<PAGE>
As filed with the Securities and Exchange Commission on June 2, 2000
File No. 333-31172
File No. 811-05343
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 [X]
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
For Registration Under the Investment Company Act of 1940 [X]
Amendment No. 53
GE Life & Annuity Separate Account 4
(Exact Name of Registrant)
GE Life and Annuity Assurance Company
(Name of Depositor)
6610 W. Broad Street
Richmond, Virginia 23230
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (804) 281-6000
Patricia L. Dysart, Esquire
Assistant Vice President and Associate Counsel
GE Life And Annuity Assurance Company
6610 W. Broad Street
Richmond, Virginia 23230
(Name and address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
Title of Securities Being Registered: Interests in a Separate Account under
flexible premium variable annuity contracts.
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.
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<PAGE>
Prospectus For The
Flexible Premium Variable Deferred Annuity Contract
Form P1154 4/00
issued by:
GE Life and Annuity Assurance Company
Home Office:
6610 West Broad Street
Richmond, Virginia 23230
Telephone: (804) 281-6000
--------------------------------------------------------------------------------
This Prospectus describes a flexible premium variable deferred annuity contract
(the "Contract") for individuals and some qualified and nonqualified retirement
plans. GE Life and Annuity Assurance Company (the "Company," "we," "us," or
"our") issues the Contract.
The Contract offers you the accumulation of Contract Value and the payment of
periodic annuity benefits. We may pay these benefits on a variable or fixed
basis or a combination of both.
You may allocate your purchase payments to the Separate Account, the Guarantee
Account, or both. Each Subaccount of the Separate Account invests in shares of
the Funds. We list the Funds, and their currently available portfolios, below.
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund, AIM V.I. Growth Fund, AIM V.I. Value
Fund
Alliance Variable Products Series Fund, Inc.
Growth & Income Portfolio, Premier Growth Portfolio, Quasar Portfolio
Dreyfus
Dreyfus Investment Portfolios-Emerging Markets Portfolio, The Dreyfus
Socially Responsible Growth Fund, Inc.
Federated Insurance Series
Federated High Income Bond Fund II, Federated International Small Company
Fund II
Fidelity Variable Insurance Products Fund
VIP Equity-Income Portfolio, VIP Growth Portfolio
Fidelity Variable Insurance Products Fund II
VIP II Contrafund(R) Portfolio
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio, VIP III Mid Cap Portfolio
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund, Money Market Fund, Premier Growth Equity Fund,
S&P 500(R) Index Fund, Small-Cap Value Equity Fund, U.S. Equity Fund, Value
Equity Fund
Janus Aspen Series
Aggressive Growth Portfolio, Balanced Portfolio, Capital Appreciation
Portfolio, Global Life Sciences Portfolio, Global Technology Portfolio,
Growth Portfolio, International Growth Portfolio, Worldwide Growth Portfolio
MFS(R) Variable Insurance Trust
MFS(R) Growth Series, MFS(R) Growth With Income Series, MFS(R) New Discovery
Series, MFS(R) Utilities Series
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Growth &
Income Fund/VA
PIMCO Variable Insurance Trust
Foreign Bond Portfolio, High Yield Bond Portfolio, Long-Term U.S. Government
Bond Portfolio, Total Return Bond Portfolio
1
<PAGE>
Rydex Variable Trust
Rydex OTC Fund
Not all of these portfolios may be available in all states or in all
markets.
Except for amounts in the General Account, both the value of a Contract before
the Annuity Commencement Date and the amount of monthly income afterward will
depend upon the investment performance of the portfolio(s) you select. You bear
the investment risk of investing in the portfolios.
The Securities and Exchange Commission has not approved these securities or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Your investment in the Contract is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any government
agency.
This Prospectus gives details about the Separate Account and our Guarantee
Account that you should know before investing. Please read this Prospectus
carefully before investing and keep it for future reference.
A statement of additional information ("SAI"), dated , 2000, concerning
the Separate Account has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. If you would
like a free copy, call us at 1-800-352-9910. The SAI also is available on the
SEC's website at http://www.sec.gov. A table of contents for the SAI appears on
the last page of this Prospectus.
The date of this Prospectus is , 2000
2
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Definitions................................................................. 4
Expense Table............................................................... 6
Synopsis.................................................................... 21
Investment Results.......................................................... 24
Financial Statements........................................................ 25
GE Life and Annuity Assurance Company....................................... 26
The Separate Account........................................................ 27
The Guarantee Account....................................................... 35
Charges and Other Deductions................................................ 37
The Contract................................................................ 41
Transfers................................................................... 44
Surrenders and Withdrawals.................................................. 48
The Death Benefit........................................................... 50
Income Payments............................................................. 55
Federal Tax Matters......................................................... 59
Voting Rights............................................................... 68
Requesting Payments......................................................... 69
Distribution of the Contracts............................................... 70
Additional Information...................................................... 71
Condensed Financial Information............................................. 73
Appendix.................................................................... A-1
Statement of Additional Information--Table of Contents
</TABLE>
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
3
<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 -- GE Life & Annuity Separate Account 4, a separate
investment account we established to receive and invest the purchase payments
you make under the Contract, and other variable annuity contracts we issue.
Accumulation Unit -- An accounting unit of measure we use in calculating the
Contract Value in the Account before the Annuity Commencement Date.
Annuitant/Joint Annuitant -- The Annuitant is the person(s) named in the
Contract upon whose age and, where appropriate, gender, we determine monthly
income benefits.
Annuity Commencement Date -- The date stated in the Contract on which your
income payments will commence, if any Annuitant is living on that date.
Annuity Unit -- An accounting unit of measure we use in the calculation of the
amount of the second and each subsequent variable income payment.
Contract Date -- The date we issue your Contract and your Contract becomes
effective. Your Contract Date is shown in your Contract. We use it to determine
Contract years and anniversaries.
Contract Value -- The value of the Contract equal to the amount allocated to
the Subaccounts of the Account and the Guarantee Account.
Death Benefit -- The benefit provided under a Contract upon the death of any
Annuitant before the Annuity Commencement Date.
Designated Beneficiary(ies) -- The person(s) designated in the Contract who is
alive (or in existence for non-natural entities) on the date of any Annuitant's
death and who we will treat as the sole owner of the Contract following such a
death.
Fund -- Any open-end management investment company or any unit investment trust
in which a Subaccount invests.
General Account -- Our assets that are not segregated in any of our separate
investment accounts.
Guarantee Account -- Part of our General Account that provides a guaranteed
interest rate for a specified interest rate guarantee period. This account is
not part of and does not depend on the investment performance of the Separate
Account.
Owner -- The person or persons (in the case of Joint Owners) entitled to
receive income payments after the Annuity Commencement Date. During the
lifetime of the
4
<PAGE>
Annuitant, the Owner also is entitled to the ownership rights stated in the
Contract and is shown on the Contract data pages and in any application. "You"
or "your" refers to the Owner or Joint Owners.
Subaccount -- A subdivision of the Separate Account, each of which invests
exclusively in shares of a designated portfolio of one of the Funds. Not all
Subaccounts may be available in all states or in all markets.
Surrender Value -- The Contract Value (after deduction of any applicable
optional benefit charges and annual contract charge) less any applicable
surrender charge and any applicable premium tax charge.
Valuation Day -- For each Subaccount, each day on which the New York Stock
Exchange is open for regular trading except for days that the Subaccount's
corresponding Fund does not value its shares.
Valuation Period -- The period that starts at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next succeeding Valuation Day.
5
<PAGE>
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 Subaccounts of the 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 Fund prospectuses. Premium tax
charges also may apply, although they do not appear in the table. In addition,
we reserve the right to impose a transfer charge of up to $10, although we do
not currently do so.
<TABLE>
<S> <C>
Owner Transaction Expenses:
The maximum surrender charge (as a percentage of each purchase
payment surrendered/withdrawn):..................................... 6%
We reduce the surrender charge percentage over time. In general, the
later you surrender or withdraw a purchase payment, the lower the
surrender charge will be on that purchase payment.
(Note: During each Contract year, up to 10% of purchase payments plus
any gain may be withdrawn without the imposition of the surrender
charge. See Surrender Charge.)
Annual Expenses (as a percentage of Contract Value):
</TABLE>
<TABLE>
<CAPTION>
Annuitant &
Joint Annuitant Either Annuitant
Age 70 or Less Above Age 70 at
at Issue Issue
-------------------------------------------------------------------------
<S> <C> <C>
Maximum Mortality and Expense Risk
Charge................................ 1.35% 1.55%
Maximum Administrative Expense Charge.. .15% .15%
---- ----
Total Maximum Annual Expenses.......... 1.50% 1.70%
</TABLE>
<TABLE>
<S> <C>
Other Annual Expenses:
Annual Contract Charge............................................ $30*
Maximum Optional Death Benefit Charge (annual rate as a percentage
of Contract Value)............................................... .25%**
</TABLE>
* We do not assess this charge if your Contract Value at the time the charge
is due is more than $40,000.
** If the Optional Death Benefit applies.
6
<PAGE>
PORTFOLIO ANNUAL EXPENSES
Annual expenses of the portfolios of the Funds for the year ended December
31, 1999 (as a percentage of each portfolio's average net assets):
<TABLE>
<CAPTION>
Management Other
Fees (after fee Expenses (after Total
waiver, as 12b-1 Service reimbursement, Annual
Portfolio applicable) Fees* Fees** as applicable) Expenses
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund... 0.62 -- -- 0.11 0.73
AIM V.I. Growth Fund................. 0.63 -- -- 0.10 0.73
AIM V.I. Value Fund.................. 0.61 -- -- 0.16 0.77
Alliance Variable Products Series
Fund, Inc./1/
Growth & Income Portfolio -- Class B
Shares.............................. 0.63 0.25 -- 0.09 0.97
Premier Growth Portfolio -- Class B
Shares.............................. 1.00 0.25 -- 0.04 1.29
Quasar Portfolio -- Class B Shares... 0.81 0.25 -- 0.14 1.20
Dreyfus
Dreyfus Emerging Markets Portfolio... 1.25 -- -- 0.25 1.50
The Dreyfus Socially Responsible
Growth Portfolio, Inc............... 0.75 -- -- 0.04 0.79
Federated Insurance Series/2/
Federated High Income Bond Fund II--
Service Shares...................... 0.60 -- 0.10 0.19 0.89
Federated International Small Company
Fund II............................. 0.40 -- 0.10 1.00 1.50
Fidelity Variable Insurance Products
Fund VIP/3/
VIP Equity-Income Portfolio --
Service Class 2 Shares.............. 0.48 0.25 -- 0.10 0.83
VIP Growth Portfolio -- Service Class
2 Shares............................ 0.58 0.25 -- 0.10 0.93
Fidelity Variable Insurance Products
Fund VIP II/4/
VIP II Contrafund Portfolio --
Service Class 2 Shares.............. 0.58 0.25 -- 0.12 0.95
Fidelity Variable Insurance Products
Fund VIP III/5/
VIP III Growth & Income Portfolio--
Service
Class 2 Shares...................... 0.48 0.25 -- 0.13 0.86
VIP III Mid Cap Portfolio -- Service
Class 2 Shares...................... 0.57 0.25 -- 0.43 1.25
GE Investments Funds, Inc./6/
Mid-Cap Value Equity Fund............ 0.65 -- -- 0.06 0.71
Money Market Fund.................... 0.24 -- -- 0.06 0.30
Premier Growth Equity Fund........... 0.65 -- -- 0.03 0.68
S&P 500 Index Fund................... 0.35 -- -- 0.04 0.39
Small-Cap Value Equity Fund.......... 0.80 -- -- 0.13 0.93
U.S. Equity Fund..................... 0.55 -- -- 0.06 0.61
Value Equity Fund.................... 0.65 -- -- 0.13 0.78
Janus Aspen Series/7/
Aggressive Growth Portfolio --
Service Shares...................... 0.65 0.25 -- 0.02 0.92
Balanced Portfolio -- Service
Shares.............................. 0.65 0.25 -- 0.02 0.92
Capital Appreciation Portfolio --
Service Shares...................... 0.65 0.25 -- 0.04 0.94
Global Life Sciences Portfolio --
Service Shares...................... 0.65 0.25 -- 0.19 1.09
Global Technology Portfolio --
Service Shares...................... 0.65 0.25 -- 0.13 1.03
Growth Portfolio -- Service Shares... 0.65 0.25 -- 0.02 0.92
International Growth Portfolio --
Service Shares...................... 0.65 0.25 -- 0.11 1.01
Worldwide Growth Portfolio -- Service
Shares.............................. 0.65 0.25 -- 0.05 0.95
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Management Fees Other
(after fee Expenses (after Total
waiver, as 12b-1 Service reimbursement, Annual
Portfolio applicable) Fees* Fees** as applicable) Expenses
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Variable
Insurance Trust/8/
MFS(R) Growth Series --
Service Class Shares.. 0.75 0.20 -- 0.16 1.11
MFS(R) Growth with
Income Series--
Service Class Shares.. 0.75 0.20 -- 0.13 1.08
MFS(R) New Discovery
Series -- Service
Class Shares.......... 0.90 0.20 -- 0.17 1.27
MFS(R) Utilities Series
-- Service Class
Shares................ 0.75 0.20 -- 0.16 1.11
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA--
Service Shares........ 0.67 0.15 -- 2.00 0.87
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares................ 0.73 0.15 -- 0.05 0.93
PIMCO Variable Insurance
Trust/9/
Foreign Bond Portfolio
-- Administrative
Shares................ 0.25 -- 0.15 0.70 1.10
High Yield Bond
Portfolio --
Administrative
Shares................ 0.25 -- 0.15 0.35 0.75
Long-Term U.S.
Government Bond
Portfolio --
Administrative
Shares................ 0.25 -- 0.15 0.25 0.65
Total Return Bond
Portfolio --
Administrative
Shares................ 0.25 -- 0.15 0.25 0.65
Rydex Variable Trust
Rydex OTC Fund......... 0.75 -- 0.25 0.55 1.55
</TABLE>
* The 12b-1 fees deducted from the 12b-1 classes of these portfolios cover
certain distribution and shareholder support services provided by the
companies selling contracts investing in those portfolios. The portion of the
12b-1 fees assessed against the Separate Account's assets related to the
portfolios will be remitted to Capital Brokerage Corporation, the principal
underwriter for the Contracts.
** The Service Share fees deducted from the service shares of these portfolios
cover certain administrative services provided by companies selling
contracts investing in those portfolios. The portion of the Service Share
fees assessed against the Separate Account's assets related to the
portfolios will be remitted to GE Life & Annuity.
/1/Alliance.Variable Products Series Fund, Inc. has voluntarily agreed to
reduce or limit certain other expenses. Absent these waivers total annual
expenses during 1999 would have been 1.44% for the Quasar Portfolio,
consisting of 1.00% management fees, .25% 12b-1 fee and .19% other expenses.
/2/Federated.Insurance Series, Inc. has voluntarily agreed to reduce or limit
certain other expenses. Absent these waivers total annual expenses during
1999 would have been 1.04% for the High Income Bond Fund II, consisting of
.60% management fees, .25% service fees and .19% other expenses; total
annual expenses of 2.50% for International Small Company Fund II, consisting
of 1.25% management fee, 1.00% service fee and .25% other expenses.
/3/The.expenses of the portfolios of the Variable Insurance Products Fund (VIP)
- Service Class 2, are based on the estimated expenses that those portfolios
expect to incur in their initial fiscal year.
8
<PAGE>
/4/The.expenses of the portfolios of the Variable Insurance Products Fund II
(VIP II) - Service Class 2, are based on the estimated expenses that those
portfolios expect to incur in their initial fiscal year.
/5/The.expenses of the portfolios of the Variable Insurance Products Fund III
(VIP III) - Service Class 2, are based on the estimated expenses that those
portfolios expect to incur in their initial fiscal year.
/6/GE.Asset Management Incorporated currently serves as investment advisor to
GE Investments Funds, Inc. (except for GE Small-Cap Value and Value Equity
Funds) and has agreed to waive a portion of the fee payable by the Fund.
Absent this fee waiver, the total annual expenses of the GE Money Market
Fund would have been .50%, consisting of .44% management fees and .06% other
expenses; GE Premier Growth Equity Fund would have been .72% total annual
expenses, consisting of .65% management fees and .07% other expenses.
Expenses for the Small-Cap Value Equity and the Value Equity Funds are
estimated due to the portfolios being in existence for less than 10 months.
/7/Janus.Aspen Series expenses (except for Global Technology and Global Life
Sciences Portfolios) are based upon expenses for the fiscal year ended
December 31, 1999, restated to reflect a reduction in the management fees
for Growth, Aggressive Growth, Capital Appreciation, International Growth,
Worldwide Growth and Balanced. Expenses for Global Technology and Global
Life Sciences Portfolios are based on the estimated expenses that those
portfolios expect to incur in their initial fiscal year. All expenses are
shown without the effect of expense offset arrangements.
/8/Absent.certain fee waivers or reimbursements, the total annual expenses of
the portfolios of MFS Variable Insurance Trust during 1999 would have been
total annual expenses of 1.66% for the Growth Series, consisting of .75%
management fees, .20% 12b-1 fee and .71% other expenses; total annual
expenses of 2.69% for the New Discovery Series, consisting of .90%
management fees, .20% 12b-1 fees and 1.59% other expenses.
9
<PAGE>
/9/Absent.certain fee waivers or reimbursements, the total annual expenses of
the portfolios of the PIMCO Variable Insurance Trust during 1999 would have
been total annual expenses of 1.25% for the Foreign Bond Portfolio,
consisting of .25% management fees, .15% service fee and .85% other
expenses; total annual expenses of .71% for the Long-Term U.S. Government
Bond Portfolio, consisting of .25% management fees, .15% service fees and
.31% other expenses; total annual expenses of .69% for Total Return Bond
Portfolio, consisting of .25% management fees, .15% service fees and .29%
other expenses.
PIMCO Foreign Bond Portfolio has contractually agreed to reduce total annual
portfolio operating expenses for the Administrative Class shares to the
extent they would exceed, due to the payment of organizational expenses and
Trustees' fee, 0.90% of average daily net assets. Under the Expense
Limitation Agreement, PIMCO may recoup these waivers and reimbursements in
future periods, not exceeding three years, provided total expenses, including
such recoupment, do not exceed the annual expense limit.
10
<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 of the Funds for the year ended December 31,
1999 (shown above in Portfolio Annual Expenses), and assume that the applicable
fee waiver and reimbursements will continue. We cannot guarantee that they will
continue. The Janus Global Life Sciences portfolio and Global Technology
portfolio did not exist as of December 31, 1999; therefore the expenses for
these portfolios are based on the estimated expenses that the portfolios expect
to incur in their initial fiscal year. The examples assume that the $30 annual
contract charge is equivalent to 0.1% of Contract Value attributable to the
hypothetical investment (this charge will be waived if the Contract Value is
more than $40,000 at the time the charge is due). To the extent the examples
reflect charges for the optional Death Benefit, the examples assume that the
maximum charges apply. The examples also assume that the maximum mortality and
expense risk charge and the maximum administrative expense charge apply.
* * *
EXAMPLES: An Owner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Expense Table above:
1. If you surrender* your Contract at the end of the applicable period
(assuming each Annuitant is age 70 or younger at issue):
<TABLE>
<CAPTION>
Without Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund.... 77.61 126.74 169.53 266.60
AIM V.I. Growth Fund.................. 77.61 126.74 169.53 266.60
AIM V.I. Value Fund................... 77.91 127.65 171.04 269.62
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio............. 80.01 133.95 181.54 290.49
Premier Growth Portfolio.............. 83.20 143.48 197.32 321.40
Quasar Portfolio...................... 82.31 140.81 192.91 312.81
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio..................... 85.29 149.68 207.53 341.10
The Dreyfus Socially Responsible
Growth Fund, Inc..................... 78.21 128.55 172.55 272.63
Federated Insurance Series
Federated High Income Bond Fund II.... 79.01 130.95 176.55 280.61
Federated International Small Company
Fund II.............................. 85.29 149.68 207.53 341.10
Fidelity Varible Insurance Products
Fund
VIP Equity-Income Portfolio........... 78.61 129.75 174.55 276.63
VIP Growth Portfolio.................. 79.61 132.75 179.55 286.55
Fidelity Variable Insurance Products
Fund II
VIP II Contrafund Portfolio........... 79.81 133.35 180.54 288.52
Fidelity Varible Insurance Products
Fund III
VIP III Growth & Income Portfolio..... 78.91 130.65 176.05 279.62
VIP III Mid Cap Portfolio............. 82.81 142.29 195.36 317.59
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Without Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund............. 77.41 126.14 168.52 264.58
Money Market Fund..................... 73.29 113.70 147.64 222.21
Premier Growth Equity Fund............ 77.11 125.23 167.01 261.54
S&P 500 Index Fund.................... 74.20 116.44 152.26 231.67
Small Cap Value Equity Fund........... 79.61 132.75 179.55 286.55
U.S. Equity Fund...................... 76.41 123.12 163.47 254.42
Value Equity Fund..................... 78.11 128.25 172.04 271.63
Janus Aspen Series
Aggressive Growth Portfolio........... 79.51 132.45 179.05 285.56
Balanced Portfolio.................... 79.51 132.45 179.05 285.56
Capital Appreciation Portfolio........ 79.71 133.05 180.04 287.54
Global Life Sciences Portfolio........ 81.21 137.53 187.49 302.21
Global Technology Portfolio........... 80.61 135.74 184.52 296.37
Growth Portfolio...................... 79.51 132.45 179.05 285.56
International Growth Portfolio........ 80.41 135.14 183.52 294.41
Worldwide Growth Portfolio............ 79.81 133.35 180.54 288.52
MFS Varible Insurance Trust
MFS Growth Series..................... 81.41 138.13 188.47 304.15
MFS Growth with Income Series......... 81.11 137.23 186.99 301.24
MFS New Discovery Series.............. 83.01 142.88 196.34 319.50
MFS Utilities Series.................. 81.41 138.13 188.47 304.15
Oppenheimer Variable Account Funds
Oppenheimer Global Securities
Fund/VA.............................. 77.61 126.74 169.53 266.60
Oppenheimer Main Street Growth &
Income Fund/VA....................... 79.61 132.75 179.55 286.55
PIMCO Variable Insurance Trust
Foreign Bond Portfolio................ 81.31 137.83 187.98 303.18
High Yield Bond Portfolio............. 77.81 127.34 170.54 268.61
Long-Term U. S. Government Bond
Portfolio............................ 76.81 124.33 165.49 258.49
Total Return Bond Portfolio........... 76.81 124.33 165.49 258.49
Rydex Variable Trust
Rydex OTC Fund........................ 85.79 151.15 209.95 345.73
* surrender includes annuitization over a period of less than 5 years
2. If you annuitize at the end of the applicable period, or do not surrender
(assuming each Annuitant is age 70 or younger at issue)*:
<CAPTION>
Without Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund.... 23.61 72.74 124.53 266.60
AIM V.I. Growth Fund.................. 23.61 72.74 124.53 266.60
AIM V.I. Value Fund................... 23.91 73.65 126.04 269.62
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio............. 26.01 79.95 136.54 290.49
Premier Growth Portfolio.............. 29.20 89.48 152.32 321.40
Quasar Portfolio...................... 28.31 86.81 147.91 312.81
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio..................... 31.29 95.68 162.53 341.10
The Dreyfus Socially Responsible
Growth Fund, Inc. ................... 24.21 74.55 127.55 272.63
Federated Insurance Series
Federated High Income Bond Fund II.... 25.01 76.95 131.55 280.61
Federated International Small Company
Fund II.............................. 31.29 95.68 162.53 341.10
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Without Optional Death Benefit
Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Variable Insurance Products Fund
VIP Equity-Income Portfolio................... 24.61 75.75 129.55 276.63
VIP Growth Portfolio.......................... 25.61 78.75 134.55 286.55
Fidelity Variable Insurance Products Fund II
VIP II Contrafund Portfolio................... 25.81 79.35 135.54 288.52
Fidelity Variable Insurance Products Fund III
VIP III Growth & Income Portfolio............. 24.91 76.65 131.05 279.62
VIP III Mid Cap Portfolio..................... 28.81 88.29 150.36 317.59
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund..................... 23.41 72.14 123.52 264.58
Money Market Fund............................. 19.29 59.70 102.64 222.21
Premier Growth Equity Fund.................... 23.11 71.23 122.01 261.54
S&P 500 Index Fund............................ 20.20 62.44 107.26 231.67
Small Cap Value Equity Fund................... 25.61 78.75 134.55 286.55
U.S. Equity Fund.............................. 22.41 69.12 118.47 254.42
Value Equity Fund............................. 24.11 74.25 127.04 271.63
Janus Aspen Series
Aggressive Growth Portfolio................... 25.51 78.45 134.05 285.56
Balanced Portfolio............................ 25.51 78.45 134.05 285.56
Capital Appreciation Portfolio................ 25.71 79.05 135.04 287.54
Global Life Sciences Portfolio................ 26.41 81.14 138.52 294.41
Global Technology Portfolio................... 27.21 83.53 142.49 302.21
Growth Portfolio.............................. 26.61 81.74 139.52 296.37
International Growth Portfolio................ 25.51 78.45 134.05 285.56
Worldwide Growth Portfolio.................... 25.81 79.35 135.54 288.52
MFS Variable Insurance Trust
MFS Growth Series............................. 27.41 84.13 143.47 304.15
MFS Growth with Income Series................. 27.11 83.23 141.99 301.24
MFS New Discovery Series...................... 29.01 88.88 151.34 319.50
MFS Utilities Series.......................... 27.41 84.13 143.47 304.15
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA......... 23.61 72.74 124.53 266.60
Oppenheimer Main Street Growth & Income
Fund/VA...................................... 25.61 78.75 134.55 286.55
PIMCO Variable Insurance Trust
Foreign Bond Portfolio........................ 27.31 83.83 142.98 303.18
High Yield Portfolio.......................... 23.81 73.34 125.54 268.61
Long-Term U. S. Government Bond Portfolio..... 22.81 70.33 120.49 258.49
Total Return Bond Portfolio................... 22.81 70.33 120.49 258.49
Rydex Variable Trust
Rydex OTC Fund................................ 31.79 97.15 164.95 345.73
</TABLE>
* surrender includes annuitization over a period of less than 5 years
13
<PAGE>
3. If you surrender* your Contract at the end of the applicable period
(assuming each Annuitant is Age 70 or younger at issue):
<TABLE>
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund........ 80.11 134.25 182.03 291.47
AIM V.I. Growth Fund...................... 80.11 134.25 182.03 291.47
AIM V.I. Value Fund....................... 80.41 135.14 183.52 294.41
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio................. 82.51 141.40 193.89 314.73
Premier Growth Portfolio.................. 85.69 150.86 209.47 344.81
Quasar Portfolio.......................... 84.80 148.21 205.11 336.45
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio......................... 87.78 157.01 219.55 363.98
The Dreyfus Socially Responsible Growth
Fund, Inc................................ 80.71 136.04 185.01 297.34
Federated Insurance Series
Federated High Income Bond Fund II........ 81.51 138.43 188.97 305.11
Federated International Small Company Fund
II....................................... 87.78 157.01 219.55 363.98
Fidelity Varible Insurance Products Fund
VIP Equity-Income Portfolio............... 81.11 137.23 186.99 301.24
VIP Growth Portfolio...................... 82.11 140.21 191.92 310.89
Fidelity Variable Insurance Products Fund
II
VIP II Contrafund Portfolio............... 82.31 140.81 192.91 312.81
Fidelity Varible Insurance Products Fund
III
VIP III Growth & Income Portfolio......... 81.41 138.13 188.47 304.15
VIP III Mid Cap Portfolio................. 85.29 149.68 207.53 341.10
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund................. 79.91 133.65 181.04 289.51
Money Market Fund......................... 75.81 121.30 160.43 248.27
Premier Growth Equity Fund................ 79.61 132.75 179.55 286.55
S&P 500 Index Fund........................ 76.71 124.02 164.99 257.48
Small Cap Value Equity Fund............... 82.11 140.21 191.92 310.89
U.S. Equity Fund.......................... 78.91 130.65 176.05 279.62
Value Equity Fund......................... 80.61 135.74 184.52 296.37
Janus Aspen Series
Aggressive Growth Portfolio............... 82.01 139.91 191.43 309.93
Balanced Portfolio........................ 82.01 139.91 191.43 309.93
Capital Appreciation Portfolio............ 82.21 140.51 192.41 311.86
Global Life Sciences Portfolio............ 83.70 144.96 199.76 326.13
Global Technology Portfolio............... 83.11 143.18 196.83 320.45
Growth Portfolio.......................... 82.01 139.91 191.43 309.93
International Growth Portfolio............ 82.91 142.59 195.85 318.55
Worldwide Growth Portfolio................ 82.31 140.81 192.91 312.81
MFS Variable Insurance Trust
MFS Growth Series......................... 83.90 145.55 200.74 328.02
MFS Growth with Income Series............. 83.60 144.66 199.27 325.19
MFS New Discovery Series.................. 85.49 150.27 208.50 342.96
MFS Utilities Series...................... 83.90 145.55 200.74 328.02
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA..... 80.11 134.25 182.03 291.47
Oppenheimer Main Street Growth & Income
Fund/VA.................................. 82.11 140.21 191.92 310.89
PIMCO Variable Insurance Trust
Foreign Bond.............................. 83.80 145.25 200.25 327.07
High Yield Bond Portfolio ................ 80.31 134.85 183.03 293.43
Long-Term U. S. Government Bond
Portfolio................................ 79.31 131.85 178.05 283.59
Total Return Bond Portfolio............... 79.31 131.85 178.05 283.59
Rydex Variable Trust
Rydex OTC Fund............................ 88.27 158.47 221.93 368.48
</TABLE>
* surrender includes annuitization over a period of less than 5 years
14
<PAGE>
4. If you annuitize at the end of the applicable period, or you do not
surrender (assuming each Annuitant is age 70 or younger at issue)*:
<TABLE>
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund........ 26.11 80.25 137.03 291.47
AIM V.I. Growth Fund...................... 26.11 80.25 137.03 291.47
AIM V.I. Value Fund....................... 26.41 81.14 138.52 294.41
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio................. 28.51 87.40 148.89 314.73
Premier Growth Portfolio.................. 31.69 96.86 164.47 344.81
Quasar Portfolio.......................... 30.80 94.21 160.11 336.45
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio......................... 33.78 103.01 174.55 363.98
The Dreyfus Socially Responsible Growth
Fund, Inc................................ 26.71 82.04 140.01 297.34
Federated Insurance Series
Federated High Income Bond Fund II........ 27.51 84.43 143.97 305.11
Federated International Small Company Fund
II....................................... 33.78 103.01 174.55 363.98
Fidelity Variable Insurance Products Fund
VIP Equity-Income Portfolio............... 27.11 83.23 141.99 301.24
VIP Growth Portfolio...................... 28.11 86.21 146.92 310.89
Fidelity Variable Insurance Products Fund
II
VIP II Contrafund Portfolio............... 28.31 86.81 147.91 312.81
Fidelity Variable Insurance Products Fund
III
VIP III Growth & Income Portfolio......... 27.41 84.13 143.47 304.15
VIP III Mid Cap Portfolio................. 31.29 95.68 162.53 341.10
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund................. 25.91 79.65 136.04 289.51
Money Market Fund......................... 21.81 67.30 115.43 248.27
Premier Growth Equity Fund................ 25.61 78.75 134.55 286.55
S&P 500 Index Fund........................ 22.71 70.02 119.99 257.48
Small Cap Value Equity Fund............... 28.11 86.21 146.92 310.89
U.S. Equity Fund.......................... 24.91 76.65 131.05 279.62
Value Equity Fund......................... 26.61 81.74 139.52 296.37
Janus Aspen Series
Aggressive Growth Portfolio............... 28.01 85.91 146.43 309.93
Balanced Portfolio........................ 28.01 85.91 146.43 309.93
Capital Appreciation Portfolio............ 28.21 86.51 147.41 311.86
Global Life Sciences Portfolio............ 29.70 90.96 154.76 326.13
Global Technology Portfolio............... 29.11 89.18 151.83 320.45
Growth Portfolio.......................... 28.01 85.91 146.43 309.93
International Growth Portfolio............ 28.91 88.59 150.85 318.55
Worldwide Growth Portfolio................ 28.31 86.81 147.91 312.81
MFS Variable Insurance Trust
MFS Growth Series......................... 29.90 91.55 155.74 328.02
MFS Growth with Income Series............. 29.60 90.66 154.27 325.19
MFS New Discovery Series.................. 31.49 96.27 163.50 342.96
MFS Utilities Series...................... 29.90 91.55 155.74 328.02
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA..... 26.11 80.25 137.03 291.47
Oppenheimer Main Street Growth & Income
Fund/VA.................................. 28.11 86.21 146.92 310.89
PIMCO Variable Insurance Trust
Foreign Bond Portfolio.................... 29.80 91.25 155.25 327.07
High Yield Portfolio...................... 26.31 80.85 138.03 293.43
Long-Term U. S. Government Bond
Portfolio................................ 25.31 77.85 133.05 283.59
Total Return Bond Portfolio............... 25.31 77.85 133.05 283.59
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rydex Variable Trust
Rydex OTC Fund............................. 34.27 104.47 176.93 368.48
</TABLE>
* surrender includes annuitization over a period of less than 5 years
5. If you surrender* your Contract at the end of the applicable period
(assuming either Annuitant is over age 70 at issue):
<TABLE>
<CAPTION>
Without
Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund............ 79.61 132.75 179.55 286.55
AIM V.I. Growth Fund.......................... 79.61 132.75 179.55 286.55
AIM V.I. Value Fund........................... 79.91 133.65 181.04 289.51
Alliance Variable Products Series Fund, Inc.
Growth & Income Portfolio..................... 82.01 139.91 191.43 309.93
Premier Growth Portfolio...................... 85.20 149.38 207.05 340.18
Quasar Portfolio.............................. 84.30 146.73 202.68 331.78
Dreyfus
Dreyfus Investment Portfolios-Emerging Markets
Porfolio..................................... 87.28 155.55 217.16 359.45
The Dreyfus Socially Responsible Growth Fund,
Inc.......................................... 80.21 134.55 182.53 292.45
Federated Insurance Series
Federated High Income Bond Fund II............ 81.01 136.94 186.50 300.27
Federated International Small Company Fund
II........................................... 87.28 155.55 217.16 359.45
Fidelity Varible Insurance Products Fund
VIP Equity-Income Portfolio................... 80.61 135.74 184.52 296.37
VIP Growth Portfolio.......................... 81.61 138.72 189.46 306.08
Fidelity Variable Insurance Products Fund II
VIP II Contrafund Portfolio................... 81.81 139.32 190.45 308.01
Fidelity Varible Insurance Products Fund III
VIP III Growth & Income Portfolio............. 80.91 136.64 186.00 299.29
VIP III Mid Cap Portfolio..................... 84.80 148.21 205.11 336.45
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund..................... 79.41 132.15 178.55 284.58
Money Market Fund............................. 75.30 119.78 157.88 243.11
Premier Growth Equity Fund.................... 79.11 131.25 177.05 281.60
S&P 500 Index Fund............................ 76.21 122.51 162.46 252.37
Small Cap Value Equity Fund................... 81.61 138.72 189.46 306.08
U.S. Equity Fund.............................. 78.41 129.15 173.55 274.63
Value Equity Fund............................. 80.11 134.25 182.03 291.47
Janus Aspen Series
Aggressive Growth Portfolio................... 81.51 138.43 188.97 305.11
Balanced Portfolio............................ 81.51 138.43 188.97 305.11
Capital Appreciation Portfolio................ 81.71 139.02 189.95 307.04
Global Life Sciences Portfolio................ 83.20 143.48 197.32 321.40
Global Technology Portfolio................... 82.61 141.70 194.38 315.68
Growth Portfolio.............................. 81.51 138.43 188.97 305.11
International Growth Portfolio................ 82.41 141.10 193.40 313.77
Worldwide Growth Portfolio.................... 81.81 139.32 190.45 308.01
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Without Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Variable Insurance Trust
MFS Growth Series..................... 83.40 144.07 198.30 323.29
MFS Growth with Income Series......... 83.11 143.18 196.83 320.45
MFS New Discovery Series.............. 85.00 148.79 206.08 338.32
MFS Utilities Series
Oppenheimer Variable Account Funds
Oppenheimer Global Securities
Fund/VA.............................. 79.61 132.75 179.55 286.55
Oppenheimer Main Street Growth &
Income Fund/VA....................... 81.61 138.72 189.46 306.08
PIMCO Variable Insurance Trust
Foreign Bond Portifolio............... 83.30 143.77 197.81 322.35
High Yield Portfolio.................. 79.81 133.35 180.54 288.52
Long-Term U. S. Government Bond
Portfolio............................ 78.81 130.35 175.55 278.62
Total Return Bond Portfolio........... 78.81 130.35 175.55 278.62
Rydex Variable Trust
Rydex OTC Fund........................ 87.78 157.01 219.55 363.98
* surrender includes annuitization over a period of less than 5 years
</TABLE>
6. If you annuitize at the end of the applicable period, or do not surrender
(assuming either Annuitant is over age 70 at issue)*:
<TABLE>
<CAPTION>
Without Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund.... 25.61 78.75 134.55 286.55
AIM V.I. Growth Fund.................. 25.61 78.75 134.55 286.55
AIM V.I. Value Fund................... 25.91 79.65 136.04 289.51
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio............. 28.01 85.91 146.43 309.93
Premier Growth Portfolio.............. 31.20 95.38 162.05 340.18
Quasar Portfolio...................... 30.30 92.73 157.68 331.78
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio..................... 33.28 101.55 172.16 359.45
The Dreyfus Socially Responsible
Growth Fund, Inc. ................... 26.21 80.55 137.53 292.45
Federated Insurance Series
Federated High Income Bond Fund II.... 27.01 82.94 141.50 300.27
Federated International Small Company
Fund II.............................. 33.28 101.55 172.16 359.45
Fidelity Variable Insurance Products
Fund
VIP Equity-Income Portfolio........... 26.61 81.74 139.52 296.37
VIP Growth Portfolio.................. 27.61 84.72 144.46 306.08
Fidelity Variable Insurance Products
Fund II
VIP II Contrafund Portfolio........... 27.81 85.32 145.45 308.01
Fidelity Variable Insurance Products
Fund III
VIP III Growth & Income Portfolio..... 26.91 82.64 141.00 299.29
VIP III Mid Cap Portfolio............. 30.80 94.21 160.11 336.45
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund............. 25.41 78.15 133.55 284.58
Money Market Fund..................... 21.30 65.78 112.88 243.11
Premier Growth Equity Fund............ 25.11 77.25 132.05 281.60
S&P 500 Index Fund.................... 22.21 68.51 117.46 252.37
Small Cap Value Equity Fund........... 27.61 84.72 144.46 306.08
U.S. Equity Fund...................... 24.41 75.15 128.55 274.63
Value Equity Fund..................... 26.11 80.25 137.03 291.47
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Without Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Aspen Series
Aggressive Growth Portfolio........... 27.51 84.43 143.97 305.11
Balanced Portfolio.................... 27.51 84.43 143.97 305.11
Capital Appreciation Portfolio........ 27.71 85.02 144.95 307.04
Global Life Sciences Portfolio........ 29.20 89.48 152.32 321.40
Global Technology Portfolio........... 28.61 87.70 149.38 315.68
Growth Portfolio...................... 27.51 84.43 143.97 305.11
International Growth Portfolio........ 28.41 87.10 148.40 313.77
Worldwide Growth Portfolio............ 27.81 85.32 145.45 308.01
MFS Variable Insurance Trust
MFS Growth Series..................... 29.40 90.07 153.30 323.29
MFS Growth with Income Series......... 29.11 89.18 151.83 320.45
MFS New Discovery Series.............. 31.00 94.79 161.08 338.32
MFS Utilities Series.................. 29.40 90.07 153.30 323.29
Oppenheimer Variable Account Funds
Oppenheimer Global Securities
Fund/VA.............................. 25.61 78.75 134.55 286.55
Oppenheimer Main Street Growth &
Income Fund/VA....................... 27.61 84.72 144.46 306.08
PIMCO Variable Insurance Trust
Foreign Bond Portfolio................ 29.30 89.77 152.81 322.35
High Yield Portfolio.................. 25.81 79.35 135.54 288.52
Long-Term U. S. Government Bond
Portfolio............................ 24.81 76.35 130.55 278.62
Total Return Bond Portfolio........... 24.81 76.35 130.55 278.62
Rydex Variable Trust
Rydex OTC Fund........................ 33.78 103.01 174.55 363.98
* surrender includes annuitization over a period of less than 5 years
7. If you surrender* your Contract at the end of the applicable period
(assuming either Annuitant is over age 70 at issue):
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Funds... 82.11 140.21 191.92 310.89
AIM V.I. Growth Fund.................. 82.11 140.21 191.92 310.89
AIM V.I. Value Fund................... 82.41 141.10 193.40 313.77
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio............. 84.50 147.32 203.65 333.65
Premier Growth Portfolio.............. 87.68 156.72 219.07 363.08
Quasar Portfolio...................... 86.78 154.08 214.76 354.90
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio..................... 89.76 162.84 229.05 381.83
The Dreyfus Socially Responsible
Growth Fund, Inc. ................... 82.71 141.99 194.87 316.64
Federated Insurance Series
Federated High Income Bond Fund II.... 83.50 144.36 198.78 324.24
Federated International Small Company
Fund II.............................. 89.76 162.84 229.05 381.83
Fidelity Varible Insurance Products
Fund
VIP Equity-Income Portfolio........... 83.11 143.18 196.83 320.45
VIP Growth Portfolio.................. 84.10 146.14 201.71 329.90
Fidelity Variable Insurance Products
Fund II
VIP II Contrafund Portfolio........... 84.30 146.73 202.68 331.78
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Varible Insurance Products Fund
III
VIP III Growth & Income Portfolio......... 83.40 144.07 198.30 323.29
VIP III Mid Cap Portfolio................. 87.28 155.55 217.16 359.45
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund................. 81.91 139.62 190.94 308.97
Money Market Fund......................... 77.81 127.34 170.54 268.61
Premier Growth Equity Fund................ 81.61 138.72 189.46 306.08
S&P 500 Index Fund........................ 78.71 130.05 175.05 277.63
Small Cap Value Equity Fund............... 84.10 146.14 201.71 329.90
U.S. Equity Fund.......................... 80.91 136.64 186.00 299.29
Value Equity Fund......................... 82.61 141.70 194.38 315.68
Janus Aspen Series
Aggressive Growth Portfolio............... 84.00 145.84 201.22 328.96
Balanced Portfolio........................ 84.00 145.84 201.22 328.96
Capital Appreciation Portfolio............ 84.20 146.43 202.20 330.84
Global Life Sciences Portfolio............ 85.69 150.86 209.47 344.81
Global Technology Portfolio............... 85.10 149.09 206.56 339.25
Growth Portfolio.......................... 84.00 145.84 201.22 328.96
International Growth Portfolio............ 84.90 148.50 205.60 337.39
Worldwide Growth Portfolio................ 84.30 146.73 202.68 331.78
MFS Variable Insurance Trust
MFS Growth Series......................... 85.89 151.44 210.43 346.65
MFS Growth with Income Series............. 85.59 150.56 208.98 343.88
MFS New Discovery Series.................. 87.48 156.13 218.11 361.27
MFS Utilities Series...................... 85.89 151.44 210.43 346.65
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA..... 82.11 140.21 191.92 310.89
Oppenheimer Main Street Growth & Income
Fund/VA.................................. 84.10 146.14 201.71 329.90
PIMCO Variable Insurance Trust
Foreign Bond Portfolio.................... 85.79 151.15 209.95 345.73
High Yield Portfolio...................... 82.31 140.81 192.91 312.81
Long-Term U.S. Government Bond Portfolio.. 81.31 137.83 187.98 303.18
Total Return Bond Portfolio............... 81.31 137.83 187.98 303.18
Rydex Variable Trust
Rydex OTC Fund............................ 90.25 164.29 231.41 386.23
* surrender includes annuitization over a period of less than 5 years
8. If you annuitize at the end of the applicable period, or do not surrender
(assuming either Annuitant is over age 70 at issue)*:
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Funds....... 28.11 86.21 146.92 310.89
AIM V.I. Growth Fund...................... 28.11 86.21 146.92 310.89
AIM V.I. Value Fund....................... 28.41 87.10 148.40 313.77
Alliance Variable Products Series Fund,
Inc.
