As filed with the Securities and Exchange Commission on March 15, 2000
File No. 333-96513
File No. 811-5343
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM N-4/A
Registration Statement Under the Securities Act of 1933 X
Pre-Effective Amendment No. 1
Post-Effective Amendment No. 48
For Registration Under the Investment Company Act of 1940 X
Amendment No.
GE Life & Annuity Separate Account 4
(EXACT NAME OF REGISTRANT)
GE Life and Annuity Assurance Company
(Name of Depositor)
6610 W. Broad Street
Richmond, Virginia 23230
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE)
Depositor's Telephone Number: (804) 281-6000
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Patricia L. Dysart COPY TO:
Associate General Counsel Stephen E. Roth, Esquire
and Asst. Vice President Sutherland Asbill & Brennan LLP
GE Financial Assurance 1275 Pennsylvania Avenue, N.W.
6610 W. Broad Street Washington, D.C. 20004
Richmond, Virginia 23230
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the registration statement.
TITLE OF SECURITIES BEING REGISTERED:
Interests in a Separate Account Under Flexible Premium Variable Annuity Policies
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant files
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
VARIABLE DEFERRED ANNUITY CONTRACT
FORM P1153 12/99
ISSUED BY: ADMINISTRATIVE OFFICE:
GE Life and Annuity Assurance Company GE Life and Annuity Assurance Company
6610 West Broad Street P.O. Box 691
Richmond, VA 23230 Leesburg, VA 20178
Telephone: (804) 281-6000
This prospectus describes an individual flexible premium variable deferred
annuity contract (the "Contract") issued by GE Life and Annuity Assurance
Company (the "Company", "GE Life & Annuity," "we," "us," or "our"). Most
transactions involving this Contract may be performed through our Electronic
Service Center.
The Contract offers you the accumulation of Contract Value and payment of
periodic annuity benefits. We pay these benefits on a variable basis.
You may allocate your Purchase Payments to the Separate Account. The Subaccounts
of the Separate Account invest in shares of the Funds. We list the Funds, and
their currently available portfolios, below.
Both the value of a Contract before the Annuity Commencement Date and the amount
of monthly payments afterward will depend upon the investment performance of the
portfolio(s) you select. You bear the investment risk of investing in the
portfolios.
AIM VARIABLE INSURANCE FUNDS, INC.
o AIM V.I. Aggressive Growth Fund o AIM V.I. Government Securities Fund
o AIM V.I. Capital Appreciation Fund o AIM V.I. Growth and Income Fund
o AIM V.I. Capital Development Fund o AIM V.I. Telecommunications Fund
o AIM V.I. Global Utilities Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
o VIP Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
o VIP III Growth & Income Portfolio o VIP III Mid Cap Portfolio
o VIP III Growth Opportunities Portfolio
GE INVESTMENTS FUNDS, INC.
o Income Fund o S&P 500 Index Fund
o International Equity Fund o Total Return Fund
o Money Market Fund o U.S. Equity Fund
o Premier Growth Equity Fund o Value Equity Fund
o Real Estate Securities Fund
JANUS ASPEN SERIES
o Capital Appreciation Portfolio o High-Yield Portfolio
o Equity Income Portfolio o International Growth Portfolio
o Flexible Income Portfolio
<PAGE>
Not all of these portfolios may be available in all states or in all markets.
YOUR INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT
AGENCY.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This prospectus details the information regarding the Separate Account that you
should know before investing. Please read it carefully, and it will remain
available through our Electronic Service Center. We have also provided current
prospectuses that contain information about the Funds available under the
Contract. You should read the Fund prospectuses carefully before purchasing a
Contract and they will remain available through our Electronic Service Center.
A Statement of Additional Information (SAI), dated ______ __, 2000, concerning
the Separate Account has been filed with the SEC and is incorporated by
reference into this prospectus. A table of contents for the SAI appears on the
last page of this prospectus. A free hard copy of this prospectus and the SAI is
available upon e-mail request through our Electronic Service Center at
http://AnnuityNet.com. or by calling (877) 569-3789. The SAI is also available
through the SEC website at http://www.sec.gov.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
The date of this prospectus is _______ __, 2000.
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
TABLE OF CONTENTS
==========================================================================================================
<S> <C>
DEFINITIONS..............................................................................................1
EXPENSE TABLE............................................................................................2
SYNOPSIS.................................................................................................6
INVESTMENT RESULTS.......................................................................................8
FINANCIAL STATEMENTS.....................................................................................9
GE LIFE AND ANNUITY ASSURANCE COMPANY....................................................................9
SEPARATE ACCOUNT........................................................................................10
THE FUNDS............................................................................................10
SUBACCOUNTS..........................................................................................11
CHANGES TO THE SEPARATE ACCOUNT AND THE SUBACCOUNTS..................................................16
CHARGES AND OTHER DEDUCTIONS............................................................................17
DEDUCTIONS FROM THE SEPARATE ACCOUNT.................................................................18
DEDUCTIONS FOR PREMIUM TAXES.........................................................................18
OTHER CHARGES AND DEDUCTIONS.........................................................................18
THE CONTRACT............................................................................................19
PURCHASE OF THE CONTRACT.............................................................................19
OWNERSHIP............................................................................................19
PURCHASE PAYMENTS....................................................................................20
VALUATION DATE.......................................................................................20
ALLOCATION OF PURCHASE PAYMENTS......................................................................20
VALUATION OF ACCUMULATION UNITS......................................................................21
TRANSFERS...............................................................................................21
TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE.......................................................21
TELEPHONE TRANSACTIONS...............................................................................23
TRANSFERS BY THIRD PARTIES...........................................................................22
TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE........................................................23
SURRENDERS AND WITHDRAWALS..............................................................................23
SYSTEMATIC WITHDRAWALS...............................................................................24
THE DEATH BENEFIT.......................................................................................24
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE...................................................24
DISTRIBUTION RULES...................................................................................25
ANNUITY PAYOUTS.........................................................................................26
ANNUITY PAYMENT OPTIONS..............................................................................27
LIFE ANNUITY WITH PERIOD CERTAIN.....................................................................27
JOINT LIFE ANNUITY...................................................................................27
GENERAL INFORMATION..................................................................................27
ANNUITY PAYOUTS......................................................................................28
FEDERAL TAX MATTERS.....................................................................................29
VOTING RIGHTS...........................................................................................33
i
<PAGE>
REQUESTING PAYMENTS.....................................................................................34
DISTRIBUTION OF THE CONTRACTS...........................................................................34
COMMISSIONS..........................................................................................35
ADDITIONAL INFORMATION..................................................................................35
OWNER QUESTIONS......................................................................................35
RETURN PRIVILEGE.....................................................................................35
STATE REGULATION.....................................................................................35
RECORDS AND REPORTS..................................................................................35
OTHER INFORMATION....................................................................................36
LEGAL MATTERS........................................................................................36
CONDENSED FINANCIAL INFORMATION.........................................................................36
TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION...........................................37
APPENDIX................................................................................................38
</TABLE>
ii
<PAGE>
================================================================================
DEFINITIONS
================================================================================
We have tried to make this prospectus as understandable as possible. However, in
explaining how the Contract works, we have had to use certain terms that have
special meanings. We define these terms below.
ACCOUNT OR SEPARATE ACCOUNT -- The segregated investment account, GE Life &
Annuity Separate Account 4, into which GE Life & Annuity sets aside and invests
the assets for the Contract offered in this prospectus, and other variable
annuity contracts that we issue.
ACCUMULATION UNIT -- A measure we use to calculate Contract Value before the
Annuity Commencement Date.
ADMINISTRATIVE OFFICE -- The office designated by the Company to receive written
customer requests. The address is GE Life and Annuity Assurance Company, P.O.
Box 691, Leesburg, VA 20178.
ANNUITANT -- The person upon whose life we will base the annuity benefit
payments made after the Annuity Commencement Date.
ANNUITY COMMENCEMENT DATE - The date when we apply the Contract Value (less any
premium taxes) for payment of annuity benefits under the Annuity Payment Option
selected. This is the date of the first annuity payment and is specified in your
Contract unless changed after issue.
ANNUITY PAYMENT OPTION -- Any of the forms of annuity benefit payments allowed
under the Contract.
ANNUITY PAYOUT -- An amount paid at regular intervals after the Annuity
Commencement Date under one of the Annuity Payment Options available to the
Owner and/or any other payee. The amount paid may vary.
ANNUITY UNIT -- A measure we use to calculate the amount of Annuity Payouts
after the Annuity Commencement Date.
BENEFICIARY -- The person or entity whom the Owner designates to receive the
Death Benefit, if any, in case of the Owner's death.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT -- The person named by the Owner who, at the death
of the Annuitant before the Annuity Commencement Date, may become the Annuitant
in certain circumstances.
1
<PAGE>
CONTRACT VALUE -- At a given time on or before the Annuity Commencement Date,
the total value of all Accumulation Units for a Contract.
CONTRACT YEAR -- Each one-year period starting with the effective date of the
Contract to the anniversary of that date in the following year.
DEATH BENEFIT -- The amount payable to the Owner's designated Beneficiary if the
Owner dies before the Annuity Commencement Date.
ELECTRONIC SERVICE CENTER -- The electronic site that GE Life & Annuity
maintains specifically for this Contract to provide variable annuity contract
information and other information to current and prospective annuity Contract
Owners and through which various transactions may be performed. Certain of these
transactions may require faxed or mailed signatures. The Universal Resource
Locator (or "URL") for the Electronic Service Center is http://AnnuityNet.com.
FUND - Any open-end management investment company or any unit investment trust,
in which a Subaccount invests.
OWNER - The individual(s) or entity who possesses rights of ownership under the
Contract. "You" and "your" refer to the Owner. An Owner or joint Owner is
entitled to receive Annuity Payouts after the Annuity Commencement Date. Owners
refers to the Owner or joint Owner.
PURCHASE PAYMENTS - A payment received by the Company and applied to this
Contract. When used in connection with this Contract, the term "Purchase
Payment" means the same as the term "premium payment".
SUBACCOUNT -- That portion of the Separate Account which invests in shares of a
portfolio of a particular Fund. A Subaccount corresponds to each portfolio of a
Fund.
VALUATION DATE -- Each day the New York Stock Exchange (NYSE) is open for
regular trading except for days that a Subaccount's corresponding Fund does not
value its shares.
VALUATION PERIOD -- The period commencing at the close of regular trading
(currently 4:00 p.m. New York time) on each day that the NYSE is open for
regular trading (in other words, the Valuation Date) and ending at the close of
such trading on the next succeeding Valuation Date.
================================================================================
EXPENSE TABLE
================================================================================
This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Contract. The table reflects
expenses both of the Subaccounts of the Separate Account and of the portfolios.
For more complete descriptions of the various costs and expenses involved, SEE
Charges and Other Deductions in this prospectus and the prospectuses for the
Funds. Premium tax charges also may apply, although they do not appear in the
table. In addition, we reserve the right to impose a $10.00 transfer charge,
although we do not currently do so.
2
<PAGE>
OWNER TRANSACTION EXPENSES:
None.
SEPARATE ACCOUNT ANNUAL EXPENSES FOR THE SUBACCOUNTS:
(as a percentage of average Contract Value for each Subaccount):
Maximum Annuity Asset Charge
Mortality and expense risk charge .40%
Administrative expense charge .35%
---
Effective annual rate not to exceed .75%
PORTFOLIO ANNUAL EXPENSES:
Annual expenses of the portfolios of the Funds for the year ended December 31,
1999 (as a percentage of each portfolio's average net assets.)
3
<PAGE>
<TABLE>
<CAPTION>
Management Fees Other Expenses
(after fee waiver (after reimbursement Total Annual
Portfolio as applicable) as applicable) Expenses
- -------------------------------------------------- -------------------- ------------------------ ----------------
<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Aggressive Growth Fund/1 .80% .39% 1.19%
AIM V.I. Capital Appreciation Fund/1 .62 .11 .73
AIM V.I. Capital Development Fund/1 .75 .48 1.23
AIM V.I. Global Utilities Fund/1 .65 .49 1.14
AIM V.I. Government Securities Fund/1 .50 .40 .90
AIM V.I. Growth and Income Fund/1 .61 .16 .77
AIM V.I. Telecommunications Fund/1 1.00 .27 1.27
FIDELITY VARIABLE INSURANCE PRODUCTS FUND*
VIP Overseas Portfolio/2 .73 .18 .91
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III*
VIP III Growth & Income Portfolio/3 .48 .12 .60
VIP III Growth Opportunities Portfolio/3 .58 .11 .69
VIP III Mid Cap Portfolio/3 .57 2.77 3.34
GE INVESTMENTS FUNDS
Income Fund/4 .50 .07 .57
International Equity Fund/4 1.00 .08 1.08
Money Market Fund/4 .24 .06 .30
Premier Growth Equity Fund/4 .65 .03 .68
Real Estate Securities Fund/4 .85 .09 .94
S&P 500 Index Fund/4 .35 .04 .39
Total Return Fund/4 .50 .06 .56
U.S. Equity Fund/4 .55 .06 .61
Value Equity Fund/4 .65 .06 .71
JANUS ASPEN SERIES
Capital Appreciation Portfolio/5 .65 .04 .69
Equity Income Portfolio/5 .62 .63 1.25
Flexible Income Portfolio/5 .65 .07 .72
High-Yield Portfolio/5 .00 1.00 1.00
International Growth Portfolio/5 .65 .11 .76
</TABLE>
*The fees and expense reported for the Variable Insurance Products Fund (VIP)
and Variable Insurance Products Fund III (VIP III) are prior to any fee waiver
and/or reimbursement as applicable.
Not all portfolios may be available in all states or markets.
1. Absent reimbursement, the total annual expenses of the portfolios of AIM
Variable Insurance Funds, Inc. during 1999 would have been 2.42% for
Aggressive Growth Fund and 3.42% for Capital Development Fund.
2. A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or Fidelity Management
Research on behalf of certain funds, have entered into arrangements with
their custodian whereby credits realized as a result of uninvested cash
balances were used to reduce custodian expenses. With reimbursements, the
total annual expenses of the portfolios of Variable Insurance Products Fund
during 1999 would have been .87% for VIP Overseas Portfolio.
3. A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or Fidelity Management
Research on behalf of certain funds, have entered into arrangements with
their custodian whereby credits realized as a result of uninvested cash
balances were used to reduce custodian expenses. With reimbursements, the
total annual expenses of the portfolios of Variable Insurance Products Fund
III during 1999 would have been .59% for VIP III Growth & Income Portfolio,
.68% for VIP III Growth Opportunities Portfolio and .97% for VIP III Mid
Cap Portfolio.
4. GE Asset Management Incorporated currently serves as investment adviser to
GE Investments Funds, Inc. and has voluntarily agreed to waive a portion of
the fee payable by the Fund. Absent this fee waiver, the total annual
expenses during 1999 of the GE Money Market Fund would have been .50% and
.72% for Premier Growth Equity Fund.
5. Absent reimbursements, the total annual expenses of the portfolios of the
Janus Aspen Series during 1999 would have been .69% for Capital
Appreciation Portfolio, 1.28% for Equity Income Portfolio, and 4.92% for
High-Yield Portfolio.
4
<PAGE>
EXAMPLES
These examples show what your costs would be under certain hypothetical
situations. The examples do not represent past or future expenses. Your actual
expenses may be more or less than those shown. The examples are based on the
annual expenses of the portfolios for the year ended December 31, 1999 (shown
above in Portfolio Annual Expenses).
<PAGE>
EXAMPLES: A Policyowner would pay the following expense on a $1,000
investment, assuming a 5% annual return on assets and the charges and expenses
reflected in the Expense Table above:
1. If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
<S> <C>
AIM Variable Insurance Funds, Inc.
Aggressive Growth Fund 23.21 71.53 122.51 262.55
Capital Appreciation Fund 18.59 57.56 99.03 214.79
Capital Development Fund 23.61 72.74 124.53 266.60
Global Utilities Fund 22.71 70.02 119.99 257.48
Government Securities Fund 20.30 62.75 107.78 232.72
Growth & Income Fund 18.99 58.78 101.10 219.04
Telecommunications Fund 24.01 73.95 126.54 270.62
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 20.40 63.05 108.29 233.76
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 17.28 53.57 92.30 200.86
VIP III Growth Opportunities Portfolio 18.19 56.33 96.97 210.52
VIP III Mid Cap Portfolio 44.52 134.32 225.13 456.63
GE Investments Funds, Inc.
Income Fund 16.98 52.65 90.74 197.62
International Equity Fund 22.11 68.21 116.95 251.35
Money Market Fund 14.25 44.31 76.58 167.97
Premier Growth Equity Fund 18.09 56.03 96.45 209.46
Real Estate Securities Fund 20.70 63.96 109.82 236.89
S&P 500 Index Fund 15.16 47.10 81.32 177.95
Total Return Fund 16.88 52.34 90.21 196.54
U.S. Equity Fund 17.38 53.88 92.82 201.94
Value Equity Fund 18.39 56.94 98.00 212.66
Janus Aspen Series
Capital Appreciation Portfolio 18.19 56.33 96.97 210.52
Equity Income Portfolio 23.81 73.34 125.54 268.61
Flexible Income Portfolio 18.49 57.25 98.52 213.73
High-Yield Portfolio 21.30 65.78 112.88 243.11
International Growth Portfolio 18.89 58.47 100.58 217.98
</TABLE>
* surrender includes annuitization over a period of less than 5 years
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
<S> <C>
AIM Variable Insurance Funds, Inc.
Aggressive Growth Fund 23.21 71.53 122.51 262.55
Capital Appreciation Fund 18.59 57.56 99.03 214.79
Capital Development Fund 23.61 72.74 124.53 266.60
Global Utilities Fund 22.71 70.02 119.99 257.48
Government Securities Fund 20.30 62.75 107.78 232.72
Growth & Income Fund 18.99 58.78 101.10 219.04
Telecommunications Fund 24.01 73.95 126.54 270.62
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 20.40 63.05 108.29 233.76
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 17.28 53.57 92.30 200.86
VIP III Growth Opportunities Portfolio 18.19 56.33 96.97 210.52
VIP III Mid Cap Portfolio 44.52 134.32 225.13 456.63
GE Investments Funds, Inc.
Income Fund 16.98 52.65 90.74 197.62
International Equity Fund 22.11 68.21 116.95 251.35
Money Market Fund 14.25 44.31 76.58 167.97
Premier Growth Equity Fund 18.09 56.03 96.45 209.46
Real Estate Securities Fund 20.70 63.96 109.82 236.89
S&P 500 Index Fund 15.16 47.10 81.32 177.95
Total Return Fund 16.88 52.34 90.21 196.54
U.S. Equity Fund 17.38 53.88 92.82 201.94
Value Equity Fund 18.39 56.94 98.00 212.66
Janus Aspen Series
Capital Appreciation Portfolio 18.19 56.33 96.97 210.52
Equity Income Portfolio 23.81 73.34 125.54 268.61
Flexible Income Portfolio 18.49 57.25 98.52 213.73
High-Yield Portfolio 21.30 65.78 112.88 243.11
International Growth Portfolio 18.89 58.47 100.58 217.98
</TABLE>
* surrender includes annuitization over a period of less than 5 years
* * *
The Funds supplied all of the figures provided under the subheading
Portfolio Annual Expenses and part of the data used to produce the figures in
the examples. We have not independently verified this information. Certain
portfolio expenses are shown net of fee waivers and reimbursements. We cannot
guarantee that the fee waivers and reimbursements will continue.
5
<PAGE>
OTHER CONTRACTS
We offer other variable annuity contracts which may also invest in the same
portfolios offered in the Contract. These contracts have different charges
that could affect their subaccounts' performance and they offer different
benefits.
================================================================================
SYNOPSIS
================================================================================
WHAT TYPE OF CONTRACT AM I It is an individual deferred variable annuity
BUYING? contract issued by GE Life & Annuity. This
prospectus only provides disclosure about the
Contract. Certain features described in this
prospectus may vary from your Contract. See The
Contract.
WHAT IS THE ACCOUNT? It is a separate account established under
Virginia insurance law, and registered with the
SEC as a unit investment trust. The assets of
the Separate Account are allocated to one or
more Subaccounts. Those assets are not
chargeable with liabilities arising out of any
other business which GE Life & Annuity may
conduct. See Separate Account.
WHAT ARE MY INVESTMENT Through its various Subaccounts, the Separate
CHOICES? Account uses your Purchase Payments to purchase
shares, at your direction, in one or more of the
portfolios of the Funds. In turn, each
portfolio holds securities consistent with its
own particular investment policy. See Separate
Account - Subaccounts.
HOW DOES THE CONTRACT WORK? During the accumulation period, while you are
paying in, your Purchase Payments will buy
Accumulation Units under the Contract. When you
annuitize (that is, change your Contract to a
payment mode rather than an accumulation mode),
your Accumulation Units will be converted to
Annuity Units. Your periodic Annuity Payout will
be based upon the number of Annuity Units to
which you became entitled at the time you
annuitized and the value of each unit on the
Valuation Date the payment is calculated. See
The Contract.
WHAT CAN I DO THROUGH THE We maintain the Electronic Service Center to
ELECTRONIC SERVICE CENTER? provide information to you. Also, we perform
various transactions through the Center.
For security, we may issue you a Personal
Identification Number (PIN) or password. You are
responsible for any use of this PIN or password.
Detailed instructions on how to perform various
transactions such as transferring funds from one
Subaccount to another Subaccount, changing the
Beneficiary or making a withdrawal can be found
at the Electronic Service Center. These
procedures must be followed.
6
<PAGE>
For legal reasons, certain transactions require
a document with a signature. Electronic requests
for transactions that require a signature will
not be processed.
WHAT CHARGES ARE We assess annual charges in the aggregate at an
ASSOCIATED WITH THIS effective annual rate of .75% against the daily
CONTRACT? net asset value of the Separate Account,
including that portion of the Account
attributable to your Purchase Payments. These
charges consist of an administrative expense
charge of .35% and a mortality and expense risk
charge of .40%.
If your state assesses a premium tax with
respect to your Contract, we will deduct those
amounts from Purchase Payments or Contract Value
at the time the tax is incurred (or at another
time we choose). See Charges and Other
Deductions.
Finally, each portfolio pays a management fee to
its investment advisers based upon its average
daily net asset value. Each portfolio also has
additional operating expenses associated with
the daily operation of the Funds. See the
Expense Table. These fees and expenses are more
fully described in the prospectuses for the
Funds.
HOW MUCH MUST I PAY, AND You may purchase the contract for $1000.00.
HOW OFTEN? After that, Purchase Payments are flexible,
although some limitations on the amounts may
apply. See The Contract - Purchase Payments.
HOW WILL MY ANNUITY When you annuitize, you elect an Annuity Payment
PAYOUTS BE CALCULATED? Option. Once you have done so, your Annuity
Payout will be based upon a number of factors.
One factor will be the changing values of the
Subaccounts to which you have allocated funds.
Another factor will be your age at the
Annuity Commencement Date. See Annuity Payouts.
WHAT HAPPENS IF I DIE We will pay the Contract Value to your
BEFORE I ANNUITIZE? designated Beneficiary. Your Beneficiary will
have certain options for how we pay the money
out. See the Death Benefit.
MAY I TRANSFER CONTRACT Yes, but there may be limits on how often you
VALUE AMONG SUBACCOUNTS? may do so. Transfers are limited to three times
annually after the Annuity Commencement Date.
See Transfers.
7
<PAGE>
MAY I SURRENDER THE Yes, subject to Contract requirements. See
CONTRACT OR MAKE A Surrenders and Withdrawals.
WITHDRAWAL?
If you surrender the Contract or make a
withdrawal, certain charges may be assessed, as
discussed above and under Charges and Other
Deductions. In addition, if you take a
distribution before age 59 1/2 the Internal
Revenue Service may assess a 10% premature
withdrawal penalty tax. A surrender or a
withdrawal may be subject to tax withholding.
See Federal Tax Matters.
DO I GET A FREE LOOK AT Yes. If within ten days (or a longer period
THIS CONTRACT? if required by law) of the date you receive the
signed Contract through the Electronic Service
Center, you cancel the Contract through the
Electronic Service Center or return it, postage
prepaid to our Administrative Office, it will be
canceled. We will allocate your Purchase
Payments to the Subaccount investing in GE
Investments Funds' Money Market Fund until we
deem the free look period to have expired.
Solely for this purpose, we deem the free look
period to expire 15 days after we deliver your
Contract to your personal folder.
If you exercise this right, we will cancel the
Contract as of the day we receive your request,
and send you a refund equal to the greater of
(1) your Contract Value plus any charges we have
deducted from your Purchase Payments prior to
the allocation to the Separate Account (and
excluding any charges the portfolios may have
deducted) on or before the date we received the
returned Contract, or (2) we will refund your
Purchase Payments made (less any withdrawals
previously taken). See Additional Information -
Return Privilege.
MAY I RECEIVE MATERIALS IN Yes. You may receive any materials in writing,
WRITING FROM GE LIFE & such as the prospectuses and annual reports, by
ANNUITY? contacting our Administrative Office or by
e-mailing our Electronic Service Center. In
addition, at any time, you may revoke your
consent to receive materials electronically by
writing our Administrative Office.
================================================================================
INVESTMENT RESULTS
================================================================================
At times, the Separate Account may compare its investment results to various
unmanaged indices or other variable annuities in reports to shareholders,
sales literature, and advertisements. We will calculate the results on a
total return basis for various periods. Total returns include the reinvestment
of all distributions. Total returns reflect portfolio charges and expenses, the
administrative expense charge, and the mortality and expense risk charge.
Total returns do not reflect any premium taxes. See the SAI for further
information.
8
<PAGE>
================================================================================
FINANCIAL STATEMENTS
================================================================================
The consolidated financial statements of GE Life and Annuity Assurance Company
and subsidiary (formerly The Life Insurance Company of Virginia), and GE Life &
Annuity Separate Account 4 (formerly Life of Virginia Separate Account 4), are
located in the Statement of Additional Information ("SAI"). If you would like a
free hard copy of the SAI, please contact our Electronic Service Center at
http://ww.annuitynet.com. Otherwise, the SAI is available on the SEC's website
at http://www.sec.gov.
================================================================================
GE LIFE AND ANNUITY ASSURANCE COMPANY
================================================================================
We are a stock life insurance company operating under a charter granted
by the Commonwealth of Virginia on March 21, 1871. We principally offer life
insurance and annuity policies. We may do business in 49 states and the District
of Columbia. Our principal offices are at 6610 West Broad Street, Richmond,
Virginia 23230. Before January 1, 1999, our name was The Life Insurance Company
of Virginia.
General Electric Capital Assurance Company ("GE Capital Assurance") owns the
majority of our capital stock, and Federal Home Life Insurance Company and
Phoenix Home Group, Inc. own the remainder. GE Capital Assurance and Federal are
indirectly owned by GE Financial Assurance Holdings Inc which is a wholly owned
subsidiary of General Electric Capital Corporation ("GE Capital"). GE Capital, a
New York corporation, is a diversified financial services company whose
subsidiaries consist of specialty insurance, equipment management, and
commercial and consumer financing businesses. GE Capital's indirect parent,
General Electric Company, founded more than one hundred years ago by Thomas
Edison, is the world's largest manufacturer of jet engines, engineering
plastics, medical diagnostic equipment, and large electric power generation
equipment.
GNA Corporation, a direct wholly owned subsidiary of GE Financial
Assurance Holdings, Inc., directly owns the stock of Capital Brokerage
Corporation (the principal underwriter for the Contracts and a broker/dealer
registered with the U.S. Securities and Exchange Commission).
We are a member of the Insurance Marketplace Standards Association
("IMSA"). We may use the IMSA membership logo and language in our
advertisements, as outlined in IMSA's Marketing and Graphics Guidelines.
Companies that belong to IMSA subscribe to a set of ethical standards covering
the various aspects of sales and service for individually sold life insurance
and annuities.
9
<PAGE>
================================================================================
SEPARATE ACCOUNT
================================================================================
We established the Separate Account as a separate investment account on
August 19, 1987. The Separate Account may invest in mutual funds, unit
investment trusts, managed separate accounts, and other portfolios. We use the
Separate Account to support the Contract as well as for other purposes permitted
by law.
The Separate Account currently has 25 Subaccounts that are available under the
Contract, but that number may change in the future. Each Subaccount invests
exclusively in shares representing an interest in a separate corresponding
portfolio of the Funds described below. We allocate net Purchase Payments in
accordance with your instructions after we deem the free look period to have
ended.
The assets of the Separate Account belong to us. Nonetheless, we do not
charge the assets in the Separate Account attributable to the Contracts with
liabilities arising out of any other business which we may conduct. The assets
of the Separate Account shall, however, be available to cover the liabilities of
our general account to the extent that the assets of the Separate Account exceed
its liabilities arising under the Contracts supported by it. Income and both
realized and unrealized gains or losses from the assets of the Separate Account
are credited to or charged against the Separate Account without regard to the
income, gains, or losses arising out of any other business we may conduct.
We registered the Separate Account with the SEC as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"). The Separate Account
meets the definition of a separate account under the federal securities
laws. Registration with the SEC does not involve supervision of the management
or investment practices or policies of the Separate Account by the SEC. You
assume the full investment risk for all amounts you allocate to the Separate
Account.
THE FUNDS There is a separate Subaccount which corresponds
to each portfolio of a Fund offered in this
Contract. You decide the Subaccounts to which
you allocate net Purchase Payments after we deem
the free look period to have ended. You may
change your allocation without penalty or
charges. Each Fund is registered with the
Securities and Exchange Commission as an
open-end management investment company under the
1940 Act. The assets of each portfolio are
separate from other portfolios of a Fund and
each portfolio has distinct investment
objectives and policies. As a result, each
portfolio operates as a separate portfolio and
the investment performance of one portfolio has
no effect on the investment performance of any
other portfolio.
10
<PAGE>
Before allocating your net Purchase Payments and
Contract Value to a Subaccount, carefully read
the prospectus for each Fund, along with this
prospectus. We summarize the investment
objectives of each portfolio below. There is no
assurance that any of the portfolios will meet
these objectives. We do not guarantee any
minimum value for the amounts you allocate to
the Separate Account. You bear the investment
risk of investing in the portfolios.
The investment objectives and policies of
certain portfolios may be similar to the
investment objectives and policies of other
portfolios that may be managed by the same
investment adviser or manager, but are not
available under the Contract. The investment
results of the portfolios, however, may be
higher or lower than the results of such other
portfolios. There can be no assurance, and no
representation is made, that the investment
results of any of the portfolios will be
comparable to the investment results of any
other portfolio, even if the other portfolio has
the same investment adviser or manager, or if
the other portfolio has a similar name.
SUBACCOUNTS We offer you a choice from among 25 Subaccounts,
each of which invests in an underlying portfolio
of one of the Funds.
<TABLE>
<S> <C>
- ------------------------- -------------------------------------------------- ----------------------------
SUBACCOUNT INVESTMENT OBJECTIVES ADVISER (AND SUB-
ADVISER, AS APPLICABLE)
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
========================= ================================================== ============================
AIM VARIABLE INSURANCE Objective is to achieve long-term growth of AIM Advisors, Inc.
FUNDS, INC. capital. The fund seeks to meet this objective by (Subadvised by INVESCO
Aggresive Growth Fund investing primarily in common stocks, convertible Asset Management Limited)
bonds, convertible preferred stocks and warrants
of small and medium sized companies whose
earnings the fund's portfolio managers expect to
grow more than 15% per year. The fund may also
invest up 25% of its total assets in foreign
securities.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is growth of capital through investment AIM Advisors, Inc.
FUNDS, INC. in common stocks, with emphasis on medium and (Subadvised by INVESCO
Capital Appreciation small sized growth companies. Asset Management Limited)
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is long-term growth of capital. The AIM Advisors, Inc.
FUNDS, INC. fund seeks to meet this objective by investing (Subadvised by INVESCO
Capital Development Fund primarily in securities, including common stocks, Asset Management Limited)
Convertible securities and bonds, of small and
medium sized companies. The fund may also invest
up to 25% of its total assets in foreign
securities.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective are to achieve a high level of current AIM Advisors, Inc.
FUNDS, INC. income and secondarily, growth of capital, by (Subadvised by INVESCO
Global Utilities Fund investing primarily in the common and preferred Asset Management Limited)
stocks of public utility companies (either
domestic or foreign). The fund seeks to meet
these objectives by investing, normally, at least
65% of its total assets in securities of domestic
and foreign public utility companies.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is to achieve a high level of current AIM Advisors, Inc.
FUNDS, INC. income consistent with reasonable concern for (Subadvised by INVESCO
Government Securities Fund safety of principal by investing in debt Asset Management Limited)
securities issued, guaranteed or otherwise backed
by the United States Government.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is growth of capital with a secondary AIM Advisors, Inc.
FUNDS, INC. objective of current income. The fund seeks to (Subadvised by INVESCO
Growth and Income Fund meet these objectives by investing at least 65% Asset Management Limited)
of its net assets in income producing securities,
including dividend paying common stocks and
convertible securities.
- ------------------------- -------------------------------------------------- ----------------------------
AIM VARIABLE INSURANCE Objective is long-term growth of capital. The AIM Advisors, Inc.
FUNDS, INC. fund seeks to meet this objective by investing (Subadvised by INVESCO
Telecommunications Fund primarily in equity securities of companies Asset Management Limited)
throughout the world engaged in the development,
manufacture or sale of telecommunications
services or equipment. The fund will invest,
normally, at least 65% of its total assets in
common and preferred stocks and warrants to
acquire such stocks issued by
telecommunications companies.
- ------------------------- -------------------------------------------------- ----------------------------
12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
========================= ================================================== ============================
FIDELITY VARIABLE Seeks long-term growth of capital by investing at Fidelity Management &
INSURANCE least 65% of total assets in foreign securities, Research Company
PRODUCTS FUND primarily in common stocks. (Subadvised by Fidelity
VIP Overseas Portfolio Management & Research (U.K.)
Inc., Fidelity
Management & Research Far
East Inc., Fidelity
International Investment
Advisors and Fidelity
International Investment
Advisors (U.K.) Limited)
- ------------------------- -------------------------------------------------- ----------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
========================= ================================================== ============================
FIDELITY VARIABLE Seeks high total return through a combination of Fidelity Management
INSURANCE current income and capital appreciation by & Research Company
PRODUCTS FUND III investing a majority of assets in common stocks (Subadvised by Fidelity
VIP III Growth & Income with a focus on those that pay current dividends Management & Research
Portfolio and show potential for capital appreciation. (U.K.) Inc. and Fidelity
Management & Research
Far East Inc.)
- ------------------------- -------------------------------------------------- ----------------------------
FIDELITY VARIABLE Seeks to provide capital growth by investing Fidelity Management &
INSURANCE PRODUCTS primarily in common stock and other types of Research Company
FUND III securities, including bonds, which may be (Subadvised by Fidelity
VIP III Growth lower-quality debt securities. Management & Research
Opportunities Portfolio (U.K.) Inc. and Fidelity
Management & Research Far
East Inc.)
- ------------------------- -------------------------------------------------- ----------------------------
FIDELITY VARIABLE Seeks long-term growth of capital investing Fidelity Management & Research
INSURANCE primarily in common stocks and at least 65% of Company (subadvised by
PRODUCTS FUND III total assets in securities of companies Fidelity Management
VIP III Mid-Cap Portfolio with medium market capitalizations. & Research (U.K.), Inc. and
Fidelity Management &
Research Far East, Inc.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS, INC
========================= ================================================== ============================
GE INVESTMENTS FUNDS Objective of providing maximum income consistent GE Asset
Income Fund with prudent investment management and Management Incorporated
preservation of capital by investing primarily
in income-bearing debt securities and other income
bearing instruments.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long-term growth of capital GE Asset
International Equity Fund by investing primarily in foreign equity and Management Incorporated
equity-related securities which the Adviser
believes have long-term potential for capital
growth.
13
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing highest level of current GE Asset
Money Market Fund income as is consistent with high liquidity and Management Incorporated
safety of principal by investing in various
types of good quality money market securities.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long-term growth of GE Asset
Premier Growth capital as well as future (rather than current) Management Incorporated
Equity Fund income by investing primarily in growth-oriented
equity securities.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing maximum total return GE Asset
Real Estate Securities through current income and capital appreciation by Management
Fund investing primarily in securities of U.S. issuers Incorporated
that are principally engaged in or related to the (Subadvised by
real estate industry including those that own Seneca Capital
significant real estate assets. The portfolio Management, L.L.C.)
will not invest directly in real estate.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing capital appreciation and GE Asset Management
S&P 500 Index Fund(1) accumulation of income that corresponds to the Incorporated
investment return of the Standard & Poor's 500 (Subadvised by
Composite Stock Price Index through investment State Street Global
in common stocks comprising the Index. Advisors)
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing the highest total return, GE Asset
Total Return Fund composed of current income and capital Management Incorporated
appreciation, as is consistent with prudent
investment risk by investing in common stock,
bonds and money market instruments, the
proportion of each being continuously
determined by the investment adviser.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long-term growth of GE Asset Management
U.S. Equity Fund capital through investments primarily in equity Incorporated
securities of U.S. companies.
- ------------------------- -------------------------------------------------- ----------------------------
GE INVESTMENTS FUNDS Objective of providing long term growth of capital GE Asset
Value Equity Fund by investing primarily in common stock and other Management
equity securities of companies that the investment Incorporated
adviser believes are undervalued by the (Subadvised by
marketplace at the time of purchase and that offer NWQ Investment
the potential for above-average growth of capital. Management
Although the current portfolio reflects Company)
investments primarily within the mid cap range,
the Fund is not restricted to investments within
any particular capitalization and may in the
future invest a majority of its assets in another
capitalization range.
- ------------------------- -------------------------------------------------- ----------------------------
(1) "Standard & Poor's", "S&P", and "S&P 500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by GE Investment Management
Incorporated. The S&P 500 Index Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard and Poor's makes no representation
or warranty, express or implied, regarding the advisability of investing in this
Fund of the Policy.
14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
JANUS ASPEN SERIES
========================= ================================================== ============================
JANUS ASPEN SERIES Seeks long-term growth of capital. Pursues this Janus Capital
Capital Appreciation objective by investing primarily in common Corporation
Portfolio stocks of companies of any size.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks current income and long-term growth of Janus Capital
Equity Income Portfolio capital. It pursues its objective by normally Corporation
emphasizing investments in common stock, and
growth potential is a significant investment
consideration.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks maximum total return consistent with Janus Capital
Flexible Income Portfolio preservation of capital. Total return is expected Corporation
to result from a combination of income and capital
appreciation. The portfolio pursues its objective
primarily by investing in any type of
income-producing securities. This portfolio
may have substantial holdings of lower-rated debt
securities or "junk" bonds. The risks of
investing in junk bonds are described in the
prospectus for Janus Aspen Series, which
should be read carefully before investing.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks to obtain a high current income. Capital Janus Capital Corporation
High-Yield Portfolio appreciation is secondary objective when
consistent with its primary objective. It pursues
its objectives by normally investing 65% of its
assets in high-yield-risk fixed-income securities,
and may at time invest all of its assets in these
securities.
- ------------------------- -------------------------------------------------- ----------------------------
JANUS ASPEN SERIES Seeks long term growth of capital. Normally, the Janus Capital Corporation
International Growth Portfolio pursues its objective by investing at
Portfolio least 65% of its total assets in securities
of issuers from at least five different countries,
excluding the United States. Although the
Portfolio intends to invest substantially all of
its assets in issuers outside of the United States,
it may at times invest in U.S. issuers and
it may at times invest all of its assets in fewer
than five countries or even a single country.
========================= ================================================== ============================
</TABLE>
- --------
Not all of these portfolios may be available in all states or markets.
15
<PAGE>
We will purchase shares of the portfolios at net
asset value and direct them to the appropriate
Subaccounts of the Separate Account. We will
redeem sufficient shares of the appropriate
portfolios at net asset value to pay Death
Benefits and surrender/withdrawal proceeds, to
make Annuity Payouts, or for other purposes
described in the Contract. We automatically
reinvest all dividend and capital gain
distributions of the portfolios in shares of the
distributing portfolios at their net asset value
on the date of distribution. In other words, we
do not pay portfolio dividends or portfolio
distributions out to Owners as additional units,
but instead reflect them in unit values.
Shares of the Funds are not sold directly to the
general public. They are sold to the Company and
they may also be sold to other insurance
companies that issue variable annuity and
variable life insurance policies. In addition,
they may be sold to retirement plans.
When a Fund sells shares in any of its
portfolios both to variable annuity and to
variable life insurance separate accounts, it
engages in mixed funding. When a Fund sells
shares in any of its portfolios to separate
accounts of unaffiliated life insurance
companies, it engages in shared funding.
Each Fund may engage in mixed and shared
funding. Therefore, due to differences in
redemption rates or tax treatment, or other
considerations, the interests of various
shareholders participating in a Fund could
conflict. A Fund's Board of Directors will
monitor for the existence of any material
conflicts, and determine what action, if any,
should be taken. See the prospectuses for the
Funds.
We have entered into agreements with either the
investment adviser or distributor of each of the
Funds under which the adviser or distributor
pays us a fee ordinarily based upon a percentage
of the average aggregate amount we have invested
on behalf of the Separate Account and other
separate accounts. These percentages differ, and
some investment advisers or distributors pay us
a greater percentage than other advisers or
distributors. These agreements reflect
administrative services we provide.
CHANGES TO THE SEPARATE We reserve the right, within the law, to make
ACCOUNT AND THE SUBACCOUNTS additions, deletions and substitutions for the
Funds and/or any portfolios within the Funds in
which the Separate Account participates. We may
substitute shares of other portfolios for shares
already purchased, or to be purchased in the
future, under the Contract. This substitution
might occur if shares of a portfolio should no
longer be available, or if investment in any
Fund's shares should no longer be available, or
if investment in any portfolio's shares should
become inappropriate, in the judgment of our
management, for the purposes for the Contract.
We cannot substitute shares attributable to your
Contact without prior notice to you and before
approval of the SEC, in accordance with the 1940
Act. We will also inform you within fifteen (15)
days after such substitution occurs. We will
notify you before and after the substitution by
placing a notice in your personal folder at the
Electronic Service Center. This notice will also
be sent to your e-mail address on file with us.
16
<PAGE>
We also reserve the right to establish
additional Subaccounts, each of which would
invest in a separate portfolio of a Fund, or in
shares of another investment company, with a
specified investment objective. We may also
eliminate one or more Subaccounts if, in our
sole discretion, marketing, tax, or investment
conditions warrant. We may combine existing
Subaccounts.
If permitted by law, we may deregister the
Separate Account under the 1940 Act in the event
such registration is no longer required, manage
the Separate Account under the direction of a
committee, create new separate accounts, or
combine the Separate Account with other separate
accounts of the Company. Further, to the extent
permitted by applicable law, we may transfer the
assets of the Separate Account to another
separate account.
================================================================================
CHARGES AND OTHER DEDUCTIONS
================================================================================
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the Contracts. We incur certain
costs and expenses for the distribution and administration of the Contracts and
for providing the benefits payable thereunder. Our administrative services
include:
o processing applications for and issuing the Contracts;
o processing purchases and redemptions of portfolio shares as
required;
o maintaining records;
o telephone transfers;
o administering Annuity Payouts;
o furnishing accounting and valuation services (including the
calculation and monitoring of daily Subaccount values);
o reconciling and depositing cash receipts;
o providing Contract confirmations and periodic statements; and
O providing Electronic services.
17
<PAGE>
The risks we assume include:
o the risk that the actual life-span of persons receiving Annuity Payouts
under the Contract will exceed the assumptions reflected in our
guaranteed rates (these rates are incorporated in the Contract and
cannot be changed); and
o the risk that our costs in providing the services will exceed our
revenues from Contract charges (which cannot be changed by us).
The amount of a charge may not necessarily correspond to the costs associated
with providing the services or benefits indicated by the designation of the
charge. We also may realize a profit on one or more of the charges. We may use
any such profits for any corporate purpose, including the payment of sales
expenses.
DEDUCTIONS FROM THE We deduct from the Separate Account an amount,
SEPARATE ACCOUNT computed daily, which is equal to an annual rate
of 0.75% of the daily net asset value. This is
our annuity asset charge. This charge consists
of an administrative expense charge of .35% and
a mortality and expense risk charge of .40%. We
will pay an administrative expense charge to
AnnuityNet, P.O. Box 691, Leesburg, VA 20178 for
the services it provides. AnnuityNet maintains
the Electronic Service Center, processes
applications, and performs various other
administrative services. These deductions are
reflected in your Contract Value.
DEDUCTIONS FOR PREMIUM Any premium tax or other tax levied by any
TAXES governmental entity as a result of the existence
of the Contracts or the Separate Account will be
deducted from the Contract Value when incurred,
or at another time of our choosing.
The applicable premium tax rates that states and
other governmental entities impose on the
purchase of an annuity are subject to change by
legislation, by administrative interpretation or
by judicial action. These premium taxes will
vary, generally depending upon the law of your
state of residence. In those states which tax
these premiums, the tax generally ranges from
0% to 3%.
OTHER CHARGES AND There are deductions from and expenses paid out
DEDUCTIONS of the assets of the underlying Funds that are
more fully described in the prospectuses for the
Funds.
In addition, we reserve the right to impose a
$10.00 transfer charge.
18
<PAGE>
================================================================================
THE CONTRACT
================================================================================
The Contract is an individual flexible premium variable deferred annuity
Contract. We describe your rights and benefits below and in the Contract. Your
Contract may differ in certain respects from the description below because of
the requirements of the state where we issued your Contract. In addition, we
reserve the right to amend the Contract to meet the requirements of the 1940 Act
or other applicable federal or state laws or regulations. You will be notified
of any changes, modifications, or waivers through the Electronic Service Center.
PURCHASE OF THE CONTRACT If you wish to purchase the Contract, you must
apply for it by downloading, completing,
signing, and then sending the application to our
Administrative Office. When we receive the
completed application, we decide whether to
accept or reject it. If the application is
accepted, the Contract is prepared and executed
by our legally authorized officers. The Contract
is then provided to you through the Electronic
Service Center. See Distribution of the
Contracts.
Once a completed application and all other
information necessary for processing a purchase
order are received, we will apply your initial
Purchase Payment no later than two business days
after we receive the order. While attempting to
finish an incomplete application, we may hold
the initial Purchase Payment for no more than
five business days. If an incomplete application
cannot be completed within those five days, you
will be informed of the reasons, and the
Purchase Payment will be returned immediately
(unless you specifically authorize us to keep it
until the application is complete). Once the
application is complete, we must apply the
initial Purchase Payment within two business
days.
Purchase Payments can be made electronically by
an electronic fund transfer ("EFT"), wired or
mailed to: GE Life and Annuity Assurance
Company, P. O. Box 691, Leesburg, VA 20178.
To apply for a Contract, you must be of legal
age in a state where we may lawfully sell the
Contract. The Annuitant cannot be older than age
85 at the time of issue.
OWNERSHIP As the Owner, you have all the rights under the
Contract, subject to the rights of any
irrevocable Beneficiary. According to Virginia
law, the assets in the Separate Account equal to
the Contract liabilities are held for the
exclusive benefit of all Owners and their
designated Beneficiaries. You may not assign
your Contract without our permission.
19
<PAGE>
If you name a joint Owner in the application, we
will treat the joint Owners as having equal
undivided interests in the Contract. Either
joint Owner, independently of the other, may
exercise any ownership rights in the Contract.
