustment. You may also choose to receive the
maturity value (that is, the Surrender Value of your Policy on the date
immediately preceding the Maturity Date) in one lump sum (in which case we will
cancel the Policy).
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than ten years, payments will continue for his or her life. If the Annuitant
dies before the end of ten years, the remaining payments for the ten year
period will be discounted at the same rate used to calculate the monthly
income. If the remaining payments are variable income payments, the amount of
each payment to be discounted will be assumed equal to the value of the payment
amount on the date we receive due proof of death. We will pay this discounted
amount in one sum.
The Policy also provides optional forms of annuity payments, each of which is
payable on a fixed basis. Optional payment plans 1 and 5 also are available on
a variable basis. The Policy provides that all or part of the Account Value may
be used to purchase an annuity.
If you elect fixed income payments, the guaranteed amount payable will earn
interest at 3% compounded yearly. We may increase the interest rate which will
increase the amount paid to you or the payee.
If you elect variable income payments, your income payments, after the first
payment, will reflect the investment experience of the Investment Subdivisions
to which you allocated Account Value.
We will make annuity payments monthly unless you elect quarterly, semi-annual,
or annual installments. Under the monthly income benefit and all of the
optional
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<PAGE>
payment plans, if any payment made more frequently than annually would be or
becomes less than $100, we reserve the right to reduce the frequency of
payments to an interval that would result in each payment being at least $100.
If the annual payment payable at maturity is less than $20, we will pay the
maturity value in a lump sum. Upon making such a payment, we will have no
future obligation under the Policy. Following are explanations of the optional
payment plans available.
OPTIONAL PAYMENT PLANS
Plan 1 -- Life Income With Period Certain. This option guarantees periodic
payments during a designated period. If the payee lives longer than the minimum
period, payments will continue for his or her life. The minimum period can be
10, 15, or 20 years. The payee selects the designated period. If the payee dies
during the minimum period, we will discount the amount of the remaining
guaranteed payments at the same rate used in calculating income payments. We
will pay the discounted amount in one sum to the payee's estate unless
otherwise provided.
Plan 2 -- Income For A Fixed Period. This option provides for periodic payments
to be made for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly, or monthly. If the payee dies, we will discount the
amount of the remaining guaranteed payments to the date of the payee's death at
the same rate used in calculating income payments. We will pay the discounted
amount in one sum to the payee's estate unless otherwise provided.
Plan 3 -- Income Of A Definite Amount. This option provides periodic payments
of a definite amount to be paid. Payments can be annual, semi-annual,
quarterly, or monthly. The amount paid each year must be at least $120 for each
$1,000 of proceeds. Payments will continue until the proceeds are exhausted.
The last payment will equal the amount of any unpaid proceeds. If the payee
dies, we will pay the amount of the remaining proceeds with earned interest in
one sum to the payee's estate unless otherwise provided.
Plan 4 -- Interest Income. This option provides for periodic payments of
interest earned from the proceeds left with us. Payments can be annual, semi-
annual, quarterly, or monthly. If the payee dies, we will pay the amount of
remaining proceeds and any earned but unpaid interest in one sum to the payee's
estate unless otherwise provided. This plan is not available under Qualified
Policies.
Plan 5 -- Joint Life And Survivor Income. This option provides for monthly
payments to be made to two payees for a guaranteed minimum of 10 years. Each
payee must be at least 35 years old when payments begin. Payments will continue
as long as either payee is living. If both payees die before the end of the
minimum period, we will discount the amount of the remaining payments for the
10-year period
46
<PAGE>
at the same rate used in calculating income payments. We will pay the
discounted amount in one sum to the survivor's estate unless otherwise
provided.
If the payee is not a natural person, our consent must be obtained before
selecting an optional payment plan.
Before the Maturity Date, you may change:
. your Maturity Date (however, the Maturity Date cannot be a date later than
the Policy anniversary on which the Annuitant reaches age 90, unless we
approve a later date);
. your optional payment plan;
. the allocation of your investment among the Investment Subdivisions; and
. the Owner, Joint Owner, primary beneficiary, contingent beneficiary, and
contingent Annuitant upon written notice to the Home Office if you reserved
this right and the Annuitant is living.
We must receive your request for a change in a form satisfactory to us. The
change will take effect as of the date you sign the request. The change will be
subject to any payment made before we recorded the change.
Fixed income payments will begin on the date we receive due proof of the
Annuitant's death, on surrender, or on the Policy's Maturity Date. Variable
income payments will begin within seven days after the date payments would
begin under the corresponding fixed option. Payments under optional payment
plan 4 (Interest Income) will begin at the end of the first interest period
after the date proceeds are otherwise payable.
VARIABLE INCOME PAYMENTS
Variable income payments will be determined using:
1. The maturity value (which is the Surrender Value of the Policy on the date
immediately preceding the Maturity Date);
2. The annuity tables contained in the Policy including the settlement age
table;
3. The optional payment plan selected; and
4. The investment performance of the portfolios selected.
To determine the amount of payment, we make this calculation:
1. Determine the dollar amount of the first income payment; then
2. Allocate that amount to the Investment Subdivisions according to your
instructions; then
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<PAGE>
3. Determine the number of Annuity Units for each Investment Subdivision by
dividing the amount allocated by the Annuity Unit value seven days before
the income payment is due; and then
4. Calculate the value of the Annuity Units for each Investment Subdivision
seven days before the income payment is due for each income payment
thereafter.
To calculate your variable income payments, we need to make an assumption
regarding the investment performance of the Investment Subdivisions you select.
We call this your assumed investment rate. This rate is simply the total
return, after expenses, you need to earn to keep your variable income payments
level. We assume an effective annual rate of 3%. This means that if the
annualized investment performance, after expenses, of your Investment
Subdivisions is less than 3%, then the dollar amount of your variable income
payment will decrease. Conversely, if the annualized investment performance,
after expenses, of your Investment Subdivisions is greater than 3%, then the
dollar amount of your income payments will increase.
TRANSFERS AFTER THE MATURITY DATE
If we are making variable income payments, the payee may change the Investment
Subdivisions from which we are making the payments once each calendar year. We
will not assess a charge on such transfers. The transfer will be effective as
of the end of the Valuation Period during which we receive written request at
our Home Office. However, we reserve the right to limit the number of transfers
if necessary for the Policy to continue to be treated as an annuity under the
Code. We also reserve the right to refuse to execute any transfer if any of the
Investment Subdivisions that would be affected by the transfer is unable to
purchase or redeem shares of the Fund in which the Investment Subdivision
invests or if the transfer would adversely affect Annuity Unit values. If the
number of Annuity Units remaining in an Investment Subdivision after a transfer
is less than 1, we will transfer the remaining balance in addition to the
amount requested for the transfer. We do not permit transfers between the
Investment Subdivisions and the Guarantee Account after the Maturity Date.
48
<PAGE>
Federal Tax Matters
INTRODUCTION
This part of the Prospectus discusses the Federal income tax treatment of the
Policy. The Federal income tax treatment of the Policy is complex and sometimes
uncertain. The Federal income tax rules may vary with your particular
circumstances.
This discussion does not address all of the Federal income tax rules that may
affect you and your Policy. This discussion also does not address other Federal
tax consequences, or state or local tax consequences, associated with a Policy.
As a result, you should always consult a tax advisor about the application of
tax rules to your individual situation.