Growth & Income Portfolio................. 30.50 93.32 158.65 333.65
Premier Growth Portfolio.................. 33.68 102.72 174.07 363.08
Quasar Portfolio.......................... 32.78 100.08 169.76 354.90
Dreyfus
Dreyfus Investment Portfolios-Emerging
Markets Porfolio......................... 35.76 108.84 184.05 381.83
The Dreyfus Socially Responsible Growth
Fund, Inc................................ 28.71 87.99 149.87 316.64
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
With Optional Death Benefit Rider
Subaccount Investing In: 1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federated Insurance Series
Federated High Income Bond Fund II........ 29.50 90.36 153.78 324.24
Federated International Small Company Fund
II....................................... 35.76 108.84 184.05 381.83
Fidelity Variable Insurance Products Fund
VIP Equity-Income Portfolio............... 29.11 89.18 151.83 320.45
VIP Growth Portfolio...................... 30.10 92.14 156.71 329.90
Fidelity Variable Insurance Products Fund
II
VIP II Contrafund Portfolio............... 30.30 92.73 157.68 331.78
Fidelity Variable Insurance Products Fund
III
VIP III Growth & Income Portfolio......... 29.40 90.07 153.30 323.29
VIP III Mid Cap Portfolio................. 33.28 101.55 172.16 359.45
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund................. 27.91 85.62 145.94 308.97
Money Market Fund......................... 23.81 73.34 125.54 268.61
Premier Growth Equity Fund................ 27.61 84.72 144.46 306.08
S&P 500 Index Fund........................ 24.71 76.05 130.05 277.63
Small Cap Value Equity Fund............... 30.10 92.14 156.71 329.90
U.S. Equity Fund.......................... 26.91 82.64 141.00 299.29
Value Equity Fund......................... 28.61 87.70 149.38 315.68
Janus Aspen Series
Aggressive Growth Portfolio............... 30.00 91.84 156.22 328.96
Balanced Portfolio........................ 30.00 91.84 156.22 328.96
Capital Appreciation Portfolio............ 30.20 92.43 157.20 330.84
Global Life Sciences Portfolio............ 31.69 96.86 164.47 344.81
Global Technology Portfolio............... 31.10 95.09 161.56 339.25
Growth Portfolio.......................... 30.00 91.84 156.22 328.96
International Growth Portfolio............ 30.90 94.50 160.60 337.39
Worldwide Growth Portfolio................ 30.30 92.73 157.68 331.78
MFS Variable Insurance Trust
MFS Growth Series......................... 31.89 97.44 165.43 346.65
MFS Growth with Income Series............. 31.59 96.56 163.98 343.88
MFS New Discovery Series.................. 33.48 102.13 173.11 361.27
MFS Utilities Series...................... 31.89 97.44 165.43 346.65
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA..... 28.11 86.21 146.92 310.89
Oppenheimer Main Street Growth & Income
Fund/VA.................................. 30.10 92.14 156.71 329.90
PIMCO Variable Insurance Trust
Foreign Bond Portfolio.................... 31.79 97.15 164.95 345.73
Long-Term U.S. Government Bond Portfolio.. 27.31 83.83 142.98 303.18
High Yield Portfolio...................... 28.31 86.81 147.91 312.81
Total Return Bond Portfolio............... 27.31 83.83 142.98 303.18
Rydex Variable Trust
Rydex OTC Fund............................ 36.25 110.29 186.41 386.23
</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.
OTHER CONTRACTS
We offer other variable annuity contracts which also may invest in many of the
same Funds offered under the Contract. These contracts have different charges
that could affect their Subaccounts' performance, and they offer different
benefits.
20
<PAGE>
Synopsis
What type of Contract am I buying? The Contract is an individual flexible
premium variable deferred annuity contract. We may issue it as a contract
qualified ("Qualified Contract") under the Internal Revenue Code of 1986, as
amended (the "Code"), or as a contract that is not qualified under the Code
("Non-Qualified Contract"). This Prospectus only provides disclosure about the
Contract. Certain features described in this Prospectus may vary from your
Contract. See The Contract.
How does the Contract work? Once we approve your application, we will issue a
Contract to you. During the accumulation period, while you are paying in, you
can use your purchase payments to buy Accumulation Units in the Separate
Account or interests in the Guarantee Account. Should you decide to annuitize
(that is, change your Contract to a payout mode rather than an accumulation
mode) we will convert your Accumulation Units to Annuity Units. You can choose
a fixed or variable income payment. If you choose a variable income payment, we
will base your periodic income payment upon the number of Annuity Units to
which you became entitled at the time you decided to annuitize and on the value
of each unit on the date the payment is determined. See The Contract.
What are my variable investment choices? Through its 41 Subaccounts, the
Account uses your purchase payments to purchase shares, at your direction, in
one or more portfolios of the 13 Funds. In turn, each portfolio holds
securities consistent with its own particular investment objective. Amounts you
allocate to the Separate Account will reflect the investment performance of the
portfolios you select. You bear the risk of investment gain or loss. See The
Separate Account -- Subaccounts.
What is the Guarantee Account? We offer fixed investment choices through our
Guarantee Account. The Guarantee Account is part of our General Account and
pays interest at declared rates we guarantee for selected periods of time. We
also guarantee the principal, after deductions. Since the Guarantee Account is
part of the General Account, we assume the risk of investment gain or loss on
this amount. You may transfer value between the Guarantee Account and the
Separate Account subject to certain restrictions. See Transfers Before the
Annuity Commencement Date. The Guarantee Account may not be available in all
states or all markets.
What charges are associated with this Contract? Should you withdraw Contract
Value before your purchase payments have been in your Contract for six years,
we will assess a surrender charge of anywhere from 0% to 6%, depending upon how
many full years those payments have been in the Contract. We may waive the
surrender charge in certain circumstances. See Surrender Charge.
We assess annual charges in the aggregate at an effective annual rate of 1.50%
(1.70% for Contracts where either Annuitant was older than age 70 at issue)
against the daily net asset value of the Separate Account, including that
portion of the account attributable to your purchase payments. These charges
consist of a .15%
21
<PAGE>
administrative expense charge and a 1.35% (1.55% where either Annuitant was
older than age 70 at issue) mortality and expense risk charge. Additionally, we
may impose a $30 annual contract charge. We also charge for the optional Death
Benefit. For a complete discussion of all charges associated with the Contract,
See Charges and Other Deductions.
If your state assesses a premium tax with respect to your Contract, then at the
time your Contract incurs the tax (or at such other time as we may choose), we
will deduct those amounts from purchase payments or Contract Value, as
applicable. See Charges and Other Deductions and Deductions for Premium Taxes.
The portfolios also have certain expenses. These include management fees and
other expenses associated with the daily operation of each portfolio. See
Portfolio Annual Expenses. These expenses are more fully described in each
Fund's prospectus.
How much must I pay, and how often? Subject to certain minimum and maximum
payments, the amount and frequency of purchase payments are completely
flexible. See The Contract -- Purchase Payments.
How will my income payments be calculated? We will pay you a monthly income
beginning on the Annuity Commencement Date if the Annuitant is still living.
You may also decide to annuitize under one of the optional payment plans. We
will base your initial payment on Annuity Commencement Value and other factors.
See Income Payments.
What happens if an Annuitant dies before the Annuity Commencement Date? Before
the Annuity Commencement Date, if any Annuitant dies while the Contract is in
force, we will treat the Designated Beneficiary as the sole Owner of the
Contract, subject to certain distribution rules. We may pay a Death Benefit to
the Designated Beneficiary. You may elect to have your Designated Beneficiary
receive the basic Death Benefit or, for a fee, our optional Death Benefit. See
The Death Benefit.
May I Transfer Contract Value among Portfolios? Yes, but there may be limits on
how often you may do so. The minimum transfer amount is $100 or the entire
balance in the Subaccount if the transfer will leave a balance of less than
$100. See The Contract -- Transfers Before the Annuity Commencement Date and
Income Payments -- Transfers After the Annuity Commencement Date.
May I surrender the Contract or make a withdrawal? Yes, subject to Contract
requirements and to restrictions imposed under certain retirement plans.
If you surrender the Contract or make a withdrawal, we may assess a surrender
charge as discussed above. In addition, you may be subject to income tax and,
if you are younger than age 59 1/2 at the time of the surrender or withdrawal,
a 10% penalty
22
<PAGE>
tax. A surrender or a withdrawal may also be subject to withholding. See
Federal Tax Matters. A withdrawal may reduce the Death Benefit by the
proportion that the withdrawal (including any applicable surrender charge and
premium tax) reduces Contract Value. See The Death Benefit.
Do I get a free look at this Contract? Yes. You have the right to return the
Contract to us at our Home Office, and have us cancel the Contract within a
certain number of days (usually 10 days from the date you receive the Contract,
but some states require different periods).
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 your Contract Value plus
any charges we have deducted from 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, if
required by the law of your state, we will refund your purchase payments (less
any withdrawals previously taken). See Return Privilege.
When are my allocations effective? Within two business days after we have
received all of the information necessary to process your purchase order, we
will allocate your initial purchase payment directly to the Guarantee Account
and/or the Subaccounts you choose.
Where may I find more information about Accumulation Unit Values? The Condensed
Financial Information section at the end of this Prospectus provides more
information about Accumulation Unit Values.
23
<PAGE>
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, with or without surrender charges. Results
calculated without surrender charges will be higher. Total returns include the
reinvestment of all distributions of the portfolios. Total returns reflect Fund
charges and expenses and the maximum administrative expense charge. They assume
that the applicable mortality and expense risk charge is 1.35% (which is the
maximum mortality and expense risk charge that applies when each Annuitant is
age 70 or younger at issue). (The maximum mortality and expense risk charge
that applies when either Annuitant is older than age 70 at issue is 1.55%.)
They also assume that the $30 annual contract charge is equivalent to 0.1% of
Contract Value (this charge will be waived if the Contract Value is more than
$40,000 at the time the charge is due). Total returns do not reflect the
optional Death Benefit charge. They also do not reflect any premium taxes. See
the Appendix and the SAI for further information.
24
<PAGE>
Financial Statements
The consolidated financial statements for GE Life and Annuity Assurance
Company, and GE Life & Annuity Separate Account 4, are located in the SAI. If
you would like a free copy of the SAI, call 1-800-352-9910. Otherwise, the SAI
is available on the SEC's website at http://www.sec.gov.
25
<PAGE>
GE Life and Annuity Assurance Company
We are a stock life insurance company operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. We principally offer life insurance
and annuity contracts. 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
("Federal") and Phoenix Group Holdings, Inc. own the remainder. GE Capital
Assurance and Federal are indirectly owned by GE Financial Assurance Holdings,
Inc. which is a wholly-owned subsidiary of General Electric Capital Corporation
("GE Capital"). GE Capital, a New York corporation, is a diversified financial
services company whose subsidiaries consist of specialty insurance, equipment
management, and commercial and consumer financing businesses. GE Capital's
indirect parent, General Electric Company, founded more than one hundred years
ago by Thomas Edison, is the world's largest manufacturer of jet engines,
engineering plastics, medical diagnostic equipment, and large electric power
generation equipment.
GNA Corporation, a direct wholly owned subsidiary of GE Financial Assurance
Holdings, Inc., directly owns the stock of Capital Brokerage Corporation (the
principal underwriter for the 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.
26
<PAGE>
The 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 41 Subaccounts 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 among up to ten of the 41 Subaccounts available under the
Contract.
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 PORTFOLIOS
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. You may change your allocation without penalty or charges.
Each Fund is registered with the Securities and Exchange Commission as an open-
end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one
portfolio has no effect on the investment performance of any other portfolio.
Before choosing a Subaccount to allocate your net purchase payments and
Contract Value, carefully read the prospectus for each Fund, along with this
Prospectus. We summarize the investment objectives of each portfolio below.
There is no assurance that any of the portfolios will meet these objectives. We
do not guarantee any minimum value for the amounts allocated to the Separate
Account. You bear the investment risk of investing in the portfolios.
27
<PAGE>
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the
investment results of any other portfolio, even if the other portfolio has the
same investment adviser or manager, or if the other portfolio has a similar
name.
SUBACCOUNTS
We offer you a choice from among 41 Subaccounts, each of which invests in an
underlying portfolio of one of the Funds. You may allocate purchase payments to
up to ten Subaccounts plus the Guarantee Account at any one time.
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
----------------------------------------------------------------------------
<S> <C> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I. Capital The fund's investment AIM Advisors, Inc.
Appreciation Fund objective is growth of
capital. Invests principally
in common stocks, with
emphasis on medium and small-
sized growth companies. This
fund may invest up to 25% of
the value of the total assets
in foreign securities.
----------------------------------------------------------------------------
AIM V.I. Growth Fund The fund's investment AIM Advisors, Inc.
objective is to seek growth of
capital. Invests principally
in seasoned and better
capitalized companies
considered to have strong
earnings momentum. This fund
may invest up to 25% of the
value of the total assets in
foreign securities.
----------------------------------------------------------------------------
AIM V.I. Value Fund Seeks to achieve long-term AIM Advisors, Inc.
growth of capital. Income is a
secondary objective. Invests
principally in equity
securities judged by the
investment advisor of the fund
to be undervalued. This fund
may invest up to 25% of the
value of the total assets in
foreign securities.
----------------------------------------------------------------------------
Alliance Variable Products Series Fund
Growth & Income Portfolio Seeks reasonable current Alliance Capital
income and reasonable Management, L.P.
opportunity for appreciation
through investments primarily
in dividend-paying common
stocks of good quality. May
also invest in fixed-income
securities and convertible
securities.
----------------------------------------------------------------------------
Premier Growth Portfolio Seeks long term growth of Alliance Capital
capital by investing Management, L.P.
predominantly in the equity
securities of a limited number
of large, carefully selected,
high quality U.S. companies
judged likely to achieve
superior earnings growth.
----------------------------------------------------------------------------
Quasar Portfolio Seeks growth of capital by Alliance Capital
pursuing aggressive investment Management, L.P.
policies. This fund invests
based upon the potential for
capital appreciation and only
incidentally for current
income. The investment
policies are aggressive.
----------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
-----------------------------------------------------------------------------
<S> <C> <C>
Dreyfus
The Dreyfus Emerging Seeks long-term capital growth The Dreyfus
Markets Portfolio by investing primarily in the Corporation
stocks of companies organized,
or with a majority of its
assets or business, in
emerging market countries.
-----------------------------------------------------------------------------
The Dreyfus Socially Seeks to provide capital The Dreyfus
Responsible Growth Fund, growth, with current income as Corporation
Inc. a secondary goal by investing
primarily in the common stock
of companies that in the
opinion of the Fund's
management, meet traditional
investment standards and
conduct their business in a
manner that contributes to the
enhancement of the quality of
life in America.
-----------------------------------------------------------------------------
Federated Insurance Series
Federated High Income Seeks high current income by Federated
Bond investing primarily in a Investment
Fund II professionally managed, Management Company
diversified portfolio of fixed
income securities. Pursues
this objective by investing in
a diversified portfolio of
high-yield, lower-rated
corporate bonds (also known as
"junk bonds").
-----------------------------------------------------------------------------
Federated International Seeks to provide long-term Federated Global
Small Company Fund II growth of capital. Purses this Investment
objective by investing at Management Corp.
least 65% of its assets in
equity securities of foreign
companies that have a market
capitalization at the time of
purchase of $1.5 billion or
less.
-----------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund (VIP)
Equity-Income Portfolio Seeks reasonable income and Fidelity Management
will consider the potential & Research Company;
for capital appreciation. The (beginning January
fund also seeks a yield, which 1, 2001, FMR Co.,
exceeds the composite yield on Inc. will
the securities comprising the subadvise.)
S&P 500 by investing primarily
in income-producing equity
securities and by investing in
domestic and foreign issuers.
-----------------------------------------------------------------------------
Growth Portfolio Seeks capital appreciation by Fidelity Management
investing primarily in common & Research Company;
stocks of companies believed (beginning January
to have above-average growth 1, 2001, FMR Co.,
potential. Inc. will
subadvise.)
-----------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II (VIP II)
Contrafund(TM) Portfolio Seeks long-term capital Fidelity Management
appreciation by investing & Research Company
primarily in common stocks and (subadvised by
securities of companies whose Fidelity Management
value it believes to have not & Research (U.K.)
fully been recognized by the Inc. and Fidelity
public. This fund invests in Management &
domestic and foreign issuers Research (Far East)
and also invests in "growth" Inc., and Fidelity
stocks or "value" stocks or Investments Japan
both. Limited; beginning
January 1, 2001,
FMR Co., Inc. will
subadvise.)
-----------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II (VIP III)
Growth & Income Portfolio Seeks high total return Fidelity Management
through a combination of & Research Company
current income and capital (subadvised by
appreciation by investing a Fidelity Management
majority of assets in common & Research (U.K.)
stocks with a focus on those Inc. and Fidelity
that pay current dividends and Management &
show potential for capital Research (Far East)
appreciation. Inc. and Fidelity
Investments Japan
Limited; beginning
January 1, 2001,
FMR Co., Inc. will
subadvise.)
-----------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
-----------------------------------------------------------------------------
<S> <C> <C>
Mid-Cap Portfolio Seeks long-term growth of Fidelity Management
capital by investing primarily & Research Company
in common stocks and at least (subadvised by
65% of total assets in Fidelity Management
securities of companies with & Research (U.K.),
medium market capitalizations. Inc. and Fidelity
Management &
Research Far East
Inc.)
-----------------------------------------------------------------------------
GE Investments Funds, Inc,
Mid-Cap Value Equity Fund Objective of providing long GE Asset Management
term growth of capital by Incorporated
investing primarily in common (Subadvised by NWQ
stock and other equity Investment
securities of companies that Management Company)
the investment adviser
believes are undervalued by
the marketplace at the time of
purchase and that offer the
potential for above-average
growth of capital. Although
the current portfolio reflects
investments primarily within
the mid cap range, the Fund is
not restricted to investments
within any particular
capitalization and may in the
future invest a majority of
its assets in another
capitalization range.
-----------------------------------------------------------------------------
Money Market Fund Objective of providing highest GE Asset Management
level of current income as is Incorporated
consistent with high liquidity
and safety of principal by
investing in various types of
good quality money market
securities.
-----------------------------------------------------------------------------
Premier Growth Equity Objective of providing long- GE Asset Management
Fund term growth of capital as well Incorporated
as future (rather than
current) income by investing
primarily in growth-oriented
equity securities.
-----------------------------------------------------------------------------
S&P 500 Index Fund(/1/) Objective of providing capital GE Asset Management
appreciation and accumulation Incorporated
of income that corresponds to (Subadvised by
the investment return of the State Street Global
Standard & Poor's 500 Advisers)
Composite Stock Price Index
through investment in common
stocks comprising the Index.
-----------------------------------------------------------------------------
Small-Cap Value Equity Objective of providing long- GE Asset Management
Fund term growth of capital by Incorporated
investing primarily in equity (Subadvised by
securities of small cap Palisade Capital
undervalued U.S. companies Management, L.L.C.)
that have solid growth
prospects.
-----------------------------------------------------------------------------
U.S. Equity Fund Objective of providing long- GE Asset Management
term growth of capital through Incorporated
investments primarily in
equity securities of U.S.
companies.
-----------------------------------------------------------------------------
</TABLE>
(/1/"Standard)& Poor's", "S&P"," and S&P 500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by GE Asset Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard and Poor's makes no
representation or warranty, express or implied, regarding the advisability
of investing in this Fund or the Contract.
30
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
-------------------------------------------------------------------------------
<S> <C> <C>
Value Equity Fund Objective of providing long- GE Asset Management
term growth of capital and Incorporated
future income. Pursues
investments in equity
securities of large
undervalued U.S. companies
that have solid growth
prospects.
-------------------------------------------------------------------------------
Janus Aspen Series
Aggressive Growth Non-diversified portfolio Janus Capital
Portfolio pursuing long-term growth of Corporation
capital. Pursues this
objective by normally
investing at least 50% of its
assets in equity securities
issued by medium-sized
companies.
-------------------------------------------------------------------------------
Balanced Portfolio Seeks long term growth of Janus Capital
capital. Pursues this Corporation
objective consistent with the
preservation of capital and
balanced by current income.
Normally invests 40-60% of its
assets in securities selected
primarily for their growth
potential and 40-60% of its
assets in securities selected
primarily for their income
potential.
-------------------------------------------------------------------------------
Capital Appreciation Seeks long-term growth of Janus Capital
Portfolio capital. Pursues this Corporation
objective by investing
primarily in common stocks of
companies of any size.
-------------------------------------------------------------------------------
Global Life Sciences Invests primarily in equity Janus Capital
Portfolio securities of U.S. and foreign Corporation
companies selected for their
growth potential. Normally
invests at least 65% of its
total assets in securities of
companies that the portfolio
manager believes have a life
science orientation.
-------------------------------------------------------------------------------
Global Technology Invests primarily in equity Janus Capital
Portfolio securities of U.S. and foreign Corporation
companies selected for their
growth potential. Under normal
circumstances, it invests at
least 65% of its total assets
in securities of companies
that the portfolio manager
believes will benefit
significantly from advances or
improvements in technology.
-------------------------------------------------------------------------------
Growth Portfolio Seeks long-term capital growth Janus Capital
consistent with the Corporation
preservation of capital and
pursues its objective by
investing in common stocks of
companies of any
size. Emphasizes larger, more
established issuers.
-------------------------------------------------------------------------------
International Growth Seeks long-term growth of Janus Capital
Portfolio capital. Pursues this Corporation
objective primarily through
investments in common stocks
of issuers located outside the
United States. The portfolio
normally invests at least 65%
of its total assets in
securities of issuers from at
least five different
countries, excluding the
United States.
-------------------------------------------------------------------------------
Worldwide Growth Seeks long-term capital growth Janus Capital
Portfolio in a manner consistent with Corporation
the preservation of capital.
Pursues this objective by
investing in a diversified
portfolio of common stocks of
foreign and domestic issuers
of all sizes. Normally invests
in at least five different
countries including the United
States.
-------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
----------------------------------------------------------------------------
<S> <C> <C>
MFS Variable Insurance Trust
MFS(R) Growth Series Seeks to provide long-term Massachusetts
growth of capital and future Financial Services
income rather than current Company
income. ("MFS")
----------------------------------------------------------------------------
MFS(R) Growth With Income Seeks to provide reasonable Massachusetts
Series current income and long-term Financial Services
growth of capital and income. Company ("MFS")
----------------------------------------------------------------------------
MFS(R) New Discovery Seeks capital appreciation. Massachusetts
Series Pursues this objective by Financial Services
investing at least 65% of its Company ("MFS")
total assets in equity
securities of emerging growth
companies.
----------------------------------------------------------------------------
MFS(R) Utilities Series Seeks capital growth and Massachusetts
current income. Purses this Financial Services
objective by investing at Company ("MFS")
least 65% of its total assets
in equity and debt securities
of domestic and foreign
companies in the utilities
industry.
----------------------------------------------------------------------------
Oppenheimer Variable Account Funds
Global Securities Fund/VA Seeks long-term capital OppenheimerFunds,
appreciation by investing a Inc.
substantial portion of assets
in securities of foreign
issuers, "growth-type"
companies, cyclical industries
and special situations that
are considered to have
appreciation possibilities. It
invests mainly in common
stocks of U.S. and foreign
issuers.
----------------------------------------------------------------------------
Main Street Growth & Seeks high total return, which OppenheimerFunds,
Income Fund/VA includes growth in the value Inc.
of its shares as well as
current income, from equity
and debt securities. The Fund
invests mainly in common
stocks of U.S. companies.
----------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Foreign Bond Portfolio Non-diversified portfolio Pacific Investment
seeking to maximize total Management Company
return, consistent with
preservation of capital and
prudent investment management.
This fund primarily invests in
intermediate maturity hedged
foreign fixed income
securities.
----------------------------------------------------------------------------
High Yield Bond Portfolio Seeks to maximize total Pacific Investment
return, consistent with Management Company
preservation of capital and
prudent investment management.
Primarily invests in higher
yielding fixed income
securities (also known as
"junk bonds.")
----------------------------------------------------------------------------
Long-Term U.S. Government Seeks to maximize total Pacific Investment
Bond Portfolio return, consistent with the Management Company
preservation of capital and
prudent investment management.
Primarily invests in long-term
maturity fixed income
securities.
----------------------------------------------------------------------------
Total Return Bond Seeks to maximize total return Pacific Investment
Portfolio consistent with preservation Management Company
of capital and prudent
investment management.
Primarily invests in
intermediate maturity fixed
income securities.
----------------------------------------------------------------------------
Rydex Variable Trust
OTC Fund(/2/) Non-diversified fund seeks to Rydex Global
provide investment results Advisors
that correspond to a benchmark
for over-the-counter
securities that invest
primarily in securities of
companies included in NASDAQ
100 Index TM.
----------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
(/2/THE)NASDAQ 100 Index(TM) is an unmanaged index that is a widely recognized
indicator of OTC Market performance.
32
<PAGE>
Not all of these portfolios may be available in all states or in all markets.
We will purchase shares of the portfolios at net asset value and direct them to
the appropriate Subaccounts of the Separate Account. We will redeem sufficient
shares of the appropriate portfolios at net asset value to pay Death Benefits,
surrender proceeds, withdrawals, to make income payments, 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 portfolios of the Funds are not sold directly to the general
public. They are sold to the Company, and may be sold to other insurance
companies that issue variable annuity and variable life insurance contracts. 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 advisor 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. The amounts we receive under these
agreements may be significant.
We will also receive Service Share fees from certain of the portfolios. These
fees are deducted from portfolio assets, and are for the administrative
services we provide to those portfolios. In addition, our affiliate, Capital
Brokerage Corporation, the principal underwriter for the Contracts, will
receive 12b-1 fees, deducted from certain portfolio assets for providing
distribution and shareholder support services to some of the portfolios.
Because the Service Share fees and 12b-1 fees are paid out of a portfolio's
assets on an ongoing basis, over time they will increase the cost of an
investment in portfolio shares.
33
<PAGE>
CHANGES TO THE SEPARATE ACCOUNT AND THE SUBACCOUNTS
We reserve the right, within the law, to make additions, deletions and
substitutions for the Funds and/or any portfolios within the Funds in which 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 portfolio's shares should become
inappropriate, in the judgment of our management, for the purposes of the
Contract. The new portfolios may have higher fees and charges than the ones
they replaced, and not all portfolios may be available to all classes of
Contracts. No substitution of the shares attributable to your Contract may take
place without prior notice to you and before approval of the SEC, in accordance
with the 1940 Act.
We also reserve the right to establish additional 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 will not eliminate a Subaccount without
prior notice to you and before approval of the SEC. Not all Subaccounts may be
available to all classes of contracts.
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; 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.
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The Guarantee Account
Due to certain exemptive and exclusionary provisions of the Federal securities
laws, we have not registered interests in the Guarantee Account under the
Securities Act of 1933 (the "1933 Act"), and we have not registered either the
Guarantee Account or our General Account as an investment company under the
1940 Act. Accordingly, neither our Guarantee Account, nor our General Account
is generally subject to regulation under the 1933 Act and the 1940 Act.
Disclosures relating to the interests in the Guarantee Account, and the General
Account, however, may be subject to certain generally applicable provisions of
the Federal securities laws relating to the accuracy of statements made in a
registration statement.
You may allocate some or all of your net purchase payments and transfer some or
all of your Contract Value to the Guarantee Account. We credit the portion of
the Contract Value allocated to the Guarantee Account with interest (as
described below). Contract Value in the Guarantee Account is subject to some,
but not all, of the charges we assess in connection with the Contract. See
Charges and Other Deductions.
Each time you allocate net purchase payments or transfer Contract Value to the
Guarantee Account, we establish an interest rate guarantee period. For each
interest rate guarantee period, we guarantee an interest rate for a specified
period of time.
We determine the interest rates in our sole discretion. The determination made
will be influenced by, but not necessarily correspond to, interest rates
available on fixed income investments which we may acquire with the amounts we
receive as purchase payments or transfers of Contract Value under the
Contracts. You will have no direct or indirect interest in these investments.
We also will consider other factors in determining interest rates for a
guarantee period including, but not limited to, regulatory and tax
requirements, sales commissions, and administrative expenses borne by us,
general economic trends, and competitive factors. Amounts you allocate to the
Guarantee Account will not share in the investment performance of our General
Account, or any portion thereof. We cannot predict or guarantee the level of
interest rates in future guarantee periods. However, the interest rates for any
interest rate guarantee period will be at least the guaranteed interest rate
shown in your Contract.
We will notify you in writing at least 10 days prior to the expiration date of
any interest rate guarantee period about the then currently available interest
rate guarantee periods and the guaranteed interest rates applicable to such
interest rate guarantee periods. A new one year interest rate guarantee period
will commence automatically unless we receive written notice prior to the end
of the 30 day period following the expiration of the interest rate guarantee
period ("30 day window") of your election of a different interest rate
guarantee period from among those being
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<PAGE>
offered by us at that time, or instructions to transfer all or a portion of the
remaining amount to one or more Subaccounts, subject to certain restrictions.
(See Transfers Before the Annuity Commencement Date.) During the 30 day window,
the allocation will accrue interest at the new interest rate guarantee period's
interest rate.
We reserve the right to credit bonus interest on purchase payments allocated to
a Guarantee Account participating in the Dollar-Cost Averaging Program. (This
may not be available to all classes of Contracts.)
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<PAGE>
CHARGES AND OTHER DEDUCTIONS
All of the charges described in this section apply to Contract Value allocated
to the Separate Account. Contract Value in the Guarantee Account is subject to
all of the charges described in this section except for the mortality and
expense risk charge and the administrative expense charge.
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the 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:
. processing applications for and issuing the Contracts;
. maintaining records;
. administering annuity payouts;
. furnishing accounting and valuation services (including the calculation and
monitoring of daily Subaccount values);
. reconciling and depositing cash receipts;
. providing Contract confirmations and periodic statements;
. providing toll-free inquiry services; and
. furnishing telephone transaction services.
The risks we assume include:
. the risk that the Death Benefits will be greater than the Surrender Value;
. the risk that the actual life-span of persons receiving income payments under
the Contract will exceed the assumptions reflected in our guaranteed rates
(these rates are incorporated in the Contract and cannot be changed); and
. 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. For example, the surrender charge we collect may not fully cover all of
the sales and distribution expenses we actually incur. 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.
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<PAGE>
TRANSACTION EXPENSES
Surrender Charge
We assess a surrender charge (except as described below) on withdrawals and
surrenders of purchase payments. You pay this charge to compensate us for the
losses we experience on Contract distribution costs.
We calculate the surrender charge separately for each purchase payment. For
purposes of calculating this charge, we assume that you withdraw purchase
payments on a first-in, first-out basis. We deduct the surrender charge
proportionately from the Subaccounts. However, if there is no Contract Value in
the Separate Account, we will deduct the charge proportionately from all monies
in the Guarantee Account. The charge will be taken first from any six year
interest guarantee periods to which you have allocated purchase payment and
then from the one year interest rate guarantee periods on a first-in, first-out
basis. The surrender charge is as follows:
<TABLE>
<CAPTION>
Number of Full and Partially Surrender Charge as a Percentage
Completed Years Since We Received of the Surrendered or Withdrawn
the Purchase Payment Purchase Payment
--------------------------------------------------------------------------
Year Percentage
---- ----------
<S> <C>
1 6%
2 6%
3 6%
4 6%
5 5%
6 4%
7 or more 0%
</TABLE>
We do not assess the surrender charge on surrenders:
. of amounts representing gain (as defined below);
. of free withdrawal amounts (as defined below);
. if taken under Optional Payment Plan 1, Optional Payment Plan 2 (for a period
of 5 or more years), or Optional Payment Plan 5; or
. if a waiver of surrender charge provision applies.
You may withdraw any gain in your Contract free of any surrender charge. We
calculate gain in the Contract as: (a) plus (b) minus (c) minus (d), but not
less than zero where:
(a) is the Contract Value on the date we receive your withdrawal or surrender
request;
(b) is the total of any withdrawals including surrender charges previously
taken;
(c) is the total of purchase payments made; and
(d) is the total of any gain previously withdrawn.
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<PAGE>
In addition to any gain, you may withdraw an amount equal to 10% of your total
purchase payments each Contract year without a surrender charge (the "free
withdrawal amount"). The free withdrawal amount is not cumulative from Contract
year to Contract year.
Further, we will waive the surrender charge if you annuitize under Optional
Payment Plan 1 (Life Income with Period Certain), Optional Payment Plan 2
(Income for a Fixed Period) provided that you select a fixed period of 5 years
or more, or Optional Payment Plan 5 (Joint Life and Survivor Income). See
Optional Payment Plans.
We also will waive surrender charges arising from a surrender occurring before
income payments begin if, at the time we receive the surrender request, we have
received due proof that the Annuitant has a qualifying terminal illness, or has
a qualifying confinement to a state licensed or legally operated hospital or
inpatient nursing facility for a minimum period as set forth in the Contract
(provided the confinement began, or the illness was diagnosed, at least one
year after the Contract Date). If you surrender the Contract under the terminal
illness waiver, please remember that we will pay your Contract Value, which
could be less than the Death Benefit otherwise available. The terms and
conditions of the waivers are set forth in your Contract.
DEDUCTIONS FROM THE SEPARATE ACCOUNT
We deduct from the Separate Account an amount, computed daily, at an annual
rate of 1.50% (1.70% where either Annuitant was above age 70 at the Contract
Date) of the daily net asset value. The charge consists of an administrative
expense charge at an effective annual rate of .15% and a mortality and expense
risk charge at an effective annual rate of 1.35% (1.55% for Contracts where
either Annuitant was above age 70 at the Contract Date). These deductions from
the Separate Account are reflected in your Contract Value.
OTHER CHARGES
CHARGES FOR THE OPTIONAL DEATH BENEFIT
We charge you for expenses related to the optional Death Benefit. We deduct
these charges against the Contract Value in the Separate Account at each
anniversary and at surrender to compensate us for the increased risks and
expenses associated with providing the optional Death Benefit. We will allocate
the annual charge among the Subaccounts in the same proportion that the
Contract's Contract Value in each Subaccount bears to the total Contract Value
in all Subaccounts at the time we make the charge. If the Guarantee Account is
available under the Contract and the Contract Value in the Separate Account is
not sufficient to cover the charge for the optional Death Benefit, we will
deduct the charge first from the Contract Value in the Separate Account, if
any, and then from the Guarantee Account. At surrender, we will charge you a
pro-rata portion of the annual charge. The maximum optional Death Benefit
charge is 0.25% times the Contract Value at the time of deduction.
ANNUAL CONTRACT CHARGE
We will deduct a charge of $30 annually from the Contract Value of each
Contract to compensate us for certain administrative expenses incurred in
connection with the Contracts. We will deduct the charge at each Contract
anniversary and at surrender. We will waive this charge if your Contract Value
at the time of deduction is more than $40,000.
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<PAGE>
We will allocate the annual contract charge among the Subaccounts in the same
proportion that the Contract's Contract Value in each Subaccount bears to the
total Contract Value in all Subaccounts at the time we make the charge. If
there is insufficient Contract Value allocated to the Separate Account, we will
deduct any remaining portion of the charge from the Guarantee Account
proportionally from all monies in the Guarantee Account. Other allocation
methods may be available upon request.
DEDUCTIONS FOR PREMIUM TAXES
We will deduct charges for any premium tax or other tax levied by any
governmental entity from 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
generally depend upon the law of your state of residence. The tax generally
ranges from 0.0% to 3.0%.
OTHER CHARGES AND DEDUCTIONS
Each portfolio incurs certain fees and expenses. To pay for these charges, the
Fund makes deductions from its assets. The deductions are described more fully
in each Fund's Prospectus.
In addition, we reserve the right to impose a charge of up to $10 for
transfers. This charge is at cost with no profit to us.
