GOLDEN AMERICAN LIFE INSURANCE CO /NY/, 424B3, 1999-05-27

GOLDEN AMERICAN LIFE INSURANCE CO /NY/
424B3, 1999-05-27

Previous: PREMIER BANCSHARES INC /GA, 8-A12B, 1999-05-27

Next: GOLDEN AMERICAN LIFE INSURANCE CO /NY/, 424B3, 1999-05-27

<PAGE>
<PAGE>
File No. 333-76941
Filed under Rule 424(b)(3)

GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY

[begin shaded block]
PROFILE OF
GOLDENSELECT ES II/R/
FIXED AND VARIABLE ANNUITY CONTRACT
MAY 1, 1999

[inset within shaded block]
This Profile is a summary of some of the more important points that
you should know and consider before purchasing the Contract. The
Contract is more fully described in the full prospectus which
accompanies this Profile. Please read the prospectus carefully.
[end inset within shaded block]

[end shaded block]

1.THE ANNUITY CONTRACT
The Contract offered in this prospectus is a deferred combination
variable and fixed annuity contract between you and Golden American
Life Insurance Company. The Contract provides a means for you to
invest on a tax-deferred basis in (i) one or more of 21 mutual fund
investment portfolios through our Separate Account B listed on the
next page and/or (ii) in a fixed account of Golden American with
guaranteed interest periods. We set the interest rates in the fixed
account (which will never be less than 3%) periodically. We
currently offer guaranteed interest periods of 6 months, 1, 3, 5, 7
and 10 years. We may credit a different interest rate for each
interest period. The interest you earn in the fixed account as well
as your principal is guaranteed by Golden American as long as you do
not take your money out before the maturity date for the interest
period. We will apply a market value adjustment if you withdraw your
money from the fixed account more than 30 days before the applicable
maturity date. The investment portfolios are designed to offer a
better return than the fixed account. However, this is NOT
guaranteed. You may not make any money, and you can even lose the
money you invest.

The Contract, like all deferred variable annuity contracts, has two
phases: the accumulation phase and the income phase. The
accumulation phase is the period between the contract date and the
date on which you start receiving the annuity payments under your
Contract. The amounts you accumulate during the accumulation phase
will determine the amount of annuity payments you will receive. The
income phase begins when you start receiving regular annuity payments
from your Contract on the annuity start date.

You determine (1) the amount and frequency of premium payments, (2)
the investments, (3) transfers between investments, (4) the type of
annuity to be paid after the accumulation phase, (5) the beneficiary
who will receive the death benefits, and (6) the amount and frequency
of withdrawals.

2.YOUR ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity payments are the periodic payments you will begin receiving
on the annuity start date. You may choose one of the following
annuity payment options:

[Table with Shaded Heading]
Annuity Options
|------------------------------------------------------------------------|
| Option 1 Income for a Payments are made for a specified |
| fixed period number of years to you |
| or your beneficiary. |
|------------------------------------------------------------------------|
| Option 2 Income for Payments are made for the rest of |
| life with a your life or longer for a specified |
| period certain period such as 10 or 20 years or |
| until the total amount used to buy |
| this option has been repaid. This |
| option comes with an added guarantee|
| that payments will continue to your |
| beneficiary for the remainder of |
| period if you should die during the |
| period. |
|------------------------------------------------------------------------|
| Option 3 Joint life income Payments are made for your life |
| and the life of another person |
| (usually your spouse). |
|------------------------------------------------------------------------|
| Option 4 Annuity plan Any other annuitization plan that we|
| choose to offer on the annuity |
| start date. |
|------------------------------------------------------------------------|

Annuity payments under Options 1, 2 and 3 are fixed. Annuity
payments under Option 4 may be fixed or variable. Once you elect an
annuity option and begin to receive payments, it cannot be changed.

3.PURCHASE (BEGINNING OF THE ACCUMULATION PHASE)
You may purchase the Contract with an initial payment of $5,000 or
more ($1,500 for a qualified Contract) up to and including age 85.
You may make additional payments of $100 or more ($250 for a
qualified Contract) at any time before you turn 85 during the
accumulation phase. Under certain circumstances, we may waive the
minimum initial and additional premium payment requirement. Any
initial or additional premium payment that would cause the contract
value of all annuities that you maintain with us to exceed $1,000,000
requires our prior approval.

Who may purchase this Contract? The Contract may be purchased by
individuals as part of a personal retirement plan (a "non-qualified
Contract"), or as a Contract that qualifies for special tax treatment
when purchased as either an Individual Retirement Annuity (IRA) or in
connection with a qualified retirement plan (each a "qualified
Contract").

The Contract is designed for people seeking long-term tax-deferred
accumulation of assets, generally for retirement or other long-term
purposes. The tax-deferred feature is more attractive to people in
high federal and state tax brackets. You should not buy this
Contract if you are looking for a short-term investment or if you
cannot risk getting back less money than you put in.

4.THE INVESTMENT PORTFOLIOS
You can direct your money into (1) the fixed account with guaranteed
interest periods of 6 months, 1, 3, 5, 7 and 10 years, and/or (2)
into any one or more of the following 21 mutual fund investment
portfolios through our Separate Account B. The investment portfolios
are described in the prospectuses for the GCG Trust, PIMCO Variable
Insurance Trust and Warburg Pincus Trust. Keep in mind that any
amount you direct into the fixed account earns a fixed interest rate.
But if you invest in any of the following investment portfolios,
depending on market conditions, you may make or lose money:

<TABLE>
<S> <C> <C>
THE GCG TRUST
Liquid Asset Series Rising Dividends Series Capital Appreciation Series
Limited Maturity Bond Series Growth & Income Series Mid-Cap Growth Series
Global Fixed Income Series Growth Series Small Cap Series
Total Return Series Value Equity Series Real Estate Series
Equity Income Series Research Series Hard Assets Series
Fully Managed Series Strategic Equity Series Developing World Series

THE PIMCO TRUST
PIMCO High Yield Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
2

THE WARBURG PINCUS TRUST
International Equity Portfolio
</TABLE>

5.EXPENSES
The Contract has insurance features and investment features, and
there are costs related to each. The Company deducts an annual
contract administrative charge of $30. We also collect a mortality
and expense risk charge and an asset-based administrative charge.
These 2 charges are deducted daily directly from the amounts in the
investment portfolios. The asset-based administrative charge is
0.15% annually.

Mortality & Expense Risk Charge 1.25%
Asset-Based Administrative Charge 1.15%
-----
Total 1.40%

Each investment portfolio has charges for investment management fees
and other expenses. These charges, which vary by investment
portfolio, currently range from 0.59% to 1.83% annually (see
following table) of the portfolio's average daily net asset balance.

If you withdraw money from your Contract, or if you begin receiving
annuity payments, we may deduct a premium tax of 0%-3.5% to pay to
your state.

We deduct a surrender charge if you surrender your Contract or
withdraw an amount exceeding the free withdrawal amount. The free
withdrawal amount is the total of (i) your cumulative earnings (which
is your contract value less premium payments received and prior
withdrawals), and (ii) 10% of premium payments not previously
withdrawn received within 8 years prior to the date of the
withdrawal. The following table shows the schedule of the surrender
charge that will apply. The surrender charge is a percent of each
premium payment.

COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+
SINCE PREMIUM PAYMENT | | | | | | | |
SURRENDER CHARGE 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0%

The following table is designed to help you understand the Contract
charges. The "Total Annual Insurance Charges" column includes the
mortality and expense risk charge, the asset-based administrative
charge, and reflects the annual contract administrative charge as
0.05% (based on an average contract value of $55,000). The "Total
Annual Investment Portfolio Charges" column reflects the portfolio
charges for each portfolio and are based on actual expenses as of
December 31, 1998, except for portfolios that commenced operations
during 1998 where the charges have been annualized. The column
"Total Annual Charges" reflects the sum of the previous two columns.
The columns under the heading "Examples" show you how much you would
pay under the Contract for a 1-year period and for a 10-year period.

As required by the Securities and Exchange Commission, the examples
assume that you invested $1,000 in a Contract that earns 5% annually
and that you withdraw your money at the end of Year 1 or at the end
of Year 10. For Years 1 and 10, the examples show the total annual
charges assessed during that time. For these examples, the premium
tax is assumed to be 0%.

[Table with Shaded Heading]
TOTAL ANNUAL EXAMPLES:
TOTAL ANNUAL INVESTMENT TOTAL TOTAL CHARGES AT THE END OF:
INSURANCE PORTFOLIO ANNUAL
INVESTMENT PORTFOLIO CHARGES CHARGES CHARGES 1 YEAR 10 YEARS

THE GCG TRUST
Liquid Asset 1.45% 0.59% 2.04% $100.74 $236.59
Limited Maturity Bond 1.45% 0.60% 2.05% $100.85 $237.63
Global Fixed Income 1.45% 1.60% 3.05% $110.85 $336.45
Total Return 1.45% 0.97% 2.42% $104.56 $275.44
Equity Income 1.45% 0.98% 2.43% $104.66 $276.45
Fully Managed 1.45% 0.98% 2.43% $104.66 $276.45
Rising Dividends 1.45% 0.98% 2.43% $104.66 $276.45
Growth & Income 1.45% 1.08% 2.53% $105.66 $286.40
Growth 1.45% 1.09% 2.54% $105.76 $287.39
Value Equity 1.45% 0.98% 2.43% $104.66 $276.45
Research 1.45% 0.94% 2.39% $104.26 $272.43
Mid-Cap Growth 1.45% 0.95% 2.40% $104.36 $273.44
Strategic Equity 1.45% 0.99% 2.44% $104.76 $277.45
Capital Appreciation 1.45% 0.98% 2.43% $104.66 $276.45
Small Cap 1.45% 0.99% 2.44% $104.76 $277.45
Real Estate 1.45% 0.99% 2.44% $104.76 $277.45
Hard Assets 1.45% 1.00% 2.45% $104.86 $278.44
Developing World 1.45% 1.83% 3.28% $113.13 $357.69

THE PIMCO TRUST
PIMCO High Yield Bond 1.45% 0.75% 2.20% $102.35 $253.14
PIMCO StocksPLUS
Growth and Income 1.45% 0.65% 2.10% $101.35 $242.83

THE WARBURG PINCUS TRUST
International Equity 1.45% 1.33% 2.78% $108.16 $310.81

The "Total Annual Investment Portfolio Charges" reflect current
expense reimbursements for the Total Return and Global Fixed Income
portfolios. The Year 1 examples above include a 8% surrender charge.
For more detailed information, see the fee table in the prospectus
for the Contract.