TAXATION OF NON-QUALIFIED POLICIES
This part of the discussion describes some of the Federal income tax rules
applicable to Non-Qualified Policies. A Non-Qualified Policy is a Policy not
issued in connection with a qualified retirement plan receiving special tax
treatment under the Code, such as an individual retirement annuity or a section
401(k) plan.
Tax Deferral on Earnings. The Federal income tax law does not tax any increase
in an Owner's Account Value until there is a distribution from the Policy.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
. An individual must own the Policy (or the tax law must treat the Policy as
owned by an individual);
. The investments of Account 4 must be "adequately diversified" in accordance
with Internal Revenue Service ("IRS") regulations;
. The Owner's right to choose particular investments for a Policy must be
limited; and
. The Policy's Maturity Date must not occur near the end of the Annuitant's
life expectancy.
This part of the Prospectus discusses each of these requirements.
Policies not owned by an individual -- no tax deferral and loss of interest
deduction: As a general rule, the Code does not treat a Policy that is owned by
an entity (rather than an individual) as an annuity contract for Federal income
tax purposes. The entity owning the Policy pays tax currently on the excess of
the Account Value over the premiums paid for the Policy. Policies issued to a
corporation or a trust are examples of Policies where the Owner pays current
tax on the Policy's earnings.
There are several exceptions to this rule. For example, the Code treats a
Policy as owned by an individual if the nominal owner is a trust or other
entity that holds the Policy as an agent for an individual. However, this
exception does not apply in the
49
<PAGE>
case of any employer that owns a Policy to provide deferred compensation for
its employees.
In the case of a Policy issued after June 8, 1997 to a taxpayer that is not an
individual, or a Policy held for the benefit of an entity, the entity will lose
its deduction for a portion of its otherwise deductible interest expenses. This
disallowance does not apply if the Owner pays tax on the annual increase in the
Account Value. Entities that are considering purchasing the Policy, or entities
that will benefit from someone else's ownership of a Policy, should consult a
tax advisor.
Investments in Account 4 must be diversified: For a Policy to be treated as an
annuity contract for Federal income tax purposes, the investments of a separate
account such as Account 4 must be "adequately diversified." The IRS has issued
regulations that prescribe standards for determining whether the investments of
Account 4 are adequately diversified. If Account 4 fails to comply with these
diversification standards, the Owner could be required to pay tax currently on
the excess of the Account Value over the premiums paid for the Policy.
Although we do not control the investments of all of the Funds (we only
indirectly control those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
Account 4 will be considered "adequately diversified."
Restrictions on the extent to which an Owner can direct the investment of
Account Values: Federal income tax law limits the Owner's right to choose
particular investments for the Policy. The U.S. Treasury Department stated in
1986 that it expected to issue guidance clarifying those limits, but it has not
yet done so. Thus, the nature of the limits is currently uncertain. As a
result, an Owner's right to allocate Account Values among the portfolios may
exceed those limits. If so, the Owner would be treated as the owner of the
assets of Account 4 and thus subject to current taxation on the income and
gains from those assets.
We do not know what limits the Treasury Department may set forth in any
guidance that the Treasury Department may issue or whether any such limits will
apply to existing Policies. We therefore reserve the right to modify the Policy
without the Owners' consent to attempt to prevent the tax law from considering
the Owners as the owners of the assets of Account 4.
Age at which annuity payouts must begin: Federal income tax rules do not
expressly identify a particular age by which annuity payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through annuity payouts, of the contract's premiums paid and
earnings. If annuity payouts under the Policy begin or are scheduled to begin
on a date past the Annuitant's 85th
50
<PAGE>
birthday, it is possible that the tax law will not treat the Policy as an
annuity contract for Federal income tax purposes. In that event, the Owner
would be currently taxable on the excess of the Account Value over the premiums
paid for the Policy.
No guarantees regarding tax treatment: We make no guarantees regarding the tax
treatment of any Policy or of any transaction involving a Policy. However, the
remainder of this discussion assumes that your Policy will be treated as an
annuity contract for Federal income tax purposes and that the tax law will not
impose tax on any increase in your Account Value until there is a distribution
from your Policy.
Withdrawals and Surrenders. A withdrawal occurs when you receive less than the
total amount of the Policy's Surrender Value. In the case of a withdrawal, you
will pay tax on the amount you receive to the extent your Account Value before
the withdrawal exceeds your "investment in the contract." (This term is
explained below.) This income (and all other income from your Policy) is
ordinary income. The Code imposes a higher rate of tax on ordinary income than
it does on capital gains.
A surrender occurs when you receive the total amount of the Policy's Surrender
Value. In the case of a surrender, you will pay tax on the amount you receive
to the extent it exceeds your "investment in the contract."
Your "investment in the contract" generally equals the total of your premium
payments under the Policy, reduced by any amounts you previously received from
the Policy that you did not include in your income.
Your Policy imposes mortality charges relating to the Death Benefit including
any Optional Enhanced Death Benefit Rider. It is possible that all or a portion
of these charges could be treated as withdrawals from the Policy.
Assignments and Pledges. The Code treats any assignment or pledge of (or
agreement to assign or pledge) any portion of your Account Value as a
withdrawal of such amount or portion.
Gifting a Policy. If you transfer ownership of your Policy -- without receiving
a payment equal to your Policy's value -- to a person other than your spouse
(or to your former spouse incident to divorce), you will pay tax on your
Account Value to the extent it exceeds your "investment in the contract." In
such a case, the new owner's "investment in the contract" will be increased to
reflect the amount included in your income.
Systematic Withdrawals. In the case of systematic withdrawals, the amount of
each withdrawal should be considered a distribution and taxed in the same
manner as a withdrawal from the Policy.
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<PAGE>
Taxation of Annuity Payouts. The Code imposes tax on a portion of each annuity
payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract." We will notify you annually of the
taxable amount of your annuity payout.
Pursuant to IRS regulations, you will pay tax on the full amount of your
annuity payouts once you have recovered the total amount of the "investment in
the contract." If annuity payouts cease because of the death of the Annuitant
and before the total amount of the investment in the contract has been
recovered, the unrecovered amount generally will be deductible.
If proceeds are left with the Company (Optional Payment Plan 4), they are taxed
in the same manner as a surrender. The Owner must pay tax currently on the
interest credited on these proceeds. This treatment could also apply to Plan 3
if the payee is at an advanced age, such as age 80 or older.
Taxation of Death Benefits. We may distribute amounts from your Policy because
of the death of an Owner, a Joint Owner, or an Annuitant. The tax treatment of
these amounts depends on whether the Owner, Joint Owner, or Annuitant dies
before or after the Policy's Maturity Date.
Before the Policy's Maturity Date:
. If received under an annuity payout option, death benefits are taxed in the
same manner as annuity payouts.
. If not received under an annuity payout option, death benefits are taxed in
the same manner as a withdrawal.
After the Policy's Maturity Date:
. If received in accordance with the existing annuity payout option, death
benefits are excludible from income to the extent that they do not exceed the
unrecovered "investment in the contract." All annuity payouts in excess of
the unrecovered "investment in the contract" are includible in income.
. If received in a lump sum, the tax law imposes tax on death benefits to the
extent that they exceed the unrecovered "investment in the contract" at that
time.
Penalty Taxes Payable on Withdrawals, Surrenders, or Annuity Payouts. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
Policy that is included in your gross income. The Code does not impose the 10%
penalty tax if one of several exceptions applies. These exceptions include
withdrawals, surrenders, or annuity payouts that:
. you receive on or after you reach age 59 1/2,
52
<PAGE>
. you receive because you became disabled (as defined in the tax law),
. a beneficiary receives on or after the death of the Owner, or
. you receive as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer.