PURCHASE PAYMENTS You may make Purchase Payments at a frequency
and in the amount you select, subject to certain
limitations. You must obtain our approval before
you make total Purchase Payments for an
Annuitant age 79 or younger that exceed $2
million. If the Annuitant is age 80 or older at
the time of payment, the total amount not
subject to prior approval is $1 million. The
minimum initial Purchase Payment is $1,000.
Subsequent Purchase Payments must be at least
$100. Payments may be made or, if stopped,
resumed at any time until the Annuity
Commencement Date, the surrender of the
Contract, or the death of the Owner (or joint
Owner, if applicable), whichever comes first. We
reserve the right to refuse to accept a Purchase
Payment for any lawful reason.
VALUATION DATE We will value Accumulation Units and Annuity
Units once daily at the close of regular trading
(currently, 4:00 p.m. New York time) on each day
the New York Stock Exchange is open except for
days on which a corresponding portfolio does not
value its shares (Valuation Date). If a
Valuation Period contains more than one day, the
unit values will be the same for each day in the
Valuation Period.
ALLOCATION OF PURCHASE After we deem the free look period to end (15
PAYMENTS days after we deliver your Contract to your
personal folder), we place Purchase Payments
into the Separate Account's Subaccounts.
Following your allocation instructions, each
Subaccount invests in shares of the
corresponding portfolios of the Funds.
Upon allocation to the appropriate Subaccount,
we convert net Purchase Payments into
Accumulation Units. We determine the number of
Accumulation Units credited by dividing the
amount allocated to each Subaccount by the value
of an Accumulation Unit for that Subaccount on
the Valuation Date on which we receive the
Purchase Payment at our Administrative Office if
received before 4:00 p.m., New York time. If we
receive the Purchase Payment at or after 4:00
p.m, New York time, we will use the Accumulation
Unit value computed on the next Valuation Date.
The number of Accumulation Units determined in
this way is not changed by any subsequent change
in the value of an Accumulation Unit. However,
the dollar value of an Accumulation Unit will
vary depending not only upon how well the
portfolio's investments perform, but also upon
the charges of the Separate Account and the fees
and expenses of the portfolios.
20
<PAGE>
You may change the allocation of subsequent
Purchase Payments at any time, without charge,
by sending us acceptable notice through our
Electronic Service Center or in writing to our
Administrative Office. The new allocation will
apply to any Purchase Payments made after we
receive notice of the change.
VALUATION OF ACCUMULATION We value Accumulation Units for each Subaccount
UNITS separately. Initially, we arbitrarily set the
value of each Accumulation Unit at $10.00.
Thereafter, the value of an Accumulation Unit in
any Subaccount for a Valuation Period equals the
value of an Accumulation Unit in that Subaccount
as of the preceding Valuation Period multiplied
by the net investment factor of that Subaccount
for the current Valuation Period.
The net investment factor is an index used to
measure the investment performance of a
Subaccount from one Valuation Period to the
next. The net investment factor for any
Subaccount for any Valuation Period reflects the
change in the net asset value per share of the
portfolio held in the Subaccount from one
Valuation Period to the next, adjusted for the
daily deduction of the administrative expense
and mortality and expense risk charges from
assets in the Subaccount. If any "ex-dividend"
date occurs during the Valuation Period, we take
into account the per share amount of any
dividend or capital gain distribution so that
the unit value is not impacted. Also, if we need
to reserve money for taxes, we take into account
a per share charge or credit for any taxes
reserved which we determine to have resulted
from the operations of the Subaccount.
================================================================================
TRANSFERS
================================================================================
TRANSFERS BEFORE THE Before the earliest of the surrender of the
ANNUITY COMMENCEMENT DATE Contract, payment of any Death Benefit, and the
Annuity Commencement Date, you may transfer all
or a portion of your Contract Value between and
among the Subaccounts of the Separate Account,
subject to certain conditions. We process
transfers among the Subaccounts of the Separate
Account as of the end of the Valuation Period
that we receive the transfer request through our
Electronic Service Center or in writing at
our Administrative Office. We may postpone
transfers to, from, or among the Subaccounts
of the Separate Account, under certain
circumstances. See Requesting Payments.
21
<PAGE>
We may restrict certain transfers from the
Subaccounts. Currently, there is no limit on the
number of transfers between and among
Subaccounts of the Separate Account; however,
upon written notice we reserve the right to
limit the number of transfers each calendar
year, if it is necessary for the Contract to
continue to be treated as an annuity contract by
the Code, a lower number. We do not currently
charge for transfers. However, we reserve the
right to assess a charge of $10.00 per transfer.
Any transfer charge will be taken from the
amount transferred. In addition we reserve the
right to revise the transfer privilege at any
time.
Sometimes, we may not honor your transfer
request. We may not honor your transfer
request if:
(1) any Subaccount that would be
affected by the transfer is unable
to purchase or redeem shares of the
portfolio in which the Subaccount
invests; or
(2) the transfer is a result of more
than one trade involving the same
Subaccount within a 30 day
period; or
(3) the transfer would adversely affect
Accumulation Unit values (which may
occur if the transfer would affect
one percent or more of the relevant
portfolio's total assets); or
(4) the transfer would adversely affect
any portfolio affected by the
transfer.
We also may not honor transfers made by third
parties. See Transfers by Third Parties.
When thinking about a transfer of Contract
Value, you should consider the inherent risk
involved. Frequent transfers based on short-term
expectations may increase the risk that you will
make a transfer at an inopportune time.
TRANSFERS BY THIRD PARTIES As a general rule and as a convenience to you,
we allow the use of transfers by third parties
whereby you give third parties the right to
effect transfers on your behalf. However, when
the same third party possesses this ability on
behalf of many Owners, the result can be
simultaneous transfers involving large amounts
of Contract Value. Such transfers can disrupt
the orderly management of the portfolios
underlying the Contract, can result in higher
costs to Owners, and are generally not
compatible with the long-range goals of Owners.
We believe that such simultaneous transfers
effected by such third parties are not in the
best interests of all shareholders of the Funds
underlying the Contracts, and the managements of
the Funds share this position. Therefore, as
described in your Contract, we may limit
transfers made by a third party.
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TRANSFERS AFTER THE You may transfer all or a portion of your
ANNUITY COMMENCEMENT DATE Annuity Units from one Subaccount to another
Subaccount after the Annuity Commencement Date.
These transfers will be limited to three times
per Contract Year after the Annuity Commencement
Date. If you request a transfer from a
Subaccount, all of the Annuity Units in that
Subaccount must be transferred to a single
different Subaccount. Currently, there is no
charge for these transfers. However, we reserve
the right to impose a charge in the future for
these transfers.
TELEPHONE TRANSFERS In the event that the Electronic Service Center
is unable to accept Subaccount transfer requests
through the Internet, transfer requests will be
accepted by the AnnuityNet.com call center at
its toll free number (1-877-569-3789). We may be
liable for losses resulting from unauthorized or
fraudulent telephone transfers if we fail to
employ reasonable procedures to confirm that the
telephone instructions that we receive are
genuine. Therefore, we will employ means to
prevent unauthorized or fraudulent telephone
requests, such as recording telephone requests
and/or requesting other identifying information.
In addition, we will require written
authorization before allowing you to make
telephone transfers. We reserve the right to
limit telephone transactions. The call center
toll free number can be found in any of your
AnnuityNet.com confirmation emails. We will
process telephone transfer requests as of the
end of the Valuation Period that the call center
receives the request.
================================================================================
SURRENDERS AND WITHDRAWALS
================================================================================
Subject to the rules discussed below, we will allow the surrender of your
Contract in whole or in part at any time before the Annuity Commencement
Date upon your written request through our Electronic Service Center or in
writing to our Administrative Office.
We will not permit a withdrawal that is less than $300 or that reduces
Contract Value to less than $1,000. If your withdrawal request would reduce
Contract Value to less than $1,000, we will pay out only that amount of Contract
Value that would reduce the remaining Contract Value to $1,000.
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The amount payable on full surrender of the Contract is the Contract Value at
the end of the Valuation Period during which we receive the request less any
applicable premium tax charge (the "Contract Surrender Value"). We may
pay the Contract Surrender Value in a lump sum or under one of the Annuity
Payment Options specified in the Contract, based on your instructions.
Unless otherwise requested, we will deduct the amount of the withdrawal
from the Subaccounts on a pro-rata basis.
SYSTEMATIC WITHDRAWALS
You may elect in writing on our form to take systematic withdrawals of a
specified dollar amount (in equal installments of at least $300) on a monthly,
quarterly, semi-annual or annual basis. Payments can begin at any time after 30
days from the Policy Date. We will process the withdrawals by first taking on a
pro-rata basis Accumulation Units from all of the Subaccounts in which you have
an interest. After systematic withdrawals begin, you may change the frequency
and/or amount of your payments, once each calendar quarter:
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Contract Value to be less than $1,000. If a
systematic withdrawal would cause the Contract Value to be less than $1,000,
then we will not process that systematic withdrawal transaction. You may
discontinue systematic withdrawals at any time by notifying us through the
Electronic Service Center or in writing to our Administrative Office.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to federal income taxes on any portion considered gain for
tax purposes. In addition, you may be assessed a 10% federal penalty tax on
systematic withdrawals if you are under age 59 1/2 at the time of the
withdrawal.
We also reserve the right to discontinue systematic withdrawals upon 30 days
written notice to Owners. Notice will be provided to you by the Electronic
Service Center or U.S. mail.
================================================================================
THE DEATH BENEFIT
================================================================================
DEATH BENEFIT BEFORE THE Upon due proof of the Owner's death before the
ANNUITY COMMENCEMENT DATE Annuity Commencement Date (generally, due proof
is a certified copy of the death certificate or
a certified copy of the decree of a court of
competent jurisdiction as to the finding of
death) along with the completed forms described
in your Contract, we will treat the Death
Benefit in accordance with the Beneficiary's
instructions, subject to the distribution rules
and termination of contract provisions described
below. The Death Benefit will be the Contract
Surrender Value at the date of payment.
In certain circumstances, federal tax law
requires that distributions under the Contract
be made upon the first death of :
o an Owner or joint Owner; or
o the Annuitant if any Owner is a non-
natural entity (such as a trust or
corporation).
The discussion below describes the methods
available for distributing the Contract
Surrender Value upon death.
At the death of any Owner (or Annuitant, if any
Owner is a non-natural entity), the person or
entity first listed below who is alive or in
existence on the date of that death will become
the designated Beneficiary:
(1) Owner or joint Owners;
(2) Primary Beneficiary;
(3) Contingent Beneficiary; or
(4) Owner's estate.
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We then will treat the designated Beneficiary as
the sole Owner of the Contract. If there is more
than one designated Beneficiary, we will treat
each one separately and apply the tax laws
described below.
DISTRIBUTION RULES The distributions required by federal tax law
differ depending on whether the designated
Beneficiary is the spouse of the deceased Owner
(or of the Annuitant, if the Contract is owned
by a non-natural entity).
o SPOUSES. If the designated Beneficiary is
the surviving spouse of the deceased
person, we will continue the Contract in
force with the surviving spouse as the new
Owner. If the deceased person was the
Annuitant and there was no surviving
Contingent Annuitant, the surviving spouse
will automatically become the new
Annuitant. At the death of the surviving
spouse, this provision may not be used
again, even if the surviving spouse
remarries. Instead, the rules for non-
spouses will apply.
o NON-SPOUSES. If the designated Beneficiary
is not the surviving spouse of the deceased
person, this Contract cannot be continued
in force indefinitely. Instead, upon the
death of any Owner (or Annuitant, if any
Owner is a non-natural entity), payments
must be made to (or for the benefit of) the
designated Beneficiary under one of the
following payment choices:
(1) Receive the Contract Surrender Value in
one lump sum payment.
(2) Receive the Contract Surrender Value at
any time during the five year period
following the date of death. At the end
of the five year period, we will pay a
lump sum payment of any Contract
Surrender Value remaining.
(3) Apply the Contract Surrender Value to
an Annuity Payment Option with certain
restrictions.
If no choice is made by the designated
Beneficiary within 60 days following receipt of
due proof of death, we will use payment choice 2
(payment of the entire value of the Contract
within 5 years of the date of death) if the
Beneficiary is an individual. We will not accept
any Purchase Payments after the non-spouse's
death. If the designated Beneficiary dies before
we have distributed the entire value of the
Contract, including interest accruing after the
date of death, we will pay in a lump sum payment
of any value still remaining to the person named
by the designated Beneficiary. If no person is
so named, we will pay the designated
Beneficiary's estate.
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<PAGE>
Under payment choices 1 or 2, the Contract will
terminate upon payment of the entire value of
the Contract, including interest accruing after
the date of death. Under payment choice 3, this
Contract will terminate when we apply the
Contract Surrender Value to provide Annuity
Payouts.
================================================================================
ANNUITY PAYOUTS
================================================================================
When you apply for a Contract, you may select any Annuity Commencement Date
permitted by law provided that the Annuity Commencement Date occurs before
the Annuitant's (or the elder of the joint Annuitants') 90th birthday.
Unless you elect otherwise, we will pay a monthly annuity benefit to the Owner
beginning on the Annuity Commencement Date if the Annuitant is still living. We
will pay the monthly annuity benefit under the Annuity Payment Option which
provides a life annuity with annuity payments guaranteed for 10 years,
using the gender and settlement age of the Annuitant instead of the payee,
unless you make another election. Under this Option, if the Annuitant lives
longer than ten years, payments will continue for his or her life. If the
Annuitant dies before the end of ten years, we will discount the remaining
payments for the ten year period at the assumed investment rate used to
calculate the initial variable monthly annuity payment (for this purpose, we
assume that the amount of each payment equals the payment amount on the date we
receive due proof of death). We may pay this discounted amount in one sum.
You may select one of the forms of payment of annuities available under the
Contract (described below). Annuity payments under any of the Annuity
Payment Options are made on a monthly basis and, after the first payment, will
reflect the investment experience of the Subaccounts in which you allocated
Annuity Units.
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<PAGE>
ANNUITY PAYMENT OPTIONS
LIFE ANNUITY WITH This option guarantees periodic payments during
PERIOD CERTAIN the lifetime of the Annuitant, with payments
guaranteed for at least a minimum period. The
minimum period is selected by the Owner, and can
be 0, 10 or 20 years. If the Annuitant dies
after payments have begun, but before the end of
the selected minimum period, the person entitled
to the remaining payments may be able to receive
the discounted value of those payments in a lump
sum. The amount of remaining payments for the
minimum period will be discounted at the same
rate used in calculating the initial variable
monthly annuity payment. Discounted means we
will adjust for the fact that, because each
remaining payment is being made early, it does
not earn any additional investment return.
JOINT LIFE ANNUITY This option provides periodic payments during
the joint lifetime of the Annuitant and a
designated joint Annuitant. The payments
continue during the lifetime of the surviving
Annuitant after the death of the first Annuitant
to die, and stop when both Annuitants have died.
GENERAL INFORMATION None of the options listed above currently
provide withdrawal features permitting the Owner
to withdraw commuted values as a lump sum
payment. We may make available other options,
with or without withdrawal features. The annuity
asset charge will be assessed on all variable
Annuity Payouts, including options that may be
offered that do not have a life contingency and
therefore no mortality risk.
Before the Annuity Commencement Date, you may
change:
o your Annuity Commencement Date (but you
must give us at least 14 days' notice
before payments are to begin and the
Annuitant(s) must be no older than 90 years
of age on the Annuity Commencement Date);
o your Annuity Payment Option;
o the allocation of your Contract Value among
the Subaccounts; and
o the primary Beneficiary, contingent
Beneficiary, and Contingent Annuitant
through our Electronic Service Center or in
writing to our Administrative Office if the
Annuitant is living. This policy may not be
assigned without our permission.
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<PAGE>
You may change any Beneficiary. A person named
irrevocably may be changed only with that
person's written consent. A change of
Beneficiary will revoke any previous
designation.
We must receive your request for a change in a
form acceptable to us. The change will take
effect as of the date we receive the request.
The change will be subject to any payment made
before we recorded the change.
ANNUITY PAYOUTS Variable Annuity Payouts will be determined
using:
1. The Contract Value on the Annuity
Commencement Date;
2. The annuity tables contained in the Contract;
3. The Annuity Payment Option selected; and
4. The investment performance of the Subaccounts
selected or transferred to.
To determine the amount of payment, we make this
calculation:
1. First, we determine the amount of the first
Annuity Payout; then
2. we allocate that amount to the Subaccounts
according to your instructions; then
3. we determine the number of Annuity Units
for each Subaccount by dividing the amount
allocated by the Annuity Unit value on the
day the payment is due; and finally
4. we calculate the value of the Annuity Units
for each Subaccount on the day the payment
is due for each Annuity Payout thereafter.
To calculate your Annuity Payouts, we need to
make an assumption regarding the investment
performance of the Subaccounts you select. We
call this your assumed investment rate. We
assume an investment rate of 5% per year, as
applied to the applicable mortality table. This
means that if the annualized investment
performance, after expenses, of your Subaccounts
is less than 5%, then the dollar amount of your
Annuity Payout will decrease. Conversely, if the
annualized investment performance, after
expenses, of your Subaccounts is greater than
5%, then the dollar amount of your Annuity
Payouts will increase. The age used to determine
the monthly payment amount may be subject to an
adjustment as provided in the Contract, which
could result in a lower Annuity Payout than
without the adjustment.
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================================================================================
FEDERAL TAX MATTERS
================================================================================
INTRODUCTION
This part of the prospectus discusses the federal income tax treatment of the
Contract. The federal income tax treatment of the Contract is complex and
sometimes uncertain. The federal income tax rules may vary with your particular
circumstances. This discussion does not address all of the federal income tax
rules that may affect you or your Contract. This discussion also does not
address other federal tax consequences, or state or local tax consequences,
associated with a Contract. As a result, you should always consult a tax adviser
about the application of tax rules to your individual situation.
TAX DEFERRAL ON EARNINGS. The federal income tax law does not tax any increase
in an Owner's Contract Value until there is a distribution from the Contract.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
o An individual must own the Contract (or the tax law must treat the
Contract as owned by an individual);
o The investments of the Separate Account must be "adequately
diversified" in accordance with Internal Revenue Service ("IRS")
regulations;
o The Owner's right to choose particular investments for a Contract must
be limited; and
o The Contract's Annuity Commencement Date must not occur near the end of
the Annuitant's life expectancy.
This part of the prospectus discusses each of these requirements.
CONTRACTS NOT OWNED BY AN INDIVIDUAL -- NO TAX DEFERRAL AND LOSS OF INTEREST
DEDUCTION. As a general rule, the Code does not treat a Contract that is owned
by an entity (rather than an individual) as an annuity contract for federal
income tax purposes. The entity owning the Contract pays tax currently on the
excess of the Contract Value over the premiums paid for the Contract. Contracts
issued to a corporation or a trust are examples of Contracts where the Owner
pays current tax on the Contract's earnings.
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<PAGE>
There are several exceptions to this rule. For example, the Code treats a
Contract as owned by an individual if the nominal Owner is a trust or other
entity that holds the Contract as an agent for an individual. However, this
exception does not apply in the case of any employer that owns a Contract to
provide deferred compensation for its employees.
In the case of a Contract issued to a taxpayer that is not an individual, or a
Contract held for the benefit of an entity, the entity will lose its deduction
for a portion of its otherwise deductible interest expenses. This disallowance
does not apply if the Owner pays tax on the annual increase in the Contract
Value. Entities that are considering purchasing the Contract, or entities that
will benefit from someone else's ownership of a Contract, should consult a tax
adviser.
INVESTMENTS IN THE SEPARATE ACCOUNT MUST BE DIVERSIFIED. For a Contract to be
treated as an annuity contract for federal income tax purposes, the investments
of a separate account such as the Separate Account must be "adequately
diversified". The IRS has issued regulations that prescribe standards for
determining whether the investments of the Separate Account are adequately
diversified. If the Separate Account fails to comply with these diversification
standards, the Owner could be required to pay tax currently on the excess of the
Contract Value over the Purchase Payments made under the Contract.
Although we do not control the investments of all of the Funds (we only
indirectly control those of GE Investments Funds, Inc., through an affiliated
company), we expect that the Funds will comply with the IRS regulations so that
the Separate Account will be considered "adequately diversified".
RESTRICTIONS ON THE EXTENT TO WHICH AN OWNER CAN DIRECT THE INVESTMENT OF
CONTRACT VALUES: Federal income tax law limits the Owner's right to choose
particular investments for the Contract. The U.S. Treasury Department stated in
1986 that it expected to issue guidance clarifying those limits, but it has not
yet done so. Thus, the nature of the limits is currently uncertain. As a result,
an Owner's right to allocate Contract Values among the portfolios may exceed
those limits. If so, the Owner would be treated as the owner of the assets of
the Separate Account and thus subject to current taxation on the income and
gains from those assets.
We do not know what limits the Treasury Department may set forth in any guidance
that the Treasury Department may issue or whether any such limits will apply to
existing Contracts. We therefore reserve the right to modify the Contract
without the Owners' consent to attempt to prevent the tax law from considering
the Owners as the owners of the assets of the Separate Account.
AGE AT WHICH ANNUITY PAYOUTS MUST BEGIN. Federal income tax rules do not
expressly identify a particular age by which Annuity Payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through Annuity Payouts, of the contract's premiums paid and
earnings. If Annuity Payouts under the Contract begin or are scheduled to begin
on a date that is near the end of the Annuitant's life expectancy, it is
possible that the tax law will not treat the Contract as an annuity contract for
federal income tax purposes. In that event, the Owner would be currently taxable
on the excess of the Contract Value over the Purchase Payments made under the
Contract.
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NO GUARANTEES REGARDING TAX TREATMENT: We make no guarantees regarding the tax
treatment of any Contract or of any transaction involving a Contract. However,
the remainder of this discussion assumes that your Contract will be treated as
an annuity contract for federal income tax purposes and that the tax law will
not impose tax on any increase in your Contract Value until there is a
distribution from your Contract.
WITHDRAWALS AND SURRENDERS. A withdrawal occurs when you receive less than the
total amount of the Contract's Contract Surrender Value. In the case of a
withdrawal, you will pay tax on the amount you receive to the extent your
Contract Surrender Value before the withdrawal exceeds your "investment in the
contract". (This term is explained below.) This income (and all other income
from your Contract) is ordinary income. The Code imposes a higher rate of tax on
ordinary income than it does on capital gains.
A surrender occurs when you receive the total amount of the Contract's Contract
Surrender Value. In the case of a surrender, you will pay tax on the amount you
receive to the extent it exceeds your "investment in the contract".
Your "investment in the contract" generally equals the total of your Purchase
Payments under the Contract, reduced by any amounts you previously received from
the Contract that you did not include in your income.
ASSIGNMENTS AND PLEDGES. The Code treats any assignment or pledge of (or
agreement to assign or pledge) any portion of your Contract Value as a
withdrawal.
GIFTING A CONTRACT. If you transfer ownership of your Contract -- without
receiving a payment equal to your Contract's value -- to a person other than
your spouse (or to your former spouse incident to divorce), you will pay tax on
your Contract Value to the extent it exceeds your "investment in the contract".
In such a case, the new Owner's "investment in the contract" will be increased
to reflect the amount included in your income.
TAXATION OF ANNUITY PAYOUTS. The Code imposes tax on a portion of each Annuity
Payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract". The Company will notify you
annually of the taxable amount of your Annuity Payout.
Pursuant to the Code, you will pay tax on the full amount of your Annuity
Payouts once you have recovered the total amount of the "investment in the
contract". If Annuity Payouts cease because of the death of the Annuitant and
before the total amount of the investment in the contract has been recovered,
the unrecovered amount generally will be deductible.
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TAXATION OF DEATH BENEFITS. We may distribute amounts from your Contract because
of the death of an Owner, a joint Owner, or an Annuitant. The tax treatment of
these amounts depends on whether the Owner, joint Owner, or Annuitant dies
before or after the Contract's Annuity Commencement Date. BEFORE THE CONTRACT'S
ANNUITY COMMENCEMENT DATE:
o If received under an Annuity Payment Option, Death Benefits are taxed
in the same manner as Annuity Payouts.
o If not received under an Annuity Payment Option, Death Benefits are
taxed in the same manner as a withdrawal.
AFTER THE CONTRACT'S ANNUITY COMMENCEMENT DATE:
o If received in accordance with the existing Annuity Payment Option,
Death Benefits are excludible from income to the extent that they do
not exceed the unrecovered "investment in the contract". Death
Benefits in excess of the unrecovered "investment in the contract"
are includable in income.
o If received in a lump sum, the tax law imposes tax on Death Benefits
to the extent that they exceed the unrecovered "investment in the
contract" at that time.
PENALTY TAXES PAYABLE ON WITHDRAWALS, SURRENDERS, OR ANNUITY PAYMENTS. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
Contract that is included in your gross income. The Code does not impose the 10%
penalty tax if one of several exceptions applies. These exceptions include
withdrawals, surrenders, or Annuity Payouts that:
o you receive on or after you reach age 59 1/2,
o you receive because you became disabled (as defined in the tax law),
o a Beneficiary receives on or after the death of the Owner, or
o you receive as a series of substantially equal periodic payments for
the life (or life expectancy) of the taxpayer.
SPECIAL RULES IF YOU OWN MORE THAN ONE CONTRACT. In certain circumstances, you
must combine some or all of the annuity contracts you own in order to determine
the amount of an Annuity Payout, a surrender, or a withdrawal that you must
include in income. For example:
o If you purchase a Contract offered by this prospectus and also
purchase at approximately the same time an immediate annuity, the IRS
may treat the two contracts as one contract.
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<PAGE>
o If you purchase two or more deferred annuity contracts from the same
life insurance company (or its affiliates) during any calendar year,
the Code treats all such contracts as one contract.
The effects of such aggregation are not clear. However, it could affect:
o the amount of a surrender, a withdrawal or an Annuity Payout that you
must include in income, and
o the amount that might be subject to the penalty tax described above.
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a Contract unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, federal income tax rules may require
us to withhold tax. At the time you request a withdrawal, surrender, or Annuity
Payout, we will provide you forms that explain the withholding requirements.
TAX STATUS OF THE COMPANY
Under existing federal income tax laws, we do not pay tax on investment income
and realized capital gains of the Separate Account. We do not anticipate that we
will incur any federal income tax liability on the income and gains earned by
the Separate Account. The Company, therefore, does not impose a charge for
federal income taxes. If federal income tax law changes and we must pay tax on
some or all of the income and gains earned by the Separate Account, we may
impose a charge against the Separate Account to pay the taxes.
CHANGES IN THE LAW
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this prospectus. Congress, the IRS, and the courts may
modify these authorities.
================================================================================
VOTING RIGHTS
================================================================================
As required by law, we will vote the portfolio shares held in the Separate
Account at meetings of the shareholders of the various Funds. The voting will
be done according to the instructions of Owners who have interests in any
Subaccounts which invest in the portfolios of the Funds. If the 1940 Act
or any regulation under it should be amended, and if as a result we determine
that we are permitted to vote the portfolios' shares in our own right, we may
elect to do so.
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The number of votes which you have the right to cast will be determined
by applying your percentage interest in a Subaccount to the total number of
votes attributable to the Subaccount. In determining the number of votes, we
will recognize fractional shares.
We will vote portfolio shares of a class held in a Subaccount for which
we received no timely instructions in proportion to the voting instructions
which we received for all Contracts participating in that Subaccount. We will
apply voting instructions to abstain on any item to be voted on a pro-rata basis
to reduce the number of votes eligible to be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in a Subaccount will receive proxy voting material, reports, and
other materials relating to the relevant portfolio. Since each Fund may engage
in shared funding, other persons or entities besides the Company may vote Fund
shares. See Separate Account - Subaccounts.
================================================================================
REQUESTING PAYMENTS
================================================================================
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, withdrawal, or surrender proceeds
within seven days after receipt through our Electronic Service Center or in
writing at our Administrative Office of all the requirements for such a payment.
We will determine the amount of the payment as of the end of the Valuation
Period during which our Electronic Service Center or Administrative Office
receives all such requirements.
We may delay making a payment, applying Contract Value to a payment option, or
processing a transfer request if: (1) the disposal or valuation of the Separate
Account's assets is not reasonably practicable because the New York Stock
Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the SEC, or the SEC declares that an emergency exists; or (2) the
SEC, by order, permits postponement of payment to protect our Owners. We also
may defer making payments attributable to a check that has not cleared (not to
exceed 30 days).
================================================================================
DISTRIBUTION OF THE CONTRACTS
================================================================================
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New Mexico,
and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is the
principal underwriter of the Contracts. Capital Brokerage, a Washington
corporation and an affiliate of ours, is located at 6630 W. Broad St., Richmond,
Virginia 23230. Capital Brokerage is registered with the SEC under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Independent
broker-dealers will sell the Contracts. These broker-dealers have selling
agreements with Capital Brokerage and have been licensed by state insurance
departments to represent us. We will offer the Contracts in all states where we
are licensed to do business.
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COMMISSIONS
We may pay commissions to broker-dealers of up to 1.40% of Purchase Payments.
Commission payments will not result in increased charges and other expenses, and
thus will not affect your Contract Value.
================================================================================
ADDITIONAL INFORMATION
================================================================================
OWNER QUESTIONS The obligations to Owners under the Contracts
are ours. Please direct your questions and
concerns to us through our Electronic Service
Center or in writing to our Administrative
Office.
RETURN PRIVILEGE Within the free look period (usually 10 days)
after you receive the Contract, you may cancel
the Contract for any reason through the
Electronic Service Center or return it, postage
prepaid, to our Administrative Office, P.O. Box
691, Leesburg, VA 20178. If you cancel your
Contract, it will be void. Upon cancellation, we
will send you a refund equal to the greater of
(1) your contract value plus any charges we have
deducted from your Purchase Payments prior to
the allocation to the Separate Account (and
excluding any charges the portfolios may have
deducted) on or before the date we received the
returned contract, or (2) your Purchase Payments
made (less any withdrawals previously taken). In
certain states, you may have more than 10 days
to return a Contract for a refund.
STATE REGULATION As a life insurance company organized and
operated under the laws of the Commonwealth of
Virginia, we are subject to provisions governing
life insurers and to regulation by the Virginia
Commissioner of Insurance.
Our books and accounts are subject to review and
examination by the State Corporation Commission
of the Commonwealth of Virginia at all times.
That Commission conducts a full examination of
our operations at least once every five years.
RECORDS AND REPORTS As presently required by the 1940 Act and
applicable regulations, we are responsible for
maintaining all records and accounts relating to
the Separate Account. At least once each year,
we will provide you with a report showing
information about your Contract for the period
covered by the report. The report will show the
Contract Value in each Subaccount. The report
also will show Purchase Payments and charges
made during the statement period. We will also
provide you with an annual and a semi-annual
report for each portfolio underlying a
Subaccount to which you have allocated Contract
Value, as required by the 1940 Act. In addition,
when you make Purchase Payments, transfers, or
withdrawals, you will be provided with a
confirmation of these transactions.
35
<PAGE>
OTHER INFORMATION A registration statement has been filed with the
SEC, under the Securities Act of 1933 as
amended, for the Contracts being offered here.
This prospectus does not contain all the
information in the registration statement, its
amendments and exhibits. Please refer to the
registration statement for further information
about the Separate Account, the Company, and the
Contracts offered. Statements in this prospectus
about the content of Contracts and other legal
instruments are summaries. For the complete text
of these Contracts and instruments, please refer
to these documents as filed with the SEC and
available on the SEC's website at
http://www.sec.gov.
LEGAL The Company, like other life insurance
MATTERS companies, is involved in lawsuits, including
class action lawsuits. In some class action and
other lawsuits involving insurance companies,
substantial damages have been sought and/or
material settlement payments have been made.
Although the Company cannot predict the outcome
of any litigation with certainty, the Company
believes that at the present time there are no
pending or threatened lawsuits that are
reasonably likely to have a material adverse
impact on it or the Separate Account.
================================================================================
CONDENSED FINANCIAL INFORMATION
================================================================================
Because the Subaccounts which are available under this Contract did not begin
operation before the date of this prospectus, we did not include financial
information for the Subaccounts in the prospectus or in the SAI.
36
<PAGE>
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
================================================================================
TABLE OF CONTENTS
Page
The Contracts..................................................................1
Transfer of Annuity Units...................................................1
Net Investment Factor.......................................................1
Termination of Participation Agreements........................................2
Calculation of Performance Data................................................2
Money Market Subaccount.....................................................3
Other Subaccounts...........................................................4
Tax Matters....................................................................6
Taxation of The Company.....................................................6
IRS Required Distributions..................................................6
General Provisions.............................................................7
Designation of Beneficiaries................................................7
Ownership...................................................................7
Non-Participating...........................................................7
Misstatement of Age or Gender...............................................7
Incontestability............................................................7
Statement of Values.........................................................7
Written Notice..............................................................7
Distribution of the Contracts..................................................8
Legal Developments Regarding Employment-Related Benefit Plans..................8
Legal Matters..................................................................8
Experts........................................................................8
Financial Statements...........................................................9
Dated ____, 2000
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, Virginia 23230
If you would like a printed copy of this prospectus, or the SAI (Statement of
Additional Information), please email us at [email protected].
<PAGE>
APPENDIX
We compute standard performance according to SEC standards. These standards are
discussed in our Statement of Additional Information. We show periods of one,
three, five and ten years or from inception in the Separate Account and deduct
all fees and charges (reflecting all portfolio expenses, the administrative
expense charge and the mortality and expense risk charge (combined annual
percentage of .75% of Contract Value)) under the Contract. Annual standard
performance is shown in Table 1. Although the Contract did not exist during the
periods shown, the returns of subaccounts shown have been adjusted to reflect
this Contract's fees and charges.
Standard performance for the Subaccounts is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------ ------------ ------------ ----------- ------------ ------------- ----------------
For the For the For the For the From the Date of
1-year 3-year 5-year 10-year Inception Inception*
period period period period in Separate in Separate
ended ended ended ended Account to Account
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------ ------------ ------------ ----------- ------------ ------------- ----------------
<S> <C>
AIM Variable Insurance Funds
AIM V.I. Aggressive Growth Fund n/a n/a n/a n/a n/a **
AIM V.I. Capital Appreciation Fund n/a n/a n/a n/a n/a **
AIM V.I. Capital Development Fund n/a n/a n/a n/a n/a **
AIM V.I. Global Utilities Fund n/a n/a n/a n/a n/a **
AIM V.I. Government Securities Fund n/a n/a n/a n/a n/a **
AIM V.I. Growth & Income Fund n/a n/a n/a n/a n/a **
AIM V.I. Telecommunications Fund n/a n/a n/a n/a n/a **
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 41.56 20.60 16.49 10.59 11.30 05/02/88
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 8.35 n/a n/a n/a 22.81 05/01/97
VIP III Growth Opportunities Portfolio 3.49 n/a n/a n/a 18.65 05/01/97
VIP III Mid Cap Portfolio n/a n/a n/a n/a n/a **
GE Investments Funds
Income Fund -2.17 n/a n/a n/a 2.39 12/12/97
International Equity Fund 29.35 18.14 n/a n/a 14.98 05/01/95
Money Market Fund 4.20 4.44 4.60 4.09 4.51 05/02/88
Premier Growth Equity Fund n/a n/a n/a n/a 17.96 05/03/99
Real Estate Securities Fund -0.97 -1.36 n/a n/a 9.23 05/01/95
S&P 500 Index Fund 19.71 25.37 26.89 16.87 17.06 05/02/88
Total Return Fund 12.40 15.22 16.37 12.19 12.45 05/02/88
U.S. Equity Fund 18.71 n/a n/a n/a 15.45 05/01/98
Value Equity Fund 16.39 n/a n/a n/a 19.96 05/01/97
Janus Aspen Series Service Shares
Capital Appreciation Portfolio 65.75 n/a n/a n/a 55.89 05/01/97
Equity Income Portfolio n/a n/a n/a n/a n/a **
Flexible Income Portfolio .84 6.60 n/a n/a 7.87 10/25/95
High Yield Portfolio n/a n/a n/a n/a n/a **
International Growth Portfolio 80.91 35.28 n/a n/a 33.69 05/01/96
- ------------------------------------------------ ------------ ------------ ----------- ------------ ------------- ----------------
</TABLE>
* Date on which a particular portfolio was first available in Separate Account
4. As Separate Account 4 is also used for other variable annuities offered by GE
Life & Annuity, this date may be different from the date the portfolio was first
available in this product.
** Subaccount has not yet been made available to the Separate Account.
38
<PAGE>
Past performance is not a guarantee of future results.
Not all of the Subaccounts have commenced operations as of the date of the
Prospectus; therefore, standard performance data for all of the Subaccounts is
not available. Some of the portfolios that underlie certain of the Subaccounts
have not been in operation for one year. For these Subaccounts, no performance
will be shown.
However, certain of the underlying portfolios have been in operation for a year
or more. For the Subaccounts that invest in these portfolios, non-standard
adjusted historical performance data (reflecting all portfolio expenses, the
administrative expense charge and the mortality and expense risk charge
(combined annual percentage of .75% of Contract Value).
Non Standard performance is shown in Table 2.
<TABLE>
<CAPTION>
- ------------------------------------------------ ------------ ------------ ----------- ----------- ------------
For the For the For the For the Date of
1-year 3-year 5-year 10-year Portfolio
period period period period Inception*
ended ended ended ended
12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------ ------------ ------------ ----------- ----------- ------------
<S> <C>
AIM Variable Insurance Funds
AIM V.I. Aggressive Growth Fund 43.59 n/a n/a n/a 05/01/98
AIM V.I. Capital Appreciation Fund 43.53 24.17 24.65 n/a 05/05/93
AIM V.I. Capital Development Fund 28.13 n/a n/a n/a 05/01/98
AIM V.I. Global Utilities Fund 32.56 22.76 20.95 n/a 05/02/94
AIM V.I. Government Securities Fund -2.06 3.98 5.53 n/a 05/05/93
AIM V.I. Growth & Income Fund 33.24 28.20 27.22 n/a 05/02/94
AIM V.I. Telecommunications Fund 104.97 41.35 32.64 n/a 10/18/93
Fidelity Variable Insurance Products Fund
VIP Overseas Portfolio 41.56 20.60 16.49 10.59 01/28/87
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio 8.35 21.63 n/a n/a 12/31/96
VIP III Growth Opportunities Portfolio 3.49 18.19 n/a n/a 01/03/95
VIP III Mid Cap Portfolio 47.92 n/a n/a n/a 12/29/98
GE Investments Funds
Income Fund -2.17 4.29 n/a n/a 01/02/95
International Equity Fund 29.35 18.14 n/a n/a 05/01/95
Money Market Fund 4.20 4.44 4.60 4.09 06/30/85
Premier Growth Equity Fund 35.24 n/a n/a n/a 12/12/97
Real Estate Securities Fund -0.97 -1.36 n/a n/a 05/01/95
S&P 500 Index Fund 19.71 25.37 26.89 16.87 04/14/85
Total Return Fund 12.40 15.22 16.37 12.19 07/01/85
U.S. Equity Fund 18.71 24.00 n/a n/a 01/02/95
Value Equity Fund 16.39 n/a n/a n/a 05/01/97
Janus Aspen Series
Capital Appreciation Portfolio 65.75 n/a n/a n/a 05/01/97
Equity Income Portfolio 39.70 n/a n/a n/a 05/01/97
Flexible Income Portfolio 0.84 6.60 10.04 n/a 09/13/93
High Yield Portfolio -4.41 3.41 n/a n/a 05/01/96
International Growth Portfolio 80.91 35.28 32.25 n/a 05/02/94
- ------------------------------------------------ ------------ ------------ ----------- ----------- ------------
</TABLE>
* Date on which a particular portfolio was declared effective by the SEC; this
date may be different from the date the portfolio was first available in the
Separate Account.
Past performance is not a guarantee of future results.
Returns for period of less than one year are not annualized.
39
<PAGE>
PART B
GE LIFE AND ANNUITY ASSURANCE COMPANY
SEPARATE ACCOUNT 4
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY CONTRACT
FORM P1153 12/99
OFFERED BY
GE LIFE AND ANNUITY ASSURANCE COMPANY
(A Virginia Stock Corporation)
6610 W. Broad Street
Richmond, Virginia 23230
ADMINISTRATIVE OFFICE:
GE LIFE AND ANNUITY ASSURANCE COMPANY
P.O. Box 691
Leesburg, VA 20178
This Statement of Additional Information expands upon subjects discussed in the
current prospectus for the above-named flexible premium variable deferred
annuity contract (the "Contract") offered by GE Life and Annuity Assurance
Company. You may obtain a copy of the prospectus dated _________ through our
Electronic Service Center at http://www.annuitynet.com or by calling (877)
569-3789. The prospectus is also available on the SEC's website at
http://www.sec.gov. Terms used in the current prospectus for the Contract are
incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUSES FOR THE CONTRACT AND THE FUNDS.
Dated ___________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
THE CONTRACTS................................................................1
Transfer of Annuity Units.................................................1
Net Investment Factor.....................................................1
TERMINATION OF PARTICIPATION AGREEMENTS......................................2
CALCULATION OF PERFORMANCE DATA..............................................2
Money Market Subaccount...................................................3
Other Subaccounts.........................................................4
TAX MATTERS..................................................................6
Taxation of The Company...................................................6
IRS Required Distributions................................................6
GENERAL PROVISIONS...........................................................7
Designation of Beneficiaries..............................................7
Ownership.................................................................7
Non-Participating.........................................................7
Misstatement of Age or Gender.............................................7
Incontestability..........................................................7
Statement of Values.......................................................7
Written Notice............................................................7
DISTRIBUTION OF THE CONTRACTS................................................8
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS................8
LEGAL MATTERS................................................................8
EXPERTS......................................................................8
FINANCIAL STATEMENTS.........................................................9
<PAGE>
THE CONTRACTS
TRANSFER OF ANNUITY UNITS
Annuity Units may be transferred upon request, but not more than three times in
a Contract Year. If a transfer is requested from a Subaccount, all of the
Annuity Units in that Subaccount must be transferred to a single different
Subaccount.
The number of Annuity Units for the new Subaccount will be (a) times (b),
divided by (c), where:
(a) is the number of Annuity Units for the current Subaccount;
(b) is the value of an Annuity Unit for the current Subaccount; and
(c) is the value of an Annuity Unit for the new Subaccount.
The values of (a), (b) and (c) are all determined as of the date we receive the
transfer request.
The amount of the Annuity Payout as of the date of the transfer will not be
affected by the transfer (however, subsequent Annuity Payouts will reflect the
investment experience of the selected Subaccounts).
NET INVESTMENT FACTOR
The Net Investment Factor measures investment performance of the Subaccounts of
the Separate Account during a Valuation Period. Each Subaccount has its own Net
Investment Factor for a Valuation Period. The Net Investment Factor of a
Subaccount available under the Contracts for a Valuation Period is (a) divided
by (b) minus (c) where:
(a) is the result of
(1) the value of the net assets of that Subaccount at the end of the
preceding Valuation Period; plus
(2) the investment income and capital gains, realized or unrealized,
credited to those assets of that Subaccount at the end of the Valuation
Period for which the Net Investment Factor is being determined; minus
(3) the capital losses, realized or unrealized, charged against those
assets during the Valuation Period; minus
(4) any amount charged against that Separate Account for taxes, or any
amount set aside during the Valuation Period by the Company as a
provision for taxes attributable to the operation or maintenance of
that Separate Account; and
(b) is the value of the assets of that Subaccount at the end of the preceding
Valuation Period; and
(c) is a charge no greater than .002063% for each day in the Valuation
Period. This corresponds to a total of .75% per year of the net assets of
1
<PAGE>
that Subaccount and consists of a .40% mortality and expense risk charge and
a .35% administrative expense charge.
We will value the assets at their fair market value in accordance with
generally accepted accounting practices and applicable laws and regulations.
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares to
the Separate Account contain varying provisions regarding termination. The
following summarizes those provisions:
AIM VARIABLE INSURANCE FUNDS, INC. This agreement may be terminated by the
parties on six months' advance written notice.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND AND FIDELITY VARIABLE INSURANCE
PRODUCTS FUND III ("THE FUND"). These agreements provide for termination
(1) on one year's advance notice by either party, (2) at the Company's option
if shares of the Fund are not reasonably available to meet requirements of the
policies, (3) at the option of either party if certain enforcement proceedings
are instituted against the other, (4) upon vote of the policyowners to
substitute shares of another mutual fund, (5) at the Company's option if shares
of the Fund are not registered, issued, or sold in accordance with applicable
laws, if the Fund ceases to qualify as a regulated investment company under the
Code, (6) at the option of the Fund or its principal underwriter if it
determines that the Company has suffered material adverse changes in its
business or financial condition or is the subject of material adverse publicity,
(7) at the option of the Company if the Fund has suffered material adverse
changes in its business or financial condition or is the subject of material
adverse publicity, or (8) at the option of the Fund or its principal underwriter
if the Company decides to make another mutual fund available as a funding
vehicle for its policies.
GE INVESTMENTS FUNDS, INC. This agreement may be terminated at the option of any
party upon six months' written notice to the other parties, unless a shorter
time is agreed to by the parties.
JANUS ASPEN SERIES. This agreement may be terminated by the parties on six
months' advance written notice.
CALCULATION OF PERFORMANCE DATA
From time to time, the Company may disclose total return, yield, and other
performance data for the Subaccounts pertaining to the Contracts. Such
performance data will be computed, or accompanied by performance data computed,
in accordance with the standards defined by the Securities and Exchange
Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Contract. Premium taxes will vary, generally depending on the law of your state
or residence. In those states which tax these premiums, the tax generally ranges
from 0.0% to 3.0%.
2
<PAGE>
MONEY MARKET SUBACCOUNT
From time to time, advertisements and sales literature may quote the yield of
the Money Market Subaccount for a seven-day period, in a manner which does not
take into consideration any realized or unrealized gains or losses on shares of
the corresponding money market investment portfolio or on its portfolio
securities. This current annualized yield is computed by determining the net
change (exclusive of unrealized gains and losses on the sale of securities and
unrealized appreciation and depreciation and income other than investment
income) at the end of the seven-day period in the value of a hypothetical
account under a Contract having a balance of one unit in the Money Market
Subaccount at the beginning of the period, dividing such net change in Contract
Value by the value of the account at the beginning of the period to determine
the base period return, and annualizing the result on a 365-day basis. The net
change in Contract Value reflects: 1) net income from the investment portfolio
attributable to the hypothetical account; and 2) charges and deductions imposed
under the Contract which are attributable to the hypothetical account. The
charges and deductions include the per unit charges for the administrative
expense charge and the mortality and expense risk charge. Current Yield will be
calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) X (365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income) for
the seven-day period attributable to a hypothetical account having a balance
of one Subaccount unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value on the first day of the seven-day period.
The effective yield of the Money Market Subaccount determined on a compounded
basis for the same seven-day period may also be quoted. The effective yield
is calculated by compounding the base period return according to the
following formula:
Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income) for
the seven-day period attributable to a hypothetical account having a balance
of one Subaccount unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
3
<PAGE>
The yield on amounts held in the Money Market Subaccount normally will fluctuate
on a daily basis. Therefore, the disclosed yield for any given past period is
not an indication or representation of future yields or rates of return. The
Money Market Subaccount's actual yield is affected by changes in interest rates
on money market securities, average portfolio maturity of the Subaccount's
corresponding money market investment portfolio, the types and quality of
portfolio securities held by that investment portfolio, and that investment
portfolio's operating expenses. Because of the charges and deductions imposed
under the Contract, the yield for the Money Market Subaccount will be lower than
the yield for its corresponding money market investment portfolio.