6.TAXES
Under a qualified Contract, your premiums are generally pre-tax
contributions and accumulate on a tax-deferred basis. Premiums and
earnings are generally taxed as income when you make a withdrawal or
begin receiving annuity payments, presumably when you are in a lower
tax bracket.

Under a non-qualified Contract, premiums are paid with after-tax
dollars, and any earnings will accumulate tax-deferred. You will be
taxed on these earnings, but not on premiums, when you withdraw them
from the Contract.

For owners of most qualified Contracts, when you reach age 70 1/2
(or, in some cases, retire), you will be required by federal tax laws
to begin receiving payments from your annuity or risk paying a
penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59
1/2 when you take money out, in most cases, you will be charged a 10%
federal penalty tax on the amount withdrawn.

7.WITHDRAWALS
You can withdraw your money at any time during the accumulation
phase. You may elect in advance to take systematic withdrawals which
are described on page 7. Withdrawals above the free withdrawal
amount may be subject to a surrender charge. We will apply a market
value adjustment if you withdraw your money from

the fixed account
more than 30 days before the applicable maturity date. Income taxes
and a penalty tax may apply to amounts withdrawn.

8.PERFORMANCE
The value of your Contract will fluctuate depending on the investment
performance of the portfolio(s) you choose. The following chart
shows average annual total return for each portfolio that was in
operation for the entire year for 1998. These numbers reflect the
deduction of the mortality and expense risk charge, the asset-based
administrative charge and the annual contract fee, but do not reflect
deductions for any withdrawal charges if withdrawal charges were
reflected, they would have the effect of reducing performance.
Please keep in mind that past performance is not a guarantee of
future results.

[Table with Shaded Heading]
CALENDAR YEAR
INVESTMENT PORTFOLIO 1998
Managed by A I M Capital Management, Inc.
Capital Appreciation(1) 11.05%
Strategic Equity(2) (0.62%)
Managed by T. Rowe Price Associates, Inc.
Fully Managed 4.36%
Equity Income(2) 6.69%
Managed by Kayne Anderson Investment Management, LLC
Rising Dividends 12.49%
Managed by EII Realty Securities, Inc.
Real Estate (14.71%)
Managed by Eagle Asset Management, Inc.
Value Equity 0.08%
Managed by Fred Alger Management, Inc.
Small Cap 19.24%
Managed by ING Investment Management, LLC
Limited Maturity Bond 5.31%
Liquid Asset 3.53%
Managed by Pacific Investment Management Company
PIMCO High Yield Bond --
PIMCO StocksPLUS Growth and Income --
Managed by Alliance Capital Management L.P.
Growth & Income(2) 10.35%
Managed by Janus Capital Corporation
Growth(2) 25.00%
Managed by Massachusetts Financial Services Company
Mid-Cap Growth 21.04%
Total Return 9.98%
Research 21.28%
Managed by Baring International Investment Limited
Global Fixed Income 10.23%
Hard Assets(2) (30.62%)
Developing World(2) --
Managed by Warburg Pincus Asset Management, Inc.
International Equity 3.83%
_________________________
(1)Prior to April 1, 1999, a different firm managed the
Portfolio.
(2)Prior to March 1, 1999, a different firm managed the
Portfolio.

9.DEATH BENEFIT
The death benefit is payable when the first of the following persons
dies: the contract owner, joint owner, or annuitant (if a contract
owner is not an individual). Assuming you are the contract owner, if
you die during the accumulation phase, your beneficiary will receive
a death benefit unless the beneficiary is your surviving spouse and
elects to continue the Contract. The death benefit value is
calculated at the close of the business day on which we receive due
proof of death at our Customer Service Center. If your beneficiary
elects to delay receipt of the death benefit until a date after the
time of your death, the amount of the benefit payable in the future
may be affected. If you die after the annuity start date and you are
the annuitant, your beneficiary will receive the death benefit you
chose under the annuity option then in effect.

If you or the annuitant (if a contract owner is not an individual)
die before the annuity start date, we determine the death benefit as
follows.

If you are AGE 67 OR YOUNGER at the time of purchase, the death
benefit is the greatest of:

1) the contract value;

2) the total premium payments made under the Contract after
subtracting any withdrawals;

3) the cash surrender value; or

4) the highest contract value (plus subsequent premiums less
subsequent withdrawals) determined on every contract
anniversary on or before your death beginning with the 8th
anniversary and ending on the last anniversary prior to you
attaining age 76.

If you are BETWEEN AGES 68 AND 75 at the time of purchase, the death
benefit is the greatest of:

1) the contract value;

2) the total premium payments made under the Contract after
subtracting any withdrawals;

3) the cash surrender value; or

4) the contract value (plus subsequent premiums less subsequent
withdrawals) determined on the 8th contract anniversary but on
or before your death.

If you are AGE 76 OR OLDER at the time of purchase, the death benefit
is the greater of:

1) the contract value; or

2) the cash surrender value.

Note: In all cases described above, amounts could be reduced by
premium taxes owed and withdrawals not previously deducted.

10.OTHER INFORMATION
FREE LOOK. If you cancel the Contract within 10 days after you
receive it, you will receive a full refund of the contract value.
For purposes of the refund during the free look period, your contract
value (i) is adjusted for any market value adjustment (if you have
invested in the fixed account), and (ii) includes a refund of any
charges deducted from your contract value. Because of the market
risks associated with investing in the portfolios and the potential
positive or negative effect of the market value adjustment, the
contract value returned may be greater or less than the premium
payment you paid. Some states require us to return to you the amount
of the paid premium (rather than the contract value) in which case
you will not be subject to investment risk during the free look
period. Also, in some states, you may be entitled to a longer free
look period. We determine your contract value at the close of
business on the day we receive your written refund request.

TRANSFERS AMONG INVESTMENT PORTFOLIOS AND THE FIXED ACCOUNT. You
can make transfers among your investment portfolios and your
investment in the fixed account as frequently as you wish without any
current tax implications. The minimum amount for a transfer is $100.
Currently there is no charge for transfers, and we do not limit the
number of transfers allowed. The Company may, in the future, charge
a $25 fee for any transfer after the twelfth transfer in a contract
year or limit the number of transfers allowed. Keep in mind that if
you transfer or otherwise withdraw your money from the fixed account
more than 30 days before the applicable maturity date, we will apply
a market value adjustment. A market value adjustment could increase
or decrease your contract value and/or the amount you transfer or
withdraw.

NO PROBATE. In most cases, when you die, the person you choose as
your beneficiary will receive the death benefit without going through
probate.

ADDITIONAL FEATURES. This Contract has other features you may be
interested in. These include:

Dollar Cost Averaging. This is a program that allows you to
invest a fixed amount of money in the investment portfolios each
month, which may give you a lower average cost per unit over
time than a single one-time purchase. Dollar cost averaging
requires regular investments regardless of fluctuating price
levels, and does not guarantee profits or prevent losses in a
declining market. This option is currently available only if
you have $1,200 or more in the Limited Maturity Bond or the
Liquid Asset investment portfolios or in the fixed account with
either a 6-month or 1-year guaranteed interest period.
Transfers from the fixed account under this program will not be
subject to a market value adjustment.

Systematic Withdrawals. During the accumulation phase, you
can arrange to have money sent to you at regular intervals
throughout the year. Within limits these withdrawals will not
result in any withdrawal charge. Withdrawals from your money in
the fixed account under this program are not subject to a market
value adjustment. Of course, any applicable income and penalty
taxes will apply on amounts withdrawn.

Automatic Rebalancing. If your contract value is $10,000 or
more, you may elect to have the Company automatically readjust
the money between your investment portfolios periodically to
keep the blend you select. Investments in the fixed account are
not eligible for automatic rebalancing.

11.INQUIRIES

If you need more information after reading this prospectus, please
contact us at:

CUSTOMER SERVICE CENTER
P.O. BOX 2700
WEST CHESTER, PA 19380
(800) 366-0066

or your registered representative.

<PAGE>
<PAGE>
[begin shaded block]
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
MAY 1, 1999
DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY PROSPECTUS
GOLDENSELECT ES II/R/
[end shaded block]
- ----------------------------------------------------------------------

This prospectus describes GoldenSelect ES II, a group and individual
deferred variable annuity contract (the "Contract") offered by Golden
American Life Insurance Company (the "Company," "we" or "our"). The
Contract is available in connection with certain retirement plans
that qualify for special federal income tax treatment ("qualified
Contracts") as well as those that do not qualify for such treatment
("non-qualified Contracts").