ADDITIONAL INFORMATION
We may reduce or eliminate the administrative expense and surrender charges
described previously for any particular Contract. However, we will reduce these
charges only to the extent that we anticipate lower distribution and/or
administrative expenses, or that we perform fewer sales or administrative
services than those originally contemplated in establishing the level of those
charges. Lower distribution and administrative expenses may be the result of
economies associated with (1) the use of mass enrollment procedures, (2) the
performance of administrative or sales functions by the employer, (3) the use
by an employer of automated techniques in submitting deposits or information
related to deposits on behalf of its employees, or (4) any other circumstances
which reduce distribution or administrative expenses. We will state the exact
amount of administrative expense and surrender charges applicable to a
particular Contract in that Contract.
We may also reduce charges and/or deductions for sales of the Contracts to
registered representatives who sell the Contracts to the extent we realize
savings of distribution and administrative expenses. Any such reduction in
charges and/or deductions will be consistent with the standards we use in
determining the reduction in charges and/or deductions for other group
arrangements.
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The Contract
The Contract is an individual flexible premium variable deferred annuity
Contract. We describe your rights and benefits below and in the Contract. There
may be differences in your Contract because of requirements of the state where
we issued your Contract. We will include any such differences in your Contract.
PURCHASE OF THE CONTRACT
If you wish to purchase a Contract, you must apply for it through an authorized
sales representative. The sales representative will send your completed
application to us, and we will decide whether to accept or reject it. If we
accept your application, our legally authorized officers prepare and execute a
Contract. We then send the Contract to you through your sales representative.
See Distribution of the Contracts.
If we receive a completed application and all other information necessary for
processing a purchase order, 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 your initial purchase payment for
no more than five business days. If the incomplete application cannot be
completed within those five days, we will inform you of the reasons, and will
return your purchase payment immediately (unless you specifically authorize us
to keep it until the application is complete). Once you complete your
application, we must apply the initial purchase payment within two business
days. We will apply any additional premium payments you make on the Valuation
Day we receive them.
To apply for a Contract, you must be of legal age in a state where we may
lawfully sell the Contracts and also be eligible to participate in any of the
qualified or non-qualified retirement plans for which we designed the
Contracts. The Annuitant cannot be older than age 85, unless we approve a
different age.
This Contract may be used with certain tax qualified retirement plans. The
Contract includes attributes such as tax deferral on accumulated earnings.
Qualified retirement plans provide their own tax deferral benefit; the purchase
of this Contract does not provide additional tax deferral benefits beyond those
provided in the qualified plan. Accordingly, if you are purchasing this
Contract through a qualified plan, you should consider purchasing this Contract
for its Death Benefit, income benefits and other non-tax-related benefits.
Please consult a tax advisor for information specific to your circumstances in
order to determine whether the Contract is an appropriate investment for you.
OWNERSHIP
As Owner, you have all rights under the Contract, subject to the rights of any
irrevocable beneficiary. According to Virginia law, the assets of the Separate
Account are held for the exclusive benefit of all Owners and their Designated
Beneficiaries. Qualified Contracts may not be assigned or transferred except as
permitted by the
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<PAGE>
Employee Retirement Income Security Act (ERISA) of 1974 and upon written
notification to us. We assume no responsibility for the validity or effect of
any assignment. Consult your tax advisor about the tax consequences of an
assignment.
If you name a Joint Owner in the application, we will treat the Joint Owners as
having equal undivided interests in the Contract. All Owners must together
exercise any ownership rights in this 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
$2,000,000. If any Annuitant is age 80 or older at the time of payment, the
total amount not subject to prior approval is $1,000,000. Payments may be made
or, if stopped, resumed at any time until the 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.
The minimum initial purchase payment is $5,000 (or $2,000 if your Contract is
an IRA Contract). We may accept a lower initial purchase payment in the case of
certain group sales. Each additional purchase payment must be at least $500 for
Non-Qualified Contracts ($200 in the case of certain bank drafts), $50 for IRA
Contracts and $100 for other Qualified Contracts.
VALUATION DAY
We will value Accumulation and Annuity Units once daily as of the close of
regular trading (currently 4:00 p.m., New York time) for each day the New York
Stock Exchange is open except for days on which a Fund does not value its
shares (Valuation Day). If a Valuation Period contains more than one day, the
unit values will be the same for each day in the Valuation Period.
ALLOCATION OF PURCHASE PAYMENTS
We place net purchase payments into the Separate Account's Subaccounts, each of
which invests in shares of a corresponding portfolio of the Funds, and/or the
Guarantee Account, according to your instructions. You may allocate purchase
payments to up to ten Subaccounts at any one time.
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<PAGE>
The percentage of any purchase payment which you can put into any one
Subaccount or guarantee period must be a whole percentage and not less than
$100. Upon allocation to the appropriate Subaccounts 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 Day on which we receive
any additional purchase payment at our Home Office if received before 4:00
p.m., New York time. If we receive the additional purchase payment at or after
4:00 p.m, New York time, we will use the Accumulation Unit value computed on
the next Valuation Day. The number of Accumulation Units determined in this way
is not changed by any subsequent change in the value of an Accumulation Unit.
However, the dollar value of an Accumulation Unit will vary depending not only
upon how well the portfolio's investments perform, but also upon the charges of
the Separate Account and the fees and expenses of the portfolios.
You may change the allocation of subsequent purchase payments at any time,
without charge, by sending us acceptable notice in writing or over the phone.
The new allocation will apply to any purchase payments made after we receive
notice of the change.
VALUATION OF ACCUMULATION UNITS
We value Accumulation Units for each Subaccount 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 for which we determine to have resulted from the operations
of the Subaccount.
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<PAGE>
Transfers
TRANSFERS
BEFORE THE
ANNUITY
COMMENCE-
MENT DATE
Before the earliest of the surrender of the Contract, payment of any Death
Benefit, and the Annuity Commencement Date, you may transfer all or a portion
of your investment between and among the Subaccounts of the Separate Account
and the Guarantee Account, subject to certain conditions. We process transfers
among the Subaccounts of the Separate Account and between the Subaccounts and
the Guarantee Account as of the end of the Valuation Period that we receive the
transfer request at our Home Office. We may postpone transfers to, from or
among the Subaccounts of the Separate Account, under certain circumstances. See
Requesting Payments.
We restrict transfers from any particular allocation of a Guarantee Account to
a Subaccount. Unless you are participating in the dollar-cost averaging program
(see Dollar-Cost Averaging), you may make such transfers only during the 30 day
period beginning with the end of the preceding interest rate guarantee period
applicable to that particular allocation. We also may limit the amount which
you may transfer to the Subaccounts. However, for any particular allocation to
the Guarantee Account, the limited amount will not be less than any accrued
interest on that allocation plus 25% of the original amount of that allocation.
Further, we may restrict certain transfers from the Subaccounts to the
Guarantee Account. We reserve the right to prohibit or limit transfers from a
Subaccount to the Guarantee Account during the six-month period following the
transfer of any amount from the Guarantee Account to any Subaccount.
Currently, there is no other limit on the number of transfers between and among
Subaccounts of the Separate Account and the Guarantee Account; however, we
reserve the right to limit the number of transfers each calendar year to twelve
or one transfer per month or, if it is necessary for the Contract to continue
to be treated as an annuity contract by the Internal Revenue Service, a lower
number. Currently, all transfers under the Contract are free. However, we
reserve the right to assess a charge of up to $10 per transfer. The minimum
transfer amount is $100 or the entire balance in the Subaccount or guarantee
period if the transfer will leave a balance of less than $100.
Sometimes, we may not honor your transfer request. We may not honor your
transfer request:
(i) if any Subaccount that would be affected by the transfer is unable to
purchase or redeem shares of the Fund in which the Subaccount invests;
(ii) if the transfer is a result of more than one trade involving the same
Subaccount within a 30 day period; or
(iii) if the transfer would adversely affect Accumulation Unit values.
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We also may not honor transfers made by third parties. (See Transfers by Third
Parties.)
When thinking about a transfer of 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.
TELEPHONE TRANSACTIONS
We permit certain telephone transactions (including transfers) as described in
this Prospectus. We may be liable for losses resulting from unauthorized or
fraudulent telephone transactions if we fail to employ reasonable procedures to
confirm that the telephone instructions that we receive are genuine. Therefore,
we will employ means to prevent unauthorized or fraudulent telephone requests,
such as sending written confirmation, recording telephone requests, and/or
requesting other identifying information. In addition, we will require written
authorization before allowing you to make telephone transactions. We reserve
the right to limit telephone transactions.
To request a telephone transaction, you should call our Annuity Customer
Service Line at 1-800-352-9910. We will record all telephone transaction
requests. We will execute transfer requests received before the close of
regular trading on the New York Stock Exchange on a Valuation Day at that day's
prices. We will execute requests received after that time on the next Valuation
Day at that day's prices.
TRANSFERS BY THIRD PARTIES
As a general rule and as a convenience to you, we allow you to give third
parties the right to effect transfers on your behalf. However, when the same
third party makes transfers for 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 management of the Funds share this position.
Therefore, as described in your Contract, we may limit or disallow transfers
made by a third party.
DOLLAR-COST AVERAGING
The dollar-cost averaging program permits you to systematically transfer on a
monthly or quarterly basis a set dollar amount from the Money Market Subaccount
and/or the Guarantee Account to any combination of other Subaccounts (as long
as the total number of Subaccounts used does not exceed the maximum number
allowed under the Contract). The dollar-cost averaging method of investment is
designed to reduce the risk of making purchases only when the price of units is
high, but you should
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carefully consider your financial ability to continue the program over a long
enough period of time to purchase Accumulation Units when their value is low as
well as when it is high. Dollar-cost averaging does not assure a profit or
protect against a loss.
You may participate in the dollar-cost averaging program by selecting the
program on the application, completing a dollar-cost averaging agreement, or
calling our Annuity Customer Service Line. To use the dollar-cost averaging
program, you must transfer at least $100 from a Subaccount or an interest rate
guarantee period with each transfer. Once elected, dollar-cost averaging
remains in effect from the date we receive your request until the value of the
Subaccount or the interest rate guarantee period from which transfers are being
made is depleted, or until you cancel the program by written request or by
telephone if we have your telephone authorization on file. The dollar-cost
averaging program will start 30 days after we receive your instructions and
purchase payment, unless you specify an earlier date.
With regard to dollar-cost averaging from the Guarantee Account, we reserve the
right to determine the amount of each automatic transfer. We reserve the right
to transfer any remaining portion of an allocation used for dollar-cost
averaging to the Guarantee Account with a new guarantee period upon termination
of the dollar-cost averaging program for that allocation.
There is no additional charge for dollar-cost averaging. We reserve the right
to discontinue offering or to modify the dollar-cost averaging program at any
time and for any reason. We reserve the right to prohibit simultaneous dollar-
cost averaging and systematic withdrawals.
PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Subaccounts, the performance of
each Subaccount may cause your allocation to shift. You may instruct us to
automatically rebalance (on a quarterly, semi-annual or annual basis) your
Contract Value among the Subaccounts to return to the percentages specified in
your allocation instructions. The program does not include allocations to the
Guarantee Account. You may elect to participate in the portfolio rebalancing
program at any time by completing the portfolio rebalancing agreement. Your
percentage allocations must be in whole percentages.
Subsequent changes to your percentage allocations may be made at any time by
written or telephone instructions to the Home Office. Once elected, portfolio
rebalancing remains in effect from the date we receive your written request
until you instruct us to discontinue portfolio rebalancing. There is no
additional charge for using portfolio rebalancing, and we do not consider a
portfolio rebalancing transfer a transfer for purposes of assessing a transfer
charge or calculating the maximum
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number of transfers permitted in a calendar year. We reserve the right to
discontinue offering or to modify the portfolio rebalancing program at any time
and for any reason. We also reserve the right to exclude Subaccounts from
portfolio rebalancing. Portfolio rebalancing does not guarantee a profit or
protect against a loss.
GUARANTEE ACCOUNT INTEREST SWEEP PROGRAM
Before the Annuity Commencement Date, you may instruct us to transfer interest
earned on your Contract Value in the Guarantee Account to the Subaccounts to
which you are allocating purchase payments, in accordance with the allocation
instructions in effect on the date of the transfer. You must specify the
frequency of the transfers (either quarterly, semi-annually, or annually).
The minimum Contract Value in the Guarantee Account required to elect this
option is $1,000, but may be reduced at our discretion. The transfers under
this program will take place on the last calendar day of each period.
You may participate in the interest sweep program at the same time you
participate in either the dollar-cost averaging program or the portfolio
rebalancing program. If any interest sweep transfer is scheduled for the same
day as a portfolio rebalancing transfer, the interest sweep transfer will be
processed first.
We limit the amount you may transfer from the Guarantee Account to the
Subaccounts for any particular allocation to the Guarantee Account. See
Transfers Before the Annuity Commencement Date. We will not process an interest
sweep transfer if that transfer would exceed the amount permitted to be
transferred.
You may cancel your participation in the interest sweep program at any time by
writing our Home Office or by calling our Annuity Customer Service Line. We
will cancel your participation in the program if your Contract Value in the
Guarantee Account is less than $1,000 or such a lower amount as we may
determine. There is no additional charge for the interest sweep program. We do
not consider interest sweep transfers a transfer for purposes of assessing a
transfer charge or calculating the maximum number of transfers permitted in a
calendar year.
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Surrenders and Withdrawals
SURRENDER AND WIRHDRAWALS
Subject to the rules discussed below, we will allow the surrender of the
Contract or a withdrawal of a portion of the Contract Value at any time before
the Annuity Commencement Date upon your written request.
We will not permit a withdrawal that is less than $1,000 or that reduces
Contract Value to less than $5,000. If your withdrawal request would reduce
Contract Value to less than $5,000, we will surrender only that amount of
Contract Value that would reduce the remaining Contract Value to $5,000 and
deduct any surrender charge from the amount you withdrew. Different limits and
other restrictions may apply to qualified retirement plans.
The amount payable on surrender of the Contract is the Surrender Value at the
end of the Valuation Period during which we receive the request. The Surrender
Value equals the Contract Value (after deduction of any applicable optional
benefit charges and annual contract charge) on the Valuation Day we receive a
request for surrender less any applicable surrender charge and any applicable
premium tax charge. We may pay the Surrender Value in a lump sum or under one
of the optional payment plans specified in the Contract, based on your
instructions.
You may indicate, in writing or by calling our Annuity Customer Service Line,
from which Subaccounts or guarantee periods we are to take your withdrawal. If
you do not so specify, we will deduct the amount of the withdrawal first from
the Subaccounts of the Separate Account on a pro-rata basis, in proportion to
the Contract Value in the Separate Account. We then will deduct any remaining
amount from the Guarantee Account. We will take deductions from the Guarantee
Account from the amounts (including any interest credited to such amounts)
which have been in the Guarantee Account for the longest period of time.
Please remember that a withdrawal may reduce the Death Benefit by the
proportion that the withdrawal (including any applicable surrender charge and
any premium tax) reduced Contract Value, depending on the amount of the
withdrawal and the Death Benefit chosen. See The Death Benefit.
RESTRICTIONS ON DISTRIBUTIONS FROM CERTAIN contracts
Section 830.105 of the Texas Government Code permits participants in the Texas
Optional Retirement Program ("ORP") to withdraw their interest in a variable
annuity contract issued under the ORP only upon (i) termination of employment
in the Texas public institutions of higher education, (ii) retirement, (iii)
death, or (iv) the participant's attainment of age 70 1/2. Accordingly, before
we distribute any amounts from these Contracts, you must furnish us proof that
one of these four events has occurred.
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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 $100) on a monthly,
quarterly, semi-annual or annual basis. Payments can begin at any time after 30
days from the Contract Date unless we allow an earlier date. Your systematic
withdrawals in a Contract year may not exceed the amount which is not subject
to a surrender charge. You may provide specific instructions as to how we are
to take the systematic withdrawals. If you have not provided specific
instructions, or if your specific instructions cannot be carried out, we will
process the withdrawals by first taking on a pro-rata basis Accumulation Units
from all of the Subaccounts in which you have an interest. To the extent that
your Contract Value in the Separate Account is not sufficient to accomplish the
withdrawal, we will take any Contract Value you have in the Guarantee Account
to accomplish the withdrawal.
After your systematic withdrawals begin, you may change the frequency and/or
amount of your payments, subject to the following:
. you may request only one such change in a calendar quarter; and
. if you did not elect the maximum amount you could withdraw under this program
at the time you elected the current series of systematic withdrawals, then
you may increase the remaining payments up to the maximum amount.
A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Contract Value to be less than $5,000. If
a systematic withdrawal would cause the Contract Value to be less than $5,000,
then we will not process that systematic withdrawal transaction. If any of your
systematic withdrawals would be or becomes less than $100, we reserve the right
to reduce the frequency of payments to an interval that would result in each
payment being at least $100. You may discontinue systematic withdrawals at any
time by notifying us in writing at our Home Office or by telephone.
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.
Both withdrawals at your specific request and withdrawals under a systematic
withdrawal program will count toward the limit of the amount that you may
withdraw in any Contract year free under the free withdrawal privilege.
We reserve the right to prohibit simultaneous systematic withdrawals and
dollar-cost averaging. We also reserve the right to discontinue systematic
withdrawals upon 30 days written notice to Owners.
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The Death Benefit
DEATH BENEFIT AT DEATH OF ANY ANNUITANT BEFORE ANNUITY COMMENCEMENT DATE
If any Annuitant dies before income payments begin, regardless of whether the
Annuitant is also an Owner or Joint Owner of the Contract, the amount of
proceeds available is the Death Benefit. Upon receipt of due proof of an
Annuitant's death (generally, due proof is a certified copy of the death
certificate or a certified copy of the decree of a court of competent
jurisdiction as to the finding of death), we will treat the Death Benefit in
accordance with your instructions, subject to distribution rules and
termination of contract provisions described elsewhere.
We offer two Death Benefits -- the basic Death Benefit and the optional Death
Benefit. We automatically provide the basic Death Benefit to you. The optional
Death Benefit is available to you for an additional charge.
The basic Death Benefit varies based on the age of the Annuitant at issue. If
the Annuitant is, or both the Annuitant and the Joint Annuitant are, age 80 or
younger at issue, the basic Death Benefit equals the greatest of:
(a) the Contract Value as of the date we receive due proof of death of any
Annuitant;
(b) the sum of (1) minus (2) plus (3), where
(1) is the greatest Contract Value as of any Contract anniversary up to and
including the Contract anniversary next following or coincident with the
80th birthday of the older of any Annuitant;
(2) is the Contract Value on the date of death; and
(3) is the Contract Value on the date we receive due proof of death; and
(c) the sum of (1) minus (2) plus (3), where:
(1) is the excess of purchase payments accumulated at 5% per year and
credited as of the Contract anniversary until the 80th birthday of the
older of any Annuitant up to a maximum of 200% of purchase payments;
(2) is the Contract Value on the date of death; and
(3) is the Contract Value on the date we receive due proof of death.
Withdrawals reduce the sums calculated under (b) and (c) proportionately by the
same percentage that the withdrawal reduces your Contract Value.
If any Annuitant is older than age 80 at issue, the basic Death Benefit is
equal to the greatest of:
(a) the Contract Value as of the date we receive due proof of death of any
Annuitant;
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(b) the sum of (1) minus (2) plus (3), where:
(1) is the greatest Contract Value as of any Contract anniversary up to and
including the Contract anniversary next following or coincident with the
85th birthday of the older of any Annuitant;
(2) is the Contract Value on the date of death; and
(3) is the Contract Value on the date we receive due proof of death; and
(c) the purchase payments less any withdrawals.
Withdrawals reduce the sum calculated under (b) proportionally by the same
percentage that the withdrawal reduces Contract Value.
Example: Assuming an Owner: (i) purchases a Contract for $100,000; (ii) makes
no additional purchase payments and no withdrawals; (iii) is not subject to
premium taxes; (iv) the Annuitant's age is 75 on the Contract Date; and (v) we
receive due proof of death on the date of death then:
<TABLE>
<CAPTION>
Premiums
End of Annuitant's Contract Accumulated Death
Year Age Value @ 5% Benefit
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 76 $103,000 $105,000 $105,000
2 77 112,000 110,250 112,000
3 78 90,000 115,763 115,763
4 79 135,000 121,551 135,000
5 80 130,000 127,628 135,000
6 81 150,000 127,628 150,000
7 82 125,000 127,628 135,000
8 83 145,000 127,628 145,000
</TABLE>
The purpose of this example is to show how the basic Death Benefit works based
on purely hypothetical values and is not intended to depict investment
performance of the Contract.
Withdrawals may reduce the Death Benefit by the proportion that the withdrawal
(including any surrender charge and premium tax) reduced Contract Value. For
example:
<TABLE>
<CAPTION>
Purchase Contract Death
Date Payment Value Benefit
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3/31/00 $5,000 $5,000 $5,000
3/31/01 -- $10,000 $10,000
3/31/02 -- $7,000 $10,000
</TABLE>
If a withdrawal of $3,500 is made on March 31, 2002, the Death Benefit
immediately after the withdrawal will be $5,000 ($10,000 to $5,000) since the
Contract Value is reduced 50% by the withdrawal ($7,000 to $3,500). (This
assumes that the Death Benefit immediately before the withdrawal (as calculated
above) is not the Contract Value on the date we receive due proof of death
(i.e., part "(a)" under the calculation above), nor is it part "(c)" under the
calculation above. It also assumes that the Annuitant and any Joint Annuitant
were both younger than age
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80 at issue, that no surrender charge applies, and that no premium tax applies
to the withdrawal.) This example is based on purely hypothetical values and is
not intended to depict investment performance of the Contract.
OPTIONAL DEATH BENEFIT
The optional Death Benefit coordinates with the basic Death Benefit and adds an
extra feature. Under the optional Death Benefit, the amount payable at the
death of the Annuitant will be the greater of:
. the basic Death Benefit; or
. the minimum Death Benefit. The minimum Death Benefit is the value of purchase
payments increased with interest at 6% per Contract year up to 200% of
purchase payments.
Withdrawals up to 6% of purchase payments per year reduce the minimum Death
Benefit by the same amount that the withdrawal reduces the Contract Value. If
withdrawals greater than 6% of purchase payments are made in the current or any
prior contract year, the minimum Death Benefit will be reduced proportionately
by the same percentage that the withdrawal reduces Contract Value.
You may only elect the optional Death Benefit when you apply for a Contract.
Once elected, the benefit remains in effect while your Contract is in force
until income payments begin, or until the Contract anniversary following the
date of receipt of your request to terminate the rider. If we receive your
request within 30 days of any Contract anniversary, you may request that the
rider terminate as of that anniversary.
The optional Death Benefit rider may not be available in all states or markets.
Age restrictions may apply. We charge you an additional amount for this
benefit. This charge will not exceed 0.25% of the Contract Value at the time of
deduction. See Charges for the Optional Death Benefit.
DEATH OF AN OWNER OR JOINT OWNER BEFORE THE ANNUITY COMMENCEMENT DATE
General: In certain circumstances, Federal tax law requires that distributions
be made under this Contract upon the first death of:
. an Owner or Joint Owner, or
. the Annuitant or Joint Annuitant if any Owner is a non-natural entity (such
as a trust or corporation).
The discussion below describes the methods available for distributing the value
of the Contract upon death.
Designated Beneficiary: At the death of any Owner (or any 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;
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(3) Contingent Beneficiary; or
(4) Owner's estate.
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 in applying the tax law's rules described below.
Distribution Rules: The distributions required by Federal tax law differ
depending on whether the Designated Beneficiary is the spouse of the deceased
Owner (or of the Annuitant, if the Contract is owned by a non-natural entity).
. 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 an Annuitant, the
surviving spouse will automatically become the new sole Annuitant. Any Joint
Annuitant will be removed from the Contract. At the death of the surviving
spouse, this provision may not be used again, even if the surviving spouse
remarries. In that case, the rules for non-spouses will apply. The Contract
Value on the date we receive due proof of death of the Annuitant will be set
equal to the Death Benefit on that date. Any increase in the Contract Value
will be allocated to the Subaccounts using the purchase payment allocation in
effect at that time. Any Death Benefit payable subsequently (at the death of
the new Annuitant) will be based on the new Annuitant's age on the Contract
Date, rather than the age of the previously deceased Annuitant.
. Non-Spouses -- If the Designated Beneficiary is not the surviving spouse of
the deceased person, this Contract cannot be continued in force indefinitely.
Instead, upon the death of any Owner (or any Annuitant, if any Owner is a
non-natural entity), payments must be made to (or for the benefit of) the
Designated Beneficiary under one of the following payment choices:
(1) Receive the Surrender Value in one lump sum payment upon receipt of due
proof of death.
(2) Receive the Surrender Value at any time during the five year period
following the date of death. At the end of the five year period, we will
pay in a lump sum payment any Surrender Value still remaining.
(3) Apply the Surrender Value to provide a monthly income benefit under
Optional Payment Plan 1 or 2. The first monthly income benefit payment must
be made no later than one year after the date of death. Also, the monthly
income benefit payment period must be either the lifetime of the Designated
Beneficiary or a period not exceeding the Designated Beneficiary's life
expectancy.
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If the Designated Beneficiary makes no choice within 30 days following receipt
of due proof of death, we will use payment choice 2 (payment of the entire
Surrender Value of the Contract within 5 years of the date of death). Due proof
of death must be provided within 90 days of the date of death. We will not
accept any purchase payments after the non-spouse's death. If the Designated
Beneficiary dies before we distributed the entire Surrender Value, we will pay
in a lump sum any Surrender 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.
Under payment choices 1 or 2, the Contract will terminate upon payment of the
entire Surrender Value. Under payment choice 3, this Contract will terminate
when we apply the Surrender Value to provide a Monthly Income Benefit.
Amount of the proceeds: The proceeds we pay will vary, in part, based on the
person who dies. We show the amount of proceeds below.
<TABLE>
<CAPTION>
Person Who Died Proceeds Paid
--------------------------------------------------
<S> <C>
Owner or Joint Owner Surrender Value
(who is not an Annuitant)
--------------------------------------------------
Owner or Joint Owner Death Benefit
(who is an Annuitant)
--------------------------------------------------
Annuitant Death Benefit
--------------------------------------------------
</TABLE>
Upon receipt of due proof of death, the Designated Beneficiary will instruct us
how to treat the proceeds subject to the distribution rules discussed above.
DEATH OF OWNER, JOINT OWNER, OR ANNUITANT AFTER INCOME PAYMENT BEGIN
After the Annuity Commencement Date (including after income payments begin), if
an Owner, Joint Owner, Annuitant or Designated Beneficiary dies while the
Contract is in force, payments that are already being made under the Contract
will be made at least as rapidly as under the method of distribution in effect
at the time of such death, notwithstanding any other provision in the Contract.
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Income Payments
When you apply for a Contract, you may select any Annuity Commencement Date
permitted by law; however, this date can not be any later than the Contract
anniversary following the younger Annuitant's 90th birthday, unless we approve
otherwise. You may change the Annuity Commencement Date to any date at least
ten years after the date of the last purchase payment; however, the Annuity
Commencement Date cannot be a date later than the Contract anniversary
following the younger Annuitant's 90th birthday, unless we approve a later
date. To make a change, send written notice to our Home Office before the
Annuity Commencement Date then in effect. We reserve the right to establish a
maximum Annuity Commencement Date. If you change the Annuity Commencement Date,
Annuity Commencement Date will then mean the new Annuity Commencement Date you
selected. (Please note the following exception: Contracts issued under
qualified retirement plans provide for income payments to start at the date and
under the option specified in the plan.)
We will pay a monthly income benefit to the Owner beginning on the Annuity
Commencement Date if the Annuitant is still living. We will pay the monthly
income benefit in the form of "Life Income with 10 Years Certain (automatic
payment plan)" variable income payments, using the gender and settlement age of
the Annuitant instead of the payee, unless you make another election. As
described in your Contract, the settlement age may be less than the Annuitant's
age. This means that payments may be lower than they would have been without
the adjustment. You may also choose to receive the Annuity Commencement Value
(that is, the Surrender Value of your Contract on the date immediately
preceding the Annuity Commencement Date) in one lump sum (in which case we will
cancel the Contract).
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than ten years, payments will continue for his or her life. If the Annuitant
dies before the end of ten years, we will discount the remaining payments for
the ten-year period at the same rate used to calculate the monthly income
payment. If the remaining payments are variable income payments, we will assume
the amount of each payment that we discount equals the payment amount on the
date we receive due proof of death. We will pay this discounted amount in one
sum.
The Contract also provides optional forms of annuity payments, each of which is
payable on a fixed basis. Optional Payment Plans 1 and 5 also are available on
a variable basis. The Contract provides that all or part of the Contract Value
may be used to purchase an annuity.
If you elect fixed income payments, the guaranteed amount payable will be
computed using interest at 3% compounded yearly. We may increase the interest
rate, which will increase the amount we pay to you or the payee.
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If you elect variable income payments, your income payments, after the first
payment, will reflect the investment experience of the Subaccounts to which you
allocated Contract Value.
We will make annuity payments monthly unless you elect quarterly, semi-annual
or annual installments. Under the monthly income benefit and all of the
optional payment plans, if any payment made more frequently than annually would
be or becomes less than $100, we reserve the right to reduce the frequency of
payments to an interval that would result in each payment being at least $100.
If the annual payment payable at maturity is less than $20, we will pay the
Annuity Commencement Value in a lump sum. Upon making such a payment, we will
have no future obligation under the Contract. Following are explanations of the
optional payment plans available.
OPTIONAL PAYMENT PLANS
Plan 1 -- Life Income with Period Certain. This option guarantees periodic
payments during a designated period. If the payee lives longer than the minimum
period, payments will continue for his or her life. The minimum period can be
10, 15, or 20 years. The payee selects the designated period. If the payee dies
during the minimum period, we will discount the amount of the remaining
guaranteed payments at the same rate used in calculating income payments. We
will pay the discounted amount in one sum to the payee's estate unless
otherwise provided.
Plan 2 -- Income for a Fixed Period. This option provides for periodic payments
to be made for a fixed period not longer than 30 years. Payments can be annual,
semi-annual, quarterly, or monthly. If the payee dies, we will discount the
amount of the remaining guaranteed payments to the date of the payee's death at
the same rate used in calculating income payments. We will pay the discounted
amount in one sum to the payee's estate unless otherwise provided.
Plan 3 -- Income of a Definite Amount. This option provides periodic payments
of a definite amount to be paid. Payments can be annual, semi-annual,
quarterly, or monthly. The amount paid each year must be at least $120 for each
$1,000 of proceeds. Payments will continue until the proceeds are exhausted.
The last payment will equal the amount of any unpaid proceeds. If the payee
dies, we will pay the amount of the remaining proceeds with earned interest in
one sum to the payee's estate unless otherwise provided.
Plan 4 -- Interest Income. This option provides for periodic payments of
interest earned from the proceeds left with us. Payments can be annual, semi-
annual, quarterly, or monthly. If the payee dies, we will pay the amount of
remaining proceeds and any earned but unpaid interest in one sum to the payee's
estate unless otherwise provided. This plan is not available under Qualified
Contracts.
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Plan 5 -- Joint Life and Survivor Income. This option provides for us to make
monthly payments to two payees for a guaranteed minimum of 10 years. Each payee
must be at least 35 years old when payments begin. Payments will continue as
long as either payee is living. If both payees die before the end of the
minimum period, we will discount the amount of the remaining payments for the
10-year period at the same rate used in calculating income payments. We will
pay the discounted amount in one sum to the survivor's estate unless otherwise
provided.
If the payee is not a natural person, our consent must be obtained before
selecting an optional payment plan.
Before the Annuity Commencement Date, you may change:
. your Annuity Commencement Date to any date at least ten years after your last
purchase payment (however, the Annuity Commencement Date cannot be a date
later than the Contract anniversary following the younger Annuitant's 90th
birthday, unless we approve a later date):
. your optional payment plan;
. the allocation of your investment among the Subaccounts; and
. the Owner, Joint Owner, primary beneficiary, and contingent beneficiary upon
written notice to the Home Office if you reserved this right and the
Annuitant is living.
We must receive your request for a change in a form satisfactory to us. The
change will take effect as of the date you sign the request. The change will be
subject to any payment made before we recorded the change.
Fixed Income Payments, if selected, will begin on the date we receive due proof
of the Annuitant's death, on surrender, or on the Contract's Annuity
Commencement Date. Variable income payments will begin within seven days after
the date payments would begin under the corresponding fixed option. Payments
under Optional Payment Plan 4 (Interest Income) will begin at the end of the
first interest period after the date proceeds are otherwise payable.
VARIABLE INCOME PAYMENTS
We will determine your variable income payments using:
1. The Annuity Commencement Value;
2. The annuity tables contained in the Contract including the settlement age
table;
3. The optional payment plan selected; and
4. The investment performance of the Subaccounts selected.
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To determine the amount of payment, we make this calculation:
1. First, we determine the dollar amount of the first income payment; 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 seven days before the income
payment is due; and finally
4. we calculate the value of the Annuity Units for each Subaccount seven days
before the income payment is due for each income payment thereafter.
To calculate your first variable income payment, we need to make an assumption
regarding the investment performance of the Subaccounts you select. We call
this your assumed investment rate. This rate is simply the total return, after
expenses, you need to earn to keep your variable income payments level. We
assume an effective annual rate of 3%. This means that if the annualized
investment performance, after expenses, of your Subaccounts is less than 3%,
then the dollar amount of your variable income payments will decrease.
Conversely, if the annualized investment performance, after expenses, of your
Subaccounts is greater than 3%, then the dollar amount of your income payments
will increase.
TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE
If we are making variable income payments, the payee may change the Subaccounts
from which we are making the payments three times each calendar year. The
transfer will be effective as of the end of the Valuation Period during which
we receive written request at our Home Office. However, we reserve the right to
limit the number of transfers if necessary for the Contract to continue to be
treated as an annuity under the Code. We also reserve the right to refuse to
execute any transfer if any of the Subaccounts that would be affected by the
transfer is unable to purchase or redeem shares of the Fund in which the
Subaccount invests. If the number of Annuity Units remaining in a Subaccount
after a transfer is less than 1, we will transfer the remaining balance in
addition to the amount requested for the transfer. We will not transfer into
any Subaccount unless the number of Annuity Units of that Subaccount after the
transfer is at least 1.
We do not permit transfers between the Subaccounts and the Guarantee Account
after the Annuity Commencement Date.
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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 and 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
advisor about the application of tax rules to your individual situation.
TAXATION OF NON-QUALIFIED CONTRACTS
This part of the discussion describes some of the Federal income tax rules
applicable to Non-Qualified Contracts. A Non-Qualified Contract is a Contract
not issued in connection with a qualified retirement plan receiving special tax
treatment under the Code, such as an individual retirement annuity or a section
401(k) plan.
Tax Deferral On Earnings. The Federal income tax law does not tax any increase
in an Owner's 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:
. An individual must own the Contract (or the tax law must treat the Contract
as owned by an individual);
. The investments of the Separate Account must be "adequately diversified" in
accordance with Internal Revenue Service ("IRS") regulations;
. The Owner's right to choose particular investments for a Contract must be
limited; and
. 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 purchase payments 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.
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
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<PAGE>
the case of any employer that owns a Contract to provide deferred compensation
for its employees.
In the case of a Contract issued after June 8, 1997 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 advisor.
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 paid for 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
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under the Contract begin or are scheduled to begin on a date past the
Annuitant's 85th birthday, it is possible that the tax law will not treat the
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 paid for the Contract.
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 Surrender Value. In the case of a withdrawal,
you will pay tax on the amount you receive to the extent your Contract 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
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.
Your Contract imposes mortality charges relating to the Death Benefit,
including any optional Death Benefit. It is possible that all or a portion of
these charges could be treated as withdrawals from the Contract.
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 of such amount or portion.
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.
Systematic Withdrawals. In the case of systematic withdrawals, the amount of
each withdrawal should be considered a distribution and taxed in the same
manner as a withdrawal from the Contract.
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<PAGE>
Taxation of Annuity Payouts. The Code imposes tax on a portion of each annuity
payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract." 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.
If proceeds are left with us (Optional Payment Plan 4), they are taxed in the
same manner as a surrender. The Owner must pay tax currently on the interest
credited on these proceeds. This treatment could also apply to Plan 3 if the
payee is at an advanced age, such as age 80 or older.
Taxation of Death Benefits. We may distribute amounts from your 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:
. If received under an annuity payout option, Death Benefits are taxed in the
same manner as annuity payouts.
. If not received under an annuity payout option, Death Benefits are taxed in
the same manner as a withdrawal.
After the Contract's Annuity Commencement Date:
. If received in accordance with the existing annuity payout option, Death
Benefits are excludible from income to the extent that they do not exceed the
unrecovered "investment in the contract." All annuity payouts in excess of
the unrecovered "investment in the contract" are includible in income.
. If received in a lump sum, the tax law imposes tax on Death Benefits to the
extent that they exceed the unrecovered "investment in the contract" at that
time.
Penalty Taxes Payable on Withdrawals, Surrenders, or Annuity Payouts. The Code
may impose a penalty tax equal to 10% of the amount of any payment from your
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:
. you receive on or after you reach age 59 1/2,
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<PAGE>
. you receive because you became disabled (as defined in the tax law),
. a beneficiary receives on or after the death of the Owner, or
. you receive as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer.
It is uncertain whether systematic withdrawals will qualify for this last
exception. If they did, any modification of the systematic withdrawals,
including additional withdrawals apart from the systematic withdrawals, could
result in certain adverse tax consequences. In addition, a transfer between
Subaccounts may result in payments not qualifying for this exception.
Special Rules If You Own More Than One Contract. In certain circumstances, you
must combine some or all of the Non-Qualified 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:
. 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.
. If you purchase two or more deferred annuity contracts from the same life
insurance company (or its affiliates) during any calendar year, the Code
treats all such contracts as one contract.
The effects of such aggregation are not clear. However, it could affect:
. the amount of a surrender, a withdrawal or an annuity payout that you must
include in income, and
. the amount that might be subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
We also designed the Contracts for use in connection with certain types of
retirement plans that receive favorable treatment under the Code. Contracts
issued to or in connection with a qualified retirement plan are called
"Qualified Contracts." We do not currently offer all of the types of Qualified
Contracts described, and may not offer them in the future. Prospective
purchasers should contact our Home Office to learn the availability of
Qualified Contracts at any given time.
The Federal income tax rules applicable to qualified plans are complex and
varied. As a result, this Prospectus makes no attempt to provide more than
general information about use of the Contract with the various types of
qualified plans. Persons intending to use the Contract in connection with a
qualified plan should obtain advice from a competent advisor.
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<PAGE>
Types of Qualified Contracts. Some of the different types of Qualified
Contracts include:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Simplified Employee Pensions ("SEP's")
. Savings Incentive Matched Plan for Employees ("SIMPLE plans," including
"SIMPLE IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit-sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans")
Terms of Qualified Plans and Qualified Contracts. The terms of a qualified
retirement plan may affect your rights under a Qualified Contract. When issued
in connection with a qualified plan, we will amend a Contract as generally
necessary to conform to the requirements of the type of plan. However, the
rights of any person to any benefits under qualified plans may be subject to
the terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contract. In addition, we are not bound by the terms and
conditions of qualified retirement plans to the extent such terms and
conditions contradict the Contract, unless we consent.
The Death Benefit and Qualified Contracts. Pursuant to IRS regulations, IRAs
may not invest in life insurance contracts. We do not believe that these
regulations prohibit the Death Benefit, including that provided by the optional
Death Benefit, from being provided under the Contracts when we issue the
Contracts as Traditional IRAs, Roth IRAs or SIMPLE IRAs. However, the law is
unclear and it is possible that the presence of the Death Benefit under a
Contract issued as a Traditional IRA, Roth IRA or SIMPLE IRAs could result in
increased taxes to the Owner.
It is also possible that the Death Benefit could be characterized as an
incidental Death Benefit. If the Death Benefit were so characterized, this
could result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental Death Benefits that may be provided
under qualified plans, such as in connection with a 403(b) plan. Even if the
Death Benefit under the Contract were characterized as an incidental Death
Benefit, it is unlikely to violate those limits unless the purchaser also
purchases a life insurance contract in connection with such plan.
64
<PAGE>
Treatment of Qualified Contracts Compared With Non-Qualified
Contracts. Although some of the Federal income tax rules are the same for both
Qualified and Non-Qualified Contracts, many of the rules are different. For
example:
. The Code generally does not impose tax on the earnings under either Qualified
or Non-Qualified Contracts until received.