It is uncertain whether systematic withdrawals will qualify for this last
exception. If they did, any modification of the systematic withdrawals,
including additional partial withdrawals apart from the systematic withdrawals,
could result in certain adverse tax consequences. In addition, a transfer
between Investment Subdivisions may result in payments not qualifying for this
exception.
Special Rules If You Own More Than One Policy. In certain circumstances, you
must combine some or all of the Non-Qualified Policies you own in order to
determine the amount of an annuity payout, a surrender, or a withdrawal that
you must include in income. For example:
. If you purchase a Policy offered by this Prospectus and also purchase at
approximately the same time an immediate annuity, the IRS may treat the two
contracts as one contract.
. 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:
. the amount of a surrender, a withdrawal or an annuity payout that you must
include in income, and
. the amount that might be subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
We also designed the Policies for use in connection with certain types of
retirement plans that receive favorable treatment under the Code. Policies
issued to or in connection with a qualified retirement plan are called
"Qualified Policies." We do not currently offer all of the types of Qualified
Policies described, and may not offer them in the future. Prospective
purchasers should contact our Home Office to learn the availability of
Qualified Policies at any given time.
The Federal income tax rules applicable to qualified retirement plans are
complex and varied. As a result, this Prospectus makes no attempt to provide
more than general information about use of the Policy with the various types of
qualified retirement plans. Persons intending to use the Policy in connection
with a qualified retirement plan should obtain advice from a competent advisor.
53
<PAGE>
Types of Qualified Policies. Some of the different types of Qualified Policies
include:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Simplified Employee Pensions ("SEP's")
. Savings Incentive Matched Plan for Employees ("SIMPLE" plans including
"SIMPLE IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit-sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans")
Terms Of Qualified Plans And Qualified Policies. The terms of a qualified
retirement plan may affect your rights under a Qualified Policy. When issued in
connection with a qualified retirement plan, we will amend a Policy as
generally necessary to conform to the requirements of the type of plan.
However, the rights of any person to any benefits under qualified retirement
plans may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Policy. In addition, we are not
bound by the terms and conditions of qualified retirement plans to the extent
such terms and conditions contradict the Policy, unless we consent.
The Death Benefit And Qualified Policies. Pursuant to IRS regulations, IRAs may
not invest in life insurance contracts. We do not believe that these
regulations prohibit the Death Benefit including that provided by the Optional
Enhanced Death Benefit Rider, from being provided under the Policies when we
issue the Policies as Traditional IRAs, Roth IRAs or SIMPLE IRAs. However, the
law is unclear and it is possible that the presence of the Death Benefit under
a Policy issued as a Traditional IRA, Roth IRA or SIMPLE IRA could result in
increased taxes to the Owner. It is also possible that the Death Benefit could
be characterized as an incidental death benefit. If the Death Benefit were so
characterized, this could result in currently taxable income to purchasers. In
addition, there are limitations on the amount of incidental death benefits that
may be provided under qualified retirement plans, such as in connection with a
403(b) plan. Even if the Death Benefit under the Policy were characterized as
an incidental death benefit, it is unlikely to violate those limits unless the
purchaser also purchases a life insurance contract in connection with such
plan.
54
<PAGE>
Treatment of Qualified Policies Compared with Non-Qualified Policies. Although
some of the Federal income tax rules are the same for both Qualified and Non-
Qualified Policies, many of the rules are different. For example:
. The Code generally does not impose tax on the earnings under either Qualified
or Non-Qualified Policies until received.
. The Code does not limit the amount of premium payments and the time at which
premium payments can be made under Non-Qualified Policies. However, the Code
does limit both the amount and frequency of premium payments made to
Qualified Policies.
. The Code does not allow a deduction for premium payments made for Non-
Qualified Policies, but sometimes allows a deduction or exclusion from income
for premium payments made to a Qualified Policy.
The Federal income tax rules applicable to qualified retirement plans and
Qualified Policies vary with the type of plan and Policy. For example:
. Federal tax rules limit the amount of premium payments that can be made, and
the tax deduction or exclusion that may be allowed for the premium payments.
These limits vary depending on the type of qualified retirement plan and the
circumstances of the plan participant, e.g., the participant"s compensation.
. Under most qualified retirement plans. e.g., 403(b) plans and Traditional
IRAs, the Owner must begin receiving payments from the Policy in certain
minimum amounts by a certain age, typically age 70 1/2. However, these
"minimum distribution rules" do not apply to a Roth IRA.
Amounts Received Under Qualified Policies. Amounts are Generally Subject to
Income Tax: Federal income tax rules generally include distributions from a
Qualified Policy in your income as ordinary income. Premium payments that are
deductible or excludible from income do not create "investment in the
contract." Thus, under many Qualified Policies there will be no "investment in
the contract" and you include the total amount you receive in your income.
There are exceptions. For example, you do not include amounts received from a
Roth IRA if certain conditions are satisfied.
Additional Federal Taxes May Be Payable in Connection With a Qualified
Policy: For example, failure to comply with the minimum distribution rules
applicable to certain qualified retirement plans, such as Traditional IRAs,
will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the qualified retirement plan.
55
<PAGE>
Federal Penalty Taxes Payable on Distributions: The Code may impose a penalty
tax equal to 10% of the amount of any payment from your Qualified Policy that
is includible in your income. The Code does not impose the penalty tax if one
of several exceptions apply. The exceptions vary depending on the type of
Qualified Policy you purchase. For example, in the case of an IRA, exceptions
provide that the penalty tax does not apply to a withdrawal, surrender, or
annuity payout:
. received on or after the Owner reaches age 59 1/2,
. received on or after the Owner's death or because of the Owner's disability
(as defined in the tax law),
. received as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer, or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified retirement plans. However, the
specific requirements of the exception may vary.
Moving Money From One Qualified Policy or Qualified Plan to Another. Rollovers
And Transfers: In many circumstances you may move money between Qualified
Policies and qualified retirement plans by means of a rollover or a transfer.
Special rules apply to such rollovers and transfers. If you do not follow the
applicable rules, you may suffer adverse Federal income tax consequences,
including paying taxes which you might not otherwise have had to pay. You
should always consult a qualified advisor before you move or attempt to move
funds between any Qualified Policy or plan and another Qualified Policy or
plan.
Direct Rollovers: The direct rollover rules apply to certain payments (called
"eligible rollover distributions") from section 401(a) plans, section 403(a) or
(b) plans, H.R. 10 plans, and Qualified Policies used in connection with these
types of plans. (The direct rollover rules do not apply to distributions from
IRAs or section 457 plans). The direct rollover rules require Federal income
tax equal to 20% of the eligible rollover distribution to be withheld from the
amount of the distribution, unless the Owner elects to have the amount directly
transferred to certain Qualified Policies or plans.
Prior to receiving an eligible rollover distribution from the Company, we will
provide you with a notice explaining these requirements and how you can avoid
20% withholding by electing a direct rollover.
56
<PAGE>
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a Policy unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, Federal income tax rules may
require us to withhold tax. At the time you request a withdrawal, surrender, or
annuity payout, we will send you forms that explain the withholding
requirements.
TAX STATUS OF THE COMPANY
Under existing Federal income tax laws, we do not pay tax on investment income
and realized capital gains of Account 4. We do not anticipate that we will
incur any Federal income tax liability on the income and gains earned by
Account 4. We, therefore, do not impose a charge for Federal income taxes. If
Federal income tax law changes and we must pay tax on some or all of the income
and gains earned by Account 4, we may impose a charge against Account 4 to pay
the taxes.