The Contract provides a means for you to invest your premium payments
in one or more of 21 mutual fund investment portfolios. You may also
allocate premium payments to our Fixed Account with guaranteed
interest periods. Your contract value will vary daily to reflect the
investment performance of the investment portfolio(s) you select and
any interest credited to your allocations in the Fixed Account. The
investment portfolios available under your Contract and the portfolio
managers are:

<TABLE>
<C> <C>
T. ROWE PRICE ASSOCIATES, INC. ALLIANCE CAPITAL MANAGEMENT L. P.
Equity Income Series Growth & Income Series
Fully Managed Series JANUS CAPITAL CORPORATION
A I M CAPITAL MANAGEMENT, INC. Growth Series
Capital Appreciation Series MASSACHUSETTS FINANCIAL SERVICES COMPANY
Strategic Equity Series Mid-Cap Growth Series
KAYNE ANDERSON INVESTMENT MANAGEMENT, LLC Total Return Series
Rising Dividends Series Research Series
EII REALTY SECURITIES, INC. ING INVESTMENT MANAGEMENT, LLC (AN AFFILIATE)
Real Estate Series Limited Maturity Bond Series
BARING INTERNATIONAL INVESTMENT LIMITED (AN AFFILIATE) Liquid Asset Series
Hard Assets Series PACIFIC INVESTMENT MANAGEMENT COMPANY
Developing World Income Series PIMCO High Yield Bond Portfolio
Global Fixed Series PIMCO StocksPLUS Growth and Income Portfolio
EAGLE ASSET MANAGEMENT, INC. WARBURG PINCUS ASSET MANAGEMENT, INC.
Value Equity Series International Equity Portfolio
FRED ALGER MANAGEMENT, INC.
Small Cap Series
</TABLE>

The above mutual fund investment portfolios are purchased and held by
corresponding divisions of our Separate Account B. We refer to the
divisions as "subaccounts" and the money you place in the Fixed
Account's guaranteed interest periods as "Fixed Interest Allocations"
in this prospectus.

We will credit your Fixed Interest Allocation(s) with a fixed rate of
interest. We set the interest rates periodically. We will not set
the interest rate to be less than a minimum annual rate of 3%. You
may choose guaranteed interest periods of 6 months, and 1, 3, 5, 7
and 10 years. The interest earned on your money as well as your
principal is guaranteed as long as you hold them until the maturity
date. If you take your money out from a Fixed Interest Allocation
more than 30 days before the applicable maturity date, we will apply
a market value adjustment ("Market Value Adjustment"). A Market
Value Adjustment could increase or decrease your contract value
and/or the amount you take out. You bear the risk that you may
receive less than your principal if we take a Market Value
Adjustment. For Contracts sold in some states, not all Fixed
Interest Allocations or subaccounts are available. You have a right
to return a Contract within 10 days after you receive it for a full
refund of the contract value (which may be more or less than the
premium payments you paid), or if required by your state, the
original amount of your premium payment. Longer free look periods
apply in some states.

This prospectus provides information that you should know before
investing and should be kept for future reference. A Statement of
Additional Information, dated May 1, 1999, has been filed with the
Securities and Exchange Commission. It is available without charge
upon request. To obtain a copy of this document, write to our
Customer Service Center at P.O. Box 2700, West Chester, Pennsylvania
19380 or call (800) 366-0066, or access the SEC's website
(http://www.sec.gov). The table of contents of the Statement of
Additional Information ("SAI") is on the last page of this prospectus
and the SAI is made part of this prospectus by reference.

- ----------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

AN INVESTMENT IN THE GCG TRUST, PIMCO TRUST OR WARBURG PINCUS TRUST
IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE
GCG TRUST, PIMCO TRUST AND WARBURG PINCUS TRUST.

<PAGE>
<PAGE>
[Shaded Section Header]
- ----------------------------------------------------------------------
TABLE OF CONTENTS
- ----------------------------------------------------------------------

PAGE

Index of Special Terms................................ 1
Fees and Expenses..................................... 2
Performance Information............................... 5
Accumulation Unit.................................. 5
Net Investment Factor.............................. 5
Condensed Financial Information.................... 6
Financial Statements............................... 6
Performance Information............................ 6
Golden American Life Insurance Company................ 7
The Trusts............................................ 7
Golden American Separate Account B.................... 8
The Investment Portfolios............................. 8
Investment Objectives.............................. 8
Investment Portfolio Management Fees............... 10
The Fixed Interest Allocation......................... 11
Selecting a Guaranteed Interest Period............. 11
Guaranteed Interest Rates.......................... 11
Transfers from a Fixed Interest Allocation......... 12
Withdrawals from a Fixed Interest Allocation....... 12
Market Value Adjustment............................ 13
The Annuity Contract.................................. 14
Contract Date and Contract Year.................... 14
Annuity Start Date................................. 14
Contract Owner..................................... 14
Annuitant.......................................... 14
Beneficiary........................................ 15
Purchase and Availability of the Contract.......... 15
Crediting of Premium Payments...................... 16
Contract Value..................................... 16
Cash Surrender Value............................... 17
Surrendering to Receive the Cash Surrender Value... 17
Addition, Deletion or Substitution of Subaccounts
and Other Changes.................................. 17
The Fixed Account.................................. 18
Other Contracts.................................... 18
Other Important Provisions......................... 18
Withdrawals........................................... 18
Regular Withdrawals................................ 18
Systematic Withdrawals............................. 19
IRA Withdrawals.................................... 20
Transfers Among Your Investments...................... 20
Dollar Cost Averaging.............................. 21
Automatic Rebalancing.............................. 21
Death Benefit......................................... 22
Death Benefit During the Accumulation Phase........ 22
Death Benefit During the Income Phase.............. 23
Charges and Fees...................................... 23
Charge Deduction Subaccount........................ 23
Charges Deducted from the Contract Value........... 23
Surrender Charge................................. 23

[Shaded Section Header]
- ----------------------------------------------------------------------
TABLE OF CONTENTS (CONTINUED)
- ----------------------------------------------------------------------

PAGE

Free Withdrawal Amount........................... 24
Surrender Charge for Excess Withdrawals.......... 24
Premium Taxes.................................... 24
Administrative Charge............................ 24
Transfer Charge.................................. 24
Charges Deducted from the Subaccounts.............. 25
Mortality and Expense Risk Charge................ 25
Asset-Based Administrative Charge................ 25
Trust Expenses..................................... 25
The Annuity Options................................... 25
Annuitization of Your Contract..................... 25
Selecting the Annuity Start Date................... 26
Frequency of Annuity Payments...................... 26
The Annuity Options................................ 26
Income for a Fixed Period........................ 26
Income for Life with a Period Certain............ 26
Joint Life Income................................ 26
Annuity Plan..................................... 26
Payment When Named Person Dies..................... 26
Other Contract Provisions............................. 27
Reports to Contract Owners......................... 27
Suspension of Payments............................. 27
In Case of Errors in Your Application.............. 27
Assigning the Contract as Collateral............... 28
Contract Changes-Applicable Tax Law................ 28
Free Look.......................................... 28
Group or Sponsored Arrangements.................... 28
Selling the Contract............................... 28
Other Information..................................... 29
Voting Rights...................................... 29
Year 2000 Problem.................................. 29
State Regulation................................... 29
Legal Proceedings.................................. 30
Legal Matters...................................... 30
Experts............................................ 30
Federal Tax Considerations............................ 30
More Information About Golden American Life
Insurance Company..................................... 36
Financial Statements of Golden American Life
Insurance Company..................................... 58
Statement of Additional Information
Table of Contents.................................. 88
Appendix A
Condensed Financial Information A1
Appendix B
Market Value Adjustment Examples B1
Appendix C
Surrender Charge for Excess Withdrawals Example C1

[Shaded Section Header]
- ----------------------------------------------------------------------
INDEX OF SPECIAL TERMS
- ----------------------------------------------------------------------

The following special terms are used throughout this prospectus.
Refer to the page(s) listed for an explanation of each term:

SPECIAL TERM PAGE
Accumulation Unit 5
Annuitant 14
Annuity Start Date 14
Cash Surrender Value 17
Contract Date 14
Contract Owner 14
Contract Value 16
Contract Year 14
Fixed Interest Allocation 11
Free Withdrawal Amount 24
Market Value Adjustment 13
Net Investment Factor 5
Death Benefit 22

The following terms as used in this prospectus have the same or
substituted meanings as the corresponding terms currently used in the
Contract:

TERM USED IN THIS PROSPECTUS CORRESPONDING TERM USED IN THE
CONTRACT
Accumulation Unit Value Index of Investment Experience
Annuity Start Date Annuity Commencement Date
Contract Owner Owner or Certificate Owner
Contract Value Accumulation Value
Transfer Charge Excess Allocation Charge
Fixed Interest Allocation Fixed Allocation
Free Look Period Right to Examine Period
Guaranteed Interest Period Guarantee Period
Subaccount(s) Division(s)
Net Investment Factor Experience Factor
Regular Withdrawals Conventional Partial Withdrawals
Withdrawals Partial Withdrawals

[Shaded Section Header]
- ----------------------------------------------------------------------
FEES AND EXPENSES
- ----------------------------------------------------------------------

CONTRACT OWNER TRANSACTION EXPENSES*
Surrender Charge:

COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+
SINCE PREMIUM PAYMENT | | | | | | | |
SURRENDER CHARGE 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0%

Transfer Charge....................................... None**

* If you invested in a Fixed Interest Allocation, a Market Value
Adjustment may apply to certain transactions. This may increase
or decrease your contract value and/or your transfer or
surrender amount.