. The Code does not limit the amount of purchase payments and the time at which
purchase payments can be made under Non-Qualified Contracts. However, the
Code does limit both the amount and frequency of purchase payments made to
Qualified Contracts.
. The Code does not allow a deduction for purchase payments made for Non-
Qualified Contracts, but sometimes allows a deduction or exclusion from
income for purchase payments made to a Qualified Contract.
The Federal income tax rules applicable to qualified plans and Qualified
Contracts vary with the type of plan and Contract. For example:
. Federal tax rules limit the amount of purchase payments that can be made, and
the tax deduction or exclusion that may be allowed for the purchase payments.
These limits vary depending on the type of qualified plan and the
circumstances of the plan participant, e.g., the participant's compensation.
. Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the
Owner must begin receiving payments from the Contract in certain minimum
amounts by a certain age, typically age 70 1/2. However, these "minimum
distribution rules" do not apply to a Roth IRA.
Amounts Received Under Qualified Contracts. Amounts are generally subject to
income tax: Federal income tax rules generally include distributions from a
Qualified Contract in your income as ordinary income. Purchase payments that
are deductible or excludible from income do not create "investment in the
contract." Thus, under many Qualified Contracts there will be no "investment in
the contract" and you include the total amount you receive in your income.
There are exceptions. For example, you do not include amounts received from a
Roth IRA if certain conditions are satisfied.
Additional Federal taxes may be payable in connection with a Qualified
Contract: For example, failure to comply with the minimum distribution rules
applicable to certain qualified plans, such as Traditional IRAs, will result in
the imposition of an excise tax. This excise tax generally equals 50% of the
amount by which a minimum required distribution exceeds the actual distribution
from the qualified plan.
65
<PAGE>
Federal penalty taxes payable on distributions: The Code may impose a penalty
tax equal to 10% of the amount of any payment from your Qualified Contract that
is includible in your income. The Code does not impose the penalty tax if one
of several exceptions apply. The exceptions vary depending on the type of
Qualified Contract you purchase. For example, in the case of an IRA, exceptions
provide that the penalty tax does not apply to a withdrawal, surrender, or
annuity payout:
. received on or after the Owner reaches age 59 1/2,
. received on or after the Owner's death or because of the Owner's disability
(as defined in the tax law),
. received as a series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer, or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
Moving Money from One Qualified Contract or Qualified Plan to
Another. Rollovers and Transfers: In many circumstances you may move money
between Qualified Contracts and qualified plans by means of a rollover or a
transfer. Special rules apply to such rollovers and transfers. If you do not
follow the applicable rules, you may suffer adverse Federal income tax
consequences, including paying taxes which you might not otherwise have had to
pay. You should always consult a qualified advisor before you move or attempt
to move funds between any Qualified Contract or plan and another Qualified
Contract or plan.
Direct Rollovers: The direct rollover rules apply to certain payments (called
"eligible rollover distributions") from section 401(a) plans, section 403(a) or
(b) plans, H.R. 10 plans, and Qualified Contracts used in connection with these
types of plans. (The direct rollover rules do not apply to distributions from
IRAs or section 457 plans). The direct rollover rules require Federal income
tax equal to 20% of the eligible rollover distribution to be withheld from the
amount of the distribution, unless the Owner elects to have the amount directly
transferred to certain Qualified Contracts or plans.
Prior to receiving an eligible rollover distribution from the Company, we will
provide you with a notice explaining these requirements and how you can avoid
20% withholding by electing a direct rollover.
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<PAGE>
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a 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 send you forms that explain the withholding
requirements.
TAX STATUS OF THE COMPANY
Under existing Federal income tax laws, we do not pay tax on investment income
and realized capital gains of 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, however, sometimes retroactively.
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<PAGE>
Voting Rights
As required by law, we will vote the portfolio shares held in the Separate
Account at meetings of the shareholders of the 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.
We will determine the number of votes which you have the right to cast 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 The Separate Account -- Subaccounts.
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<PAGE>
Requesting Payments
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any Death Benefit, withdrawal, or surrender proceeds
within seven days after receipt at our Home Office of all the requirements for
such a payment. We will determine the amount as of the end of the Valuation
Period during which our Home Office receives all such requirements.
We may delay making a payment, applying Contract Value to a payment plan, 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 (which
may take up to 15 days), and we may defer payment of proceeds from the
Guarantee Account for a withdrawal, surrender, or transfer request for up to
six months from the date we receive the request. The amount deferred will earn
interest at a rate and for a time period not less than the minimum required in
the jurisdiction in which we issued the Contract.
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<PAGE>
Distribution of the Contracts
COMMISSIONS
DISTRIBUTOR
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New
Mexico, and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is
the distributor and principal underwriter of the Contracts. Capital Brokerage,
a Washington corporation and an affiliate of ours, is located at 6630 W. Broad
St., Richmond, Virginia 23230. Properly licensed registered representatives of
both independent and affiliated broker/dealers (including our affiliate, Terra
Securities Corporation) will sell the Contracts. These broker/dealers have
selling agreements with Capital Brokerage and have been licensed by state
insurance departments to represent us. Properly licensed registered
representatives of Capital Brokerage will also sell the Contracts. Capital
Brokerage is registered with the SEC under the Securities Exchange Act of 1934
as a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). We will offer the Contracts in all states where we are
licensed to do business.
COMMISSIONS
We pay commissions and other expenses associated with the promotion and sales
of the Contracts to broker/dealers. Broker/dealers may receive aggregate
commissions of up to 6% of your aggregate purchase payments.
Under certain circumstances and in exchange for lower initial commissions,
certain sellers of the Contracts may be paid a persistency trail commission
which will take into account, among other things, the length of time purchase
payments have been held under the Contract, and Contract Values. A trail
commission is not anticipated to exceed, on an annual basis, 1.00% of the
Contract Values considered in connection with the trail commission. We may also
pay override payments, expense allowances, bonuses, wholesaler fees and
training allowances. Registered representatives earn commissions from the
broker/dealer with which they are affiliated and such arrangements may vary. In
addition, registered representatives who meet specified production levels may
qualify, under sales incentive programs adopted by us, to receive non-cash
compensation such as expense-paid trips, expense-paid educational seminars and
merchandise.
Capital Brokerage will receive 12b-1 fees assessed against certain portfolio
assets as compensation for providing certain distribution and shareholder
support services to some of the portfolios.
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<PAGE>
Additional Information
OWNER QUESTIONS
The obligations to Owners under the Contracts are ours. Please direct your
questions and concerns to us at our Home Office.
RETURN PRIVILEGE
Within the free-look period after you receive the Contract, you may cancel it
for any reason by delivering or mailing it postage prepaid, to our Home Office,
Annuity New Business, 6610 W. Broad Street, Richmond, Virginia 23230. If you
cancel your Contract, it will be void. Unless state law requires that we return
your purchase payments, the amount of the refund you receive will equal the
Contract Value less any adjustments required by applicable law or regulation on
the date we receive the Contract, but without reduction for any surrender
charge. If state law requires that we return your purchase payments, the amount
of the refund will equal the purchase payments made less any withdrawals you
previously made. In certain states, you may have more than 10 days to return
the 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 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 send you 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 also will send you 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
receive a written confirmation of these transactions.
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<PAGE>
OTHER INFORMATION
We have filed a Registration Statement with the SEC, under the Securities Act
of 1933 as amended, for the 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 those Contracts and
instruments, please refer to those documents as filed with the SEC and
available on the SEC's website at http://www.sec.gov.
LEGAL MATTERS
The Company, like other life insurance companies, is involved in lawsuits,
including class action lawsuits. In some class action and other lawsuits
involving insurance companies, substantial damages have been sought and/or
material settlement payments have been made. Although the Company cannot
predict the outcome of any litigation with certainty, the Company believes that
at the present time there are no pending or threatened lawsuits that are
reasonably likely to have a material adverse impact on it or the Separate
Account.
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<PAGE>
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 this Prospectus or in the SAI.
73
<PAGE>
Appendix
This is a new product and the majority of the portfolios are new to GE Life &
Annuity's Separate Account 4. For this reason, standardized performance for the
majority of the Subaccounts is not yet available and, therefore, standardized
and non-standardized performance data for these Subaccounts is not yet listed.
STANDARDIZED PERFORMANCE DATA
We may advertise the historical total returns for the Subaccounts according to
SEC standards. These standards are discussed in the Statement of Additional
Information. The total return for a Subaccount assumes that an investment has
been held in the Subaccount for various periods of time including a period
measured from the date on which the particular portfolio was first available in
Separate Account 4. When a portfolio has been available for one, five, and ten
years, we will provide the total return for these periods, adjusted to reflect
current Subaccount charges. The total return quotations represent the average
annual compounded rates of return that an initial investment of $1,000 in that
Subaccount would equal as of the last day of each period.
In Table 1, we show the standardized average annual total returns of the
Subaccounts for periods from the date on which a particular portfolio was first
available in Separate Account 4 to December 31, 1999, and for the one, five and
ten year periods ended December 31, 1999. Although the Contract did not exist
during the periods shown in Table 1 below, the returns of the Subaccounts shown
have been adjusted to reflect current Subaccount charges imposed under the
Contract. The total returns shown in Table 1 reflect the deduction of all fees
and charges assessed under the Contract; that is, the portfolio charges and
expenses, the mortality and expense risk charge (deducted daily at an effective
annual rate of 1.35% of Contract Value), the administrative expense charge
(deducted daily at an effective annual rate of .15% of Contract Value), the
annual contract charge of $30 (assumed to be equivalent to .1% of Contract
Value), and the surrender charge. We assume that you make a complete surrender
of the Contract at the end of the period; therefore, we deduct the surrender
charge. Total returns do not reflect the optional Death Benefit charge and
assume that no premium taxes apply.
Table 1
Standardized Total Returns
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Variable Insurance
Funds
AIM V.I. Capital
Appreciation Fund NA NA NA NA **
AIM V.I. Growth Fund NA NA NA NA **
AIM V.I. Value Fund NA NA NA NA **
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Capital
Management
Premier Growth
Portfolio -- Class B Shares NA NA NA NA **
Growth & Income
Portfolio -- Class B Shares NA NA NA NA **
Quasar Portfolio -- Class
B Shares NA NA NA NA **
Dreyfus
Dreyfus Emerging Markets
Portfolio NA NA NA NA **
The Dreyfus Socially
Responsible Growth
Portfolio, Inc. NA NA NA NA **
Federated Insurance Series
Federated High Income
Bond Fund II --Service
Shares NA NA NA NA **
Federated International
Small Company Fund II NA NA NA NA **
Fidelity Variable
Insurance Products Fund VIP
VIP Equity-Income
Portfolio -- Service
Class 2 Shares NA NA NA NA **
VIP Growth Portfolio --
Service Class 2 Shares NA NA NA NA **
Fidelity Variable
Insurance Products Fund VIP II
VIP II Contrafund
Portfolio -- Service
Class 2 Shares NA NA NA NA **
Fidelity Variable
Insurance Products Fund VIP III
VIP III Growth & Income
Portfolio -- Service
Class 2 Shares NA NA NA NA **
VIP III Mid Cap
Portfolio -- Service
Class 2 Shares NA NA NA NA **
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 9.99 NA NA 17.39 05/01/97
Money Market Fund -2.09 2.91 3.20 3.61 05/02/88
Premier Growth Equity
Fund NA NA NA NA 05/03/99
S&P 500 Index Fund 13.28 25.45 15.87 16.06 05/02/88
Small-Cap Value Equity
Fund NA NA NA NA **
US Equity Fund 12.30 NA NA 11.45 05/01/98
Value Equity Fund NA NA NA NA **
Janus Aspen Series
Aggressive Growth
Portfolio --
Service Shares NA NA NA NA **
Balanced Portfolio --
Service Shares NA NA NA NA **
Capital Appreciation
Portfolio --
Service Shares NA NA NA NA **
Global Life Sciences
Portfolio --
Service Shares NA NA NA NA **
Global Technology
Portfolio --
Service Shares NA NA NA NA **
Growth Portfolio --
Service Shares NA NA NA NA **
International Growth
Portfolio --
Service Shares NA NA NA NA **
Worldwide Growth
Portfolio --
Service Shares NA NA NA NA **
MFS(R) Variable Insurance
Trust
MFS(R) Growth Series --
Service Class Shares NA NA NA NA **
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
For the For the For the From the
1-year 5-year 10-year Inception In Date of
period period period Separate Inception In
ended ended ended Account to Separate
12/31/99 12/31/99 12/31/99 12/31/99 Account*
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Growth with Income
Series --Service Class
Shares NA NA NA NA **
MFS(R) New Discovery
Series -- Service Class
Shares NA NA NA NA **
MFS(R) Utilities
Series -- Service Class Shares NA NA NA NA **
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA --
Service Shares NA NA NA NA **
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares NA NA NA NA **
PIMCO Variable Insurance
Trust
Foreign Bond Portfolio --
Administrative Shares NA NA NA NA **
High Yield Bond
Portfolio --
Administrative Shares NA NA NA NA **
Long-Term U.S. Government
Bond Portfolio --
Administrative Shares NA NA NA NA **
Total Return Bond
Portfolio --
Administrative Shares NA NA NA NA **
Rydex Variable Trust
Rydex OTC Fund NA NA NA NA **
</TABLE>
* 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.
Past performance is not a guarantee of future results.
NON-STANDARDIZED PERFORMANCE DATA
In addition to the standardized data discussed above, we may also show similar
performance data for other periods.
We may from time to time also advertise or disclose average annual total return
or other performance data in non-standardized formats for the Subaccounts. The
non-standardized performance data may make different assumptions regarding the
amount invested, the time periods shown, or the effect of withdrawals or income
payments.
All non-standardized performance data will be advertised only if we also
disclose the standardized performance data as shown in Table 1.
Adjusted Historical Performance Data. We may disclose historic performance data
for the portfolios since their inception reduced by some or all of the fees and
charges under the Contract. Such adjusted historic performance includes data
that precedes the date on which a particular portfolio was first available in
Separate Account 4. This data is designed to show the performance that would
have resulted if the Contract had been in existence during that time, based on
the portfolio's performance. This data assumes that the Subaccounts available
under the Contract were in existence for the
A-3
<PAGE>
same period as the portfolio with a level of charges equal to those currently
assessed under the Contract. This data is not intended to indicate future
performance.
Based on the method of calculation described in the Statement of Additional
Information, the adjusted historic average annual total returns for the
portfolios for periods from the time a particular portfolio was first available
in Separate Account 4 to December 31, 1999, and for the one, five and ten year
periods ended December 31, 1999 is shown in Tables 2 and 3, below. The total
returns of the portfolios have been reduced by all charges currently assessed
under the Contract, as if the Contract had been in existence since the
inception of the portfolio. In Table 2, adjusted total returns for the
portfolios reflect portfolio charges and expenses, as well as deductions of all
fees and charges under the Contract, including the mortality and expense risk
charge (deducted daily at an effective annual rate of 1.35% of Contract Value),
the administrative expense charge (deducted daily at an effective annual rate
of .15% of Account Value), the annual contract charge of $30 (assumed to be
equivalent to .1% of Contract Value), and the surrender charge. In Table 2, we
assume that you make a complete surrender of the Contract at the end of the
period, therefore we deduct the surrender charge. In Table 3, we assume that
you do not surrender the Contract, and we do not deduct the surrender charge.
Table 2
Adjusted Historical Performance Data
assuming surrender at the end of the applicable time period.
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund NA NA NA 05/05/93
AIM V.I. Growth Fund NA NA NA 05/05/93
AIM V.I. Value Fund NA NA NA 05/05/93
Alliance Capital Management
Premier Growth Portfolio -- Class B
Shares NA NA NA 06/01/99
Growth & Income Portfolio -- Class B
Shares NA NA NA 06/01/99
Quasar Portfolio -- Class B Shares NA NA NA 06/01/99
Dreyfus
Dreyfus Emerging Markets Portfolio NA NA NA 12/15/99
The Dreyfus Socially Responsible Growth
Portfolio NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund II --
Service Shares NA NA NA 05/01/00
Federated International Small Company
Fund II NA NA NA 05/01/00
Fidelity Variable Insurance Products Fund
VIP
VIP Equity-Income Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
VIP Growth Portfolio -- Service Class 2
Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP II
VIP II Contrafund Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP III
VIP III Growth & Income Portfolio --
Service Class 2 Shares NA NA NA 01/12/00
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VIP III Mid Cap Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 9.99 NA NA 05/01/97
Money Market Fund -2.09 2.91 3.20 06/30/85
Premier Growth Equity Fund NA NA NA 12/12/97
S&P 500 Index Fund 13.28 25.45 15.87 04/14/85
Small-Cap Value Equity Fund NA NA NA 05/01/00
US Equity Fund 12.30 NA NA 01/02/95
Value Equity Fund NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Balanced Portfolio -- Service Shares NA NA NA 12/31/99
Capital Appreciation Portfolio -- Service
Shares NA NA NA 12/31/99
Global Life Sciences Portfolio -- Service
Shares NA NA NA 01/15/00
Global Technology Portfolio -- Service
Shares NA NA NA 01/15/00
Growth Portfolio -- Service Shares NA NA NA 12/31/99
International Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Worldwide Growth Portfolio -- Service
Shares NA NA NA 12/31/99
MFS(R) Variable Insurance Trust
MFS(R) Growth Series -- Service Class
Shares NA NA NA 05/01/00
MFS(R) Growth with Income Series --
Service Class Shares NA NA NA 05/01/00
MFS(R) New Discovery Series -- Service
Class Shares NA NA NA 05/01/00
MFS(R) Utilities Series -- Service Class
Shares NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA --
Service Shares NA NA NA 04/26/00
Oppenheimer Main Street Growth & Income
Fund/VA -- Service Shares NA NA NA 04/26/00
PIMCO Variable Insurance Trust
Foreign Bond Portfolio -- Administrative
Shares NA NA NA 02/16/99
High Yield Bond Portfolio --
Administrative Shares NA NA NA 04/30/99
Long-Term U.S. Government Bond
Portfolio --Administrative Shares NA NA NA 04/30/99
Total Return Bond Portfolio --
Administrative Shares NA NA NA 12/24/97
Rydex Variable Trust
Rydex OTC Fund NA NA NA 05/07/97
</TABLE>
* 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 a period of less than one year are not annualized.
Table 3
Adjusted Historical Performance Data
assuming no surrender at the end of the applicable time period.
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Variable Insurance Funds
AIM V.I. Capital Appreciation Fund NA NA NA 05/05/93
AIM V.I. Growth Fund NA NA NA 05/05/93
AIM V.I. Value Fund NA NA NA 05/05/93
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
For the For the For the
1-year 5-year 10-year
period period period Portfolio
ended ended ended Inception
12/31/99 12/31/99 12/31/99 Date*
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Capital Management
Premier Growth Portfolio -- Class B
Shares NA NA NA 06/01/99
Growth & Income Portfolio -- Class B
Shares NA NA NA 06/01/99
Quasar Portfolio -- Class B Shares NA NA NA 06/01/99
Dreyfus
Dreyfus Emerging Markets Portfolio NA NA NA 12/15/99
The Dreyfus Socially Responsible Growth
Portfolio, Inc. NA NA NA 10/17/93
Federated Insurance Series
Federated High Income Bond Fund II --
Service Shares NA NA NA 05/01/00
Federated International Small Company
Fund II NA NA NA 05/01/00
Fidelity Variable Insurance Products Fund
VIP
VIP Equity-Income Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
VIP Growth Portfolio -- Service Class 2
Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP II
VIP II Contrafund Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
Fidelity Variable Insurance Products Fund
VIP III
VIP III Growth & Income Portfolio --
Service Class 2 Shares NA NA NA 01/12/00
VIP III Mid Cap Portfolio -- Service
Class 2 Shares NA NA NA 01/12/00
GE Investments Funds, Inc.
Mid-Cap Value Equity Fund 15.51 NA NA 05/01/97
Money Market Fund 3.42 3.81 3.30 06/30/85
Premier Growth Equity Fund NA NA NA 12/12/97
S&P 500 Index Fund 18.80 25.93 15.98 04/14/85
Small-Cap Value Equity Fund NA NA NA 05/01/00
US Equity Fund 17.81 NA NA 01/02/95
Value Equity Fund NA NA NA 05/01/00
Janus Aspen Series
Aggressive Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Balanced Portfolio -- Service Shares NA NA NA 12/31/99
Capital Appreciation Portfolio -- Service
Shares NA NA NA 12/31/99
Global Life Sciences Portfolio -- Service
Shares NA NA NA 01/15/00
Global Technology Portfolio -- Service
Shares NA NA NA 01/15/00
Growth Portfolio -- Service Shares NA NA NA 12/31/99
International Growth Portfolio -- Service
Shares NA NA NA 12/31/99
Worldwide Growth Portfolio -- Service
Shares NA NA NA 12/31/99
MFS Variable Insurance Trust
MFS Growth Series -- Service Class Shares NA NA NA 05/01/00
MFS Growth with Income Series -- Service
Class Shares NA NA NA 05/01/00
MFS New Discovery Series -- Service Class
Shares NA NA NA 05/01/00
MFS Utilities Series -- Service Class
Shares NA NA NA 05/01/00
Oppenheimer Variable Account Funds
Oppenheimer Global Securities Fund/VA --
Service Shares NA NA NA 04/26/00
Oppenheimer Main Street Growth & Income
Fund/VA --Service Shares NA NA NA 04/26/00
PIMCO Variable Insurance Trust
Foreign Bond Portfolio -- Administrative
Shares NA NA NA 02/16/99
High Yield Bond Portfolio --
Administrative Shares NA NA NA 04/30/99
Long-Term U.S. Government Bond
Portfolio --Administrative Shares NA NA NA 04/30/99
Total Return Bond Portfolio --
Administrative Shares NA NA NA 12/24/97
Rydex Variable Trust
Rydex OTC Fund NA NA NA 05/07/97
</TABLE>
* 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 a period of less than one year are not annualized.
A-6
<PAGE>
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
--------------------------------------------------------------------------------
<S> <C>
The Contracts.............................................................. B-3
Transfer of Annuity Units................................................ B-3
Net Investment Factor.................................................... B-3
Termination of Participation Agreements.................................... B-3
Calculation of Performance Data............................................ B-4
Money Market Subaccount.................................................. B-4
Other Subaccounts........................................................ B-6
Other Performance Data................................................... B-7
Federal Tax Matters........................................................ B-8
Taxation of GE Life & Annuity............................................ B-8
IRS Required Distributions............................................... B-8
General Provisions......................................................... B-8
Using the Contracts as Collateral........................................ B-8
The Beneficiary.......................................................... B-9
Non-Participating........................................................ B-9
Misstatement of Age or Gender............................................ B-9
Incontestability......................................................... B-9
Statement of Values...................................................... B-9
Written Notice........................................................... B-9
Distribution of the Contracts.............................................. B-9
Legal Developments Regarding Employment-Related Benefit Plans.............. B-9
Legal Matters.............................................................. B-10
Experts.................................................................... B-10
Financial Statements....................................................... B-10
</TABLE>
Dated , 2000
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, Virginia 23230
<PAGE>
A Statement of Additional Information containing more detailed information
about the Contract and the Separate Account is available free by writing us at
the address below or by calling (800) 352-9910.
To GE Life & Annuity
Annuity New Business
6610 W. Broad Street
Richmond, VA 23230
Please mail a copy of the Statement of Additional Information for the Separate
Account, Contract Form P1154 4/00 to:
Name: _______________________________________
Address: ____________________________________
Street
________________________________________
City State Zip
Signature of Requestor: ________________________
Date
<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 P1154 4/00
OFFERED BY
GE LIFE AND ANNUITY ASSURANCE COMPANY
6610 W. Broad Street
Richmond, Virginia 23230
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the above-named flexible premium variable deferred
annuity Contract offered by GE Life and Annuity Assurance Company. You may
obtain a copy of the Prospectus dated by calling (800) 352-9910, or by
writing to GE Life and Annuity Assurance Company, 6610 W. Broad Street,
Richmond, Virginia 23230. The 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
B-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Contracts.............................................................. 3
Transfer of Annuity Units................................................ 3
Net Investment Factor.................................................... 3
Termination of Participation Agreements.................................... 3
Calculation of Performance Data............................................ 4
Money Market Subaccount.................................................. 4
Other Subaccounts........................................................ 6
Other Performance Data................................................... 7
Federal Tax Matters........................................................ 8
Taxation of GE Life & Annuity............................................ 8
IRS Required Distributions............................................... 8
General Provisions......................................................... 8
Using the Contracts as Collateral........................................ 8
The Beneficiary.......................................................... 9
Non-Participating........................................................ 9
Misstatement of Age or Gender............................................ 9
Incontestability......................................................... 9
Statement of Values...................................................... 9
Written Notice........................................................... 9
Distribution of the Contracts.............................................. 9
Legal Developments Regarding Employment-Related Benefit Plans.............. 9
Legal Matters.............................................................. 10
Experts.................................................................... 10
Financial Statements....................................................... 10
</TABLE>
B-2
<PAGE>
THE CONTRACTS
Transfer of Annuity Units
At your request, Annuity Units may be transferred three times per calendar year
from the Subaccounts in which they are currently held. The number of Annuity
Units to be transferred is (a) times (b) divided by (c) where: (a) is the
number of Annuity Units in the current Subaccount desired to be transferred;
(b) is the Annuity Unit Value for the Subaccount in which the Annuity Units are
currently held; and (c) is the Annuity Unit Value for the Subaccount to which
the transfer is made. The amount of the income payment as of the date of the
transfer will not be affected by the transfer (however, subsequent variable
income payments will reflect the investment experience of the selected
Subaccounts).
Net Investment Factor
The net investment factor measures investment performance of the Subaccounts
during a Valuation Period. Each Subaccount has its own net investment factor.
The net investment factor of a Subaccount available under a Contract 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 the net assets of that Subaccount during the Valuation
Period for which the net investment factor is being determined,
minus
(3) the capital losses, realized or unrealized, charged against those
assets during the Valuation Period, minus
(4) any amount charged against that Subaccount for taxes; this includes
any amount we set aside during the Valuation Period as a provision
for taxes attributable to the operation or maintenance of that
Subaccount; and
(b) is the value of the net assets of that Subaccount at the end of the
preceding Valuation Period; and
(c) is a factor for the Valuation Period representing the mortality and
expense risk charge and the administrative expense charge; this factor
is shown in your Contract.
We will value their assets at 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
Separate Account contain varying provisions regarding termination. The
following summarizes those provisions:
AIM VARIABLE INSURANCE FUNDS This agreement may be terminated by the parties on
six months' advance written notice.
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. This agreement may be terminated
by the parties on six months' advance written notice.
DREYFUS. This agreement may be terminated by the parties on six months' advance
written notice.
B-3
<PAGE>
FEDERATED INSURANCE SERIES. This agreement may be terminated by the parties on
six months' advance written notice.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND, FIDELITY VARIABLE INSURANCE PRODUCTS
FUND II, AND FIDELITY VARIABLE INSURANCE PRODUCTS FUND III ("THE FUND"). These
agreements provide for termination (1) on one year's advance notice by either
party, (2) at the Company's option if shares of the Fund are not reasonably
available to meet requirements of the policies, (3) at the option of either
party if certain enforcement proceedings are instituted against the other, (4)
upon vote of the policyowners to substitute shares of another mutual fund, (5)
at the Company's option if shares of the Fund are not registered, issued, or
sold in accordance with applicable laws, if the Fund ceases to qualify as a
regulated investment company under the Code, (6) at the option of the Fund or
its principal underwriter if it determines that the Company has suffered
material adverse changes in its business or financial condition or is the
subject of material adverse publicity, (7) at the option of the Company if the
Fund has suffered material adverse changes in its business or financial
condition or is the subject of material adverse publicity, or (8) at the option
of the Fund or its principal underwriter if the Company decides to make another
mutual fund available as a funding vehicle for its policies.
GE INVESTMENTS FUNDS, INC. This agreement may be terminated at the option of
any party upon six months' written notice to the other parties, unless a
shorter time is agreed to by the parties.
JANUS ASPEN SERIES. This agreement may be terminated by the parties on six
months' advance written notice.
MFS VARIABLE INSURANCE TRUST. This agreement may be terminated by the parties
on six months' advance written notice.
OPPENHEIMER VARIABLE ACCOUNT FUNDS. This agreement may be terminated by the
parties on six months' advance written notice.
PIMCO VARIABLE INSURANCE TRUST. This agreement may be terminated by the parties
on six months' advance written notice, unless a shorter time is agreed to by
the parties.
RYDEX VARIABLE TRUST. This agreement may be terminated by the parties on six
months' advance written notice.
CALCULATION OF PERFORMANCE DATA
From time to time, we may disclose total return, yield, and other performance
data for the 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 currently range generally from 0% to 3% of purchase
payments and are generally based on the rules of the state in which you reside.
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 portfolio or on its portfolio securities. This
current annualized yield is computed by determining the net change (exclusive
of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income) at the
end of the seven-day period in the value of a hypothetical account under a
Contract having a balance of one unit in
B-4
<PAGE>
the Money Market Subaccount at the beginning of the period, dividing such net
change in account value by the value of the account at the beginning of the
period to determine the base period return, and annualizing the result on a
365-day basis. The net change in account value reflects: 1) net income from the
portfolio attributable to the hypothetical account; and 2) charges and
deductions imposed under the Contract which are attributable to the
hypothetical account. The charges and deductions include the per unit charges
for the $30 annual contract charge, the maximum mortality and expense risk
charge that applies when each Annuitant is age 70 or younger at issue (deducted
daily at an effective annual rate of 1.35% of Contract Value), and the maximum
administrative expense charge (deducted daily at an effective annual rate
of .15% of Contract Value). The annual contract charge is only deducted if
Contract Value at the time of deduction is $40,000 or less. We assume for the
purposes of the yield calculation that this charge will be waived. Current
Yield will be calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) X (365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income)
for the seven-day period attributable to a hypothetical account having
a balance of one 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.
We may also quote the effective yield of the Money Market Subaccount determined
on a compounded basis for the same seven-day period. 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.
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 portfolio, the types and quality of
portfolio securities held by that portfolio, and that 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 portfolio.
Yield calculations do not take into account the surrender charge under the
Contract or the charge for the optional Death Benefit rider.
B-5
<PAGE>
Past Performance is not a Guarantee of Future Results.
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 began before the Contract was available, performance data will
be based on the performance of the underlying portfolios, adjusted for the
level of the Separate Account and Contract charges currently in effect for this
Contract. Average annual total return will be calculated using Subaccount unit
values and deductions for the annual contract charge and the surrender charge
as described below:
1. We calculate the unit value for each Valuation Period based on the
performance of the Subaccount's underlying investment portfolio (after
deductions for portfolio charges and expenses, the maximum administrative
expense charge (deducted daily at an effective annual rate of .15%
of Contract Value), and the maximum mortality and expense risk charge
that applies when each Annuitant is age 70 or younger at issue (deducted
daily at an effective annual rate of 1.35% of Contract Value).)
2. The annual contract charge is $30 deducted at the beginning of each
Contract Year and is waived if the Contract Value is more than $40,000
at the time the charge is due. For purposes of calculating average
annual total return, we assume that the annual contract charge is
equivalent to .1% of Contract Value.
3. The surrender charge will be determined by assuming a surrender of the
Contract at the end of the period. Average annual total return for
periods of six years or less will therefore reflect the deduction of a
surrender charge.
4. Total return does not consider the optional Death Benefit charge, and
does not reflect the deduction of any premium taxes.
5. Total return will then be calculated according to the following
formula:
TR = (ERV/P)1/N - 1
where:
TR = the average annual total return for the period.
ERV = the ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
N = the duration of the period (in years).
Past Performance is not a Guarantee of Future Results.
The Funds have provided the price information used to calculate the adjusted
historical performance 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.
B-6
<PAGE>
Other Performance Data
We may disclose cumulative total return in conjunction with the standard
format described above. The cumulative total return will be calculated using
the following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1,000.
Sales literature may also quote cumulative and/or average annual total return
that does not reflect the surrender charge. This is calculated in exactly the
same way as average annual total return, except that the ending redeemable
value of the hypothetical investment is replaced with an ending value for the
period that does not take into account any charges on withdrawn amounts.
Other non-standard quotations of Subaccount performance may also be used in
sales literature. Such quotations will be accompanied by a description of how
they were calculated. We will accompany any non-standard quotations of
Subaccount performance with standard performance quotations.
B-7
<PAGE>
FEDERAL TAX MATTERS
Taxation of GE Life & Annuity
We do not expect to incur any Federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Contracts. (See Federal Tax Matters section of the Prospectus.) Based upon
these expectations, no charge is being made currently to the Separate Account
for Federal income taxes. We will periodically review the question of a charge
to the Separate Account for Federal income taxes related to the Account. Such a
charge may be made in future years if we believe that we may incur Federal
income taxes. This might become necessary if the tax treatment of the Company
is ultimately determined to be other than what we currently believe it to be,
if there are changes made in the Federal income tax treatment of annuities at
the corporate level, or if there is a change in our tax status. In the event
that we should incur Federal income taxes attributable to investment income or
capital gains retained as part of the reserves under the Contracts, the
Contract Value would be correspondingly adjusted by any provision or charge for
such taxes.
We may also incur state and local taxes (in addition to premium taxes). 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 the Separate Account may be
made.
IRS Required Distributions
In order to be treated as an annuity contract for Federal income tax purposes,
section 72(s) of the Code requires any Non-Qualified 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 income payments which will begin
within one year of that Owner's death and which will be made over the life of
the Owner's "designated beneficiary" or over a period not extending beyond the
life expectancy of that beneficiary. The "designated beneficiary" generally is
the person who will be treated as the sole Owner of the Contract following the
death of the Owner, Joint Owner or, in certain circumstances, the Annuitant or
Joint 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 or
Joint Annuitant will be treated as the death of an Owner for purposes of these
rules.
The Non-Qualified 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.
Other rules may apply to Qualified Contracts.
GENERAL PROVISIONS
Using the Contracts as Collateral
A Non-Qualified Contract can be assigned as collateral security. We must be
notified in writing if a Contract is assigned. Any payment made before the
assignment is recorded at our Home Office will not be affected. We are not
responsible for the validity of an assignment. Your rights and the rights of a
Beneficiary may be affected by an assignment.
B-8
<PAGE>
A Qualified Contract may not be sold, assigned, transferred, discounted,
pledged or otherwise transferred except under such conditions as may be allowed
under applicable law.
The basic benefits of the Contract are assignable. Additional benefits added by
rider may or may not be available/eligible for assignments.
The Beneficiary
You may select one or more primary and contingent beneficiaries during your
lifetime upon application and by filing a written request with our Home Office.
Each change of beneficiary revokes any previous designation.
Non-Participating
The 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 page, 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 send 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 Home Office at 6610 West Broad
Street, Richmond, Virginia 23230. The Contract number and the Annuitant's full
name must be included.
We will send all notices to the Owner at the last known address on file with
the Company.
DISTRIBUTION OF THE CONTRACTS
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 DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for Tax
Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964, vary between men and women on
the basis of gender. The Contract contains guaranteed annuity purchase rates
for certain optional payment plans that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of Norris, and Title VII generally,
on any employment-related insurance or benefit program for which a Contract may
be purchased.
In addition, we are subject to the insurance laws and regulations of other
states within which we are licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
B-9
<PAGE>
determining permissible investments. Presently, the Company is licensed to do
business in the District of Columbia and all states, except New York.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to Federal securities laws applicable to the
issue and sale of the Contract described in this Prospectus. Patricia L.
Dysart, Assistant Vice President and Associate 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 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 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.
FINANCIAL STATEMENTS
This Statement of Additional Information contains consolidated financial
statements for GE Life and Annuity Assurance Company (the Company) as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, and GE Life & Annuity Separate Account 4 as of
December 31, 1999 and for each of the years or lesser periods in the two-year
period ended December 31, 1999. The consolidated financial statements of the
Company included herein should be distinguished from the financial statements
of GE Life & Annuity Separate Account 4 and should be considered only as
bearing on the ability of the Company to meet its obligations under the
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.