CHANGES IN THE LAW
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this Prospectus. Congress, the IRS, and the courts may
modify these authorities, however, sometimes retroactively.
57
<PAGE>
Voting Rights
As required by law, we will vote the portfolio shares held in Account 4 at
meetings of the shareholders of the Funds. The voting will be done according to
the instructions of Owners who have interests in any Investment Subdivisions
which invest in the portfolios of the Funds. If the 1940 Act or any regulation
under it should be amended, and if as a result we determine that we are
permitted to vote the portfolios' shares in our own right, we may elect to do
so.
We will determine the number of votes which you have the right to cast by
applying your percentage interest in an Investment Subdivision to the total
number of votes attributable to the Investment Subdivision. In determining the
number of votes, we will recognize fractional shares.
We will vote portfolio shares of a class held in an Investment Subdivision for
which we received no timely instructions in proportion to the voting
instructions which we received for all Policies participating in that
Investment Subdivision. We will apply voting instructions to abstain on any
item to be voted on a pro-rata basis to reduce the number of votes eligible to
be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in an Investment Subdivision will receive proxy voting material,
reports and other materials relating to the relevant portfolio. Since each Fund
may engage in shared funding, other persons or entities besides the Company may
vote Fund shares. See Investments of Account 4.
58
<PAGE>
Requesting Payments
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, partial surrenders, or surrender
proceeds within seven days after receipt at our Home Office of all the
requirements for such a payment. We will determine the amount as of the end of
the Valuation Period during which our Home Office receives all such
requirements.
We may delay making a payment, applying Account Value to a payment plan, or
processing a transfer request if: (1) the disposal or valuation of Account 4's
assets is not reasonably practicable because the New York Stock Exchange is
closed for other than a regular holiday or weekend, trading is restricted by
the SEC, or the SEC declares that an emergency exists; or (2) the SEC, by
order, permits postponement of payment to protect our Owners. We also may defer
making payments attributable to a check that has not cleared (which may take up
to 15 days), and we may defer payment of proceeds from the Guarantee Account
for a partial surrender, surrender, or transfer request for up to six months
from the date we receive the request. The amount deferred will earn interest at
a rate and for a time period not less than the minimum required in the
jurisdiction in which we delivered the Policy.
59
<PAGE>
Distribution of the Policies
DISTRIBUTOR
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New
Mexico, and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is
the distributor and principal underwriter of the Policies. Capital Brokerage, a
Washington corporation and an affiliate of ours, is located at 6630 W. Broad
St., Richmond, Virginia 23230. Properly licensed registered representatives of
both independent and affiliated broker/dealers (including our affiliate, Terra
Securities Corporation) will sell the Policies. These broker/dealers have
selling agreements with Capital Brokerage and have been licensed by state
insurance departments to represent us. Properly licensed registered
representatives of Capital Brokerage will also sell the Policies. Capital
Brokerage is registered with the SEC under the Securities Exchange Act of 1934
as a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). We will offer the Policies in all states where we are
licensed to do business.
COMMISSIONS
We pay commissions and other expenses associated with the promotion and sales
of the Policies to broker/dealers. Broker/dealers may receive aggregate
commissions of up to 1.4% of your aggregate premium payments.
Under certain circumstances and in exchange for lower initial commissions,
certain sellers of the Policies may be paid a persistency trail commission
which will take into account, among other things, the length of time premium
payments have been held under the Policy, and Account Values. A trail
commission is not anticipated to exceed, on an annual basis, 1.00% of the
Account Values considered in connection with the trail commission. We may also
pay override payments, expense allowances, bonuses, wholesaler fees and
training allowances. Registered representatives earn commissions from the
broker/dealer with which they are affiliated and such arrangements may vary. In
addition, registered representatives who meet specified production levels may
qualify, under sales incentive programs adopted by us, to receive non-cash
compensation such as expense-paid trips, expense-paid educational seminars and
merchandise.
Capital Brokerage will receive 12b-1 fees assessed against the Janus Aspen
Series (Service Shares) as compensation for providing certain distribution and
shareholder support services.
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<PAGE>
Additional Information
OWNER QUESTIONS
The obligations to Owners under the Policies are ours. Please direct your
questions and concerns to us at our Home Office.
RETURN PRIVILEGE
Within the free-look period after you receive the Policy, you may cancel it for
any reason by delivering or mailing it postage prepaid, to our Home Office,
Annuity New Business, 6610 W. Broad Street, Richmond, Virginia 23230. A Policy
canceled under this provision will be void. Unless state law requires that
premium payments be returned as the refund, the amount of the refund will equal
the Account Value. If state law requires that premium payments be returned, the
amount of the refund will equal the greater of (1) the Account Value, plus any
amount deducted from the premium payments prior to allocation to Account 4
(excluding any charges the portfolios may have deducted), and (2) the premium
payments made less any withdrawals you previously made. In certain states, you
may have more than 10 days to return the Policy for a refund.
Once we change our allocation procedure with respect to the free-look period
(see Allocation of Premium Payments), the amount of the refund in states that
require that premium payments be returned will equal the premium payments made
less any withdrawals you previously made.
STATE REGULATION
As a life insurance company organized and operated under the laws of the
Commonwealth of Virginia, we are subject to provisions governing life insurers
and to regulation by the Virginia Commissioner of Insurance.
Our books and accounts are subject to review and examination by the State
Corporation Commission of the Commonwealth of Virginia at all times. That
Commission conducts a full examination of our operations at least every five
years.
RECORDS AND REPORTS
As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to Account 4. At
least once each year, we will send you a report showing information about your
Policy for the period covered by the report. The report will show the Account
Value in each Investment Subdivision. The report also will show premium
payments and charges made during the statement period. We also will send you an
annual and a semi-annual report for each portfolio underlying an Investment
Subdivision to which you have allocated Account Value, as required by the 1940
Act. In addition, when you make premium payments, transfers, or partial
surrenders, you will receive a written confirmation of these transactions.
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<PAGE>
OTHER INFORMATION
We have filed a registration statement with the SEC, under the Securities Act
of 1933 as amended, for the Policies being offered here. This Prospectus does
not contain all the information in the registration statement, its amendments
and exhibits. Please refer to the registration statement for further
information about Account 4, the Company, and the Policies offered. Statements
in this Prospectus about the content of Policies and other legal instruments
are summaries. For the complete text of those Policies and instruments, please
refer to those documents as filed with the SEC and available on the SEC's
website at http://www.sec.gov.
LEGAL MATTERS
We, like other life insurance companies, are involved in lawsuits, including
class action lawsuits. In some class action and other lawsuits involving
insurance companies, substantial damages have been sought and/or material
settlement payments have been made. Although we cannot predict the outcome of
any litigation with certainty, we believe that at the present time there are no
pending or threatened lawsuits that are reasonably likely to have a material
adverse impact on us or Account 4.
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<PAGE>
Condensed Financial Information
Several of the Subdivisions, which are available under this Contract, did not
begin operation before the date of this Prospectus. The Prospectus and the
Statement of Additional Information include the financial information for those
Subdivisions that were in operation before the date of this Prospectus.
The Accumulation Unit Values and the number of accumulation units outstanding
for each Investment Subdivision for the periods shown are as follows:
Financial statements for Account 4 and consolidated financial statements for GE
Life & Annuity (as well as the auditors' reports thereon) are in the Statement
of Additional Information.