OTHER SUBACCOUNTS
TOTAL RETURN. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Subaccounts for
various periods of time including 1 year, 5 years and 10 years, or from
inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of the period. The ending date for each period for which total return quotations
are provided will be for the most recent practicable, considering the type and
media of the communication, and will be stated in the communication.
For periods that begin before the Contract was available, performance data will
be based on the performance of the underlying portfolios, restated with the
level of Separate Account and Contract charges used in this Contract. Average
annual total return will be calculated using Subaccount unit values as
described below:
1. The Company calculates unit value for each Valuation Period based on
the performance of the Subaccount's underlying investment portfolio
(after deductions for portfolio expenses, the administrative expense
charge, and the mortality and expense risk charge).
2. Total return will then be calculated according to the following
formula:
TR = (ERV/P)^1/N - 1
where:
TR = the average annual total return for the period.
ERV = the ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
N = the duration of the period (in years).
4
<PAGE>
The available Subaccounts have not yet commenced operations; therefore, standard
performance data for the available Subaccounts is not available at this time.
However, non-standard adjusted historical performance data (reflects all
Separate Account and Contract fees and charges) for the portfolios underlying
the available Subaccounts will be shown.
5
<PAGE>
The Funds have provided the price information used to calculate the total return
of the Subaccounts for periods prior to the inception of the Subaccounts. While
we have no reason to doubt the accuracy of the figures provided by the Funds, we
have not independently verified such information.
Other Performance Data
We may disclose cumulative total return in conjunction with the standard format
described above. The cumulative total return will be calculated using the
following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting
deductions as described above) of the
hypothetical investment at the end of the
period.
P = a hypothetical single investment of $1,000.
Other non-standard quotations of Subaccount performance may also be used in
sales literature. Such quotations will be accompanied by a description of how
they were calculated.
TAX MATTERS
TAXATION OF THE COMPANY
We may incur state and local taxes (in addition to premium taxes) in several
states. At present, these taxes, with the exception of premium taxes, are not
significant. If there is a material change in applicable state or local tax laws
causing an increase in taxes other than premium taxes (for which we currently
impose a charge), charges for such taxes attributable to Account 4 may be made.
IRS REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for federal income tax purposes,
section 72(s) of the Code requires the Contract to provide that (a) if any Owner
dies on or after the Annuity Commencement Date but prior to the time the entire
interest in the Contract has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Annuity Commencement Date, the entire interest in the
Contract will be distributed (1) within five years after the date of that
Owner's death, or (2) as Annuity Payouts which will begin within one year of
that Owner's death and which will be made over the life of the Owner's
6
<PAGE>
"designated Beneficiary" or over a period not extending beyond the life
expectancy of that Beneficiary. The "designated Beneficiary" generally is the
person who will be treated as the sole Owner of the Policy following the death
of the Owner, joint Owner or, in certain circumstances, the Annuitant. However,
if the "designated Beneficiary" is the surviving spouse of the decedent, these
distribution rules will not apply until the surviving spouse's death (and this
spousal exception will not again be available). If any Owner is not an
individual, the death of the Annuitant will be treated as the death of an Owner
for purposes of these rules.
The Contracts contain provisions which are intended to comply with the
requirements of section 72(s) of the Code, although no regulations interpreting
these requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the requirements of
Code section 72(s) when clarified by regulation or otherwise.
GENERAL PROVISIONS
DESIGNATION OF BENEFICIARIES
You may designate a Beneficiary during your lifetime and, unless prohibited by a
previous designation, change the Beneficiary by filing a written request with
our Administrative Office, or through our Electronic Service Center. Each change
of Beneficiary revokes any previous designation.
OWNERSHIP
You may not assign your Contract without our permission. Your rights and the
rights of a Beneficiary may be affected by an assignment.
NON-PARTICIPATING
The Contract is non-participating. No dividends are payable.
MISSTATEMENT OF AGE OR GENDER
If an Annuitant's age or gender was misstated on the Contract data pages, any
Contract benefits or proceeds, or availability thereof, will be determined using
the correct age and gender.
INCONTESTABILITY
We will not contest the Contract.
STATEMENT OF VALUES
At least once each year, we will provide you a statement of values within 30
days after each report date. The statement will show Contract Value, Purchase
Payments and charges made during the report period.
WRITTEN NOTICE
Any written notice should be sent to us at our Administrative Office at P.O. Box
691, Leesburg, VA 20178. The Contract number and the Annuitant's full name must
be included.
We will send all notices to the Owner to the last known email address on file
with the company.
7
<PAGE>
DISTRIBUTION OF THE CONTRACTS
Capital Brokerage Corporation, the principal underwriter of the Contracts, is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc.
The Contracts are sold to the public through brokers licensed under the federal
securities laws and state insurance laws and have entered into selling
agreements with Capital Brokerage Corporation. The offering is continuous and
Capital Brokerage Corporation does not anticipate discontinuing the offering of
the Contracts. However, the Company does reserve the right to discontinue the
offering of the Contracts.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to federal securities laws applicable to the
issue and sale of the Contracts described in this prospectus. Patricia L.
Dysart, Assistant Vice President and Associate General Counsel of the Company,
has provided advice on certain legal matters pertaining to the Contract,
including the validity of the Contract and the Company's right to issue the
Contracts under Virginia insurance law.
EXPERTS
The consolidated financial statements of GE Life and Annuity Assurance Company
and subsidiary (formerly The Life Insurance Company of Virginia) as of December
31, 1999 and 1998, and for each of the years in the three-year period ended
December 31, 1999, and the financial statements of GE Life & Annuity Separate
Account 4, formerly Life of Virginia Separate Account 4, as of December 31, 1999
and for each of the years or lesser periods in the two-year period ended
December 31, 1999, have been included herein in reliance upon the reports of
KPMG LLP, independent certified public accountants, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG LLP dated January 21, 2000 with respect to the consolidated
financial statements of GE Life and Annuity Assurance Company and subsidiary,
contains an explanatory paragraph that states that the Company changed its
method of accounting for insurance-related assessments in 1999.
8
<PAGE>
FINANCIAL STATEMENTS
This Statement of Additional Information contains consolidated financial
statements for GE Life and Annuity Assurance Company and subsidiary, formerly
The Life Insurance Company of Virginia, (the Company) as of December 31, 1999
and 1998, and for each of the years in the three-year period ended December 31,
1999, and GE Life & Annuity Separate Account 4, formerly Life of Virginia
Separate Account 4, as of December 31, 1999 and for each of the years or lesser
periods in the two-year period ended December 31, 1999. The consolidated
financial statements of the Company included herein should be distinguished from
the financial statements of GE Life & Annuity Separate Account 4 and should be
considered only as bearing on the ability of the Company to meet its
obligations under the Contract. Such consolidated financial statements of the
Company should not be considered as bearing on the investment performance of the
assets held in Separate Account 4.
Because the Subaccounts which are available under this Contract did not begin
operation before the date of this prospectus, the historical financial
statements of GE Life & Annuity Separate Account 4 do not reflect the the new
type of units to be issued under this policy form.
9
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
(formerly Life of Virginia Separate Account 4)
Financial Statements
Year ended December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Table of Contents
Year ended December 31, 1999
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities....................................... F-2
Statements of Operations................................................... F-12
Statements of Changes in Net Assets........................................ F-17
Notes to Financial Statements.............................................. F-34
</TABLE>
<PAGE>
Independent Auditors' Report
Contractholders
GE Life & Annuity Separate Account 4
and
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying statements of assets and liabilities of GE
Life & Annuity Separate Account 4 (the Account) (comprising the GE Investments
Funds, Inc.--S&P 500 Index, Money Market, Total Return, International Equity,
Real Estate Securities, Global Income, Value Equity, Income, U.S. Equity and
Premier Growth Equity Funds; the Oppenheimer Variable Account Funds--Bond/VA,
Capital Appreciation/VA, Aggressive Growth/VA, High Income/VA and Multiple
Strategies/VA Funds; the Variable Insurance Products Fund--Equity-Income, Growth
and Overseas Portfolios; the Variable Insurance Products Fund II--Asset Manager
and Contrafund Portfolios; the Variable Insurance Products III--Growth & Income
and Growth Opportunities Portfolios; the Federated Insurance Series-- American
Leaders, High Income Bond and Utility Funds II; the Alger American Fund--Small
Capitalization and Growth Portfolios; the PBHG Insurance Series Fund, Inc.--PBHG
Large Cap Growth and PBHG Growth II Portfolios; the Janus Aspen
Series--Aggressive Growth, Growth, Worldwide Growth, Balanced, Flexible Income,
International Growth and Capital Appreciation Portfolios; the Goldman Sachs
Variable Insurance Trust--Growth and Income and Mid Cap Value Funds; and the
Salomon Brothers Variable Series Fund Inc.--Strategic Bond, Investors, and Total
Return Funds) as of December 31, 1999, the related statements of operations for
the aforementioned funds of GE Life & Annuity Separate Account 4 for the year or
lesser period ended December 31, 1999 and the related statements of changes in
net assets for the aforementioned funds of GE Life & Annuity Separate Account 4
for each of the years or lesser periods in the two-year period ended December
31, 1999. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the underlying mutual funds or their transfer agent. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
portfolios constituting GE Life & Annuity Separate Account 4 as of December 31,
1999, the results of their operations for the year or lesser period then ended,
and changes in their net assets for each of the years or lesser periods in the
two-year period ended December 31, 1999 in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
Richmond, Virginia
February 11, 2000
F-1
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------
Real
S&P 500 Money Total International Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Assets ------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Investment in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(22,215,478 shares;
cost --
$533,600,551)......... $624,254,935 -- -- -- --
Money Market Fund
(441,032,754 shares;
cost --
$441,032,754)........ -- 441,032,754 -- -- --
Total Return Fund
(6,493,333 shares;
cost -- $96,506,872).. -- -- 102,984,256 -- --
International Equity
Fund (2,726,755
shares; cost --
$33,751,159)......... -- -- -- 39,456,150 --
Real Estate Securities
Fund (3,748,156
shares; cost --
$48,639,416)......... -- -- -- -- 40,742,452
Receivable from
affiliate.............. -- 232,035 -- 1 --
Receivable for units
sold................... 345,348 6,011,576 154,310 25,071 --
------------ ----------- ----------- ---------- ----------
Total assets........... 624,600,283 447,276,365 103,138,566 39,481,222 40,742,452
------------ ----------- ----------- ---------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 571,063 340,766 83,321 17,115 26,319
Payable for units
withdrawn.............. 56,938 2,493,447 16,499 42 15,060
------------ ----------- ----------- ---------- ----------
Total liabilities...... 628,001 2,834,213 99,820 17,157 41,379
------------ ----------- ----------- ---------- ----------
Net assets.............. $623,972,282 444,442,152 103,038,746 39,464,065 40,701,073
------------ ----------- ----------- ---------- ----------
Analysis of net assets:
Attributable to:
Variable deferred
annuity
contractholders...... $623,972,282 444,442,152 103,038,746 19,905,813 25,055,708
GE Life and Annuity
Assurance Company.... -- -- -- 19,558,252 15,645,365
------------ ----------- ----------- ---------- ----------
Net assets.............. $623,972,282 444,442,152 103,038,746 39,464,065 40,701,073
============ =========== =========== ========== ==========
Outstanding units: Type
I (note 2)............. 1,079,890 5,265,274 513,721 203,538 218,219
============ =========== =========== ========== ==========
Net asset value per
unit: Type I........... $ 59.90 15.96 37.52 18.74 14.82
============ =========== =========== ========== ==========
Outstanding units: Type
II (note 2)............ 7,955,210 13,992,458 1,884,184 735,974 1,409,644
============ =========== =========== ========== ==========
Net asset value per
unit: Type II.......... $ 58.17 15.50 36.44 18.60 14.65
============ =========== =========== ========== ==========
Outstanding units: Type
III (note 2)........... 7,821,903 12,703,804 1,305,705 179,463 107,802
============ =========== =========== ========== ==========
Net asset value per
unit: Type III......... $ 11.59 10.32 10.94 12.36 9.97
============ =========== =========== ========== ==========
Outstanding units: Type
IV (note 2)............ 543,614 1,214,273 78,079 15,200 10,487
============ =========== =========== ========== ==========
Net asset value per
unit: Type IV.......... $ 10.81 10.23 10.50 12.12 9.12
============ =========== =========== ========== ==========
</TABLE>
F-2
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
-------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth
Fund Fund Fund Fund Equity Fund
Assets ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investment in GE
Investments Funds,
Inc.,
at fair value (note 2):
Global Income Fund
(938,940 shares;
cost -- $9,506,906).. $9,004,438 -- -- -- --
Value Equity Fund
(4,711,803 shares;
cost --
$68,652,601).......... -- 74,399,373 -- -- --
Income Fund (3,907,281
shares;
cost --
$47,902,723).......... -- -- 44,972,802 -- --
U.S. Equity Fund
(1,029,660 shares;
cost -- $38,053,766).. -- -- -- 39,024,108 --
Premier Growth Equity
Fund (305,976 shares;
cost --
$25,075,237).......... -- -- -- -- 27,124,734
Receivable from affili-
ate.................... -- -- -- -- --
Receivable for units
sold................... -- 56,630 27,145 95,306 201,431
---------- ---------- ---------- ---------- ----------
Total assets........... 9,004,438 74,456,003 44,999,947 39,119,414 27,326,165
---------- ---------- ---------- ---------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 4,330 66,736 118,416 50,811 14,969
Payable for units with-
drawn.................. -- 84,855 31,497 -- --
---------- ---------- ---------- ---------- ----------
Total liabilities...... 4,330 151,591 149,913 50,811 14,969
---------- ---------- ---------- ---------- ----------
Net assets.............. $9,000,108 74,304,412 44,850,034 39,068,603 27,311,196
---------- ---------- ---------- ---------- ----------
Analysis of net assets:
Attributable to:
Variable deferred an-
nuity
contractholders...... $3,579,380 69,329,399 44,850,034 39,068,603 27,311,196
GE Life and Annuity
Assurance Company.... 5,420,728 4,975,013 -- -- --
---------- ---------- ---------- ---------- ----------
Net assets.............. $9,000,108 74,304,412 44,850,034 39,068,603 27,311,196
========== ========== ========== ========== ==========
Outstanding units: Type
I (note 2)............. 50,781 419,746 1,124,188 82,891 46,603
========== ========== ========== ========== ==========
Net asset value per
unit: Type I........... $ 10.51 16.08 10.41 12.62 11.76
========== ========== ========== ========== ==========
Outstanding units: Type
II (note 2)............ 291,731 3,011,792 2,729,732 1,613,261 802,961
========== ========== ========== ========== ==========
Net asset value per
unit: Type II.......... $ 10.44 15.97 10.36 12.57 11.75
========== ========== ========== ========== ==========
Outstanding units: Type
III (note 2)........... -- 1,168,256 433,696 1,442,844 1,380,434
========== ========== ========== ========== ==========
Net asset value per
unit: Type III......... $ -- 11.17 9.71 11.56 11.73
========== ========== ========== ========== ==========
Outstanding units: Type
IV (note 2)............ -- 147,340 67,078 100,906 96,385
========== ========== ========== ========== ==========
Net asset value per
unit: Type IV.......... $ -- 9.72 9.78 10.55 11.73
========== ========== ========== ========== ==========
</TABLE>
F-3
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Assets ----------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investment in Oppen-
heimer Variable Account
Funds, at fair value
(note 2):
Bond Fund/VA (6,645,197
shares;
cost --
$78,301,554).......... $76,552,671 -- -- -- --
Capital Appreciation
Fund/VA (5,652,831
shares;
cost --
$192,587,611)........ -- 281,737,110 -- -- --
Aggressive Growth
Fund/VA (4,341,360
shares;
cost --
$205,932,019)......... -- -- 357,337,373 -- --
High Income Fund/VA
(15,645,970 shares;
cost --
$172,131,067)........ -- -- -- 167,724,795 --
Multiple Strategies
Fund/VA (4,649,496
shares;
cost -- $72,251,157).. -- -- -- -- 81,180,209
Receivable from affili-
ate.................... -- 6 234 -- --
Receivable for units
sold................... 24,846 375,005 1,533,710 3,506 4,203
----------- ----------- ----------- ----------- ----------
Total assets........... 76,577,517 282,112,121 358,871,317 167,728,301 81,184,412
----------- ----------- ----------- ----------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 86,300 299,509 538,204 155,738 167,256
Payable for units with-
drawn.................. 24,695 142,929 -- 94,390 179,862
----------- ----------- ----------- ----------- ----------
Total liabilities...... 110,995 442,438 538,204 250,128 347,118
----------- ----------- ----------- ----------- ----------
Net assets attributable
to variable deferred
annuity
contractholders........ $76,466,522 281,669,683 358,333,113 167,478,173 80,837,294
=========== =========== =========== =========== ==========
Outstanding units: Type
I (note 2)............. 768,244 957,458 1,804,530 1,245,529 1,051,087
=========== =========== =========== =========== ==========
Net asset value per
unit: Type I........... $ 21.51 64.57 73.61 32.02 30.80
=========== =========== =========== =========== ==========
Outstanding units: Type
II (note 2)............ 2,531,310 3,232,987 2,933,967 3,792,914 1,504,814
=========== =========== =========== =========== ==========
Net asset value per
unit: Type II.......... $ 20.88 62.71 71.49 31.09 29.91
=========== =========== =========== =========== ==========
Outstanding units: Type
III (note 2)........... 690,965 1,214,374 894,256 923,199 305,825
=========== =========== =========== =========== ==========
Net asset value per
unit: Type III......... $ 9.67 13.23 17.17 10.10 10.95
=========== =========== =========== =========== ==========
Outstanding units: Type
IV (note 2)............ 41,749 81,428 24,750 35,858 10,366
=========== =========== =========== =========== ==========
Net asset value per
unit: Type IV.......... $ 9.73 12.77 16.08 9.77 10.23
=========== =========== =========== =========== ==========
</TABLE>
F-4
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance
Products Fund
------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Assets
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (26,903,305
shares; cost -- $591,595,226).......... $691,683,976 -- --
Growth Portfolio (12,260,801 shares;
cost -- $454,460,571).................. -- 673,485,783 --
Overseas Portfolio (4,713,302 shares;
cost -- $107,086,440).................. -- -- 129,332,995
Receivable from affiliate................ -- 25 63
Receivable for units sold................ 164,930 862,358 669,332
------------ ----------- -----------
Total assets............................ 691,848,906 674,348,166 130,002,390
------------ ----------- -----------
Liabilities
Accrued expenses payable to affiliate
(note 3)................................ 749,836 911,873 325,471
Payable for units withdrawn.............. 352,267 299,787 71,531
------------ ----------- -----------
Total liabilities...................... 1,102,103 1,211,660 397,002
------------ ----------- -----------
Net assets attributable to variable de-
ferred annuity contractholders.......... $690,746,803 673,136,506 129,605,388
============ =========== ===========
Outstanding units: Type I (note 2)....... 4,454,619 3,310,123 2,244,272
============ =========== ===========
Net asset value per unit: Type I......... $ 43.33 73.80 33.25
============ =========== ===========
Outstanding units: Type II (note 2)...... 10,963,577 4,760,717 1,525,527
============ =========== ===========
Net asset value per unit: Type II........ $ 42.08 71.67 32.29
============ =========== ===========
Outstanding units: Type III (note 2)..... 3,203,653 6,561,710 388,067
============ =========== ===========
Net asset value per unit: Type III....... $ 10.65 12.73 13.80
============ =========== ===========
Outstanding units: Type IV (note 2)...... 242,696 333,735 28,190
============ =========== ===========
Net asset value per unit: Type IV........ $ 9.32 12.34 13.08
============ =========== ===========
</TABLE>
F-5
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------ -------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
Assets ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
Investment in Variable In-
surance Products Fund II,
at fair value (note 2):
Asset Manager Portfolio
(25,602,717 shares;
cost -- $394,723,593).... $478,002,728 -- -- --
Contrafund Portfolio
(17,879,468 shares;
cost -- $369,622,889).... -- 521,186,482 -- --
Investment in Variable In-
surance Products Fund III,
at fair value (note 2):
Growth & Income Portfolio
(6,951,626 shares;
cost -- $109,077,377).... -- -- 120,263,132 --
Growth Opportunities Port-
folio (4,348,199 shares;
cost -- $93,193,775)..... -- -- -- 100,660,801
Receivable from affiliate.. 1 14 -- --
Receivable for units sold.. 14,591 897,435 96,740 155,275
------------ ----------- ----------- -----------
Total assets.............. 478,017,320 522,083,931 120,359,872 100,816,076
------------ ----------- ----------- -----------
Liabilities
Accrued expenses payable to
affiliate (note 3)........ 655,233 451,120 98,967 87,841
Payable for units with-
drawn..................... 895,805 99,744 51,767 150
------------ ----------- ----------- -----------
Total liabilities......... 1,551,038 550,864 150,734 87,991
------------ ----------- ----------- -----------
Net assets attributable to
variable deferred annuity
contractholders........... $476,466,282 521,533,067 120,209,138 100,728,085
============ =========== =========== ===========
Outstanding units: Type I
(note 2).................. 11,988,811 2,650,253 618,815 525,381
============ =========== =========== ===========
Net asset value per unit:
Type I.................... $ 30.63 32.31 17.12 15.61
============ =========== =========== ===========
Outstanding units: Type II
(note 2).................. 3,361,601 11,622,130 5,051,739 4,766,024
============ =========== =========== ===========
Net asset value per
unit:Type II.............. $ 29.86 31.91 17.00 15.51
============ =========== =========== ===========
Outstanding units: Type III
(note 2).................. 777,512 5,211,986 2,078,979 1,709,162
============ =========== =========== ===========
Net asset value per unit:
Type III.................. $ 10.80 11.75 10.69 10.35
============ =========== =========== ===========
Outstanding units: Type IV
(note 2).................. 44,890 336,615 150,665 92,620
============ =========== =========== ===========
Net asset value per unit:
Type IV................... $ 10.57 11.29 10.03 9.89
============ =========== =========== ===========
</TABLE>
F-6
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Federated Insurance Series
-----------------------------------
American High
Leaders Income Bond Utility
Fund II Fund II Fund II
------------ ----------- ----------
<S> <C> <C> <C>
Assets
Investments in Federated Insurance
Series, at fair value (note 2):
American Leaders Fund II (4,849,330 shares;
cost -- $97,644,443)...................... $100,963,047 -- --
High Income Bond Fund II (6,565,038 shares;
cost -- $68,083,286)...................... -- 67,225,993 --
Utility Fund II (4,131,452 shares; cost --
$55,525,888)............................. -- -- 59,286,336
Receivable from affiliate................... -- -- --
Receivable for units sold................... 108,314 42,829 84,008
------------ ---------- ----------
Total assets............................... 101,071,361 67,268,822 59,370,344
------------ ---------- ----------
Liabilities
Accrued expenses payable to affiliate (note
3)......................................... 87,229 56,158 49,394
Payable for units withdrawn................. 3,018 58,978 --
------------ ---------- ----------
Total liabilities.......................... 90,247 115,136 49,394
------------ ---------- ----------
Net assets attributable to variable deferred
annuity contractholders.................... $100,981,114 67,153,686 59,320,950
============ ========== ==========
Oustanding units: Type I (note 2)........... 474,111 450,443 363,909
============ ========== ==========
Net asset value per unit: Type I............ $ 17.75 15.52 19.11
============ ========== ==========
Outstanding units: Type II (note 2)......... 4,554,700 3,376,105 2,483,985
============ ========== ==========
Net asset value per unit: Type II........... $ 17.58 15.32 18.87
============ ========== ==========
Oustanding units: Type III (note 2)......... 1,114,543 799,186 491,571
============ ========== ==========
Net asset value per unit: Type III.......... $ 10.49 9.89 10.44
============ ========== ==========
Outstanding units: Type IV (note 2)......... 85,187 55,873 36,259
============ ========== ==========
Net asset value per unit: Type IV........... $ 9.42 9.61 9.98
============ ========== ==========
</TABLE>
F-7
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Fund Series Fund, Inc.
-------------------------- ---------------------
Small PBHG Large PBHG
Capitalization Growth Cap Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Investment in Alger American
Fund, at fair value (note 2):
Small Capitalization Portfo-
lio (2,611,114 shares;
cost -- $112,026,784)....... $144,002,930 -- -- --
Growth Portfolio (5,007,682
shares; cost --
$257,438,791).............. -- 322,394,581 -- --
PBHG Insurance Series Fund,
Inc. at fair value (note 2):
PBHG Large Cap Growth Portfo-
lio (911,524 shares; cost --
$13,938,008)............... -- -- 23,252,983 --
PBHG Growth II Portfolio
(1,412,242 shares; cost --
$20,551,081)............... -- -- -- 32,552,176
Receivable from affiliate..... 141 9 -- --
Receivable for units sold..... 183,401 610,966 10,833 136,648
------------ ----------- ---------- ----------
Total assets................. 144,186,472 323,005,556 23,263,816 32,688,824
============ =========== ========== ==========
Liabilities
Accrued expenses payable to
affiliate (note 3)........... 120,119 336,052 60,138 24,223
Payable for units withdrawn... 7,840 55,581 22 16,350
------------ ----------- ---------- ----------
Total liabilities............ 127,959 391,633 60,160 40,573
------------ ----------- ---------- ----------
Net assets attributable to
variable deferred annuity
contractholders.............. $144,058,513 322,613,923 23,203,656 32,648,251
============ =========== ========== ==========
Oustanding units: Type I (note
2)........................... 1,090,003 1,237,526 132,343 226,702
============ =========== ========== ==========
Net asset value per unit: Type
I............................ $ 17.22 25.97 24.74 22.35
============ =========== ========== ==========
Outstanding units: Type II
(note 2)..................... 6,310,836 8,583,493 811,131 1,242,408
============ =========== ========== ==========
Net asset value per unit: Type
II........................... $ 17.04 25.69 24.57 22.20
============ =========== ========== ==========
Oustanding units: Type III
(note 2)..................... 1,160,756 5,377,154 -- --
============ =========== ========== ==========
Net asset value per unit: Type
III.......................... $ 14.14 12.50 -- --
============ =========== ========== ==========
Outstanding units: Type IV
(note 2)..................... 97,659 231,761 -- --
============ =========== ========== ==========
Net asset value per unit: Type
IV........................... $ 13.71 11.87 -- --
============ =========== ========== ==========
</TABLE>
F-8
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series
------------------------------------
Aggressive Worldwide
Growth Growth Growth
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Assets
Investment in Janus Aspen Series, at fair
value (note 2):
Aggressive Growth Portfolio (8,745,708
shares; cost -- $318,342,552)........... $522,031,288 -- --
Growth Portfolio (20,512,483 shares;
cost -- $444,244,607)................... -- 690,245,038 --
Worldwide Growth Portfolio (20,673,754
shares; cost -- $575,985,214)........... -- -- 987,171,753
Receivable from affiliate................. 1,301 30 1,440
Receivable for units sold................. 749,946 866,106 1,663,028
------------ ----------- -----------
Total assets............................. 522,782,535 691,111,174 988,836,221
============ =========== ===========
Liabilities
Accrued expenses payable to affiliate
(note 3)................................. 524,669 912,334 912,014
Payable for units withdrawn............... 6,749,277 21,844 67,703
------------ ----------- -----------
Total liabilities........................ 7,273,946 934,178 979,717
------------ ----------- -----------
Net assets attributable to variable
deferred annuity contractholders......... $515,508,589 690,176,996 987,856,504
============ =========== ===========
Outstanding units: Type I (note 2)........ 1,789,828 4,139,512 4,314,377
============ =========== ===========
Net asset value per unit: Type I.......... $ 59.91 36.56 47.86
============ =========== ===========
Outstanding units: Type II (note 2)....... 5,067,599 11,701,274 14,578,854
============ =========== ===========
Net asset value per unit: Type II......... $ 58.97 35.98 47.11
============ =========== ===========
Outstanding units: Type III (note 2)...... 4,781,470 8,278,915 5,789,831
============ =========== ===========
Net asset value per unit: Type III........ $ 20.95 13.46 15.28
============ =========== ===========
Outstanding units: Type IV (note 2)....... 513,109 500,424 406,948
============ =========== ===========
Net asset value per unit: Type IV......... $ 18.07 12.77 14.97
============ =========== ===========
</TABLE>
F-9
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------------------
Flexible International Capital
Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio
------------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Assets
Investment in Janus Aspen
Series, at fair value
(note 2):
Balanced Portfolio
(16,485,224 shares;
cost -- $370,790,126).... $460,267,444 -- -- --
Flexible Income Portfolio
(4,942,920 shares;
cost -- $58,455,980)..... -- 56,448,148 -- --
International Growth
Portfolio (4,758,145
shares; cost --
$111,821,732)........... -- -- 183,997,451 --
Capital Appreciation
Portfolio (11,148,082
shares; cost --
$273,871,408)........... -- -- -- 369,781,874
Receivable from affiliate.. -- -- 478 313
Receivable for units sold.. 388,151 102,588 489,862 949,581
------------ ---------- ----------- -----------
Total assets.............. 460,655,595 56,550,736 184,487,791 370,731,768
------------ ---------- ----------- -----------
Liabilities
Accrued expenses payable to
affiliate (note 3)........ 373,020 51,802 161,387 373,639
Payable for units
withdrawn................. 55,319 46,493 126,477 781,247
------------ ---------- ----------- -----------
Total liabilities......... 428,339 98,295 287,864 1,154,886
------------ ---------- ----------- -----------
Net assets attributable to
variable deferred annuity
contractholders........... $460,227,256 56,452,441 184,199,927 369,576,882
============ ========== =========== ===========
Outstanding units: Type I
(note 2).................. 2,796,176 514,641 949,972 1,124,173
============ ========== =========== ===========
Net asset value per unit:
Type I.................... $ 24.50 13.56 28.58 32.35
============ ========== =========== ===========
Outstanding units: Type II
(note 2).................. 12,451,725 3,172,870 4,728,347 6,407,884
============ ========== =========== ===========
Net asset value per unit:
Type II................... $ 24.24 13.41 28.32 32.13
============ ========== =========== ===========
Outstanding units: Type III
(note 2).................. 7,205,031 606,070 1,251,115 8,073,338
============ ========== =========== ===========
Net asset value per unit:
Type III.................. $ 11.93 9.97 17.11 15.07
============ ========== =========== ===========
Outstanding units: Type IV
(note 2).................. 347,931 89,213 102,381 428,091
============ ========== =========== ===========
Net asset value per unit:
Type IV................... $ 11.31 9.90 16.96 13.22
============ ========== =========== ===========
</TABLE>
F-10
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Concluded
December 31, 1999
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Fund Inc.
---------------------- ------------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets
Investment in Goldman
Sachs Variable
Insurance Trust,
at fair value (note 2):
Growth and Income Fund
(935,608 shares;
cost -- $9,933,309)... $10,188,769 -- -- -- --
Mid Cap Value Fund
(1,952,623 shares;
cost -- $17,214,626).. -- 16,441,086 -- -- --
Investment in Salomon
Brothers Variable
Series Fund Inc., at
fair value (note 2):
Strategic Bond Fund
(553,648 shares;
cost -- $5,558,043)... -- -- 5,348,241 -- --
Investors Fund (308,001
shares; cost --
$3,686,841).......... -- -- -- 3,766,850 --
Total Return Fund
(317,951 shares;
cost -- $3,363,898)... -- -- -- -- 3,252,640
Receivable from
affiliate.............. -- -- -- -- --
Receivable for units
sold................... 17,081 109,340 26,541 37,265 --
----------- ---------- ---------- --------- ---------
Total assets........... 10,205,850 16,550,426 5,374,782 3,804,115 3,252,640
----------- ---------- ---------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 7,156 10,490 3,220 12,176 1,941
Payable for units
withdrawn.............. 4 26,440 43,562 32 --
----------- ---------- ---------- --------- ---------
Total liabilities...... 7,160 36,930 46,782 12,208 1,941
----------- ---------- ---------- --------- ---------
Net assets attributable
to variable deferred
annuity
contractholders........ $10,198,690 16,513,496 5,328,000 3,791,907 3,250,699
=========== ========== ========== ========= =========
Outstanding units: Type
I (note 2)............. 80,699 195,348 46,435 15,929 6,185
=========== ========== ========== ========= =========
Net asset value per
unit: Type I........... $ 9.23 8.39 10.16 13.40 10.63
=========== ========== ========== ========= =========
Outstanding units: Type
II (note 2)............ 779,766 1,156,388 245,779 111,934 175,544
=========== ========== ========== ========= =========
Net asset value per
unit: Type II.......... $ 9.20 8.35 10.13 13.36 10.60
=========== ========== ========== ========= =========
Outstanding units: Type
III (note 2)........... 204,598 482,846 223,881 187,111 117,856
=========== ========== ========== ========= =========
Net asset value per
unit: Type III......... $ 10.44 10.02 9.90 10.98 9.91
=========== ========== ========== ========= =========
Outstanding units: Type
IV (note 2)............ 15,109 42,809 15,296 2,865 16,292
=========== ========== ========== ========= =========
Net asset value per
unit: Type IV.......... $ 9.53 8.89 9.81 9.96 9.59
=========== ========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations
Year ended December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------------
S&P 500 Money International Real Estate
Index Market Total Return Equity Securities
Fund Fund Fund Fund Fund
----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 4,410,071 15,088,188 2,067,235 46,113 1,381,537
Expenses -- Mortality
& expense risk charges
and administrative
expenses -- Type I
(note 3).............. 704,948 950,843 220,301 30,656 43,767
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 4,907,040 2,464,886 799,585 148,148 322,329
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. 460,991 701,862 85,952 8,603 7,954
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type IV
(note 3).............. 21,523 57,198 3,143 449 224
----------- ----------- ---------- ---------- -----------
Net investment income
(expense).............. (1,684,431) 10,913,399 958,254 (141,743) 1,007,263
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... 30,003,910 (10) 1,021,209 2,767,291 (2,823,490)
Unrealized
appreciation
(depreciation) on
investments.......... 47,259,421 10 5,281,350 4,958,674 1,207,080
Capital gain
distribution......... 6,090,099 -- 2,426,755 1,106,722 72,712
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments......... 83,353,430 -- 8,729,314 8,832,687 (1,543,698)
----------- ----------- ---------- ---------- -----------
Increase (decrease) in
net assets from
operations............. $81,668,999 10,913,399 9,687,568 8,690,944 (536,435)
=========== =========== ========== ========== ===========
<CAPTION>
GE Investments Funds, Inc., continued
-------------------------------------------------------------------
Premier
Global Value U.S. Equity Growth
Income Fund Equity Fund Income Fund Fund Equity Fund-a)
----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 55,082 512,848 2,343,057 200,089 23,826
Expenses -- Mortality
& expense risk charges
and administrative
expenses -- Type I
(note 3).............. 6,916 72,657 151,247 7,322 1,847
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 44,108 547,672 337,337 130,281 28,109
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. -- 71,148 21,574 67,105 42,760
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type IV
(note 3).............. -- 6,988 3,666 3,951 2,973
----------- ----------- ---------- ---------- -----------
Net investment income
(expense).............. 4,058 (185,617) 1,829,233 (8,570) (51,863)
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... (134,013) 1,440,840 (265,204) 288,484 559,025
Unrealized
appreciation
(depreciation) on
investments.......... (715,675) 5,153,071 (2,672,230) 816,588 2,049,497
Capital gain
distribution......... 4,146 -- 72,466 1,800,801 770,369
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments......... (845,542) 6,593,911 (2,864,968) 2,905,873 3,378,891
----------- ----------- ---------- ---------- -----------
Increase (decrease) in
net assets from
operations............. $ (841,484) 6,408,294 (1,035,735) 2,897,303 3,327,028
=========== =========== ========== ========== ===========
- -a) Reflects period covering May 5, 1999 to December 31, 1999.