B-10
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
Contractholders
GE Life & Annuity Separate Account 4
and
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying statements of assets and liabilities of GE
Life & Annuity Separate Account 4 (the Account) (comprising the GE Investments
Funds, Inc.--S&P 500 Index, Money Market, Total Return, International Equity,
Real Estate Securities, Global Income, Value Equity, Income, U.S. Equity and
Premier Growth Equity Funds; the Oppenheimer Variable Account Funds--Bond/VA,
Capital Appreciation/VA, Aggressive Growth/VA, High Income/VA and Multiple
Strategies/VA Funds; the Variable Insurance Products Fund--Equity-Income,
Growth and Overseas Portfolios; the Variable Insurance Products Fund II--Asset
Manager and Contrafund Portfolios; the Variable Insurance Products III--Growth
& Income and Growth Opportunities Portfolios; the Federated Insurance Series--
American Leaders, High Income Bond and Utility Funds II; the Alger American
Fund--Small Capitalization and Growth Portfolios; the PBHG Insurance Series
Fund, Inc.--PBHG Large Cap Growth and PBHG Growth II Portfolios; the Janus
Aspen Series--Aggressive Growth, Growth, Worldwide Growth, Balanced, Flexible
Income, International Growth and Capital Appreciation Portfolios; the Goldman
Sachs Variable Insurance Trust--Growth and Income and Mid Cap Value Funds; and
the Salomon Brothers Variable Series Fund Inc.--Strategic Bond, Investors, and
Total Return Funds) as of December 31, 1999, the related statements of
operations for the aforementioned funds of GE Life & Annuity Separate Account
4 for the year or lesser period ended December 31, 1999 and the related
statements of changes in net assets for the aforementioned funds of GE Life &
Annuity Separate Account 4 for each of the years or lesser periods in the two-
year period ended December 31, 1999. These financial statements are the
responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999,
by correspondence with the underlying mutual funds or their transfer agent. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
portfolios constituting GE Life & Annuity Separate Account 4 as of December
31, 1999, the results of their operations for the year or lesser period then
ended, and changes in their net assets for each of the years or lesser periods
in the two-year period ended December 31, 1999 in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Richmond, Virginia
February 11, 2000
F-1
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------
Real
S&P 500 Money Total International Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Assets ------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Investment in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(22,215,478 shares;
cost --
$533,600,551)......... $624,254,935 -- -- -- --
Money Market Fund
(441,032,754 shares;
cost --
$441,032,754)........ -- 441,032,754 -- -- --
Total Return Fund
(6,493,333 shares;
cost -- $96,506,872).. -- -- 102,984,256 -- --
International Equity
Fund (2,726,755
shares; cost --
$33,751,159)......... -- -- -- 39,456,150 --
Real Estate Securities
Fund (3,748,156
shares; cost --
$48,639,416)......... -- -- -- -- 40,742,452
Receivable from
affiliate.............. -- 232,035 -- 1 --
Receivable for units
sold................... 345,348 6,011,576 154,310 25,071 --
------------ ----------- ----------- ---------- ----------
Total assets........... 624,600,283 447,276,365 103,138,566 39,481,222 40,742,452
------------ ----------- ----------- ---------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 571,063 340,766 83,321 17,115 26,319
Payable for units
withdrawn.............. 56,938 2,493,447 16,499 42 15,060
------------ ----------- ----------- ---------- ----------
Total liabilities...... 628,001 2,834,213 99,820 17,157 41,379
------------ ----------- ----------- ---------- ----------
Net assets.............. $623,972,282 444,442,152 103,038,746 39,464,065 40,701,073
------------ ----------- ----------- ---------- ----------
Analysis of net assets:
Attributable to:
Variable deferred
annuity
contractholders...... $623,972,282 444,442,152 103,038,746 19,905,813 25,055,708
GE Life and Annuity
Assurance Company.... -- -- -- 19,558,252 15,645,365
------------ ----------- ----------- ---------- ----------
Net assets.............. $623,972,282 444,442,152 103,038,746 39,464,065 40,701,073
============ =========== =========== ========== ==========
Outstanding units: Type
I (note 2)............. 1,079,890 5,265,274 513,721 203,538 218,219
============ =========== =========== ========== ==========
Net asset value per
unit: Type I........... $ 59.90 15.96 37.52 18.74 14.82
============ =========== =========== ========== ==========
Outstanding units: Type
II (note 2)............ 7,955,210 13,992,458 1,884,184 735,974 1,409,644
============ =========== =========== ========== ==========
Net asset value per
unit: Type II.......... $ 58.17 15.50 36.44 18.60 14.65
============ =========== =========== ========== ==========
Outstanding units: Type
III (note 2)........... 7,821,903 12,703,804 1,305,705 179,463 107,802
============ =========== =========== ========== ==========
Net asset value per
unit: Type III......... $ 11.59 10.32 10.94 12.36 9.97
============ =========== =========== ========== ==========
Outstanding units: Type
IV (note 2)............ 543,614 1,214,273 78,079 15,200 10,487
============ =========== =========== ========== ==========
Net asset value per
unit: Type IV.......... $ 10.81 10.23 10.50 12.12 9.12
============ =========== =========== ========== ==========
</TABLE>
F-2
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
-------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth
Fund Fund Fund Fund Equity Fund
Assets ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investment in GE
Investments Funds,
Inc.,
at fair value (note 2):
Global Income Fund
(938,940 shares;
cost -- $9,506,906).. $9,004,438 -- -- -- --
Value Equity Fund
(4,711,803 shares;
cost --
$68,652,601).......... -- 74,399,373 -- -- --
Income Fund (3,907,281
shares;
cost --
$47,902,723).......... -- -- 44,972,802 -- --
U.S. Equity Fund
(1,029,660 shares;
cost -- $38,053,766).. -- -- -- 39,024,108 --
Premier Growth Equity
Fund (305,976 shares;
cost --
$25,075,237).......... -- -- -- -- 27,124,734
Receivable from affili-
ate.................... -- -- -- -- --
Receivable for units
sold................... -- 56,630 27,145 95,306 201,431
---------- ---------- ---------- ---------- ----------
Total assets........... 9,004,438 74,456,003 44,999,947 39,119,414 27,326,165
---------- ---------- ---------- ---------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 4,330 66,736 118,416 50,811 14,969
Payable for units with-
drawn.................. -- 84,855 31,497 -- --
---------- ---------- ---------- ---------- ----------
Total liabilities...... 4,330 151,591 149,913 50,811 14,969
---------- ---------- ---------- ---------- ----------
Net assets.............. $9,000,108 74,304,412 44,850,034 39,068,603 27,311,196
---------- ---------- ---------- ---------- ----------
Analysis of net assets:
Attributable to:
Variable deferred an-
nuity
contractholders...... $3,579,380 69,329,399 44,850,034 39,068,603 27,311,196
GE Life and Annuity
Assurance Company.... 5,420,728 4,975,013 -- -- --
---------- ---------- ---------- ---------- ----------
Net assets.............. $9,000,108 74,304,412 44,850,034 39,068,603 27,311,196
========== ========== ========== ========== ==========
Outstanding units: Type
I (note 2)............. 50,781 419,746 1,124,188 82,891 46,603
========== ========== ========== ========== ==========
Net asset value per
unit: Type I........... $ 10.51 16.08 10.41 12.62 11.76
========== ========== ========== ========== ==========
Outstanding units: Type
II (note 2)............ 291,731 3,011,792 2,729,732 1,613,261 802,961
========== ========== ========== ========== ==========
Net asset value per
unit: Type II.......... $ 10.44 15.97 10.36 12.57 11.75
========== ========== ========== ========== ==========
Outstanding units: Type
III (note 2)........... -- 1,168,256 433,696 1,442,844 1,380,434
========== ========== ========== ========== ==========
Net asset value per
unit: Type III......... $ -- 11.17 9.71 11.56 11.73
========== ========== ========== ========== ==========
Outstanding units: Type
IV (note 2)............ -- 147,340 67,078 100,906 96,385
========== ========== ========== ========== ==========
Net asset value per
unit: Type IV.......... $ -- 9.72 9.78 10.55 11.73
========== ========== ========== ========== ==========
</TABLE>
F-3
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-----------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Assets ----------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investment in Oppen-
heimer Variable Account
Funds, at fair value
(note 2):
Bond Fund/VA (6,645,197
shares;
cost --
$78,301,554).......... $76,552,671 -- -- -- --
Capital Appreciation
Fund/VA (5,652,831
shares;
cost --
$192,587,611)........ -- 281,737,110 -- -- --
Aggressive Growth
Fund/VA (4,341,360
shares;
cost --
$205,932,019)......... -- -- 357,337,373 -- --
High Income Fund/VA
(15,645,970 shares;
cost --
$172,131,067)........ -- -- -- 167,724,795 --
Multiple Strategies
Fund/VA (4,649,496
shares;
cost -- $72,251,157).. -- -- -- -- 81,180,209
Receivable from affili-
ate.................... -- 6 234 -- --
Receivable for units
sold................... 24,846 375,005 1,533,710 3,506 4,203
----------- ----------- ----------- ----------- ----------
Total assets........... 76,577,517 282,112,121 358,871,317 167,728,301 81,184,412
----------- ----------- ----------- ----------- ----------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 86,300 299,509 538,204 155,738 167,256
Payable for units with-
drawn.................. 24,695 142,929 -- 94,390 179,862
----------- ----------- ----------- ----------- ----------
Total liabilities...... 110,995 442,438 538,204 250,128 347,118
----------- ----------- ----------- ----------- ----------
Net assets attributable
to variable deferred
annuity
contractholders........ $76,466,522 281,669,683 358,333,113 167,478,173 80,837,294
=========== =========== =========== =========== ==========
Outstanding units: Type
I (note 2)............. 768,244 957,458 1,804,530 1,245,529 1,051,087
=========== =========== =========== =========== ==========
Net asset value per
unit: Type I........... $ 21.51 64.57 73.61 32.02 30.80
=========== =========== =========== =========== ==========
Outstanding units: Type
II (note 2)............ 2,531,310 3,232,987 2,933,967 3,792,914 1,504,814
=========== =========== =========== =========== ==========
Net asset value per
unit: Type II.......... $ 20.88 62.71 71.49 31.09 29.91
=========== =========== =========== =========== ==========
Outstanding units: Type
III (note 2)........... 690,965 1,214,374 894,256 923,199 305,825
=========== =========== =========== =========== ==========
Net asset value per
unit: Type III......... $ 9.67 13.23 17.17 10.10 10.95
=========== =========== =========== =========== ==========
Outstanding units: Type
IV (note 2)............ 41,749 81,428 24,750 35,858 10,366
=========== =========== =========== =========== ==========
Net asset value per
unit: Type IV.......... $ 9.73 12.77 16.08 9.77 10.23
=========== =========== =========== =========== ==========
</TABLE>
F-4
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance
Products Fund
------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Assets
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (26,903,305
shares; cost -- $591,595,226).......... $691,683,976 -- --
Growth Portfolio (12,260,801 shares;
cost -- $454,460,571).................. -- 673,485,783 --
Overseas Portfolio (4,713,302 shares;
cost -- $107,086,440).................. -- -- 129,332,995
Receivable from affiliate................ -- 25 63
Receivable for units sold................ 164,930 862,358 669,332
------------ ----------- -----------
Total assets............................ 691,848,906 674,348,166 130,002,390
------------ ----------- -----------
Liabilities
Accrued expenses payable to affiliate
(note 3)................................ 749,836 911,873 325,471
Payable for units withdrawn.............. 352,267 299,787 71,531
------------ ----------- -----------
Total liabilities...................... 1,102,103 1,211,660 397,002
------------ ----------- -----------
Net assets attributable to variable de-
ferred annuity contractholders.......... $690,746,803 673,136,506 129,605,388
============ =========== ===========
Outstanding units: Type I (note 2)....... 4,454,619 3,310,123 2,244,272
============ =========== ===========
Net asset value per unit: Type I......... $ 43.33 73.80 33.25
============ =========== ===========
Outstanding units: Type II (note 2)...... 10,963,577 4,760,717 1,525,527
============ =========== ===========
Net asset value per unit: Type II........ $ 42.08 71.67 32.29
============ =========== ===========
Outstanding units: Type III (note 2)..... 3,203,653 6,561,710 388,067
============ =========== ===========
Net asset value per unit: Type III....... $ 10.65 12.73 13.80
============ =========== ===========
Outstanding units: Type IV (note 2)...... 242,696 333,735 28,190
============ =========== ===========
Net asset value per unit: Type IV........ $ 9.32 12.34 13.08
============ =========== ===========
</TABLE>
F-5
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------ -------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
Assets ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
Investment in Variable In-
surance Products Fund II,
at fair value (note 2):
Asset Manager Portfolio
(25,602,717 shares;
cost -- $394,723,593).... $478,002,728 -- -- --
Contrafund Portfolio
(17,879,468 shares;
cost -- $369,622,889).... -- 521,186,482 -- --
Investment in Variable In-
surance Products Fund III,
at fair value (note 2):
Growth & Income Portfolio
(6,951,626 shares;
cost -- $109,077,377).... -- -- 120,263,132 --
Growth Opportunities Port-
folio (4,348,199 shares;
cost -- $93,193,775)..... -- -- -- 100,660,801
Receivable from affiliate.. 1 14 -- --
Receivable for units sold.. 14,591 897,435 96,740 155,275
------------ ----------- ----------- -----------
Total assets.............. 478,017,320 522,083,931 120,359,872 100,816,076
------------ ----------- ----------- -----------
Liabilities
Accrued expenses payable to
affiliate (note 3)........ 655,233 451,120 98,967 87,841
Payable for units with-
drawn..................... 895,805 99,744 51,767 150
------------ ----------- ----------- -----------
Total liabilities......... 1,551,038 550,864 150,734 87,991
------------ ----------- ----------- -----------
Net assets attributable to
variable deferred annuity
contractholders........... $476,466,282 521,533,067 120,209,138 100,728,085
============ =========== =========== ===========
Outstanding units: Type I
(note 2).................. 11,988,811 2,650,253 618,815 525,381
============ =========== =========== ===========
Net asset value per unit:
Type I.................... $ 30.63 32.31 17.12 15.61
============ =========== =========== ===========
Outstanding units: Type II
(note 2).................. 3,361,601 11,622,130 5,051,739 4,766,024
============ =========== =========== ===========
Net asset value per
unit:Type II.............. $ 29.86 31.91 17.00 15.51
============ =========== =========== ===========
Outstanding units: Type III
(note 2).................. 777,512 5,211,986 2,078,979 1,709,162
============ =========== =========== ===========
Net asset value per unit:
Type III.................. $ 10.80 11.75 10.69 10.35
============ =========== =========== ===========
Outstanding units: Type IV
(note 2).................. 44,890 336,615 150,665 92,620
============ =========== =========== ===========
Net asset value per unit:
Type IV................... $ 10.57 11.29 10.03 9.89
============ =========== =========== ===========
</TABLE>
F-6
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Federated Insurance Series
-----------------------------------
American High
Leaders Income Bond Utility
Fund II Fund II Fund II
------------ ----------- ----------
<S> <C> <C> <C>
Assets
Investments in Federated Insurance
Series, at fair value (note 2):
American Leaders Fund II (4,849,330 shares;
cost -- $97,644,443)...................... $100,963,047 -- --
High Income Bond Fund II (6,565,038 shares;
cost -- $68,083,286)...................... -- 67,225,993 --
Utility Fund II (4,131,452 shares; cost --
$55,525,888)............................. -- -- 59,286,336
Receivable from affiliate................... -- -- --
Receivable for units sold................... 108,314 42,829 84,008
------------ ---------- ----------
Total assets............................... 101,071,361 67,268,822 59,370,344
------------ ---------- ----------
Liabilities
Accrued expenses payable to affiliate (note
3)......................................... 87,229 56,158 49,394
Payable for units withdrawn................. 3,018 58,978 --
------------ ---------- ----------
Total liabilities.......................... 90,247 115,136 49,394
------------ ---------- ----------
Net assets attributable to variable deferred
annuity contractholders.................... $100,981,114 67,153,686 59,320,950
============ ========== ==========
Oustanding units: Type I (note 2)........... 474,111 450,443 363,909
============ ========== ==========
Net asset value per unit: Type I............ $ 17.75 15.52 19.11
============ ========== ==========
Outstanding units: Type II (note 2)......... 4,554,700 3,376,105 2,483,985
============ ========== ==========
Net asset value per unit: Type II........... $ 17.58 15.32 18.87
============ ========== ==========
Oustanding units: Type III (note 2)......... 1,114,543 799,186 491,571
============ ========== ==========
Net asset value per unit: Type III.......... $ 10.49 9.89 10.44
============ ========== ==========
Outstanding units: Type IV (note 2)......... 85,187 55,873 36,259
============ ========== ==========
Net asset value per unit: Type IV........... $ 9.42 9.61 9.98
============ ========== ==========
</TABLE>
F-7
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
PBHG Insurance
Alger American Fund Series Fund, Inc.
-------------------------- ---------------------
Small PBHG Large PBHG
Capitalization Growth Cap Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Investment in Alger American
Fund, at fair value (note 2):
Small Capitalization Portfo-
lio (2,611,114 shares;
cost -- $112,026,784)....... $144,002,930 -- -- --
Growth Portfolio (5,007,682
shares; cost --
$257,438,791).............. -- 322,394,581 -- --
PBHG Insurance Series Fund,
Inc. at fair value (note 2):
PBHG Large Cap Growth Portfo-
lio (911,524 shares; cost --
$13,938,008)............... -- -- 23,252,983 --
PBHG Growth II Portfolio
(1,412,242 shares; cost --
$20,551,081)............... -- -- -- 32,552,176
Receivable from affiliate..... 141 9 -- --
Receivable for units sold..... 183,401 610,966 10,833 136,648
------------ ----------- ---------- ----------
Total assets................. 144,186,472 323,005,556 23,263,816 32,688,824
============ =========== ========== ==========
Liabilities
Accrued expenses payable to
affiliate (note 3)........... 120,119 336,052 60,138 24,223
Payable for units withdrawn... 7,840 55,581 22 16,350
------------ ----------- ---------- ----------
Total liabilities............ 127,959 391,633 60,160 40,573
------------ ----------- ---------- ----------
Net assets attributable to
variable deferred annuity
contractholders.............. $144,058,513 322,613,923 23,203,656 32,648,251
============ =========== ========== ==========
Oustanding units: Type I (note
2)........................... 1,090,003 1,237,526 132,343 226,702
============ =========== ========== ==========
Net asset value per unit: Type
I............................ $ 17.22 25.97 24.74 22.35
============ =========== ========== ==========
Outstanding units: Type II
(note 2)..................... 6,310,836 8,583,493 811,131 1,242,408
============ =========== ========== ==========
Net asset value per unit: Type
II........................... $ 17.04 25.69 24.57 22.20
============ =========== ========== ==========
Oustanding units: Type III
(note 2)..................... 1,160,756 5,377,154 -- --
============ =========== ========== ==========
Net asset value per unit: Type
III.......................... $ 14.14 12.50 -- --
============ =========== ========== ==========
Outstanding units: Type IV
(note 2)..................... 97,659 231,761 -- --
============ =========== ========== ==========
Net asset value per unit: Type
IV........................... $ 13.71 11.87 -- --
============ =========== ========== ==========
</TABLE>
F-8
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series
------------------------------------
Aggressive Worldwide
Growth Growth Growth
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Assets
Investment in Janus Aspen Series, at fair
value (note 2):
Aggressive Growth Portfolio (8,745,708
shares; cost -- $318,342,552)........... $522,031,288 -- --
Growth Portfolio (20,512,483 shares;
cost -- $444,244,607)................... -- 690,245,038 --
Worldwide Growth Portfolio (20,673,754
shares; cost -- $575,985,214)........... -- -- 987,171,753
Receivable from affiliate................. 1,301 30 1,440
Receivable for units sold................. 749,946 866,106 1,663,028
------------ ----------- -----------
Total assets............................. 522,782,535 691,111,174 988,836,221
============ =========== ===========
Liabilities
Accrued expenses payable to affiliate
(note 3)................................. 524,669 912,334 912,014
Payable for units withdrawn............... 6,749,277 21,844 67,703
------------ ----------- -----------
Total liabilities........................ 7,273,946 934,178 979,717
------------ ----------- -----------
Net assets attributable to variable
deferred annuity contractholders......... $515,508,589 690,176,996 987,856,504
============ =========== ===========
Outstanding units: Type I (note 2)........ 1,789,828 4,139,512 4,314,377
============ =========== ===========
Net asset value per unit: Type I.......... $ 59.91 36.56 47.86
============ =========== ===========
Outstanding units: Type II (note 2)....... 5,067,599 11,701,274 14,578,854
============ =========== ===========
Net asset value per unit: Type II......... $ 58.97 35.98 47.11
============ =========== ===========
Outstanding units: Type III (note 2)...... 4,781,470 8,278,915 5,789,831
============ =========== ===========
Net asset value per unit: Type III........ $ 20.95 13.46 15.28
============ =========== ===========
Outstanding units: Type IV (note 2)....... 513,109 500,424 406,948
============ =========== ===========
Net asset value per unit: Type IV......... $ 18.07 12.77 14.97
============ =========== ===========
</TABLE>
F-9
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
--------------------------------------------------
Flexible International Capital
Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio
------------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Assets
Investment in Janus Aspen
Series, at fair value
(note 2):
Balanced Portfolio
(16,485,224 shares;
cost -- $370,790,126).... $460,267,444 -- -- --
Flexible Income Portfolio
(4,942,920 shares;
cost -- $58,455,980)..... -- 56,448,148 -- --
International Growth
Portfolio (4,758,145
shares; cost --
$111,821,732)........... -- -- 183,997,451 --
Capital Appreciation
Portfolio (11,148,082
shares; cost --
$273,871,408)........... -- -- -- 369,781,874
Receivable from affiliate.. -- -- 478 313
Receivable for units sold.. 388,151 102,588 489,862 949,581
------------ ---------- ----------- -----------
Total assets.............. 460,655,595 56,550,736 184,487,791 370,731,768
------------ ---------- ----------- -----------
Liabilities
Accrued expenses payable to
affiliate (note 3)........ 373,020 51,802 161,387 373,639
Payable for units
withdrawn................. 55,319 46,493 126,477 781,247
------------ ---------- ----------- -----------
Total liabilities......... 428,339 98,295 287,864 1,154,886
------------ ---------- ----------- -----------
Net assets attributable to
variable deferred annuity
contractholders........... $460,227,256 56,452,441 184,199,927 369,576,882
============ ========== =========== ===========
Outstanding units: Type I
(note 2).................. 2,796,176 514,641 949,972 1,124,173
============ ========== =========== ===========
Net asset value per unit:
Type I.................... $ 24.50 13.56 28.58 32.35
============ ========== =========== ===========
Outstanding units: Type II
(note 2).................. 12,451,725 3,172,870 4,728,347 6,407,884
============ ========== =========== ===========
Net asset value per unit:
Type II................... $ 24.24 13.41 28.32 32.13
============ ========== =========== ===========
Outstanding units: Type III
(note 2).................. 7,205,031 606,070 1,251,115 8,073,338
============ ========== =========== ===========
Net asset value per unit:
Type III.................. $ 11.93 9.97 17.11 15.07
============ ========== =========== ===========
Outstanding units: Type IV
(note 2).................. 347,931 89,213 102,381 428,091
============ ========== =========== ===========
Net asset value per unit:
Type IV................... $ 11.31 9.90 16.96 13.22
============ ========== =========== ===========
</TABLE>
F-10
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Assets and Liabilities, Concluded
December 31, 1999
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Fund Inc.
---------------------- ------------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets
Investment in Goldman
Sachs Variable
Insurance Trust,
at fair value (note 2):
Growth and Income Fund
(935,608 shares;
cost -- $9,933,309)... $10,188,769 -- -- -- --
Mid Cap Value Fund
(1,952,623 shares;
cost -- $17,214,626).. -- 16,441,086 -- -- --
Investment in Salomon
Brothers Variable
Series Fund Inc., at
fair value (note 2):
Strategic Bond Fund
(553,648 shares;
cost -- $5,558,043)... -- -- 5,348,241 -- --
Investors Fund (308,001
shares; cost --
$3,686,841).......... -- -- -- 3,766,850 --
Total Return Fund
(317,951 shares;
cost -- $3,363,898)... -- -- -- -- 3,252,640
Receivable from
affiliate.............. -- -- -- -- --
Receivable for units
sold................... 17,081 109,340 26,541 37,265 --
----------- ---------- ---------- --------- ---------
Total assets........... 10,205,850 16,550,426 5,374,782 3,804,115 3,252,640
----------- ---------- ---------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 7,156 10,490 3,220 12,176 1,941
Payable for units
withdrawn.............. 4 26,440 43,562 32 --
----------- ---------- ---------- --------- ---------
Total liabilities...... 7,160 36,930 46,782 12,208 1,941
----------- ---------- ---------- --------- ---------
Net assets attributable
to variable deferred
annuity
contractholders........ $10,198,690 16,513,496 5,328,000 3,791,907 3,250,699
=========== ========== ========== ========= =========
Outstanding units: Type
I (note 2)............. 80,699 195,348 46,435 15,929 6,185
=========== ========== ========== ========= =========
Net asset value per
unit: Type I........... $ 9.23 8.39 10.16 13.40 10.63
=========== ========== ========== ========= =========
Outstanding units: Type
II (note 2)............ 779,766 1,156,388 245,779 111,934 175,544
=========== ========== ========== ========= =========
Net asset value per
unit: Type II.......... $ 9.20 8.35 10.13 13.36 10.60
=========== ========== ========== ========= =========
Outstanding units: Type
III (note 2)........... 204,598 482,846 223,881 187,111 117,856
=========== ========== ========== ========= =========
Net asset value per
unit: Type III......... $ 10.44 10.02 9.90 10.98 9.91
=========== ========== ========== ========= =========
Outstanding units: Type
IV (note 2)............ 15,109 42,809 15,296 2,865 16,292
=========== ========== ========== ========= =========
Net asset value per
unit: Type IV.......... $ 9.53 8.89 9.81 9.96 9.59
=========== ========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Operations
Year ended December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------------
S&P 500 Money International Real Estate
Index Market Total Return Equity Securities
Fund Fund Fund Fund Fund
----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 4,410,071 15,088,188 2,067,235 46,113 1,381,537
Expenses -- Mortality
& expense risk charges
and administrative
expenses -- Type I
(note 3).............. 704,948 950,843 220,301 30,656 43,767
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 4,907,040 2,464,886 799,585 148,148 322,329
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. 460,991 701,862 85,952 8,603 7,954
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type IV
(note 3).............. 21,523 57,198 3,143 449 224
----------- ----------- ---------- ---------- -----------
Net investment income
(expense).............. (1,684,431) 10,913,399 958,254 (141,743) 1,007,263
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... 30,003,910 (10) 1,021,209 2,767,291 (2,823,490)
Unrealized
appreciation
(depreciation) on
investments.......... 47,259,421 10 5,281,350 4,958,674 1,207,080
Capital gain
distribution......... 6,090,099 -- 2,426,755 1,106,722 72,712
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments......... 83,353,430 -- 8,729,314 8,832,687 (1,543,698)
----------- ----------- ---------- ---------- -----------
Increase (decrease) in
net assets from
operations............. $81,668,999 10,913,399 9,687,568 8,690,944 (536,435)
=========== =========== ========== ========== ===========
<CAPTION>
GE Investments Funds, Inc., continued
-------------------------------------------------------------------
Premier
Global Value U.S. Equity Growth
Income Fund Equity Fund Income Fund Fund Equity Fund-a)
----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 55,082 512,848 2,343,057 200,089 23,826
Expenses -- Mortality
& expense risk charges
and administrative
expenses -- Type I
(note 3).............. 6,916 72,657 151,247 7,322 1,847
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 44,108 547,672 337,337 130,281 28,109
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. -- 71,148 21,574 67,105 42,760
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type IV
(note 3).............. -- 6,988 3,666 3,951 2,973
----------- ----------- ---------- ---------- -----------
Net investment income
(expense).............. 4,058 (185,617) 1,829,233 (8,570) (51,863)
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... (134,013) 1,440,840 (265,204) 288,484 559,025
Unrealized
appreciation
(depreciation) on
investments.......... (715,675) 5,153,071 (2,672,230) 816,588 2,049,497
Capital gain
distribution......... 4,146 -- 72,466 1,800,801 770,369
----------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments......... (845,542) 6,593,911 (2,864,968) 2,905,873 3,378,891
----------- ----------- ---------- ---------- -----------
Increase (decrease) in
net assets from
operations............. $ (841,484) 6,408,294 (1,035,735) 2,897,303 3,327,028
=========== =========== ========== ========== ===========
-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
expenses -- Type I
(note 3).............. 211,534 610,992 1,107,841 525,530 397,035
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type II
(note 3).............. 684,021 2,181,875 1,965,558 1,624,725 609,540
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- Type III
(note 3).............. 37,302 71,673 44,712 74,133 15,762
Expenses -- Mortality &
expense risk charges
and administrative
expenses -- 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 Year ended December
Year ended December 31, 31, 31,
------------------------ ---------------------- ----------------------
1999 1998 1999 1998 1998 1996
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (513,220) (550,126) 3,467,372 377,590 481,654 (182,451)
Net realized gain
(loss)................ 1,360,681 1,333,508 (1,194,670) 901,146 1,236,132 1,730,044
Unrealized appreciation
(depreciation) on
investments........... (4,248,287) 4,019,536 (1,948,643) (615,798) (3,774,428) 1,205,055
Capital gain
distribution.......... 7,121,918 2,704,294 372,335 273,209 2,310,160 1,841,863
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from
operations............. 3,721,092 7,507,212 696,394 936,147 253,518 4,594,511
------------ ---------- ---------- ---------- ---------- ----------
From capital
transactions:
Net premiums........... 21,419,498 17,174,298 12,914,758 7,609,375 9,759,421 5,300,423
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (221,728) (702,585) (245,085) (420,052) (562,420) (295,533)
Surrenders........... (5,313,269) (2,256,129) (3,914,221) (3,031,255) (3,154,249) (1,872,219)
Administrative
expense (note 3).... (77,785) (47,545) (43,801) (34,940) (45,364) (36,851)
Transfer gain (loss)
and transfer fees... (56,238) 404,576 989 650,014 (154,923) (738,016)
Transfers (to) from the
Guarantee Account
(note 1).............. 15,009,686 15,132,233 11,169,833 12,815,682 10,141,825 5,791,377
Interfund transfers.... (7,715,367) 2,109,439 (5,891,810) (1,253,689) (2,728,703) 2,670,259
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from capital
transactions........... 23,044,797 31,814,287 13,990,663 16,335,135 13,255,587 10,819,440
------------ ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets............. 26,765,889 39,321,499 14,687,057 17,271,282 13,509,105 15,413,951
Net assets at beginning
of year................ 74,215,225 34,893,726 52,466,629 35,195,347 45,811,845 30,397,894
------------ ---------- ---------- ---------- ---------- ----------
Net assets at end of
year................... $100,981,114 74,215,225 67,153,686 52,466,629 59,320,950 45,811,845
============ ========== ========== ========== ========== ==========
</TABLE>
F-26
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Alger American Fund
--------------------------------------------------
Small Capitalization
Portfolio Growth Portfolio
------------------------ ------------------------
Year ended December 31, Year ended December 31,
------------------------ ------------------------
1999 1998 1999 1998
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (1,348,858) (1,053,686) (2,681,920) (966,536)
Net realized gain
(loss).................. 4,496,020 411,066 16,000,254 4,172,054
Unrealized appreciation
(depreciation) on in-
vestments............... 25,658,694 2,406,527 34,200,259 20,408,775
Capital gain distribu-
tion.................... 11,288,748 10,556,556 16,366,607 13,947,299
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from operations... 40,094,604 12,320,463 63,885,200 37,561,592
------------ ---------- ----------- -----------
From capital transactions:
Net premiums............. 18,801,609 6,622,636 92,259,433 11,725,922
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits......... (420,284) (459,998) (1,648,447) (663,235)
Surrenders............. (7,370,878) (3,709,013) (13,584,719) (5,345,156)
Administrative expense
(note 3).............. (95,877) (83,804) (148,219) (89,422)
Transfer gain (loss)
and transfer fees..... 339,009 246,716 622,265 (10,013)
Transfers (to) from the
Guarantee Account (note
1)...................... 7,500,439 8,384,117 26,764,387 9,961,009
Interfund transfers...... (9,144,368) (2,794,548) 22,462,752 6,706,761
------------ ---------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. 9,609,650 8,206,106 126,727,452 22,285,866
------------ ---------- ----------- -----------
Increase (decrease) in net
assets................... 49,704,254 20,526,569 190,612,652 59,847,458
Net assets at beginning of
year..................... 94,354,259 73,827,690 132,001,271 72,153,813
------------ ---------- ----------- -----------
Net assets at end of
year..................... $144,058,513 94,354,259 322,613,923 132,001,271
============ ========== =========== ===========
</TABLE>
F-27
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Fund, Inc.
-----------------------------------------------
PBHG PBHG
Large Cap Growth II
Growth Portfolio Portfolio
----------------------- ----------------------
Year ended December Year ended December
31, 31,
----------------------- ----------------------
1999 1998 1999 1998
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)...................... $ (183,335) (106,500) (211,133) (119,244)
Net realized gain (loss)..... 1,293,989 282,909 2,553,635 (281,878)
Unrealized appreciation (de-
preciation) on investments.. 7,139,998 2,025,080 11,061,365 1,029,558
Capital gain distribution.... -- -- -- --
----------- ---------- ---------- ----------
Increase (decrease) in net
assets from operations....... 8,250,652 2,201,489 13,403,867 628,436
----------- ---------- ---------- ----------
From capital transactions:
Net premiums................. 1,893,719 2,342,871 2,634,384 1,855,144
Transfers (to) from the gen-
eral account of GE Life and
Annuity:
Death benefits.............. (120,414) (42,994) (31,216) (117,890)
Surrenders.................. (2,112,511) (588,848) (1,282,939) (409,105)
Administrative expense (note
3)......................... (13,054) (7,464) (13,646) (8,868)
Transfer gain (loss) and
transfer fees.............. 8,735 40,495 92,029 27,528
Transfers (to) from the
Guarantee Account (note 1) 2,244,446 2,026,921 1,647,321 2,485,422
Interfund transfers.......... 1,070,497 1,290,849 5,263,684 (477,840)
----------- ---------- ---------- ----------
Increase (decrease) in net
assets from capital
transactions................. 2,971,418 5,061,830 8,309,617 3,354,391
----------- ---------- ---------- ----------
Increase (decrease) in net
assets....................... 11,222,070 7,263,319 21,713,484 3,982,827
Net assets at beginning of
year......................... 11,981,586 4,718,267 10,934,767 6,951,940
----------- ---------- ---------- ----------
Net assets at end of year..... $23,203,656 11,981,586 32,648,251 10,934,767
=========== ========== ========== ==========
</TABLE>
F-28
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
------------------------- ------------------------
Year ended December 31, Year ended December 31,
------------------------- ------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)............... $ (174,869) (1,431,833) (4,896,666) 6,056,709
Net realized gain
(loss).................. 62,362,096 11,413,034 35,813,367 11,096,226
Unrealized appreciation
(depreciation) on
investments............. 163,992,838 24,333,274 142,877,179 56,452,101
Capital gain
distribution............ 4,906,978 -- 2,247,871 7,613,462
------------ ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 231,087,043 34,314,475 176,041,751 81,218,498
------------ ----------- ----------- -----------
From capital transactions:
Net premiums............. 82,694,488 4,886,885 129,921,095 19,968,429
Transfers (to) from the
general account of
GE Life and Annuity:
Death benefits......... (693,006) (815,476) (2,337,901) (1,360,596)
Surrenders............. (14,862,560) (5,681,643) (28,100,426) (11,799,421)
Administrative expense
(note 3).............. (206,645) (120,730) (458,087) (317,146)
Transfer gain (loss)
and transfer fees..... (5,761,812) (352,260) 893,020 (691,664)
Transfers (to) from the
Guarantee Account (note
1)...................... 14,163,240 4,693,626 37,755,657 19,406,972
Interfund transfers...... 74,808,346 (8,460,504) 42,077,065 3,890,833
------------ ----------- ----------- -----------
Increase (decrease) in net
assets from capital
transactions............. 150,142,051 (5,850,102) 179,750,423 29,097,407
------------ ----------- ----------- -----------
Increase (decrease) in net
assets................... 381,229,094 28,464,373 355,792,174 110,315,905
Net assets at beginning of
year..................... 134,279,495 105,815,122 334,384,822 224,068,917
------------ ----------- ----------- -----------
Net assets at end of
year..................... $515,508,589 134,279,495 690,176,996 334,384,822
============ =========== =========== ===========
</TABLE>
F-29
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-----------------------------------------------------------------------------
Worldwide Flexible
Growth Balanced Income
Portfolio Portfolio Portfolio
------------------------- ------------------------ ------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (7,350,545) 6,523,226 3,945,453 3,182,878 2,762,764 1,259,217
Net realized gain
(loss)................ 59,273,825 46,111,510 13,526,836 3,053,389 (288,141) 222,001
Unrealized appreciation
(depreciation) on
investments........... 309,685,852 41,481,543 55,762,394 28,743,051 (2,373,888) 30,008
Capital gain
distribution.......... -- 4,933,615 -- 722,300 146,515 66,130
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from
operations............. 361,609,132 99,049,894 73,234,683 35,701,618 247,250 1,577,356
------------ ----------- ----------- ----------- ----------- -----------
From capital
transactions:
Net premiums........... 103,924,205 44,526,187 123,717,725 24,644,401 12,258,667 4,066,867
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits....... (2,973,664) (1,373,901) (1,474,438) (857,556) (202,784) (36,188)
Surrenders........... (40,772,035) (19,617,340) (20,730,548) (9,165,787) (2,936,151) (813,459)
Administrative
expense (note 3).... (619,954) (469,515) (267,776) (138,515) (34,631) (21,644)
Transfer gain (loss)
and transfer fees... 934,945 125,152 456,442 1,031,515 (128,719) 453,024
Transfers (to) from the
Guarantee Account
(note 1).............. 51,917,924 41,574,483 78,194,170 24,485,481 13,890,840 7,043,148
Interfund transfers.... 5,019,615 (124,706) 32,520,849 21,236,757 312,624 6,439,490
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets from capital
transactions........... 117,431,036 64,640,360 212,416,424 61,236,296 23,159,846 17,131,238
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in
net assets............. 479,040,168 163,690,254 285,651,107 96,937,914 23,407,096 18,708,594
Net assets at beginning
of year................ 508,816,336 345,126,082 174,576,149 77,638,235 33,045,345 14,336,751
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of
year................... $987,856,504 508,816,336 460,227,256 174,576,149 56,452,441 33,045,345
============ =========== =========== =========== =========== ===========
</TABLE>
F-30
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series (continued)
-------------------------------------------------
International Growth Capital Appreciation
Portfolio Portfolio
------------------------ -----------------------
Year ended December
Year ended December 31, 31,
------------------------ -----------------------
1999 1998 1999 1998
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................. $ (1,103,843) 285,215 (2,139,496) (129,163)
Net realized gain (loss)... 6,798,898 7,205,182 12,257,740 336,728
Unrealized appreciation
(depreciation) on
investments............... 68,867,033 1,486,427 88,365,393 7,532,890
Capital gain distribution.. -- 168,340 909,471 --
------------ ---------- ----------- ----------
Increase (decrease) in net
assets from operations... 74,562,088 9,145,164 99,393,108 7,740,455
------------ ---------- ----------- ----------
From capital transactions:
Net premiums............... 19,686,581 7,538,624 136,931,557 8,764,540
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits............ (397,836) (372,667) (1,194,716) (52,380)
Surrenders................ (5,164,544) (2,368,354) (7,042,061) (765,563)
Administrative expense
(note 3)................. (84,094) (70,684) (94,871) (11,745)
Transfer gain (loss) and
transfer fees............ 96,657 74,891 280,719 485,206
Transfer (to) from the
Guarantee Account (note
1)........................ 8,757,358 10,288,178 34,911,459 4,797,081
Interfund transfers........ 9,262,544 (1,419,705) 67,308,216 15,456,302
------------ ---------- ----------- ----------
Increase (decrease) in net
assets from capital
transactions............... 32,156,666 13,670,283 231,100,303 28,673,441
------------ ---------- ----------- ----------
Increase (decrease) in net
assets..................... 106,718,754 22,815,447 330,493,411 36,413,896
Net assets at beginning of
year....................... 77,481,173 54,665,726 39,083,471 2,669,575
------------ ---------- ----------- ----------
Net assets at end of year... $184,199,927 77,481,173 369,576,882 39,083,471
============ ========== =========== ==========
</TABLE>
F-31
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance
Trust
----------------------------------------------------
Growth and Mid Cap
Income Value
Fund Fund
-------------------------- -------------------------
Period from Period from
May 12, May 8,
Year ended 1998 to Year ended 1998 to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................ $ 16,010 20,010 (7,991) 12,176
Net realized gain (loss).. 9,945 (32,043) 40,722 (72,641)
Unrealized appreciation
(depreciation) on
investments.............. 215,378 40,081 (786,328) 12,789
Capital gain
distribution............. -- -- -- --
----------- --------- ---------- ---------
Increase (decrease) in net
assets from operations.... 241,333 28,048 (753,597) (47,676)
----------- --------- ---------- ---------
From capital transactions:
Net premiums.............. 3,188,933 1,873,044 7,662,493 1,653,452
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........... -- -- (44,741) --
Surrenders............... (312,406) (42,593) (399,418) (42,773)
Administrative expense
(note 3)................ (5,657) (447) (6,665) (527)
Transfer gain (loss) and
transfer fees........... (17,014) 89,687 129,599 (48,872)
Transfer (to) from the
Guarantee Account (note
1)....................... 2,602,797 1,085,095 3,097,131 1,327,515
Interfund transfers....... 238,136 1,229,734 3,205,503 782,072
----------- --------- ---------- ---------
Increase (decrease) in net
assets from capital
transactions.............. 5,694,789 4,234,520 13,643,902 3,670,867
----------- --------- ---------- ---------
Increase (decrease) in net
assets.................... 5,936,122 4,262,568 12,890,305 3,623,191
Net assets at beginning of
year...................... 4,262,568 -- 3,623,191 --
----------- --------- ---------- ---------
Net assets at end of year.. $10,198,690 4,262,568 16,513,496 3,623,191
=========== ========= ========== =========
</TABLE>
F-32
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Salomon Brothers Variable Series Fund Inc.
-----------------------------------------------------------------------------
Strategic Total
Bond Investors Return
Fund Fund Fund
------------------------- ------------------------- -------------------------
Period from Period from Period from
October 22, November 27, October 30,
Year ended 1998 to Year ended 1998 to Year ended 1998 to
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 227,713 5,736 144 40 53,428 4,787
Net realized gain
(loss)................ 1,001 322 (45,705) -- 1,801 1
Unrealized appreciation
(depreciation) on
investments........... (204,979) (4,823) 79,688 321 (108,299) (2,958)
Capital gain
distribution.......... -- 121 -- -- -- 1,011
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets from
operations............. 23,735 1,356 34,127 361 (53,070) 2,841
---------- ------- --------- ------ --------- -------
From capital
transactions:
Net premiums........... 2,763,150 19,355 2,330,816 9,900 1,867,404 168,401
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits........ (10,950) -- -- -- -- --
Surrenders............ (107,247) -- (29,589) -- (26,394) (16)
Administrative expense
(note 3)............. (1,739) (17) (405) (3) (1,097) --
Transfer gain (loss)
and transfer fees.... (3,392) (48) 39,941 123 741 140
Transfer (to) from the
Guarantee Account
(note 1).............. 1,179,490 14,903 425,716 606 1,001,197 14,269
Interfund transfers.... 1,352,931 96,473 980,314 -- 118,197 158,086
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets from capital
transactions........... 5,172,243 130,666 3,746,793 10,626 2,960,048 340,880
---------- ------- --------- ------ --------- -------
Increase (decrease) in
net assets............. 5,195,978 132,022 3,780,920 10,987 2,906,978 343,721
Net assets at beginning
of year................ 132,022 -- 10,987 -- 343,721 --
---------- ------- --------- ------ --------- -------
Net assets at end of
year................... $5,328,000 132,022 3,791,907 10,987 3,250,699 343,721
========== ======= ========= ====== ========= =======
</TABLE>
See accompanying notes to financial statements.