<TABLE>
<CAPTION>
Accumulation Accumulation No. of Accumulation Accumulation No. of
Unit Values Unit Values Units Unit Values Unit Values Units
as of as of as of as of as of as of
Funds 7/03/00 6/30/00 6/30/00 1/03/00 12/31/99 12/31/99
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GE Investment Funds,
Inc.
Mid-Cap Value Equity
Fund.................. 9.44 9.23 272,475 9.48 9.72 147,340
Money Market Fund...... 10.45 10.45 1,742,115 10.23 10.23 1,214,273
Premier Growth Equity
Fund.................. 11.68 11.57 224,624 11.51 11.73 96,385
S&P 500 Index Fund..... 10.77 10.66 1,099,480 10.70 10.81 543,614
Small-Cap Value
Equity................ -- -- -- -- -- --
U.S. Equity Fund....... 10.63 10.49 178,929 10.37 10.55 100,906
Value Equity Fund...... -- -- -- -- -- --
</TABLE>
63
<PAGE>
Appendix A
The majority of the portfolios are new to GE Life & Annuity's Account 4. For
this reason, standardized performance for the majority of the Investment
Subdivision is not yet available and, therefore, standardized and non-
standardized performance data for these Investment Subdivisions is not yet
listed.
STANDARDIZED PERFORMANCE DATA
We may advertise the historical total returns for the Investment Subdivisions
according to SEC standards. These standards are discussed in the Statement of
Additional Information. The total return for an Investment Subdivision assumes
that an investment has been held in the Investment Subdivision for various
periods of time including a period measured from the date on which the
particular portfolio was first available in Account 4. When a portfolio has
been available for one, five, and ten years, we will provide the total return
for these periods, adjusted to reflect current Investment Subdivision charges.
The total return quotations represent the average annual compounded rates of
return that an initial investment of $1,000 in that Investment Subdivision
would equal as of the last day of each period.
In Table 1, we show the standardized average annual total returns of the
Investment Subdivisions for periods from the date on which a particular
portfolio was first available in Account 4 to December 31, 1999, and for the
one, five and ten year periods ended December 31, 1999. Although the Policy did
not exist during the periods shown in Table 1 below, the returns of the
Investment Subdivisions shown have been adjusted to reflect current Investment
Subdivision charges imposed under the Policy. The total returns shown in Table
1 reflect the deduction all common fees and charges assessed under the Policy,
that is, the portfolio expenses, the mortality and expense risk charge
(deducted daily at an effective annual rate of 1.35% of Account Value), the
administrative expense charge (deducted daily at an effective annual rate of
.25% of Account Value) and the annual policy maintenance charge of $25. Total
returns do not reflect the optional enhanced Death Benefit charge and assume
that no premium taxes apply.
A-1
<PAGE>
Table 1
Standardized Total Returns
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance
Funds
AIM V.I. Capital
Appreciation Fund..... NA NA NA NA **
AIM V.I. Growth Fund... NA NA NA NA **
AIM V.I. Value Fund.... NA NA NA NA **
Alliance Variable
Products Series Fund,
Inc.
Growth and Income
Portfolio -- Class B
Shares................ NA NA NA NA **
Premier Growth
Portfolio -- Class B
Shares................ NA NA NA NA **
Quasar Portfolio --
Class B Shares....... NA NA NA NA **
Dreyfus
Dreyfus Investment
Portfolios-Emerging
Markets Fund.......... NA NA NA NA **
The Dreyfus Socially
Responsible Growth
Portfolio, Inc........ NA NA NA NA **
The Federated Insurance
Series
Federated High Income
Bond Fund II --
Service Shares....... NA NA NA NA **
Federated International
Small Company Fund
II.................... NA NA NA NA **
Fidelity Variable
Insurance Products Fund
(VIP)
VIP Equity-Income
Portfolio -- Service
Class 2 Shares........ NA NA NA NA **
VIP Growth Portfolio --
Service Class 2
Shares................ NA NA NA NA **
Fidelity Variable
Insurance Products Fund
(VIP II)
VIP II Contrafund
Portfolio -- Service
Class 2 Shares........ NA NA NA NA **
Fidelity Variable
Insurance Products Fund
(VIP III)
VIP III Growth & Income
Portfolio -- Service
Class 2 Shares........ NA NA NA NA **
VIP III Mid Cap
Portfolio -- Service
Class 2 Shares........ NA NA NA NA **
GE Investments Funds,
Inc.
Mid-Cap Value Equity
Fund.................. 15.39 NA NA 18.94 05/01/97
Money Market Fund...... 3.32 3.70 3.20 3.71 06/30/85
Premier Growth Equity
Fund.................. NA NA NA NA 12/12/97
S&P 500(R) Index Fund.. 18.69 25.81 15.87 15.19 04/14/85
Small-Cap Value Equity
Fund.................. NA NA NA NA **
U.S. Equity Fund....... 17.70 NA NA 24.37 01/02/95
Value Equity Fund...... NA NA NA NA **
Janus Aspen Series
Aggressive Growth
Portfolio -- Service
Shares................ NA NA NA NA **
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced Portfolio --
Service Shares....... NA NA NA NA **
Capital Appreciation
Portfolio -- Service
Shares................ NA NA NA NA **
Global Life Sciences
Portfolio -- Service
Shares................ NA NA NA NA **
Global Technology
Portfolio -- Service
Shares................ NA NA NA NA **
Growth Portfolio --
Service Shares....... NA NA NA NA **
International Growth
Portfolio -- Service
Shares................ NA NA NA NA **
Worldwide Growth
Portfolio -- Service
Shares................ NA NA NA NA **
MFS(R) Variable
Insurance Trust
MFS(R) Growth Series --
Service Class
Shares................ NA NA NA NA **
MFS(R) Growth with
Income Series --
Service Class
Shares................ NA NA NA NA **
MFS(R) New Discovery
Series -- Service
Class Shares.......... NA NA NA NA **
MFS(R) Utilities
Series -- Service
Class Shares.......... NA NA NA NA **
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA --
Service Shares....... NA NA NA NA **
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares................ NA NA NA NA **
PIMCO Variable Insurance
Trust
Foreign Bond
Portfolio --
Administrative
Shares................ NA NA NA NA **
High Yield Bond
Portfolio --
Administrative
Shares................ NA NA NA NA **
Long-Term U.S.
Government Bond
Portfolio --
Administrative
Shares................ NA NA NA NA **
Total Return Bond
Portfolio --
Administrative
Shares................ NA NA NA NA **
Rydex Variable Trust
Rydex OTC Fund......... NA NA NA NA **
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* Date on which a particular portfolio was first available in Account 4. As
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.
** Investment Subdivision has not yet been made available to the Separate
Account.
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
Past performance is not a guarantee of future results.
A-3
<PAGE>
NON-STANDARDIZED PERFORMANCE DATA
In addition to the standardized data discussed above, we may also show similar
performance data for other periods.
We may from time to time also advertise or disclose average annual total return
or other performance data in non-standardized formats for the Investment
Subdivisions. The non-standardized performance data may make different
assumptions regarding the amount invested, the time periods shown, or the
effect of partial surrenders or income payments.
All non-standardized performance data will be advertised only if we also
disclose the standardized performance data as shown in Table 1.
Adjusted Historical Performance Data. We may disclose historic performance data
for the portfolios since their inception reduced by some or all of the fees and
charges under the Policy. Such adjusted historic performance includes data that
precedes the date on which a particular portfolio was first available in
Account 4. This data is designed to show the performance that would have
resulted if the Policy had been in existence during that time, based on the
portfolio's performance. This data assumes that the Investment Subdivisions
available under the Policy were in existence for the same period as the
portfolio with a level of charges equal to those currently assessed under the
Policy. This data is not intended to indicate future performance.