</TABLE>
F-12
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
----------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary Div-
idends................ $ 3,095,204 647,295 -- 11,617,048 2,750,715
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type I (note
3).................... 211,534 610,992 1,107,841 525,530 397,035
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type II
(note 3).............. 684,021 2,181,875 1,965,558 1,624,725 609,540
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type III
(note 3).............. 37,302 71,673 44,712 74,133 15,762
Expenses -- Mortality &
expense risk charges
and administrative ex-
penses -- Type IV
(note 3).............. 2,616 2,934 913 1,234 367
----------- ---------- ----------- ---------- ---------
Net investment income
(expense).............. 2,159,731 (2,220,179) (3,119,024) 9,391,426 1,728,011
----------- ---------- ----------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (367,634) 8,028,813 43,460,518 (2,467,228) 1,998,615
Unrealized appreciation
(depreciation) on
investments........... (4,062,392) 64,932,288 120,804,294 (1,860,876) 249,173
Capital gain distribu-
tion.................. 306,119 7,443,892 -- -- 3,958,345
----------- ---------- ----------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments......... (4,123,907) 80,404,993 164,264,812 (4,328,104) 6,206,133
----------- ---------- ----------- ---------- ---------
Increase (decrease) in
net assets from opera-
tions.................. $(1,964,176) 78,184,814 161,145,788 5,063,322 7,934,144
=========== ========== =========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Fund
-------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
------------ ----------- ----------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary Dividends............ $ 10,155,685 956,132 1,571,786
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type I (note 3)....................... 2,492,600 2,538,686 777,904
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type II (note 3)...................... 6,522,445 3,548,591 559,606
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type III (note 3)..................... 186,038 405,119 21,330
Expenses -- Mortality & expense risk
charges and administrative expenses --
Type IV (note 3)...................... 10,576 11,944 1,011
------------ ----------- ----------
Net investment income (expense).......... 944,026 (5,548,208) 211,935
------------ ----------- ----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)................ 32,608,373 40,501,315 22,135,968
Unrealized appreciation (depreciation)
on investments......................... (23,171,445) 83,757,029 16,842,471
Capital gain distribution............... 22,604,590 46,850,486 2,564,494
------------ ----------- ----------
Net realized and unrealized gain (loss)
on investments.......................... 32,041,518 171,108,830 41,542,933
------------ ----------- ----------
Increase (decrease) in net assets from
operations.............................. $ 32,985,544 165,560,622 41,754,868
============ =========== ==========
</TABLE>
F-13
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year ended December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------ ------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends................. $ 16,324,271 1,703,921 387,131 567,056
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3).......... 4,367,086 941,924 161,230 107,137
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3)......... 1,287,699 4,240,466 951,315 852,938
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)........ 41,993 286,944 137,297 99,378
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3)......... 1,982 13,783 5,408 3,459
------------ ---------- --------- ---------
Net investment income
(expense).................. 10,625,511 (3,779,196) (868,119) (495,856)
------------ ---------- --------- ---------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)... 16,067,053 24,922,273 3,957,786 2,346,277
Unrealized appreciation
(depreciation) on
investments............... (2,840,015) 55,449,896 2,814,926 (404,266)
Capital gain distribution.. 20,776,345 12,495,419 785,993 1,053,105
------------ ---------- --------- ---------
Net realized and unrealized
gain (loss) on
investments................ 34,003,383 92,867,588 7,558,705 2,995,116
------------ ---------- --------- ---------
Increase (decrease) in net
assets from operations..... $ 44,628,894 89,088,392 6,690,586 2,499,260
============ ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Federated Insurance Series
------------------------------------
American High Income
Leaders Bond Utility
Fund II Fund II Fund II
----------- ----------- ----------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary Dividends............. $ 704,366 4,281,850 1,190,082
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type I (note 3)............. 95,183 83,957 88,850
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type II (note 3)............ 1,047,440 681,714 588,434
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type III (note 3)........... 72,076 45,805 29,308
Expenses -- Mortality & expense risk
charges and administrative
expenses -- Type IV (note 3)............ 2,887 3,002 1,836
----------- ---------- ----------
Net investment income (expense)........... (513,220) 3,467,372 481,654
----------- ---------- ----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)................. 1,360,681 (1,194,670) 1,236,132
Unrealized appreciation (depreciation) on
investments............................. (4,248,287) (1,948,643) (3,774,428)
Capital gain distribution................ 7,121,918 372,335 2,310,160
----------- ---------- ----------
Net realized and unrealized gain (loss) on
investments.............................. 4,234,312 (2,770,978) (228,136)
----------- ---------- ----------
Increase (decrease) in net assets from op-
erations................................. $ 3,721,092 696,394 253,518
=========== ========== ==========
</TABLE>
F-14
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year ended December 31, 1999
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------- ---------------------
PBHG
Small Large Cap PBHG
Capitalization Growth Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary Divi-
dends...................... $ -- 165,319 -- --
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3)........... 192,915 338,789 20,933 27,493
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3).......... 1,098,622 2,152,122 162,402 183,640
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)......... 53,181 347,936 -- --
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3).......... 4,140 8,392 -- --
----------- ---------- --------- ----------
Net investment income (ex-
pense)...................... (1,348,858) (2,681,920) (183,335) (211,133)
----------- ---------- --------- ----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss).... 4,496,020 16,000,254 1,293,989 2,553,635
Unrealized appreciation (de-
preciation) on invest-
ments...................... 25,658,694 34,200,259 7,139,998 11,061,365
Capital gain distribution... 11,288,748 16,366,607 -- --
----------- ---------- --------- ----------
Net realized and unrealized
gain (loss) on investments.. 41,443,462 66,567,120 8,433,987 13,615,000
----------- ---------- --------- ----------
Increase (decrease) in net
assets from operations...... $40,094,604 63,885,200 8,250,652 13,403,867
=========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
--------------------------------------
Aggressive Worldwide
Growth Growth Growth
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary Dividends......... $ 2,881,876 1,107,540 1,115,148
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type I
(note 3)............................ 677,194 1,417,071 1,769,864
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type II
(note 3)............................ 2,051,000 4,084,205 6,316,146
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type III
(note 3)............................ 308,490 483,682 361,048
Expenses -- Mortality & expense risk
charges and
administrative expenses -- Type IV
(note 3)............................ 20,061 19,248 18,635
------------ ----------- -----------
Net investment income (expense)....... (174,869) (4,896,666) (7,350,545)
------------ ----------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)............. 62,362,096 35,813,367 59,273,825
Unrealized appreciation (deprecia-
tion) on investments................ 163,992,838 142,877,179 309,685,852
Capital gain distribution............ 4,906,978 2,247,871 --
------------ ----------- -----------
Net realized and unrealized gain
(loss) on investments................ 231,261,912 180,938,417 368,959,677
------------ ----------- -----------
Increase (decrease) in net assets from
operations........................... $231,087,043 176,041,751 361,609,132
============ =========== ===========
</TABLE>
F-15
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations, Continued
Year ended December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------------------
Flexible International Capital
Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends................. $ 7,970,337 3,387,191 230,552 79,084
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3).......... 724,446 84,668 201,248 280,059
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3)......... 2,795,494 492,939 1,061,078 1,375,897
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)........ 489,490 41,297 67,763 546,887
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3)......... 15,454 5,523 4,306 15,737
----------- ---------- ---------- -----------
Net investment income
(expense).................. 3,945,453 2,762,764 (1,103,843) (2,139,496)
----------- ---------- ---------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)... 13,526,836 (288,141) 6,798,898 12,257,740
Unrealized appreciation
(depreciation) on
investments............... 55,762,394 (2,373,888) 68,867,033 88,365,393
Capital gain distribution.. -- 146,515 -- 909,471
----------- ---------- ---------- -----------
Net realized and unrealized
gain (loss) on
investments................ 69,289,230 (2,515,514) 75,665,931 101,532,604
----------- ---------- ---------- -----------
Increase (decrease) in net
assets from operations..... $73,234,683 247,250 74,562,088 99,393,108
=========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------- -----------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
---------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends................. 112,074 116,838 266,587 19,120 78,025
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type I (note 3).......... 7,339 13,312 7,088 1,561 1,042
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type II (note 3)......... 78,696 79,328 16,165 7,237 16,090
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type III (note 3)........ 9,532 30,093 13,973 10,004 6,754
Expenses -- Mortality &
expense risk charges and
administrative expenses --
Type IV (note 3)......... 497 2,096 1,648 174 711
-------- -------- -------- ------- --------
Net investment income
(expense).................. 16,010 (7,991) 227,713 144 53,428
-------- -------- -------- ------- --------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)... 9,945 40,722 1,001 (45,705) 1,801
Unrealized appreciation
(depreciation) on
investments............... 215,378 (786,328) (204,979) 79,688 (108,299)
Capital gain distribution.. -- -- -- -- --
-------- -------- -------- ------- --------
Net realized and unrealized
gain (loss) on
investments................ 225,323 (745,606) (203,978) 33,983 (106,498)
-------- -------- -------- ------- --------
Increase (decrease) in net
assets from operations..... $241,333 (753,597) 23,735 34,127 (53,070)
======== ======== ======== ======= ========
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------------------------
S&P 500
Index Money Market Total Return
Fund Fund Fund
------------------------- ------------------------- -------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------- -------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets From operations:
Net investment income
(expense)............. $ (1,684,431) (394,895) 10,913,399 6,916,677 958,254 2,668,826
Net realized gain
(loss)................ 30,003,910 8,830,544 (10) 545,381 1,021,209 (144,205)
Unrealized appreciation
(depreciation) on
investments........... 47,259,421 35,731,485 10 (545,381) 5,281,350 5,408,858
Capital gain distribu-
tion.................. 6,090,099 8,918,905 -- -- 2,426,755 --
------------ ----------- ------------ ----------- ------------ -----------
Increase (decrease) in
net assets from oper-
ations............... 81,668,999 53,086,039 10,913,399 6,916,677 9,687,568 7,933,479
------------ ----------- ------------ ----------- ------------ -----------
From capital
transactions:
Net premiums........... 150,605,950 53,735,217 455,850,801 103,629,024 20,100,592 7,103,374
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (1,914,921) (1,018,619) (6,110,039) (4,961,886) (782,405) (336,462)
Surrenders........... (23,948,873) (11,869,972) (119,079,947) (46,255,514) (5,649,875) (3,264,071)
Administrative
expense (note 3).... (346,732) (193,962) (308,122) (222,910) (83,454) (63,853)
Transfer gain (loss)
and transfer fees... 957,648 623,320 5,822,636 6,222,666 67,204 76,515
Capital contribution
(withdrawal)........ -- -- -- -- -- --
Transfers (to) from the
Guarantee Account
(note 1).............. 89,343,041 40,155,936 19,221,784 24,299,736 13,514,725 9,157,868
Interfund transfers.... 18,779,770 20,883,117 (140,405,301) 5,214,444 76,047 974,377
------------ ----------- ------------ ----------- ------------ -----------
Increase (decrease) in
net assets from capital
transactions........... 233,475,883 102,315,037 214,991,812 87,925,560 27,242,834 13,647,748
------------ ----------- ------------ ----------- ------------ -----------
Increase (decrease) in
net assets............. 315,144,882 155,401,076 225,905,211 94,842,237 36,930,402 21,581,227
Net assets at beginning
of year................ 308,827,400 153,426,324 218,536,941 123,694,704 66,108,344 44,527,117
------------ ----------- ------------ ----------- ------------ -----------
Net assets at end of
year................... $623,972,282 308,827,400 444,442,152 218,536,941 103,038,746 66,108,344
============ =========== ============ =========== ============ ===========
</TABLE>
F-17
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
----------------------------------------------------
International Real Estate
Equity Securities
Fund Fund
------------------------- -------------------------
Year ended December 31, Year ended December 31,
------------------------- -------------------------
1999 1998 1999 1998
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (141,743) 1,294,582 1,007,263 1,409,122
Net realized gain
(loss)................ 2,767,291 441,842 (2,823,490) (878,569)
Unrealized appreciation
(depreciation) on
investments........... 4,958,674 2,296,938 1,207,080 (12,908,191)
Capital gain
distribution.......... 1,106,722 -- 72,712 1,726,962
------------ ----------- ----------- ------------
Increase (decrease) in
net assets from
operations............. 8,690,944 4,033,362 (536,435) (10,650,676)
------------ ----------- ----------- ------------
From capital
transactions:
Net premiums........... 2,858,308 985,487 2,212,512 5,008,291
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits....... (66,512) (49,268) (124,447) (182,572)
Surrenders........... (545,373) (558,600) (2,167,345) (1,142,178)
Administrative
expense (note 3).... (12,619) (13,254) (24,242) (30,467)
Transfer gain (loss)
and transfer fees... 108,529 (258,988) (129,406) (443,138)
Capital contribution
(withdrawal)........ (198,516) -- -- --
Transfers (to) from the
Guarantee Account
(note 1).............. 1,447,720 1,469,927 2,498,480 6,836,059
Interfund transfers.... 361,833 (1,665,448) (7,573,589) (5,533,571)
------------ ----------- ----------- ------------
Increase (decrease) in
net assets from capital
transactions........... 3,953,370 (90,144) (5,308,037) 4,512,424
------------ ----------- ----------- ------------
Increase (decrease) in
net assets............. 12,644,314 3,943,218 (5,844,472) (6,138,252)
Net assets at beginning
of year................ 26,819,751 22,876,533 46,545,545 52,683,797
------------ ----------- ----------- ------------
Net assets at end of
year................... $ 39,464,065 26,819,751 40,701,073 46,545,545
============ =========== =========== ============
</TABLE>
F-18
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
--------------------------------------------------
Global Income Fund Value Equity Fund
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)................... $ 4,058 504,065 (185,617) (158,569)
Net realized gain (loss).. (134,013) 96,320 1,440,840 576,810
Unrealized appreciation
(depreciation) on invest-
ments.................... (715,675) 337,555 5,153,071 (292,099)
Capital gain distribu-
tion..................... 4,146 22,214 -- 929,149
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from operations.... (841,484) 960,154 6,408,294 1,055,291
------------ ---------- ----------- -----------
From capital transactions:
Net premiums.............. 298,133 600,772 21,173,356 9,579,320
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........... -- -- (219,644) (25,562)
Surrenders............... (230,326) (63,958) (3,878,411) (1,731,724)
Administrative expense
(note 3)................ (2,504) -- (39,635) (18,611)
Transfer gain (loss) and
transfer fees........... 41,185 (1,623) (24,010) 1,014,745
Capital contribution
(withdrawal)............ -- 45,130 -- --
Transfers (to) from the
Guarantee Account (note
1)....................... 1,130,309 986,575 9,162,615 8,817,658
Interfund transfers....... (1,065,929) 1,028,376 2,580,708 4,550,014
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions.............. 170,868 2,595,272 28,754,979 22,185,840
------------ ---------- ----------- -----------
Increase (decrease) in net
assets.................... (670,616) 3,555,426 35,163,273 23,214,131
Net assets at beginning of
year...................... 9,670,724 6,115,298 39,141,139 15,900,008
------------ ---------- ----------- -----------
Net assets at end of year.. $ 9,000,108 9,670,724 74,304,412 39,114,139
============ ========== =========== ===========
</TABLE>
F-19
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
------------------------------------------------------------------------
U.S. Premier
Income Equity Growth
Fund Fund Equity Fund
------------------------- ---------------------------- ---------------
Period from Period from
Year ended December 31, Year ended May 4, 1998 May 5, 1999
------------------------- December 31, to December 31, to December 31,
1999 1998 1999 1998 1999
------------ ----------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 1,829,233 1,286,221 (8,570) 9,991 (51,863)
Net realized gain
(loss)................ (265,204) 335,927 288,484 9,452 559,025
Unrealized appreciation
(depreciation) on
investments........... (2,672,230) (245,492) 816,588 153,754 2,049,497
Capital gain distribu-
tion.................. 72,466 285,194 1,800,801 36,079 770,369
------------ ----------- ---------- --------- ----------
Increase (decrease) in
net assets from
operations............. (1,035,735) 1,661,850 2,897,303 209,276 3,327,028
------------ ----------- ---------- --------- ----------
From capital
transactions:
Net premiums........... 6,923,805 1,921,255 22,445,779 864,801 14,174,762
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits....... (489,017) (145,003) (45,279) -- (3,881)
Surrenders........... (2,870,344) (1,961,475) (528,852) (8,236) (153,976)
Administrative ex-
pense (note 3)...... (44,669) (34,884) (5,653) (374) (1,218)
Transfer gain (loss)
and transfer fees... 62,981 (172,635) 129,249 4,703 205,591
Capital contribution
(withdrawal)........ -- -- -- -- --
Transfers (to) from the
Guarantee Account
(note 1).............. 8,054,862 4,132,905 6,635,234 500,876 1,787,824
Interfund transfers.... (75,826) 6,911,104 5,339,842 629,934 7,975,066
------------ ----------- ---------- --------- ----------
Increase (decrease) in
net assets from capital
transactions........... 11,561,792 10,651,267 33,970,320 1,991,704 23,984,168
------------ ----------- ---------- --------- ----------
Increase (decrease) in
net assets............. 10,526,057 12,313,117 36,867,623 2,200,980 27,311,196
Net assets at beginning
of year................ 34,323,977 22,010,860 2,200,980 -- --
------------ ----------- ---------- --------- ----------
Net assets at end of
year................... $ 44,850,034 34,323,977 39,068,603 2,200,980 27,311,196
============ =========== ========== ========= ==========
</TABLE>
F-20
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Capital
Bond Appreciation
Fund/VA Fund/VA
------------------------- -------------------------
Year ended December 31, Year ended December 31,
------------------------- -------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense).............. $ 2,159,731 67,918 (2,220,179) (932,825)
Net realized gain
(loss)................. (367,634) 557,479 8,028,813 19,777,101
Unrealized appreciation
(depreciation) on
investments............ (4,062,392) 1,205,533 64,932,288 922,343
Capital gain
distribution........... 306,119 628,926 7,443,892 13,330,660
------------ ----------- ------------ -----------
Increase (decrease) in
net assets from
operations.............. (1,964,176) 2,459,856 78,184,814 33,097,279
------------ ----------- ------------ -----------
From capital
transactions:
Net premiums............ 12,174,256 6,231,291 23,530,758 17,725,498
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits........ (689,793) (410,382) (1,199,344) (894,216)
Surrenders............ (5,269,460) (4,432,337) (14,095,955) (9,299,680)
Administrative expense
(note 3)............. (69,547) (55,996) (221,476) (184,119)
Transfer gain (loss)
and transfer fees.... (235,556) (86,859) 87,768 (3,882)
Transfers (to) from the
Guarantee Account (note
1)..................... 13,999,173 8,638,887 14,646,072 17,267,813
Interfund transfers..... (4,224,435) 10,655,917 (8,629,648) (7,357,815)
------------ ----------- ------------ -----------
Increase (decrease) in
net assets from capital
transactions............ 15,684,638 20,540,521 14,118,175 17,253,599
------------ ----------- ------------ -----------
Increase (decrease) in
net assets.............. 13,720,462 23,000,377 92,302,989 50,350,878
Net assets at beginning
of year................. 62,746,060 39,745,683 189,366,694 139,015,816
------------ ----------- ------------ -----------
Net assets at end of
year.................... $ 76,466,522 62,746,060 281,669,683 189,366,694
============ =========== ============ ===========
</TABLE>
F-21
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds (continued)
------------------------------------------------------------------------------
Aggressive High Multiple
Growth Income Strategies
Fund/VA Fund/VA Fund/VA
-------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
-------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (3,119,024) (2,113,073) 9,391,426 1,269,071 1,728,011 (243,868)
Net realized gain
(loss)................ 43,460,518 19,896,478 (2,467,228) (99,049) 1,998,615 1,712,582
Unrealized appreciation
(depreciation) on
investments........... 120,804,294 (396,149) (1,860,876) (7,301,468) 249,173 (1,662,556)
Capital gain
distribution.......... -- 5,372,387 -- 4,091,636 3,958,345 4,043,187
------------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 161,145,788 22,759,643 5,063,322 (2,039,810) 7,934,144 3,849,345
------------- ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 13,548,977 9,377,106 14,520,822 13,886,757 5,277,206 5,911,134
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (1,088,159) (796,601) (1,064,649) (1,060,654) (560,764) (527,685)
Surrenders........... (20,015,823) (11,332,990) (13,777,348) (10,775,891) (7,655,266) (6,115,145)
Administrative ex-
pense
(note 3)............ (320,865) (280,687) (181,388) (189,819) (112,560) (118,214)
Transfer gain (loss)
and
transfer fees....... 978,941 (1,028,582) (340,605) (612,294) (334,258) (298,427)
Transfers (to) from the
Guarantee Account
(note 1).............. 5,300,960 11,708,764 13,711,757 20,861,727 4,683,850 8,281,940
Interfund transfers.... (19,243,413) (20,227,182) (14,458,320) (4,351,060) (8,149,619) (3,251,940)
------------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... (20,839,382) (12,580,172) (1,589,731) 17,758,766 (6,851,411) 3,881,663
------------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. 140,306,406 10,179,471 3,473,591 15,718,956 1,082,733 7,731,008
Net assets at beginning
of year................ 218,026,707 207,847,236 164,004,582 148,285,626 79,754,561 72,023,553
------------- ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $ 358,333,113 218,026,707 167,478,173 164,004,582 80,837,294 79,754,561
============= =========== =========== =========== =========== ===========
</TABLE>
F-22
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund
-----------------------------------------------------------------------------
Equity-Income Portfolio Growth Portfolio Overseas Portfolio
------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 944,026 365,176 (5,548,208) (2,577,337) 211,935 761,025
Net realized gain
(loss)................ 32,608,373 40,058,923 40,501,315 17,030,101 22,135,968 12,998,779
Unrealized appreciation
(depreciation) on
investments........... (23,171,445) (9,194,909) 83,757,029 58,825,099 16,842,471 (6,292,784)
Capital gain
distribution.......... 22,604,590 31,355,502 46,850,486 41,858,263 2,564,494 6,294,605
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 32,985,544 62,584,692 165,560,622 115,136,126 41,754,868 13,761,625
------------ ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 55,451,274 46,774,052 102,689,652 15,214,848 5,626,757 1,843,855
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (3,558,664) (3,800,272) (2,182,323) (2,191,698) (566,490) (439,740)
Surrenders........... (58,264,096) (39,388,010) (50,608,296) (23,927,419) (11,598,256) (6,306,537)
Administrative
expense (note 3).... (810,775) (787,804) (662,552) (510,394) (182,204) (183,116)
Transfer gain (loss)
and transfer fees... (463,678) (4,002,591) (193,058) (1,467,259) 691,511 (1,416,329)
Transfers (to) from the
Guarantee Account
(note 1).............. 32,482,731 49,734,168 27,141,802 9,000,692 1,257,466 2,209,192
Interfund transfers.... (59,307,860) (32,464,680) 13,823,927 (8,701,771) (10,841,539) (14,310,296)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... (34,471,068) 16,064,863 90,009,152 (12,583,001) (15,612,755) (18,602,971)
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. (1,485,524) 78,649,555 255,569,774 102,553,125 26,142,113 (4,841,346)
Net assets at beginning
of year................ 692,232,327 613,582,772 417,566,732 315,013,607 103,463,275 108,304,621
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $690,746,803 692,232,327 673,136,506 417,566,732 129,605,388 103,463,275
============ =========== =========== =========== =========== ===========
</TABLE>
F-23
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund II
---------------------------------------------------
Asset Manager Portfolio Contrafund Portfolio
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ 10,625,511 9,625,658 (3,779,196) (1,952,491)
Net realized gain (loss)
........................ 16,067,053 12,994,733 24,922,273 14,314,697
Unrealized appreciation
(depreciation) on
investments............. (2,840,015) (5,404,033) 55,449,896 47,868,379
Capital gain
distribution............ 20,776,345 45,774,419 12,495,419 12,625,996
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from operations... 44,628,894 62,990,777 89,088,392 72,856,581
------------ ----------- ----------- -----------
From capital transactions:
Net premiums............. 14,653,091 10,264,331 82,802,444 25,285,801
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits.......... (2,929,710) (2,712,196) (1,793,088) (1,246,412)
Surrenders.............. (65,155,121) (43,729,546) (26,567,889) (13,148,361)
Administrative expense
(note 3)............... (1,071,066) (1,091,339) (379,551) (296,892)
Transfer gain (loss) and
transfer fees.......... (2,618,892) (6,077,325) (2,525,155) (122,549)
Transfers (to) from
Guarantee Account
(note 1)................ 9,583,071 9,427,060 32,522,703 25,805,412
Interfund transfers...... (21,111,137) (12,459,422) 4,661,245 (7,547,010)
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. (68,649,764) (46,378,437) 88,720,709 28,729,989
------------ ----------- ----------- -----------
Increase (decrease) in net
assets................... (24,020,870) 16,612,340 177,809,101 101,586,570
Net assets at beginning of
year..................... 500,487,152 483,874,812 343,723,966 242,137,396
------------ ----------- ----------- -----------
Net assets at end of
year..................... $476,466,282 500,487,152 521,533,067 343,723,966
============ =========== =========== ===========
</TABLE>
F-24
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund III
---------------------------------------------------
Growth & Income Growth Opportunities
Portfolio Portfolio
------------------------ -------------------------
Year ended December 31, Year ended December 31,
------------------------ -------------------------
1999 1998 1999 1998
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (868,119) (420,269) (495,856) (241,549)
Net realized gain
(loss).................. 3,957,786 983,225 2,346,277 378,467
Unrealized appreciation
(depreciation) on
investments............. 2,814,926 7,912,728 (404,266) 6,815,534
Capital gain
distribution............ 785,993 102,863 1,053,105 739,930
------------ ---------- ------------ -----------
Increase (decrease) in net
assets from operations... 6,690,586 8,578,547 2,499,260 7,692,382
------------ ---------- ------------ -----------
From capital transactions:
Net premiums............. 37,343,267 13,303,380 31,843,565 10,151,968
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits.......... (452,650) (688,026) (291,426) (104,398)
Surrenders.............. (4,513,761) (1,264,908) (4,617,789) (1,515,091)
Administrative expense
(note 3)............... (71,973) (29,641) (57,526) (29,463)
Transfer gain (loss) and
transfer fees.......... 351,485 732,615 253,392 483,076
Transfers (to) from
Guarantee Account (note
1)...................... 24,539,942 10,185,026 15,970,057 10,705,328
Interfund transfers...... (525,341) 10,322,368 1,492,494 9,164,481
------------ ---------- ------------ -----------
Increase (decrease) in net
assets from capital
transactions............. 56,670,969 32,560,814 44,592,767 28,855,901
------------ ---------- ------------ -----------
Increase (decrease) in net
assets................... 63,361,555 41,139,361 47,092,027 36,548,283
Net assets at beginning of
year..................... 56,847,583 15,708,222 53,636,058 17,087,775
------------ ---------- ------------ -----------
Net assets at end of
year..................... $120,209,138 56,847,583 100,728,085 53,636,058
============ ========== ============ ===========
</TABLE>
F-25
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Federated Insurance Series
------------------------------------------------------------------------
American High Income
Leaders Bond Utility
Fund II Fund II Fund II
------------------------ ---------------------- ----------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------ ---------------------- ----------------------
1999 1998 1999 1998 1998 1996
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (513,220) (550,126) 3,467,372 377,590 481,654 (182,451)
Net realized gain
(loss)................ 1,360,681 1,333,508 (1,194,670) 901,146 1,236,132 1,730,044
Unrealized appreciation
(depreciation) on
investments........... (4,248,287) 4,019,536 (1,948,643) (615,798) (3,774,428) 1,205,055
Capital gain
distribution.......... 7,121,918 2,704,294 372,335 273,209 2,310,160 1,841,863
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from
operations............. 3,721,092 7,507,212 696,394 936,147 253,518 4,594,511
------------ ---------- ---------- ---------- ---------- ----------
From capital
transactions:
Net premiums........... 21,419,498 17,174,298 12,914,758 7,609,375 9,759,421 5,300,423
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (221,728) (702,585) (245,085) (420,052) (562,420) (295,533)
Surrenders........... (5,313,269) (2,256,129) (3,914,221) (3,031,255) (3,154,249) (1,872,219)
Administrative
expense (note 3).... (77,785) (47,545) (43,801) (34,940) (45,364) (36,851)
Transfer gain (loss)
and transfer fees... (56,238) 404,576 989 650,014 (154,923) (738,016)
Transfers (to) from the
Guarantee Account
(note 1).............. 15,009,686 15,132,233 11,169,833 12,815,682 10,141,825 5,791,377
Interfund transfers.... (7,715,367) 2,109,439 (5,891,810) (1,253,689) (2,728,703) 2,670,259
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from capital
transactions........... 23,044,797 31,814,287 13,990,663 16,335,135 13,255,587 10,819,440
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets............. 26,765,889 39,321,499 14,687,057 17,271,282 13,509,105 15,413,951
Net assets at beginning
of year................ 74,215,225 34,893,726 52,466,629 35,195,347 45,811,845 30,397,894
------------ ---------- ---------- ---------- ---------- ----------
Net assets at end of
year................... $100,981,114 74,215,225 67,153,686 52,466,629 59,320,950 45,811,845
============ ========== ========== ========== ========== ==========
</TABLE>
F-26
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Alger American Fund
--------------------------------------------------
Small Capitalization
Portfolio Growth Portfolio
------------------------ ------------------------
Year ended December 31, Year ended December 31,
------------------------ ------------------------
1999 1998 1999 1998
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (1,348,858) (1,053,686) (2,681,920) (966,536)
Net realized gain
(loss).................. 4,496,020 411,066 16,000,254 4,172,054
Unrealized appreciation
(depreciation) on in-
vestments............... 25,658,694 2,406,527 34,200,259 20,408,775
Capital gain distribu-
tion.................... 11,288,748 10,556,556 16,366,607 13,947,299
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from operations... 40,094,604 12,320,463 63,885,200 37,561,592
------------ ---------- ----------- -----------
From capital transactions:
Net premiums............. 18,801,609 6,622,636 92,259,433 11,725,922
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits......... (420,284) (459,998) (1,648,447) (663,235)
Surrenders............. (7,370,878) (3,709,013) (13,584,719) (5,345,156)
Administrative expense
(note 3).............. (95,877) (83,804) (148,219) (89,422)
Transfer gain (loss)
and transfer fees..... 339,009 246,716 622,265 (10,013)
Transfers (to) from the
Guarantee Account (note
1)...................... 7,500,439 8,384,117 26,764,387 9,961,009
Interfund transfers...... (9,144,368) (2,794,548) 22,462,752 6,706,761
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. 9,609,650 8,206,106 126,727,452 22,285,866
------------ ---------- ----------- -----------
Increase (decrease) in net
assets................... 49,704,254 20,526,569 190,612,652 59,847,458
Net assets at beginning of
year..................... 94,354,259 73,827,690 132,001,271 72,153,813
------------ ---------- ----------- -----------
Net assets at end of
year..................... $144,058,513 94,354,259 322,613,923 132,001,271
============ ========== =========== ===========
</TABLE>
F-27
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Fund, Inc.
-----------------------------------------------
PBHG PBHG
Large Cap Growth II
Growth Portfolio Portfolio
----------------------- ----------------------
Year ended December Year ended December
31, 31,
----------------------- ----------------------
1999 1998 1999 1998
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)...................... $ (183,335) (106,500) (211,133) (119,244)
Net realized gain (loss)..... 1,293,989 282,909 2,553,635 (281,878)
Unrealized appreciation (de-
preciation) on investments.. 7,139,998 2,025,080 11,061,365 1,029,558
Capital gain distribution.... -- -- -- --
----------- ---------- ---------- ----------
Increase (decrease) in net
assets from operations....... 8,250,652 2,201,489 13,403,867 628,436
----------- ---------- ---------- ----------
From capital transactions:
Net premiums................. 1,893,719 2,342,871 2,634,384 1,855,144
Transfers (to) from the gen-
eral account of GE Life and
Annuity:
Death benefits.............. (120,414) (42,994) (31,216) (117,890)
Surrenders.................. (2,112,511) (588,848) (1,282,939) (409,105)
Administrative expense (note
3)......................... (13,054) (7,464) (13,646) (8,868)
Transfer gain (loss) and
transfer fees.............. 8,735 40,495 92,029 27,528
Transfers (to) from the
Guarantee Account (note 1) 2,244,446 2,026,921 1,647,321 2,485,422
Interfund transfers.......... 1,070,497 1,290,849 5,263,684 (477,840)
----------- ---------- ---------- ----------
Increase (decrease) in net
assets from capital
transactions................. 2,971,418 5,061,830 8,309,617 3,354,391
----------- ---------- ---------- ----------
Increase (decrease) in net
assets....................... 11,222,070 7,263,319 21,713,484 3,982,827
Net assets at beginning of
year......................... 11,981,586 4,718,267 10,934,767 6,951,940
----------- ---------- ---------- ----------
Net assets at end of year..... $23,203,656 11,981,586 32,648,251 10,934,767
=========== ========== ========== ==========
</TABLE>
F-28
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (174,869) (1,431,833) (4,896,666) 6,056,709
Net realized gain
(loss).................. 62,362,096 11,413,034 35,813,367 11,096,226
Unrealized appreciation
(depreciation) on
investments............. 163,992,838 24,333,274 142,877,179 56,452,101
Capital gain
distribution............ 4,906,978 -- 2,247,871 7,613,462
------------ ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 231,087,043 34,314,475 176,041,751 81,218,498
------------ ----------- ----------- -----------
From capital transactions:
Net premiums............. 82,694,488 4,886,885 129,921,095 19,968,429
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits......... (693,006) (815,476) (2,337,901) (1,360,596)
Surrenders............. (14,862,560) (5,681,643) (28,100,426) (11,799,421)
Administrative expense
(note 3).............. (206,645) (120,730) (458,087) (317,146)
Transfer gain (loss)
and transfer fees..... (5,761,812) (352,260) 893,020 (691,664)
Transfers (to) from the
Guarantee Account (note
1)...................... 14,163,240 4,693,626 37,755,657 19,406,972
Interfund transfers...... 74,808,346 (8,460,504) 42,077,065 3,890,833
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. 150,142,051 (5,850,102) 179,750,423 29,097,407
------------ ----------- ----------- -----------
Increase (decrease) in net
assets................... 381,229,094 28,464,373 355,792,174 110,315,905
Net assets at beginning of
year..................... 134,279,495 105,815,122 334,384,822 224,068,917
------------ ----------- ----------- -----------
Net assets at end of
year..................... $515,508,589 134,279,495 690,176,996 334,384,822
============ =========== =========== ===========
</TABLE>
F-29
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-----------------------------------------------------------------------------
Worldwide Flexible
Growth Balanced Income
Portfolio Portfolio Portfolio
------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (7,350,545) 6,523,226 3,945,453 3,182,878 2,762,764 1,259,217
Net realized gain
(loss)................ 59,273,825 46,111,510 13,526,836 3,053,389 (288,141) 222,001
Unrealized appreciation
(depreciation) on
investments........... 309,685,852 41,481,543 55,762,394 28,743,051 (2,373,888) 30,008
Capital gain
distribution.......... -- 4,933,615 -- 722,300 146,515 66,130
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 361,609,132 99,049,894 73,234,683 35,701,618 247,250 1,577,356
------------ ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 103,924,205 44,526,187 123,717,725 24,644,401 12,258,667 4,066,867
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (2,973,664) (1,373,901) (1,474,438) (857,556) (202,784) (36,188)
Surrenders........... (40,772,035) (19,617,340) (20,730,548) (9,165,787) (2,936,151) (813,459)
Administrative
expense (note 3).... (619,954) (469,515) (267,776) (138,515) (34,631) (21,644)
Transfer gain (loss)
and transfer fees... 934,945 125,152 456,442 1,031,515 (128,719) 453,024
Transfers (to) from the
Guarantee Account
(note 1).............. 51,917,924 41,574,483 78,194,170 24,485,481 13,890,840 7,043,148
Interfund transfers.... 5,019,615 (124,706) 32,520,849 21,236,757 312,624 6,439,490
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... 117,431,036 64,640,360 212,416,424 61,236,296 23,159,846 17,131,238
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. 479,040,168 163,690,254 285,651,107 96,937,914 23,407,096 18,708,594
Net assets at beginning
of year................ 508,816,336 345,126,082 174,576,149 77,638,235 33,045,345 14,336,751
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $987,856,504 508,816,336 460,227,256 174,576,149 56,452,441 33,045,345
============ =========== =========== =========== =========== ===========
</TABLE>
F-30
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-------------------------------------------------
International Growth Capital Appreciation
Portfolio Portfolio
------------------------ -----------------------
Year ended December 31, Year ended December 31,
------------------------ -----------------------
1999 1998 1999 1998
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................. $ (1,103,843) 285,215 (2,139,496) (129,163)
Net realized gain (loss)... 6,798,898 7,205,182 12,257,740 336,728
Unrealized appreciation
(depreciation) on
investments............... 68,867,033 1,486,427 88,365,393 7,532,890
Capital gain distribution.. -- 168,340 909,471 --
------------ ---------- ----------- ----------
Increase (decrease) in net
assets from operations... 74,562,088 9,145,164 99,393,108 7,740,455
------------ ---------- ----------- ----------
From capital transactions:
Net premiums............... 19,686,581 7,538,624 136,931,557 8,764,540
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits............ (397,836) (372,667) (1,194,716) (52,380)
Surrenders................ (5,164,544) (2,368,354) (7,042,061) (765,563)
Administrative expense
(note 3)................. (84,094) (70,684) (94,871) (11,745)
Transfer gain (loss) and
transfer fees............ 96,657 74,891 280,719 485,206
Transfer (to) from the
Guarantee Account (note
1)........................ 8,757,358 10,288,178 34,911,459 4,797,081
Interfund transfers........ 9,262,544 (1,419,705) 67,308,216 15,456,302
------------ ---------- ----------- ----------
Increase (decrease) in net
assets from capital
transactions............... 32,156,666 13,670,283 231,100,303 28,673,441
------------ ---------- ----------- ----------
Increase (decrease) in net
assets..................... 106,718,754 22,815,447 330,493,411 36,413,896
Net assets at beginning of
year....................... 77,481,173 54,665,726 39,083,471 2,669,575
------------ ---------- ----------- ----------
Net assets at end of year... $184,199,927 77,481,173 369,576,882 39,083,471
============ ========== =========== ==========
</TABLE>
F-31
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance
Trust
----------------------------------------------------
Growth and Mid Cap
Income Value
Fund Fund
-------------------------- -------------------------
Period from Period from
May 12, May 8,
Year ended 1998 to Year ended 1998 to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................ $ 16,010 20,010 (7,991) 12,176
Net realized gain (loss).. 9,945 (32,043) 40,722 (72,641)
Unrealized appreciation
(depreciation) on
investments.............. 215,378 40,081 (786,328) 12,789
Capital gain
distribution............. -- -- -- --
----------- --------- ---------- ---------
Increase (decrease) in net
assets from operations.... 241,333 28,048 (753,597) (47,676)
----------- --------- ---------- ---------
From capital transactions:
Net premiums.............. 3,188,933 1,873,044 7,662,493 1,653,452
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........... -- -- (44,741) --
Surrenders............... (312,406) (42,593) (399,418) (42,773)
Administrative expense
(note 3)................ (5,657) (447) (6,665) (527)
Transfer gain (loss) and
transfer fees........... (17,014) 89,687 129,599 (48,872)
Transfer (to) from the
Guarantee Account (note
1)....................... 2,602,797 1,085,095 3,097,131 1,327,515
Interfund transfers....... 238,136 1,229,734 3,205,503 782,072
----------- --------- ---------- ---------
Increase (decrease) in net
assets from capital
transactions.............. 5,694,789 4,234,520 13,643,902 3,670,867
----------- --------- ---------- ---------
Increase (decrease) in net
assets.................... 5,936,122 4,262,568 12,890,305 3,623,191
Net assets at beginning of
year...................... 4,262,568 -- 3,623,191 --
----------- --------- ---------- ---------
Net assets at end of year.. $10,198,690 4,262,568 16,513,496 3,623,191
=========== ========= ========== =========
</TABLE>
F-32
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Salomon Brothers Variable Series Fund Inc.
--------------------------------------------------------------------------------------
Strategic Total
Bond Investors Return
Fund Fund Fund
--------------------------- ------------------------- -------------------------
Period from Period from Period from
October 22, November 27, October 30,
Year ended 1998 to Year ended 1998 to Year ended 1998 to
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 227,713 5,736 144 40 53,428 4,787
Net realized gain
(loss)................ 1,001 322 (45,705) -- 1,801 1
Unrealized appreciation
(depreciation) on
investments........... (204,979) (4,823) 79,688 321 (108,299) (2,958)
Capital gain
distribution.......... -- 121 -- -- -- 1,011
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets from
operations............. 23,735 1,356 34,127 361 (53,070) 2,841
---------- ------- --------- ------ --------- -------
From capital
transactions:
Net premiums........... 2,763,150 19,355 2,330,816 9,900 1,867,404 168,401
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........ (10,950) -- -- -- -- --
Surrenders............ (107,247) -- (29,589) -- (26,394) (16)
Administrative expense
(note 3)............. (1,739) (17) (405) (3) (1,097) --
Transfer gain (loss)
and transfer fees.... (3,392) (48) 39,941 123 741 140
Transfer (to) from the
Guarantee Account
(note 1).............. 1,179,490 14,903 425,716 606 1,001,197 14,269
Interfund transfers.... 1,352,931 96,473 980,314 -- 118,197 158,086
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets from capital
transactions........... 5,172,243 130,666 3,746,793 10,626 2,960,048 340,880
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets............. 5,195,978 132,022 3,780,920 10,987 2,906,978 343,721
Net assets at beginning
of year................ 132,022 -- 10,987 -- 343,721 --
---------- ------- --------- ------ --------- -------
Net assets at end of
year................... $5,328,000 132,022 3,791,907 10,987 3,250,699 343,721
========== ======= ========= ====== ========= =======
</TABLE>
See accompanying notes to financial statements.
F-33
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements
December 31, 1999
(1) Description of Entity
GE Life & Annuity Separate Account 4 (the Account), formerly Life of Virginia
Separate Account 4, is a separate investment account established in 1987 by GE
Life and Annuity Assurance Company (GE Life & Annuity), formerly The Life
Insurance Company of Virginia, under the laws of the Commonwealth of Virginia.
The Account operates as a unit investment trust under the Investment Company Act
of 1940. The Account is used to fund certain benefits for flexible premium
variable deferred annuity life insurance policies issued by GE Life & Annuity.
GE Life and Annuity Assurance Company is a stock life insurance company
operating under a charter granted by the Commonwealth of Virginia on March 21,
1871. A majority of the capital stock of GE Life & Annuity is owned by General
Electric Capital Assurance Company. General Electric Capital Assurance Company
and its parent, GE Financial Assurance Holdings, Inc. are indirectly,
wholly-owned subsidiaries of General Electric Capital Corporation (GE Capital).
GE Capital, a diversified financial services company, is a wholly-owned
subsidiary of General Electric Company (GE), a New York corporation.
In June 1999, a new investment subdivision was added to the Account for all
types of units (see Note 2). The Premier Growth Equity Fund invests solely in a
designated portfolio of the GE Investment Funds, Inc. and is a series type
mutual fund. Between 1997 and 1999, the Oppenheimer Variable Account Capital
Appreciation Fund changed its name to the Oppenheimer Variable Account
Aggressive Growth Fund/VA and the Oppenheimer Variable Account Growth Fund
changed its name to the Oppenheimer Variable Account Capital Appreciation
Fund/VA.
In October 1998, three new investment subdivisions were added to the Account.
The Investors Fund, Strategic Bond Fund, and the Total Return Fund each invest
solely in a designated portfolio of the Salomon Brothers Variable Series Fund
Inc.
In May 1998, three new investment subdivisions were added to the Account. The
U.S. Equity Portfolio invests solely in a designated portfolio of the GE
Investments Funds, Inc. The Mid Cap Value Fund (formerly known as the Mid Cap
Equity Fund) and Growth and Income Fund each invest solely in a designated
portfolio of the Goldman Sachs Variable Insurance Trust. All designated
portfolios described above are series type mutual funds.
Policyowners may transfer cash values between the Account's portfolios and the
Guarantee Account that is part of the general account of GE Life & Annuity.
Amounts transferred to the Guarantee Account earn interest at the interest rate
in effect at the time of such transfer and remain in effect for one year, after
which a new rate may be declared.
(2) Summary of Significant Accounting Policies
(a) Unit Classes
There are four unit classes included in the Account. Type I units are sold
under policy form P1140 and P1141. Type II units are sold under policy forms
P1142, P1142N and P1143. Type III units are sold under policy form P1152 and
began sales in the first quarter of 1999. Type IV unit sales are sold under
Policy Form P1151 and began sales in the second quarter of 1999.
F-34
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(b) Investments
Investments are stated at fair value which is based on the underlying net asset
value per share of the respective portfolios or funds. Purchases and sales of
investments are recorded on the trade date and income distributions are recorded
on the ex-dividend date. Realized gains and losses on investments are determined
on the average cost basis. The units and unit values are disclosed as of the
last business day in the applicable year.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the year ended December 31, 1999 were:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- -------------- --------------
<S> <C> <C>
GE Investment Funds, Inc.:
S&P 500 Index Fund............................... $ 479,953,109 240,675,116
Money Market Fund................................ 2,709,722,205 2,475,380,915
Total Return Fund................................ 51,675,569 21,161,494
International Equity Fund........................ 58,643,467 54,760,704
Real Estate Securities Fund...................... 10,713,861 15,004,297
Global Income Fund............................... 6,954,217 7,026,889
Value Equity Fund................................ 54,346,586 25,721,299
Income Fund...................................... 29,457,972 16,007,415
U.S. Equity Fund................................. 43,581,601 7,797,307
Premier Growth Equity Fund....................... 38,883,748 14,367,536
Oppenheimer Variable Account Funds:
Bond Fund/VA..................................... 45,060,045 26,657,558
Aggressive Growth Fund/VA........................ 197,174,231 222,386,370
Capital Appreciation Fund/VA..................... 71,654,277 52,761,076
High Income Fund/VA.............................. 92,366,718 84,579,951
Multiple Strategies Fund/VA...................... 23,029,714 24,055,134
Variable Insurance Products Fund:
Equity-Income Portfolio.......................... 179,598,082 191,780,961
Growth Portfolio................................. 297,222,394 166,464,545
Overseas Portfolio............................... 631,917,400 655,516,215
Variable Insurance Products Fund II:
Asset Manager Portfolio.......................... 89,283,720 126,101,734
Contrafund Portfolio............................. 201,949,816 105,373,757
Variable Insurance Products Fund III:
Growth & Income Portfolio........................ 101,691,761 44,939,988
Growth Opportunties Portfolio.................... 74,653,003 29,331,119
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund........................... 8,838,178 3,077,278
Mid Cap Value Fund............................... 24,173,203 10,663,003
Janus Aspen Series:
Aggressive Growth Portfolio...................... 407,424,565 246,382,506
Growth Portfolio................................. 297,235,227 120,740,868
Worldwide Growth Portfolio....................... 352,769,148 245,642,656
Balanced Portfolio............................... 308,476,408 91,408,986
Flexible Income Portfolio........................ 50,727,756 24,540,205
</TABLE>
F-35
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ------------ -----------
<S> <C> <C>
International Growth Portfolio........................ $104,597,851 73,668,969
Capital Appreciation Portfolio........................ 342,016,654 110,984,538
Federated Insurance Series:
Utility Fund II....................................... 32,061,371 16,065,087
High Income Bond Fund II.............................. 100,193,253 81,675,988
American Leaders Fund II.............................. 61,138,187 31,509,097
The Alger American Fund:
Small Capitalization Portfolio........................ 206,574,736 187,536,157
Growth Portfolio...................................... 278,969,806 138,086,817
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio....................... 10,200,499 7,400,345
PBHG Growth II Portfolio.............................. 19,335,309 11,354,160
Salomon Brothers Variable Series Fund Inc.:
Strategic Bond Fund................................... 6,599,848 1,173,721
Investors Fund........................................ 5,284,092 1,562,172
Total Return Fund..................................... 4,562,928 1,541,701
</TABLE>
F-36
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(c) Capital Transactions
The increase (decrease) in outstanding units for Types I, II, III and IV from
capital transactions for the years or periods ended December 31, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Type I Units: --------- ---------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 918,847 3,512,260 631,828 181,530 353,450
--------- ---------- ------- ------- --------
From capital
transactions:
Net premiums........... 43,692 3,088,601 8,156 37,608 139,356
Transfers (to) from the
general account
of GE Life & Annuity:
Death benefits....... (4,853) (89,832) (2,466) (463) (1,816)
Surrenders........... (75,788) (2,689,646) (56,739) (24,253) (85,757)
Cost of insurance and
administrative
expenses............ (2,222) (13,914) (1,299) (767) (3,200)
Transfers (to) from the
Guarantee Account..... 44,702 269,329 8,553 14,103 112,800
Interfund transfers.... 172,435 1,145,551 (3,122) (46,225) (198,141)
--------- ---------- ------- ------- --------
Net increase (decrease)
in units from capital
transactions........... 177,966 1,710,089 (46,917) (19,997) (36,758)
--------- ---------- ------- ------- --------
Units outstanding at
December 31, 1998...... 1,096,813 5,222,349 584,911 161,533 316,692
--------- ---------- ------- ------- --------
From capital
transactions:
Net premiums........... 26,703 759,952 3,914 4,903 4,743
Transfers (to) from the
general account
of GE Life & Annuity:
Death benefits...... (2,575) (38,073) (6,637) (820) (798)
Surrenders.......... (92,539) (2,984,885) (69,560) (18,356) (28,756)
Cost of insurance
and administrative
expenses........... (1,912) (9,559) (1,381) (453) (656)
Transfers (to) from the
Guarantee Account..... 16,215 158,666 11,706 2,536 5,966
Interfund transfers.... 37,185 2,156,824 (9,232) 54,195 (78,972)
--------- ---------- ------- ------- --------
Net increase (decrease)
in units from capital
transactions........... (16,923) 42,925 (71,190) 42,005 (98,473)
--------- ---------- ------- ------- --------
Units outstanding at
December 31, 1999...... 1,079,890 5,265,274 513,721 203,538 218,219
========= ========== ======= ======= ========
</TABLE>
F-37
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
---------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
Type I Units: ------- ------- --------- ------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997......... 12,950 177,211 1,295,638 -- --
------- ------- --------- ------- ------
From capital transactions:
Net premiums.............. 3,542 73,340 14,672 2,951 --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........... -- (261) (5,419) -- --
Surrenders............... (3,547) (33,659) (93,554) (67) --
Cost of insurance and
administrative
expenses................ (80) (1,036) (1,780) (24) --
Transfers (to) from the
Guarantee Account........ 8,901 54,595 34,085 660 --
Interfund transfers....... 24,866 115,186 89,003 22,607 --
------- ------- --------- ------- ------
Net increase (decrease) in
units from capital
transactions.............. 33,682 208,165 37,007 26,127 --
------- ------- --------- ------- ------
Units outstanding at
December 31, 1998......... 46,632 385,376 1,332,645 26,127 --
------- ------- --------- ------- ------
From capital transactions:
Net premiums.............. 316 59,988 7,628 19,691 1,385
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........... -- (5,314) (28,458) -- --
Surrenders............... (11,174) (63,009) (154,718) (12,593) (2,995)
Cost of insurance and
administrative
expenses................ (106) (667) (2,892) (127) (39)
Transfers (to) from the
Guarantee Account........ (322) 11,639 33,529 2,525 3,139
Interfund transfers....... 15,435 31,733 (63,546) 47,268 45,113
------- ------- --------- ------- ------
Net increase (decrease) in
units from capital
transactions.............. 4,149 34,370 (208,457) 56,764 46,603
------- ------- --------- ------- ------
Units outstanding at
December 31, 1999......... 50,781 419,746 1,124,188 82,891 46,603
======= ======= ========= ======= ======
</TABLE>
F-38
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
--------------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type I Units: -------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 929,630 2,591,419 1,291,813 1,869,843 1,553,549
-------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 74,703 19,338 34,584 31,959 40,822
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (15,395) (5,238) (2,748) (10,837) (8,380)
Surrenders........... (407,204) (170,429) (110,751) (182,095) (161,263)
Cost of insurance and
administrative
expenses............ (5,618) (5,190) (2,659) (4,385) (3,584)
Transfers (to) from the
Guarantee Account..... 81,767 15,924 19,698 51,660 19,533
Interfund transfers.... 257,976 (101,296) (56,877) (97,711) (96,211)
-------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (13,771) (246,891) (118,753) (211,409) (209,083)
-------- --------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 915,859 2,344,528 1,173,060 1,658,434 1,344,466
-------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 16,723 8,891 9,743 6,374 5,456
Loan interest.......... -- -- -- -- --
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (1,308) (5,005) (5,270) (15,916) (12,309)
Surrenders........... (131,944) (252,917) (131,083) (219,777) (185,583)
Cost of insurance and
administrative
expenses............ (2,123) (4,988) (2,494) (3,586) (2,994)
Transfers (to) from
the Guarantee
Account.............. 31,638 (1,082) 4,151 8,252 4,406
Interfund transfers... (60,601) (284,897) (90,649) (188,252) (102,355)
-------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (147,615) (539,998) (215,602) (412,905) (293,379)
-------- --------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 768,244 1,804,530 957,458 1,245,529 1,051,087
======== ========= ========= ========= =========
</TABLE>
F-39
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
-------------------------------- ---------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type I Units ---------- --------- --------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 6,589,338 4,467,825 3,398,260 17,101,510 3,296,201 294,329 341,417
---------- --------- --------- ---------- --------- -------- --------
From capital
transactions:
Net premiums........... 92,608 28,017 20,092 71,298 74,775 36,361 51,350
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (21,942) (20,703) (8,411) (86,711) (3,720) -- --
Surrenders........... (584,254) (406,572) (201,390) (1,581,072) (275,339) (33,956) (51,341)
Cost of insurance and
administrative
expenses............ (14,640) (9,624) (6,558) (41,759) (6,747) (1,229) (1,181)
Transfers (to) from the
Guarantee Account..... 51,832 6,585 16,016 16,975 48,507 44,357 39,391
Interfund transfers.... (359,182) (96,107) (404,695) (645,083) (51,589) 411,418 215,578
---------- --------- --------- ---------- --------- -------- --------
Net increase (decrease)
in units from capital
transactions........... (835,578) (498,404) (584,946) (2,266,352) (214,113) 456,951 253,797
---------- --------- --------- ---------- --------- -------- --------
Units outstanding at
December 31, 1998...... 5,753,760 3,969,421 2,813,314 14,835,158 3,082,088 751,280 595,214
---------- --------- --------- ---------- --------- -------- --------
From capital
transactions:
Net premiums........... 32,040 21,432 6,715 55,870 34,968 18,249 62,572
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (32,919) (19,611) (10,390) (83,836) (15,176) (4,731) (538)
Surrenders........... (740,369) (578,929) (309,058) (2,113,665) (367,961) (73,634) (116,547)
Cost of insurance and
administrative
expenses............ (12,151) (8,612) (5,175) (36,211) (6,633) (1,662) (1,314)
Transfers (to) from the
Guarantee Account..... (9,305) 6,821 (324) (19,440) 11,652 36,628 14,682
Interfund transfers.... (536,437) (80,399) (250,810) (649,065) (88,685) (107,315) (28,688)
---------- --------- --------- ---------- --------- -------- --------
Net increase (decrease)
in units from capital
transactions........... (1,299,141) (659,298) (569,042) (2,846,347) (431,835) (132,465) (69,833)
---------- --------- --------- ---------- --------- -------- --------
Units outstanding at
December 31, 1999...... 4,454,619 3,310,123 2,244,272 11,988,811 2,650,253 618,815 525,381
========== ========= ========= ========== ========= ======== ========
</TABLE>
F-40
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
PBHG Insurance
Federated Insurance Series Alger American Fund Series Fund, Inc.
------------------------------ ------------------------ --------------------
American High Small PBHG Large PBHG
Leaders Income Bond Utility Capitalization Growth Cap Growth Growth II
Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
Type I Units: -------- ----------- -------- -------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 361,619 456,124 485,332 1,325,070 1,022,514 55,997 76,611
------- ------- -------- --------- --------- ------- -------
From capital
transactions:
Net premiums........... 49,226 (16,663) (2,080) 429,477 25,796 12,832 43,391
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- 1,444 816 (384) (6,748) -- --
Surrenders........... (38,733) 22,376 6,445 (28,813) (101,948) (13,525) (2,223)
Cost of insurance and
administrative
expenses............ (1,089) 466 179 (1,249) (2,260) (192) (222)
Transfers (to) from the
Guarantee Account..... 23,362 (25,648) (2,909) 27,106 20,996 8,053 7,385
Interfund transfers.... 86,081 33,576 (9,318) (17,778) 203,074 34,878 (2,510)
------- ------- -------- --------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... 118,847 15,551 (6,867) 408,359 138,910 42,046 45,821
------- ------- -------- --------- --------- ------- -------
Units outstanding at
December 31, 1998...... 480,466 471,675 478,465 1,733,429 1,161,424 98,043 122,432
------- ------- -------- --------- --------- ------- -------
From capital
transactions:
Net premiums........... (22,424) 23,352 8,540 8,057 65,273 4,242 4,265
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... 642 -- (616) (333) (7,424) -- --
Surrenders........... 61,366 (66,408) (58,803) (168,826) (220,228) (11,876) (13,149)
Cost of insurance and
administrative
expenses............ 1,380 (837) (1,105) (2,952) (3,876) (229) (390)
Transfers (to) from the
Guarantee Account..... (21,326) 5,873 1,829 6,564 21,695 1,395 2,631
Interfund transfers.... (25,993) 16,788 (64,401) (485,936) 220,662 40,768 110,913
------- ------- -------- --------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... (6,355) (21,232) (114,556) (643,426) 76,102 34,300 104,270
------- ------- -------- --------- --------- ------- -------
Units outstanding at
December 31, 1999...... 474,111 450,443 363,909 1,090,003 1,237,526 132,343 226,702
======= ======= ======== ========= ========= ======= =======
</TABLE>
F-41
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type I Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 1,817,576 4,505,765 4,938,272 2,481,552 280,878 1,004,669 49,257
--------- --------- --------- --------- ------- --------- ---------
From capital
transactions:
Net premiums........... 16,545 85,570 235,218 127,113 37,137 55,993 124,428
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (8,425) (16,960) (17,077) (16,246) (1,939) (2,564) --
Surrenders........... (137,584) (306,115) (371,035) (424,576) (20,362) (67,352) (9,789)
Cost of insurance and
administrative
expenses............ (3,687) (10,854) (11,204) (6,797) (928) (2,002) (416)
Transfers (to) from the
Guarantee Account..... 13,161 60,329 69,943 102,984 62,318 28,874 11,707
Interfund transfers.... (145,916) (10,306) 50,630 652,003 195,121 35,806 331,630
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (265,906) (198,336) (43,525) 434,481 271,347 48,755 457,560
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1998...... 1,551,670 4,307,429 4,894,747 2,916,033 552,225 1,053,424 506,817
--------- --------- --------- --------- ------- --------- ---------
From capital
transactions:
Net premiums........... 16,117 66,898 87,098 41,784 38,041 20,440 112,397
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (5,060) (24,078) (19,731) (10,763) -- (5,129) (829)
Surrenders........... (154,266) (441,863) (536,289) (398,768) (87,684) (170,441) (110,831)
Cost of insurance and
administrative
expenses............ (3,157) (9,579) (10,670) (6,116) (2,017) (2,552) (2,368)
Transfers (to) from the
Guarantee Account..... 6,581 22,989 9,986 47,747 67,950 14,917 18,113
Interfund transfers.... 377,943 217,716 (110,764) 206,259 (53,874) 39,313 600,874
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 238,158 (167,917) (580,370) (119,857) (37,584) (103,452) 617,356
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 1,789,828 4,139,512 4,314,377 2,796,176 514,641 949,972 1,124,173
========= ========= ========= ========= ======= ========= =========
</TABLE>
F-42
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable
Insurance Salomon Brothers Variable
Trust Series Fund Inc.