**We may in the future charge $25 per transfer if you make more
than 12 transfers in a contract year.

ANNUAL CONTRACT ADMINISTRATIVE CHARGE
Administrative Charge................................. $30

SEPARATE ACCOUNT ANNUAL CHARGES***

Mortality and Expense Risk Charge.......... 1.25%
Asset-Based Administrative Charge.......... 0.15%
-----
Total Separate Account Charges............. 1.40%

***As a percentage of average assets in each subaccount.

THE GCG TRUST ANNUAL EXPENSES (as a percentage of the average daily
net assets of an investment portfolio or on the combined average
daily net assets of the indicated groups of portfolios):

[Table with Shaded Heading and Shaded lines for readability]
|---------------------------------------------------------------------------|
| OTHER TOTAL |
| EXPENSES(2) EXPENSES |
| MANAGEMENT AFTER EXPENSE AFTER EXPENSE |
| PORTFOLIO FEES(1) REIMBURSEMENT REIMBURSEMENT(3) |
|---------------------------------------------------------------------------|
| Liquid Asset 0.59% 0.00% 0.59% |
| Limited Maturity Bond 0.60% 0.00% 0.60% |
| Global Fixed Income 1.60% 0.00% 1.60%(3) |
| Total Return 0.94% 0.03% 0.97%(3) |
| Equity Income 0.98% 0.00% 0.98% |
| Fully Managed 0.98% 0.00% 0.98% |
| Rising Dividends 0.98% 0.00% 0.98% |
| Growth & Income 1.08% 0.00% 1.08% |
| Growth 1.08% 0.01% 1.09% |
| Value Equity 0.98% 0.00% 0.98% |
| Research 0.94% 0.00% 0.94% |
| Strategic Equity 0.98% 0.01% 0.99% |
| Capital Appreciation 0.98% 0.00% 0.98% |
| Mid-Cap Growth 0.94% 0.01% 0.95% |
| Small Cap 0.98% 0.01% 0.99% |
| Real Estate 0.98% 0.01% 0.99% |
| Hard Assets 0.98% 0.02% 1.00% |
| Developing World 1.75% 0.08% 1.83% |
| All-Growth(4) 0.98% 0.01% 0.99% |
| Growth Opportunities(4) 1.10% 0.05% 1.15% |
|---------------------------------------------------------------------------|

(1)Fees decline as combined assets increase. See the prospectus for
the GCG Trust for more information.
(2)Other expenses generally consist of independent trustees fees and
certain expenses associated with investing in international
markets. Other expenses are based on actual expenses for the
year ended December 31, 1998, except for portfolios that
commenced operations in 1998 where the charges have been
annualized.
(3)Directed Services, Inc. is currently reimbursing expenses to
maintain total expenses at 0.97% for the Total Return portfolio
and 1.60% for the Global Fixed Income portfolio as shown.
Without this reimbursement, and based on current estimates, total
expenses would be 0.98% for the Research portfolio and 1.74% for
the Global Fixed Income portfolio. This reimbursement agreement
will remain in place through December 31, 1999.
(4)As of May 1, 1999, we no longer offer the All-Growth and Growth
Opportunities portfolios.

THE PIMCO TRUST ANNUAL EXPENSES (as a percentage of the average daily
net assets of a portfolio):
[Table with Shaded Heading]
|---------------------------------------------------------------------------|
| OTHER TOTAL |
| EXPENSES EXPENSES |
| MANAGEMENT AFTER EXPENSE AFTER EXPENSE |
| PORTFOLIO FEES(1) REIMBURSEMENT(1) REIMBURSEMENT(1) |
|---------------------------------------------------------------------------|
| PIMCO High Yield Bond 0.50% 0.25%(2) 0.75% |
| PIMCO StocksPLUS Growth |
| and Income 0.40% 0.25% 0.65% |
|---------------------------------------------------------------------------|

(1)Since the PIMCO High Yield Bond portfolio commenced operations on
April 30, 1998, other expenses as shown has been annualized for
the year ended December 31, 1998.

THE WARBURG PINCUS TRUST ANNUAL EXPENSES (as a percentage of the
average daily net assets of the portfolio):

[Table with Shaded Heading]
|---------------------------------------------------------------------------|
| ADVISORY OTHER TOTAL |
| PORTFOLIO FEES EXPENSES EXPENSES(1) |
|---------------------------------------------------------------------------|
| International Equity 1.00% 0.33% 1.33% |
|---------------------------------------------------------------------------|

(1)Total expenses are based on actual expenses for the fiscal year
ended December 31, 1998.

The purpose of the foregoing tables is to help you understand various
costs and expenses that you will bear directly and indirectly. See
the prospectuses of the GCG Trust, PIMCO Trust and Warburg Pincus
Trust for additional information on portfolio expenses.

Premium taxes (which currently range from 0% to 3.5% of premium
payments) may apply, but are not reflected in the tables above or in
the examples below.

EXAMPLES:

In the following examples, surrender charges may apply if you choose
to annuitize within the first 8 contract years. The examples also
assume a 5% annual return.

If you surrender your Contract at the end of the applicable time
period, you would pay the following expenses for each $1,000
invested:

- -----------------------------------------------------------------------
THE GCG TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Liquid Asset $100.74 $124.04 $149.88 $236.59
Limited Maturity Bond $100.85 $124.35 $150.39 $237.63
Global Fixed Income $110.85 $154.32 $200.24 $336.45
Total Return $104.56 $135.54 $169.13 $275.44
Equity Income $104.66 $135.84 $169.64 $276.45
Fully Managed $104.66 $135.84 $169.64 $276.45
Rising Dividends $104.66 $135.84 $169.64 $276.45
Growth & Income $105.66 $138.85 $174.64 $286.40
Growth $105.76 $139.15 $175.14 $287.39
Value Equity $104.66 $135.84 $169.64 $276.45
Research $104.26 $134.64 $167.63 $272.43
Strategic Equity $104.76 $136.14 $170.14 $277.45
Capital Appreciation $104.66 $135.84 $169.64 $276.45
Mid-Cap Growth $104.36 $134.94 $168.13 $273.44
Small Cap $104.76 $136.14 $170.14 $277.45
Real Estate $104.76 $136.14 $170.14 $277.45
Hard Assets $104.86 $136.45 $170.64 $278.44
Developing World $113.13 $161.08 $211.35 $357.69
All-Growth(1) $104.76 $136.14 $170.14 $277.45
Growth Opportunities(1) $106.36 $140.94 $178.13 $293.30

THE PIMCO TRUST
PIMCO High Yield Bond $102.35 $128.90 $158.03 $253.14
PIMCO StocksPLUS Growth
and Income $101.35 $125.87 $152.94 $242.83

THE WARBURG PINCUS TRUST
International Equity $108.16 $146.31 $187.03 $310.81
-------------------
(1)As of May 1, 1999, we no longer offer the All-Growth or
Growth Opportunities portfolios.

If you do not surrender your Contract or if you annuitize on the
annuity start date, you would pay the following expenses for each
$1,000 invested:

- -----------------------------------------------------------------------
THE GCG TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Liquid Asset $20.74 $64.04 $109.88 $236.59
Limited Maturity Bond $20.85 $64.35 $110.39 $237.63
Global Fixed Income $30.85 $94.32 $160.24 $336.45
Total Return $24.56 $75.54 $129.13 $275.44
Equity Income $24.66 $75.84 $129.64 $276.45
Fully Managed $24.66 $75.84 $129.64 $276.45
Rising Dividends $24.66 $75.84 $129.64 $276.45
Growth & Income $25.66 $78.85 $134.64 $286.40
Growth $25.76 $79.15 $135.14 $287.39
Value Equity $24.66 $75.84 $129.64 $276.45
Research $24.26 $74.64 $127.63 $272.43
Strategic Equity $24.76 $76.14 $130.14 $277.45
Capital Appreciation $24.66 $75.84 $129.64 $276.45
Mid-Cap Growth $24.36 $74.94 $128.13 $273.44
Small Cap $24.76 $76.14 $130.14 $277.45
Real Estate $24.76 $76.14 $130.14 $277.45
Hard Assets $24.86 $76.45 $130.64 $278.44
Developing World $33.13 $101.08 $171.35 $357.69
All-Growth(1) $24.76 $76.14 $130.14 $277.45
Growth Opportunities(1) $26.36 $80.94 $138.13 $293.30

THE PIMCO TRUST
PIMCO High Yield Bond $22.35 $68.90 $118.03 $253.14
PIMCO StocksPLUS Growth
and Income $21.35 $65.87 $112.94 $242.83

THE WARBURG PINCUS TRUST
International Equity $28.16 $86.31 $147.03 $310.81
-------------------
(1)As of May 1, 1999, we no longer offer the All-Growth or
Growth Opportunities portfolios.

The examples above reflect the annual administrative charge as an
annual charge of 0.05% of assets (based on an average contract value
of $55,000) and the mortality and expense risk charge.

THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN SUBJECT TO THE TERMS OF YOUR CONTRACT.

[Shaded Section Header]
- ----------------------------------------------------------------------
PERFORMANCE INFORMATION
- ----------------------------------------------------------------------

ACCUMULATION UNIT
We use accumulation units to calculate the value of a Contract. Each
subaccount of Separate Account B has its own accumulation unit value.
The accumulation units are valued each business day that the New York
Stock Exchange is open for trading. Their values may increase or
decrease from day to day according to a Net Investment Factor, which
is primarily based on the investment performance of the applicable
investment portfolio. Shares in the investment portfolios are valued
at their net asset value.

THE NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges
under the Contract and the investment performance of the subaccount.
The Net Investment Factor is calculated as follows:

(1)We take the net asset value of the subaccount at the end of
each business day.

(2)We add to (1) the amount of any dividend or capital gains
distribution declared for the subaccount and reinvested in
such subaccount. We subtract from that amount a charge for
our taxes, if any.

(3)We divide (2) by the net asset value of the subaccount at the
end of the preceding business day.

(4)We then subtract the applicable daily mortality and expense
risk charge and the daily asset-based administrative charge
from each subaccount.

Calculations for the subaccounts are made on a per share basis.

CONDENSED FINANCIAL INFORMATION
Tables containing (i) the accumulation unit value history of each
subaccount of Golden American Separate Account B offered in this
prospectus and (ii) the total investment value history of each such
subaccount are presented in Appendix A - Condensed Financial
Information.