F-33
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements
December 31, 1999
(1) Description of Entity
GE Life & Annuity Separate Account 4 (the Account), formerly Life of
Virginia Separate Account 4, is a separate investment account established in
1987 by GE Life and Annuity Assurance Company (GE Life & Annuity), formerly
The Life Insurance Company of Virginia, under the laws of the Commonwealth of
Virginia. The Account operates as a unit investment trust under the Investment
Company Act of 1940. The Account is used to fund certain benefits for flexible
premium variable deferred annuity life insurance policies issued by GE Life &
Annuity. GE Life and Annuity Assurance Company is a stock life insurance
company operating under a charter granted by the Commonwealth of Virginia on
March 21, 1871. A majority of the capital stock of GE Life & Annuity is owned
by General Electric Capital Assurance Company. General Electric Capital
Assurance Company and its parent, GE Financial Assurance Holdings, Inc. are
indirectly, wholly-owned subsidiaries of General Electric Capital Corporation
(GE Capital). GE Capital, a diversified financial services company, is a
wholly-owned subsidiary of General Electric Company (GE), a New York
corporation.
In June 1999, a new investment subdivision was added to the Account for all
types of units (see Note 2). The Premier Growth Equity Fund invests solely in
a designated portfolio of the GE Investment Funds, Inc. and is a series type
mutual fund. Between 1997 and 1999, the Oppenheimer Variable Account Capital
Appreciation Fund changed its name to the Oppenheimer Variable Account
Aggressive Growth Fund/VA and the Oppenheimer Variable Account Growth Fund
changed its name to the Oppenheimer Variable Account Capital Appreciation
Fund/VA.
In October 1998, three new investment subdivisions were added to the
Account. The Investors Fund, Strategic Bond Fund, and the Total Return Fund
each invest solely in a designated portfolio of the Salomon Brothers Variable
Series Fund Inc.
In May 1998, three new investment subdivisions were added to the Account.
The U.S. Equity Portfolio invests solely in a designated portfolio of the GE
Investments Funds, Inc. The Mid Cap Value Fund (formerly known as the Mid Cap
Equity Fund) and Growth and Income Fund each invest solely in a designated
portfolio of the Goldman Sachs Variable Insurance Trust. All designated
portfolios described above are series type mutual funds.
Policyowners may transfer cash values between the Account's portfolios and
the Guarantee Account that is part of the general account of GE Life &
Annuity. Amounts transferred to the Guarantee Account earn interest at the
interest rate in effect at the time of such transfer and remain in effect for
one year, after which a new rate may be declared.
(2) Summary of Significant Accounting Policies
(a) Unit Classes
There are four unit classes included in the Account. Type I units are sold
under policy form P1140 and P1141. Type II units are sold under policy forms
P1142, P1142N and P1143. Type III units are eligible for up to a 4% bonus
credit and are sold under policy form P1152 and began sales in the first
quarter of 1999. Type IV unit sales are sold under Policy Form P1151 and began
sales in the second quarter of 1999. Type V unit sales are sold under policy
form P1154 and are expected to begin sales in the second quarter of 2000.
F-34
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(b) Investments
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income distributions
are recorded on the ex-dividend date. Realized gains and losses on investments
are determined on the average cost basis. The units and unit values are
disclosed as of the last business day in the applicable year.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the year ended December 31, 1999 were:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
-------------- -------------- --------------
<S> <C> <C>
GE Investment Funds, Inc.:
S&P 500 Index Fund............................... $ 479,953,109 240,675,116
Money Market Fund................................ 2,709,722,205 2,475,380,915
Total Return Fund................................ 51,675,569 21,161,494
International Equity Fund........................ 58,643,467 54,760,704
Real Estate Securities Fund...................... 10,713,861 15,004,297
Global Income Fund............................... 6,954,217 7,026,889
Value Equity Fund................................ 54,346,586 25,721,299
Income Fund...................................... 29,457,972 16,007,415
U.S. Equity Fund................................. 43,581,601 7,797,307
Premier Growth Equity Fund....................... 38,883,748 14,367,536
Oppenheimer Variable Account Funds:
Bond Fund/VA..................................... 45,060,045 26,657,558
Aggressive Growth Fund/VA........................ 197,174,231 222,386,370
Capital Appreciation Fund/VA..................... 71,654,277 52,761,076
High Income Fund/VA.............................. 92,366,718 84,579,951
Multiple Strategies Fund/VA...................... 23,029,714 24,055,134
Variable Insurance Products Fund:
Equity-Income Portfolio.......................... 179,598,082 191,780,961
Growth Portfolio................................. 297,222,394 166,464,545
Overseas Portfolio............................... 631,917,400 655,516,215
Variable Insurance Products Fund II:
Asset Manager Portfolio.......................... 89,283,720 126,101,734
Contrafund Portfolio............................. 201,949,816 105,373,757
Variable Insurance Products Fund III:
Growth & Income Portfolio........................ 101,691,761 44,939,988
Growth Opportunties Portfolio.................... 74,653,003 29,331,119
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund........................... 8,838,178 3,077,278
Mid Cap Value Fund............................... 24,173,203 10,663,003
Janus Aspen Series:
Aggressive Growth Portfolio...................... 407,424,565 246,382,506
Growth Portfolio................................. 297,235,227 120,740,868
Worldwide Growth Portfolio....................... 352,769,148 245,642,656
Balanced Portfolio............................... 308,476,408 91,408,986
Flexible Income Portfolio........................ 50,727,756 24,540,205
</TABLE>
F-35
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
-------------- ------------ -----------
<S> <C> <C>
International Growth Portfolio........................ $104,597,851 73,668,969
Capital Appreciation Portfolio........................ 342,016,654 110,984,538
Federated Insurance Series:
Utility Fund II....................................... 32,061,371 16,065,087
High Income Bond Fund II.............................. 100,193,253 81,675,988
American Leaders Fund II.............................. 61,138,187 31,509,097
The Alger American Fund:
Small Capitalization Portfolio........................ 206,574,736 187,536,157
Growth Portfolio...................................... 278,969,806 138,086,817
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio....................... 10,200,499 7,400,345
PBHG Growth II Portfolio.............................. 19,335,309 11,354,160
Salomon Brothers Variable Series Fund Inc.:
Strategic Bond Fund................................... 6,599,848 1,173,721
Investors Fund........................................ 5,284,092 1,562,172
Total Return Fund..................................... 4,562,928 1,541,701
</TABLE>
F-36
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
(c) Capital Transactions
The increase (decrease) in outstanding units for Types I, II, III and IV from
capital transactions for the years or periods ended December 31, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Type I Units: --------- ---------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 918,847 3,512,260 631,828 181,530 353,450
--------- ---------- ------- ------- --------
From capital
transactions:
Net premiums........... 43,692 3,088,601 8,156 37,608 139,356
Transfers (to) from the
general account
of GE Life & Annuity:
Death benefits....... (4,853) (89,832) (2,466) (463) (1,816)
Surrenders........... (75,788) (2,689,646) (56,739) (24,253) (85,757)
Cost of insurance and
administrative
expenses............ (2,222) (13,914) (1,299) (767) (3,200)
Transfers (to) from the
Guarantee Account..... 44,702 269,329 8,553 14,103 112,800
Interfund transfers.... 172,435 1,145,551 (3,122) (46,225) (198,141)
--------- ---------- ------- ------- --------
Net increase (decrease)
in units from capital
transactions........... 177,966 1,710,089 (46,917) (19,997) (36,758)
--------- ---------- ------- ------- --------
Units outstanding at
December 31, 1998...... 1,096,813 5,222,349 584,911 161,533 316,692
--------- ---------- ------- ------- --------
From capital
transactions:
Net premiums........... 26,703 759,952 3,914 4,903 4,743
Transfers (to) from the
general account
of GE Life & Annuity:
Death benefits...... (2,575) (38,073) (6,637) (820) (798)
Surrenders.......... (92,539) (2,984,885) (69,560) (18,356) (28,756)
Cost of insurance
and administrative
expenses........... (1,912) (9,559) (1,381) (453) (656)
Transfers (to) from the
Guarantee Account..... 16,215 158,666 11,706 2,536 5,966
Interfund transfers.... 37,185 2,156,824 (9,232) 54,195 (78,972)
--------- ---------- ------- ------- --------
Net increase (decrease)
in units from capital
transactions........... (16,923) 42,925 (71,190) 42,005 (98,473)
--------- ---------- ------- ------- --------
Units outstanding at
December 31, 1999...... 1,079,890 5,265,274 513,721 203,538 218,219
========= ========== ======= ======= ========
</TABLE>
F-37
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
---------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
Type I Units: ------- ------- --------- ------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997......... 12,950 177,211 1,295,638 -- --
------- ------- --------- ------- ------
From capital transactions:
Net premiums.............. 3,542 73,340 14,672 2,951 --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........... -- (261) (5,419) -- --
Surrenders............... (3,547) (33,659) (93,554) (67) --
Cost of insurance and
administrative
expenses................ (80) (1,036) (1,780) (24) --
Transfers (to) from the
Guarantee Account........ 8,901 54,595 34,085 660 --
Interfund transfers....... 24,866 115,186 89,003 22,607 --
------- ------- --------- ------- ------
Net increase (decrease) in
units from capital
transactions.............. 33,682 208,165 37,007 26,127 --
------- ------- --------- ------- ------
Units outstanding at
December 31, 1998......... 46,632 385,376 1,332,645 26,127 --
------- ------- --------- ------- ------
From capital transactions:
Net premiums.............. 316 59,988 7,628 19,691 1,385
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........... -- (5,314) (28,458) -- --
Surrenders............... (11,174) (63,009) (154,718) (12,593) (2,995)
Cost of insurance and
administrative
expenses................ (106) (667) (2,892) (127) (39)
Transfers (to) from the
Guarantee Account........ (322) 11,639 33,529 2,525 3,139
Interfund transfers....... 15,435 31,733 (63,546) 47,268 45,113
------- ------- --------- ------- ------
Net increase (decrease) in
units from capital
transactions.............. 4,149 34,370 (208,457) 56,764 46,603
------- ------- --------- ------- ------
Units outstanding at
December 31, 1999......... 50,781 419,746 1,124,188 82,891 46,603
======= ======= ========= ======= ======
</TABLE>
F-38
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
--------------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type I Units: -------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 929,630 2,591,419 1,291,813 1,869,843 1,553,549
-------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 74,703 19,338 34,584 31,959 40,822
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (15,395) (5,238) (2,748) (10,837) (8,380)
Surrenders........... (407,204) (170,429) (110,751) (182,095) (161,263)
Cost of insurance and
administrative
expenses............ (5,618) (5,190) (2,659) (4,385) (3,584)
Transfers (to) from the
Guarantee Account..... 81,767 15,924 19,698 51,660 19,533
Interfund transfers.... 257,976 (101,296) (56,877) (97,711) (96,211)
-------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (13,771) (246,891) (118,753) (211,409) (209,083)
-------- --------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 915,859 2,344,528 1,173,060 1,658,434 1,344,466
-------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 16,723 8,891 9,743 6,374 5,456
Loan interest.......... -- -- -- -- --
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (1,308) (5,005) (5,270) (15,916) (12,309)
Surrenders........... (131,944) (252,917) (131,083) (219,777) (185,583)
Cost of insurance and
administrative
expenses............ (2,123) (4,988) (2,494) (3,586) (2,994)
Transfers (to) from
the Guarantee
Account.............. 31,638 (1,082) 4,151 8,252 4,406
Interfund transfers... (60,601) (284,897) (90,649) (188,252) (102,355)
-------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (147,615) (539,998) (215,602) (412,905) (293,379)
-------- --------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 768,244 1,804,530 957,458 1,245,529 1,051,087
======== ========= ========= ========= =========
</TABLE>
F-39
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
-------------------------------- ---------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type I Units ---------- --------- --------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 6,589,338 4,467,825 3,398,260 17,101,510 3,296,201 294,329 341,417
---------- --------- --------- ---------- --------- -------- --------
From capital
transactions:
Net premiums........... 92,608 28,017 20,092 71,298 74,775 36,361 51,350
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (21,942) (20,703) (8,411) (86,711) (3,720) -- --
Surrenders........... (584,254) (406,572) (201,390) (1,581,072) (275,339) (33,956) (51,341)
Cost of insurance and
administrative
expenses............ (14,640) (9,624) (6,558) (41,759) (6,747) (1,229) (1,181)
Transfers (to) from the
Guarantee Account..... 51,832 6,585 16,016 16,975 48,507 44,357 39,391
Interfund transfers.... (359,182) (96,107) (404,695) (645,083) (51,589) 411,418 215,578
---------- --------- --------- ---------- --------- -------- --------
Net increase (decrease)
in units from capital
transactions........... (835,578) (498,404) (584,946) (2,266,352) (214,113) 456,951 253,797
---------- --------- --------- ---------- --------- -------- --------
Units outstanding at
December 31, 1998...... 5,753,760 3,969,421 2,813,314 14,835,158 3,082,088 751,280 595,214
---------- --------- --------- ---------- --------- -------- --------
From capital
transactions:
Net premiums........... 32,040 21,432 6,715 55,870 34,968 18,249 62,572
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (32,919) (19,611) (10,390) (83,836) (15,176) (4,731) (538)
Surrenders........... (740,369) (578,929) (309,058) (2,113,665) (367,961) (73,634) (116,547)
Cost of insurance and
administrative
expenses............ (12,151) (8,612) (5,175) (36,211) (6,633) (1,662) (1,314)
Transfers (to) from the
Guarantee Account..... (9,305) 6,821 (324) (19,440) 11,652 36,628 14,682
Interfund transfers.... (536,437) (80,399) (250,810) (649,065) (88,685) (107,315) (28,688)
---------- --------- --------- ---------- --------- -------- --------
Net increase (decrease)
in units from capital
transactions........... (1,299,141) (659,298) (569,042) (2,846,347) (431,835) (132,465) (69,833)
---------- --------- --------- ---------- --------- -------- --------
Units outstanding at
December 31, 1999...... 4,454,619 3,310,123 2,244,272 11,988,811 2,650,253 618,815 525,381
========== ========= ========= ========== ========= ======== ========
</TABLE>
F-40
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
PBHG Insurance
Federated Insurance Series Alger American Fund Series Fund, Inc.
------------------------------ ------------------------ --------------------
American High Small PBHG Large PBHG
Leaders Income Bond Utility Capitalization Growth Cap Growth Growth II
Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
Type I Units: -------- ----------- -------- -------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 361,619 456,124 485,332 1,325,070 1,022,514 55,997 76,611
------- ------- -------- --------- --------- ------- -------
From capital
transactions:
Net premiums........... 49,226 (16,663) (2,080) 429,477 25,796 12,832 43,391
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- 1,444 816 (384) (6,748) -- --
Surrenders........... (38,733) 22,376 6,445 (28,813) (101,948) (13,525) (2,223)
Cost of insurance and
administrative
expenses............ (1,089) 466 179 (1,249) (2,260) (192) (222)
Transfers (to) from the
Guarantee Account..... 23,362 (25,648) (2,909) 27,106 20,996 8,053 7,385
Interfund transfers.... 86,081 33,576 (9,318) (17,778) 203,074 34,878 (2,510)
------- ------- -------- --------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... 118,847 15,551 (6,867) 408,359 138,910 42,046 45,821
------- ------- -------- --------- --------- ------- -------
Units outstanding at
December 31, 1998...... 480,466 471,675 478,465 1,733,429 1,161,424 98,043 122,432
------- ------- -------- --------- --------- ------- -------
From capital
transactions:
Net premiums........... (22,424) 23,352 8,540 8,057 65,273 4,242 4,265
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... 642 -- (616) (333) (7,424) -- --
Surrenders........... 61,366 (66,408) (58,803) (168,826) (220,228) (11,876) (13,149)
Cost of insurance and
administrative
expenses............ 1,380 (837) (1,105) (2,952) (3,876) (229) (390)
Transfers (to) from the
Guarantee Account..... (21,326) 5,873 1,829 6,564 21,695 1,395 2,631
Interfund transfers.... (25,993) 16,788 (64,401) (485,936) 220,662 40,768 110,913
------- ------- -------- --------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... (6,355) (21,232) (114,556) (643,426) 76,102 34,300 104,270
------- ------- -------- --------- --------- ------- -------
Units outstanding at
December 31, 1999...... 474,111 450,443 363,909 1,090,003 1,237,526 132,343 226,702
======= ======= ======== ========= ========= ======= =======
</TABLE>
F-41
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type I Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 1,817,576 4,505,765 4,938,272 2,481,552 280,878 1,004,669 49,257
--------- --------- --------- --------- ------- --------- ---------
From capital
transactions:
Net premiums........... 16,545 85,570 235,218 127,113 37,137 55,993 124,428
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (8,425) (16,960) (17,077) (16,246) (1,939) (2,564) --
Surrenders........... (137,584) (306,115) (371,035) (424,576) (20,362) (67,352) (9,789)
Cost of insurance and
administrative
expenses............ (3,687) (10,854) (11,204) (6,797) (928) (2,002) (416)
Transfers (to) from the
Guarantee Account..... 13,161 60,329 69,943 102,984 62,318 28,874 11,707
Interfund transfers.... (145,916) (10,306) 50,630 652,003 195,121 35,806 331,630
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (265,906) (198,336) (43,525) 434,481 271,347 48,755 457,560
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1998...... 1,551,670 4,307,429 4,894,747 2,916,033 552,225 1,053,424 506,817
--------- --------- --------- --------- ------- --------- ---------
From capital
transactions:
Net premiums........... 16,117 66,898 87,098 41,784 38,041 20,440 112,397
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (5,060) (24,078) (19,731) (10,763) -- (5,129) (829)
Surrenders........... (154,266) (441,863) (536,289) (398,768) (87,684) (170,441) (110,831)
Cost of insurance and
administrative
expenses............ (3,157) (9,579) (10,670) (6,116) (2,017) (2,552) (2,368)
Transfers (to) from the
Guarantee Account..... 6,581 22,989 9,986 47,747 67,950 14,917 18,113
Interfund transfers.... 377,943 217,716 (110,764) 206,259 (53,874) 39,313 600,874
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 238,158 (167,917) (580,370) (119,857) (37,584) (103,452) 617,356
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 1,789,828 4,139,512 4,314,377 2,796,176 514,641 949,972 1,124,173
========= ========= ========= ========= ======= ========= =========
</TABLE>
F-42
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable
Insurance Salomon Brothers Variable
Trust Series Fund Inc.
--------------- ---------------------------
Growth
and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type I Units: ------ ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31,
1997............................ -- -- -- -- --
------ ------- ------ ------ -------
From capital transactions:
Net premiums.................... -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................. -- -- -- -- --
Surrenders..................... -- -- -- -- --
Cost of insurance and
administrative expenses....... -- -- -- -- --
Transfers (to) from the
Guarantee Account.............. -- -- -- -- --
Interfund transfers............. -- -- -- -- --
------ ------- ------ ------ -------
Net increase (decrease) in units
from capital transactions....... -- -- -- -- --
------ ------- ------ ------ -------
Units outstanding at December 31,
1998............................ -- -- -- -- --
------ ------- ------ ------ -------
From capital transactions:
Net premiums.................... 54,553 87,322 3,309 1,543 2,537
Loan interest................... -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................. -- -- -- -- --
Surrenders..................... (1,073) (11,503) (908) (171) 369
Cost of insurance and
administrative expenses....... (141) (314) (133) (23) 161
Transfers (to) from the
Guarantee Account.............. 8,811 1,315 11,419 66 (34,628)
Interfund transfers............. 18,549 118,528 32,748 14,514 37,746
------ ------- ------ ------ -------
Net increase (decrease) in units
from capital transactions....... 80,699 195,348 46,435 15,929 6,185
------ ------- ------ ------ -------
Units outstanding at December 31,
1999............................ 80,699 195,348 46,435 15,929 6,185
====== ======= ====== ====== =======
</TABLE>
F-43
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
----------------------------------------------------------
Real
S&P 500 Money Total Estate
Index Market Return International Securities
Fund Fund Fund Equity Fund Fund
Type II Units: --------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 3,025,140 4,980,487 928,145 614,410 1,478,247
--------- ---------- --------- -------- ---------
From capital
transactions:
Net premiums........... 1,191,108 4,686,359 224,832 71,002 242,837
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (18,705) (269,042) (8,405) (4,372) (9,506)
Surrenders........... (199,459) (1,083,395) (46,133) (38,542) (44,578)
Cost of insurance and
administrative
expenses............ (2,313) (4,489) (698) (803) (1,006)
Transfers (to) from the
Guarantee Account..... 878,507 1,448,793 291,977 130,273 346,955
Interfund transfers.... 313,281 (525,766) 35,416 (130,050) (259,466)
--------- ---------- --------- -------- ---------
Net increase (decrease)
in units from capital
transactions........... 2,162,419 4,252,460 496,989 27,508 275,236
--------- ---------- --------- -------- ---------
Units outstanding at
December 31, 1998...... 5,187,559 9,232,947 1,425,134 641,918 1,753,483
--------- ---------- --------- -------- ---------
From capital
transactions:
Net premiums........... 1,370,969 10,416,167 205,390 75,458 76,678
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (30,271) (277,340) (16,416) (3,637) (7,735)
Surrenders........... (313,331) (4,042,604) (90,526) (19,183) (118,250)
Cost of insurance and
administrative
expenses............ (3,902) (8,097) (1,063) (429) (1,038)
Transfers (to) from the
Guarantee Account..... 1,648,875 1,088,704 382,126 89,711 159,941
Interfund transfers.... 95,311 (2,417,319) (20,461) (47,864) (453,435)
--------- ---------- --------- -------- ---------
Net increase (decrease)
in units from capital
transactions........... 2,767,651 4,759,511 459,050 94,056 (343,839)
--------- ---------- --------- -------- ---------
Units outstanding at
December 31, 1999...... 7,955,210 13,992,458 1,884,184 735,974 1,409,644
========= ========== ========= ======== =========
</TABLE>
F-44
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
-------------------------------------------------------
Global Value U.S. Premier
Income Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
Type II Units: ------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 79,290 730,616 903,249 -- --
------- --------- --------- --------- -------
From capital
transactions:
Net premiums........... 52,447 651,133 162,212 86,729 --
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (1,696) (5,856) -- --
Surrenders........... (2,877) (104,573) (49,209) (787) --
Cost of insurance and
administrative
expenses............ (81) (689) (703) (16) --
Transfers (to) from the
Guarantee Account..... 83,494 607,675 345,204 51,261 --
Interfund transfers.... 73,722 257,534 529,843 43,108 --
------- --------- --------- --------- -------
Net increase (decrease)
in units from capital
transactions........... 206,705 1,409,384 981,491 180,295 --
------- --------- --------- --------- -------
Units outstanding at
December 31, 1998...... 285,995 2,140,000 1,884,740 180,295 --
------- --------- --------- --------- -------
From capital
transactions:
Net premiums........... 21,353 458,276 312,773 715,249 386,311
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (2,410) (15,900) (3,000) (383)
Surrenders........... (6,818) (146,114) (111,572) (22,241) (5,342)
Cost of insurance and
administrative
expenses............ (88) (1,590) (1,338) (359) (82)
Transfers (to) from the
Guarantee Account..... 82,304 546,156 729,550 557,143 145,917
Interfund transfers.... (91,015) 17,474 (68,521) 186,174 276,540
------- --------- --------- --------- -------
Net increase (decrease)
in units from capital
transactions........... 5,736 871,792 844,992 1,432,966 802,961
------- --------- --------- --------- -------
Units outstanding at
December 31, 1999...... 291,731 3,011,792 2,729,732 1,613,261 802,961
======= ========= ========= ========= =======
</TABLE>
F-45
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
---------------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type II Units: --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at De-
cember 31, 1997........ 994,017 3,176,448 2,462,359 2,934,974 1,200,126
--------- --------- --------- --------- ---------
From capital transac-
tions:
Net premiums........... 270,558 267,347 407,290 416,094 182,920
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (14,333) (18,426) (19,533) (24,017) (11,769)
Surrenders........... (74,631) (147,815) (120,149) (177,425) (74,629)
Cost of insurance and
administrative
expenses............ (785) (2,506) (1,908) (2,036) (993)
Transfers (to) from the
Guarantee Account..... 382,347 343,625 410,907 621,713 292,547
Interfund transfers.... 419,337 (505,666) (126,117) (49,276) (29,622)
--------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 982,493 (63,441) 550,490 785,053 358,454
--------- --------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 1,976,510 3,113,007 3,012,849 3,720,027 1,558,580
--------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 261,544 114,559 235,472 187,738 66,844
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (20,072) (17,306) (18,769) (20,088) (7,328)
Surrenders........... (114,443) (173,315) (149,959) (247,870) (82,238)
Cost of insurance and
administrative
expenses............ (1,229) (1,900) (1,972) (2,515) (972)
Transfers (to) from the
Guarantee Account..... 611,535 110,666 286,238 480,849 153,230
Interfund transfers.... (182,535) (211,744) (130,872) (325,227) (183,302)
--------- --------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 554,800 (179,040) 220,138 72,887 (53,766)
--------- --------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 2,531,310 2,933,967 3,232,987 3,792,914 1,504,814
========= ========= ========= ========= =========
</TABLE>
F-46
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
-------------------------------- --------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type II Units: ---------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at De-
cember 31, 1997........ 10,074,173 3,614,598 1,762,588 2,678,933 8,595,677 976,086 1,049,540
---------- --------- --------- --------- ---------- --------- ---------
From capital transac-
tions:
Net premiums........... 1,114,775 299,241 60,690 252,836 1,051,752 918,372 716,944
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (77,675) (28,379) (10,651) (17,250) (51,811) (49,171) (7,825)
Surrenders........... (485,863) (150,297) (67,437) (134,438) (317,883) (60,159) (69,582)
Cost of insurance and
administrative
expenses............ (7,075) (2,366) (1,208) (1,548) (6,665) (1,024) (1,197)
Transfers (to) from the
Guarantee Account..... 1,227,043 185,849 81,221 283,280 1,100,294 688,392 768,665
Interfund transfers.... (509,932) (100,385) (208,247) 114,498 (285,564) 371,319 502,246
---------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,261,273 203,663 (145,632) 497,378 1,490,123 1,867,729 1,909,251
---------- --------- --------- --------- ---------- --------- ---------
Units outstanding at
December 31, 1998...... 11,335,446 3,818,261 1,616,956 3,176,311 10,085,800 2,843,815 2,958,791
---------- --------- --------- --------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 508,048 671,122 32,780 212,839 1,125,622 1,010,227 984,520
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (52,314) (14,943) (6,271) (20,795) (42,873) (21,323) (17,744)
Surrenders........... (641,881) (252,347) (52,978) (208,601) (526,069) (166,818) (170,732)
Cost of insurance and
administrative
expenses............ (7,133) (2,405) (621) (2,033) (6,316) (2,437) (2,365)
Transfers (to) from the
Guarantee Account..... 782,737 434,475 31,394 356,995 1,034,910 1,417,083 988,048
Interfund transfers.... (961,326) 106,554 (95,733) (153,115) (48,944) (28,808) 25,506
---------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... (371,869) 942,456 (91,429) 185,290 1,536,330 2,207,924 1,807,233
---------- --------- --------- --------- ---------- --------- ---------
Units outstanding at
December 31, 1999...... 10,963,577 4,760,717 1,525,527 3,361,601 11,622,130 5,051,739 4,766,024
========== ========= ========= ========= ========== ========= =========
</TABLE>
F-47
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
PBHG Insurance Series
Federated Insurance Series Alger American Fund Fund, Inc.
-------------------------------- ------------------------ ------------------------
American High Small PBHG Large PBHG
Leaders Income Bond Utility Capitalization Growth Cap Growth Growth II
Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
Type II Units: --------- ----------- --------- -------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 2,056,691 1,886,887 1,325,701 5,645,458 4,380,186 346,833 576,010
--------- --------- --------- --------- --------- --------- -----------
From capital
transactions:
Net premiums............ 1,050,794 473,760 292,385 543,439 690,044 168,982 126,932
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (44,621) (24,952) (12,603) (35,528) (33,911) (3,311) (11,165)
Surrenders........... (111,859) (152,690) (73,103) (238,113) (227,269) (33,291) (36,248)
Cost of insurance and
administrative
expenses............ (2,136) (1,284) (1,163) (4,762) (3,266) (404) (590)
Transfers (to) from the
Guarantee Account..... 942,089 803,434 316,103 719,382 587,070 148,909 227,092
Interfund transfers.... 64,125 (7,464) 103,595 (547,462) 212,429 68,319 (42,435)
--------- --------- --------- --------- --------- --------- -----------
Net increase (decrease)
in units from capital
transactions........... 1,898,392 1,090,804 625,214 436,956 1,225,097 349,204 263,586
--------- --------- --------- --------- --------- --------- -----------
Units outstanding at
December 31, 1998...... 3,955,083 2,977,691 1,950,915 6,082,414 5,605,283 696,037 839,596
--------- --------- --------- --------- --------- --------- -----------
From capital
transactions:
Net premiums........... 435,360 341,570 266,112 402,251 1,791,980 90,269 153,521
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (12,111) (15,026) (29,633) (26,201) (52,245) (5,995) (1,861)
Surrenders........... (247,366) (162,671) (112,310) (332,834) (428,283) (93,949) (65,505)
Cost of insurance and
administrative
expenses............ (3,320) (1,784) (1,448) (3,705) (3,739) (434) (487)
Transfers (to) from the
Guarantee Account..... 814,778 708,367 535,523 475,632 1,181,832 110,416 96,030
Interfund transfers.... (387,724) (472,042) (125,174) (286,721) 488,665 14,787 221,114
--------- --------- --------- --------- --------- --------- -----------
Net increase (decrease)
in units from capital
transactions........... 599,617 398,414 533,070 228,422 2,978,210 115,094 402,812
--------- --------- --------- --------- --------- --------- -----------
Units outstanding at
December 31, 1999...... 4,554,700 3,376,105 2,483,985 6,310,836 8,583,493 811,131 1,242,408
========= ========= ========= ========= ========= ========= ===========
</TABLE>
F-48
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Janus Aspen Series
--------------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type II Units: ----------- ---------- ---------- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1997...... 3,442,667 7,270,898 10,111,685 2,804,435 869,089 3,001,600 163,550
----------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums........... 8,584,230 859,963 1,450,914 1,375,800 279,606 441,888 430,714
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (1,210,219) (49,261) (36,063) (37,836) (1,075) (22,070) (3,280)
Surrenders........... (5,336,460) (293,814) (402,150) (191,342) (44,562) (83,852) (38,646)
Cost of insurance and
administrative
expenses............ (83,426) (5,694) (7,564) (2,568) (846) (2,512) (341)
Transfers (to) from the
Guarantee Account..... 8,351,873 854,937 1,487,450 1,386,720 485,989 655,579 289,248
Interfund transfers.... (10,259,970) 190,192 (49,539) 724,982 322,950 (134,423) 653,113
----------- ---------- ---------- ---------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 46,028 1,556,323 2,443,048 3,255,756 1,042,062 854,610 1,330,808
----------- ---------- ---------- ---------- --------- --------- ---------
Units outstanding at
December 31, 1998...... 3,488,695 8,827,221 12,554,733 6,060,191 1,911,151 3,856,210 1,494,358
----------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums........... 638,515 1,601,777 1,366,984 2,443,910 407,985 403,321 2,091,905
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (7,927) (51,477) (70,333) (56,072) (15,328) (13,648) (26,724)
Surrenders........... (177,407) (468,271) (691,964) (481,019) (152,834) (118,139) (153,401)
Cost of insurance and
administrative
expenses............ (1,613) (5,722) (8,181) (5,586) (1,366) (2,208) (1,683)
Transfers (to) from the
Guarantee Account..... 304,246 1,198,630 1,538,151 3,543,222 1,004,702 411,856 1,373,095
Interfund transfers.... 823,090 599,116 (110,536) 947,079 18,560 190,955 1,630,334
----------- ---------- ---------- ---------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,578,904 2,874,053 2,024,121 6,391,534 1,261,719 872,137 4,913,526
----------- ---------- ---------- ---------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 5,067,599 11,701,274 14,578,854 12,451,725 3,172,870 4,728,347 6,407,884
=========== ========== ========== ========== ========= ========= =========
</TABLE>
F-49
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Salomon Brothers Variable
Insurance Trust Series Fund Inc.
------------------ ---------------------------
Growth
and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type II Units: ------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1997..................... -- -- -- -- --
------- --------- ------- ------- -------
From capital transactions:
Net premiums................. 205,860 187,855 -- 811 15,933
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- -- -- -- --
Surrenders.................. (4,646) (4,160) -- -- (2)
Cost of insurance and
administrative expenses.... (13) (9) 1,466 -- --
Transfers (to) from the
Guarantee Account........... 104,669 147,037 8,628 52 1,350
Interfund transfers.......... 123,066 14,810 -- -- 8,634
------- --------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 428,936 345,533 10,094 863 25,915
------- --------- ------- ------- -------
Units outstanding at December
31, 1998..................... 428,936 345,533 10,094 863 25,915
------- --------- ------- ------- -------
From capital transactions:
Net premiums................. 136,381 275,911 87,824 38,147 63,047
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- (1,270) (1,085) -- --
Surrenders.................. (29,344) (30,281) (3,421) (962) (1,857)
Cost of insurance and
administrative expenses.... (460) (479) (43) (6) (80)
Transfers (to) from the
Guarantee Account........... 265,191 332,699 101,045 24,576 86,095
Interfund transfers.......... (20,938) 234,275 51,365 49,316 2,424
------- --------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 350,830 810,855 235,685 111,071 149,629
------- --------- ------- ------- -------
Units outstanding at December
31, 1999..................... 779,766 1,156,388 245,779 111,934 175,544
======= ========= ======= ======= =======
</TABLE>
F-50
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-------------------------------------------------------------
S&P 500 Total Real Estate
Index Money Market Return International Securities
Fund Fund Fund Equity Fund Fund
Type III Units: --------- ------------ --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
--------- ----------- --------- ------- -------
From capital
transactions:
Net premiums........... 6,802,805 26,606,289 1,215,947 145,060 95,069
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... (12,776) (144,732) -- -- --
Surrenders........... (58,579) (148,000) (18,907) (644) (3,611)
Transfers (to) from the
Guarantee Account..... 150,344 82,774 21,136 4,164 6,696
Interfund transfers.... 940,109 (13,692,527) 87,529 30,883 9,648
--------- ----------- --------- ------- -------
Net increase (decrease)
in units from capital
transactions........... 7,821,903 12,703,804 1,305,705 179,463 107,802
--------- ----------- --------- ------- -------
Units outstanding at
December 31, 1999...... 7,821,903 12,703,804 1,305,705 179,463 107,802
========= =========== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
--------------------------------------------
Value U.S. Premier
Equity Income Equity Growth Equity
Fund Fund Fund Fund
Type III Units: --------- ------- --------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998............................. -- -- -- --
--------- ------- --------- ---------
From capital transactions:
Net premiums..................... 1,036,116 314,012 1,220,973 936,093
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits.................. (6,042) (2,147) (973) --
Surrenders...................... (17,768) (6,141) (11,217) (6,629)
Transfers (to) from the Guarantee
Account......................... 22,379 6,119 13,194 26,808
Interfund transfers.............. 133,571 121,853 220,867 424,162
--------- ------- --------- ---------
Net increase (decrease) in units
from capital transactions........ 1,168,256 433,696 1,442,844 1,380,434
--------- ------- --------- ---------
Units outstanding at December 31,
1999............................. 1,168,256 433,696 1,442,844 1,380,434
========= ======= ========= =========
</TABLE>
F-51
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type III Units: ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998........ -- -- -- -- --
------- ------- --------- ------- -------
From capital transactions:
Net premiums............. 598,416 593,660 986,033 879,869 293,357
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits......... (24,269) (3,451) (1,032) (1,416) --
Surrenders............. (13,660) (10,533) (15,060) (8,322) (2,950)
Transfers (to) from the
Guarantee Account....... 30,987 12,469 29,811 23,655 5,153
Interfund transfers...... 99,491 302,111 214,622 29,413 10,265
------- ------- --------- ------- -------
Net increase (decrease) in
units from capital
transactions............. 690,965 894,256 1,214,374 923,199 305,825
------- ------- --------- ------- -------
Units outstanding at
December 31, 1999........ 690,965 894,256 1,214,374 923,199 305,825
======= ======= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Products Variable Insurance Variable Insurance
Fund Products Fund II Products Fund III
------------------------------- -------------------- ------------------------
Equity - Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type III Units: --------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
--------- --------- ------- ------- --------- --------- ---------
From capital
transactions:
Net premiums........... 2,911,113 5,455,784 342,131 655,968 4,350,101 1,863,827 1,517,495
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (1,168) (10,565) -- -- (7,525) (1,287) (1,320)
Surrenders............ (35,105) (64,018) (7,322) (11,671) (25,586) (35,107) (10,269)
Transfers (to) from the
Guarantee Account..... 76,560 94,771 1,189 13,510 129,791 66,596 72,775
Interfund transfers.... 252,253 1,085,738 52,069 119,705 765,205 184,950 130,481
--------- --------- ------- ------- --------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 3,203,653 6,561,710 388,067 777,512 5,211,986 2,078,979 1,709,162
--------- --------- ------- ------- --------- --------- ---------
Units outstanding at
December 31, 1999...... 3,203,653 6,561,710 388,067 777,512 5,211,986 2,078,979 1,709,162
========= ========= ======= ======= ========= ========= =========
</TABLE>
F-52
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Federated Insurance Series Alger American Fund
------------------------------ ------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Fund II Fund II Fund II Portfolio Portfolio
Type III Units: --------- ----------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
--------- ------- ------- --------- ---------
From capital
transactions:
Net premiums........... 1,215,352 684,526 421,560 998,630 4,680,722
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits....... -- (2,079) (120) (1,650) (35,922)
Surrenders........... (9,777) (12,146) (8,023) (4,078) (43,905)
Transfers (to) from the
Guarantee Account..... 38,379 45,896 15,150 18,113 66,471
Interfund transfers.... (129,411) 82,989 63,004 149,741 709,788
--------- ------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 1,114,543 799,186 491,571 1,160,756 5,377,154
--------- ------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 1,114,543 799,186 491,571 1,160,756 5,377,154
========= ======= ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type III Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
--------- --------- --------- --------- ------- --------- ---------
From capital transac-
tions:
Net premiums........... 3,433,215 6,733,050 4,679,934 6,431,170 572,513 863,953 6,946,766
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (8,849) (7,911) (2,840) (2,310) -- (3,678) (45,793)
Surrenders........... (31,999) (80,226) (40,954) (74,010) (18,968) (11,168) (66,978)
Transfers (to) from the
Guarantee Account..... 44,684 140,668 134,338 185,544 2,662 21,060 97,938
Interfund transfers.... 1,344,419 1,493,334 1,019,353 664,637 49,863 380,948 1,141,405
--------- --------- --------- --------- ------- --------- ---------
Net increase (decrease)
in units from capital
transactions........... 4,781,470 8,278,915 5,789,831 7,205,031 606,070 1,251,115 8,073,338
--------- --------- --------- --------- ------- --------- ---------
Units outstanding at
December 31, 1999...... 4,781,470 8,278,915 5,789,831 7,205,031 606,070 1,251,115 8,073,338
========= ========= ========= ========= ======= ========= =========
</TABLE>
F-53
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------ ---------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type III Units: ---------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1998..................... -- -- -- -- --
------- ------- ------- ------- -------
From capital transactions:
Net premiums................. 179,877 448,554 166,205 164,131 100,325
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits.............. -- (3,176) -- -- --
Surrenders.................. (3,320) (4,186) (6,562) (1,317) (577)
Transfers (to) from the
Guarantee Account........... 9,236 20,162 4,931 9,264 2,093
Interfund transfers.......... 18,805 21,492 59,307 15,033 16,015
------- ------- ------- ------- -------
Net increase (decrease) in
units from capital
transactions................. 204,598 482,846 223,881 187,111 117,856
------- ------- ------- ------- -------
Units outstanding at December
31, 1999..................... 204,598 482,846 223,881 187,111 117,856
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
Type IV Units: ------- ---------- ------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- --
------- ---------- ------ ------ ------
From capital
transactions:
Net premiums........... 436,947 2,333,947 58,534 11,080 3,519
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (1,506) (30,516) (465) -- --
Transfers (to) from the
Guarantee Account..... 5,872 -- 1,056 -- --
Interfund transfers.... 102,301 (1,089,158) 18,954 4,120 6,968
------- ---------- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 543,614 1,214,273 78,079 15,200 10,487
------- ---------- ------ ------ ------
Units outstanding at
December 31, 1999...... 543,614 1,214,273 78,079 15,200 10,487
======= ========== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
(continued)
---------------------------------------
Value U.S. Premier
Equity Income Equity Growth Equity
Fund Fund Fund Fund
Type IV Units: ------- ------ ------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998.................................. -- -- -- --
------- ------ ------- ------
From capital transactions:
Net premiums.......................... 130,022 53,541 76,072 61,341
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits....................... -- -- -- --
Surrenders........................... (527) (216) (213) (194)
Transfers (to) from the Guarantee Ac-
count................................ 2,195 -- 385 105
Interfund transfers................... 15,650 13,753 24,662 35,583
------- ------ ------- ------
Net increase (decrease) in units from
capital transactions.................. 147,340 67,078 100,906 96,835
------- ------ ------- ------
Units outstanding at December 31,
1999.................................. 147,340 67,078 100,906 96,835
======= ====== ======= ======
</TABLE>
F-54
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
----------------------------------------------------
Aggressive Capital High Multiple
Bond Growth Appreciation Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Type IV Units: ------- ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998.......... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums............... 47,460 17,619 78,714 28,067 9,815
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits............ -- -- -- -- --
Surrenders................ (245) (66) (899) (48) --
Transfers (to) from the
Guarantee Account......... -- 168 -- -- 152
Interfund transfers........ (5,466) 7,029 3,613 7,839 399
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............... 41,749 24,750 81,428 35,858 10,366
------ ------ ------ ------ ------
Units outstanding at
December 31, 1999.......... 41,749 24,750 81,428 35,858 10,366
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Variable Insurance Products Fund Products Fund II Products Fund III
-------------------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type IV Units: ----------- ----------- ---------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
----------- ----------- ---------- ------ ------- ------- ------
From capital
transactions:
Net premiums........... 216,084 270,338 25,780 34,594 269,745 134,288 65,370
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- -- -- --
Surrenders........... (756) (1,836) (2) (134) (1,607) (368) (519)
Transfers (to) from the
Guarantee Account..... 3,774 2,002 -- 358 2,732 4,476 165
Interfund transfers.... 23,594 63,231 2,412 10,072 65,745 12,269 27,604
----------- ----------- ---------- ------ ------- ------- ------
Net increase (decrease)
in units from capital
transactions........... 242,696 333,735 28,190 44,890 336,615 150,665 92,620
----------- ----------- ---------- ------ ------- ------- ------
Units outstanding at
December 31, 1999...... 242,696 333,735 28,190 44,890 336,615 150,665 92,620
=========== =========== ========== ====== ======= ======= ======
</TABLE>
F-55
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Federated Insurance Series Alger American Fund
---------------------------- ------------------------
American High Small
Leaders Income Bond Utility Capitalization Growth
Fund II Fund II Fund II Portfolio Portfolio
Type IV Units: -------- ----------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998....... -- -- -- -- --
------ ------ ------ ------ -------
From capital
transactions:
Net premiums............ 76,520 55,116 33,820 97,052 188,807
Transfers (to) from the
general account of
GE Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (68) (345) (210) (852) (828)
Transfers (to) from the
Guarantee Account...... -- 846 -- 45 3,434
Interfund transfers..... 8,735 256 2,649 1,414 40,348
------ ------ ------ ------ -------
Net increase (decrease)
in units from capital
transactions............ 85,187 55,873 36,259 97,659 231,761
------ ------ ------ ------ -------
Units outstanding at
December 31, 1999....... 85,187 55,873 36,259 97,659 231,761
====== ====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Type IV Units: ---------- --------- --------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------- -------
From capital
transactions:
Net premiums........... 290,801 414,640 334,265 302,041 86,807 79,968 343,133
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- -- -- --
Surrenders........... (971) (1,895) (1,705) (1,671) (692) (353) (1,763)
Transfers (to) from the
Guarantee Account..... 767 1,935 4,641 6,715 1,497 41 3,287
Interfund transfers.... 222,512 85,744 69,747 40,846 1,601 22,725 83,434
------- ------- ------- ------- ------ ------- -------
Net increase (decrease)
in units from capital
transactions........... 513,109 500,424 406,948 347,931 89,213 102,381 428,091
------- ------- ------- ------- ------ ------- -------
Units outstanding at
December 31, 1999...... 513,109 500,424 406,948 347,931 89,213 102,381 428,091
======= ======= ======= ======= ====== ======= =======
</TABLE>
F-56
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Fund Inc.