--------------- ---------------------------
Growth
and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type I Units: ------ ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31,
1997............................ -- -- -- -- --
------ ------- ------ ------ -------
From capital transactions:
Net premiums.................... -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................. -- -- -- -- --
Surrenders..................... -- -- -- -- --
Cost of insurance and
administrative expenses....... -- -- -- -- --
Transfers (to) from the
Guarantee Account.............. -- -- -- -- --
Interfund transfers............. -- -- -- -- --
------ ------- ------ ------ -------
Net increase (decrease) in units
from capital transactions....... -- -- -- -- --
------ ------- ------ ------ -------
Units outstanding at December 31,
1998............................ -- -- -- -- --
------ ------- ------ ------ -------
From capital transactions:
Net premiums.................... 54,553 87,322 3,309 1,543 2,537
Loan interest................... -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................. -- -- -- -- --
Surrenders..................... (1,073) (11,503) (908) (171) 369
Cost of insurance and
administrative expenses....... (141) (314) (133) (23) 161
Transfers (to) from the
Guarantee Account.............. 8,811 1,315 11,419 66 (34,628)
Interfund transfers............. 18,549 118,528 32,748 14,514 37,746
------ ------- ------ ------ -------
Net increase (decrease) in units
from capital transactions....... 80,699 195,348 46,435 15,929 6,185
------ ------- ------ ------ -------
Units outstanding at December 31,
1999............................ 80,699 195,348 46,435 15,929 6,185
====== ======= ====== ====== =======
</TABLE>
F-43
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
----------------------------------------------------------
Real
S&P 500 Money Total Estate
Index Market Return International Securities
Fund Fund Fund Equity Fund Fund
Type II Units: --------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 3,025,140 4,980,487 928,145 614,410 1,478,247
--------- ---------- --------- -------- ---------
From capital
transactions:
Net premiums........... 1,191,108 4,686,359 224,832 71,002 242,837
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (18,705) (269,042) (8,405) (4,372) (9,506)
Surrenders........... (199,459) (1,083,395) (46,133) (38,542) (44,578)
Cost of insurance and
administrative
expenses............ (2,313) (4,489) (698) (803) (1,006)
Transfers (to) from the
Guarantee Account..... 878,507 1,448,793 291,977 130,273 346,955
Interfund transfers.... 313,281 (525,766) 35,416 (130,050) (259,466)
--------- ---------- --------- -------- ---------
Net increase (decrease)
in units from capital
transactions........... 2,162,419 4,252,460 496,989 27,508 275,236
--------- ---------- --------- -------- ---------
Units outstanding at
December 31, 1998...... 5,187,559 9,232,947 1,425,134 641,918 1,753,483
--------- ---------- --------- -------- ---------
From capital
transactions:
Net premiums........... 1,370,969 10,416,167 205,390 75,458 76,678
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (30,271) (277,340) (16,416) (3,637) (7,735)
Surrenders........... (313,331) (4,042,604) (90,526) (19,183) (118,250)
Cost of insurance and
administrative
expenses............ (3,902) (8,097) (1,063) (429) (1,038)
Transfers (to) from the
Guarantee Account..... 1,648,875 1,088,704 382,126 89,711 159,941
Interfund transfers.... 95,311 (2,417,319) (20,461) (47,864) (453,435)
--------- ---------- --------- -------- ---------
Net increase (decrease)
in units from capital
transactions........... 2,767,651 4,759,511 459,050 94,056 (343,839)
--------- ---------- --------- -------- ---------
Units outstanding at
December 31, 1999...... 7,955,210 13,992,458 1,884,184 735,974 1,409,644
========= ========== ========= ======== =========
</TABLE>
F-44
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
-------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
Type II Units: ------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 79,290 730,616 903,249 -- --
------- --------- --------- --------- -------
From capital
transactions:
Net premiums........... 52,447 651,133 162,212 86,729 --
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (1,696) (5,856) -- --
Surrenders........... (2,877) (104,573) (49,209) (787) --
Cost of insurance and
administrative
expenses............ (81) (689) (703) (16) --
Transfers (to) from the
Guarantee Account..... 83,494 607,675 345,204 51,261 --
Interfund transfers.... 73,722 257,534 529,843 43,108 --
------- --------- --------- --------- -------
Net increase (decrease)
in units from capital
transactions........... 206,705 1,409,384 981,491 180,295 --
------- --------- --------- --------- -------
Units outstanding at
December 31, 1998...... 285,995 2,140,000 1,884,740 180,295 --
------- --------- --------- --------- -------
From capital
transactions:
Net premiums........... 21,353 458,276 312,773 715,249 386,311
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (2,410) (15,900) (3,000) (383)
Surrenders........... (6,818) (146,114) (111,572) (22,241) (5,342)
Cost of insurance and
administrative
expenses............ (88) (1,590) (1,338) (359) (82)
Transfers (to) from the
Guarantee Account..... 82,304 546,156 729,550 557,143 145,917
Interfund transfers.... (91,015) 17,474 (68,521) 186,174 276,540
------- --------- --------- --------- -------
Net increase (decrease)
in units from capital
transactions........... 5,736 871,792 844,992 1,432,966 802,961
------- --------- --------- --------- -------
Units outstanding at
December 31, 1999...... 291,731 3,011,792 2,729,732 1,613,261 802,961
======= ========= ========= ========= =======
</TABLE>
F-45
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
---------------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type II Units: --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at De-
cember 31, 1997........ 994,017 3,176,448 2,462,359 2,934,974 1,200,126
--------- --------- --------- --------- ---------
From capital transactions:
Net premiums........... 270,558 267,347 407,290 416,094 182,920
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (14,333) (18,426) (19,533) (24,017) (11,769)
Surrenders........... (74,631) (147,815) (120,149) (177,425) (74,629)
Cost of insurance and
administrative
expenses............ (785) (2,506) (1,908) (2,036) (993)
Transfers (to) from the
Guarantee Account..... 382,347 343,625 410,907 621,713 292,547
Interfund transfers.... 419,337 (505,666) (126,117) (49,276) (29,622)
--------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 982,493 (63,441) 550,490 785,053 358,454
--------- --------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 1,976,510 3,113,007 3,012,849 3,720,027 1,558,580
--------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 261,544 114,559 235,472 187,738 66,844
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (20,072) (17,306) (18,769) (20,088) (7,328)
Surrenders........... (114,443) (173,315) (149,959) (247,870) (82,238)
Cost of insurance and
administrative
expenses............ (1,229) (1,900) (1,972) (2,515) (972)
Transfers (to) from the
Guarantee Account..... 611,535 110,666 286,238 480,849 153,230
Interfund transfers.... (182,535) (211,744) (130,872) (325,227) (183,302)
--------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 554,800 (179,040) 220,138 72,887 (53,766)
--------- --------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 2,531,310 2,933,967 3,232,987 3,792,914 1,504,814
========= ========= ========= ========= =========
</TABLE>
F-46
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
-------------------------------- --------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type II Units: ---------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at De-
cember 31, 1997........ 10,074,173 3,614,598 1,762,588 2,678,933 8,595,677 976,086 1,049,540
---------- --------- --------- --------- ---------- --------- ---------
From capital transactions:
Net premiums........... 1,114,775 299,241 60,690 252,836 1,051,752 918,372 716,944
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (77,675) (28,379) (10,651) (17,250) (51,811) (49,171) (7,825)
Surrenders........... (485,863) (150,297) (67,437) (134,438) (317,883) (60,159) (69,582)
Cost of insurance and
administrative
expenses............ (7,075) (2,366) (1,208) (1,548) (6,665) (1,024) (1,197)
Transfers (to) from the
Guarantee Account..... 1,227,043 185,849 81,221 283,280 1,100,294 688,392 768,665
Interfund transfers.... (509,932) (100,385) (208,247) 114,498 (285,564) 371,319 502,246
---------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,261,273 203,663 (145,632) 497,378 1,490,123 1,867,729 1,909,251
---------- --------- --------- --------- ---------- --------- ---------
Units outstanding at
December 31, 1998...... 11,335,446 3,818,261 1,616,956 3,176,311 10,085,800 2,843,815 2,958,791
---------- --------- --------- --------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 508,048 671,122 32,780 212,839 1,125,622 1,010,227 984,520
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (52,314) (14,943) (6,271) (20,795) (42,873) (21,323) (17,744)
Surrenders........... (641,881) (252,347) (52,978) (208,601) (526,069) (166,818) (170,732)
Cost of insurance and
administrative
expenses............ (7,133) (2,405) (621) (2,033) (6,316) (2,437) (2,365)
Transfers (to) from the
Guarantee Account..... 782,737 434,475 31,394 356,995 1,034,910 1,417,083 988,048
Interfund transfers.... (961,326) 106,554 (95,733) (153,115) (48,944) (28,808) 25,506
---------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (371,869) 942,456 (91,429) 185,290 1,536,330 2,207,924 1,807,233
---------- --------- --------- --------- ---------- --------- ---------
Units outstanding at
December 31, 1999...... 10,963,577 4,760,717 1,525,527 3,361,601 11,622,130 5,051,739 4,766,024
========== ========= ========= ========= ========== ========= =========
</TABLE>
F-47
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
PBHG Insurance Series
Federated Insurance Series Alger American Fund Fund, Inc.
-------------------------------- ------------------------ ------------------------
American High Small PBHG Large PBHG
Leaders Income Bond Utility Capitalization Growth Cap Growth Growth II
Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
Type II Units: --------- ----------- --------- -------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 2,056,691 1,886,887 1,325,701 5,645,458 4,380,186 346,833 576,010
--------- --------- --------- --------- --------- --------- -----------
From capital
transactions:
Net premiums............ 1,050,794 473,760 292,385 543,439 690,044 168,982 126,932
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (44,621) (24,952) (12,603) (35,528) (33,911) (3,311) (11,165)
Surrenders........... (111,859) (152,690) (73,103) (238,113) (227,269) (33,291) (36,248)
Cost of insurance and
administrative
expenses............ (2,136) (1,284) (1,163) (4,762) (3,266) (404) (590)
Transfers (to) from the
Guarantee Account..... 942,089 803,434 316,103 719,382 587,070 148,909 227,092
Interfund transfers.... 64,125 (7,464) 103,595 (547,462) 212,429 68,319 (42,435)
--------- --------- --------- --------- --------- --------- -----------
Net increase (decrease)
in units from capital
transactions........... 1,898,392 1,090,804 625,214 436,956 1,225,097 349,204 263,586
--------- --------- --------- --------- --------- --------- -----------
Units outstanding at
December 31, 1998...... 3,955,083 2,977,691 1,950,915 6,082,414 5,605,283 696,037 839,596
--------- --------- --------- --------- --------- --------- -----------
From capital
transactions:
Net premiums........... 435,360 341,570 266,112 402,251 1,791,980 90,269 153,521
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (12,111) (15,026) (29,633) (26,201) (52,245) (5,995) (1,861)
Surrenders........... (247,366) (162,671) (112,310) (332,834) (428,283) (93,949) (65,505)
Cost of insurance and
administrative
expenses............ (3,320) (1,784) (1,448) (3,705) (3,739) (434) (487)
Transfers (to) from the
Guarantee Account..... 814,778 708,367 535,523 475,632 1,181,832 110,416 96,030
Interfund transfers.... (387,724) (472,042) (125,174) (286,721) 488,665 14,787 221,114
--------- --------- --------- --------- --------- --------- -----------
Net increase (decrease)
in units from capital
transactions........... 599,617 398,414 533,070 228,422 2,978,210 115,094 402,812
--------- --------- --------- --------- --------- --------- -----------
Units outstanding at
December 31, 1999...... 4,554,700 3,376,105 2,483,985 6,310,836 8,583,493 811,131 1,242,408
========= ========= ========= ========= ========= ========= ===========
</TABLE>
F-48
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Janus Aspen Series
--------------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type II Units: ----------- ---------- ---------- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 3,442,667 7,270,898 10,111,685 2,804,435 869,089 3,001,600 163,550
----------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums........... 8,584,230 859,963 1,450,914 1,375,800 279,606 441,888 430,714
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (1,210,219) (49,261) (36,063) (37,836) (1,075) (22,070) (3,280)
Surrenders........... (5,336,460) (293,814) (402,150) (191,342) (44,562) (83,852) (38,646)
Cost of insurance and
administrative
expenses............ (83,426) (5,694) (7,564) (2,568) (846) (2,512) (341)
Transfers (to) from the
Guarantee Account..... 8,351,873 854,937 1,487,450 1,386,720 485,989 655,579 289,248
Interfund transfers.... (10,259,970) 190,192 (49,539) 724,982 322,950 (134,423) 653,113
----------- ---------- ---------- ---------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 46,028 1,556,323 2,443,048 3,255,756 1,042,062 854,610 1,330,808
----------- ---------- ---------- ---------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 3,488,695 8,827,221 12,554,733 6,060,191 1,911,151 3,856,210 1,494,358
----------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums........... 638,515 1,601,777 1,366,984 2,443,910 407,985 403,321 2,091,905
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (7,927) (51,477) (70,333) (56,072) (15,328) (13,648) (26,724)
Surrenders........... (177,407) (468,271) (691,964) (481,019) (152,834) (118,139) (153,401)
Cost of insurance and
administrative
expenses............ (1,613) (5,722) (8,181) (5,586) (1,366) (2,208) (1,683)
Transfers (to) from the
Guarantee Account..... 304,246 1,198,630 1,538,151 3,543,222 1,004,702 411,856 1,373,095
Interfund transfers.... 823,090 599,116 (110,536) 947,079 18,560 190,955 1,630,334
----------- ---------- ---------- ---------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,578,904 2,874,053 2,024,121 6,391,534 1,261,719 872,137 4,913,526
----------- ---------- ---------- ---------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 5,067,599 11,701,274 14,578,854 12,451,725 3,172,870 4,728,347 6,407,884
=========== ========== ========== ========== ========= ========= =========
</TABLE>
F-49
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Salomon Brothers Variable
Insurance Trust Series Fund Inc.
------------------ ---------------------------
Growth
and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type II Units: ------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1997..................... -- -- -- -- --
------- --------- ------- ------- -------
From capital transactions:
Net premiums................. 205,860 187,855 -- 811 15,933
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- -- -- -- --
Surrenders.................. (4,646) (4,160) -- -- (2)
Cost of insurance and
administrative expenses.... (13) (9) 1,466 -- --
Transfers (to) from the
Guarantee Account........... 104,669 147,037 8,628 52 1,350
Interfund transfers.......... 123,066 14,810 -- -- 8,634
------- --------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 428,936 345,533 10,094 863 25,915
------- --------- ------- ------- -------
Units outstanding at December
31, 1998..................... 428,936 345,533 10,094 863 25,915
------- --------- ------- ------- -------
From capital transactions:
Net premiums................. 136,381 275,911 87,824 38,147 63,047
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- (1,270) (1,085) -- --
Surrenders.................. (29,344) (30,281) (3,421) (962) (1,857)
Cost of insurance and
administrative expenses.... (460) (479) (43) (6) (80)
Transfers (to) from the
Guarantee Account........... 265,191 332,699 101,045 24,576 86,095
Interfund transfers.......... (20,938) 234,275 51,365 49,316 2,424
------- --------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 350,830 810,855 235,685 111,071 149,629
------- --------- ------- ------- -------
Units outstanding at December
31, 1999..................... 779,766 1,156,388 245,779 111,934 175,544
======= ========= ======= ======= =======
</TABLE>
F-50
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------
S&P 500 Total Real Estate
Index Money Market Return International Securities
Fund Fund Fund Equity Fund Fund
Type III Units: --------- ------------ --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
--------- ----------- --------- ------- -------
From capital
transactions:
Net premiums........... 6,802,805 26,606,289 1,215,947 145,060 95,069
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (12,776) (144,732) -- -- --
Surrenders........... (58,579) (148,000) (18,907) (644) (3,611)
Transfers (to) from the
Guarantee Account..... 150,344 82,774 21,136 4,164 6,696
Interfund transfers.... 940,109 (13,692,527) 87,529 30,883 9,648
--------- ----------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... 7,821,903 12,703,804 1,305,705 179,463 107,802
--------- ----------- --------- ------- -------
Units outstanding at
December 31, 1999...... 7,821,903 12,703,804 1,305,705 179,463 107,802
========= =========== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
--------------------------------------------
Value U.S. Premier
Equity Income Equity Growth Equity
Fund Fund Fund Fund
Type III Units: --------- ------- --------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998............................. -- -- -- --
--------- ------- --------- ---------
From capital transactions:
Net premiums..................... 1,036,116 314,012 1,220,973 936,093
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits.................. (6,042) (2,147) (973) --
Surrenders...................... (17,768) (6,141) (11,217) (6,629)
Transfers (to) from the Guarantee
Account......................... 22,379 6,119 13,194 26,808
Interfund transfers.............. 133,571 121,853 220,867 424,162
--------- ------- --------- ---------
Net increase (decrease) in units
from capital transactions........ 1,168,256 433,696 1,442,844 1,380,434
--------- ------- --------- ---------
Units outstanding at December 31,
1999............................. 1,168,256 433,696 1,442,844 1,380,434
========= ======= ========= =========
</TABLE>
F-51
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type III Units: ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998........ -- -- -- -- --
------- ------- --------- ------- -------
From capital transactions:
Net premiums............. 598,416 593,660 986,033 879,869 293,357
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits......... (24,269) (3,451) (1,032) (1,416) --
Surrenders............. (13,660) (10,533) (15,060) (8,322) (2,950)
Transfers (to) from the
Guarantee Account....... 30,987 12,469 29,811 23,655 5,153
Interfund transfers...... 99,491 302,111 214,622 29,413 10,265
------- ------- --------- ------- -------
Net increase (decrease) in
units from capital
transactions............. 690,965 894,256 1,214,374 923,199 305,825
------- ------- --------- ------- -------
Units outstanding at
December 31, 1999........ 690,965 894,256 1,214,374 923,199 305,825
======= ======= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
------------------------------- -------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type III Units: --------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
--------- --------- ------- ------- --------- --------- ---------
From capital
transactions:
Net premiums........... 2,911,113 5,455,784 342,131 655,968 4,350,101 1,863,827 1,517,495
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (1,168) (10,565) -- -- (7,525) (1,287) (1,320)
Surrenders............ (35,105) (64,018) (7,322) (11,671) (25,586) (35,107) (10,269)
Transfers (to) from the
Guarantee Account..... 76,560 94,771 1,189 13,510 129,791 66,596 72,775
Interfund transfers.... 252,253 1,085,738 52,069 119,705 765,205 184,950 130,481
--------- --------- ------- ------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 3,203,653 6,561,710 388,067 777,512 5,211,986 2,078,979 1,709,162
--------- --------- ------- ------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 3,203,653 6,561,710 388,067 777,512 5,211,986 2,078,979 1,709,162
========= ========= ======= ======= ========= ========= =========
</TABLE>
F-52
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Federated Insurance Series Alger American Fund
------------------------------ ------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Fund II Fund II Fund II Portfolio Portfolio
Type III Units: --------- ----------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
--------- ------- ------- --------- ---------
From capital
transactions:
Net premiums........... 1,215,352 684,526 421,560 998,630 4,680,722
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (2,079) (120) (1,650) (35,922)
Surrenders........... (9,777) (12,146) (8,023) (4,078) (43,905)
Transfers (to) from the
Guarantee Account..... 38,379 45,896 15,150 18,113 66,471
Interfund transfers.... (129,411) 82,989 63,004 149,741 709,788
--------- ------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,114,543 799,186 491,571 1,160,756 5,377,154
--------- ------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 1,114,543 799,186 491,571 1,160,756 5,377,154
========= ======= ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type III Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
--------- --------- --------- --------- ------- --------- ---------
From capital transactions:
Net premiums........... 3,433,215 6,733,050 4,679,934 6,431,170 572,513 863,953 6,946,766
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (8,849) (7,911) (2,840) (2,310) -- (3,678) (45,793)
Surrenders........... (31,999) (80,226) (40,954) (74,010) (18,968) (11,168) (66,978)
Transfers (to) from the
Guarantee Account..... 44,684 140,668 134,338 185,544 2,662 21,060 97,938
Interfund transfers.... 1,344,419 1,493,334 1,019,353 664,637 49,863 380,948 1,141,405
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 4,781,470 8,278,915 5,789,831 7,205,031 606,070 1,251,115 8,073,338
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 4,781,470 8,278,915 5,789,831 7,205,031 606,070 1,251,115 8,073,338
========= ========= ========= ========= ======= ========= =========
</TABLE>
F-53
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------ ---------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type III Units: ---------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1998..................... -- -- -- -- --
------- ------- ------- ------- -------
From capital transactions:
Net premiums................. 179,877 448,554 166,205 164,131 100,325
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- (3,176) -- -- --
Surrenders.................. (3,320) (4,186) (6,562) (1,317) (577)
Transfers (to) from the
Guarantee Account........... 9,236 20,162 4,931 9,264 2,093
Interfund transfers.......... 18,805 21,492 59,307 15,033 16,015
------- ------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 204,598 482,846 223,881 187,111 117,856
------- ------- ------- ------- -------
Units outstanding at December
31, 1999..................... 204,598 482,846 223,881 187,111 117,856
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Type IV Units: ------- ---------- ------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
------- ---------- ------ ------ ------
From capital
transactions:
Net premiums........... 436,947 2,333,947 58,534 11,080 3,519
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (1,506) (30,516) (465) -- --
Transfers (to) from the
Guarantee Account..... 5,872 -- 1,056 -- --
Interfund transfers.... 102,301 (1,089,158) 18,954 4,120 6,968
------- ---------- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 543,614 1,214,273 78,079 15,200 10,487
------- ---------- ------ ------ ------
Units outstanding at
December 31, 1999...... 543,614 1,214,273 78,079 15,200 10,487
======= ========== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(continued)
---------------------------------------
Value U.S. Premier
Equity Income Equity Growth Equity
Fund Fund Fund Fund
Type IV Units: ------- ------ ------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998.................................. -- -- -- --
------- ------ ------- ------
From capital transactions:
Net premiums.......................... 130,022 53,541 76,072 61,341
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits....................... -- -- -- --
Surrenders........................... (527) (216) (213) (194)
Transfers (to) from the Guarantee Ac-
count................................ 2,195 -- 385 105
Interfund transfers................... 15,650 13,753 24,662 35,583
------- ------ ------- ------
Net increase (decrease) in units from
capital transactions.................. 147,340 67,078 100,906 96,835
------- ------ ------- ------
Units outstanding at December 31,
1999.................................. 147,340 67,078 100,906 96,835
======= ====== ======= ======
</TABLE>
F-54
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type IV Units: ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998.......... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums............... 47,460 17,619 78,714 28,067 9,815
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits............ -- -- -- -- --
Surrenders................ (245) (66) (899) (48) --
Transfers (to) from the
Guarantee Account......... -- 168 -- -- 152
Interfund transfers........ (5,466) 7,029 3,613 7,839 399
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............... 41,749 24,750 81,428 35,858 10,366
------ ------ ------ ------ ------
Units outstanding at
December 31, 1999.......... 41,749 24,750 81,428 35,858 10,366
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Variable Insurance Products Fund Products Fund II Products Fund III
-------------------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type IV Units: ----------- ----------- ---------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
----------- ----------- ---------- ------ ------- ------- ------
From capital
transactions:
Net premiums........... 216,084 270,338 25,780 34,594 269,745 134,288 65,370
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- -- -- --
Surrenders........... (756) (1,836) (2) (134) (1,607) (368) (519)
Transfers (to) from the
Guarantee Account..... 3,774 2,002 -- 358 2,732 4,476 165
Interfund transfers.... 23,594 63,231 2,412 10,072 65,745 12,269 27,604
----------- ----------- ---------- ------ ------- ------- ------
Net increase (decrease)
in units from capital
transactions........... 242,696 333,735 28,190 44,890 336,615 150,665 92,620
----------- ----------- ---------- ------ ------- ------- ------
Units outstanding at
December 31, 1999...... 242,696 333,735 28,190 44,890 336,615 150,665 92,620
=========== =========== ========== ====== ======= ======= ======
</TABLE>
F-55
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Federated Insurance Series Alger American Fund
---------------------------- ------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Fund II Fund II Fund II Portfolio Portfolio
Type IV Units: -------- ----------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998....... -- -- -- -- --
------ ------ ------ ------ -------
From capital
transactions:
Net premiums............ 76,520 55,116 33,820 97,052 188,807
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (68) (345) (210) (852) (828)
Transfers (to) from the
Guarantee Account...... -- 846 -- 45 3,434
Interfund transfers..... 8,735 256 2,649 1,414 40,348
------ ------ ------ ------ -------
Net increase (decrease)
in units from capital
transactions............ 85,187 55,873 36,259 97,659 231,761
------ ------ ------ ------ -------
Units outstanding at
December 31, 1999....... 85,187 55,873 36,259 97,659 231,761
====== ====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type IV Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------- -------
From capital
transactions:
Net premiums........... 290,801 414,640 334,265 302,041 86,807 79,968 343,133
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- -- -- --
Surrenders........... (971) (1,895) (1,705) (1,671) (692) (353) (1,763)
Transfers (to) from the
Guarantee Account..... 767 1,935 4,641 6,715 1,497 41 3,287
Interfund transfers.... 222,512 85,744 69,747 40,846 1,601 22,725 83,434
------- ------- ------- ------- ------ ------- -------
Net increase (decrease)
in units from capital
transactions........... 513,109 500,424 406,948 347,931 89,213 102,381 428,091
------- ------- ------- ------- ------ ------- -------
Units outstanding at
December 31, 1999...... 513,109 500,424 406,948 347,931 89,213 102,381 428,091
======= ======= ======= ======= ====== ======= =======
</TABLE>
F-56
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Fund Inc.
------------------ --------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type IV Units: ---------- ------- --------- --------- ------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1998....................... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums................... 10,321 42,856 20,339 6,921 17,669
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................ -- -- -- -- --
Surrenders.................... -- (88) -- (44) --
Transfers (to) from the
Guarantee Account............. -- -- -- -- --
Interfund transfers............ 4,788 41 (5,043) (4,012) (1,377)
------ ------ ------ ------ ------
Net increase (decrease) in units
from capital transactions...... 15,109 42,809 15,296 2,865 16,292
------ ------ ------ ------ ------
Units outstanding at December
31, 1999....................... 15,109 42,809 15,296 2,865 16,292
====== ====== ====== ====== ======
</TABLE>
(d) Federal Income Taxes
The Account is not taxed separately because the operations of the Account are
part of the total operations of GE Life & Annuity. GE Life & Annuity is taxed as
a life insurance company under the Internal Revenue Code (the Code). GE Life &
Annuity is included in the General Electric Capital Assurance Company
consolidated federal income tax return. The Account will not be taxed as a
regulated investment company under subchapter M of the Code. Under existing
federal income tax law, no taxes are payable on the investment income or on the
capital gains of the Account.
(e) Use of Estimates
Financial statements prepared in conformity with generally accepted accounting
principles require management to make estimates and assumptions that affect
amounts and disclosures reported therein. Actual results could differ from those
estimates.
(3) Related Party Transactions
Net premiums transferred from GE Life & Annuity to the Account represent gross
premiums recorded by GE Life & Annuity on its flexible premium variable deferred
annuity products, less deductions retained as compensation for premium taxes.
For policies issued on or after May 1, 1993, the deduction for premium taxes
will be deferred until surrender. For Type I policies, during the first ten
years following a premium payment, a charge of .20% of the premium payment is
deducted monthly from the policy Account values to reimburse GE Life & Annuity
for certain distribution expenses. In addition, a charge is imposed on full and
certain partial surrenders that occur within six years of any premium payment
for Type I policies, seven years for certain Type II policies, and eight years
for Type III policies. These surrender charges are assessed to cover certain
expenses relating to the sale of a policy. Subject to certain limitations, the
charge equals 6% (or less) of the premium surrendered for Type I and Type II
policies and 8% (or less) for Type III policies, depending on the time between
premium payment and surrender. There is no surrender charge for Type IV
policies.
GE Life & Annuity will deduct the following charges from the policy account
values to cover certain administrative expenses incurred: $30 per year for Type
I policies, $25 plus 0.15% per year for Type II policies, and $25 plus 0.25% per
year for both Type III and Type IV policies. For Type II, III and IV policies,
the $25 charge may be waived if the account value is greater than $75,000,
$10,000, and $25,000, respectively. In addition, GE Life & Annuity charges the
Account for the mortality and expense risk that GE Life & Annuity assumes based
on the following rates: Type I--1.15%, Type II--1.25%, Type III--1.3%, and Type
IV--1.35%. Administrative expenses as well as mortality and risk charges are
deducted daily and reflect the effective annual rates.
F-57
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(3) Related Party Transactions -- Continued
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company.
Capital Brokerage Corporation, an affiliate of GE Life & Annuity, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation also
serves as principal underwriter for variable life insurance policies issued by
GE Life & Annuity.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid an
investment advisory fee by the Fund based on the average daily net assets at an
effective annual rate of .35% for the S&P 500 Index Fund, .50% for the Money
Market, Income Fund, and Total Return Funds, 1.00% for the International Equity
Fund, .85% for the Real Estate Securities Fund, .60% for the Global Income Fund,
.65% for the Value Equity and Premier Growth Equity Funds, and .55% for the U.S.
Equity Fund.
Certain officers and directors of GE Life & Annuity are also officers and
directors of Capital Brokerage Corporation.
F-58
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying consolidated balance sheets of GE Life and
Annuity Assurance Company, formerly The Life Insurance Company of Virginia,
(an indirect wholly-owned subsidiary of General Electric Capital Corporation)
and subsidiary as of December 31, 1999 and 1998, and the related consolidated
statements of income, shareholders' interest, and cash flows for each of the
years in the three-year period ended December 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion of these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GE Life
and Annuity Assurance Company and subsidiary as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
As discussed in note 15 to the consolidated financial statements, the
Company changed its method of accounting for insurance-related assessments in
1999.
/s/ KPMG LLP
Richmond, Virginia
January 21, 2000
F-2
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Assets
Investments:
Fixed maturities available-for-sale, at fair value....... $ 8,033.7 $ 7,022.8
Equity securities available-for-sale, at fair value:
Common stocks........................................... 9.2 6.1
Preferred stocks, non-redeemable........................ 23.9 48.3
Investment in subsidiary................................. 2.6 2.6
Mortgage loans, net of valuation allowance of $23.3 and
$20.9 at December 31, 1999 and 1998, respectively....... 810.5 745.8
Policy loans............................................. 58.5 204.4
Real estate owned........................................ 2.5 2.5
Other invested assets.................................... 141.5 130.8
--------- ---------
Total investments....................................... 9,082.4 8,163.3
--------- ---------
Cash...................................................... 21.2 11.1
Accrued investment income................................. 190.2 141.5
Deferred acquisition costs................................ 482.5 282.8
Intangible assets......................................... 472.8 458.3
Reinsurance recoverable................................... 72.4 68.9
Deferred income tax asset................................. 120.3 42.1
Other assets.............................................. 269.7 64.2
Separate account assets................................... 9,245.8 5,528.7
--------- ---------
Total Assets............................................ $19,957.3 $14,760.9
========= =========
Liabilities and Shareholders' Interest
Liabilities:
Future annuity and contract benefits..................... $ 9,063.0 $ 7,538.1
Liability for policy and contract claims................. 110.7 154.2
Other policyholder liabilities........................... 138.8 118.9
Accounts payable and accrued expenses.................... 193.3 127.2
Separate account liabilities............................. 9,245.8 5,528.7
--------- ---------
Total liabilities....................................... 18,751.6 13,467.1
--------- ---------
Shareholders' interest:
Net unrealized investment gains (losses)................. (134.2) 57.8
--------- ---------
Accumulated non-owner changes in equity.................. (134.2) 57.8
Preferred stock, Series A ($1,000 par value, $1,000
redemption and liquidation value, 200,000 shares
authorized, 120,000 shares issued and outstanding)...... 120.0 120.0
Common stock ($1,000 par value, 50,000 authorized, 25,651
shares issued and outstanding in 1999; 7,010 issued and
outstanding, 18,641 declared but not issued in 1998).... 25.6 25.6
Additional paid-in capital............................... 1,050.7 1,050.1
Retained earnings........................................ 143.6 40.3
--------- ---------
Total shareholders' interest............................ 1,205.7 1,293.8
--------- ---------
Total Liabilities and Shareholders' Interest............ $19,957.3 $14,760.9
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Net investment income............................. $ 638.2 $ 574.7 $ 562.7
Net realized investment gains..................... 12.0 29.6 19.0
Premiums.......................................... 123.9 123.1 171.8
Cost of insurance................................. 129.0 128.5 127.2
Variable product fees............................. 90.2 60.8 44.4
Other income...................................... 24.6 22.3 23.7
-------- ------- -------
Total revenues................................... 1,017.9 939.0 948.8
-------- ------- -------
Benefits and expenses:
Interest credited................................. 440.8 378.4 373.7
Benefits and other changes in policy reserves..... 214.7 178.4 217.2
Commissions....................................... 192.1 112.8 139.1
General expenses.................................. 124.7 111.0 92.2
Amortization of intangibles, net.................. 58.3 64.8 69.7
Change in deferred acquisition costs, net......... (179.1) (74.7) (112.6)
Interest expense.................................. 1.9 2.2 --
-------- ------- -------
Total benefits and expenses...................... 853.4 772.9 779.3
-------- ------- -------
Income before income taxes and cumulative effect
of accounting change............................ 164.5 166.1 169.5
Provision for income taxes......................... 56.6 60.3 62.1
-------- ------- -------
Income before cumulative effect of accounting
change.......................................... 107.9 105.8 107.4
-------- ------- -------
Cumulative effect of accounting change, net of
tax............................................... 5.0 -- --
-------- ------- -------
Net Income....................................... $ 112.9 $ 105.8 $ 107.4
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INTEREST
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Common Stock
Preferred Declared Accumulated
Stock Common Stock but not Issued Additional Non-owner Total
-------------- ------------- --------------- Paid-In Changes Retained Shareholders'
Shares Amount Shares Amount Shares Amount Capital in Equity Earnings Interest
------- ------ ------ ------ ------- ------ ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1996................... -- -- 7,010 7.0 -- -- 1,060.6 25.8 85.7 1,179.1
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 107.4 107.4
Net unrealized gains on
investment securities
(a)................... -- -- -- -- -- -- -- 61.9 -- 61.9
-------
Total changes other
than transactions with
shareholders.......... 169.3
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (2.2) -- -- (2.2)
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1997................... -- -- 7,010 7.0 -- -- 1,058.4 87.7 193.1 1,346.2
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 105.8 105.8
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (29.9) -- (29.9)
-------
Total changes other
than transactions with
shareholders.......... 75.9
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (120.0) (120.0)
Preferred stock
dividend............... 120,000 120.0 -- -- -- -- -- -- (120.0) --
Common stock dividend
declared but not
issued................. -- -- -- -- 18,641 18.6 -- -- (18.6) --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (8.3) -- -- (8.3)
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1998................... 120,000 120.0 7,010 7.0 18,641 18.6 1,050.1 57.8 40.3 1,293.8
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 112.9 112.9
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (192.0) -- (192.0)
-------
Total changes other
than transactions with
shareholders.......... (79.1)
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (9.6) (9.6)
Common stock issued..... -- -- 18,641 18.6 (18,641) (18.6) -- -- -- --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- 0.6 -- -- 0.6
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1999................... 120,000 120.0 25,651 25.6 -- -- 1,050.7 (134.2) 143.6 1,205.7
======= ===== ====== ==== ======= ===== ======= ====== ====== =======
</TABLE>
- -------
(a) Presented net of deferred taxes of $72.2, $(31.1) and $(47.2) in 1999,
1998, and 1997, respectively.
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 112.9 $ 105.8 $ 107.4
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Cost of insurance and surrender fees........ (169.5) (171.6) (170.7)
Increase in future policy benefits.......... 565.5 440.6 461.2
Net realized investment gains............... (12.0) (29.6) (19.0)
Amortization of investment premiums and
discounts.................................. (1.3) (1.3) 4.7
Amortization of intangibles................. 58.3 64.8 69.7
Deferred income tax expense (benefit)....... 25.0 29.5 (9.6)
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income................. (48.6) 1.5 (5.7)
Deferred acquisition costs................ (179.1) (74.7) (112.6)
Other assets, net......................... (200.1) (30.3) (14.3)
Increase (decrease) in:
Policy and contract claims................ (43.4) 18.0 36.4
Other policyholder liabilities............ 20.0 2.5 (0.4)
Accounts payable and accrued expenses..... 73.8 19.6 (113.3)
--------- --------- ---------
Total adjustments........................ 88.6 269.0 126.4
--------- --------- ---------
Net cash provided by operating
activities.............................. 201.5 374.8 233.8
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales and maturities of
investment securities and other invested
assets...................................... 1,702.2 2,238.0 992.3
Principal collected on mortgage loans........ 103.3 138.3 91.8
Proceeds collected from securitization....... 145.1 -- --
Purchase of investment securities and other
invested assets............................. (3,086.2) (2,685.4) (1,232.6)
Mortgage loans originations and increase in
policy loans................................ (170.4) (212.3) (121.5)
--------- --------- ---------
Net cash used in investing activities.... (1,306.0) (521.4) (270.0)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of investment
contracts................................... 4,717.6 2,280.0 1,961.9
Redemption and benefit payments on investment
contracts................................... (3,593.4) (2,016.2) (1,973.4)
Cash dividend to shareholders................ (9.6) (120.0) --
--------- --------- ---------
Net cash provided by (used in) financing
activities.............................. 1,114.6 143.8 (11.5)
--------- --------- ---------
Net increase (decrease) in cash and
equivalents............................. 10.1 (2.8) (47.7)
Cash and cash equivalents at beginning of
year......................................... 11.1 13.9 61.6
--------- --------- ---------
Cash and cash equivalents at end of year...... $ 21.2 $ 11.1 $ 13.9
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the historical
operations and accounts of GE Life and Annuity Assurance Company and its
subsidiary, Assigned Settlements Inc. (collectively the "Company" or
"GELAAC"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Effective January 1, 1999, an affiliated company, The Harvest Life
Insurance Company ("Harvest") merged into The Life Insurance Company of
Virginia ("LOV") with the merged Company renamed GE Life and Annuity Assurance
Company ("GELAAC"). Harvest's former parent, Federal Home Life Insurance
Company ("FHLIC"), received common stock of GELAAC in exchange for its
interest in Harvest. FHLIC is an indirect wholly-owned subsidiary of GE
Financial Assurance Holdings, Inc. ("GEFAHI"). As the merged entities were
under common control, the transaction has been accounted for similar to a
pooling of interests. Accordingly, the GELAAC consolidated financial
statements have been restated for the years ended December 31, 1998 and 1997
as if Harvest had been a part of LOV as of January 1, 1997.
The majority of GELAAC's outstanding common stock is owned by General
Electric Capital Assurance Company ("GECA"). GECA is a wholly-owned subsidiary
of GEFAHI, which is an indirect wholly-owned subsidiary of General Electric
Capital Corporation ("GECC"). GECC is an indirect wholly-owned subsidiary of
General Electric Company.
(b) Basis of Presentation
The accompanying consolidated financial statements have been prepared on
the basis of generally accepted accounting principles ("GAAP") for insurance
companies, which vary in several respects from accounting practices prescribed
or permitted by the Insurance Commissioner of the state where the Company is
domiciled. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and related disclosures. Actual results could differ from those
estimates.
(c) Products
The Company's product offerings are divided along two major segments of
consumer needs: (i) Wealth Accumulation and Transfer and (ii) Lifestyle
Protection and Enhancement.
The Company's principal product lines under the Wealth Accumulation and
Transfer segment are (i) annuities (deferred and immediate; either fixed or
variable); (ii) life insurance (universal, ordinary and group), (iii)
guaranteed investment contracts ("GICs") including funding agreements and (iv)
mutual funds. Wealth Accumulation and Transfer products are used by customers
as vehicles for accumulating wealth, often on a tax-deferred basis,
transferring wealth to beneficiaries, or providing a means to replace the
insured's income in the event of premature death. The Company's distribution
of Wealth Accumulation and Transfer products is accomplished through two
distribution methods: (i) intermediaries and (ii) career or dedicated sales
forces.
The Company's principal product lines under the Lifestyle Protection and
Enhancement segment are (i) long-term care insurance and (ii) supplemental
accident and health insurance. Lifestyle Protection and Enhancement products
are used by customers as vehicles to protect their income and assets from the
adverse economic impacts of significant health care costs or other
unanticipated events that cause temporary or permanent loss of earnings
capabilities (including the ability to repay certain indebtedness). The
Company's distribution of Lifestyle Protection and Enhancement products is
accomplished through two distribution methods: (i) intermediaries and (ii)
career or dedicated sales forces.
Approximately 17%, 20% and 27% of premium and annuity consideration
collected, in 1999, 1998, and 1997, respectively, came from customers residing
in the South Atlantic region of the United States, and approximately 17%, 27%
and 13% of premium and annuity consideration collected, in 1999, 1998, and
1997, respectively, came from customers residing in the Mid-Atlantic region of
the United States.
F-7
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
Although the Company markets its products through numerous distributors,
approximately 28%, 20% and 19% of the Company's sales in 1999, 1998, and 1997,
respectively, have been through two specific national stockbrokerage firms
(part of the Wealth Accumulation and Transfer segment.) Loss of all or a
substantial portion of the business provided by these stockbrokerage firms
could have a material adverse effect on the business and operations of the
Company. The Company does not believe, however, that the loss of such business
would have a long-term adverse effect because of the Company's competitive
position in the marketplace and the availability of business from other
distributors.
(d) Revenues
Investment income is recorded when earned. Realized investment gains and
losses are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or, in the
case of life contingent immediate annuities, when the contracts are issued.
Premiums received under annuity contracts without significant mortality risk
and premiums received on universal life products are not reported as revenues
but as future annuity and contract benefits. Cost of insurance is charged to
universal life policyholders based upon at risk amounts, and is recognized as
revenue when due. Variable product fees are charged to variable annuity and
variable life policyholders based upon the daily net assets of the
policyholders' account values, and are recognized as revenue when charged.
Other income consists primarily of surrender charges on certain policies.
Surrender charges are recognized as income when the policy is surrendered.
(e) Investments
The Company has designated its fixed maturities (bonds, notes, mortgage-
backed securities, asset-backed securities, and redeemable preferred stock)
and equity securities (common and non-redeemable preferred stock) as
available-for-sale. The fair value for fixed maturities and equity securities
is based on individual quoted market prices, where available. For fixed
maturities not actively traded, fair values are estimated using values
obtained from independent pricing services or, in the case of private
placements, are estimated by discounting expected future cash flows using a
current market rate applicable to the credit quality, call features and
maturity of the investments, as applicable.
Changes in the market values of investments available-for-sale, net of the
effect on deferred policy acquisition costs, present value of future profits
and deferred federal income taxes are reflected as unrealized investment gains
or losses and, accordingly, have no effect on net income, but are shown as a
separate component of accumulated non-owner changes in equity in the
consolidated statements of shareholders' interest. Unrealized losses that are
considered other than temporary are recognized in earnings through an
adjustment to the amortized cost basis of the underlying securities.
Additionally, reserves for mortgage loans and certain other long-term
investments are established based on an evaluation of the respective
investment portfolio, past credit loss experience, and current economic
conditions. Writedowns and the change in reserves are included in realized
investment gains and losses in the consolidated statements of income. In
general, the Company ceases to accrue investment income when interest or
dividend payments are 90 days in arrears.
Investment income on mortgage-backed and asset-backed securities is
initially based upon yield, cash flow and prepayment assumptions at the date
of purchase. Subsequent revisions in those assumptions are recorded using the
retrospective method, whereby the amortized cost of the securities is adjusted
to the amount that would have existed had the revised assumptions been in
place at the date of purchase. The adjustments to amortized cost are recorded
as a charge or credit to investment income. Realized gains and losses are
accounted for on the specific identification method.
Mortgage loans and policy loans are carried at their unpaid principal
balance, net of allowances for estimated uncollectible amounts. Short-term
investments are carried at amortized cost which approximates fair value.
Equity securities are carried at fair value. Investments in limited
partnerships are accounted for under the equity method of accounting. Real
estate is carried generally at cost less accumulated depreciation. Other long-
term investments are carried generally at amortized cost.
F-8
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
Under certain securities lending transactions, the Company requires the
borrower provide collateral, consisting primarily of cash and government
securities, on a daily basis, in amounts equal to or exceeding 102% of the
market value of the applicable securities loaned.
(f) Deferred Acquisition Costs
Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts.
Deferred acquisition costs include first-year commissions in excess of
recurring renewal commissions, certain solicitation and printing costs, and
certain support costs such as underwriting and policy issue expenses. For
investment and universal life type contracts, amortization is based on the
present value of anticipated gross profits from investments, interest
credited, surrender and other policy charges, and mortality and maintenance
expenses. Amortization is adjusted retroactively when current or estimates of
future gross profits to be realized are revised. For other long-duration
insurance contracts, the acquisition costs are amortized in relation to the
estimated benefit payments or the present value of expected future premiums.
Deferred acquisition costs are reviewed to determine if they are
recoverable from future income, including investment income, and, if not
considered recoverable, are charged to expense.
(g) Intangible Assets
Present Value of Future Profits -- In conjunction with the acquisition of
the Company, a portion of the purchase price was assigned to the right to
receive future gross profits arising from existing insurance and investment
contracts. This intangible asset, called present value of future profits
(PVFP), represents the actuarially determined present value of the projected
future cash flows from the acquired policies.
Goodwill -- Goodwill is amortized over a period of 20 years on the
straight-line method. Goodwill in excess of associated expected operating cash
flows is considered to be impaired and is written down to fair value. No such
write-downs have occurred.
(h) Federal Income Taxes
Deferred income taxes have been provided for the effects of temporary
differences between financial reporting and tax bases of assets and
liabilities and have been measured using the enacted marginal tax rates and
laws that are currently in effect.
(i) Reinsurance
Premium revenue, benefits, underwriting, acquisition and insurance expenses
are reported net of the amounts relating to reinsurance ceded to other
companies. Amounts due from reinsurers for incurred future claims are
reflected in the reinsurance recoverable asset. The cost of reinsurance is
accounted for over the terms of the related treaties using assumptions
consistent with those used to account for the underlying reinsured policies.
(j) Future Annuity and Contract Benefits
Future annuity and contract benefits consist of the liability for
investment contracts, insurance contracts and accident and health contracts.