FINANCIAL STATEMENTS
The audited financial statements of Separate Account B for the years
ended December 31, 1998 and 1997 are included in the Statement of
Additional Information. The audited consolidated financial statements
of Golden American for the years ended December 31, 1998, 1997 and
1996 are included in this prospectus.

PERFORMANCE INFORMATION
From time to time, we may advertise or include in reports to contract
owners performance information for the subaccounts of Separate
Account B, including the average annual total return performance,
yields and other nonstandard measures of performance. Such
performance data will be computed, or accompanied by performance data
computed, in accordance with standards defined by the SEC.

Except for the Liquid Asset subaccount, quotations of yield for the
subaccounts will be based on all investment income per unit (contract
value divided by the accumulation unit) earned during a given 30-day
period, less expenses accrued during such period. Information on
standard total average annual return performance will include average
annual rates of total return for 1, 5 and 10 year periods, or lesser
periods depending on how long the subaccount of Separate Account B
has been in existence. We may show other total returns for periods
less than one year. Total return figures will be based on the actual
historic performance of the subaccounts of Separate Account B,
assuming an investment at the beginning of the period, withdrawal of
the investment at the end of the period, and the deduction of all
applicable portfolio and contract charges. We may also show rates of
total return on amounts invested at the beginning of the period with
no withdrawal at the end of the period. Total return figures which
assume no withdrawals at the end of the period will reflect all
recurring charges, but will not reflect the surrender charge.
Quotations of average annual return for the Managed Global subaccount
take into account the period before September 3, 1996, during which
it was maintained as a subaccount of Golden American Separate Account
D. In addition, we may present historic performance data for the
mutual fund investment 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
inception dates of the subaccounts of Separate Account B. This data
is designed to show the performance that would have resulted if the
Contract had been in existence during that time.

Current yield for the Liquid Asset subaccount is based on income
received by a hypothetical investment over a given 7-day period, less
expenses accrued, and then "annualized" (i.e., assuming that the 7-
day yield would be received for 52 weeks). We calculate "effective
yield" for the Liquid Asset subaccount in a manner similar to that
used to calculate yield, but when annualized, the income earned by
the investment is assumed to be reinvested. The "effective yield"
will thus be slightly higher than the "yield" because of the
compounding effect of earnings. We calculate quotations of yield for
the remaining subaccounts on all investment income per accumulation
unit earned during a given 30-day period, after subtracting fees and
expenses accrued during the period.

We may compare performance information for a subaccount to: (i) the
Standard & Poor's 500 Stock Index, Dow Jones Industrial Average,
Donoghue Money Market Institutional Averages, or any other applicable
market indices, (ii) other variable annuity separate accounts or
other investment products tracked by Lipper Analytical Services (a
widely used independent research firm which ranks mutual funds and
other investment companies), or any other rating service, and (iii)
the Consumer Price Index (measure for inflation) to assess the real
rate of return from an investment in the Contract. Our reports and
promotional literature may also contain other information including
the ranking of any subaccount based on rankings of variable annuity
separate accounts or other investment products tracked by Lipper
Analytical Services or by similar rating services.

Performance information reflects only the performance of a
hypothetical contract and should be considered in light of other
factors, including the investment objective of the investment
portfolio and market conditions. Please keep in mind that past
performance is not a guarantee of future results.

[Shaded Section Header]
- ----------------------------------------------------------------------
GOLDEN AMERICAN LIFE INSURANCE COMPANY
- ----------------------------------------------------------------------

Golden American Life Insurance Company is a Delaware stock life
insurance company, which was originally incorporated in Minnesota on
January 2, 1973. Golden American is a wholly owned subsidiary of
Equitable of Iowa Companies, Inc. ("Equitable of Iowa"). Equitable
of Iowa is a wholly owned subsidiary of ING Groep N.V. ("ING"), a
global financial services holding company with over $461.8 billion in
assets as of December 31, 1998. Golden American is authorized to
sell insurance and annuities in all states, except New York, and the
District of Columbia. In May 1996, Golden American established a
subsidiary, First Golden American Life Insurance Company of New York,
which is authorized to sell annuities in New York and Delaware.
Golden American's consolidated financial statements appear in this
prospectus.

Equitable of Iowa is the holding company for Golden American,
Directed Services, Inc., the investment manager of the GCG Trust and
the distributor of the Contracts, and other interests. Equitable of
Iowa and another ING affiliate own ING Investment Management, LLC, a
portfolio manager of the GCG Trust. ING also owns Baring
International Investment Limited, another portfolio manager of the
GCG Trust.

Our principal office is located at 1475 Dunwoody Drive, West Chester,
Pennsylvania 19380.

[Shaded Section Header]
- ----------------------------------------------------------------------
THE TRUSTS
- ----------------------------------------------------------------------

The GCG Trust is a mutual fund whose shares are available to separate
accounts funding variable annuity and variable life insurance
policies offered by Golden American. The GCG Trust also sells its
shares to separate accounts of other insurance companies, both
affiliated and not affiliated with Golden American. Pending SEC
approval, shares of the GCG Trust may also be sold to certain
qualified pension and retirement plans.

The PIMCO Trust is also a mutual fund whose shares are available to
separate accounts of insurance companies, including Golden American,
for both variable annuity contracts and variable life insurance
policies and by qualified pension and retirement plans. The
principal address of the PIMCO Trust is 840 Newport Center Drive,
Suite 300, Newport Beach, CA 92660.

The Warburg Pincus Trust is also a mutual fund whose shares are
available to separate accounts of life insurance companies, including
Golden American and Equitable Life Insurance Company of Iowa, and to
certain qualified and retirement plans. The principal address of the
Warburg Pincus Trust is 466 Lexington Avenue, New York, NY 10017.

In the event that, due to differences in tax treatment or other
considerations, the interests of contract owners of various contracts
participating in the Trusts conflict, we, the Boards of Trustees of
the GCG Trust,

the PIMCO Trust, the Warburg Pincus Trust, Directed
Services, Inc., Pacific Investment Management Company,

Warburg Pincus
Trust Asset Management, Inc. and any other insurance companies
participating in the Trusts will monitor events to identify and
resolve any material conflicts that may arise.

YOU WILL FIND COMPLETE INFORMATION ABOUT THE GCG TRUST, PIMCO TRUST
AND WARBURG PINCUS TRUST IN THE ACCOMPANYING TRUSTS' PROSPECTUSES.
YOU SHOULD READ THEM CAREFULLY BEFORE INVESTING.

[Shaded Section Header]
- ----------------------------------------------------------------------
GOLDEN AMERICAN SEPARATE ACCOUNT B
- ----------------------------------------------------------------------

Golden American Separate Account B ("Account B") was established as a
separate account of the Company on July 14, 1988. It is registered
with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. Account B is a
separate investment account used for our variable annuity contracts.
We own all the assets in Account B but such assets are kept separate
from our other accounts.

Account B is divided into subaccounts. Each subaccount invests
exclusively in shares of one investment portfolio of the GCG Trust,
PIMCO Trust and Warburg Pincus Trust. Each investment portfolio has
its own distinct investment objectives and policies. Income, gains
and losses, realized or unrealized, of a portfolio are credited to or
charged against the corresponding subaccount of Account B without
regard to any other income, gains or losses of the Company. Assets
equal to the reserves and other contract liabilities with respect to
each are not chargeable with liabilities arising out of any other
business of the Company. They may, however, be subject to
liabilities arising from subaccounts whose assets we attribute to
other variable annuity contracts supported by Account B. If the
assets in Account B exceed the required reserves and other
liabilities, we may transfer the excess to our general account. We
are obligated to pay all benefits and make all payments provided
under the Contracts.

We currently offer other variable annuity contracts that invest in
Account B but are not discussed in this prospectus. Account B may
also invest in other investment portfolios which are not available
under your Contract.

[Shaded Section Header]
- ----------------------------------------------------------------------
THE INVESTMENT PORTFOLIOS
- ----------------------------------------------------------------------

During the accumulation phase, you may allocate your premium payments
and contract value to any of the investment portfolios listed below.
YOU BEAR THE ENTIRE INVESTMENT RISK FOR AMOUNTS YOU ALLOCATE TO THE
INVESTMENT PORTFOLIOS AND MAY LOSE YOUR PRINCIPAL.

INVESTMENT OBJECTIVES
The investment objective of each investment portfolio is set forth
below. You should understand that there is no guarantee that any
portfolio will meet its investment objectives. Meeting objectives
depends on various factors, including, in certain cases, how well the
portfolio managers anticipate changing economic and market
conditions. MORE DETAILED INFORMATION ABOUT THE INVESTMENT
PORTFOLIOS CAN BE FOUND IN THE PROSPECTUSES FOR THE GCG TRUST, PIMCO
TRUST AND WARBURG PINCUS TRUST. YOU SHOULD READ THESE PROSPECTUSES
BEFORE INVESTING.