Based on the method of calculation described in the Statement of Additional
Information, the adjusted historic average annual total returns for the
portfolios for periods from a particular portfolio was declared effective by
the SEC to December 31, 1999, and for the one, five and ten year periods ended
December 31, 1999 is shown in Table 2 below. The total returns of the
portfolios have been reduced by all common charges currently assessed under the
Policy, as if the Policy had been in existence since the inception of the
portfolio. In Table 2, adjusted total returns for the portfolios reflect
deductions of all common fees and charges under the Policy, including the
mortality and expense risk charge (deducted daily at an effective annual rate
of 1.35% of Account Value), and the administrative expense charge (deducted
daily at an effective annual rate of .25% of Account Value). The returns do not
reflect the optional enhanced Death Benefit charge and assume that no reflect
premium taxes apply.
A-4
<PAGE>
Table 2
Adjusted Historical Performance Data assuming surrender at the end of the
applicable time period.
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation
Fund............................. NA NA NA 05/05/93
AIM V.I. Growth Fund.............. NA NA NA 05/05/93
AIM V.I. Value Fund............... NA NA NA 05/05/93
Alliance Variable Products Series
Fund, Inc.
Growth and Income Portfolio --
Class B Shares.................. NA NA NA 06/01/99
Premier Growth Portfolio -- Class
B Shares......................... NA NA NA 06/01/99
Quasar Portfolio -- Class B
Shares........................... NA NA NA 06/01/99
Dreyfus
Dreyfus Investments Portfolio --
Emerging Markets Fund........... NA NA NA 12/15/99
The Dreyfus Socially Responsible
Growth Portfolio................. NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund
II -- Service Shares............. NA NA NA 05/01/00
Federated International Small
Company Fund II.................. NA NA NA 05/01/00
Fidelity Variable Insurance
Products Fund (VIP)
VIP Equity-Income Portfolio --
Service Class 2 Shares.......... NA NA NA 01/12/00
VIP Growth Portfolio -- Service
Class 2 Shares................... NA NA NA 01/12/00
Fidelity Variable Insurance
Products Fund (VIP II)
VIP II Contrafund Portfolio --
Service Class 2 Shares.......... NA NA NA 01/12/00
Fidelity Variable Insurance
Products Fund (VIP III)
VIP III Growth & Income
Portfolio -- Service Class 2
Shares........................... NA NA NA 01/12/00
VIP III Mid Cap Portfolio --
Service Class 2 Shares.......... NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund......... 15.28 NA NA 05/01/97
Money Market Fund................. 3.21 3.60 3.10 06/30/85
Premier Growth Equity Fund........ NA NA NA 12/12/97
S&P 500(R) Index Fund............. 18.57 25.68 15.75 04/14/85
Small-Cap Value Equity Fund....... NA NA NA 05/01/00
U.S. Equity Fund.................. 17.58 NA NA 01/02/95
Value Equity Fund................. NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio --
Service Shares.................. NA NA NA 12/31/99
Balanced Portfolio -- Service
Shares........................... NA NA NA 12/31/99
Capital Appreciation Portfolio --
Service Shares.................. NA NA NA 12/31/99
Global Life Sciences Portfolio --
Service Shares.................. NA NA NA 01/15/00
Global Technology Portfolio --
Service Shares.................. NA NA NA 01/15/00
Growth Portfolio -- Service
Shares........................... NA NA NA 12/31/99
International Growth Portfolio --
Service Shares.................. NA NA NA 12/31/99
Worldwide Growth Portfolio --
Service Shares.................. NA NA NA 12/31/99
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS(R) Variable Insurance Trust
MFS(R) Growth Series -- Service
Class Shares..................... NA NA NA 05/01/00
MFS(R) Growth with Income
Series -- Service Class Shares... NA NA NA 05/01/00
MFS(R) New Discovery Series --
Service Class Shares............ NA NA NA 05/01/00
MFS(R) Utilities Series -- Service
Class Shares..................... NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities
Fund/VA -- Service Shares........ NA NA NA 04/26/00
Oppenheimer Main Street Growth &
Income Fund/VA -- Service
Shares........................... NA NA NA 04/26/00
PIMCO Variable Insurance Trust
Foreign Bond Portfolio --
Administrative Shares........... NA NA NA 02/16/99
High Yield Bond Portfolio --
Administrative Shares........... NA NA NA 04/30/99
Long-Term U.S. Government Bond
Portfolio -- Administrative
Shares........................... NA NA NA 04/30/99
Total Return Bond Portfolio --
Administrative Shares........... NA NA NA 12/24/97
Rydex Variable Trust
Rydex OTC Fund.................... NA NA NA 05/07/97
</TABLE>
Yield more closely reflects current earnings of the GE Investments Funds,
Inc.'s Money Market Fund than its total return.
* 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
Account. Past performance is not a guarantee of future results. Returns for
a period of less than one year are not annualized.
A-6
<PAGE>
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
--------------------------------------------------------------------------------
<S> <C>
The Policies............................................................... 3
Transfer of Annuity Units................................................ 3
Net Investment Factor.................................................... 3
Termination of Participation Agreements.................................... 3
Calculation of Performance Data............................................ 4
Money Market Investment Subdivision...................................... 4
Other Investment Subdivisions............................................ 6
Other Performance Data................................................... 6
Federal Tax Matters........................................................ 7
Taxation of GE Life & Annuity............................................ 7
IRS Required Distributions............................................... 7
General Provisions......................................................... 7
Using the Policies as Collateral......................................... 7
The Beneficiary.......................................................... 8
Non-Participating........................................................ 8
Misstatement of Age or Sex............................................... 8
Incontestability......................................................... 8
Statement of Values...................................................... 8
Written Notice........................................................... 8
Distribution of the Policies............................................... 8
Legal Developments Regarding Employment-Related Benefit Plans.............. 8
Legal Matters.............................................................. 9
Experts.................................................................... 9
Financial Statements....................................................... 9
</TABLE>
Dated
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, Virginia 23230
<PAGE>
A Statement of Additional Information containing more detailed information
about the Policy and Account 4 is available free by writing us at the address
below or by calling (800) 352-9910.
To GE Life & Annuity
Annuity New Business
6610 W. Broad Street
Richmond, VA 23230
Please mail a copy of the Statement of Additional Information for Account 4,
Policy Form P1151 1/99 to:
Name ___________________________________________________________________________
Address ________________________________________________________________________
Street
________________________________________________________________________________
City State Zip
Signature of Requestor _________________________________________________________
Date
<PAGE>
GE Life and Annuity Assurance Company
Separate Account 4
Part B
Statement of Additional Information
For The
Flexible Premium Variable Deferred Annuity Policy
Form P1151 1/99
Offered By
GE Life and Annuity Assurance Company
(A Virginia Stock Corporation)
6610 W. Broad Street
Richmond, Virginia 23230
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the above-named flexible premium variable deferred
annuity policy ("Policy") offered by GE Life and Annuity Assurance Company. You
may obtain a copy of the Prospectus dated by calling (800) 352-9910 or
by writing to GE Life and Annuity Assurance Company, 6610 W. Broad Street,
Richmond, Virginia 23230. The SAI is also available on the SEC website at
http://www.sec.gov. Terms used in the current Prospectus for the Policy are
incorporated in this Statement.