Investment contract liabilities are generally equal to the policyholder's
current account value. The liability for insurance and accident and health
contracts is calculated based upon actuarial assumptions as to mortality,
morbidity, interest, expense and withdrawals, with experience adjustments for
adverse deviation where appropriate.
F-9
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
(k) Liability for Policy and Contract Claims
The liability for policy and contract claims represents the amount needed
to provide for the estimated ultimate cost of settling claims relating to
insured events that have occurred on or before the end of the respective
reporting period. The estimated liability includes requirements for future
payments of (a) claims that have been reported to the insurer, and (b) claims
related to insured events that have occurred but that have not been reported
to the insurer as of the date the liability is estimated.
(l) Separate Account Assets and Liabilities
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life contract owners.
The Company receives mortality risk fees and administration charges from the
variable mutual fund portfolios. The separate account assets are carried at
fair value and are equivalent to the liabilities that represent the
policyholders' equity in those assets.
The Company has periodically transferred capital to the separate accounts
to provide for the initial purchase of investments in new mutual fund
portfolios. As of December 31, 1999, approximately $44.3 of the Company's
other invested assets related to its capital investments in the separate
accounts.
(m) Interest Rate Risk Management
As a matter of policy, the Company does not engage in derivatives trading,
market-making or other speculative activities.
The Company uses interest rate floors primarily to minimize risk on
investment contracts with minimum guaranteed interest rates. The Company
requires all interest rate floors to be designated and accounted for as hedges
of specific assets, liabilities or committed transactions; resulting payments
and receipts are recognized contemporaneously with effects of hedged
transactions. A payment or receipt arising from early termination of an
effective hedge is accounted for as an adjustment to the basis of the hedged
transaction.
Instruments used as hedges must be effective at reducing the risk
associated with the exposure being hedged and must be designated as a hedge at
the inception of the contract. Accordingly, changes in market values of hedged
instruments must be highly correlated with changes in market values of
underlying hedges items both at inception of the hedge and over the life of
the hedge contract. Any instrument designated but ineffective as a hedge is
marked to market and recognized in operations immediately.
(2) Investments
(a) General
The sources of investment income of the Company for the years ended
December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Fixed maturities..................................... $560.1 $489.8 $477.2
Equity securities.................................... -- 4.9 7.3
Mortgage loans....................................... 66.9 64.2 61.0
Policy loans......................................... 14.0 14.4 13.7
Other investments.................................... 2.5 6.7 9.0
------ ------ ------
Gross investment income.............................. 643.5 580.0 568.2
Investment expenses.................................. (5.3) (5.3) (5.5)
------ ------ ------
Net investment income................................ $638.2 $574.7 $562.7
====== ====== ======
</TABLE>
F-10
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
For the years ended December 31, sales proceeds and gross realized
investment gains and losses from the sales of investment securities available-
for-sale were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ -------- ------
<S> <C> <C> <C>
Sales proceeds..................................... $590.3 $1,330.0 $483.6
====== ======== ======
Gross realized investment:
Gains............................................. 28.6 43.8 24.5
Losses............................................ (16.6) (14.2) (5.5)
------ -------- ------
Net realized investment gains...................... $ 12.0 $ 29.6 $ 19.0
====== ======== ======
</TABLE>
The additional proceeds from the investments presented in the consolidated
statements of cash flows result from principal collected on mortgage-backed
securities, asset-backed securities, maturities, calls and sinking fund
payments.
Net unrealized gains and losses on investment securities and other invested
assets classified as available-for-sale are reduced by deferred income taxes
and adjustments to the present value of future profits and deferred policy
acquisition costs that would have resulted had such gains and losses been
realized. Net unrealized gains and losses on available-for-sale investment
securities and other invested assets reflected as a separate component of
shareholders' interest as of December 31, are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Net unrealized gains/(losses) on available-for-sale
investment securities and other invested assets
before adjustments:
Fixed maturities.................................... $(245.0) $138.2 $192.2
Equity securities................................... (0.4) 5.5 14.6
Other invested assets............................... (4.1) 2.3 6.4
------- ------ ------
Subtotal........................................... (249.5) 146.0 213.2
------- ------ ------
Adjustments to the present value of future profits
and deferred acquisition costs 43.1 (57.1) (78.3)
Deferred income taxes................................ 72.2 (31.1) (47.2)
------- ------ ------
Net unrealized gains/(losses)...................... $(134.2) $ 57.8 $ 87.7
======= ====== ======
</TABLE>
At December 31, the amortized cost, gross unrealized gains and losses, and
fair values of the Company's fixed maturities and equity securities available-
for-sale were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Fair
1999 cost gains losses value
- ---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. government and agency........... $ 9.8 $ 0.1 $ (0.2) $ 9.7
State and municipal.................. 1.5 -- -- 1.5
Non-U.S. government.................. 3.0 -- (0.2) 2.8
U.S. corporate....................... 4,936.3 21.4 (227.6) 4,730.1
Non-U.S. corporate................... 624.6 8.1 (17.8) 614.9
Mortgage-backed...................... 1,696.5 16.9 (27.4) 1,686.0
Asset-backed......................... 1,007.0 1.5 (19.8) 988.7
-------- ----- ------- --------
Total fixed maturities............. 8,278.7 48.0 (293.0) 8,033.7
Common stocks and non-redeemable
preferred stocks.................... 33.5 1.3 (1.7) 33.1
-------- ----- ------- --------
Total available-for-sale securities.. $8,312.2 $49.3 $(294.7) $8,066.8
======== ===== ======= ========
</TABLE>
F-11
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Fair
1998 cost gains losses value
- ---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturites:
U.S. government and agency........... $ 66.3 $ 2.2 $ (0.1) $ 68.4
State and municipal.................. 1.6 0.4 -- 2.0
Non-U.S. government.................. 3.0 -- (0.4) 2.6
U.S. corporate....................... 4,223.8 142.2 (54.6) 4,311.4
Non-U.S. corporate................... 314.3 6.4 (9.0) 311.7
Mortgage-backed...................... 1,665.0 58 (9) 1,714.0
Asset-backed......................... 610.6 7.8 (5.7) 612.7
-------- ------ ------ --------
Total fixed maturities............. 6,884.6 217.0 (78.8) 7,022.8
Common stocks and non-redeemable
preferred stocks.................... 48.9 5.8 (0.3) 54.4
-------- ------ ------ --------
Total available-for-sale securities.. $6,933.5 $222.8 $(79.1) $7,077.2
======== ====== ====== ========
</TABLE>
The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 1999 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- --------
<S> <C> <C>
Due in one year or less.................................. $ 332.4 $ 329.7
Due one year through five years.......................... 2,222.5 2,170.0
Due five years through ten years......................... 1,663.2 1,565.5
Due after ten years...................................... 1,357.1 1,293.8
-------- --------
Subtotals.............................................. 5,575.2 5,359.0
Mortgage-backed securities............................... 1,696.5 1,686.0
Asset-backed securities.................................. 1,007.0 988.7
-------- --------
Totals................................................. $8,278.7 $8,033.7
======== ========
</TABLE>
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders of $5.9
and $10.8 as of December 31, 1999 and 1998, respectively.
As of December 31, 1999, approximately 26.1% and 16.1% of the Company's
investment portfolio is comprised of securities issued by the manufacturing
and financial industries, respectively, the vast majority of which are rated
investment grade, and which are senior secured bonds. No other industry group
comprises more than 10% of the Company's investment portfolio. This portfolio
is widely diversified among various geographic regions in the United States,
and is not dependent on the economic stability of one particular region.
As of December 31, 1999 the Company did not hold any fixed maturity
securities which exceeded 10% of shareholders' interest.
F-12
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
The credit quality of the fixed maturity portfolio at December 31, follows.
The categories are based on the higher of the ratings published by Standard &
Poors or Moody's.
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
Fair Fair
value Percent value Percent
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Agencies and treasuries.................... $ 284.7 3.5% $ 536.0 7.6%
AAA/Aaa.................................... 2,080.7 25.9 1,696.1 24.2
AA/Aa...................................... 461.7 5.7 415.2 5.9
A/A........................................ 1,807.5 22.5 1,388.8 19.8
BBB/Baa.................................... 2,078.2 25.9 1,980.8 28.2
BB/Ba...................................... 368.2 4.6 401.5 5.7
B/B........................................ 191.6 2.4 188.5 2.7
CCC/Ca..................................... 0.7 0.0 -- --
CC/Ca...................................... 0.1 0.0 -- --
Not rated.................................. 760.3 9.5 415.9 5.9
-------- ----- -------- -----
Totals..................................... $8,033.7 100.0% $7,022.8 100.0%
======== ===== ======== =====
</TABLE>
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa are generally regarded
as investment grade securities. Some agencies and treasuries (that is, those
securities issued by the United States government or an agency thereof) are
not rated, but all are considered to be investment grade securities. Finally,
some securities, such as private placements, have not been assigned a rating
by any rating service and are therefore categorized as "not rated." This has
neither positive nor negative implications regarding the value of the
security.
At December 31, 1999 and 1998, there were fixed maturities in default with
a fair value of $1.0 and $4.5, respectively.
(b) Mortgage and Real Estate Portfolio
The Company's mortgage and real estate portfolio is distributed by
geographic location and type. However, the Company has concentration exposures
in certain regions and in certain types as shown in the following two tables.
Geographic distribution as of December 31, 1999:
<TABLE>
<CAPTION>
Mortgage Real Estate
-------- -----------
<S> <C> <C>
South Atlantic.......................................... 30.0% 100.0%
Pacific................................................. 26.0 --
East North Central...................................... 15.0 --
West South Central...................................... 10.0 --
Mountain................................................ 5.0 --
Other................................................... 14.0 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
</TABLE>
F-13
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
Type distribution as of December 31, 1999:
<TABLE>
<CAPTION>
Mortgage Real Estate
-------- -----------
<S> <C> <C>
Office Building......................................... 22.0% --%
Retail.................................................. 30.0 100.0
Industrial.............................................. 23.0 --
Apartments.............................................. 15.0 --
Other................................................... 10.0 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
</TABLE>
"Impaired" loans are defined under generally accepted accounting principles
as loans for which it is probable that the lender will be unable to collect
all amounts due according to the original contractual terms of the loan
agreement. That definition excludes, among other things, leases or large
groups of smaller-balance homogenous loans, and therefore applies principally
to the Company's commercial loans.
Under these principles, the Company has two types of "impaired" loans as of
December 31, 1999 and 1998: loans requiring allowances for losses and loans
expected to be fully recoverable because the carrying amount has been reduced
previously through charge-offs or deferral of income recognition ($12.5 and
$11.3, respectively). There was no allowance for losses on these loans as of
December 31, 1999 or 1998. Average investment in impaired loans during 1999,
1998 and 1997 was $15.0, $20.0 and $23.0 and interest income earned on these
loans while they were considered impaired was $2.6, $1.8 and $2.0 for the
years ended 1999, 1998 and 1997, respectively.
The following table shows the activity in the allowance for losses during
the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Balance on January 1...................................... $20.9 $17.7 $21.0
Provision charged to operations........................... 1.6 1.5 1.4
Amounts written off, net of recoveries.................... 0.8 1.7 (4.7)
----- ----- -----
Balance at December 31.................................... $23.3 $20.9 $17.7
===== ===== =====
</TABLE>
The allowance for losses on mortgage loans at December 31, 1999 and 1998
represented 2.8% and 2.7% of gross mortgage loans, respectively.
The Company had $4.5 and $5.6 of non-income producing mortgage loan
investments as of December 31, 1999 and 1998 respectively.
(3) Deferred Acquisition Costs
Activity impacting deferred policy acquisition costs for the years ended
December 31, was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unamortized balance -- at January 1................ $296.1 $221.4 $108.8
Costs deferred..................................... 218.9 107.0 130.6
Amortization, net.................................. (39.8) (32.3) (18.0)
------ ------ ------
Unamortized balance -- at December 31.............. 475.2 296.1 221.4
Cumulative effect of net unrealized investment
(gains) losses.................................... 7.3 (13.3) (14.8)
------ ------ ------
Balance at December 31............................. $482.5 $282.8 $206.6
====== ====== ======
</TABLE>
F-14
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(4) Intangibles
(a) Present Value of Future Profits
PVFP reflects the estimated fair value of the Company's life insurance
business in-force and represents the portion of the cost to acquire the
Company that is allocated to the value of the right to receive future cash
flows from investment and insurance contracts existing at the date of
acquisition. Such value is the present value of the actuarially determined
projected cash flows for the acquired policies discounted at an appropriate
rate.
PVFP is amortized, net of accreted interest, in a manner similar to the
amortization of deferred acquisition costs. Interest accretes at rates
credited to policyholders on underlying contracts. Recoverability of PVFP is
evaluated periodically by comparing the current estimate of expected future
gross profits to the unamortized asset balance. If such a comparison indicates
that the expected gross profits will not be sufficient to recover PVFP, the
difference is charged to expense.
PVFP is further adjusted to reflect the impact of unrealized gains or
losses on fixed maturities classified as available for sale in the investment
portfolios. Such adjustments are not recorded in the Company's net income but
rather as a credit or charge to shareholders' interest, net of applicable
income tax.
The components of PVFP are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unamortized balance -- at January 1................ $367.0 $426.9 $487.9
Interest accreted at 7.19%, 6.25% and 6.75% for
1999, 1998, and 1997, respectively................ 21.9 24.0 28.4
Amortization....................................... (74.1) (83.9) (89.4)
------ ------ ------
Unamortized balance -- at December 31.............. 314.8 367.0 426.9
Cumulative effect of net unrealized investment
(gains) losses.................................... 35.8 (43.8) (63.5)
------ ------ ------
Balance at December 31............................. $350.6 $323.2 $363.4
====== ====== ======
</TABLE>
The estimated percentage of the December 31, 1999 balance, before the
effect of unrealized investment gains or losses, to be amortized over each of
the next five years is as follows:
<TABLE>
<S> <C>
2000................................... 14.7%
2001................................... 12.4
2002................................... 10.2
2003................................... 8.5
2004................................... 7.2
</TABLE>
(b) Goodwill
Goodwill represents the excess of purchase price over the fair value of the
assets acquired, less the fair value of the liabilities assumed which has been
pushed-down to the consolidated financial statements by the Company's parent.
Adjustments to the purchase price related to pre-acquisition contingencies are
recorded as adjustments to goodwill in the period in which they are resolved.
At December 31, 1999 and 1998, total unamortized goodwill was $121.4 and
$134.2, respectively, which is shown net of accumulated amortization and
adjustments of $36.1 and $50.9 for the years ended December 31, 1999 and 1998,
respectively. Goodwill amortization was $6.0, $4.9, and $8.7 for the years
ending December 31, 1999, 1998 and 1997, respectively. Adjustments to goodwill
totaled ($6.8), ($27.6) and ($1.9) for the years ending December 31, 1999,
1998 and 1997, respectively.
(5) Reinsurance and Claim Reserves
GELAAC is involved in both the cession and assumption of reinsurance with
other companies. Although these reinsurance agreements contractually obligate
the reinsurers to reimburse the Company, they do not discharge the
F-15
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(5) Reinsurance and Claim Reserves -- Continued
Company from its primary liabilities and the Company remains liable to the
extent that the reinsuring companies are unable to meet their obligations.
In order to limit the amount of loss retention, certain policy risks are
reinsured with other insurance companies. The maximum of individual ordinary
life insurance normally retained by the Company on any one life policy is $1.
The Company does not have significant reinsurance contracts with any one
reinsurer that could have a material impact on its results of operations.
A summary of reinsurance activity is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Direct............................................... $348.0 $427.5 $412.7
Assumed.............................................. 17.9 19.2 20.7
Ceded................................................ (113.0) (195.1) (134.4)
------ ------ ------
Net premiums earned.................................. $252.9 $251.6 $299.0
------ ------ ------
Percentage of amount assumed to net.................. 7% 8% 7%
====== ====== ======
</TABLE>
Due to the nature of the Company's insurance contracts, premiums earned
approximate premiums written. The above premium amounts include cost of
insurance charges on universal life policies.
During 1998 and 1997, a significant portion of GELAAC's ceded premiums
related to group life and health premiums. During 1998 and 1997, GELAAC was
the primary carrier for the State of Virginia employees group life and health
plan. By statute, GELAAC had to reinsure these risks with other Virginia
domiciled companies who wished to participate.
Incurred losses and loss adjustment expenses are net of reinsurance of
$68.2, $112.4 and $85.6 for the years ended December 31, 1999, 1998 and 1997,
respectively.
(6) Future Annuity and Contract Benefits
(a) Investment Contracts
Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment contracts are recognized by providing a liability equal to the
current account value of the policyholder's contracts. Interest rates credited
to investment contracts are guaranteed for the initial policy term with
renewal rates determined as necessary by management.
(b) Insurance Contracts
Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future benefits
of insurance contracts is the present value of such benefits based on
mortality, morbidity, and other assumptions which were appropriate at the time
the policies were issued or acquired. These assumptions are periodically
evaluated for potential premium deficiencies. Reserves for cancelable accident
and health insurance are based upon unearned premiums, claims incurred but not
reported, and claims in the process of settlement. This estimate is based on
the experience of the insurance industry and the Company, adjusted for current
trends. Any changes in the estimated liability are reflected in income as the
estimates are revised.
F-16
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(6) Future Annuity and Contract Benefits -- Continued
The following chart summarizes the major assumptions underlying the
Company's recorded liabilities for future annuity and contract benefits:
<TABLE>
<CAPTION>
Mortality/ December 31,
Withdrawal Morbidity Interest Rate -----------------
Assumption Assumption Assumption 1999 1998
------------------ ---------- ------------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Contracts.... N/A N/A N/A $6,891.1 $5,416.2
Limited-payment
Contracts.............. None (a) 4.0-9.3% 16.3 14.4
Traditional life
insurance contracts.... Company Experience (b) 7.1% 380.8 381.5
Universal life-type
contracts.............. N/A N/A N/A 1,730.2 1,684.7
Accident & Health....... Company Experience (c) 3.5-7.5% 44.6 41.3
-------- --------
Total future annuity and
contract benefits...... $9,063.0 $7,538.1
======== ========
</TABLE>
- -------
(a) Either the United States Population Table, 1983 Group Annuitant Mortality
Table or 1983 Individual Annuitant Mortality Table.
(b) Principally modifications of the 1965-70 or 1975-80 Select and Ultimate
Tables.
(c) The 1958 Commissioner's Standard Ordinary Table and 1964 modified and 1987
Commissioner's Disability Tables.
(7) Income Taxes
GELAAC and its subsidiary have been included in the life insurance company
consolidated federal income tax return of GECA and are also subject to a
separate tax-sharing agreement, as approved by state insurance regulators, the
provisions of which are substantially the same as the tax-sharing agreement
with GE Capital. As such the Company is not at risk for income taxes nor
entitled to recoveries related to post-acquisition periods.
The total provision for income taxes at December 31, consisted of the
following components:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Current federal income tax provision ..................... $29.3 $29.2 $69.1
Deferred federal income tax provision (benefit)........... 24.9 28.7 (9.5)
----- ----- -----
Subtotal-federal provision.............................. 54.2 57.9 59.6
Current state income tax provision ....................... 2.3 1.6 2.6
Deferred state income tax provision (benefit)............. 0.1 0.8 (0.1)
----- ----- -----
Subtotal-state provision................................ 2.4 2.4 2.5
----- ----- -----
Total income tax provision.............................. $56.6 $60.3 $62.1
===== ===== =====
</TABLE>
The reconciliation of the federal statutory rate to the effective income
tax rate at December 31, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal income tax rate..................... 35.0% 35.0% 35.0%
State income tax........................................... 0.5 0.5 0.5
Non-deductible goodwill amortization....................... 1.2 1.0 1.7
Dividends received deduction............................... (1.1) (0.2) --
Other, net................................................. (1.2) -- (0.5)
---- ---- ----
Effective rate........................................... 34.4% 36.3% 36.7%
==== ==== ====
</TABLE>
F-17
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(7) Income Taxes -- Continued
The components of the net deferred income tax asset at December 31 are as
follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Assets:
Insurance reserve amounts.................................... $149.0 $159.5
Investments.................................................. 10.7 --
Net unrealized investment losses on investment securities.... 72.2 --
Other........................................................ 22.2 7.7
------ ------
Total deferred tax assets................................... 254.1 167.2
------ ------
Liabilities:
Net unrealized investment gains on investment securities..... -- 31.1
Investments.................................................. -- 15.9
Present value of future profits.............................. 59.6 67.1
Deferred acquisition costs................................... 74.2 11.0
------ ------
Total deferred tax liabilities.............................. 133.8 125.1
------ ------
Net deferred income tax asset............................... $120.3 $ 42.1
====== ======
</TABLE>
Based on an analysis of the Company's tax position, management believes it
is more likely than not that the results of future operations and
implementation of tax planning strategies will generate sufficient taxable
income enabling the Company to realize remaining deferred tax assets.
Accordingly, no valuation allowance for deferred tax assets is deemed
necessary.
The Company paid $41.8, $25.6 and $70.6, for federal and state income taxes
for the years ended December 31, 1999, 1998 and 1997, respectively.
(8) Related Party Transactions
GELAAC pays investment advisory fees and other fees to affiliates. Amounts
incurred for these items aggregated $14.8, $11.5 and $11.9 for the years ended
December 31, 1999, 1998 and 1997, respectively. GELAAC charges affiliates for
certain services and for the use of facilities and equipment which aggregated
$45.1, $19.1 and $4.6, for the years ended December 31, 1999, 1998 and 1997,
respectively.
GELAAC pays interest on outstanding amounts under a credit funding
agreement with GNA Corporation, the parent company of GECA. Interest expense
under this agreement was $1.9 and $2.2 with no outstanding borrowings at
December 31, 1999 and $64.3 outstanding at December 31, 1998.
During 1998, GELAAC sold $18.5 of third-party preferred stock investments
to an affiliate. This resulted in a gain on sale of $3.9, which is included in
net realized investment gains.
(9) Commitments and Contingencies
(a) Mortgage Loan Commitments
GELAAC has certain investment commitments to provide fixed-rate loans. The
investment commitments, which would be collateralized by related properties of
the underlying investments, involve varying elements of credit and market
risk. Investment commitments outstanding as of December 31, 1999 and 1998,
totaled $30.8 and $75.9, respectively.
(b) Guaranty Association Assessments
The Company is required by law to participate in the guaranty associations
of the various states in which they do business. The state guaranty
associations ensure payment of guaranteed benefits, with certain restrictions,
to policyholders of impaired or insolvent insurance companies by assessing all
other companies involved in similar lines of business.
F-18
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(9) Commitments and Contingencies -- Continued
There are currently several unrelated insurance companies which had
substantial amounts of annuity business in the process of liquidation or
rehabilitation. The Company paid assessments of $.1, $3.1, and $4.6 to various
state guaranty associations during 1999, 1998 and 1997, respectively. At
December 31, 1999 and 1998, accounts payable and accrued expenses include $4.1
and $17.8, respectively, related to estimated future payments.
(c) Litigation
The Company and its subsidiary are defendants in various cases of
litigation considered to be in the normal course of business. The Company
believes that the outcome of such litigation will not have a material effect
on its financial position or results of operations.
(10) Fair Value of Financial Instruments
The Company has no derivative financial instruments as of December 31, 1999
and 1998 other than mortgage loan commitments of $53.0 and $83.8 and interest
rate floors of $13.9 and $17.2, respectively. The notional value of the
interest rate floors at December 31, 1999 and 1998, was $1,800 and the floors
expire from September 2003 to October 2003.
The fair values of financial instruments presented in the applicable notes
to the Company's consolidated financial statements are estimates of the fair
values at a specific point in time using available market information and
valuation methodologies considered appropriate by management. These estimates
are subjective in nature and involve uncertainties and significant judgment in
the interpretation of current market data. Therefore, the fair values
presented are not necessarily indicative of amounts the Company could realize
or settle currently. The Company does not necessarily intend to dispose of or
liquidate such instruments prior to maturity.
Financial instruments that, as a matter of accounting policy, are reflected
in the accompanying consolidated financial statements at fair value are not
included in the following disclosures. Such items include fixed maturities,
equity securities and certain other invested assets. The carrying value of
policy loans and short-term investments approximate fair value at both
December 31, 1999 and 1998.
At December 31, the carrying amounts and fair value of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
Carrying Fair Carrying Fair
amount value amount value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Mortgage loans.......................... $ 810.5 $ 819.4 $ 745.8 $ 828.3
Investment type insurance contracts..... 6,891.1 6,849.8 5,416.2 5,441.8
Interest rate floors.................... 13.9 1.2 17.2 12.5
</TABLE>
The fair value of mortgage loans is estimated by discounting the estimated
future cash flows using interest rates applicable to current loan origination,
adjusted for credit risk.
The estimated fair value of investment contracts is the amount payable on
demand (cash surrender value) for deferred annuities and the net present value
based on interest rates currently offered on similar contracts for non-life
contingent immediate annuities. Fair value disclosures are not required for
insurance contracts.
F-19
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(11) Restrictions on Dividends
Insurance companies are restricted by states as to the aggregate amount of
dividends they may pay to their parent in any consecutive twelve-month period
without regulatory approval. Generally, dividends may be paid out of earned
surplus without approval with thirty days prior written notice within certain
limits. The limits are generally based on 10% of the prior year surplus (net
of adjustments in some cases) and prior year statutory income (net gain from
operations, net income adjusted for realized capital gains, or net investment
income). Dividends in excess of the prescribed limits or the Company's earned
surplus require formal state insurance commission approval. The maximum
dividend payout which may be made without prior approval in 2000 is $54.2.
On December 3, 1998, the Company received approval from the Commonwealth of
Virginia for, and declared, a dividend payable in cash, preferred stock and/or
common stock at the election of each shareholder. GEFAHI elected to receive
cash and preferred stock and GECA elected to receive common stock. A cash
dividend of $120 was paid and a Series A preferred stock dividend of $120 was
issued to GEFAHI on December 15, 1998. The Series A preferred stock has a par
value of $1,000 per share, is redeemable at par at the Company's election, and
is not subject to call penalties. Dividends on the preferred stock are
cumulative and payable semi-annually at the annual rate of 8.0% of the par
value. The Series A preferred stock is not convertible into any other security
of the Company, and the holders thereof have no voting rights except with
respect to any proposed changes in the preferences and special rights of such
stock. GECA received its dividend in the form of 18,641 shares of newly issued
common stock in 1999.
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners ("NAIC")
that are prepared on an accounting basis prescribed by such authorities
(statutory basis). Statutory accounting practices differ from GAAP in several
respects, causing differences in reported net income and shareholders'
interest. Permitted statutory accounting practices encompass all accounting
practices not so prescribed but that have been specifically allowed by state
insurance authorities. The Company has no significant permitted accounting
practices.
At December 31, statutory net income and statutory capital and surplus is
summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Statutory net income................................... $ 70.8 $ 70.1 $ 80.9
Statutory capital and surplus.......................... $542.5 $577.5 $600.0
</TABLE>
The NAIC adopted Risk Based Capital ("RBC") requirements to evaluate the
adequacy of statutory capital and surplus in relation to risks associated with
(i) asset quality, (ii) insurance risk, (iii) interest rate risk, and (iv)
other business factors. The RBC formula is designated as an early warning tool
for the states to identify possible under-capitalized companies for the
purpose of initiating regulatory action. In the course of operations, the
Company periodically monitors its RBC level. At December 31, 1999 and 1998,
the Company exceeded the minimum required RBC levels.
(13) Operating Segment Information
The Company conducts its operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase
the policyholder's wealth, transfer wealth to beneficiaries or provide a means
for replacing the income of the insured in the event of premature death, and
(2) Lifestyle Protection and Enhancement, comprised of products intended to
protect accumulated wealth and income from the financial drain of unforeseen
events. See Note (1)(c) for further discussion of the Company's principal
product lines within these two segments.
F-20
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(13) Operating Segment Information -- Continued
The following is a summary of industry segment activity for 1999, 1998 and
1997:
<TABLE>
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1999 -- Segment Data Transfer & Enhancement Consolidated
- -------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ 634.2 4.0 638.2
Net realized investment gains........ 12.0 -- 12.0
Premiums............................. 67.8 56.1 123.9
Other revenues....................... 243.6 0.2 243.8
-------- ----- --------
Total revenues..................... 957.6 60.3 1,017.9
-------- ----- --------
Interest credited, benefits, and
other changes in policy reserves.... 617.0 38.5 655.5
Commissions.......................... 179.7 12.4 192.1
Amortization of intangibles.......... 56.2 2.1 58.3
Other operating costs and expenses... (55.1) 2.6 (52.5)
-------- ----- --------
Total benefits and expenses........ 797.8 55.6 853.4
-------- ----- --------
Income before income taxes and
cumulative effect of accounting
change............................ 159.8 4.7 164.5
======== ===== ========
Total Assets......................... 19,790.9 183.1 19,974.0
======== ===== ========
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1998 -- Segment Data Transfer & Enhancement Consolidated
- -------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ 569.4 5.3 574.7
Net realized investment gains........ 29.6 -- 29.6
Premiums............................. 101.4 21.7 123.1
Other revenues....................... 211.1 0.5 211.6
-------- ----- --------
Total revenues..................... 911.5 27.5 939.0
-------- ----- --------
Interest credited, benefits, and
other changes in policy reserves.... 560.7 (3.9) 556.8
Commissions.......................... 106.2 6.6 112.8
Amortization of intangibles.......... 55.1 9.7 64.8
Other operating costs and expenses... 26.0 12.5 38.5
-------- ----- --------
Total benefits and expenses........ 748.0 24.9 772.9
-------- ----- --------
Income before income taxes and
cumulative effect of accounting
change............................ 163.5 2.6 166.1
======== ===== ========
Total Assets......................... 14,661.1 99.8 14,760.9
======== ===== ========
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1997 -- Segment Data Transfer & Enhancement Consolidated
- -------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ 555.7 7.0 562.7
Net realized investment gains........ 19.0 -- 19.0
Premiums............................. 105.6 66.2 171.8
Other revenues....................... 195.1 0.2 195.3
-------- ----- --------
Total revenues..................... 875.4 73.4 948.8
-------- ----- --------
Interest credited, benefits, and
other changes in policy reserves.... 548.4 42.5 590.9
Commissions.......................... 125.2 13.9 139.1
Amortization of intangibles.......... 66.6 3.1 69.7
Other operating costs and expenses... (24.5) 4.1 (20.4)
-------- ----- --------
Total benefits and expenses........ 715.7 63.6 779.3
-------- ----- --------
Income before income taxes and
cumulative effect of accounting
change............................ 159.7 9.8 169.5
======== ===== ========
Total Assets......................... 12,699.0 47.9 12,746.9
======== ===== ========
</TABLE>
F-21
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(14) Accounting Pronouncements Not Yet Adopted
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities (Statement No. 133), effective for GELAAC
on January 1, 2001 (as amended by Statement of Financial Accounting Standards
No. 137, Deferral of the Effective Date of Statement No. 133.) Upon adoption,
all derivative instruments (including certain derivative instruments embedded
in other contracts) will be recognized in the balance sheets at fair value,
and changes in such fair values must be recognized immediately in earnings
unless specific hedging criteria are met. Changes in the values of derivatives
meeting these hedging criteria will ultimately offset related earnings effects
of the hedged items; effects of qualifying changes in fair value are to be
recorded in equity pending recognition in earnings. Certain significant
refinements and interpretations of Statement 133 are being deliberated by the
FASB, and the effects on accounting for GELAAC financial instruments will
depend to some degree on the results of such deliberations. Management has not
determined the total probable effects of adopting Statement 133, and does not
believe that an estimate of such effects would be meaningful at this time.
(15) Cumulative Effect of Accounting Change
The American Institute of Certified Public Accountants has issued Statement
of Position ("SOP") No. 97-3, Accounting by Insurance and Other Enterprises
for Insurance-Related Assessments. This SOP provided guidance on accounting by
insurance and other enterprises for guaranty-fund and certain other insurance-
related assessments. The SOP requires enterprises to recognize (1) a liability
for assessments when (a) an assessment has been asserted or information
available prior to issuance of the financial statements indicates it is
probable that an assessment will be asserted, (b) the underlying cause of the
asserted or probable assessment has occurred on or before the date of the
financial statements, and (c) the amount of the loss can be reasonably
estimated and (2) an asset for an amount when it is probable that a paid or
accrued assessment will result in an amount that is recoverable from premium
tax offsets or policy surcharges from in-force policies.
Effective January 1, 1999, the Company adopted SOP No. 97-3 and has
reported the favorable impact of this adoption as a cumulative effect of a
change in accounting principle resulting in an increase to net income of $5
(net of income taxes of $2.8).
F-22
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part B of this Registration
Statement.
(b) Exhibits
(1)(a) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of Separate Account 4. 12/
(1)(b) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of twenty-two (22) additional subdivisions of
Separate Account 4, investing in shares of Money Market
Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio of the Fidelity Variable
Insurance Products Fund; Asset Manager Portfolio of the Fidelity
Variable Insurance Products Fund II; Money Market Portfolio,
Government Securities Portfolio, Common Stock Index Portfolio,
Total Return Portfolio of the Life of Virginia Series Fund,
Inc.; Limited Maturity Bond Portfolio, Growth Portfolio and
Balanced Portfolio of the Neuberger & Berman Advisers Management
Trust; Growth Portfolio, Aggressive Growth Portfolio, and
Worldwide Growth Portfolio of the Janus Aspen Series; Money
Fund, High Income Fund, Bond Fund, Capital Appreciation Fund,
Growth Fund, Multiple Strategies Fund of the Oppenheimer
Variable Account Funds. 12/
(1)(c) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of two additional investment subdivisions of
Separate Account 4, investing in shares of the International
Equity Portfolio and the Real Estate Securities Portfolio of
Life of Virginia Series Fund. 12/
(1)(d) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of four additional investment subdivisions of
Separate Account 4, investing in shares of the American Growth
Portfolio and the American Small Capitalization Portfolio of The
Alger American Fund, and the Growth Portfolio and Flexible
Income Portfolio of the Janus Aspen Series. 8/
(1)(e) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of twelve additional investment subdivisions
of Separate Account 4, investing in shares of the Growth &
Income Portfolio and Growth Opportunities Portfolio of Variable
Insurance Products Fund III; Growth II Portfolio and Large Cap
Growth Portfolio of the PBHG Insurance Series Fund, Inc.; Global
Income Fund and Value Equity Fund of GE Investments Funds,
Inc. 11/
<PAGE>
(1)(f) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of two additional investment subdivisions of
Separate Account 4, investing in shares of the Capital
Appreciation Portfolio of the Janus Aspen Series. 11/
(1)(g) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of twenty-two (22) additional subdivisions
of Separate Account 4. 12/
(1)(h) Resolution of Board of Directors of Life of Virginia authorizing
the establishment of six additional investment subdivisions of
Separate Account 4, investing in shares of the U.S. Equity Fund
of the GE Investments Funds, Inc., Growth and Income Fund of the
Goldman Sachs Variable Insurance Trust Fund and Mid Cap Equity
Fund of Goldman Sachs Variable Insurance Trust. Further a name
change for Oppenheimer Variable Account Fund Capital
Appreciation Fund to Oppenheimer Variable Account Fund
Aggressive Growth Fund. 12/
(1)(i) Resolution of Board of Directors of GE Life & Annuity
authorizing the establishment of an additional Investment
Subdivision investing in shares of GE Premier Growth Equity Fund
of GE Investments Funds, Inc.15/
(1)(j) Resolution of Board of Directors of GE Life & Annuity
authorizing the establishment of additional investment
subdivisions of Separate Account 4, investing in shares of AIM
V.I. Aggressive Growth Fund, AIM V.I. Capital Appreciation
Fund, AIM V.I. Capital Development Fund, AIM V.I. Global
Utilities Fund, AIM V.I. Government Securities Fund, AIM V.I.
Growth Fund, AIM V.I. Growth & Income Fund, AIM V.I.
Telecommunications Fund and AIM V.I. Value Fund of AIM
Variable Insurance Funds, Inc.; Growth & Income Portfolio,
Premier Growth Portfolio and Quasar Portfolio of Alliance
Variable Products Series Fund; The Dreyfus Socially
Responsible Growth Fund, Inc. of The Dreyfus Corporation;
Equity Income Portfolio and Growth Portfolio of Fidelity
Variable Insurance Products Fund; Contrafund Portfolio of
Fidelity Variable Insurance Products Fund II; Growth & Income
Portfolio and Mid Cap Portfolio of Fidelity Variable Insurance
Products Fund III; Money Market Fund, Premier Growth Equity
Fund, S&P 500 Index Fund, U.S. Equity Fund, and Value Equity
Fund of GE Asset Management; Aggressive Growth Portfolio,
Balanced Portfolio, Capital Appreciation Portfolio,
Equity-Income Portfolio, Global Sciences Portfolio, Global
Technology Portfolio, Growth Portfolio, High-Yield Portfolio,
International Growth Portfolio, and Worldwide Growth Portfolio
of Janus Aspen Series; Global Securities Fund/VA and Main
Street Growth & Income Fund/VA of Oppenheimer Variable Account
Funds; Foreign Bond Portfolio, High Yield Bond Portfolio,
Long-Term U.S. Government Bond Portfolio and Total Return Bond
Portfolio of PIMCO Variable Insurance Trust; and OTC Fund of
Rydex Variable Trust. 17/
(2) Not Applicable.
(3)(a) Underwriting Agreement dated December 12, 1997 between The Life
Insurance Company of Virginia and Capital Brokerage Corporation.
12/
(b) Dealer Sales Agreement dated December 13, 1997.12/
(4)(a) Form of Contract P1153 12/99. 18/
(5)(a) Form of Application. 18/
(6)(a) Certificate of Incorporation of The Life Insurance Company of
Virginia. 12/
<PAGE>
(b) By-Laws of The Life Insurance Company of Virginia. 12/
(7) Not Applicable.
(8)(a) Stock Sale Agreement between The Life Insurance Company of
Virginia and The Life of Virginia Series Fund, Inc. 12/
(b) Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation, and The Life Insurance
Company of Virginia. 12/
(b)(i) Amendment to Participation Agreement Referencing Policy Form
Numbers. 12/
(b)(ii) Amendment to Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation, and The Life
Insurance Company of Virginia. 9/
(b)(iii) Amendment to Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation, and GE Life
and Annuity Assurance Company. 15/
(c) Participation Agreement between Janus Capital Corporation and
The Life Insurance Company of Virginia. 12/
(c)(i) Amendment to Participation Agreement between Janus Capital
Corporation and GE Life and Annuity Assurance Company. 15/
(d) Participation Agreement between Variable Insurance Products Fund
III and The Life Insurance Company of Virginia. 11/
(e) Participation Agreement between GE Investments Funds, Inc. and
GE Life and Annuity Assurance Company.15/
(f) Form of Participation Agreement between AIM Variable Insurance
Funds, Inc. and GE Life and Annuity Assurance Company. 18/
(9) Opinion and Consent of Counsel. 18/
(10)(a) Consent of Counsel. 18/
(b) Consent of Independent Auditors. 18/
(11) Not Applicable.
<PAGE>
(12) Not Applicable.
(13) Schedule showing computation for Performance Data 16/
(14) (i) Power of Attorney dated April 16, 1997.11/
(ii) Power of Attorney dated April 15, 1999 15/
(iii) Power of Attorney dated December 20, 1999 16/
--------------------------
8/ Incorporated herein by reference to post-effective amendment number 3 to
the Registrant's registration statement on Form N-4, File No. 33-76334,
filed with the Securities and Exchange Commission on September 28, 1995.
9/ Incorporated herein by reference to post-effective amendment number 4 to
the Registrant's registration statement on Form N-4, File No. 33-76334,
filed with the Securities and Exchange Commission on April 30, 1996.
10/ Incorporated herein by reference to post-effective amendment number 6 to
the Registrant's registration statement on Form N-4, File No. 33-76334,
filed with the Securities and Exchange Commission on March 24, 1997.
11/ Incorporated herein by reference to post-effective amendment number 7 to
the Registrant's registration statement on Form N-4, File No. 33-76334
filed with the Securities and Exchange Commission on May 1, 1997.
12/ Incorporated herein by reference to post-effective amendment number 9 to
the Registrant's registration statement on Form N-4, File No. 33-76334
filed with the Securities and Exchange Commission on May 1, 1998.
13/ Incorporated herein by reference to post-effective amendment number 11 to
the Registrant's registration statement on Form N-4, File No. 33-76334
filed with the Securities and Exchange Commission on July 17, 1998.
14/ Incorporated herein by reference to pre-effective amendment number 11 to
the Registrant's registration statement on Form N-4, File No. 333-62695
filed with the Securities and Exchange Commission on December 18, 1998.
15/ Incorporated herein by reference to pre-effective amendment number 16 to
the Registrant's registration statement on Form N-4, File No. 33-76334
filed with the Securities and Exchange Commission on April 30, 1999.
16/ Incorporated herein by reference to initial filing to the Registrant's
registration statement on Form N-4, File No. 333-96513 filed with the
Securities and Exchange Commission on December 22, 1999.
17/ Incorporated herein by reference to initial filing to the Registrant's
registration statement on Form N-4, File No. 333-31172 filed with the
Securities and Exchange Commission on February 25, 2000.
18/ Incorporated herein.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF GE LIFE & ANNUITY
<TABLE>
<CAPTION>
Positions and Offices
Name Address with Depositor
<S> <C>
Michael G. Fraizer GE Financial Assurance Director and Chairman of
6604 W. Broad Street the Board
Richmond, VA 23230
Pamela S. Schutz GE Life & Annuity Director and President
6610 W. Broad Street
Richmond, VA 23230
Selwyn L. Flournoy, Jr GE Life & Annuity Director and Senior Vice
6610 W. Broad Street President
Richmond, VA 23230
Robert D. Chinn GE Life & Annuity Director and Senior Vice
6610 W. Broad Street President - Agency
Richmond, VA 23230
Elliot Rosenthal GE Life & Annuity Senior Vice President -
6610 W. Broad Street Investment Products
Richmond, VA 23230
Victor C. Moses GE Financial Assurance Director and Vice President
601 Union Street, Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff GE Life & Annuity Director and Senior Vice President
6610 W. Broad Street
Richmond, VA 23230
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
ORGANIZATIONAL CHART
----------- GENERAL ELECTRIC
| COMPANY
OTHER SUBSIDIARIES |
(100%)
|
GENERAL ELECTRIC
CAPITAL SERVICES, INC.
|
(100%)
|
GENERAL ELECTRIC
CAPITAL CORPORATION
<PAGE>
<TABLE>
<S> <C>
|
(100%)
|
GE FINANCIAL ASSURANCE
HOLDINGS, INC.
|
(100%)
|
GNA CORPORATION
|
(100%)
|
GENERAL ELECTRIC
CAPITAL ASSURANCE COMPANY------------
| |
(85.2%) |
| |
| Federal Home Life Phoenix Group
| Insurance Company Holdings, Inc.
| (11.7%) (3.1%)
| | |
| | |
| | |
GE LIFE AND ANNUITY----------------------------------------
ASSURANCE COMPANY
</TABLE>
ITEM 27. NUMBER OF CONTRACTOWNERS
Not applicable.
ITEM 28. INDEMNIFICATION
Section 13.1-698 and 13.1-702 of the Code of Virginia, in brief, allow a
corporation to indemnify any person made party to a proceeding because such
person is or was a director, officer, employee, or agent of the corporation,
against liability incurred in the proceeding if: (1) he conducted himself in
good faith; and (2) he believed that (a) in the case of conduct in his official
capacity with the corporation, his conduct was in its best interests; and (b) in
all other cases, his conduct was at least not opposed to the corporation's best
interests and (3) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. The termination of a proceeding by
judgment, order, settlement or conviction is not, of itself, determinative that
the director, officer, employee, or agent of the corporation did not meet the
standard of conduct described. A corporation may not indemnify a director,
officer, employee, or agent of the corporation in connection with a proceeding
by or in the right of the corporation, in which such person was adjudged liable
to the corporation, or in connection with any other proceeding charging improper
personal benefit to such person, whether or not involving action in his official
capacity, in which such person was adjudged liable on the basis that personal
benefit was improperly received by him. Indemnification permitted under these
sections of the Code of Virginia in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
Section 5 of the By-Laws of GE Life & Annuity further provides that:
<PAGE>
(a) The Corporation shall indemnify each director, officer and employee of
this Company who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he is or
was a director, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgements [sic], fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in the best interests of the
Corporation, and with respect to any criminal action, had no cause to believe
his conduct unlawful. The termination of any action, suit or proceeding by
judgement [sic], order, settlement, conviction, or upon a plea of nolo
contendere, shall not of itself create a presumption that the person did not
act in good faith, or in a manner opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, believed
his conduct unlawful.
(b) The Corporation shall indemnify each director, officer or employee of the
Corporation who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgement [sic] in its favor by reason of the fact
that he is or was a director, officer or employee of the Corporation, or is
or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such
court shall deem proper.
(c) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer or
employee is proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b). Such determination
shall be made (1) by the Board of Directors of the Corporation by a majority
vote of a quorum consisting of the directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders of
the Corporation.
(d) Expenses (including attorneys' fees) incurred in defending an action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in subsection (c) upon receipt of an undertaking by or on behalf of
<PAGE>
the director, officer or employee to repay such amount to the Corporation
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
(e) The Corporation shall have the power to make any other or further
indemnity to any person referred to in this section except an indemnity
against gross negligence or willful misconduct.
(f) Every reference herein to director, officer or employee shall include
every director, officer or employee, or former director, officer or employee
of the Corporation and its subsidiaries and shall enure to the benefit of the
heirs, executors and administrators of such person.
(g) The foregoing rights and indemnification shall not be exclusive of any
other rights and indemnification to which the directors, officers and
employees of the Corporation may be entitled according to law.
* * *
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to the foregoing provisions, or otherwise, the depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the depositor of expenses incurred
or paid by a director, officer or controlling person of the depositor in
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the depositor will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Capital Brokerage Corporation is the principal underwriter of the
Contracts as defined in the Investment Company Act of 1940, and is also the
principal underwriter for flexible premium variable life insurance policies
issued through GE Life & Annuity Separate Accounts I, II, III and V.
<PAGE>
(b)
<TABLE>
<CAPTION>
<S> <C> <C>
Position and offices
Name Address with Underwriter
- ---- ------- -----------------
Scott A. Curtis GE Financial Assurance President and Chief
6610 W. Broad Street Executive Officer
Richmond, VA 23230
David J. Beck GE Financial Assurance Senior Vice President &
601 Union St., Ste. 5600 Chief Investment Officer
Seattle, WA 98101
Thomas W. Casey GE Financial Assurance Senior Vice President &
6604 W. Broad St. Chief Financial Officer
Richmond, VA 23230
Gary T. Prizzia GE Financial Assurance Treasurer
6604 W. Broad Street
Richmond, VA 23230
Victor C. Moses GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff GE Financial Assurance Senior Vice President
6610 W. Broad St.
Richmond, VA 23230
Marycatherine Yeagley GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Ward E. Bobitz GE Financial Assurance Vice President &
6604 W. Broad St. Assistant Secretary
Richmond, VA 23230
Brenda Daglish GE Financial Assurance Vice President &
6604 W. Broad Street Assistant Treasurer
Richmond, VA 23230
William E. Daner, Jr. GE Financial Assurance Vice President, Counsel
6610 W. Broad St. & Secretary
Richmond, VA 23230
Stephen N. DeVos GE Financial Assurance Vice President &
6604 W. Broad Street Investment Officer
Richmond, VA 23230
Richard G. Fucci GE Financial Assurance Vice President &
6604 W. Broad Street Controller
Richmond, VA 23230
Scott A. Reeks GE Financial Assurance Vice President &
6630 W. Broad St. Assistant Treasurer
Richmond, VA 23230
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules under it are maintained by GE Life
& Annuity at its administrative offices.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B of this Registration
Statement.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective amendment to
this Registration Statement as frequently as necessary to ensure that the
audited financial statements in the Registration Statement are never more
<PAGE>
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2)
a post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of
Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to GE Life & Annuity at the address or
phone number listed in the Prospectus.