[Shaded Table Header]
INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------

Liquid Asset Seeks high level of current income consistent with
the preservation of capital and liquidity.
Invests primarily in obligations of the U.S.
Government and its agencies and
instrumentalities, bank obligations,
commercial paper and short-term corporate debt
securities. All securities will mature in
less than one year.
----------------------------------------------------

Limited Maturity Seeks highest current income consistent with
Bond low risk to principal and liquidity.
Also seeks to enhance its total return through
capital appreciation when market factors, such as
falling interest rates and rising bond prices,
indicate that capital appreciation may be
available without significant risk to
principal.
Invests primarily in diversified limited maturity
debt securities with average maturity dates of
five years or shorter and in no cases more than
seven years.
----------------------------------------------------

Global Fixed Seeks high total return.
Income Invests primarily in high-grade fixed income
securities, both foreign and domestic.
----------------------------------------------------

Total Return Seeks above-average income (compared to a portfolio
entirely invested in equity securities)
consistent with the prudent employment of
capital.
Invests primarily in a combination of equity
and fixed income securities.
----------------------------------------------------

Equity Income Seeks substantial dividend income as well as long-
term growth of capital.
Invests primarily in common stocks of well-
established companies paying above-average
dividends.
----------------------------------------------------

Fully Managed Seeks, over the long term, a high total investment
return consistent with the preservation of
capital and with prudent investment risk.
Invests primarily in the common stocks of
established companies believed by the
portfolio manager to have above-average
potential for capital growth.
----------------------------------------------------

Rising Dividends Seeks capital appreciation. A secondary
objective is dividend income.
Invests in equity securities that meet the
following quality criteria: regular dividend
increases; 35% of earnings reinvested
annually; and a credit rating of "A" to "AAA".
----------------------------------------------------

Growth & Income Seeks long-term total return.
Invests primarily in common stocks of
companies where the potential for change
(earnings acceleration) is significant.
----------------------------------------------------

Growth Seeks capital appreciation.
Invests primarily in common stocks of growth
companies that have favorable relationships between
price/earnings ratios and growth rates in sectors
offering the potential for above-average returns.
----------------------------------------------------

Value Equity Seeks capital appreciation. Dividend income
is a secondary objective.
Invests primarily in common stocks of domestic
and foreign issuers which meet quantitative
standards relating to financial soundness and
high intrinsic value relative to price.
----------------------------------------------------

Research Seeks long-term growth of capital and future income.
Invests primarily in common stocks or
securities convertible into common stocks of
companies believed to have better than average
prospects for long-term growth.
----------------------------------------------------
Mid-Cap Growth Seeks long-term growth of capital.
Invests primarily in equity securities of
companies with medium market capitalization
which the portfolio manager believes have
above-average growth potential.
----------------------------------------------------

Strategic Equity Seeks capital appreciation.
Invests primarily in common stocks of medium-
and small-sized companies.
----------------------------------------------------

Capital Seeks long-term capital growth.
Appreciation Invests primarily in equity securities
believed by the portfolio manager to be
undervalued.
----------------------------------------------------

Small Cap Seeks long-term capital appreciation.
Invests primarily in equity securities of
companies that have a total market
capitalization within the range of companies
in the Russell 2000 Growth Index or the
Standard & Poor's Small-Cap 600 Index.
----------------------------------------------------

Real Estate Seeks capital appreciation. Current income is a
secondary objective.
Invests primarily in publicly-traded real
estate equity securities.
----------------------------------------------------

Hard Assets Seeks long-term capital appreciation.
Invests primarily in hard asset securities.
Hard asset companies produce a commodity which
the portfolio manager is able to price on a
daily or weekly basis.
----------------------------------------------------

Developing World Seeks capital appreciation.
Invests primarily in equity securities of
companies in developing or emerging countries.
----------------------------------------------------

PIMCO High Yield Seeks to maximize total return, consistent with
Bond preservation of capital and prudent investment
management.
Invests in at least 65% of its assets in a diversified
portfolio of junk bonds rated at least B by
Moody's Investor Services, Inc. or Standard &
Poor's or, if unrated, determined by the
portfolio manager to be of comparable quality.
----------------------------------------------------

PIMCO StocksPLUS Seeks to achieve a total return which exceeds
Growth and the total return performance of the S&P 500.
Income Invests primarily in common stocks, options, futures,
options on futures and swaps.
----------------------------------------------------

International Seeks long-term appreciation.
Equity Invests primarily in a broadly diversified
portfolio of equity securities of companies
that have their principal business activities
outside of the United States.
----------------------------------------------------

As of May 1, 1999, we no longer offer the following two portfolios:

All-Growth Seeks capital appreciation.
Invests primarily in growth securities of
middle-range capitalization companies.
----------------------------------------------------

Growth Seeks capital appreciation.
Opportunities Invests primarily in equity securities of
domestic companies emphasizing companies with
market capitalizations of $1 billion or more.
----------------------------------------------------

INVESTMENT PORTFOLIO MANAGEMENT FEES
Directed Services, Inc. serves as the overall manager of the GCG
Trust, Pacific Investment Management Company ("PIMCO") serves as the
overall adviser of the PIMCO Trust and Warburg Pincus Asset
Management, Inc. serves as the overall adviser of the Warburg Pincus
Trust. Directed Services, Inc., PIMCO and Warburg Pincus Asset
provide or procure, at their own expense, the services necessary for
the operation of the portfolios. See the cover page of this
prospectus for the names of the corresponding portfolio managers.
Directed Services, Inc., PIMCO and Warburg Pincus Asset do not bear
the expense of brokerage fees and other transactional expenses for
securities, taxes (if any) paid by a portfolio, interest on
borrowing, fees and expenses of the independent trustees, and
extraordinary expenses, such as litigation or indemnification
expenses.

The GCG Trust pays Directed Services for its services a monthly fee
based on the annual rates of the average daily net assets of the
investment portfolios. Directed Services (and not the GCG Trust) in
turn pays each portfolio manager a monthly fee for managing the
assets of the portfolios.

The PIMCO Trust pays PIMCO a monthly advisory fee and a monthly
administrative fee of 0.25% based on the average daily net assets of
each of the investment portfolios for managing the assets of the
portfolios and for administering the PIMCO Trust.

The Warburg Pincus Trust pays Warburg Pincus Asset a fee for managing
the International Equity portfolio.

More detailed information about each portfolio's management fees can
be found in the prospectuses for each Trust. You should read these
prospectuses before investing.

[Shaded Section Header]
- ----------------------------------------------------------------------
THE FIXED INTEREST ALLOCATION
- ----------------------------------------------------------------------

You may allocate premium payments and transfer your contract value to
the guaranteed interest periods of our Fixed Account at any time
during the accumulation period. Every time you allocate money to the
Fixed Account, we set up a Fixed Interest Allocation for the
guaranteed interest period you select. We currently offer guaranteed
interest periods of 6 months, 1, 3, 5, 7 and 10 years, although we
may not offer all these periods in the future. You may select one or
more guaranteed interest periods at any one time. We will credit
your Fixed Interest Allocation with a guaranteed interest rate for
the interest period you select, so long as you do not withdraw money
from that Fixed Interest Allocation before the end of the guaranteed
interest period. Each guaranteed interest period ends on its
maturity date which is the last day of the month in which the
interest period is scheduled to expire.

If you surrender, withdraw, transfer or annuitize your investment in
a Fixed Interest Allocation more than 30 days before the end of the
guaranteed interest period, we will apply a Market Value Adjustment
to the transaction. A Market Value Adjustment could increase or
decrease the amount you surrender, withdraw, transfer or annuitize,
depending on current interest rates at the time of the transaction.
YOU BEAR THE RISK THAT YOU MAY RECEIVE LESS THAN YOUR PRINCIPAL IF WE
APPLY A MARKET VALUE ADJUSTMENT.

Assets supporting amounts allocated to the Fixed Account are
available to fund the claims of all classes of our customer, contract
owners and other creditors. Interests under your Contract relating
to the Fixed Account are registered under the Securities Act of 1933,
but the Fixed Account is not registered under the 1940 Act.

SELECTING A GUARANTEED INTEREST PERIOD
You may select one or more Fixed Interest Allocations with specified
guaranteed interest periods. A guaranteed interest period is the
period that a rate of interest is guaranteed to be credited to your
Fixed Interest Allocation. We may at any time decrease or increase
the number of guaranteed interest periods offered. In addition, we
may offer DCA Fixed Interest Allocations, which are 6-month and 1-
year Fixed Interest Allocations available exclusively in connection
with our dollar cost averaging program. For more information, see
"Transfers Among Your Investments - Dollar Cost Averaging."

Your contract value in the Fixed Account is the sum of your Fixed
Interest Allocations and the interest credited as adjusted for any
withdrawals (including any Market Value Adjustment applied to such
withdrawal), transfers or other charges we may impose. Your Fixed
Interest Allocation will be credited with the guaranteed interest
rate in effect for the guaranteed interest period you selected when
we receive and accept your premium or reallocation of contract value.
We will credit interest daily at a rate which yields the quoted
guaranteed interest rate.

GUARANTEED INTEREST RATES
Each Fixed Interest Allocation will have an interest rate that is
guaranteed as long as you hold it until its maturity date. We do not
have a specific formula for establishing the guaranteed interest
rates for thedifferent guaranteed interest periods. We determine
guaranteed interest rates at our sole discretion. The determination
may be influenced by the interest rates on fixed income investments
in which we may invest with the amounts we receive under the
Contracts. We will invest these amounts primarily in investment-
grade fixed income securities (i.e., rated by Standard & Poor's
rating system to be suitable for prudent investors) although we are
not obligated to invest according to any particular strategy, except
as may be

required by applicable law. You will have no direct or
indirect interest in these investments. We will also consider other
factors in determining the guaranteed interest rates, including
regulatory and tax requirements, sales commissions and administrative
expenses borne by us, general economic trends and competitive
factors. We cannot predict the level of future interest rates but no
Fixed Interest Allocation will ever have a guaranteed interest rate
of less than 3% per year.

We may from time to time at our discretion offer interest rate
specials for new premiums that are higher than the current base
interest rate. Renewal rates for such rate specials will be based on
the base interest rate and not on the special rates initially
declared.

TRANSFERS FROM A FIXED INTEREST ALLOCATION
You may transfer your contract value in a Fixed Interest Allocation
to one or more new Fixed Interest Allocations with new guaranteed
interest periods, or to any of the subaccounts of Account B. Unless
you tell us the Fixed Interest Allocations from which such transfers
will be made, we will transfer amounts from your Fixed Interest
Allocations starting with the guaranteed interest period nearest its
maturity date, until we have honored your transfer request.