This statement of additional information is
not a prospectus and should be read only
in conjunction with the prospectuses for the Policy and the Funds.
Dated
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Policies............................................................... 3
Transfer of Annuity Units................................................ 3
Net Investment Factor.................................................... 3
Termination of Participation Agreements.................................... 4
Calculation of Performance Data............................................ 4
Money Market Investment Subdivision...................................... 5
Other Investment Subdivisions............................................ 6
Other Performance Data................................................... 7
Federal Tax Matters........................................................ 7
Taxation of GE Life & Annuity............................................ 7
IRS Required Distributions............................................... 8
General Provisions......................................................... 8
Using the Policies as Collateral......................................... 8
The Beneficiary.......................................................... 8
Non-Participating........................................................ 8
Misstatement of Age or Sex............................................... 9
Incontestability......................................................... 9
Statement of Values...................................................... 9
Written Notice........................................................... 9
Distribution of the Policies............................................... 9
Legal Developments Regarding Employment-Related Benefit Plans.............. 9
Legal Matters.............................................................. 9
Experts.................................................................... 10
Financial Statements....................................................... 10
</TABLE>
2
<PAGE>
THE POLICIES
Transfer of Annuity Units
At your request, Annuity Units may be transferred once per calendar year
from the Investment Subdivisions in which they are currently held. However,
where permitted by state law, we reserve the right to refuse to execute any
transfer if any of the Investment Subdivisions that would be affected by the
transfer are unable to purchase or redeem shares of the portfolios in which the
Investment Subdivisions invest. The number of Annuity Units to be transferred
is (a) times (b) divided by (c) where: (a) is the number of Annuity Units in
the current Investment Subdivision desired to be transferred; (b) is the
Annuity Unit Value for the Investment Subdivision in which the Annuity Units
are currently held; and (c) is the Annuity Unit Value for the Investment
Subdivision to which the transfer is made.
If the number of Annuity Units remaining in an Investment Subdivision after
the transfer is less than 1, we will transfer the amount remaining in addition
to the amount requested. We will not transfer into any Investment Subdivision
unless the number of Annuity Units of that Investment Subdivision after the
transfer is at least 1. The amount of the income payment as of the date of the
transfer will not be affected by the transfer (however, subsequent variable
income payments will reflect the investment experience of the selected
Investment Subdivisions).
Net Investment Factor
The net investment factor measures investment performance of the Investment
Subdivisions of Account 4 during a Valuation Period. Each Investment
Subdivision has its own net investment factor for a Valuation Period. The net
investment factor of an Investment Subdivision available under the Policies for
a Valuation Period is (a) divided by (b) minus (c) where:
(a) is the result of:
(1) the value of the net assets of that Investment Subdivision at
the end of the preceding Valuation Period, plus
(2) the investment income and capital gains, realized or unrealized,
credited to the net assets of that Investment Subdivision during the
Valuation Period for which the net investment factor is being
determined, minus
(3) the capital losses, realized or unrealized, charged against
those assets during the Valuation Period, minus
(4) any amount charged against that Investment Subdivision for
taxes; this includes any amount we set aside during the Valuation
Period as a provision for taxes attributable to the operation or
maintenance of that Subdivision; and
(b) is the value of the net assets of that Investment Subdivision at the
end of the preceding Valuation Period; and
(c) is a factor for the Valuation Period representing the mortality and
expense charge and the administrative expense charge; this factor is shown
in your Policy.
The values of the assets in Account 4 will be taken at their fair market
value in accordance with generally accepted accounting practices and applicable
laws and regulations.
3
<PAGE>
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares
to Account 4 contain varying provisions regarding termination. The following
summarizes those provisions:
AIM Variable Insurance Funds. This agreement may be terminated by the
parties on six months' advance written notice.
Alliance Variable Products Series Fund, Inc. This agreement may be
terminated by the parties on six months' advance written notice.
Dreyfus. This agreement may be terminated by the parties on six months'
advance written notice.
Federated Insurance Series. This agreement may be terminated by the parties
on six months' advance written notice.
Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, 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.
MFS Variable Insurance Trust. This agreement may be terminated by the
parties on six months' advance written notice.
Oppenheimer Variable Account Funds. This agreement may be terminated by the
parties on six months' advance written notice.
PIMCO Variable Insurance Trust. This agreement may be terminated by the
parties on six months' advance written notice, unless a shorter time is agreed
to by the parties.
Rydex Variable Trust. This agreement may be terminated by the parties on six
months' advance written notice.
CALCULATION OF PERFORMANCE DATA
From time to time, we may disclose total return, yield, and other
performance data for the Investment Subdivisions pertaining to the Policies.
Such performance data will be computed, or accompanied by performance data
computed, in accordance with the standards defined by the Securities and
Exchange Commission.
4
<PAGE>
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Policy. Premium taxes currently range from 0% to 3% of premium payments and are
generally based on the rules of the state in which you reside.
Money Market Investment Subdivision
From time to time, advertisements and sales literature may quote the yield
of the Money Market Investment Subdivision 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 portfolio or on its
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of
securities and unrealized appreciation and depreciation and income other than
investment income) at the end of the seven-day period in the value of a
hypothetical account under a Policy having a balance of one unit in that Money
Market Investment Subdivision at the beginning of the period, dividing such net
change in Account Value by the value of the account at the beginning of the
period to determine the base period return, and annualizing the result on a
365-day basis. The net change in Account Value reflects: 1) net income from the
portfolio attributable to the hypothetical account; and 2) charges and
deductions imposed under the Policy which are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the annual
policy maintenance charge, administrative expense charge, and the mortality and
expense risk charge (the administrative expense charge and the mortality and
expense risk charge combined on an effective annual basis equal to 1.60% of
Account Value). The annual policy maintenance charge is only deducted if
Account Value at the time of deduction is less than $25,000. We assume for the
purposes of the yield calculation that this charge will be waived. Current
Yield will be calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) (365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive
of realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the seven-day period attributable to a hypothetical
account having a balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value on the first day of the seven-day period.
The effective yield of a Money Market Investment Subdivision determined on a
compounded basis for the same seven-day period may also be quoted. The
effective yield is calculated by compounding the base period return according
to the following formula:
Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1
Where:
NCP = the net change in the value of the investment portfolio (exclusive
of realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the seven-day period attributable to a hypothetical
account having a balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day
period.
UV = the unit value for the first day of the seven-day period.
5
<PAGE>
The yield on amounts held in the Money Market Investment Subdivision
normally will fluctuate on a daily basis. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yields
or rates of return. A Money Market Investment Subdivision's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity of the Investment Subdivision's corresponding money market
portfolio, the types and quality of portfolio securities held by that
portfolio, and that investment portfolio's operating expenses. Because of the
charges and deductions imposed under the Policy, the yield for a Money Market
Investment Subdivision will be lower than the yield for its corresponding
money market portfolio.
Yield calculations for the underlying Money Market Fund are less the
administrative charge and the mortality and expense risk charge (the
administrative expense charge and the mortality and expense risk charge
combined equal an annual 1.60% of Account Value). The annual policy
maintenance charge is only deducted if Account Value at the time of deduction
is less than $25,000. We assume for the purposes of the yield calculation that
this charge will be waived. Yield calculations for the GE Investments Money
Market Fund as of December 31, 1999 are as follows:
Current Yield 3.95%
Effective Yield 4.02%
Past performance is not a guarantee of future results.