SECTION 26(e) REPRESENTATION
GE Life & Annuity hereby represents that the fees and charges deducted under
the Contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by GE
Life & Annuity.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, GE Life & Annuity Separate Account 4, has duly caused Pre
Effective Amendment Number 1 to this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, in the County of Henrico in the Commonwealth of Virginia,
on the 15th of March, 2000.
GE Life & Annuity Separate Account 4
(Registrant)
By: /s/ Selwyn L. Flournoy, Jr.
----------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
GE Life and Annuity Assurance Company
GE Life and Annuity Assurance Company
(Depositor)
By: /s/ Selwyn L. Flournoy, Jr.
----------------------------
Selwyn L. Flournoy, Jr.
Senior Vice President
GE Life and Annuity Assurance Company
<PAGE>
As required by the Securities Act of 1933, this registration statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
* Director, Chairman of the Board 3/13/00
- ---------------------------
Michael Fraizer
* Director and President 3/13/00
- ---------------------------
Pamela S. Schutz
/s/ Selwyn L. Flournoy, Jr.
- ---------------------------
Selwyn L. Flournoy, Jr. Director, Senior Vice President 3/13/00
* Director, Senior Vice President 3/13/00
- ---------------------------
Robert D. Chinn
* Director; Vice President 3/13/00
- ---------------------------
Victor C. Moses
* Director, Senior Vice President 3/13/00
- ---------------------------
Geoffrey S. Stiff
By /s/ Selwyn L. Flournoy, Jr. , pursuant to Power of Attorney executed on
----------------------------------
December 17, 1999.
<PAGE>
EXHIBIT INDEX
-------------
Exhibit (4)(a) Form of Contract P1153 12/99
Exhibit (5)(a) Form of Application
Exhibit (8)(f) Form of Participation Agreement between AIM Variable
Insurance Funds, Inc. and GE Life & Annuity Assurance
Company
Exhibit (9) Opinion and Consent of Counsel
Exhibit (10)(a) Consent of Counsel
Exhibit (10)(b) Consent of Independent Auditors
EXHIBIT 4(a)
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY CONTRACT
BENEFIT PAYMENT OPTIONS
NON-PARTICIPATING, NO DIVIDENDS
GE Life and Annuity Assurance Company agrees to provide the benefits and other
rights described in this Contract in accordance with the terms of this Contract.
RIGHT TO CANCEL. WITHIN 10 DAYS AFTER THIS CONTRACT IS FIRST RECEIVED, IT MAY BE
CANCELLED FOR ANY REASON WITHOUT PENALTY BY CANCELING THE CONTRACT THROUGH OUR
ELECTRONIC SERVICE CENTER OR BY DELIVERING OR MAILING IT TO OUR ADMINISTRATIVE
OFFICE. UPON CANCELLATION, WE WILL RETURN THE GREATER OF ALL PURCHASE PAYMENTS
RECEIVED OR THE CONTRACT VALUE.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT (SEE ARTICLES 2 AND 3).
For GE Life and Annuity Assurance Company at its home office in Richmond,
Virginia.
PAMELA S. SCHUTZ DONITA M. KING
PRESIDENT SECRETARY
GE LIFE AND ANNUITY
ASSURANCE COMPANY
[ADMINISTRATIVE OFFICE
P. O. BOX 691
LEESBURG, VA 20178]
A STOCK COMPANY
<PAGE>
CONTRACT DATA
CONTRACT NUMBER: [XXXXXXXXXX]
CONTRACT OWNER INFORMATION
PRIMARY JOINT
CONTRACT OWNER: [John Doe] [Jane Doe]
CONTRACT OWNER
ADDRESS: [123 Main Street [123 Main Street
Anytown, USA Anytown, USA
00000] 00000]
CONTRACT OWNER
SSN/TAX ID: [123-45-6789] [234-56-7890]
ANNUITANT INFORMATION
ANNUITANT: [John Doe] DATE OF BIRTH:
GENDER: [Male] [8/01/1964]
CONTRACT INFORMATION
TYPE OF CONTRACT: [Non-Qualified]
EFFECTIVE DATE: [December 1, 1999]
ANNUITY COMMENCEMENT
DATE: [December 1, 2054]
PRODUCT: [On-Line Variable Annuity]
INITIAL PURCHASE PAYMENT: [$1,000.00]
MINIMUM ADDITIONAL
PURCHASE PAYMENT: [$100.00]
MAXIMUM ANNUITY
ASSET CHARGE: [0.75% Annually (.002063% Daily)]
MINIMUM WITHDRAWAL: [$300.00 with a Contract Value after the
Withdrawal of no less than $1,000.00]
MAXIMUM TRANSFERS EACH
CALENDAR YEAR: [12]
MAXIMUM TRANSFER CHARGE: [$10.00]
PREMIUM TAX RATE: [00.00%]
PURCHASE PAYMENT
ALLOCATION: [25% GE Premier Growth Equity Fund
75% GE Total Return Fund]
<PAGE>
BENEFICIARY INFORMATION
BENEFICIARY NAME: [Estate of John Doe]
GE LIFE AND ANNUITY ASSURANCE COMPANY CONTRACT INFORMATION
GE Life and Annuity Assurance Company
[Administrative Office
P.O. Box 691
Leesburg, VA 20178]
URL: (or Internet address): [http://www.annuitynet.com]
--------------------------
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
There are currently [25] Subaccounts in the Separate Account available to the
Owner. The Owner may direct Purchase Payments under the Contract to any of the
available Subaccounts, subject to limitations. The amounts allocated to each
Subaccount will be invested at net asset value in the shares of a registered
investment company (the Funds). The available Subaccounts are:
[GE INVESTMENTS FUNDS, INC.
o International Equity Fund
o Premier Growth Equity Fund
o Value Equity Fund
o Real Estate Securities Fund
o S&P 500 Index Fund *
o Total Return Fund
o U.S. Equity Fund
o Income Fund
o Money Market Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
o VIP III Growth & Income Portfolio
o VIP III Growth Opportunities Portfolio
o VIP III Mid Cap Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
o VIP Overseas Portfolio
JANUS ASPEN SERIES
o Equity Income Portfolio
o Capital Appreciation Portfolio
o High-Yield Portfolio
o Flexible Income Portfolio
o International Growth Portfolio
<PAGE>
AIM VARIABLE INSURANCE FUNDS, INC.
o AIM V.I. Aggressive Growth Fund
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
o AIM V.I. Global Utilities Fund
o AIM V.I. Government Securities Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. Telecommunications Fund]
* "Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
GE Investment Management Incorporated. The S&P 500 Index Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the Fund.
See Article 2.03 for provisions that govern limitations, substitutions or
elimination of Funds.
<PAGE>
TABLE OF CONTENTS
ARTICLE
1 DEFINITIONS
2 PURCHASE PAYMENTS, OPTIONS, AND BENEFITS
3 ANNUITY PAYMENT OPTION BENEFITS
4 BENEFICIARY
5 GENERAL PROVISIONS
6 ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
ARTICLE 1
DEFINITIONS
ACCUMULATION UNIT - A unit of measure used to calculate the Contract Value
during the accumulation period.
ADMINISTRATIVE OFFICE - The office as shown on the contract data pages to
receive written requests.
ANNUITANT - The person on whose life benefit payments are based.
ANNUITY COMMENCEMENT DATE - The date as specified on contract data pages unless
changed after issue. The date we apply the Contract Surrender Value to an
Annuity Payment Option. The date of the first payment.
ANNUITY PAYMENT OPTION - Any form of benefit payments we allow.
ANNUITY UNIT - A unit of measure used after the Annuity Commencement Date to
calculate the benefit payments.
ASSUMED INTEREST RATE - Interest rate used in calculating the benefit payments.
BENEFICIARY - The person or entity designated to receive the Death Benefit.
CODE - The Internal Revenue Code of 1986, as amended.
THE COMPANY - GE Life and Annuity Assurance Company. "We", "us", and "our"
refer to the Company.
<PAGE>
CONTINGENT ANNUITANT - The person who, at the Annuitant's death before the
Annuity Commencement Date, may become the Annuitant.
CONTRACT - This agreement between you and the Company.
CONTRACT SURRENDER VALUE - The Contract Value, at the end of the Valuation
Period during which we receive your surrender request, less any premium tax.
CONTRACT VALUE - The sum of your Accumulation Unit values.
CONTRACT YEAR - Each one year period from the anniversary of the effective date
to the anniversary of that date in the following year. Effective date is shown
on the contract data pages.
DEATH BENEFIT - The amount payable if the death occurs before the Annuity
Commencement Date.
ELECTRONIC SERVICE CENTER - The electronic site we maintain for this Contract.
FUND - Any open-end management investment company or unit investment trust in
which a Subaccount invests.
OWNER - The individual(s) or entity who owns this Contract and receives benefit
payments after the Annuity Commencement Date. "You" and "your" refer to the
Owner or joint Owner.
PURCHASE PAYMENT - A payment we receive and apply to this Contract. "Purchase
Payment" means the same as "premium payment".
SEPARATE ACCOUNT - Our segregated investment account as shown on the contract
data pages.
SUBACCOUNT - That part of the Separate Account which invests in shares of a
particular Fund. There is a Subaccount that corresponds to each Fund.
UNIVERSAL RESOURCE LOCATOR (URL) - A standard for locating an object on the
Internet. URL may be found on the contract data pages.
VALUATION DATE - Each day the New York Stock Exchange (NYSE) is open for regular
trading. This does not include days that a Subaccount's corresponding Fund does
not value its shares.
VALUATION PERIOD - The period starting at the close of regular trading on the
NYSE on any Valuation Date and ending at the close of regular trading on the
NYSE on the next succeeding Valuation Date.
WRITTEN REQUEST - A request in writing. The request must be in a form acceptable
to us. The request must be received at our Electronic Service Center or
Administrative Office.
<PAGE>
ARTICLE 2
PURCHASE PAYMENTS, OPTIONS AND BENEFITS
2.01 WHERE PAYABLE
You must make Purchase Payments through the Electronic Service Center or
Administrative Office.
2.02 AMOUNT AND FREQUENCY
The minimum additional Purchase Payment we will accept is shown on the contract
data pages. Purchase Payments may be made until the earliest of:
1. the Annuity Commencement Date;
2. the surrender of the Contract; and
3. payment of any Death Benefit.
We reserve the right to limit the maximum Purchase Payments we will accept.
This maximum will be based on our rules at the time of payment.
2.03 SEPARATE ACCOUNT
Purchase Payments are allocated to the Separate Account. The Separate Account is
for persons who receive benefits under variable annuity contracts. We own the
assets in the Separate Account. These assets are held separately from our other
assets. They are not part of our general account. The Separate Account is
registered with the SEC as a unit investment trust under the Investment Company
Act of 1940. The Separate Account is subject to Virginia laws. These laws
regulate the operations of insurance companies incorporated in Virginia. The
investment policies of the Separate Account will not be changed without the
approval of the Virginia Insurance Commissioner.
The Separate Account assets equal the reserves and other contract liabilities
supported by the Separate Account. These assets will not be charged with
liabilities arising from any other business we conduct. We have the right to
transfer to our general account any assets of the Separate Account, which are
more than such reserves and other contract liabilities.
Allocations of all Purchase Payments, received within 15 days after we deliver
your Contract, will be made to the Money Market Subaccount. Delivery will be to
your personal folder and/or by U.S. Mail. The value will remain in that
Subaccount for the 15 day period. Then the Contract Value in the Subaccount will
be transferred according to your allocation instructions. This transfer will not
count against your allowable transfers as shown on the contract data pages. We
will not charge you for this transfer. Purchase Payments received after this
period will be allocated in accordance with your instructions.
The amounts allocated to each Subaccount will be invested at net asset value per
share in the shares of the corresponding Funds. The Funds are shown on the
contract data pages.
<PAGE>
We reserve the right to eliminate the shares of any Fund. We reserve the right
to substitute the securities of a different Fund or investment company. We may
take this action if the shares of a Fund are no longer available for investment.
We may take this action if further investment in any Fund becomes inappropriate
in view of the purposes of the Contract. Where permitted by law, we may:
o create new separate accounts;
o combine separate accounts, including the Separate Account;
o transfer assets of the Separate Account to another separate account. These
assets are associated with the class of contracts to which this Contract
belongs;
o add new Subaccounts to or remove existing Subaccounts from the Separate
Account;
o combine existing Subaccounts;
o deregister the Separate Account under the Investment Company Act of 1940; and
o operate the Separate Account under the direction of a committee or any form
permitted by law.
We will notify you within 15 days of the elimination and substitution of any
Fund. Notice will be posted on the Electronic Service Center. We will send the
notice to your last known electronic address. Elimination, substitution or
addition will be subject to compliance with regulatory requirements.
We will use each Purchase Payment to buy Accumulation Units in your selected
Subaccount(s). The Subaccount's income, gains and losses, realized or unrealized
are credited to or charged against such Subaccount. The charge is made without
regard to other income, gains or losses of the Company or any other Subaccount.
We will value these assets on each Valuation Date at their fair market value.
Our valuation will use generally accepted accounting practices and regulatory
requirements.
The number of Accumulation Units purchased will be determined by dividing (a) by
(b), where:
(a) is the amount directed to the Subaccount; and
(b) is the Accumulation Unit value of the Subaccount as of the end of the
Valuation Period following our receipt of the Purchase Payment.
Your number of Accumulation Units will not change simply because of a change in
the unit value.
2.04 VALUATION OF ACCUMULATION UNITS
The Contract Value equals the sum of the Accumulation Unit values credited in
the Subaccounts.
The value of a Subaccount on any Valuation Date is the number of Accumulation
Units multiplied by the Accumulation Unit value at the end of the Valuation
Period.
<PAGE>
Accumulation Units for each Subaccount are valued separately. Initially, the
Accumulation Unit value was arbitrarily set at the start of the Subaccount.
Thereafter, the Accumulation Unit value at the end of a Valuation Period is
equal to (a) times (b), where:
(a) is the Accumulation Unit value as of the end of the previous Valuation
Period; and
(b) is the net investment factor.
The value may vary from Valuation Period to Valuation Period.
NET INVESTMENT FACTOR
- ---------------------
The net investment factor is used to measure the Subaccount's investment
performance. Any Subaccount's net investment factor for a Valuation Period is
determined by (a) divided by (b), minus (c), where:
(a) is the result of:
(1) the value of the Subaccount's assets at the end of the preceding
Valuation Period; plus
(2) the investment income and capital gains, realized or unrealized,
credited to those assets at the end of the Valuation Period for
which the net investment factor is being determined; minus
(3) the capital losses, realized or unrealized, charged against those
assets during the Valuation Period; minus
(4) any amount charged against the Separate Account for taxes. This
includes any amount set aside during the Valuation Period for
taxes from the operation or maintenance of the Separate Account;
(b) is the value of the Subaccount's assets at the end of the preceding
Valuation Period; and
(c) is a factor for the Valuation Period representing the asset charge
deducted from the Subaccount. The factor is adjusted for the number of
calendar days in the Valuation Period. The maximum rates for this
charge are shown on the contract data pages.
2.05 TRANSFERS
Prior to the earliest of:
1. surrender of the Contract;
2. payment of any Death Benefit; and
3. the Annuity Commencement Date;
you may transfer amounts between Subaccounts.
A transfer will result in the redemption of Accumulation Units in one Subaccount
and the purchase of Accumulation Units in the other Subaccount. The transfer
will be accomplished at the Accumulation Unit values of each Subaccount as of
the end of the Valuation Period during which we receive the transfer request.
<PAGE>
We do not currently charge for this service. We do reserve the right to impose a
charge in the future for transfers. Any transfer charge is provided on the
contract data pages. Any transfer charge will be taken from the amount
transferred. We reserve the right to revise the transfer privilege at any time.
On written notice, we reserve the right to limit the number of transfers as
shown on the contract data pages. We reserve the right to limit the number of
transfers to a lower number. This may be necessary for the Contract to continue
to be treated as an annuity contract by the Internal Revenue Service. We reserve
the right to refuse to execute any transfer:
1. if any of the Subaccounts that would be affected by the transfer is
unable to purchase or redeem shares of the Fund in which the Subaccount
invests; or
2. if the transfer is a result of more than one trade involving the same
Subaccount within a 30 day period;
3. if the transfer would adversely affect Accumulation Unit values. This
may occur if the transfer would affect one percent or more of the Fund's
total assets; or
4. if the transfer would adversely affect any Fund affected by the
transfer.
Where permitted by law, we may accept your authorization of third party
transfers. We may restrict the Subaccounts that will be available for transfers.
This restriction may occur during any period such third party is authorized to
act for you. We will give you prior notice of any restrictions. We will not
enforce such restrictions if you provide us with satisfactory evidence that:
1. a court of competent jurisdiction has appointed such third party to act
for you; or
2. you have appointed such third party to act for you for all of your
financial affairs.
You may also transfer between Subaccounts after the Annuity Commencement Date.
(See Article 3.09).
2.06 WITHDRAWAL OPTION
You may withdraw part of the Contract Value. The withdrawal will be effective as
of the end of the Valuation Period during which we receive a Written Request.
The withdrawal amount is subject to limitations as shown on the contract data
pages. If your withdrawal would reduce the Contract Value to less than the
minimum value, we will withdraw only that amount of Contract Value that would
reduce the remaining Contract Value to the minimum value.
Unless otherwise instructed, we will withdraw the amount requested on a pro-rata
basis from each Subaccount. We will mail or electronically transfer any payment
from our Administrative Office.
You may not withdraw amounts after the Annuity Commencement Date.
<PAGE>
2.07 SURRENDER OPTION
You may surrender this Contract for its Contract Surrender Value. On surrender,
this Contract terminates. Surrender will be effective on the Valuation Date on
which we receive a Written Request.
You may not surrender this Contract after the Annuity Commencement Date.
2.08 DEATH OF OWNER
ENTITLEMENT
- -----------
On the death of any Owner, the Beneficiary becomes entitled to all ownership
rights. If there is more than one Beneficiary, each one will share equally. You
can specify otherwise.
If any Owner dies before the Annuity Commencement Date, the Beneficiary may
elect to receive the Death Benefit. The Death Benefit equals the Contract Value
on the date of payment.
We will pay the Death Benefit on receipt of due proof of your death.
MANDATORY DISTRIBUTION RULES APPLICABLE ON ANY OWNER'S DEATH BEFORE THE ANNUITY
COMMENCEMENT DATE
GENERAL. On the death of an Owner before the Annuity Commencement Date, the
Contract Value, including interest accrued after date of death, must be
distributed in one of the following manners:
(a) in lump sum payment on receipt of proof of death;
(b) within 5 years of the Owner's date of death; or
(c) to provide an income under Annuity Payment Option 1. The first income
payment must be made no later than one year after the date of death. The
payment period must be either (1) the lifetime of the Beneficiary or (2)
the lifetime of the Beneficiary with a guarantee period. Any guarantee
period cannot exceed the Beneficiary's life expectancy.
Option "b" will control unless an election of "a" or "c" is made within 60 days
of the Owner's death. Option "c" is available only if the Beneficiary is an
individual. This Contract terminates after making the above distributions.
SPOUSES. If the Beneficiary is the spouse of the deceased Owner, such spouse
will continue the Contract as its new Owner. The provision above requiring
distributions will not apply. This provision will not apply on subsequent death
of such surviving spouse. Instead, the Contract's Death Benefit and distribution
rules will apply.
NON-NATURAL OWNERS. If any Owner is not a natural person, the death of any
Annuitant before the Annuity Commencement Date will be treated as the death of
an Owner.
<PAGE>
MULTIPLE BENEFICIARIES. If there is more than one Beneficiary, we will treat
each Beneficiary separately with respect to his/her portion. However, only one
Annuity Payment Option may be selected.
MANDATORY DISTRIBUTION RULES APPLICABLE ON ANY OWNER'S DEATH AFTER THE ANNUITY
COMMENCEMENT DATE
If an Owner dies on or after the Annuity Commencement Date, we will continue to
distribute remaining benefits to the Beneficiary under the current Annuity
Payment Option. The remaining value must be distributed at least as rapidly as
under the method of distribution being used as of the Owner's death.
CONSTRUCTION
- ------------
You should construe this Contract as complying with section 72(s) of the Code.
2.09 DEATH OF ANNUITANT
BEFORE THE ANNUITY COMMENCEMENT DATE
- ------------------------------------
If an Annuitant is also the Owner, the Death Benefit paid will be subject to the
provisions regarding the Owner's death. If the surviving spouse of the
Owner/Annuitant becomes the Owner, the Contingent Annuitant becomes the
Annuitant. If no Contingent Annuitant is named, the spouse becomes the
Annuitant.
If an Annuitant who is not an Owner dies, any Contingent Annuitant becomes the
Annuitant. If no Contingent Annuitant is named, the Owner (or the younger of the
joint Owners) becomes the Annuitant.
ON OR AFTER THE ANNUITY COMMENCEMENT DATE
- -----------------------------------------
On receipt of proof of death of an Annuitant or both joint Annuitants, any
remaining benefit payments under the Annuity Payment Option will be paid to the
living Owner. The payments must be made at least as rapidly as under the method
of distribution being used at death. If there is not a living Owner, payments
will be made to the Beneficiary. If there is no Beneficiary, payments will be
made to the Annuitant's estate.
2.10 POSTPONEMENT OF PAYMENTS
We will make payment within seven days from the date of withdrawal or surrender.
We will make payment within seven days from the date of approval of a lump sum
claim settlement. We may be permitted to defer such payment under the Investment
Company Act of 1940, if:
<PAGE>
o the NYSE is closed other than customary weekend and holiday closings; or
o the SEC restricts trading on the NYSE; or
o the SEC permits postponement for the protection of Contract Owners; or
o the SEC determines an emergency exists. Due to the emergency, disposal of
securities or the determination of the values of net assets of the Separate
Account is not reasonably practical.
We will defer any payment which is derived from a check or draft recently paid
to us. We will make payment when the check or draft has been paid by the
financial institution on which it is drawn.
ARTICLE 3
ANNUITY PAYMENT OPTION BENEFITS
3.01 ANNUITY PAYMENTS
You must elect to receive payments under an Annuity Payment Option before the
Annuity Commencement Date.
If an Annuity Payment Option is not chosen before the Annuity Commencement Date,
payments will be made to you on the Annuity Commencement Date. The payments will
be made under a life annuity with payments guaranteed for 10 years.
Before the Annuity Commencement Date, you may change the Annuity Commencement
Date. Annuitant(s) can not be older than age 90 on the Annuity Commencement
Date. You must send us Written Request at least 14 days before payments are to
begin. The request will be subject to our approval. Purchase Payments may be
made until the new Annuity Commencement Date.
3.02 CHOICE OR CHANGE OF ANNUITY PAYMENT OPTION
BY OWNER - Before the Annuity Commencement Date, you may choose or change any
Annuity Payment Option.
BY BENEFICIARY - At the time proceeds are payable to a Beneficiary, a
Beneficiary may choose or change any Annuity Payment Option. The option must
meet the requirements of Code section 72(s) if proceeds are available to the
Beneficiary in a lump sum. The Beneficiary then becomes the Annuitant.
A choice or change should be made by filing a Written Request.
3.03 CHANGE IN ANNUITY PAYMENT OPTION AFTER ANNUITY COMMENCEMENT DATE
The Annuity Payment Option may not be changed after the Annuity Commencement
Date.
<PAGE>
3.04 CHOICE OF ANNUITANT AND ANNUITY COMMENCEMENT DATE
If you are a natural person, you may change the Annuitant(s) and the Annuity
Commencement Date. Any change you make must be prior to the earliest of:
1. surrender of the Contract;
2. payment of any Death Benefit; and
3. the Annuity Commencement Date.
If you are a non-natural person, you may only change the Annuity Commencement
Date. Annuitant(s) can not be older than age 90 on the Annuity Commencement
Date. A choice or change should be made by filing a Written Request.
3.05 ANNUITY PAYMENT OPTIONS
1. Life annuity with period certain. This option provides periodic payments
during the lifetime of the Annuitant. Payments are guaranteed for at least a
minimum period. Period is selected by the Owner. Period can be 0, 10 or 20
years. If the Annuitant dies during this period, the person entitled to the
remaining payments may be able to receive the discounted value of those
payments in a lump sum. The remaining payments for the minimum period will
be discounted at the rate used in calculating the initial payment.
Discounted means we will adjust for the fact that each payment does not earn
any additional investment return. This occurs because each remaining payment
is being made early.
2. Joint life annuity. This option provides periodic payments during the joint
lifetime of the Annuitant and a joint Annuitant. The initial payment will be
determined using Table 2 in Article 6. The payments continue during the
lifetime of the surviving Annuitant after the death of the first Annuitant
to die. The payments stop when both Annuitants are dead.
On the Annuity Commencement Date, the Contract Value (less any premium tax) will
be applied to provide a variable benefit payment. Only one Annuity Payment
Option may be selected.
The payments will depend on the age and gender of the Annuitant(s) as of the
Annuity Commencement Date. The payments will be made once each month. The values
used will be calculated as of the Annuity Commencement Date. Subsequent values
will be calculated on a monthly basis thereafter. Payments will be made within
seven days following each monthly calculation.
<PAGE>
3.06 DETERMINATION OF THE AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The tables in Article 6 are used to determine the first benefit payment. They
show, for various plans, ages and genders, the monthly payment that can be
purchased with $1,000 of proceeds. The first payment is equal to (a) times (b),
divided by 1,000, where:
(a) is the Contract Value as of the Annuity Commencement Date, less any
premium taxes;
(b) is the monthly payment from the table in Article 6 for the chosen plan
and appropriate age(s) and gender(s) of the Annuitant(s). The age
used to determine the payment may be subject to an adjustment as shown
in Table 3 of Article 6.
These amounts use the 1983 `a' Individual Annuity Mortality Table, modified,
with an Assumed Interest Rate of 5%. Other options may be available.
3.07 DETERMINATION OF THE AMOUNT OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Subsequent payments are determined by means of Annuity Units. The amount may be
greater or less than the initial payment.
The number of Annuity Units will be determined on the Annuity Commencement Date.
The number will not change unless a transfer is made. The number of Annuity
Units for a Subaccount is (a) divided by (b), where:
(a) is the portion of the first payment from that Subaccount; and
(b) is the Annuity Unit value for that Subaccount on the day the first
payment is due.
Each subsequent payment is equal to the sum of payments for each Subaccount. The
payment for a Subaccount is the number of Annuity Units for that Subaccount
times the Annuity Unit value for that Subaccount on the day that payment is due.
We guarantee that each subsequent payment will not be affected by variations in
mortality experience from the mortality assumptions on which the first payment
is based.
3.08 DETERMINATION OF ANNUITY UNIT VALUE
Initially, the Annuity Unit value was arbitrarily set at the start of the
Subaccount. The Annuity Unit value of each Subaccount for any Valuation Period
is equal to the Annuity Unit value for the preceding Valuation Period multiplied
by the product of (a) and (b), where:
(a) is the net investment factor for the Valuation Period for which the
Annuity Unit value is being calculated; and
(b) is an assumed interest rate factor equal to .99991902 raised to a power
equal to the number of days in the Valuation Period.
<PAGE>
The assumed interest rate factor in (b) is the daily equivalent of dividing by
one plus the Assumed Interest Rate of 5%. If a plan with a different Assumed
Interest Rate is used to determine the initial payment, a different assumed
interest rate factor will be used to determine subsequent payments.
As described above, our determination of an Accumulation Unit value or Annuity
Unit value will be binding on you and any Beneficiary.
3.09 TRANSFERS
You may request the transfer of Annuity Units. We will not make more than three
transfers in a Contract Year. If a transfer is requested from a Subaccount, all
of the Subaccount's Annuity Units must be transferred to a single different
Subaccount.
The number of Annuity Units for the new Subaccount will be (a) times (b),
divided by (c), where:
(a) is the number of Annuity Units for the current Subaccount;
(b) is the Annuity Unit value for the current Subaccount; and
(c) is the Annuity Unit value for the new Subaccount.
The values of (a), (b) and (c) are determined as of the end of the Valuation
Period during which we receive the transfer request.
3.10 EVIDENCE OF SURVIVAL
If payments depend on the continuing life of an Annuitant, we may require proof
that the Annuitant is alive when each payment is due.
ARTICLE 4
BENEFICIARY
4.01 DESIGNATION
You may designate a Beneficiary(s). Unless there are joint Owners, the
designated Beneficiary(s) will receive the Death Benefit on your death.
If there are joint Owners, the surviving joint Owner will receive the Death
Benefit on the death of the first joint Owner. The surviving joint Owner will be
treated as the primary, designated Beneficiary. Any other Beneficiary
designation on record at the death of the first joint Owner will be treated as a
contingent Beneficiary.
If the surviving joint Owner, as spouse of the deceased joint Owner, continues
the Contract in lieu of receiving the Death Benefit, the designated
Beneficiary(s) will receive the Death Benefit on the death of the surviving
spouse.
Unless otherwise stated, designated Beneficiaries will share the Death Benefit
equally.
<PAGE>
4.02 CHANGE
You may change any designated Beneficiary. A person named irrevocably may be
changed only with that person's written consent. A change of Beneficiary will
then revoke any previous designation.
A change should be made by filing a Written Request. The change will become
effective on our receipt of the request. The change will be subject to any
transaction we make before the change is recorded.
4.03 DEATH
Unless otherwise provided, if any Beneficiary dies before the Owner, that
Beneficiary's interest will go to any other named Beneficiaries, according to
their respective interests. If there are no other named Beneficiaries, benefits
will be paid to any contingent Beneficiary(s). Before the Annuity Commencement
Date, if no Beneficiary or contingent Beneficiary survives the Owner, the
proceeds will be paid to your estate.
Once a Beneficiary is entitled to the Death Benefits, the Beneficiary may name
his or her own Beneficiary(s) to receive any remaining benefits, should the
Beneficiary die before receipt of all benefits. If no Beneficiary is named, or
if the named Beneficiary predeceases the original Beneficiary, any remaining
benefits will continue to the original Beneficiary's estate. This designation
must be made by Written Request.
ARTICLE 5
GENERAL PROVISIONS
5.01 THE CONTRACT
The Contract, application, and any attached riders and endorsements is the
entire Contract. Only an authorized officer has the power to change, modify, or
waive provisions of this Contract.
We reserve the right to change the Contract for the purpose of keeping it in
compliance with federal or state law. If the Contract is amended, we will
provide you with a copy.
Any changes, modifications, or waivers must be in writing. All terms in this
Contract will have their usual and customary meaning except when specifically
defined.
5.02 THE ELECTRONIC SERVICE CENTER
The Electronic Service Center is maintained to provide information to current
and prospective customers and to enable various transactions. We may issue you a
Personal Identification Number (PIN) or password. You are responsible for any
use of this PIN or password. Instructions on how to perform various transactions
can be found at the Electronic Service Center. These procedures must be
followed.
<PAGE>
Certain transactions require a document with a signature. Electronic requests
for transactions that require a signature will not be processed.
We will send any notices to your last known e-mail address. You should notify us
of any change in e-mail address through our Electronic Service Center or
Administrative Office. While this Contract remains in force, you agree to
receive all required documents through the Electronic Service Center. Required
documents are contracts, prospectuses, transaction confirmations and reports.
Documents will be considered to be delivered to you when they are placed in your
personal folder at the Electronic Service Center. You may revoke this provision
by sending signed, written instructions, via U.S. mail to our Administrative
Office. You should indicate that all correspondence should be sent to you via
U.S. mail.
5.03 OWNERSHIP
You may name only your spouse as a joint Owner. Joint Owners will be treated as
having equal, undivided interests, including rights of survivorship. Either
joint Owner may exercise any ownership rights.
Before the Annuity Commencement Date, you have the right to change the Annuitant
by filing a Written Request. The Annuitant may not be changed (including through
addition of a joint Annuitant) in a Contract owned in whole or part by a
non-natural person. You may also name a Contingent Annuitant by filing a Written
Request. A person named irrevocably may be changed only with that person's
written consent. The Contingent Annuitant designation does not apply after the
Annuity Commencement Date.
If a trustee is named as the Owner or Beneficiary and exercises ownership rights
or claims benefits, we will have no obligation to verify that a trust is in
effect. We will have no obligation to verify that the trustee is acting within
the scope of his/her authority. Payment of benefits to the trustee will release
us from all obligations under Contract to the extent of the payment. When
payment is made to the trustee, we have no obligation to ensure that such
payment is applied according to the terms of the trust agreement.
5.04 ASSIGNMENTS
This Contract may not be sold, assigned, discounted or pledged as loan
collateral, security for the performance of an obligation or for any other
purpose without our consent.
5.05 INCONTESTABILITY
We will not contest this Contract.
5.06 MISSTATEMENT OF AGE AND/OR GENDER
If the age and/or gender of the Annuitant has been misstated, the benefits
available will be those which the Purchase Payments would have purchased using
the correct age and/or gender. Underpayments will be made up immediately.
Overpayments will be charged against the next succeeding payments.
<PAGE>
5.07 NONPARTICIPATING
The Contract is nonparticipating. It will not share in our surplus earnings.
5.08 VOTING RIGHTS
We will vote the Fund shares held in the Separate Account at meetings of the
various Funds. The votes will be cast according to the instructions of Owners
with interests in a Fund. You may give instructions for the number of votes
equal to your percentage interest of the Subaccount's total number of votes.
Fractional shares will be recognized.
You can not vote at any meeting of our shareholders.
5.09 OWNERSHIP OF THE ASSETS
We will have ownership and control of our assets. This includes all assets in
the Separate Account.
5.10 REPORTS
We will provide you a report at least once each Contract Year. The report will
include a statement of your number of units credited to the Separate Account and
the value of such units. This information will be as of a date not more than 30
days before the date the report is provided. At least once each Contract Year,
we will provide you a report of your investments held in the Subaccounts.
5.11 PREMIUM TAX
We will deduct any state and local government premium tax from Purchase Payments
or Contract Value. The deduction will be made when incurred or at another time
of our choosing.
5.12 MAXIMUM ISSUE AGE
An Annuitant or contingent Annuitant can not be over age 85 at issue.
<PAGE>
ARTICLE 6
ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
SINGLE LIFE ANNUITIES
TABLE 1
<TABLE>
<CAPTION>
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
SETTLEMENT MALE MALE MALE FEMALE FEMALE FEMALE
AGE WITH 0 WITH 120 WITH 240 WITH 0 WITH 120 WITH 240
MONTHS MONTHS MONTHS MONTHS MONTHS MONTHS
CERTAIN CERTAIN CERTAIN CERTAIN CERTAIN CERTAIN
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
20 $4.29 $4.29 $4.28 $4.22 $4.22 $4.21
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
25 $4.36 $4.35 $4.34 $4.27 $4.26 $4.26
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
30 $4.45 $4.44 $4.42 $4.33 $4.33 $4.32
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
35 $4.57 $4.56 $4.53 $4.42 $4.41 $4.40
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
40 $4.74 $4.72 $4.68 $4.54 $4.53 $4.51
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
45 $4.97 $4.94 $4.85 $4.70 $4.68 $4.65
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
50 $5.26 $5.21 $5.07 $4.91 $4.89 $4.83
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
51 $5.33 $5.27 $5.12 $4.97 $4.94 $4.87
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
52 $5.40 $5.33 $5.17 $5.02 $4.99 $4.92
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
53 $5.48 $5.40 $5.22 $5.08 $5.05 $4.96
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
54 $5.56 $5.48 $5.28 $5.14 $5.11 $5.01
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
55 $5.65 $5.56 $5.33 $5.21 $5.17 $5.06
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
56 $5.74 $5.64 $5.39 $5.28 $5.24 $5.12
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
57 $5.84 $5.73 $5.45 $5.36 $5.31 $5.17
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
58 $5.94 $5.82 $5.51 $5.44 $5.38 $5.23
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
59 $6.06 $5.92 $5.57 $5.52 $5.46 $5.29
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
60 $6.18 $6.03 $5.63 $5.62 $5.55 $5.35
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
61 $6.31 $6.14 $5.69 $5.72 $5.64 $5.41
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
62 $6.46 $6.26 $5.75 $5.82 $5.73 $5.48
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
63 $6.61 $6.38 $5.81 $5.94 $5.83 $5.54
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
64 $6.78 $6.51 $5.87 $6.06 $5.94 $5.61
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
65 $6.95 $6.64 $5.93 $6.19 $6.05 $5.68
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
66 $7.14 $6.78 $5.99 $6.34 $6.18 $5.75
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
67 $7.34 $6.93 $6.05 $6.49 $6.30 $5.81
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
68 $7.56 $7.08 $6.10 $6.65 $6.44 $5.88
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
69 $7.79 $7.24 $6.15 $6.83 $6.59 $5.95
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
70 $8.04 $7.40 $6.20 $7.03 $6.74 $6.01
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
71 $8.31 $7.56 $6.24 $7.24 $6.90 $6.07
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
72 $8.60 $7.73 $6.28 $7.47 $7.07 $6.13
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
73 $8.90 $7.90 $6.31 $7.72 $7.24 $6.18
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
74 $9.23 $8.08 $6.35 $7.99 $7.42 $6.23
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
75 $9.58 $8.25 $6.38 $8.29 $7.61 $6.28
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
76 $9.96 $8.42 $6.40 $8.61 $7.80 $6.31
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
77 $10.36 $8.59 $6.42 $8.95 $8.00 $6.35
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
78 $10.80 $8.76 $6.44 $9.33 $8.20 $6.38
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
79 $11.27 $8.93 $6.46 $9.74 $8.40 $6.41
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
80 $11.77 $9.09 $6.47 $10.18 $8.59 $6.43
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
81 $12.30 $9.24 $6.48 $10.67 $8.78 $6.45
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
82 $12.87 $9.38 $6.49 $11.19 $8.97 $6.46
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
83 $13.47 $9.52 $6.49 $11.76 $9.15 $6.47
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
84 $14.11 $9.64 $6.50 $12.37 $9.31 $6.48
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
85 $14.79 $9.76 $6.50 $13.03 $9.47 $6.49
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Values for ages not shown will be furnished upon request.
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
JOINT LIFE ANNUITIES
TABLE 2
<CAPTION>
- ------------------ ---------------------------------------------------------------------------------------------------
MALE FEMALE SETTLEMENT AGE
SETTLEMENT
AGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
35 40 45 50 55 60 65 70 75 80 85
& Over
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
35 $4.29 $4.34 $4.38 $4.42 $4.45 $4.48 $4.51 $4.53 $4.54 $4.55 $4.56
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
40 $4.32 $4.37 $4.43 $4.49 $4.54 $4.59 $4.63 $4.67 $4.69 $4.71 $4.72
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
45 $4.34 $4.41 $4.49 $4.57 $4.64 $4.72 $4.78 $4.84 $4.88 $4.91 $4.94
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
50 $4.36 $4.44 $4.53 $4.64 $4.75 $4.86 $4.96 $5.05 $5.12 $5.17 $5.21
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
55 $4.37 $4.46 $4.58 $4.70 $4.85 $5.00 $5.15 $5.29 $5.41 $5.50 $5.56
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
60 $4.39 $4.48 $4.61 $4.76 $4.94 $5.15 $5.36 $5.57 $5.77 $5.92 $6.03
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
65 $4.40 $4.50 $4.64 $4.81 $5.02 $5.28 $5.57 $5.88 $6.19 $6.45 $6.65
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
70 $4.40 $4.51 $4.66 $4.84 $5.08 $5.38 $5.75 $6.18 $6.64 $7.07 $7.43
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
75 $4.41 $4.52 $4.67 $4.87 $5.13 $5.47 $5.90 $6.44 $7.08 $7.74 $8.35
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
80 $4.41 $4.53 $4.68 $4.89 $5.16 $5.52 $6.01 $6.65 $7.46 $8.41 $9.36
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
85 & Over $4.41 $4.53 $4.69 $4.90 $5.18 $5.56 $6.08 $6.80 $7.76 $8.97 $10.34
- ------------------ -------- -------- -------- ------- -------- -------- -------- ------- -------- -------- -----------
</TABLE>
Figures for intermediate ages, for two males or two females will be furnished
upon request.
<PAGE>
MAXIMUM AGE ADJUSTMENT
TABLE 3
SETTLEMENT AGE: The settlement age is the payee's age last birthday on the date
payments begin, minus an age adjustment from the table below. The actual age
adjustment may be less than the numbers shown.
- ----------------------------------------- -------------------------------
YEAR PAYMENTS BEGIN MAXIMUM
AFTER PRIOR TO AGE
ADJUSTMENT
- ----------------------------------------- -------------------------------
---- 2001 0
2000 2026 5
2025 2051 10
2050 ---- 15
- ----------------------------------------- -------------------------------
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY CONTRACT
BENEFIT PAYMENT OPTIONS
NON-PARTICIPATING, NO DIVIDENDS
If you have any questions concerning
this Contract, please contact
GE Life and Annuity Assurance Company
through the
Electronic Service Center
GE LIFE AND ANNUITY
ASSURANCE COMPANY
[ADMINISTRATIVE OFFICE
P.O. BOX 691
LEESBURG, VA 20178]
A STOCK COMPANY
URL:[http://www.annuitynet.com]
Exhibit 5(a)
<TABLE>
<S> <C>
NS15730 12/1999
In order to complete the processing of your application, GE LIFE AND ANNUITY ASSURANCE COMPANY
this form must be signed and either: P.O. BOX 691
1. Faxed to (703) 443-8940 and the initial premium LEESBURG, VA 20178
mailed to the address at the right, or FAX: (703) 443-8940
2. Mail both the signed application and the initial
premium to the address at the right.
ONLINE VA APPLICATION
======================================================================================================================
If you have any questions or need assistance with this
form, please contact us at [email protected]
NOTE: MAXIMUM CONTRACT OWNER: JOINT CONTRACT OWNER:
AGE OF CONTRACT (SPOUSE ONLY, EXCEPT IN PA)
OWNER IS 85.
------------------------------------------------- ------------------------------------------------
Full Legal Name Full Legal Name
------------------------------------------------- ------------------------------------------------
Street Address Street Address
------------------------------------------------- ------------------------------------------------
Street Address (continued) Street Address (continued)
------------------------------------------------- ------------------------------------------------
City, State Zip City, State Zip
------------------------------------------------- ------------------------------------------------
eMail Address/Phone eMail Address
Social Security # or Tax Social Security # or Tax
ID__________________________ ID_________________________
Date of Birth __________________ Date of Birth __________________
Gender____________ Gender___________
ANNUITANT
======================================================================================================================
BENEFICIARY SOCIAL SECURITY # OR TAX ID TYPE
======================================================================================================================
CONTRACT TYPE
======================================================================================================================
ALLOCATION Initial premium will be allocated to the Money Market
subaccount for 15 days following the date on which we deliver
your Contract to your Personal Folder and/or mail it to you.
After this period, please allocate my initial purchase payment
of $ ____________ as follows:
THIS ALLOCATION _____% GE S&P 500 Index _____% Fidelity VIP Overseas
WILL APPLY TO
FUTURE PURCHASE
PAYMENTS UNLESS
OTHERWISE
SPECIFIED
THROUGH THE
ELECTRONIC
SERVICE CENTER.
_____% GE International Equity _____% Janus Equity Income
_____% GE Real Estate Securities _____% Janus Capital Appreciation
_____% GE Total Return _____% Janus High-Yield
_____% GE Income _____% Janus Flexible Income
_____% GE Value Equity _____% Janus International Growth
_____% GE U.S. Equity _____% AIM VI Growth & Income (Charter)
_____% GE Money Market _____% AIM VI Capital Development
_____% GE Premier Growth Equity _____% AIM Capital Appreciation (Constellation)
_____% Fidelity VIP Overseas Portfolio _____% AIM VI SC Aggressive Growth
_____% Fidelity VIP III Growth Opportunities _____% AIM VI Government Securities
_____% Fidelity VIP III Growth & Income _____% AIM VI Global Utilities
_____% Fidelity VIP Mid Cap Portfolio _____% AIM VI Telecommunications
======================================================================================================================
<PAGE>
REPLACEMENTS Will the proposed contract replace any existing annuity or insurance contract (including any GE
Life & Annuity contracts)? ____________
(If "Yes")
------------------------------------------------ -----------------------------------------------
Annuitant/Insured on Existing Policy
------------------------------------------------ -----------------------------------------------
Existing Company
------------------------------------------------ -----------------------------------------------
Address
------------------------------------------------ -----------------------------------------------
Policy No. Approximate Amount $
======================================================================================================================
ELECTRONIC SERVICE CENTER AND TELEPHONE AUTHORIZATION
I hereby consent to receive all documents, including, without
limitation, the annuity contract, prospectuses, transaction
confirmations, periodic statements, etc., required in
connection with the variable annuity through the Electronic
Service Center. I hereby authorize and direct GE Life and
Annuity Assurance Company to accept any instructions received
through the Electronic Service Center or by telephone from any
person who can furnish proper identification. The undersigned
agrees that GE Life & Annuity is not liable for any loss
arising from following any such instructions.
INITIAL HERE
- ------------> Initial of Contract Owner: ________________________
======================================================================================================================
AUTOMATIC BANK
DRAFT TO
--------------------------------------------------------------------------------------------------
Bank Name ABA Number
--------------------------------------------------------------------------------------------------
Bank Street Address City, State Zip
--------------------------------------------------------------------------------------------------
Automatic bank draft start date Checking Account #
--------------------------------------------------------------------------------------------------
Initial Amount Additional Monthly Amount
I/We hereby request and authorize you to pay and charge to
my/our account checks or electronic fund transfer debits
processed by and payable to the order of GE Life and
Annuity Assurance Company, P.O. Box 691, Leesburg, VA
20178, provided there are sufficient collected funds in
said account to pay the same upon presentation. It will not
be necessary for any officer or employee of GE Life &
Annuity to sign such checks. I/We agree that your rights in
respect to each such check shall be the same as if it were
a check drawn on you and signed personally by me/us. This
authority is to remain in effect until revoked by me/us,
and until you actually receive such notice I/we agree that
you shall be fully protected in honoring any such check or
electronic fund transfer debit. In addition to regular bank
draft, I/we authorize such ad hoc drafts as are requested
through the Electronic Service Center. I/We further agree
that if any such check or electronic fund transfer debit be
dishonored, whether with or without cause and whether
intentionally or inadvertently, you shall be under no
liability whatsoever even though such dishonor results in
the forfeiture of insurance or investment loss to me/us.
--------------------------------------------------------------------------------------------------
Signature(s) EXACTLY as shown on bank records Signature(s) EXACTLY as shown on bank records
--------------------------------------------------------------------------------------------------
Print full legal name(s) Date Print full legal name(s) Date
<PAGE>
======================================================================================================================
FRAUD Any person who, knowingly and with intent to
WARNING defraud any insurance company or other person, files an
application for insurance or statement of claim containing
any materially false information or conceals, for the
purpose of misleading, information concerning any fact
material thereto, commits a fraudulent insurance act, which
is a crime and subjects such person to criminal and civil
penalties.