The minimum amount that you can transfer to or from any Fixed
Interest Allocation is $100. If a transfer request would reduce the
contract value remaining in a Fixed Interest Allocation to less than
$100, we will treat such transfer request as a request to transfer
the entire contract value in such Fixed Interest Allocation.
Transfers from a Fixed Interest Allocation may be subject to a Market
Value Adjustment. If you have a special Fixed Interest Allocation
offered only with dollar cost averaging, cancelling dollar cost
averaging will cause a transfer of the entire contract value in such
Fixed Interest Allocation to the Liquid Asset subaccount, and such a
transfer is subject to a Market Value Adjustment.

On the maturity date of a guaranteed interest period, you may
transfer amounts from the applicable Fixed Interest Allocation to the
subaccounts and/or to new Fixed Interest Allocations with guaranteed
interest periods of any length we are offering at that time. You may
not, however, transfer amounts to any Fixed Interest Allocation with
a guaranteed interest period that extends beyond the annuity start
date.

At least 30 calendar days before a maturity date of any of your Fixed
Interest Allocations, or earlier if required by state law, we will
send you a notice of the guaranteed interest periods that are
available. You must notify us which subaccounts or new guaranteed
interest periods you have selected before the maturity date of your
Fixed Interest Allocations. If we do not receive timely instructions
from you, we will transfer the contract value in the maturing Fixed
Interest Allocation to a new Fixed Interest Allocation with a
guaranteed interest period that is the same as the expiring
guaranteed interest period. If such guaranteed interest period is
not available or would go beyond the annuity start date, we will
transfer your contract value in the maturing Fixed Interest
Allocation to the next shortest guaranteed interest period which does
not go beyond the annuity start date. If no such guaranteed interest
period is available, we will transfer the contract value to a
subaccount specially designated by the Company for such purpose.
Currently we use the Liquid Asset subaccount for such purpose.

WITHDRAWALS FROM A FIXED INTEREST ALLOCATION
During the accumulation phase, you may withdraw a portion of your
contract value in any Fixed Interest Allocation. You may make
systematic withdrawals of only the interest earned during the prior
month, quarter or year, depending on the frequency chosen, from a
Fixed Interest Allocation under our systematic withdrawal option.
Systematic withdrawals from a Fixed Interest Allocation are not
permitted if such Fixed Interest Allocation is currently
participating in the dollar cost averaging program. A withdrawal
from a Fixed Interest Allocation may be subject to a Market Value
Adjustment and, in some cases, a surrender charge. Be aware that
withdrawals may have federal income tax consequences, including a 10%
penalty tax.

If you tell us the Fixed Interest Allocation from which your
withdrawal will be made, we will assess the withdrawal against that
Fixed Interest Allocation. If you do not, we will assess your
withdrawal against the subaccounts in which you are invested unless
the withdrawal exceeds the contract value in the subaccounts.

If there is no contract value in those subaccounts, we will deduct your
withdrawal from your Fixed Interest Allocations starting with the
guaranteed interest periods nearest their maturity dates until we
have honored your request.

MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment (i) whenever you withdraw or
transfer money from a Fixed Interest Allocation (unless made within
30 days before the maturity date of the applicable guaranteed
interest period, or under the systematic withdrawal or dollar cost
averaging program) and (ii) if on the annuity start date a guaranteed
interest period for any Fixed Interest Allocation does not end on or
within 30 days of the annuity start date. A Market Value Adjustment
may decrease, increase or have no effect on your contract value.

We determine the Market Value Adjustment by multiplying the amount
you withdraw, transfer or apply to an income plan by the following
factor:

( 1+I )N/365
(---------) -1
(1+J+.0050)

Where,
o "I" is the Index Rate for the affected Fixed Interest Allocation
as of the first day of its guaranteed interest period;

o "J" is equal to the following:

(1) If calculated for a Fixed Interest Allocation of 1 year or
more, then "J" is the Index Rate for a new Fixed Interest
Allocation with a guaranteed interest period equal to the
time remaining (rounded up to the next full year except in
Pennsylvania) in the guaranteed interest period;

(2) If calculated for a Fixed Interest Allocation of 6 months,
then "J" is the lesser of the Index Rate for a new Fixed
Interest Allocation with (i) a 6 month guaranteed interest
period, or (ii) a 1 year guaranteed interest period at the
time of calculation; and

o "N" is the remaining number of days in the guaranteed interest
period at the time of calculation.

The Index Rate is the average of the Ask Yields for U.S. Treasury
Strips as quoted by a national quoting service for a period equal to
the applicable guaranteed interest period. The average currently is
based on the period starting from the 22nd day of the calendar month
two months prior to the month of the Index Rate determination and
ending the 21st day of the calendar month immediately before the
month of determination. We currently calculate the Index Rate once
each calendar month but have the right to calculate it more
frequently. The Index Rate will always be based on a period of at
least 28 days. If the Ask Yields are no longer available, we will
determine the Index Rate by using a suitable and approved, if
required, replacement method.

A Market Value Adjustment may be positive, negative or result in no
change. In general, if interest rates are rising, you bear the risk
that any Market Value Adjustment will likely be negative and reduce
your contract value. On the other hand, if interest rates are
falling, it is more likely that you will receive a positive Market
Value Adjustment that increases your contract value. In the event of
a full surrender, transfer or annuitization from a Fixed Interest
Allocation, we will add or subtract any Market Value Adjustment from
the amount surrendered, transferred or annuitized. In the event of a
partial withdrawal, transfer or annuitization, we will add or
subtract any Market Value Adjustment from the total amount withdrawn,
transferred or annuitized in order to provide the amount requested.
If a negative Market Value Adjustment exceeds your contract value in
the Fixed Interest Allocation, wewill consider your request to be a
full surrender, transfer or annuitization of the Fixed Interest
Allocation.

Several examples which illustrate how the Market Value Adjustment
works are included in Appendix B.

[Shaded Section Header]
- ----------------------------------------------------------------------
THE ANNUITY CONTRACT
- ----------------------------------------------------------------------

The Contract described in this prospectus is a deferred combination
variable and fixed annuity contract. The Contract provides a means
for you to invest in one or more of the available mutual fund
portfolios of the GCG Trust, PIMCO Trust and Warburg Pincus Trust
funded by Account B. It also provides a means for you to invest in a
Fixed Interest Allocation through the Fixed Account.

CONTRACT DATE AND CONTRACT YEAR
The date the Contract became effective is the contract date. Each 12-
month period following the contract date is a contract year.

ANNUITY START DATE
The annuity start date is the date you start receiving annuity
payments under your Contract. The Contract, like all deferred
variable annuity contracts, has two phases: the accumulation phase
and the income phase. The accumulation phase is the period between
the contract date and the annuity start date. The income phase
begins when you start receiving regular annuity payments from your
Contract on the annuity start date.

CONTRACT OWNER
You are the contract owner. You are also the annuitant unless
another annuitant is named in the application. You have the rights
and options described in the Contract. One or more persons may own
the Contract. If there are multiple owners named, the age of the
oldest owner will determine the applicable death benefit if such
death benefit is available for multiple owners.

The death benefit becomes payable when you die. In the case of a
sole contract owner who dies before the income phase begins, we will
pay the beneficiary the death benefit then due. The sole contract
owner's estate will be the beneficiary if no beneficiary has been
designated or the beneficiary has predeceased the contract owner. In
the case of a joint owner of the Contract dying before the income
phase begins, we will designate the surviving contract owner as the
beneficiary. This will override any previous beneficiary
designation.

If the contract owner is a trust and a beneficial owner of the trust
has been designated, the beneficial owner will be treated as the
contract owner for determining the death benefit. If a beneficial
owner is changed or added after the contract date, this will be
treated as a change of contract owner for determining the death
benefit.

JOINT OWNER. For non-qualified Contracts only, joint owners may
be named in a written request before the Contract is in effect.
Joint owners may independently exercise transfers and other
transactions allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal
shares of any benefits accruing or payments made to them. All rights
of a joint owner end at death of that owner if the other joint owner
survives. The entire interest of the deceased joint owner in the
Contract will pass to the surviving joint owner. The age of the
older owner will determine the applicable death benefit if Enhanced
Death Benefits are available for multiple owners.

ANNUITANT
The annuitant is the person designated by you to be the measuring
life in determining annuity payments. The annuitant's age determines
when the income phase must begin and the amount of the annuity
payments to be paid. You are the annuitant unless you choose to name
another person. The annuitant may not be changed after the Contract
is in effect.

The contract owner will receive the annuity benefits of the Contract
if the annuitant is living on the annuity start date. If the
annuitant dies before the annuity start date, and a contingent
annuitant has been named,
14

the contingent annuitant becomes the
annuitant (unless the contract owner is not an individual, in which
case the death benefit becomes payable).

If there is no contingent annuitant when the annuitant dies before
the annuity start date, the contract owner will become the annuitant.
The contract owner may designate a new annuitant within 60 days of
the death of the annuitant.

If there is no contingent annuitant when the annuitant dies before
the annuity start date and the contract owner is not an individual,
we will pay the designated beneficiary the death benefit then due.
If a beneficiary has not been designated, or if there is no
designated beneficiary living, the contract owner will be the
beneficiary. If the annuitant was the sole contract owner and there
is no beneficiary designation, the annuitant's estate will be the
beneficiary.

Regardless of whether a death benefit is payable, if the annuitant
dies and any contract owner is not an individual, distribution rules
under federal tax law will apply. You should consult your tax
advisor for more information if you are not an individual.

BENEFICIARY
The beneficiary is named by you in a written request. The
beneficiary is the person who receives any death benefit proceeds and
who becomes the successor contract owner if the contract owner (or
the annuitant if the contract owner is other than an individual) dies
before the annuity start date. We pay death benefits to the primary
beneficiary (unless there are joint owners, in which case death
proceeds are payable to the surviving owner(s)).