Other Investment Subdivisions
Total Return. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Investment
Subdivisions for various periods of time including 1 year, 5 years and 10
years, or from inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Policy to the redemption value of that investment as of the last day
of the period. The ending date for each period for which total return
quotations are provided will be for the most recent practicable, considering
the type and media of the communication, and will be stated in the
communication.
For periods that begin before the Policy was available, performance data
will be based on the performance of the underlying portfolios, with the level
of Account 4 and Policy charges currently in effect. Average annual total
return will be calculated using Investment Subdivision unit values and
deductions for the annual policy maintenance charge as described below:
1. We calculate unit value for each Valuation Period based on the
performance of the Investment Subdivision's underlying investment portfolio
(after deductions for Fund expenses, the administrative expense charge, and
the mortality and expense risk charge).
2. The annual policy maintenance charge is $25 per year, deducted at the
beginning of each Policy year after the first. For purposes of calculating
average annual total return, an average policy maintenance charge
(currently 0.1% of Account Value attributable to the hypothetical
investment) is used. This charge will be waived if the Account Value is at
least $25,000 at the time the charge is due.
3. Total return does not consider any riders and does not reflect the
deduction of any premium tax.
6
<PAGE>
4. 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).
Past performance is not a guarantee of future results.
Other Performance Data
We may disclose cumulative total return in conjunction with the standard
format described above. The cumulative total return will be calculated using
the following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting deductions as described
above) of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
Other non-standard quotations of Investment Subdivision performance may also
be used in sales literature. Such quotations will be accompanied by a
description of how they were calculated. We will accompany any non-standard
quotations of Investment Subdivision performance with standard performance
quotations.
FEDERAL TAX MATTERS
Taxation of GE Life & Annuity
We do not expect to incur any federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Policies. (See Federal Tax Matters section of the Prospectus.) Based upon these
expectations, no charge is being made currently to Account 4 for federal income
taxes which may be attributable to the Account. We will periodically review the
question of a charge to Account 4 for federal income taxes related to the
Account. Such a charge may be made in future years if we believe that we may
incur federal income taxes. This might become necessary if the tax treatment of
the Company is ultimately determined to be other than what we currently believe
it to be, if there are changes made in the federal income tax treatment of
annuities at the corporate level, or if there is a change in the Company's tax
status. In the event that we should incur federal income taxes attributable to
investment income or capital gains retained as part of the reserves under the
Policies, the Account Value would be correspondingly adjusted by any provision
or charge for such taxes.
We may also incur state and local taxes (in addition to premium taxes) in
several states. At present, these taxes, with the exception of premium taxes,
are not significant. If there is a material change in applicable state
7
<PAGE>
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 policy for federal income tax purposes,
section 72(s) of the Code requires any Non-Qualified Policy to provide that (a)
if any Owner dies on or after the Maturity Date but prior to the time the
entire interest in the Policy has been distributed, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Maturity Date, the entire interest in the Policy will
be distributed (1) within five years after the date of that Owner's death, or
(2) as income payments which will begin within one year of that Owner's death
and which will be made over the life of the Owner's "designated beneficiary" or
over a period not extending beyond the life expectancy of that beneficiary. The
"designated beneficiary" generally is the person who will be treated as the
sole Owner of the Policy following the death of the Owner, Joint Owner or, in
certain circumstances, the Annuitant. However, if the "designated beneficiary"
is the surviving spouse of the decedent, these distribution rules will not
apply until the surviving spouse's death (and this spousal exception will not
again be available). If any Owner is not an individual, the death of the
Annuitant will be treated as the death of an Owner for purposes of these rules.
The Non-Qualified Policies contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code section 72(s) when clarified by regulation or otherwise.
Other rules may apply to Qualified Policies.
GENERAL PROVISIONS
Using The Policies As Collateral
A Non-Qualified Policy can be assigned as collateral security. We must be
notified in writing if a Policy is assigned. Any payment made before the
assignment is recorded at our Home Office will not be affected. We are not
responsible for the validity of an assignment. Your rights and the rights of a
Beneficiary may be affected by an assignment.
A Qualified Policy may not be sold, assigned, transferred, discounted,
pledged or otherwise transferred except under such conditions as may be allowed
under applicable law.
The basic benefits of the Policy are assignable. Additional benefits added
by rider may or may not be available/eligible for assignments.
The Beneficiary
You may select one or more primary and contingent Beneficiaries during your
lifetime upon application and by filing a written request with our Home Office.
Each change of Beneficiary revokes any previous designation.
Non-Participating
The Policy is non-participating. No dividends are payable.
8
<PAGE>
Misstatement of Age or Sex
If an Annuitant's age or sex was misstated on the Policy data page, any
Policy benefits or proceeds, or availability thereof, will be determined using
the correct age and sex.
Incontestability
We will not contest the Policy.
Statement of Values
At least once each year, we will send you a statement of values within 30
days after each report date. The statement will show Account Value, premium
payments and charges made during the report period.
Written Notice
Any written notice should be sent to us at our Home Office at 6610 West
Broad Street, Richmond, Virginia 23230. The Policy number and the Annuitant's
full name must be included.
We will send all notices to the Owner at the last known address on file with
the company.
DISTRIBUTION OF THE POLICIES
The offering is continuous and Capital Brokerage Corporation does not
anticipate discontinuing the offering of the Policies. However, the Company
does reserve the right to discontinue the offering of the Policies.
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for
Tax Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964, vary between men and women on
the basis of sex. The Policy contains guaranteed annuity purchase rates for
certain optional payment plans that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of Norris, and Title VII generally,
on any employment-related insurance or benefit program for which a Policy may
be purchased.
In addition, the Company is subject to the insurance laws and regulations of
other states within which it is licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
determining permissible investments. Presently, the Company is licensed to do
business in the District of Columbia and all states, except New York.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to federal securities laws. Donita M. King,
Senior Vice President, General Counsel and Secretary of the Company, has
provided advice on certain legal matters pertaining to the Policy, including
the validity of the Policy and the Company's right to issue the Policies under
Virginia insurance law.
9
<PAGE>
EXPERTS
The consolidated financial statements of GE Life and Annuity Assurance
Company and subsidiary 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 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
contains an explanatory paragraph that states that the Company changed its
method of accounting for insurance-related assessments in 1999.
FINANCIAL STATEMENTS
This Statement of Additional Information contains consolidated financial
statements for GE Life and Annuity Assurance Company (the Company) and
subsidiary 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 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 Policy. 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.
10
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
<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
=========== =========== ========== ========== ===========
</TABLE>
-a) Reflects period covering May 5, 1999 to December 31, 1999.
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>
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 Year ended December
Year ended December 31, 31, 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
Year ended December 31, 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 eligible for up to a 4% bonus
credit and 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 transac-
tions:
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 transac-
tions:
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 transac-
tions:
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
For Type III Unit Contracts, transfers from the Guarantee Account include
approximately $38 million of payments made by GE Life & Annuity in the form of
bonus credits during 1999.
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, 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-60
<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 re-
demption and liquidation value, 200,000 shares autho-
rized, 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-61
<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-62
<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-63
<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 dis-
counts..................................... (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 activi-
ties.................................... 201.5 374.8 233.8
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales and maturities of invest-
ment 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 con-
tracts...................................... 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-64
<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-65
<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-66
<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-67
<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-68
<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-69
<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-70
<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-71
<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-72
<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-73
<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-74
<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-75
<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-76
<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-77
<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-78
<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......................... $19,774.2 $183.1 $19,957.3
========= ====== =========
<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-79
<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-80