======================================================================================================================
INVESTOR STATEMENT Since financial advisors are not available to assist you in
OF UNDERSTANDING your decision making, it is up to you to decide whether
this contract is right for you. The website contains
explanatory materials and we encourage you to use them.
RESPONSES REQUIRED I understand that I will not be issued a contract unless I
- ------------------> can answer "yes" to the following questions.
1. Do you understand that the contract value may increase
or decrease depending on theinvestment return of the
subaccounts? |_| Yes |_| No
2. Do you believe this contract will meet your financial
needs and objectives? |_| Yes |_| No
3. Do you believe that you have sufficient liquid assets
available so that, in the near future, you would not
expect to need to make withdrawals from this contract,
although you understand you have the right to do so?
|_| Yes |_| No
======================================================================================================================
SIGNATURES I acknowledge receipt of a Prospectus. I agree to accept
the copy of the application (without original signature)
delivered to me with the GE Life & Annuity contract as a
binding, valid contract. Documents will be considered
delivered when GE Life & Annuity places them in the
Contract Owner's personal folder at the Electronic Service
Center. I UNDERSTAND ALL PAYMENTS AND VALUES PROVIDED BY
THIS CONTRACT ARE BASED ON THE INVESTMENT EXPERIENCE OF A
VARIABLE ACCOUNT AND ARE NOT GUARANTEED TO A FIXED DOLLAR
AMOUNT.
CERTIFICATION
UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
1. THE NUMBER SHOWN ON THIS FORM IS MY CORRECT
TAXPAYER IDENTIFICATION NUMBER ( OR I AM WAITING FOR
A NUMBER TO BE ISSUED TO ME) AND
2. I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE: (A) I
AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE NOT
BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS)
THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF
A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C)
THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO
BACKUP WITHHOLDING.
YOU MUST CROSS OUT ITEM #2 ABOVE IF YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP
WITHHOLDING. THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
SIGN HERE
- --------->
--------------------------------------------------------------------------------------------------
Signature of Contract Owner Date Signature of Joint Contract Owner Date
--------------------------------------------------------------------------------------------------
Full Name of Contract Owner Full Name of Joint Contract Owner
--------------------------------------------------------------------------------------------------
Application signed at (City and State)
</TABLE>
NS15730 12/1999
Exhibit 8(f)
FORM OF
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.
GE LIFE AND ANNUITY ASSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
CAPITAL BROKERAGE CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE
<S> <C>
Section 1. Available Funds.......................................................................................2
1.1 Availability....................................................................................2
1.2 Addition, Deletion or Modification of Funds.....................................................2
1.3 No Sales to the General Public..................................................................2
Section 2. Processing Transactions...............................................................................3
2.1 Timely Pricing and Orders.......................................................................3
2.2 Timely Payments.................................................................................3
2.3 Applicable Price................................................................................4
2.4 Dividends and Distributions.....................................................................4
2.5 Book Entry......................................................................................4
Section 3. Costs and Expenses....................................................................................5
3.1 General.........................................................................................5
3.2 Parties To Cooperate............................................................................5
Section 4. Legal Compliance......................................................................................5
4.1 Tax Laws........................................................................................5
4.2 Insurance and Certain Other Laws................................................................8
4.3 Securities Laws.................................................................................8
4.4 Notice of Certain Proceedings and Other Circumstances...........................................9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF......................................10
4.6 AVIF To Provide Documents; Information About LIFE COMPANY......................................11
Section 5. Mixed and Shared Funding.............................................................................13
5.1 General........................................................................................13
5.2 Disinterested Directors........................................................................13
5.3 Monitoring for Material Irreconcilable Conflicts...............................................14
5.4 Conflict Remedies..............................................................................15
5.5 Notice to LIFE COMPANY.........................................................................16
5.6 Information Requested by Board of Directors....................................................16
5.7 Compliance with SEC Rules......................................................................16
5.8 Other Requirements.............................................................................16
Section 6. Termination..........................................................................................16
6.1 Events of Termination..........................................................................16
6.2 Notice Requirement for Termination.............................................................18
6.3 Funds To Remain Available......................................................................18
6.4 Survival of Warranties and Indemnifications....................................................19
6.5 Continuance of Agreement for Certain Purposes..................................................19
(i)
<PAGE>
Section 7. Parties To Cooperate Respecting Termination..........................................................19
Section 8. Assignment...........................................................................................19
Section 9. Notices..............................................................................................19
Section 10. Voting Procedures...................................................................................20
Section 11. Foreign Tax Credits.................................................................................21
Section 12. Indemnification.....................................................................................21
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER................................................21
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM................................................23
12.3 Effect of Notice...............................................................................25
12.4 Successors.....................................................................................26
Section 13. Applicable Law......................................................................................26
Section 14. Execution in Counterparts...........................................................................26
Section 15. Severability........................................................................................26
Section 16. Rights Cumulative...................................................................................26
Section 17. Headings............................................................................................26
Section 18. Confidentiality.....................................................................................26
Section 19. Trademarks and Fund Names...........................................................................27
Section 20. Amendments .........................................................................................28
</TABLE>
(ii)
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of March, 2000
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"),
GE Life and Annuity Assurance Company, a Virginia life insurance company ("LIFE
COMPANY"), on behalf of itself and each of its segregated asset accounts listed
in Schedule A hereto, as the parties hereto may amend from time to time (each,
an "Account," and collectively, the "Accounts"); and Capital Brokerage
Corporation (doing business in Indiana, Minnesota, New Mexico, and Texas as GE
Capital Brokerage Corporation), an affiliate of LIFE COMPANY and the principal
underwriter of the Contracts ("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of fifteen separate series ("Series"),
shares ("Shares") each of which are registered under the Securities Act of 1933,
as amended (the "1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY is or will be the issuer of certain variable
annuity contracts and variable life insurance contracts ("Contracts") as set
forth on Schedule A hereto, as the Parties hereto may amend from time to time,
which Contracts (hereinafter collectively, the "Contracts"), if required by
applicable law, are or will be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY funds or will fund the Contracts through the
Accounts, each of which may be divided into two or more subaccounts
("Subaccounts"; reference herein to an "Account" includes reference to each
Subaccount thereof to the extent the context requires); and
WHEREAS, LIFE COMPANY serves or will serve as the depositor of the
Accounts, each of which is registered as a unit investment trust investment
company under the 1940 Act (or exempt therefrom), and the security interests
deemed to be issued by the Accounts under the Contracts will be registered as
securities under the 1933 Act (or exempt therefrom); and
1
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC
under the Securities Exchange Act of 1934 ("1934 Act") and a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to LIFE COMPANY for
purchase and redemption at net asset value and with no sales charges, subject to
the terms and conditions of this Agreement. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or
will be sold to the general public.
2
<PAGE>
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide
LIFE COMPANY with the net asset value per Share for each Fund by 5:30 p.m.
Central Time on each Business Day. As used herein, "Business Day" shall mean any
day on which (i) the New York Stock Exchange is open for regular trading, (ii)
AVIF calculates the Fund's net asset value, and (iii) LIFE COMPANY is open for
business.
(b) LIFE COMPANY will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values and
to process transactions that receive that same Business Day's Account unit
values. LIFE COMPANY will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with AVIF by
8:30 a.m. Central Time the following Business Day; PROVIDED, however, that AVIF
shall provide additional time to LIFE COMPANY in the event that AVIF is unable
to meet the 5:30 p.m. time stated in paragraph (a) immediately above. Such
additional time shall be equal to the additional time that AVIF takes to make
the net asset values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and
of redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and
redemption orders with respect to all Funds and shall transmit one net payment
in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE COMPANY shall be entitled
to an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation or
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to LIFE COMPANY. Materiality and
reprocessing cost reimbursement shall be determined in accordance with standards
established by the Parties as provided in Schedule B, attached hereto and
incorporated herein.
2.2 TIMELY PAYMENTS.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 3:00 p.m. Eastern Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 3:00 p.m. Eastern Time
on the same day as the Order is placed, to the extent practicable, but in any
event within three (3) business days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
3
<PAGE>
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), LIFE COMPANY shall be the designated agent of
AVIF for receipt of orders relating to Contract transactions on each Business
Day and receipt by such designated agent shall constitute receipt by AVIF;
PROVIDED that AVIF receives notice of such orders by 8:30 a.m. Central Time on
the next following Business Day or such later time as computed in accordance
with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will
be effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire, telephone or e-mail (followed by
written confirmation) on or prior to the payment date to LIFE COMPANY of any
income dividends or capital gain distributions payable on the Shares of any
Fund. LIFE COMPANY hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the ex-dividend
date net asset values until LIFE COMPANY otherwise notifies AVIF in writing, it
being agreed by the Parties that the ex-dividend date and the payment date with
respect to any dividend or distribution will be the same Business Day. LIFE
COMPANY reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. AVIF shall notify LIFE
COMPANY of the number of shares so issued as payment of such dividends and
distributions.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
4
<PAGE>
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached
hereto and made a part hereof, each Party will bear, or arrange for others to
bear, all expenses incident to its performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified
as a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will use
its best efforts to qualify and to maintain qualification of each Fund as a RIC.
AVIF will notify LIFE COMPANY immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
(b) Subject to Sections 4.1(d) and 4.1(e) hereof, AVIF represents that
it will use its best efforts to comply and to maintain each Fund's compliance
with the diversification requirements set forth in Section 817(h) of the Code
and Section 1.817-5(b) of the regulations under the Code. AVIF will notify LIFE
COMPANY immediately upon having a reasonable basis for believing that a Fund has
ceased to so comply or that a Fund might not so comply in the future. In the
event of a breach of this Section 4.1(b) by AVIF, it will take all reasonable
steps to adequately diversify the Fund so as to achieve compliance within the
grace period afforded by Section 1.817-5 of the regulations under the Code.
(c) If the Internal Revenue Service ("IRS") asserts in writing in
connection with any governmental audit or review of LIFE COMPANY or, to LIFE
COMPANY's knowledge, of any Contract owners, annuitants, insureds or
participants (as appropriate) under the Contracts (collectively,
"Participants"), that any Fund has failed to comply with the diversification
requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes
aware of any facts that could give rise to any claim against AVIF or its
affiliates as a result of such a failure or alleged failure, then LIFE COMPANY,
in its sole discretion, may elect to have the provisions of this Section 4.1(c)
apply to AVIF's or AIM's participation in (as distinguished from assumption of)
the defense of any action relating to such assertion or potential claim pursuant
to Section 12.2(d) hereof (it being understood that if LIFE COMPANY does not
elect to apply this Section 4.1(c), no party hereto will be relieved of any
rights or obligations it may otherwise have).
5
<PAGE>
(i) LIFE COMPANY shall promptly notify AVIF of such
assertion or potential claim (subject to the
Confidentiality provisions of Section 18 as to any
Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to
minimize any liability that may arise as a result of
such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and
their legal and accounting advisors to participate in
any conferences, settlement discussions or other
administrative or judicial proceeding or contests
(including judicial appeals thereof) with the IRS,
any Participant or any other claimant regarding any
claims that could give rise to liability to AVIF or
its affiliates as a result of such a failure or
alleged failure; PROVIDED, however, that LIFE COMPANY
will retain control of the conduct of such
conferences, discussions, proceedings, contests or
appeals;
(v) any written materials to be submitted by LIFE COMPANY
to the IRS, any Participant or any other claimant in
connection with any of the foregoing proceedings
or contests (including, without limitation, any such
materials to be submitted to the IRS pursuant
to Treasury Regulations Section 1.817-5(a)(2)),
(a) shall be provided by LIFE COMPANY to AVIF
(together with any supporting information or
analysis); subject to the confidentiality provisions
of Section 18, at least ten (10) business days or
such shorter period to which the Parties hereto agree
prior to the day on which such proposed materials
are to be submitted, and (b) shall not be submitted
by LIFE COMPANY to any such person without the
express written consent of AVIF which shall not be
unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and
their accounting and legal advisors with such
cooperation as AVIF shall reasonably request
(including, without limitation, by permitting AVIF
and its accounting and legal advisors to review the
relevant books and records of LIFE COMPANY) in order
to facilitate review by AVIF or its advisors of any
written submissions provided to it pursuant to the
preceding clause or its assessment of the validity or
amount of any claim against it arising from such a
failure or alleged failure;
(vii) LIFE COMPANY shall not with respect to any claim of
the IRS or any Participant that would give rise to a
claim against AVIF or its affiliates (a) compromise
or settle any claim, (b) accept any adjustment on
audit, or (c) forego any allowable administrative
or judicial appeals, without the express written
consent of AVIF or its affiliates, which shall not
be unreasonably withheld, PROVIDED that LIFE COMPANY
shall not be required, after exhausting all
administrative remedies, to appeal any adverse
judicial decision unless AVIF or its affiliates shall
have provided an opinion of independent counsel to
the effect that a reasonable basis exists for taking
such appeal; and PROVIDED FURTHER that the costs of
any such appeal shall be borne equally by the
Parties hereto; and
6
<PAGE>
(viii) AVIF and its affiliates shall have no liability as a
result of such failure or alleged failure if LIFE
COMPANY fails to comply with any of the foregoing
clauses (i) through (vii), and such failure could be
shown to have materially contributed to the
liability.
Should AVIF or any of its affiliates refuse to give its written consent
to any compromise or settlement of any claim or liability hereunder, LIFE
COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the
name of LIFE COMPANY in, and to control the conduct of, such conferences,
discussions, proceedings, contests or appeals and all administrative or judicial
appeals thereof, and in that event AVIF or its affiliates shall bear the fees
and expenses associated with the conduct of the proceedings that it is so
authorized to control; PROVIDED, that in no event shall LIFE COMPANY have any
liability resulting from AVIF's refusal to accept the proposed settlement or
compromise with respect to any failure caused by AVIF. As used in this
Agreement, the term "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.
AVIF and AIM agree that this Section 4.1(c) does not require LIFE
COMPANY to provide or disclose to AVIF, AIM, or any of their respective
affiliates any attorney-client privileged books, records, or other materials or
data that do not pertain to the failure or alleged failure of any Fund to comply
with the diversification requirements of section 817(h) of the Code. AVIF and
AIM further agree that any books, records or other materials or data provided or
disclosed by LIFE COMPANY to AVIF, AIM, or their respective affiliates pursuant
to this Section 4.1(c) shall be subject to the confidentiality provisions of
Section 18 hereof.
LIFE COMPANY agrees that this Section 4.1(c) is at all times subject to
AVIF's and AIM's right, pursuant to Section 12.2(d) hereof, to assume (as
distinguished from participate in) the defense of the actions described in that
Section, including, without limitation, the conduct of any ruling request and
closing agreement or other settlement proceeding with the IRS.
(d) Subject to Sections 4.1(a) and 4.1(b) hereof, LIFE COMPANY
represents and warrants that the Contracts currently are and will be treated as
annuity contracts or life insurance contracts under applicable provisions of the
Code and that it will use its best efforts to maintain such treatment; LIFE
COMPANY will notify AVIF immediately upon having a reasonable basis for
believing that any of the Contracts have ceased to be so treated or that they
might not be so treated in the future.
(e) LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that, subject to Sections 4.1(a) and 4.1(b)
hereof, interests in each Account are offered exclusively through the purchase
of or transfer into a "variable contract," within the meaning of such terms
under Section 817 of the Code and the regulations thereunder. LIFE COMPANY will
use its best efforts to continue to meet such definitional requirements, and it
will notify AVIF immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future.
7
<PAGE>
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by LIFE COMPANY, including, the furnishing of information not otherwise
available to LIFE COMPANY which is required by state insurance law to enable
LIFE COMPANY to obtain the authority needed to issue the Contracts in any
applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under the laws of
the Commonwealth of Virginia and has full corporate power, authority and legal
right to execute, deliver and perform its duties and comply with its obligations
under this Agreement, (ii) it has legally and validly established and maintains
each Account as a segregated asset account under Virginia Insurance Law and the
regulations thereunder, and (iii) the Contracts comply in all material respects
with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(d) AIM represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(e) UNDERWRITER represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under all applicable state
laws and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
4.3 SECURITIES LAWS.
(a) LIFE COMPANY represents and warrants that (i) interests in each
Account pursuant to the Contracts are or will be registered under the 1933 Act
to the extent required by the 1933 Act, (ii) the Contracts are or will be duly
authorized for issuance and sold in compliance with all applicable federal and
state laws, including, without limitation, the 1933 Act, the 1934 Act, the 1940
Act and the law(s) of LIFE COMPANY's state(s) of organization and domicile,
(iii) each Account is and will remain registered under the 1940 Act, to the
extent required by the 1940 Act, (iv) each Account does and will comply in all
material respects with the requirements of the 1940 Act and the rules
8
<PAGE>
thereunder, to the extent required, (v) each Account's 1933 Act registration
statement relating to the Contracts, together with any amendments thereto, will
at all times comply in all material respects with the requirements of the 1933
Act and the rules thereunder, (vi) LIFE COMPANY will amend the registration
statement for its Contracts under the 1933 Act and for its Accounts under the
1940 Act from time to time as required in order to effect the continuous
offering of its Contracts or as may otherwise be required by applicable law, and
(vii) each Account Prospectus will at all times comply in all material respects
with the requirements of the 1933 Act and the rules thereunder.
(b) AVIF and AIM represent and warrant that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF's Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it
reserves the right to make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, AVIF undertakes
to have its Board of Directors, a majority of whom are not "interested" persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF or AIM will immediately notify LIFE COMPANY of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, Statement of Additional Information and
any amendments or supplements thereto (collectively the "AVIF Prospectus"), (ii)
any request by the SEC for any amendment to such registration statement or AVIF
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of AVIF's Shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Shares of any Fund in
any state or jurisdiction, including, without limitation, any circumstances in
which (a) such Shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law, or (b) such law
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precludes the use of such Shares as an underlying investment medium of the
Contracts issued or to be issued by LIFE COMPANY. AVIF and AIM will make every
reasonable effort to prevent the issuance, with respect to any Fund, of any such
stop order, cease and desist order or similar order and, if any such order is
issued, to obtain the lifting thereof at the earliest possible time.
(b) LIFE COMPANY or UNDERWRITER will immediately notify AVIF of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Contracts or each Account
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or Account Prospectus that may affect the offering of Shares of AVIF,
(iii) the initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of each Account's interests
pursuant to the Contracts, or (iv) any other action or circumstances that may
prevent the lawful offer or sale of said interests in any state or jurisdiction,
including, without limitation, any circumstances in which said interests are not
registered and, in all material respects, issued and sold in accordance with
applicable state and federal law. LIFE COMPANY and UNDERWRITER will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
(c) Each Party hereto shall cooperate with the other Parties and all
appropriate government authorities (including, without limitation, the SEC, the
NASD, and state securities and insurance regulators) and shall permit such
authorities reasonable access to its books and records, as may be required by
law, in connection with any investigation or inquiry by any such regulatory
authority relating to this Agreement or transactions contemplated hereby.
However, such access shall not extend to attorney-client privileged information.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY will provide to AVIF or its designated agent at least
one (1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least five (5)
Business Days prior to its use or such shorter period as the Parties hereto may,
from time to time, agree upon. No such material shall be used if AVIF or its
designated agent objects to such use within five (5) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon. AVIF hereby designates AIM as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to LIFE COMPANY in the manner required by Section 9 hereof.
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(c) Neither LIFE COMPANY, UNDERWRITER nor any of their respective
affiliates, will give any information or make any representations or statements
on behalf of or concerning AVIF or its affiliates in connection with the sale of
the Contracts other than (i) the information or representations contained in the
registration statement, including the AVIF Prospectus contained therein,
relating to Shares, as such registration statement and AVIF Prospectus may be
amended from time to time; or (ii) in reports or proxy materials for AVIF; or
(iii) in published reports for AVIF that are in the public domain and approved
by AVIF for distribution; or (iv) in sales literature or other promotional
material approved by AVIF, except with the express written permission of AVIF.
The parties agree that this Section 4.5 is not intended to designate nor
otherwise imply that LIFE COMPANY is underwriter or distributor of shares of
AVIF.
(d) LIFE COMPANY shall adopt and implement procedures reasonably
designed to ensure that information concerning AVIF and its affiliates that is
intended for use only by brokers or agents selling the Contracts (I.E.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and pursuant to Section 12.1 hereof, neither AVIF nor
any of its affiliates shall be liable for any losses, damages or expenses
relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5 and Section 12 hereof, the
phrase "sales literature or other promotional material" includes, but is not
limited to, advertisements (such as material published, or designed for use in,
a newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, (E.G., on-line networks such as the Internet or other electronic
messages), sales literature (I.E., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
(f) LIFE COMPANY and/or UNDERWRITER shall promptly provide to AVIF and
AIM copies of responses to no-action request, notices, orders, and other rulings
received by LIFE COMPANY and/or UNDERWRITER with respect to any filing covered
by Section 4.5 of this Agreement.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of
all SEC registration statements, AVIF Prospectuses, reports, any preliminary and
final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to AVIF or the
Shares of a Fund, contemporaneously with the filing of such document with the
SEC or other regulatory authorities. AVIF shall provide LIFE COMPANY with as
much notice as is reasonably practicable of any proxy solicitation for a Fund
and of any material change in the Fund's Prospectus or registration statement,
particularly any changes resulting in a change to the prospectus or registration
statement relating to the Contracts. Where such material changes are an item for
consideration by the Board of AVIF, such notice requirement of AVIF may be
satisfied by providing LIFE COMPANY with a copy of an agenda of the relevant
Board of Directors meeting of AVIF.
(b) AVIF will provide to LIFE COMPANY a camera ready copy of all AVIF
prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF
statements of additional information, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Contract value to a Fund. AVIF will provide such copies to
LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may
be, to print and distribute such materials within the time required by law to be
furnished to Participants.
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(c) AVIF will provide to LIFE COMPANY or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which LIFE COMPANY, or any of its respective affiliates is named, or
that refers to the Contracts, at least five (5) Business Days prior to its use
or such shorter period as the Parties hereto may, from time to time, agree upon.
No such material shall be used if LIFE COMPANY or its designated agent objects
to such use within five (5) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time to time, agree upon. LIFE
COMPANY shall receive all such sales literature until such time as it appoints a
designated agent by giving notice to AVIF in the manner required by Section 9
hereof.
(d) Neither AVIF, AIM, nor any of their respective affiliates will give
any information or make any representations or statements on behalf of or
concerning LIFE COMPANY, each Account, or the Contracts other than (i) the
information or representations contained in the registration statement,
including each Account Prospectus contained therein, relating to the Contracts,
as such registration statement and Account Prospectus may be amended from time
to time; or (ii) in published reports for the Account or the Contracts that are
in the public domain and approved by LIFE COMPANY for distribution; or (iii) in
sales literature or other promotional material approved by LIFE COMPANY or its
affiliates, except with the express written permission of LIFE COMPANY.
(e) AIM shall adopt and implement procedures reasonably designed to
ensure that information concerning LIFE COMPANY, and its respective affiliates
that is intended for use only by brokers or agents selling the Contracts (I.E.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and pursuant to Section 12.1 hereof, neither LIFE
COMPANY, nor any of its respective affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only materials.
(f) For purposes of this Section 4.6 and Section 12 hereof, the phrase
"sales literature or other promotional material" includes, but is not limited
to, advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, (E.G., on-line networks such as the Internet or other electronic
messages), sales literature (I.E., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
(g) AVIF and/or AIM shall promptly provide to LIFE COMPANY and
UNDERWRITER copies of responses to no-action requests, notices, orders, and
other rulings received by AVIF and/or AIM with respect to any filing covered by
Section 4.6 of this Agreement.
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(h) AVIF agrees to use its best efforts to provide to LIFE COMPANY
within 5 Business Days after the end of a calendar month and shall provide no
later than 10 calendar days after the end of a calendar month, the following
information with respect to each Fund set forth on Schedule A, each as of the
last Business Day of such calendar month: each Fund's 10 largest holdings
(based on the percentage of each Portfolio's net assets); the five industry
sectors in which each Fund's investments are most heavily weighted; and
year-to-date SEC standardized performance data. LIFE COMPANY shall keep the
foregoing information confidential pursuant to Section 18 of this Agreement
for a period of 15 calendar days following the end of the month to which such
information relates. In addition, AVIF agrees to use its best efforts to
provide LIFE COMPANY within 10 Business Days after the end of a calendar
quarter and shall provide no later than 15 Business Days after the end of the
calendar quarter a market commentary from the portfolio manager of each Fund
set forth on Schedule A, as of the last Business Day of such quarter. Also,
AVIF agrees to provide LIFE COMPANY, within 15 Business Days after a request
is submitted to AVIF by LIFE COMPANY, the following information with respect
to each Fund set forth on Schedule A, each as of the date or dates specified
in such request: net asset value; net asset value per share; and such other
share information as may be agreed by LIFE COMPANY and AVIF from time to time.
AVIF acknowledges that such information may be furnished to LIFE COMPANY's
internal or independent auditors and to the insurance departments of states in
which LIFE COMPANY does business.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with LIFE
COMPANY, and trustees of qualified pension and retirement plans (collectively,
"Mixed and Shared Funding"). The Parties recognize that the SEC has imposed
terms and conditions for such orders that are substantially identical to many of
the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies LIFE
COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may
be appropriate to include in the prospectus pursuant to which a Contract is
offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board;(b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
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5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). LIFE COMPANY agrees to inform the Board of Directors of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other regulatory
authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Fund are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard
the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist
the Board of Directors in carrying out its responsibilities by providing the
Board of Directors with all information reasonably necessary for the Board of
Directors to consider any issue raised, including information as to a decision
by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY's
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Participants.
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5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of
the Accounts from AVIF or any Fund and reinvesting
such assets in a different investment medium,
including another Fund of AVIF, or submitting the
question whether such segregation should be
implemented to a vote of all affected Participants
and, as appropriate, segregating the assets of any
particular group (E.G., annuity Participants, life
insurance Participants or all Participants) that
votes in favor of such segregation, or offering to
the affected Participants the option of making such a
change; and
(ii) establishing a new registered investment company of
the type defined as a "management company" in Section
4(3) of the 1940 Act or a new separate account that
is operated as a management company.
(b) If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within six (6) months
after AVIF gives notice to LIFE COMPANY that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by LIFE COMPANY for the purchase and redemption of Shares of
AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to LIFE COMPANY conflicts with
the majority of other state regulators, then LIFE COMPANY will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Directors informs LIFE COMPANY that it has determined that such decision has
created a material irreconcilable conflict, and until such withdrawal AVIF shall
continue to accept and implement orders by LIFE COMPANY for the purchase and
redemption of Shares of AVIF. No charge or penalty will be imposed as a result
of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
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5.5 NOTICE TO LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY and AVIF (or its investment adviser) will at least
annually submit to the Board of Directors of AVIF such reports, materials or
data as the Board of Directors may reasonably request so that the Board of
Directors may fully carry out the obligations imposed upon it by the provisions
hereof or any exemptive order granted by the SEC to permit Mixed and Shared
Funding, and said reports, materials and data will be submitted at any
reasonable time deemed appropriate by the Board of Directors. All reports
received by the Board of Directors of potential or existing conflicts, and all
Board of Directors actions with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating Plans of
a conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium
for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
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(a) at the option of any party, with or without cause with respect to
the Fund, upon six (6) months advance written notice to the other parties, or,
if later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) at the option of AVIF or AIM upon institution of formal proceedings
against LIFE COMPANY, UNDERWRITER or their respective affiliates by the NASD,
the SEC, any state insurance regulator or any other regulatory body regarding
LIFE COMPANY's or UNDERWRITER's obligations under this Agreement or related to
the sale of the Contracts, the operation of each Account, or the purchase of
Shares, if, in each case, AVIF or AIM reasonably determines that such
proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on the Fund with
respect to which the Agreement is to be terminated; or
(c) at the option of LIFE COMPANY or UNDERWRITER upon institution of
formal proceedings against AVIF, its principal underwriter, its investment
adviser or their respective affiliates by the NASD, the SEC, or any state
insurance regulator or any other regulatory body regarding AVIF's or AIM's
obligations under this Agreement or related to the operation or management of
AVIF or the purchase of AVIF Shares, if, in each case, LIFE COMPANY or
UNDERWRITER reasonably determines that such proceedings, or the facts on which
such proceedings would be based, have a material likelihood of imposing material
adverse consequences on LIFE COMPANY, UNDERWRITER, or the Subaccount
corresponding to the Fund with respect to which the Agreement is to be
terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares
are not registered and, in all material respects, issued and sold in accordance
with any applicable federal or state law, or (ii) such law precludes the use of
such Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in
the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a
RIC under Subchapter M of the Code or under successor or similar provisions, or
if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY or UNDERWRITER if the Fund fails to
comply with Section 817(h) of the Code or with successor or similar provisions,
or if LIFE COMPANY or UNDERWRITER reasonably believes that the Fund may fail to
so comply; or
(h) at the option of AVIF or AIM if the Contracts issued by LIFE
COMPANY cease to qualify as annuity contracts or life insurance contracts under
the Code (other than by reason of the Fund's noncompliance with Section 817(h)
or Subchapter M of the Code) or if interests in an Account under the Contracts
are not registered, where required, and, in all material respects, are not
issued or sold in accordance with any applicable federal or state law; or
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<PAGE>
(i) upon another Party's material breach of any provision of this
Agreement.
(j) at the option of LIFE COMPANY or UNDERWRITER by written notice to
AVIF or AIM, if LIFE COMPANY shall conclude in its sole judgement exercised in
good faith, that AVIF and/or AIM has suffered a material adverse change in its
business, operation, financial condition, or prospectus since the date of this
Agreement or is subject to material adverse publicity.
(k) at the option of AVIF or AIM by written notice to LIFE COMPANY or
UNDERWRITER, if AVIF shall conclude in its sole judgement exercised in good
faith, that LIFE COMPANY and/or UNDERWRITER has suffered a material adverse
change in its business, operation, financial condition, or prospectus since the
date of this Agreement or is subject to material adverse publicity.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b), 6.1(c), 6.1(j) or 6.1(k) hereof, such prior written notice
shall be given at least ninety (90) days in advance of the effective date of
termination unless a shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of LIFE COMPANY, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments in
the Fund (as in effect on such date), redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 6.3 will not apply to
any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
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6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of
this Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund
pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h), 6.1(i),
6.1(j) or 6.1(k) hereof, this Agreement shall nevertheless continue in effect as
to any Shares of that Fund that are outstanding as of the date of such
termination (the "Initial Termination Date"). This continuation shall extend to
the earlier of the date as of which an Account owns no Shares of the affected
Fund or a date (the "Final Termination Date") six (6) months following the
Initial Termination Date, except that LIFE COMPANY may, by written notice
shorten said six (6) month period.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted will be given by means
mutually acceptable to the Parties concerned. Each other notice or communication
required or permitted by this Agreement will be given to the following persons
at the following addresses and facsimile numbers, or such other persons,
addresses or facsimile numbers as the Party receiving such notices or
communications may subsequently direct in writing:
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AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
GE LIFE AND ANNUITY ASSURANCE COMPANY
6610 West Broad Street
Richmond, Virginia 23230
Email: [email protected]
Facsimile: (804)281-6005
Attn: Patricia L. Dysart, Esq.
CAPITAL BROKERAGE CORPORATION
6610 West Broad Street
Richmond, Virginia 23230
Facsimile: (804)281-6005
Attn: Patricia L. Dysart, Esq.
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3
hereof, LIFE COMPANY will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting privileges for Participants. Except
to the extent as may be required by applicable law, neither LIFE COMPANY nor any
of its affiliates will in any way recommend action in connection with or oppose
or interfere with the solicitation of proxies for the Shares held for such
Participants. LIFE COMPANY reserves the right to vote shares held in any Account
in its own right, to the extent permitted by law. LIFE COMPANY shall be
responsible for assuring that each of its Accounts holding Shares calculates
voting privileges in a manner consistent with that of other Participating
Insurance Companies or in the manner required by the Mixed and Shared Funding
exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY of any changes
of interpretations or amendments to Mixed and Shared Funding exemptive order it
has obtained. AVIF will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, AVIF either will provide for annual
meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not
to require such meetings) or will comply with Section 16(c) of the 1940 Act
(although AVIF is not one of the trusts described in Section 16(c) of that Act)
as well as with Sections 16(a) and, if and when applicable, 16(b). Further, AVIF
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of directors and with whatever
rules the SEC may promulgate with respect thereto.
20
<PAGE>
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF,
AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers, (collectively, the "Indemnified Parties" for
purposes of this Section 12.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
LIFE COMPANY and UNDERWRITER) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at common law or otherwise;
PROVIDED, the Account owns shares of the Fund and insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts,
or sales literature or other promotional material
for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements
therein not misleading; provided, that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to LIFE COMPANY or UNDERWRITER by or on
behalf of AVIF or AIM for use in any Account's 1933
Act registration statement, any Account Prospectus,
the Contracts, or sales literature or other
promotional material or otherwise for use in
connection with the sale of Contracts or Shares (or
any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales
literature or other promotional material of AVIF, or
any amendment or supplement to any of the foregoing,
not supplied for use therein by or on behalf of LIFE
COMPANY, UNDERWRITER or their respective affiliates
and on which such persons have reasonably relied) or
the negligent, illegal or fraudulent conduct of LIFE
COMPANY, UNDERWRITER or their respective affiliates
or persons under their control (including, without
limitation, their employees and "persons associated
with a member," as that term is defined in paragraph
(q) of Article I of the NASD's By-Laws), in
connection with the sale or distribution of the
Contracts or Shares; or
21
<PAGE>
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in AVIF's 1933 Act registration statement,
AVIF Prospectus, sales literature or other
promotional material of AVIF, or any amendment or
supplement to any of the foregoing, or the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading if such a
statement or omission was made in reliance upon and
in conformity with information furnished to AVIF, AIM
or their affiliates by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates for use in
AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or other promotional
material of AVIF, or any amendment or supplement to
any of the foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or
UNDERWRITER to perform the obligations, provide the
services and furnish the materials required of them
under the terms of this Agreement, or any material
breach of any representation and/or warranty made by
LIFE COMPANY or UNDERWRITER in this Agreement or
arise out of or result from any other material breach
of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued
by LIFE COMPANY to qualify as annuity contracts or
life insurance contracts under the Code, otherwise
than by reason of any Fund's failure to comply with
Subchapter M or Section 817(h) of the Code.
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any losses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
AVIF or AIM.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified LIFE COMPANY and UNDERWRITER in writing within a
reasonable time after the summons or other first legal process giving
22
<PAGE>
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
from any liability which they may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to
participate, at their own expense, in the defense of such action and also shall
be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from LIFE COMPANY or UNDERWRITER to such Indemnified
Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER will be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
12.2 OF LIFE COMPANY AND UNDERWRITER BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of AVIF and/or AIM) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law, or otherwise; PROVIDED, the Account owns shares of the Fund and
insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in AVIF's 1933 Act registration statement,
AVIF Prospectus or sales literature or other
promotional material of AVIF (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading; PROVIDED, that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to AVIF or
its affiliates by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates for use in
AVIF's 1933 Act registration statement, AVIF
Prospectus, or in sales literature or other
promotional material or otherwise for use in
connection
23
<PAGE>
with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus,
sales literature or other promotional material for
the Contracts, or any amendment or supplement to any
of the foregoing, not supplied for use therein by or
on behalf of AVIF, AIM or their affiliates and on
which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF,
AIM or their affiliates or persons under their
control (including, without limitation, their
employees and "persons associated with a member" as
that term is defined in Section (q) of Article I of
the NASD By-Laws), in connection with the sale or
distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or other promotional material covering the
Contracts, or any amendment or supplement to any of
the foregoing, or the omission or alleged omission
to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading, if such statement or
omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY,
UNDERWRITER or their respective affiliates by or on
behalf of AVIF or AIM for use in any Account's 1933
Act registration statement, any Account Prospectus,
sales literature or other promotional material
covering the Contracts, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to
perform the obligations, provide the services and
furnish the materials required of it under the terms
of this Agreement, or any material breach of any
representation and/or warranty made by AVIF or AIM
in this Agreement or arise out of or result from any
other material breach of this Agreement by AVIF or
AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with the written
consent of AVIF and/or AIM) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses) to which the Indemnified Parties
may become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M of
the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to Participants
asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of
any ruling and closing agreement or other settlement with the IRS, and the cost
of any substitution by LIFE COMPANY of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LIFE COMPANY reasonably deems necessary or appropriate as a result
of the noncompliance.
24
<PAGE>
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to LIFE COMPANY,
UNDERWRITER, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or AIM in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF and/or
AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and AVIF
and AIM will not be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, LIFE COMPANY, UNDERWRITER or any other Participating
Insurance Company or any Participant, with respect to any losses, claims,
damages, liabilities or expenses that arise out of or result from (i) a breach
of any representation, warranty, and/or covenant made by LIFE COMPANY or
UNDERWRITER hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants; (ii) the failure by LIFE COMPANY or any Participating Insurance
Company to maintain its segregated asset account (which invests in any Fund) as
a legally and validly established segregated asset account under applicable
state law and as a duly registered unit investment trust under the provisions of
the 1940 Act (unless exempt therefrom); or (iii) the failure by LIFE COMPANY or
any Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
25
<PAGE>
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
26
<PAGE>
SECTION 18. CONFIDENTIALITY
AVIF and AIM acknowledge that the identities of the customers of LIFE
COMPANY and UNDERWRITER or any of their respective affiliates (collectively, the
"LIFE COMPANY Protected Parties" for purposes of this Section 18), information
maintained regarding those customers, and all computer programs and procedures
or other information developed by the LIFE COMPANY Protected Parties or any of
their employees or agents in connection with LIFE COMPANY's performance of its
duties under this Agreement are the valuable property of the LIFE COMPANY
Protected Parties. AVIF and AIM agree that if it comes into possession of any
list or compilation of the identities of or other information about the LIFE
COMPANY Protected Parties' customers, or any other information or property of
the LIFE COMPANY Protected Parties, other than such information as may be
independently developed or compiled by AVIF or AIM from information supplied to
it by the LIFE COMPANY Protected Parties' customers who also maintain accounts
directly with AVIF or AIM, AVIF and/or AIM will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY and
UNDERWRITER acknowledge that the identities of the customers of AVIF and AIM or
any of their respective affiliates (collectively, the "AVIF Protected Parties"
for purposes of this Section 18), information maintained regarding those
customers, and all computer programs and procedures or other information
developed by the AVIF Protected Parties or any of their employees or agents in
connection with AVIF's performance of its duties under this Agreement are the
valuable property of the AVIF Protected Parties. LIFE COMPANY and UNDERWRITER
agree that if it comes into possession of any list or compilation of the
identities of or other information about the AVIF Protected Parties' customers
or any other information or property of the AVIF Protected Parties, other than
such information as may be independently developed or compiled by LIFE COMPANY
or UNDERWRITER from information supplied to it by the AVIF Protected Parties'
customers who also maintain accounts directly with LIFE COMPANY or UNDERWRITER,
LIFE COMPANY and or UNDERWRITER will hold such information or property in
confidence and refrain from using, disclosing or distributing any of such
information or other property except: (a) with AVIF's prior written consent; or
(b) as required by law or judicial process. Each Party acknowledges that any
breach of the agreements in this Section 18 would result in immediate and
irreparable harm to the other Parties for which there would be no adequate
remedy at law and agree that in the event of such a breach, the other parties
will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent jurisdiction
deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) Except as may otherwise be provided in a License Agreement among
A I M Management Group, Inc., LIFE COMPANY and UNDERWRITER, neither LIFE COMPANY
nor UNDERWRITER or any of their respective affiliates, shall use any trademark,
trade name, service mark or logo of AVIF, AIM or any of their respective
affiliates, or any variation of any such trademark, trade name, service mark or
logo, without AVIF's or AIM's prior written consent, the granting of which shall
be at AVIF's or AIM's sole option.
27
<PAGE>
(b) Except as may otherwise be provided in a License Agreement among
LIFE COMPANY UNDERWRITER, AVIF and AIM, neither AVIF nor AIM or any of their
respective affiliates, shall use any trademark, trade name, service mark or logo
of LIFE COMPANY or UNDERWRITER or any of their respective affiliates, or any
variation of any such trademark, trade name, service mark or logo, without LIFE
COMPANY's or UNDERWRITER's prior written consent, the granting of which shall be
at LIFE COMPANY's or UNDERWRITER's sole option.
SECTION 20. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner
except by a written agreement executed by all parties hereto.
28
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
<TABLE>
<CAPTION>
AIM VARIABLE INSURANCE FUNDS, INC.
<S> <C>
Attest: ________________________ By: ______________________________________
Name: Nancy L. Martin Name: Robert H. Graham
Title Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: ________________________ By: ______________________________________
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
GE LIFE AND ANNUITY ASSURANCE COMPANY, on
behalf of itself and its separate accounts
Attest: ________________________ By: ______________________________________
Name: ________________________ Name: ______________________________________
Title: ________________________ Title: ______________________________________
CAPITAL BROKERAGE CORPORATION
Attest: ________________________ By: ______________________________________
Name: ________________________ Name: ______________________________________
Title: ________________________ Title: ______________________________________
29
</TABLE>
<PAGE>
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
$ AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Aggressive Growth
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Telecommunications Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
GE Life & Annuity Separate Account 4
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Online Product
New Chassis Lineup
30
<PAGE>
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net
asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net
asset value and the correct net asset value is less
than .5% of the correct net asset value, AIM will
reimburse the affected Fund to the extent of any
loss resulting from the error. No other adjustments
shall be made.
b. If the amount of the difference in the erroneous net
asset value and the correct net asset value is .5%
of the correct net asset value or greater, then AIM
will determine the impact of the error to the
affected Fund and shall reimburse such Fund (and/or
LIFE COMPANY, as appropriate, such as in the event
that the error was not discovered until after LIFE
COMPANY processed transactions using the erroneous
net asset value) to the extent of any loss resulting
from the error. To the extent that an overstatement
of net asset value per share is detected quickly and
LIFE COMPANY has not mailed redemption checks to
Participants, LIFE COMPANY and AIM agree to examine
the extent of the error to determine the feasibility
of reprocessing such redemption transaction (for
purposes of reimbursing the Fund to the extent of
any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to
paragraph (b), above, AIM shall reimburse LIFE COMPANY for LIFE COMPANY's
reprocessing costs in an amount not to exceed $1.00 per contract affected by $10
or more.
The Pricing Policies described herein may be modified by AVIF as approved by its
Board of Directors. AIM agrees to use its best efforts to notify LIFE COMPANY at
least five (5) days prior to any such meeting of the Board of Directors of AVIF
to consider such proposed changes.
31
<PAGE>
SCHEDULE C
EXPENSE ALLOCATIONS
<TABLE>
<CAPTION>
<S> <C>
=========================================================== ========================================================
LIFE COMPANY AVIF / AIM
- ----------------------------------------------------------- --------------------------------------------------------
Preparing and filing the Account's registration statement Preparing and filing the Fund's registration statement
- ----------------------------------------------------------- --------------------------------------------------------
Text composition for Account prospectuses and supplements Text composition for Fund prospectuses and supplements
- ----------------------------------------------------------- --------------------------------------------------------
Text alterations of Account prospectuses and Account Text alterations of Fund prospectuses and Fund
supplements supplements
- ----------------------------------------------------------- --------------------------------------------------------
Printing Account prospectuses and supplements and Fund A camera ready Fund prospectus and printing of Fund
prospectuses and supplements for prospective policy owners prospectuses for existing policy owners that invest in
the Funds
- ----------------------------------------------------------- --------------------------------------------------------
Text composition and printing Account SAIs Text composition and printing Fund SAIs
- ----------------------------------------------------------- ========================================================
Mailing and distributing Account SAIs to policy owners upon Mailing and distributing Fund SAIs to policy owners upon
request by policy owners request by policy owners
- ----------------------------------------------------------- --------------------------------------------------------
Mailing and distributing Account prospectuses and Account Mailing and distributing Fund prospectuses and
supplements to policy owners of record as required by supplements to existing policy owners that invest in
Federal Securities Laws and mailing and distributing the Funds
Account and Fund prospectuses and supplements to
prospective purchasers
- ----------------------------------------------------------- --------------------------------------------------------
Text composition (Account), printing, mailing, and Text composition of annual and semi-annual reports
distributing annual and semi-annual reports for Account (Fund), printing, mailing and distributing annual and
semi-annual reports for the Fund.
- ----------------------------------------------------------- --------------------------------------------------------
Text composition, printing, mailing, distributing, and Text composition, printing, mailing, distributing and
tabulation of proxy statements and voting instruction tabulation of proxy statements and voting instruction
solicitation materials to policy owners with respect to solicitation materials to policy owners with respect to
proxies related to the Account proxies related to the Fund
- ----------------------------------------------------------- --------------------------------------------------------
Preparation, printing and distributing sales material and Preparation, printing and distributing sales material
advertising relating to the Funds contained in contract and advertising relating to the Funds and filing such
advertising and sales materials and filing such materials materials with and obtaining approval from, the SEC,
with and obtaining approval from, the SEC, the NASD, any the NASD, any state insurance regulatory authority,
state insurance regulatory authority, and any other and any other appropriate regulatory authority, to the
appropriate regulatory authority, to the extent required extent required
- ----------------------------------------------------------- --------------------------------------------------------
</TABLE>
March 13, 2000
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, VA 23230
Gentlemen:
With reference to Pre-Effective Amendment No. 1 to Form N-4 (File Number
333-96513) filed by GE Life and Annuity Assurance Company and GE Life & Annuity
Separate Account 4 with the Securities and Exchange Commission covering flexible
premium variable deferred annuity policies, I have examined such documents and
such law as I considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:
1. GE Life and Annuity Assurance Company is duly organized and validly
existing under the laws of the Commonwealth of Virginia and has been duly
authorized to issue individual flexible premium variable deferred annuity
policies by the Bureau of Insurance of the State Corporation Commission of
the Commonwealth of Virginia.
2. GE Life & Annuity Separate Account 4 is a duly authorized and existing
separate account established pursuant to the provisions of Section
38.2-3113 of the Code of Virginia.
3. The flexible premium variable deferred annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of The Life Insurance Company
of Virginia.
I hereby consent to the use of this letter, or copy thereof, as an exhibit to
Pre Effective Amendment No. 1 to the Registration Statement on Form N-4 (File
Number 333-96513) and the reference to me under the caption "Legal Matters" in
the Statement of Additional Information contained in said Pre-Effective
Amendment.
Sincerely,
/s/ Patricia L. Dysart
Patricia L. Dysart
Assistant Vice President and
Associate General Counsel
Law Department
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
March 13, 2000
GE Life and Annuity Assurance
Company
6610 West Broad Street
Richmond, VA 23230
Re: GE Life & Annuity Separate Account 4
Gentlemen:
We hereby consent to the reference to our name under the
caption "Legal Matters" in the Prospectus filed as part of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4 filed by GE Life &
Annuity Separate Account 4 for certain variable life insurance policies (File
No. 333-96513). In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
SUTHERLAND ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
------------------------------------
Stephen E. Roth
Exhibit 10(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
GE Life and Annuity Assurance Company
and
Contractholders
GE Life & Annuity Separate Account 4:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the Statement of Additional Information.
The report of KPMG LLP dated January 21, 2000 with respect to the consolidated
financial statements of GE Life and Annuity Assurance Company and subsidiary,
contains an explanatory paragraph that states that the Company changed its
method of accounting for insurance-related assessments in 1999.
/s/ KPMG LLP
Richmond, VA
March 13, 2000