------------------ --------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
Type IV Units: ---------- ------- --------- --------- ------
<S> <C> <C> <C> <C> <C>
Units outstanding at December
31, 1998....................... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums................... 10,321 42,856 20,339 6,921 17,669
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................ -- -- -- -- --
Surrenders.................... -- (88) -- (44) --
Transfers (to) from the
Guarantee Account............. -- -- -- -- --
Interfund transfers............ 4,788 41 (5,043) (4,012) (1,377)
------ ------ ------ ------ ------
Net increase (decrease) in units
from capital transactions...... 15,109 42,809 15,296 2,865 16,292
------ ------ ------ ------ ------
Units outstanding at December
31, 1999....................... 15,109 42,809 15,296 2,865 16,292
====== ====== ====== ====== ======
</TABLE>
(d) Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of GE Life & Annuity. GE Life & Annuity is
taxed as a life insurance company under the Internal Revenue Code (the Code).
GE Life & Annuity is included in the General Electric Capital Assurance
Company consolidated federal income tax return. The Account will not be taxed
as a regulated investment company under subchapter M of the Code. Under
existing federal income tax law, no taxes are payable on the investment income
or on the capital gains of the Account.
(e) Use of Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions
that affect amounts and disclosures reported therein. Actual results could
differ from those estimates.
(3) Related Party Transactions
Net premiums transferred from GE Life & Annuity to the Account represent
gross premiums recorded by GE Life & Annuity on its flexible premium variable
deferred annuity products, less deductions retained as compensation for
premium taxes. For policies issued on or after May 1, 1993, the deduction for
premium taxes will be deferred until surrender. For Type I policies, during
the first ten years following a premium payment, a charge of .20% of the
premium payment is deducted monthly from the policy Account values to
reimburse GE Life & Annuity for certain distribution expenses. In addition, a
charge is imposed on full and certain partial surrenders that occur within six
years of any premium payment for Type I policies, seven years for certain Type
II policies, and eight years for Type III policies. These surrender charges
are assessed to cover certain expenses relating to the sale of a policy.
Subject to certain limitations, the charge equals 6% (or less) of the premium
surrendered for Type I and Type II policies and 8% (or less) for Type III
policies, depending on the time between premium payment and surrender. There
is no surrender charge for Type IV policies.
GE Life & Annuity will deduct the following charges from the policy account
values to cover certain administrative expenses incurred: $30 per year for
Type I policies, $25 plus 0.15% per year for Type II policies, and $25 plus
0.25% per year for both Type III and Type IV policies. For Type II, III and IV
policies, the $25 charge may be waived if the account value is greater than
$75,000, $10,000, and $25,000, respectively. In addition, GE Life & Annuity
charges the Account for the mortality and expense risk that GE Life & Annuity
assumes based on the following rates: Type I--1.15%, Type II--1.25%, Type
III--1.3%, and Type IV--1.35%. Administrative expenses as well as mortality
and risk charges are deducted daily and reflect the effective annual rates.
F-57
<PAGE>
GE LIFE & ANNUITY SEPARATE ACCOUNT 4
Notes to Financial Statements -- Continued
December 31, 1999
(3) Related Party Transactions -- Continued
For Type III unit contracts, transfers from the Guarantee Account include
approximately $38 million of payments made by GE Life & Annuity in the form of
bonus credits during 1999.
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company.
Capital Brokerage Corporation, an affiliate of GE Life & Annuity, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation also
serves as principal underwriter for variable life insurance policies issued by
GE Life & Annuity.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid an
investment advisory fee by the Fund based on the average daily net assets at an
effective annual rate of .35% for the S&P 500 Index Fund, .50% for the Money
Market, Income Fund, and Total Return Funds, 1.00% for the International Equity
Fund, .85% for the Real Estate Securities Fund, .60% for the Global Income
Fund, .65% for the Value Equity and Premier Growth Equity Funds, and .55% for
the U.S. Equity Fund.
Certain officers and directors of GE Life & Annuity are also officers and
directors of Capital Brokerage Corporation.
F-58
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(With Independent Auditors' Report Thereon)
F-59
<PAGE>
Independent Auditors' Report
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying consolidated balance sheets of GE Life and
Annuity Assurance Company, and subsidiary as of December 31, 1999 and 1998,
and the related consolidated statements of income, shareholders' interest, and
cash flows for each of the years in the three-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion of these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GE Life
and Annuity Assurance Company and subsidiary as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
As discussed in note 15 to the consolidated financial statements, the
Company changed its method of accounting for insurance-related assessments in
1999.
/s/ KPMG LLP
Richmond, Virginia
January 21, 2000
F-60
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Assets
Investments:
Fixed maturities available-for-sale, at fair value....... $ 8,033.7 $ 7,022.8
Equity securities available-for-sale, at fair value:
Common stocks........................................... 9.2 6.1
Preferred stocks, non-redeemable........................ 23.9 48.3
Investment in subsidiary................................. 2.6 2.6
Mortgage loans, net of valuation allowance of $23.3 and
$20.9 at December 31, 1999 and 1998, respectively....... 810.5 745.8
Policy loans............................................. 58.5 204.4
Real estate owned........................................ 2.5 2.5
Other invested assets.................................... 141.5 130.8
--------- ---------
Total investments....................................... 9,082.4 8,163.3
--------- ---------
Cash...................................................... 21.2 11.1
Accrued investment income................................. 190.2 141.5
Deferred acquisition costs................................ 482.5 282.8
Intangible assets......................................... 472.8 458.3
Reinsurance recoverable................................... 72.4 68.9
Deferred income tax asset................................. 120.3 42.1
Other assets.............................................. 269.7 64.2
Separate account assets................................... 9,245.8 5,528.7
--------- ---------
Total Assets............................................ $19,957.3 $14,760.9
========= =========
Liabilities and Shareholders' Interest
Liabilities:
Future annuity and contract benefits..................... $ 9,063.0 $ 7,538.1
Liability for policy and contract claims................. 110.7 154.2
Other policyholder liabilities........................... 138.8 118.9
Accounts payable and accrued expenses.................... 193.3 127.2
Separate account liabilities............................. 9,245.8 5,528.7
--------- ---------
Total liabilities....................................... 18,751.6 13,467.1
--------- ---------
Shareholders' interest:
Net unrealized investment gains (losses)................. (134.2) 57.8
--------- ---------
Accumulated non-owner changes in equity.................. (134.2) 57.8
Preferred stock, Series A ($1,000 par value, $1,000
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-61
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Net investment income............................. $ 638.2 $ 574.7 $ 562.7
Net realized investment gains..................... 12.0 29.6 19.0
Premiums.......................................... 123.9 123.1 171.8
Cost of insurance................................. 129.0 128.5 127.2
Variable product fees............................. 90.2 60.8 44.4
Other income...................................... 24.6 22.3 23.7
-------- ------- -------
Total revenues................................... 1,017.9 939.0 948.8
-------- ------- -------
Benefits and expenses:
Interest credited................................. 440.8 378.4 373.7
Benefits and other changes in policy reserves..... 214.7 178.4 217.2
Commissions....................................... 192.1 112.8 139.1
General expenses.................................. 124.7 111.0 92.2
Amortization of intangibles, net.................. 58.3 64.8 69.7
Change in deferred acquisition costs, net......... (179.1) (74.7) (112.6)
Interest expense.................................. 1.9 2.2 --
-------- ------- -------
Total benefits and expenses...................... 853.4 772.9 779.3
-------- ------- -------
Income before income taxes and cumulative effect
of accounting change............................ 164.5 166.1 169.5
Provision for income taxes......................... 56.6 60.3 62.1
-------- ------- -------
Income before cumulative effect of accounting
change.......................................... 107.9 105.8 107.4
-------- ------- -------
Cumulative effect of accounting change, net of
tax............................................... 5.0 -- --
-------- ------- -------
Net Income....................................... $ 112.9 $ 105.8 $ 107.4
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-62
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INTEREST
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Common Stock
Preferred Declared Accumulated
Stock Common Stock but not Issued Additional Non-owner Total
-------------- ------------- --------------- Paid-In Changes Retained Shareholders'
Shares Amount Shares Amount Shares Amount Capital in Equity Earnings Interest
------- ------ ------ ------ ------- ------ ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1996................... -- -- 7,010 7.0 -- -- 1,060.6 25.8 85.7 1,179.1
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 107.4 107.4
Net unrealized gains on
investment securities
(a)................... -- -- -- -- -- -- -- 61.9 -- 61.9
-------
Total changes other
than transactions with
shareholders.......... 169.3
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (2.2) -- -- (2.2)
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1997................... -- -- 7,010 7.0 -- -- 1,058.4 87.7 193.1 1,346.2
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 105.8 105.8
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (29.9) -- (29.9)
-------
Total changes other
than transactions with
shareholders.......... 75.9
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (120.0) (120.0)
Preferred stock
dividend............... 120,000 120.0 -- -- -- -- -- -- (120.0) --
Common stock dividend
declared but not
issued................. -- -- -- -- 18,641 18.6 -- -- (18.6) --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (8.3) -- -- (8.3)
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1998................... 120,000 120.0 7,010 7.0 18,641 18.6 1,050.1 57.8 40.3 1,293.8
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 112.9 112.9
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (192.0) -- (192.0)
-------
Total changes other
than transactions with
shareholders.......... (79.1)
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (9.6) (9.6)
Common stock issued..... -- -- 18,641 18.6 (18,641) (18.6) -- -- -- --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- 0.6 -- -- 0.6
------- ----- ------ ---- ------- ----- ------- ------ ------ -------
Balances at December 31,
1999................... 120,000 120.0 25,651 25.6 -- -- 1,050.7 (134.2) 143.6 1,205.7
======= ===== ====== ==== ======= ===== ======= ====== ====== =======
</TABLE>
-------
(a) Presented net of deferred taxes of $72.2, $(31.1) and $(47.2) in 1999,
1998, and 1997, respectively.
See accompanying notes to consolidated financial statements.
F-63
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 112.9 $ 105.8 $ 107.4
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Cost of insurance and surrender fees........ (169.5) (171.6) (170.7)
Increase in future policy benefits.......... 565.5 440.6 461.2
Net realized investment gains............... (12.0) (29.6) (19.0)
Amortization of investment premiums and dis-
counts..................................... (1.3) (1.3) 4.7
Amortization of intangibles................. 58.3 64.8 69.7
Deferred income tax expense (benefit)....... 25.0 29.5 (9.6)
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income................. (48.6) 1.5 (5.7)
Deferred acquisition costs................ (179.1) (74.7) (112.6)
Other assets, net......................... (200.1) (30.3) (14.3)
Increase (decrease) in:
Policy and contract claims................ (43.4) 18.0 36.4
Other policyholder liabilities............ 20.0 2.5 (0.4)
Accounts payable and accrued expenses..... 73.8 19.6 (113.3)
--------- --------- ---------
Total adjustments........................ 88.6 269.0 126.4
--------- --------- ---------
Net cash provided by operating activi-
ties.................................... 201.5 374.8 233.8
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales and maturities of
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 con-
tracts...................................... 4,717.6 2,280.0 1,961.9
Redemption and benefit payments on investment
contracts................................... (3,593.4) (2,016.2) (1,973.4)
Cash dividend to shareholders................ (9.6) (120.0) --
--------- --------- ---------
Net cash provided by (used in) financing
activities.............................. 1,114.6 143.8 (11.5)
--------- --------- ---------
Net increase (decrease) in cash and
equivalents............................. 10.1 (2.8) (47.7)
Cash and cash equivalents at beginning of
year......................................... 11.1 13.9 61.6
--------- --------- ---------
Cash and cash equivalents at end of year...... $ 21.2 $ 11.1 $ 13.9
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-64
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the historical
operations and accounts of GE Life and Annuity Assurance Company and its
subsidiary, Assigned Settlements Inc. (collectively the "Company" or
"GELAAC"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Effective January 1, 1999, an affiliated company, The Harvest Life Insurance
Company ("Harvest") merged into The Life Insurance Company of Virginia ("LOV")
with the merged Company renamed GE Life and Annuity Assurance Company
("GELAAC"). Harvest's former parent, Federal Home Life Insurance Company
("FHLIC"), received common stock of GELAAC in exchange for its interest in
Harvest. FHLIC is an indirect wholly-owned subsidiary of GE Financial
Assurance Holdings, Inc. ("GEFAHI"). As the merged entities were under common
control, the transaction has been accounted for similar to a pooling of
interests. Accordingly, the GELAAC consolidated financial statements have been
restated for the years ended December 31, 1998 and 1997 as if Harvest had been
a part of LOV as of January 1, 1997.
The majority of GELAAC's outstanding common stock is owned by General
Electric Capital Assurance Company ("GECA"). GECA is a wholly-owned subsidiary
of GEFAHI, which is an indirect wholly-owned subsidiary of General Electric
Capital Corporation ("GECC"). GECC is an indirect wholly-owned subsidiary of
General Electric Company.
(b) Basis of Presentation
The accompanying consolidated financial statements have been prepared on the
basis of generally accepted accounting principles ("GAAP") for insurance
companies, which vary in several respects from accounting practices prescribed
or permitted by the Insurance Commissioner of the state where the Company is
domiciled. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and related disclosures. Actual results could differ from those
estimates.
(c) Products
The Company's product offerings are divided along two major segments of
consumer needs: (i) Wealth Accumulation and Transfer and (ii) Lifestyle
Protection and Enhancement.
The Company's principal product lines under the Wealth Accumulation and
Transfer segment are (i) annuities (deferred and immediate; either fixed or
variable); (ii) life insurance (universal, ordinary and group), (iii)
guaranteed investment contracts ("GICs") including funding agreements and (iv)
mutual funds. Wealth Accumulation and Transfer products are used by customers
as vehicles for accumulating wealth, often on a tax-deferred basis,
transferring wealth to beneficiaries, or providing a means to replace the
insured's income in the event of premature death. The Company's distribution
of Wealth Accumulation and Transfer products is accomplished through two
distribution methods: (i) intermediaries and (ii) career or dedicated sales
forces.
The Company's principal product lines under the Lifestyle Protection and
Enhancement segment are (i) long-term care insurance and (ii) supplemental
accident and health insurance. Lifestyle Protection and Enhancement products
are used by customers as vehicles to protect their income and assets from the
adverse economic impacts of significant health care costs or other
unanticipated events that cause temporary or permanent loss of earnings
capabilities (including the ability to repay certain indebtedness). The
Company's distribution of Lifestyle Protection and Enhancement products is
accomplished through two distribution methods: (i) intermediaries and (ii)
career or dedicated sales forces.
Approximately 17%, 20% and 27% of premium and annuity consideration
collected, in 1999, 1998, and 1997, respectively, came from customers residing
in the South Atlantic region of the United States, and approximately 17%, 27%
and 13% of premium and annuity consideration collected, in 1999, 1998, and
1997, respectively, came from customers residing in the Mid-Atlantic region of
the United States.
F-65
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
Although the Company markets its products through numerous distributors,
approximately 28%, 20% and 19% of the Company's sales in 1999, 1998, and 1997,
respectively, have been through two specific national stockbrokerage firms
(part of the Wealth Accumulation and Transfer segment.) Loss of all or a
substantial portion of the business provided by these stockbrokerage firms
could have a material adverse effect on the business and operations of the
Company. The Company does not believe, however, that the loss of such business
would have a long-term adverse effect because of the Company's competitive
position in the marketplace and the availability of business from other
distributors.
(d) Revenues
Investment income is recorded when earned. Realized investment gains and
losses are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or, in the
case of life contingent immediate annuities, when the contracts are issued.
Premiums received under annuity contracts without significant mortality risk
and premiums received on universal life products are not reported as revenues
but as future annuity and contract benefits. Cost of insurance is charged to
universal life policyholders based upon at risk amounts, and is recognized as
revenue when due. Variable product fees are charged to variable annuity and
variable life policyholders based upon the daily net assets of the
policyholders' account values, and are recognized as revenue when charged.
Other income consists primarily of surrender charges on certain policies.
Surrender charges are recognized as income when the policy is surrendered.
(e) Investments
The Company has designated its fixed maturities (bonds, notes, mortgage-
backed securities, asset-backed securities, and redeemable preferred stock)
and equity securities (common and non-redeemable preferred stock) as
available-for-sale. The fair value for fixed maturities and equity securities
is based on individual quoted market prices, where available. For fixed
maturities not actively traded, fair values are estimated using values
obtained from independent pricing services or, in the case of private
placements, are estimated by discounting expected future cash flows using a
current market rate applicable to the credit quality, call features and
maturity of the investments, as applicable.
Changes in the market values of investments available-for-sale, net of the
effect on deferred policy acquisition costs, present value of future profits
and deferred federal income taxes are reflected as unrealized investment gains
or losses and, accordingly, have no effect on net income, but are shown as a
separate component of accumulated non-owner changes in equity in the
consolidated statements of shareholders' interest. Unrealized losses that are
considered other than temporary are recognized in earnings through an
adjustment to the amortized cost basis of the underlying securities.
Additionally, reserves for mortgage loans and certain other long-term
investments are established based on an evaluation of the respective
investment portfolio, past credit loss experience, and current economic
conditions. Writedowns and the change in reserves are included in realized
investment gains and losses in the consolidated statements of income. In
general, the Company ceases to accrue investment income when interest or
dividend payments are 90 days in arrears.
Investment income on mortgage-backed and asset-backed securities is
initially based upon yield, cash flow and prepayment assumptions at the date
of purchase. Subsequent revisions in those assumptions are recorded using the
retrospective method, whereby the amortized cost of the securities is adjusted
to the amount that would have existed had the revised assumptions been in
place at the date of purchase. The adjustments to amortized cost are recorded
as a charge or credit to investment income. Realized gains and losses are
accounted for on the specific identification method.
Mortgage loans and policy loans are carried at their unpaid principal
balance, net of allowances for estimated uncollectible amounts. Short-term
investments are carried at amortized cost which approximates fair value.
Equity securities are carried at fair value. Investments in limited
partnerships are accounted for under the equity method of accounting. Real
estate is carried generally at cost less accumulated depreciation. Other long-
term investments are carried generally at amortized cost.
F-66
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
Under certain securities lending transactions, the Company requires the
borrower provide collateral, consisting primarily of cash and government
securities, on a daily basis, in amounts equal to or exceeding 102% of the
market value of the applicable securities loaned.
(f) Deferred Acquisition Costs
Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts.
Deferred acquisition costs include first-year commissions in excess of
recurring renewal commissions, certain solicitation and printing costs, and
certain support costs such as underwriting and policy issue expenses. For
investment and universal life type contracts, amortization is based on the
present value of anticipated gross profits from investments, interest
credited, surrender and other policy charges, and mortality and maintenance
expenses. Amortization is adjusted retroactively when current or estimates of
future gross profits to be realized are revised. For other long-duration
insurance contracts, the acquisition costs are amortized in relation to the
estimated benefit payments or the present value of expected future premiums.
Deferred acquisition costs are reviewed to determine if they are recoverable
from future income, including investment income, and, if not considered
recoverable, are charged to expense.
(g) Intangible Assets
Present Value of Future Profits -- In conjunction with the acquisition of
the Company, a portion of the purchase price was assigned to the right to
receive future gross profits arising from existing insurance and investment
contracts. This intangible asset, called present value of future profits
(PVFP), represents the actuarially determined present value of the projected
future cash flows from the acquired policies.
Goodwill -- Goodwill is amortized over a period of 20 years on the
straight-line method. Goodwill in excess of associated expected operating cash
flows is considered to be impaired and is written down to fair value. No such
write-downs have occurred.
(h) Federal Income Taxes
Deferred income taxes have been provided for the effects of temporary
differences between financial reporting and tax bases of assets and
liabilities and have been measured using the enacted marginal tax rates and
laws that are currently in effect.
(i) Reinsurance
Premium revenue, benefits, underwriting, acquisition and insurance expenses
are reported net of the amounts relating to reinsurance ceded to other
companies. Amounts due from reinsurers for incurred future claims are
reflected in the reinsurance recoverable asset. The cost of reinsurance is
accounted for over the terms of the related treaties using assumptions
consistent with those used to account for the underlying reinsured policies.
(j) Future Annuity and Contract Benefits
Future annuity and contract benefits consist of the liability for investment
contracts, insurance contracts and accident and health contracts. Investment
contract liabilities are generally equal to the policyholder's current account
value. The liability for insurance and accident and health contracts is
calculated based upon actuarial assumptions as to mortality, morbidity,
interest, expense and withdrawals, with experience adjustments for adverse
deviation where appropriate.
F-67
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(1) Summary of Significant Accounting Policies -- Continued
(k) Liability for Policy and Contract Claims
The liability for policy and contract claims represents the amount needed to
provide for the estimated ultimate cost of settling claims relating to insured
events that have occurred on or before the end of the respective reporting
period. The estimated liability includes requirements for future payments of
(a) claims that have been reported to the insurer, and (b) claims related to
insured events that have occurred but that have not been reported to the
insurer as of the date the liability is estimated.
(l) Separate Account Assets and Liabilities
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life contract owners.
The Company receives mortality risk fees and administration charges from the
variable mutual fund portfolios. The separate account assets are carried at
fair value and are equivalent to the liabilities that represent the
policyholders' equity in those assets.
The Company has periodically transferred capital to the separate accounts to
provide for the initial purchase of investments in new mutual fund portfolios.
As of December 31, 1999, approximately $44.3 of the Company's other invested
assets related to its capital investments in the separate accounts.
(m) Interest Rate Risk Management
As a matter of policy, the Company does not engage in derivatives trading,
market-making or other speculative activities.
The Company uses interest rate floors primarily to minimize risk on
investment contracts with minimum guaranteed interest rates. The Company
requires all interest rate floors to be designated and accounted for as hedges
of specific assets, liabilities or committed transactions; resulting payments
and receipts are recognized contemporaneously with effects of hedged
transactions. A payment or receipt arising from early termination of an
effective hedge is accounted for as an adjustment to the basis of the hedged
transaction.
Instruments used as hedges must be effective at reducing the risk associated
with the exposure being hedged and must be designated as a hedge at the
inception of the contract. Accordingly, changes in market values of hedged
instruments must be highly correlated with changes in market values of
underlying hedges items both at inception of the hedge and over the life of
the hedge contract. Any instrument designated but ineffective as a hedge is
marked to market and recognized in operations immediately.
(2) Investments
(a) General
The sources of investment income of the Company for the years ended December
31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Fixed maturities..................................... $560.1 $489.8 $477.2
Equity securities.................................... -- 4.9 7.3
Mortgage loans....................................... 66.9 64.2 61.0
Policy loans......................................... 14.0 14.4 13.7
Other investments.................................... 2.5 6.7 9.0
------ ------ ------
Gross investment income.............................. 643.5 580.0 568.2
Investment expenses.................................. (5.3) (5.3) (5.5)
------ ------ ------
Net investment income................................ $638.2 $574.7 $562.7
====== ====== ======
</TABLE>
F-68
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
For the years ended December 31, sales proceeds and gross realized
investment gains and losses from the sales of investment securities available-
for-sale were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ -------- ------
<S> <C> <C> <C>
Sales proceeds..................................... $590.3 $1,330.0 $483.6
====== ======== ======
Gross realized investment:
Gains............................................. 28.6 43.8 24.5
Losses............................................ (16.6) (14.2) (5.5)
------ -------- ------
Net realized investment gains...................... $ 12.0 $ 29.6 $ 19.0
====== ======== ======
</TABLE>
The additional proceeds from the investments presented in the consolidated
statements of cash flows result from principal collected on mortgage-backed
securities, asset-backed securities, maturities, calls and sinking fund
payments.
Net unrealized gains and losses on investment securities and other invested
assets classified as available-for-sale are reduced by deferred income taxes
and adjustments to the present value of future profits and deferred policy
acquisition costs that would have resulted had such gains and losses been
realized. Net unrealized gains and losses on available-for-sale investment
securities and other invested assets reflected as a separate component of
shareholders' interest as of December 31, are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Net unrealized gains/(losses) on available-for-sale
investment securities and other invested assets
before adjustments:
Fixed maturities.................................... $(245.0) $138.2 $192.2
Equity securities................................... (0.4) 5.5 14.6
Other invested assets............................... (4.1) 2.3 6.4
------- ------ ------
Subtotal........................................... (249.5) 146.0 213.2
------- ------ ------
Adjustments to the present value of future profits
and deferred acquisition costs 43.1 (57.1) (78.3)
Deferred income taxes................................ 72.2 (31.1) (47.2)
------- ------ ------
Net unrealized gains/(losses)...................... $(134.2) $ 57.8 $ 87.7
======= ====== ======
</TABLE>
At December 31, the amortized cost, gross unrealized gains and losses, and
fair values of the Company's fixed maturities and equity securities available-
for-sale were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Fair
1999 cost gains losses value
---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. government and agency........... $ 9.8 $ 0.1 $ (0.2) $ 9.7
State and municipal.................. 1.5 -- -- 1.5
Non-U.S. government.................. 3.0 -- (0.2) 2.8
U.S. corporate....................... 4,936.3 21.4 (227.6) 4,730.1
Non-U.S. corporate................... 624.6 8.1 (17.8) 614.9
Mortgage-backed...................... 1,696.5 16.9 (27.4) 1,686.0
Asset-backed......................... 1,007.0 1.5 (19.8) 988.7
-------- ----- ------- --------
Total fixed maturities............. 8,278.7 48.0 (293.0) 8,033.7
Common stocks and non-redeemable
preferred stocks.................... 33.5 1.3 (1.7) 33.1
-------- ----- ------- --------
Total available-for-sale securities.. $8,312.2 $49.3 $(294.7) $8,066.8
======== ===== ======= ========
</TABLE>
F-69
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Fair
1998 cost gains losses value
---- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturites:
U.S. government and agency........... $ 66.3 $ 2.2 $ (0.1) $ 68.4
State and municipal.................. 1.6 0.4 -- 2.0
Non-U.S. government.................. 3.0 -- (0.4) 2.6
U.S. corporate....................... 4,223.8 142.2 (54.6) 4,311.4
Non-U.S. corporate................... 314.3 6.4 (9.0) 311.7
Mortgage-backed...................... 1,665.0 58 (9) 1,714.0
Asset-backed......................... 610.6 7.8 (5.7) 612.7
-------- ------ ------ --------
Total fixed maturities............. 6,884.6 217.0 (78.8) 7,022.8
Common stocks and non-redeemable
preferred stocks.................... 48.9 5.8 (0.3) 54.4
-------- ------ ------ --------
Total available-for-sale securities.. $6,933.5 $222.8 $(79.1) $7,077.2
======== ====== ====== ========
</TABLE>
The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 1999 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- --------
<S> <C> <C>
Due in one year or less.................................. $ 332.4 $ 329.7
Due one year through five years.......................... 2,222.5 2,170.0
Due five years through ten years......................... 1,663.2 1,565.5
Due after ten years...................................... 1,357.1 1,293.8
-------- --------
Subtotals.............................................. 5,575.2 5,359.0
Mortgage-backed securities............................... 1,696.5 1,686.0
Asset-backed securities.................................. 1,007.0 988.7
-------- --------
Totals................................................. $8,278.7 $8,033.7
======== ========
</TABLE>
As required by law, the Company has investments on deposit with governmental
authorities and banks for the protection of policyholders of $5.9 and $10.8 as
of December 31, 1999 and 1998, respectively.
As of December 31, 1999, approximately 26.1% and 16.1% of the Company's
investment portfolio is comprised of securities issued by the manufacturing
and financial industries, respectively, the vast majority of which are rated
investment grade, and which are senior secured bonds. No other industry group
comprises more than 10% of the Company's investment portfolio. This portfolio
is widely diversified among various geographic regions in the United States,
and is not dependent on the economic stability of one particular region.
As of December 31, 1999 the Company did not hold any fixed maturity
securities which exceeded 10% of shareholders' interest.
F-70
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
The credit quality of the fixed maturity portfolio at December 31, follows.
The categories are based on the higher of the ratings published by Standard &
Poors or Moody's.
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
Fair Fair
value Percent value Percent
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Agencies and treasuries.................... $ 284.7 3.5% $ 536.0 7.6%
AAA/Aaa.................................... 2,080.7 25.9 1,696.1 24.2
AA/Aa...................................... 461.7 5.7 415.2 5.9
A/A........................................ 1,807.5 22.5 1,388.8 19.8
BBB/Baa.................................... 2,078.2 25.9 1,980.8 28.2
BB/Ba...................................... 368.2 4.6 401.5 5.7
B/B........................................ 191.6 2.4 188.5 2.7
CCC/Ca..................................... 0.7 0.0 -- --
CC/Ca...................................... 0.1 0.0 -- --
Not rated.................................. 760.3 9.5 415.9 5.9
-------- ----- -------- -----
Totals..................................... $8,033.7 100.0% $7,022.8 100.0%
======== ===== ======== =====
</TABLE>
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa are generally regarded
as investment grade securities. Some agencies and treasuries (that is, those
securities issued by the United States government or an agency thereof) are
not rated, but all are considered to be investment grade securities. Finally,
some securities, such as private placements, have not been assigned a rating
by any rating service and are therefore categorized as "not rated." This has
neither positive nor negative implications regarding the value of the
security.
At December 31, 1999 and 1998, there were fixed maturities in default with a
fair value of $1.0 and $4.5, respectively.
(b) Mortgage and Real Estate Portfolio
The Company's mortgage and real estate portfolio is distributed by
geographic location and type. However, the Company has concentration exposures
in certain regions and in certain types as shown in the following two tables.
Geographic distribution as of December 31, 1999:
<TABLE>
<CAPTION>
Mortgage Real Estate
-------- -----------
<S> <C> <C>
South Atlantic.......................................... 30.0% 100.0%
Pacific................................................. 26.0 --
East North Central...................................... 15.0 --
West South Central...................................... 10.0 --
Mountain................................................ 5.0 --
Other................................................... 14.0 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
</TABLE>
F-71
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(2) Investments -- Continued
Type distribution as of December 31, 1999:
<TABLE>
<CAPTION>
Mortgage Real Estate
-------- -----------
<S> <C> <C>
Office Building......................................... 22.0% -- %
Retail.................................................. 30.0 100.0
Industrial.............................................. 23.0 --
Apartments.............................................. 15.0 --
Other................................................... 10.0 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
</TABLE>
"Impaired" loans are defined under generally accepted accounting principles
as loans for which it is probable that the lender will be unable to collect
all amounts due according to the original contractual terms of the loan
agreement. That definition excludes, among other things, leases or large
groups of smaller-balance homogenous loans, and therefore applies principally
to the Company's commercial loans.
Under these principles, the Company has two types of "impaired" loans as of
December 31, 1999 and 1998: loans requiring allowances for losses and loans
expected to be fully recoverable because the carrying amount has been reduced
previously through charge-offs or deferral of income recognition ($12.5 and
$11.3, respectively). There was no allowance for losses on these loans as of
December 31, 1999 or 1998. Average investment in impaired loans during 1999,
1998 and 1997 was $15.0, $20.0 and $23.0 and interest income earned on these
loans while they were considered impaired was $2.6, $1.8 and $2.0 for the
years ended 1999, 1998 and 1997, respectively.
The following table shows the activity in the allowance for losses during
the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Balance on January 1...................................... $20.9 $17.7 $21.0
Provision charged to operations........................... 1.6 1.5 1.4
Amounts written off, net of recoveries.................... 0.8 1.7 (4.7)
----- ----- -----
Balance at December 31.................................... $23.3 $20.9 $17.7
===== ===== =====
</TABLE>
The allowance for losses on mortgage loans at December 31, 1999 and 1998
represented 2.8% and 2.7% of gross mortgage loans, respectively.
The Company had $4.5 and $5.6 of non-income producing mortgage loan
investments as of December 31, 1999 and 1998 respectively.
(3) Deferred Acquisition Costs
Activity impacting deferred policy acquisition costs for the years ended
December 31, was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unamortized balance -- at January 1................ $296.1 $221.4 $108.8
Costs deferred..................................... 218.9 107.0 130.6
Amortization, net.................................. (39.8) (32.3) (18.0)
------ ------ ------
Unamortized balance -- at December 31.............. 475.2 296.1 221.4
Cumulative effect of net unrealized investment
(gains) losses.................................... 7.3 (13.3) (14.8)
------ ------ ------
Balance at December 31............................. $482.5 $282.8 $206.6
====== ====== ======
</TABLE>
F-72
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(4) Intangibles
(a) Present Value of Future Profits
PVFP reflects the estimated fair value of the Company's life insurance
business in-force and represents the portion of the cost to acquire the
Company that is allocated to the value of the right to receive future cash
flows from investment and insurance contracts existing at the date of
acquisition. Such value is the present value of the actuarially determined
projected cash flows for the acquired policies discounted at an appropriate
rate.
PVFP is amortized, net of accreted interest, in a manner similar to the
amortization of deferred acquisition costs. Interest accretes at rates
credited to policyholders on underlying contracts. Recoverability of PVFP is
evaluated periodically by comparing the current estimate of expected future
gross profits to the unamortized asset balance. If such a comparison indicates
that the expected gross profits will not be sufficient to recover PVFP, the
difference is charged to expense.
PVFP is further adjusted to reflect the impact of unrealized gains or losses
on fixed maturities classified as available for sale in the investment
portfolios. Such adjustments are not recorded in the Company's net income but
rather as a credit or charge to shareholders' interest, net of applicable
income tax.
The components of PVFP are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unamortized balance -- at January 1................ $367.0 $426.9 $487.9
Interest accreted at 7.19%, 6.25% and 6.75% for
1999, 1998, and 1997, respectively................ 21.9 24.0 28.4
Amortization....................................... (74.1) (83.9) (89.4)
------ ------ ------
Unamortized balance -- at December 31.............. 314.8 367.0 426.9
Cumulative effect of net unrealized investment
(gains) losses.................................... 35.8 (43.8) (63.5)
------ ------ ------
Balance at December 31............................. $350.6 $323.2 $363.4
====== ====== ======
</TABLE>
The estimated percentage of the December 31, 1999 balance, before the effect
of unrealized investment gains or losses, to be amortized over each of the
next five years is as follows:
<TABLE>
<S> <C>
2000................................... 14.7%
2001................................... 12.4
2002................................... 10.2
2003................................... 8.5
2004................................... 7.2
</TABLE>
(b) Goodwill
Goodwill represents the excess of purchase price over the fair value of the
assets acquired, less the fair value of the liabilities assumed which has been
pushed-down to the consolidated financial statements by the Company's parent.
Adjustments to the purchase price related to pre-acquisition contingencies are
recorded as adjustments to goodwill in the period in which they are resolved.
At December 31, 1999 and 1998, total unamortized goodwill was $121.4 and
$134.2, respectively, which is shown net of accumulated amortization and
adjustments of $36.1 and $50.9 for the years ended December 31, 1999 and 1998,
respectively. Goodwill amortization was $6.0, $4.9, and $8.7 for the years
ending December 31, 1999, 1998 and 1997, respectively. Adjustments to goodwill
totaled ($6.8), ($27.6) and ($1.9) for the years ending December 31, 1999,
1998 and 1997, respectively.
(5) Reinsurance and Claim Reserves
GELAAC is involved in both the cession and assumption of reinsurance with
other companies. Although these reinsurance agreements contractually obligate
the reinsurers to reimburse the Company, they do not discharge the
F-73
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(5) Reinsurance and Claim Reserves -- Continued
Company from its primary liabilities and the Company remains liable to the
extent that the reinsuring companies are unable to meet their obligations.
In order to limit the amount of loss retention, certain policy risks are
reinsured with other insurance companies. The maximum of individual ordinary
life insurance normally retained by the Company on any one life policy is $1.
The Company does not have significant reinsurance contracts with any one
reinsurer that could have a material impact on its results of operations.
A summary of reinsurance activity is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Direct............................................... $348.0 $427.5 $412.7
Assumed.............................................. 17.9 19.2 20.7
Ceded................................................ (113.0) (195.1) (134.4)
------ ------ ------
Net premiums earned.................................. $252.9 $251.6 $299.0
------ ------ ------
Percentage of amount assumed to net.................. 7% 8% 7%
====== ====== ======
</TABLE>
Due to the nature of the Company's insurance contracts, premiums earned
approximate premiums written. The above premium amounts include cost of
insurance charges on universal life policies.
During 1998 and 1997, a significant portion of GELAAC's ceded premiums
related to group life and health premiums. During 1998 and 1997, GELAAC was
the primary carrier for the State of Virginia employees group life and health
plan. By statute, GELAAC had to reinsure these risks with other Virginia
domiciled companies who wished to participate.
Incurred losses and loss adjustment expenses are net of reinsurance of
$68.2, $112.4 and $85.6 for the years ended December 31, 1999, 1998 and 1997,
respectively.
(6) Future Annuity and Contract Benefits
(a) Investment Contracts
Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment contracts are recognized by providing a liability equal to the
current account value of the policyholder's contracts. Interest rates credited
to investment contracts are guaranteed for the initial policy term with
renewal rates determined as necessary by management.
(b) Insurance Contracts
Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future benefits
of insurance contracts is the present value of such benefits based on
mortality, morbidity, and other assumptions which were appropriate at the time
the policies were issued or acquired. These assumptions are periodically
evaluated for potential premium deficiencies. Reserves for cancelable accident
and health insurance are based upon unearned premiums, claims incurred but not
reported, and claims in the process of settlement. This estimate is based on
the experience of the insurance industry and the Company, adjusted for current
trends. Any changes in the estimated liability are reflected in income as the
estimates are revised.
F-74
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(6) Future Annuity and Contract Benefits -- Continued
The following chart summarizes the major assumptions underlying the
Company's recorded liabilities for future annuity and contract benefits:
<TABLE>
<CAPTION>
Mortality/ December 31,
Withdrawal Morbidity Interest Rate -----------------
Assumption Assumption Assumption 1999 1998
------------------ ---------- ------------- -------- --------
<S> <C> <C> <C> <C> <C>
Investment Contracts.... N/A N/A N/A $6,891.1 $5,416.2
Limited-payment
Contracts.............. None (a) 4.0-9.3% 16.3 14.4
Traditional life
insurance contracts.... Company Experience (b) 7.1% 380.8 381.5
Universal life-type
contracts.............. N/A N/A N/A 1,730.2 1,684.7
Accident & Health....... Company Experience (c) 3.5-7.5% 44.6 41.3
-------- --------
Total future annuity and
contract benefits...... $9,063.0 $7,538.1
======== ========
</TABLE>
-------
(a) Either the United States Population Table, 1983 Group Annuitant Mortality
Table or 1983 Individual Annuitant Mortality Table.
(b) Principally modifications of the 1965-70 or 1975-80 Select and Ultimate
Tables.
(c) The 1958 Commissioner's Standard Ordinary Table and 1964 modified and 1987
Commissioner's Disability Tables.
(7) Income Taxes
GELAAC and its subsidiary have been included in the life insurance company
consolidated federal income tax return of GECA and are also subject to a
separate tax-sharing agreement, as approved by state insurance regulators, the
provisions of which are substantially the same as the tax-sharing agreement
with GE Capital. As such the Company is not at risk for income taxes nor
entitled to recoveries related to post-acquisition periods.
The total provision for income taxes at December 31, consisted of the
following components:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Current federal income tax provision ..................... $29.3 $29.2 $69.1
Deferred federal income tax provision (benefit)........... 24.9 28.7 (9.5)
----- ----- -----
Subtotal-federal provision.............................. 54.2 57.9 59.6
Current state income tax provision ....................... 2.3 1.6 2.6
Deferred state income tax provision (benefit)............. 0.1 0.8 (0.1)
----- ----- -----
Subtotal-state provision................................ 2.4 2.4 2.5
----- ----- -----
Total income tax provision.............................. $56.6 $60.3 $62.1
===== ===== =====
</TABLE>
The reconciliation of the federal statutory rate to the effective income tax
rate at December 31, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal income tax rate..................... 35.0% 35.0% 35.0%
State income tax........................................... 0.5 0.5 0.5
Non-deductible goodwill amortization....................... 1.2 1.0 1.7
Dividends received deduction............................... (1.1) (0.2) --
Other, net................................................. (1.2) -- (0.5)
---- ---- ----
Effective rate........................................... 34.4% 36.3% 36.7%
==== ==== ====
</TABLE>
F-75
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(7) Income Taxes -- Continued
The components of the net deferred income tax asset at December 31 are as
follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Assets:
Insurance reserve amounts.................................... $149.0 $159.5
Investments.................................................. 10.7 --
Net unrealized investment losses on investment securities.... 72.2 --
Other........................................................ 22.2 7.7
------ ------
Total deferred tax assets................................... 254.1 167.2
------ ------
Liabilities:
Net unrealized investment gains on investment securities..... -- 31.1
Investments.................................................. -- 15.9
Present value of future profits.............................. 59.6 67.1
Deferred acquisition costs................................... 74.2 11.0
------ ------
Total deferred tax liabilities.............................. 133.8 125.1
------ ------
Net deferred income tax asset............................... $120.3 $ 42.1
====== ======
</TABLE>
Based on an analysis of the Company's tax position, management believes it
is more likely than not that the results of future operations and
implementation of tax planning strategies will generate sufficient taxable
income enabling the Company to realize remaining deferred tax assets.
Accordingly, no valuation allowance for deferred tax assets is deemed
necessary.
The Company paid $41.8, $25.6 and $70.6, for federal and state income taxes
for the years ended December 31, 1999, 1998 and 1997, respectively.
(8) Related Party Transactions
GELAAC pays investment advisory fees and other fees to affiliates. Amounts
incurred for these items aggregated $14.8, $11.5 and $11.9 for the years ended
December 31, 1999, 1998 and 1997, respectively. GELAAC charges affiliates for
certain services and for the use of facilities and equipment which aggregated
$45.1, $19.1 and $4.6, for the years ended December 31, 1999, 1998 and 1997,
respectively.
GELAAC pays interest on outstanding amounts under a credit funding
agreement with GNA Corporation, the parent company of GECA. Interest expense
under this agreement was $1.9 and $2.2 with no outstanding borrowings at
December 31, 1999 and $64.3 outstanding at December 31, 1998.
During 1998, GELAAC sold $18.5 of third-party preferred stock investments
to an affiliate. This resulted in a gain on sale of $3.9, which is included in
net realized investment gains.
(9) Commitments and Contingencies
(a) Mortgage Loan Commitments
GELAAC has certain investment commitments to provide fixed-rate loans. The
investment commitments, which would be collateralized by related properties of
the underlying investments, involve varying elements of credit and market
risk. Investment commitments outstanding as of December 31, 1999 and 1998,
totaled $30.8 and $75.9, respectively.
(b) Guaranty Association Assessments
The Company is required by law to participate in the guaranty associations
of the various states in which they do business. The state guaranty
associations ensure payment of guaranteed benefits, with certain restrictions,
to policyholders of impaired or insolvent insurance companies by assessing all
other companies involved in similar lines of business.
F-76
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(9) Commitments and Contingencies -- Continued
There are currently several unrelated insurance companies which had
substantial amounts of annuity business in the process of liquidation or
rehabilitation. The Company paid assessments of $.1, $3.1, and $4.6 to various
state guaranty associations during 1999, 1998 and 1997, respectively. At
December 31, 1999 and 1998, accounts payable and accrued expenses include $4.1
and $17.8, respectively, related to estimated future payments.
(c) Litigation
The Company and its subsidiary are defendants in various cases of litigation
considered to be in the normal course of business. The Company believes that
the outcome of such litigation will not have a material effect on its
financial position or results of operations.
(10) Fair Value of Financial Instruments
The Company has no derivative financial instruments as of December 31, 1999
and 1998 other than mortgage loan commitments of $53.0 and $83.8 and interest
rate floors of $13.9 and $17.2, respectively. The notional value of the
interest rate floors at December 31, 1999 and 1998, was $1,800 and the floors
expire from September 2003 to October 2003.
The fair values of financial instruments presented in the applicable notes
to the Company's consolidated financial statements are estimates of the fair
values at a specific point in time using available market information and
valuation methodologies considered appropriate by management. These estimates
are subjective in nature and involve uncertainties and significant judgment in
the interpretation of current market data. Therefore, the fair values
presented are not necessarily indicative of amounts the Company could realize
or settle currently. The Company does not necessarily intend to dispose of or
liquidate such instruments prior to maturity.
Financial instruments that, as a matter of accounting policy, are reflected
in the accompanying consolidated financial statements at fair value are not
included in the following disclosures. Such items include fixed maturities,
equity securities and certain other invested assets. The carrying value of
policy loans and short-term investments approximate fair value at both
December 31, 1999 and 1998.
At December 31, the carrying amounts and fair value of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
Carrying Fair Carrying Fair
amount value amount value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Mortgage loans.......................... $ 810.5 $ 819.4 $ 745.8 $ 828.3
Investment type insurance contracts..... 6,891.1 6,849.8 5,416.2 5,441.8
Interest rate floors.................... 13.9 1.2 17.2 12.5
</TABLE>
The fair value of mortgage loans is estimated by discounting the estimated
future cash flows using interest rates applicable to current loan origination,
adjusted for credit risk.
The estimated fair value of investment contracts is the amount payable on
demand (cash surrender value) for deferred annuities and the net present value
based on interest rates currently offered on similar contracts for non-life
contingent immediate annuities. Fair value disclosures are not required for
insurance contracts.
F-77
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(11) Restrictions on Dividends
Insurance companies are restricted by states as to the aggregate amount of
dividends they may pay to their parent in any consecutive twelve-month period
without regulatory approval. Generally, dividends may be paid out of earned
surplus without approval with thirty days prior written notice within certain
limits. The limits are generally based on 10% of the prior year surplus (net
of adjustments in some cases) and prior year statutory income (net gain from
operations, net income adjusted for realized capital gains, or net investment
income). Dividends in excess of the prescribed limits or the Company's earned
surplus require formal state insurance commission approval. The maximum
dividend payout which may be made without prior approval in 2000 is $54.2.
On December 3, 1998, the Company received approval from the Commonwealth of
Virginia for, and declared, a dividend payable in cash, preferred stock and/or
common stock at the election of each shareholder. GEFAHI elected to receive
cash and preferred stock and GECA elected to receive common stock. A cash
dividend of $120 was paid and a Series A preferred stock dividend of $120 was
issued to GEFAHI on December 15, 1998. The Series A preferred stock has a par
value of $1,000 per share, is redeemable at par at the Company's election, and
is not subject to call penalties. Dividends on the preferred stock are
cumulative and payable semi-annually at the annual rate of 8.0% of the par
value. The Series A preferred stock is not convertible into any other security
of the Company, and the holders thereof have no voting rights except with
respect to any proposed changes in the preferences and special rights of such
stock. GECA received its dividend in the form of 18,641 shares of newly issued
common stock in 1999.
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners ("NAIC")
that are prepared on an accounting basis prescribed by such authorities
(statutory basis). Statutory accounting practices differ from GAAP in several
respects, causing differences in reported net income and shareholders'
interest. Permitted statutory accounting practices encompass all accounting
practices not so prescribed but that have been specifically allowed by state
insurance authorities. The Company has no significant permitted accounting
practices.
At December 31, statutory net income and statutory capital and surplus is
summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Statutory net income................................... $ 70.8 $ 70.1 $ 80.9
Statutory capital and surplus.......................... $542.5 $577.5 $600.0
</TABLE>
The NAIC adopted Risk Based Capital ("RBC") requirements to evaluate the
adequacy of statutory capital and surplus in relation to risks associated with
(i) asset quality, (ii) insurance risk, (iii) interest rate risk, and (iv)
other business factors. The RBC formula is designated as an early warning tool
for the states to identify possible under-capitalized companies for the
purpose of initiating regulatory action. In the course of operations, the
Company periodically monitors its RBC level. At December 31, 1999 and 1998,
the Company exceeded the minimum required RBC levels.
(13) Operating Segment Information
The Company conducts its operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase
the policyholder's wealth, transfer wealth to beneficiaries or provide a means
for replacing the income of the insured in the event of premature death, and
(2) Lifestyle Protection and Enhancement, comprised of products intended to
protect accumulated wealth and income from the financial drain of unforeseen
events. See Note (1)(c) for further discussion of the Company's principal
product lines within these two segments.
F-78
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(13) Operating Segment Information -- Continued
The following is a summary of industry segment activity for 1999, 1998 and
1997:
<TABLE>
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1999 -- Segment Data Transfer & Enhancement Consolidated
-------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ $ 634.2 $ 4.0 $ 638.2
Net realized investment gains........ 12.0 -- 12.0
Premiums............................. 67.8 56.1 123.9
Other revenues....................... 243.6 0.2 243.8
--------- ------ ---------
Total revenues..................... 957.6 60.3 1,017.9
--------- ------ ---------
Interest credited, benefits, and
other changes in policy reserves.... 617.0 38.5 655.5
Commissions.......................... 179.7 12.4 192.1
Amortization of intangibles.......... 56.2 2.1 58.3
Other operating costs and expenses... (55.1) 2.6 (52.5)
--------- ------ ---------
Total benefits and expenses........ 797.8 55.6 853.4
--------- ------ ---------
Income before income taxes and
cumulative effect of accounting
change............................ $ 159.8 $ 4.7 $ 164.5
========= ====== =========
Total Assets......................... $19,774.2 $183.1 $19,957.3
========= ====== =========
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1998 -- Segment Data Transfer & Enhancement Consolidated
-------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ $ 569.4 $ 5.3 $ 574.7
Net realized investment gains........ 29.6 -- 29.6
Premiums............................. 101.4 21.7 123.1
Other revenues....................... 211.1 0.5 211.6
--------- ------ ---------
Total revenues..................... 911.5 27.5 939.0
--------- ------ ---------
Interest credited, benefits, and
other changes in policy reserves.... 560.7 (3.9) 556.8
Commissions.......................... 106.2 6.6 112.8
Amortization of intangibles.......... 55.1 9.7 64.8
Other operating costs and expenses... 26.0 12.5 38.5
--------- ------ ---------
Total benefits and expenses........ 748.0 24.9 772.9
--------- ------ ---------
Income before income taxes and
cumulative effect of accounting
change............................ $ 163.5 $ 2.6 $ 166.1
========= ====== =========
Total Assets......................... $14,661.1 $ 99.8 $14,760.9
========= ====== =========
<CAPTION>
Wealth Lifestyle
Accumulation & Protection
1997 -- Segment Data Transfer & Enhancement Consolidated
-------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Net investment income................ $ 555.74 $ 7.0 $ 562.7
Net realized investment gains........ 19.0 -- 19.0
Premiums............................. 105.6 66.2 171.8
Other revenues....................... 195.1 0.2 195.3
--------- ------ ---------
Total revenues..................... 875.4 73.4 948.8
--------- ------ ---------
Interest credited, benefits, and
other changes in policy reserves.... 548.4 42.5 590.9
Commissions.......................... 125.2 13.9 139.1
Amortization of intangibles.......... 66.6 3.1 69.7
Other operating costs and expenses... (24.5) 4.1 (20.4)
--------- ------ ---------
Total benefits and expenses........ 715.7 63.6 779.3
--------- ------ ---------
Income before income taxes and
cumulative effect of accounting
change............................ $ 159.7 $ 9.8 $ 169.5
========= ====== =========
Total Assets......................... $12,699.0 $ 47.9 $12,746.9
========= ====== =========
</TABLE>
F-79
<PAGE>
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued
December 31, 1999, 1998 and 1997
(Dollar amounts in millions, except per share amounts)
(14) Accounting Pronouncements Not Yet Adopted
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities (Statement No. 133), effective for GELAAC
on January 1, 2001 (as amended by Statement of Financial Accounting Standards
No. 137, Deferral of the Effective Date of Statement No. 133.) Upon adoption,
all derivative instruments (including certain derivative instruments embedded
in other contracts) will be recognized in the balance sheets at fair value,
and changes in such fair values must be recognized immediately in earnings
unless specific hedging criteria are met. Changes in the values of derivatives
meeting these hedging criteria will ultimately offset related earnings effects
of the hedged items; effects of qualifying changes in fair value are to be
recorded in equity pending recognition in earnings. Certain significant
refinements and interpretations of Statement 133 are being deliberated by the
FASB, and the effects on accounting for GELAAC financial instruments will
depend to some degree on the results of such deliberations. Management has not
determined the total probable effects of adopting Statement 133, and does not
believe that an estimate of such effects would be meaningful at this time.
(15) Cumulative Effect of Accounting Change
The American Institute of Certified Public Accountants has issued Statement
of Position ("SOP") No. 97-3, Accounting by Insurance and Other Enterprises
for Insurance-Related Assessments. This SOP provided guidance on accounting by
insurance and other enterprises for guaranty-fund and certain other insurance-
related assessments. The SOP requires enterprises to recognize (1) a liability
for assessments when (a) an assessment has been asserted or information
available prior to issuance of the financial statements indicates it is
probable that an assessment will be asserted, (b) the underlying cause of the
asserted or probable assessment has occurred on or before the date of the
financial statements, and (c) the amount of the loss can be reasonably
estimated and (2) an asset for an amount when it is probable that a paid or
accrued assessment will result in an amount that is recoverable from premium
tax offsets or policy surcharges from in-force policies.
Effective January 1, 1999, the Company adopted SOP No. 97-3 and has reported
the favorable impact of this adoption as a cumulative effect of a change in
accounting principle resulting in an increase to net income of $5 (net of
income taxes of $2.8).
F-80
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this Registration
Statement.
(b) Exhibits
<TABLE>
<C> <S>
(1)(a) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of Separate Account 4.(12)
(1)(a)(i) Resolution of the Board of Directors of GE Life & Annuity
authorizing the change in name of Life of Virginia Separate Account
4 to GE Life & Annuity Separate Account 4.(13)
(1)(b) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of additional subdivisions of
the Separate Account, investing in shares of the Asset Manager
Portfolio of the Fidelity Variable Insurance Products Fund II and
the Balanced Portfolio of the Advisers Management Trust.(12)
(1)(c) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of additional subdivisions of
the Separate Account, investing in shares of the Growth Portfolio,
the Aggressive Growth Portfolio, and the Worldwide Growth Portfolio
of the Janus Aspen Series.(12)
(1)(d) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of twenty-two (22) additional
subdivisions of the Separate Account, investing in shares of Money
Market Portfolio, High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio of the Fidelity Variable
Insurance Products Fund; Asset Manager Portfolio of the Fidelity
Variable Insurance Products Fund II; Money Market Portfolio,
Government Securities Portfolio, Common Stock Index Portfolio, Total
Return Portfolio of the Life of Virginia Series Fund, Inc.; Limited
Maturity Bond Portfolio, Growth Portfolio and Balanced Portfolio of
the Neuberger & Berman Advisers Management Trust; Growth Portfolio,
Aggressive Growth Portfolio, and Worldwide Growth Portfolio of the
Janus Aspen Series; Money Fund, High Income Fund, Bond Fund, Capital
Appreciation Fund, Growth Fund, Multiple Strategies Fund of the
Oppenheimer Variable Account Funds.(12)
(1)(e) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of two additional
subdivisions of the Separate Account, investing in shares of the
Utility Fund and the Corporate Bond Fund of the Insurance Management
Series, and the Contrafund Portfolio of the Variable Insurance
Products Fund II.(10)
(1)(f) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of two additional
subdivisions of the Separate Account, investing in shares of the
International Equity Portfolio and the Real Estate Securities
Portfolio of Life of Virginia Series Fund.(12)
(1)(g) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of four additional
subdivisions of the Separate Account, investing in shares of the
American Growth Portfolio and the American Small Capitalization
Portfolio of The Alger American Fund, and the Balanced Portfolio and
Flexible Income Portfolio of the Janus Aspen Series.(8)
(1)(h) Resolution of Board of Directors of The Life Insurance Company of
Virginia authorizing the establishment of two additional
subdivisions of the Separate Account, investing in shares of the
Federated American Leaders Fund II of the Federated Insurance
Series, and the International Growth Portfolio of the Janus Aspen
Series.(9)
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(1)(i) Resolution of Board of Directors of The Life Insurance Company of Virginia
authorizing the establishment of twelve additional subdivisions of the Separate
Account, investing in shares of the Growth and Income Portfolio and Growth
opportunities Portfolio of Variable Insurance Products Fund III; Growth II
Portfolio and Large Cap Growth Portfolio of the PBHG Insurance Series Fund, Inc.;
Global Income Fund and Value Equity Fund of GE Investments Funds, Inc.(11)
(1)(j) Resolution of Board of Directors of The Life Insurance Company of Virginia
authorizing the establishment of two additional subdivisions of the Separate
Account, investing in shares of the Capital Appreciation Portfolio of the Janus
Aspen Series.(11)
(1)(k) Resolution of Board of Directors of The Life Insurance Company of Virginia
authorizing the establishment of six additional subdivisions of the Separate
Account, investing in shares of the U.S. Equity Fund of the GE Investments Funds,
Inc., Growth and Income Fund of the Goldman Sachs Variable Insurance Trust Fund
and Mid Cap Equity Fund of Goldman Sachs Variable Insurance Trust. Further a name
change for Oppenheimer Variable Account Fund Capital Appreciation Fund to
Oppenheimer Variable Account Fund Aggressive Growth Fund.(12)
(1)(l) Resolution of Board of Directors of The Life Insurance Company of Virginia
authorizing additional Subdivisions of the Separate Account investing in shares of
the Salomon Brothers Variable Investors Fund, Salomon Brothers Variable Total
Return Fund and Salomon Brothers Variable Strategic Bond Fund of Salomon Brothers
Variable Series Funds, Inc.(12)
(1)(m) Resolution of Directors of The Life Insurance Company of Virginia authorizing the
establishment of ninety-six additional subdivisions of the Separate Account.(15)
(1)(n) Resolution of Board of Directors of GE Life and Annuity Assurance Company
authorizing additional Subaccounts investing in shares of GE Premier Growth Equity
Fund of GE Investments Funds, Inc.(17)
(1)(o) Resolution of Board of Directors of GE Life and Annuity Assurance Company
authorizing change in name of Subdivisions of Oppenheimer Variable Account Funds
and Mid Cap Value Fund of Goldman Sachs Variable Insurance Trust.(17)
(1)(p) Resolution of Board of Directors of GE Life and Annuity Assurance Company
authorizing additional subaccounts 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
Investments Funds, Inc.; 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.(19)
(1)(q) Resolution of Board of Directors of GE Life & Annuity authorizing the
establishment of additional investment subdivisions of Separate Account 4,
investing in shares of Global Life Sciences and Global Technology Portfolios of
Janus Aspen Series and Mid-Cap Value Equity Fund of GE Investments Funds, Inc.
(21)
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
(1)(r) Resolution of Board of Directors of GE Life & Annuity authorizing the
establishment of additional investment subaccounts of Separate Account 4,
investing in shares of Dreyfus Investment Portfolios-Emerging Markets Portfolio of
The Dreyfus Corporation; Federated High Income Bond Fund II and Federated
International Small Company Fund II of the Federated Insurance Series; Mid-Cap
Value Equity, Small-Cap Value Equity Fund, and Value Equity Fund of GE Investments
Funds, Inc; MFS Growth Series, MFS Growth With Income Series, MFS New Discovery
Series and MFS Utilities Series of the Massachusetts Financial Services Company
Variable Insurance Trust.(22)
(2) Not Applicable.
(3)(a) Underwriting Agreement dated December 13, 1997 between The Life Insurance Company
of Virginia and Capital Brokerage Corporation.(12)
(b) Dealer Sales Agreement dated December 12, 1997.(12)
(4)(a) Form of Contract
(a)(i) Contract Form P1154 4/00(19)
(b) Endorsements to Contract.
(b)(i) Terminal Illness Nursing Home Endorsement P5122 10/98(12)
(b)(ii) IRA Endorsement P5090F 7/97(12)
(b)(iii) Roth IRA P5100 6/99(12)
(b)(iv) Optional Death Benefit Rider P5135 4/00(19)
(5)(a) Form of Application.(19)
(6)(a) Certificate of Incorporation of The Life Insurance Company of Virginia.(12)
(b) By-Laws of The Life Insurance Company of Virginia.(12)
(7) Not Applicable.
(8)(a) Participation Agreement among Variable Insurance Products Fund, Fidelity
Distributors Corporation, and The Life Insurance Company of Virginia.(12)
(a)(i) Amendment to Participation Agreement Referencing Policy Form Numbers.(12)
(a)(ii) Amendment to Participation Agreement among Variable Insurance Products Fund II,
Fidelity Distributors Corporation, and The Life Insurance Company of Virginia.(12)
(a)(iii) Amendment to Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation, and The Life Insurance Company of Virginia.(12)
(a)(iv) Amendment to Participation Agreement Variable Insurance Products Fund, Fidelity
Distributors Corporation and GE Life and Annuity Assurance Company.(22)
(b) Agreement between Oppenheimer Variable Account Funds, Oppenheimer Management
Corporation, and The Life Insurance Company of Virginia.(12)
(b)(i) Amendment to Agreement between Oppenheimer Variable Account Funds, Oppenheimer
Management Corporation, and The Life Insurance Company of Virginia.(22)
(c) Participation Agreement among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and The Life Insurance Company of Virginia.(12)
(c)(i) Amendment to Variable Insurance Products Fund II, Fidelity Distributors
Corporation and GE Life and Annuity Assurance Company.(22)
(d) Participation Agreement between Janus Capital Corporation and Life of
Virginia.(12)
(e) Participation Agreement between Insurance Management Series, Federated Securities
Corporation, and The Life Insurance Company of Virginia.(12)
(e)(i) Amendment to Participation Agreement between Federated Securities Corporation and
GE Life and Annuity Assurance Company.(22)
(f) Participation Agreement between The Alger American Fund, Fred Alger and Company,
Inc., and The Life Insurance Company of Virginia.(6)
(f)(i) Amendment to Fund Participation Agreement between The Alger American Fund, Fred
Alger and Company, Inc. and GE Life and Annuity Assurance Company.(17)
</TABLE>
C-3
<PAGE>
<TABLE>
<C> <S>
(g) Participation Agreement between Variable Insurance Products Fund
III and The Life Insurance Company of Virginia.(8)
(g)(i) Amendment to Variable Insurance Products Fund III, Fidelity
Distributors Corporation and GE Life and Annuity Assurance
Company.(22)
(h) Participation Agreement between PBHG Insurance Series Fund, Inc.
and The Life Insurance Company of Virginia.(8)
(i) Participation Agreement between Goldman Sach Variable Series Funds
and The Life Insurance Company of Virginia.(12)
(j) Participation Agreement between Salomon Brothers Variable Series
Funds and The Life Insurance Company of Virginia.(14)
(k) Participation Agreement between GE Investments Funds, Inc. and The
Life Insurance Company of Virginia.(14)
(k)(i) Amendment to Fund Participation Agreement between GE Investments
Funds, Inc. and GE Life and Annuity Assurance Company.(17)
(k)(ii) Amendment to Fund Participation Agreement between GE Investments
Funds, Inc. and GE Life and Annuity Assurance Company.(22)
(l) Participation Agreement between AIM Variable Insurance Series and
GE Life and Annuity Assurance Company.(21)
(m) Participation Agreement between Alliance Variable Products Series
Fund, Inc. and GE Life and Annuity Assurance Company.(22)
(n) Form of Participation Agreement between Dreyfus and GE Life and
Annuity Assurance Company.(22)
(o) Participation Agreement between MFS Variable Insurance Trust and
GE Life and Annuity Assurance Company.(22)
(p) Participation Agreement between PIMCO Variable Insurance Trust and
GE Life and Annuity Assurance Company.(22)
(q) Participation Agreement between Rydex Variable Trust and GE Life
and Annuity Assurance Company.(22)
(9) Opinion and Consent of Counsel.(22)
(10)(a) Consent of Counsel.(22)
(b) Consent of Independent Auditors.(22)
(11) Not Applicable.
(12) Not Applicable.
(13) Schedule showing computation for Performance Data(9)
(14)(a) Power of Attorney dated April 16, 1997(11)
(b) Power of Attorney dated April 15, 1999(17)
(c) Power of Attorney dated December 17, 1999(18)
(d) Power of Attorney dated April 4, 2000(21)
</TABLE>
--------
<TABLE>
<C> <S>
(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
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C>
(12) Incorporated herein by reference to post-effective amendment number 9 to the Registrant's
registration
statement on Form N-4, File No. 33-76334, filed with the Securities and Exchange Commission on
May 1, 1998
(13) Incorporated herein by reference to post-effective amendment number 11 to the Registrant's
registration
statement on Form N-4, File No. 33-76334, filed with the Securities and Exchange Commission on
July 17, 1998.
(14) Incorporated herein by reference to pre-effective amendment number 1 to the Registrant's
registration
statement on Form N-4, File No. 333-62695, filed with the Securities and Exchange Commission on
December 18, 1998.
(15) Incorporated herein by reference to pre-effective amendment number 2 to the Registrant's
registration
statement on Form N-4, File No. 333-62695, filed with the Securities and Exchange Commission on
January 27, 1999.
(16) Incorporated herein by reference to pre-effective amendment number 1 to the Registrant's
registration
statement on Form N-4, File No. 333-63531 filed with the Securities and Exchange Commission on
March 12, 1999.
(17) Incorporated herein by reference to pre-effective amendment number 1 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.
(18) Incorporated herein by reference 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.
(19) Incorporated herein by reference to the initial filing to the Registrant's registration statement on
Form N-4, File No. 33-31172 filed with the Securities and Exchange Commission on February 25, 2000.
(20) Incorporated herein by reference to pre-effective amendment number 1 to the Registrant's
registration
statement on Form N-4, File No. 333-96513 filed with the Securities and Exchange Commission on
March 15, 2000.
(21) Incorporated herein by reference to Post-Effective Amendment No. 19 to the Registrant's registration
statement on Form N-4, File No. 33-76334 filed with the Securities and Exchange Commission on
April 28, 2000.
(22) Filed herewith.
</TABLE>
Item 25. Directors and Officers of GE Life & Annuity
<TABLE>
<CAPTION>
Name Address Positions and Offices with Depositor
---- ------- ------------------------------------
<C> <C> <S>
Director, Chairman of the
Michael D. Fraizer.......... GE Financial Assurance Board
6604 W. Broad Street
Richmond, VA 23230
Pamela S. Schutz............ GE Life & Annuity Director and President
6610 W. Broad Street
Richmond, VA 23230
Director and Senior Vice
Selwyn L. Flournoy, Jr...... GE Life & Annuity President
6610 W. Broad Street
Richmond, VA 23230
Director and Senior Vice
Thomas M. Stinson........... GE Life & Annuity President
6630 W. Broad Street
Richmond, VA 23230
Donita M. King.............. GE Life & Annuity Senior Vice President
6610 W. Broad Street General Counsel
Richmond, VA 23230 Secretary
Victor C. Moses............. GE Financial Assurance Director & Vice President
601 Union Street, Ste. 5600
Seattle, WA 98101
Director & Senior Vice
Geoffrey S. Stiff........... GE Life & Annuity President
6610 W. Broad Street
Richmond, VA 23230
Senior Vice President,
Richard P. McKenney......... GE Life & Annuity Chief Financial
6610 W. Broad Street Officer
Richmond, VA 23230
Vice President and
Kelly L. Groh............... GE Life & Annuity Controller
6610 W. Broad Street
Richmond, VA 23230
</TABLE>
C-5
<PAGE>
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
|
(100%)
|
GE Financial Assurance
Holdings, Inc.
|
(100%)
|
GNA Corporation
|
(100%)
|
General Electric Capital
Assurance Company -------
| |
| Federal Home Phoenix
(85.2%) Life Insurance Group
| Company Holdings, Inc.
| 11.7% 3.1%
GE Life and Annuity | |
Assurance Company ---------------------------
C-6
<PAGE>
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 The Life Insurance Company of Virginia further
provides that:
(a) The Corporation shall indemnify each director, officer and employee
of this Company who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that
he is or was a director, officer or employee of the Corporation, or is or
was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgements [sic],
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of
the Corporation, and with respect to any criminal action, had no cause to
believe his conduct unlawful. The termination of any action, suit or
proceeding by judgement [sic], order, settlement, conviction, or upon a
plea of nolo contendere, shall not of itself create a presumption that the
person did not act in good faith, or in a manner opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, believed his conduct unlawful.
(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-7
<PAGE>
(c) Any indemnification under subsections (a) and (b) (unless ordered by
a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer or employee is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors of the
Corporation by a majority vote of a quorum consisting of the directors who
were not parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders of the Corporation.
(d) Expenses (including attorneys' fees) incurred in defending an
action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized in
the manner provided in subsection (c) upon receipt of an undertaking by or
on behalf of the director, officer or employee to repay such amount to the
Corporation unless it shall ultimately be determined that he is entitled to
be indemnified by the Corporation as authorized in this Article.
(e) The Corporation shall have the power to make any other or further
indemnity to any person referred to in this section except an indemnity
against gross negligence or willful misconduct.
(f) Every reference herein to director, officer or employee shall
include every director, officer or employee, or former director, officer or
employee of the Corporation and its subsidiaries and shall enure to the
benefit of the heirs, executors and administrators of such person.
(g) The foregoing rights and indemnification shall not be exclusive of
any other rights and indemnification to which the directors, officers and
employees of the Corporation may be entitled according to law.
* * *
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to the foregoing provisions, or otherwise, the depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the depositor of expenses incurred
or paid by a director, officer or controlling person of the depositor in
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the depositor will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
C-8
<PAGE>
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 annuity and variable life
insurance policies issued through GE Life & Annuity Separate Accounts I, II,
III, and 4.
(b)
<TABLE>
<CAPTION>
Positions and Offices
Name Address with Underwriter
---- ------- ---------------------
<C> <C> <S>
Scott A. Curtis............. GE Financial Assurance President and Chief
Executive Officer
6610 W. Broad Street
Richmond, VA 23230
David J. Beck............... GE Financial Assurance Senior Vice President &
Chief Investment
601 Union St., Ste. 5600 Officer
Seattle, WA 98101
Thomas W. Casey............. GE Financial Assurance Senior Vice President &
Chief Financial
6604 W. Broad St. 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 &
Assistant Secretary
6604 W. Broad St.
Richmond, VA 23230
Brenda Daglish.............. GE Financial Assurance Vice President &
Assistant Treasurer
6604 W. Broad St.
Richmond, VA 23230
William E. Daner, Jr........ GE Financial Assurance Vice President, Counsel
& Secretary
6610 W. Broad St.
Richmond, VA 23230
Richard G. Fucci............ GE Financial Assurance Vice President &
Controller
6604 W. Broad St.
Richmond, VA 23230
Scott A. Reeks.............. GE Financial Assurance Vice President &
Assistant Treasurer
6630 W. Broad St.
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 Home Office.
C-9
<PAGE>
Item 31. Management Services
All management contracts are discussed in Part A or Part B of this
Registration Statement.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to
this Registration Statement as frequently as necessary to ensure that the
audited financial statements in the Registration Statement are never more than
16 months old for so long as payments under the variable annuity contracts may
be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to GE Life & Annuity at the address or
phone number listed in the Prospectus.
STATEMENT PURSUANT TO RULE 6c-7
GE Life & Annuity offers and will offer Contracts to participants in the Texas
Optional Retirement Program. In connection therewith, GE Life & Annuity and
the Separate Account rely on 17 C.F.R. Section 270.6c-7 and represent that the
provisions of paragraphs (a)-(d) of the Rule have been or will be complied
with.
SECTION 403(b) REPRESENTATIONS
GE Life & Annuity represents that in connection with its offering of Contracts
as funding vehicles for retirement plans meeting the requirements of Section
403(b) of the Internal Revenue Code of 1986, it is relying on a no-action
letter dated November 28, 1988, to the American Council of Life Insurance
(Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the
Investment Company Act of 1940, and that paragraphs numbered (1) through (4)
of that letter will be complied with.
SECTION 26(e)(2)(A) REPRESENTATION
GE Life & Annuity hereby represents that the fees and charges deducted under
the 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.
C-10
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, GE Life & Annuity Separate Account 4 has duly caused
this pre-effective amendment 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 2nd day of June,
2000.
GE Life & Annuity Separate Account 4
(Registrant)
/s/ Selwyn L. Flournoy, Jr.
BY: _________________________________
Selwyn L. Flournoy, Jr.
Senior Vice President
GE Life and Annuity Assurance
Company
GE Life and Annuity Assurance
Company
(Depositor)
/s/ Selwyn L. Flournoy, Jr.
BY: _________________________________
Selwyn L. Flournoy, Jr.
Senior Vice President
GE Life and Annuity Assurance
Company
As required by the Securities Act of 1933, this Pre-Effective Amendment No.
1 to Registration Statement No. 333-31172 has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael D. Fraizer Director, Chairman of the 06/01/00
______________________________________ Board
Michael D. Fraizer
/s/ Pamela S. Schutz Director, Chief Operating 06/01/00
______________________________________ Officer
Pamela S. Schutz
/s/ Selwyn L. Flournoy, Jr. Director, Senior Vice 06/01/00
______________________________________ President
Selwyn L. Flournoy, Jr.
/s/ Thomas M. Stinson Director, Senior Vice 06/01/00
______________________________________ President
Thomas M. Stinson
/s/ Richard P. Mckenney Senior Vice President, Chief 06/01/00
______________________________________ Financial Officer
Richard P. McKenney
/s/ Kelly L. Groh Vice President and 06/01/00
______________________________________ Controller
Kelly L. Groh
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Victor C. Moses Director 06/01/00
______________________________________
Victor C. Moses
/s/ Geoffrey S. Stiff Director 06/01/00
______________________________________
Geoffrey S. Stiff
</TABLE>
By /s/ Selwyn L. Flournoy, Jr., pursuant to Power of Attorney executed on April
4, 2000.
C-12
<PAGE>
Exhibit List
<TABLE>
<C> <S>
Exhibit 1(r) Resolution of Board of Directors of GE Life & Annuity
Exhibit 8(a)(iv) Amendment to Participation Agreement between Variable
Insurance Products Fund, Fidelity Distributors Corporation
and GE Life and Annuity Assurance Company
Exhibit 8(b)(i) Amendment to Participation Agreement between Oppenheimer
Variable Account Funds, Oppenheimer Management Corporation,
and GE Life and Annuity Assurance Company
Exhibit 8(c)(i) Amendment to Participation Agreement between Variable
Insurance Products Fund II, Fidelity Distributors Corporation
and GE Life and Annuity Assurance Company
Exhibit 8(e)(i) Amendment to Participation Agreement between Federated
Securities Corporation and GE Life and Annuity Assurance
Company
Exhibit 8(g)(i) Amendment to Participation Agreement between Variable
Insurance Products Fund III, Fidelity Distributors
Corporation and GE Life and Annuity Assurance Company
Exhibit 8(k)(ii) Amendment to Participation Agreement between GE Investments
Funds, Inc. and GE Life and Annuity Assurance Company
Exhibit 8(m) Participation Agreement Alliance Variable Products Series
Fund, Inc. and GE Life and Annuity Assurance Company
Exhibit 8(n) Form of Participation Agreement between Dreyfus and GE Life
and Annuity Assurance Company
Exhibit 8(o) Participation Agreement between MFS Variable Insurance Trust
and GE Life and Annuity Assurance Company
Exhibit 8(p) Participation Agreement between PIMCO Variable Insurance
Trust and GE Life and Annuity Assurance Company
Exhibit 8(q) Participation Agreement between Rydex Variable Trust and GE
Life and Annuity Assurance Company
Exhibit 9 Opinion and Consent of Counsel
Exhibit 10(a) Consent of Sutherland Asbill & Brennan LLP
Exhibit 10(b) Consent of KPMG LLP
</TABLE>
C-13