If the beneficiary dies before the annuitant or the contract owner,
the death benefit proceeds are paid to the contingent beneficiary, if
any. If there is no surviving beneficiary, we pay the death benefit
proceeds to the contract owner's estate.

One or more persons may be a beneficiary or contingent beneficiary.
In the case of more than one beneficiary, we will assume any death
benefit proceeds are to be paid in equal shares to the surviving
beneficiaries.

You have the right to change beneficiaries during the annuitant's
lifetime unless you have designated an irrevocable beneficiary. When
an irrevocable beneficiary has been designated, you and the
irrevocable beneficiary may have to act together to exercise some of
the rights and options under the Contract.

CHANGE OF CONTRACT OWNER OR BENEFICIARY. During the annuitant's
lifetime, you may transfer ownership of a non-qualified Contract. A
change in ownership may affect the amount of the death benefit and
the guaranteed death benefit. You may also change the beneficiary.
All requests for changes must be in writing and submitted to our
Customer Service Center in good order. The change will be effective
as of the day you sign the request. The change will not affect any
payment made or action taken by us before recording the change.

PURCHASE AND AVAILABILITY OF THE CONTRACT
We will issue a Contract only if both the annuitant and the contract
owner are not older than age 85.

The initial premium payment must be $5,000 or more ($1,500 for
qualified Contracts). You may make additional payments of $100 or
more ($250 for qualified Contracts) at any time after the free look
period before you turn age 85. Under certain circumstances, we may
waive the minimum premium payment requirement. We may also change
the minimum initial or additional premium requirements for certain
group or sponsored arrangements. Any initial or additional premium
payment that would cause the contract value of all annuities that you
maintain with us to exceed $1,000,000 requires our prior approval.

CREDITING OF PREMIUM PAYMENTS
We will allocate your initial premium within 2 business days after
receipt, if the application and all information necessary for
processing the Contract are complete. Subsequent premium payments
will be credited to a Contract within 1 business day if they are
received in good order. In certain states we also accept initial and
additional premium payments by wire order. Wire transmittals must be
accompanied by sufficient electronically transmitted data. We may
retain premium payments for up to 5 business days while attempting to
complete an incomplete application. If the application cannot be
completed within this period, we will inform you of the reasons for
the delay. We will also return the premium payment immediately
unless you direct us to hold the premium payment until the
application is completed. Once the completed application is
received, we will allocate the payment to the subaccount and/or Fixed
Interest Allocation specified by you within 2 business days. We will
make inquiry to discover any missing information related to
subsequent payments. For any subsequent premium payments, the
payment will be credited at the accumulation unit value next
determined after receipt of your premium payment.

Once we allocate your premium payment to the subaccounts selected by
you, we convert the premium payment into accumulation units. We
divide the amount of the premium payment allocated to a particular
subaccount by the value of an accumulation unit for the subaccount to
determine the number of accumulation units of the subaccount to be
held in Account B with respect to your Contract. The net investment
results of each subaccount vary with its investment performance.

If your premium payment was transmitted by wire order from your
broker-dealer, we will follow one of the following two procedures
after we receive and accept the wire order and investment
instructions. The procedure we follow depends on state availability
and the procedures of your broker-dealer.

(1) If either your state or broker-dealer do not permit us to
issue a Contract without an application, we reserve the right
to rescind the Contract if we do not receive and accept a
properly completed application or enrollment form within 15
days of the premium payment. If we do not receive the
application or form within 15 days of the premium payment, we
will refund the contract value plus any charges we deducted,
and the Contract will be voided. Some states require that we
return the premium paid, in which case we will comply.

(2) If your state and broker-dealer allow us to issue a Contract
without an application, we will issue and mail the Contract to
you, together with an Application Acknowledgement Statement
for your execution. Until our Customer Service Center receives
the executed Application Acknowledgement Statement, neither
you nor the broker-dealer may execute any financial
transactions on your Contract unless they are requested in
writing by you.

In some states, we may require that an initial premium designated for
a subaccount of Account B or the Fixed Account be allocated to a
subaccount specially designated by the Company (currently, the Liquid
Asset subaccount) during the free look period. After the free look
period, we will convert your contract value (your initial premium
plus any earnings less any expenses) into accumulation units of the
subaccounts you previously selected. The accumulation units will be
allocated based on the accumulation unit value next computed for each
subaccount. Initial premiums designated for Fixed Interest
Allocations will be allocated to a Fixed Interest Allocation with the
guaranteed interest period you have chosen; however, in the future we
may allocate the premiums to the specially designated subaccount
during the free look period.

CONTRACT VALUE
We determine your contract value on a daily basis beginning on the
contract date. Your contract value is the sum of (a) the contract
value in the Fixed Interest Allocations, and (b) the contract value
in each subaccount in which you are invested.

CONTRACT VALUE IN FIXED INTEREST ALLOCATIONS. The contract value
in your Fixed Interest Allocation is the sum of premium payments
allocated to the Fixed Interest Allocation under the Contract, plus
contract

value transferred to the Fixed Interest Allocation, plus
credited interest, minus any transfers and withdrawals from the Fixed
Interest Allocation (including any Market Value Adjustment applied to
such withdrawal), contract fees, and premium taxes.

CONTRACT VALUE IN THE SUBACCOUNTS. On the contract date, the
contract value in the subaccount in which you are invested is equal
to the initial premium paid and designated to be allocated to the
subaccount. On the contract date, we allocate your contract value to
each subaccount and/or a Fixed Interest Allocation specified by you,
unless the Contract is issued in a state that requires the return of
premium payments during the free look period, in which case, the
portion of your initial premium not allocated to a Fixed Interest
Allocation will be allocated to a subaccount specially designated by
the Company during the free look period for this purpose (currently,
the Liquid Asset subaccount).

On each business day after the contract date, we calculate the amount
of contract value in each subaccount as follows:

(1) We take the contract value in the subaccount at the end of the
preceding business day.

(2) We multiply (1) by the subaccount's Net Investment Factor
since the preceding business day.

(3) We add (1) and (2).

(4) We add to (3) any additional premium payments, and then add or
subtract any transfers to or from that subaccount.

(5) We subtract from (4) any withdrawals and any related charges,
and then subtract any contract fees and premium taxes.

CASH SURRENDER VALUE
The cash surrender value is the amount you receive when you surrender
the Contract. The cash surrender value will fluctuate daily based on
the investment results of the subaccounts in which you are invested
and interest credited to Fixed Interest Allocations and any Market
Value Adjustment. We do not guarantee any minimum cash surrender
value. On any date during the accumulation phase, we calculate the
cash surrender value as follows: we start with your contract value,
then we adjust for any Market Value Adjustment, then we deduct any
surrender charge, any charge for premium taxes, and any other charges
incurred but not yet deducted.

SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE
You may surrender the Contract at any time while the annuitant is
living and before the annuity start date. A surrender will be
effective on the date your written request and the Contract are
received at our Customer Service Center. We will determine and pay
the cash surrender value at the price next determined after receipt
of your request. Once paid, all benefits under the Contract will be
terminated. For administrative purposes, we will transfer your money
to a specially designated subaccount (currently the Liquid Asset
subaccount) prior to processing the surrender. This transfer will
have no effect on your cash surrender value. You may receive the
cash surrender value in a single sum payment or apply it under one or
more annuity options. We will usually pay the cash surrender value
within 7 days.

Consult your tax advisor regarding the tax consequences associated
with surrendering your Contract. A surrender made before you reach
age 59 1/2 may result in a 10% tax penalty. See "Federal Tax
Considerations" for more details.

ADDITION, DELETION OR SUBSTITUTION OF SUBACCOUNTS AND OTHER CHANGES
We may make additional subaccounts available to you under the
Contract. These subaccounts will invest in investment portfolios we
find suitable for your Contract.

We may amend the Contract to conform to applicable laws or
governmental regulations. If we feel that investment in any of the
investment portfolios has become inappropriate to the purposes of the
Contract, we may, with approval of the SEC (and any other regulatory
agency, if required) substitute another portfolio for existing and
future investments.

We also reserve the right to: (i) deregister Account B under the 1940
Act; (ii) operate Account B as a management company under the 1940
Act if it is operating as a unit investment trust; (iii) operate
Account B

as a unit investment trust under the 1940 Act if it is
operating as a managed separate account; (iv) restrict or eliminate
any voting rights as to Account B; and (v) combine Account B with
other accounts.

We will, of course, provide you with written notice before any of
these changes are effected.

THE FIXED ACCOUNT
The Fixed Account is a segregated asset account which contains the
assets that support a contract owner's Fixed Interest Allocations.
See "The Fixed Interest Allocations" for more information.

OTHER CONTRACTS
We offer other variable annuity contracts that also invest in the
same portfolios of the Trusts. These contracts have different
charges that could effect their performance, and may offer different
benefits more suitable to your needs. To obtain more information
about these other contracts, contact our Customer Service Center or
your registered representative.

OTHER IMPORTANT PROVISIONS
See "Withdrawals," "Transfers Among Your Investments," "Death
Benefit," "Charges and Fees," "The Annuity Options" and "Other
Contract Provisions" in this prospectus for information on other
important provisions in your Contract.

[Shaded Section Header]
- ----------------------------------------------------------------------
WITHDRAWALS
- ----------------------------------------------------------------------

Any time during the accumulation phase and before the death of the
annuitant, you may withdraw all or part of your money. Keep in mind
that if you request a withdrawal for more than 90% of the cash
surrender value, we will treat it as a request to surrender the
Contract. If any single withdrawal or the sum of withdrawals exceeds
the Free Withdrawal Amount, you will incur a surrender charge. The
Free Withdrawal Amount is the total of (i) your cumulative earnings
(which is your contract value less premium payments received and
prior withdrawals), and (ii) 10% of premium payments not previously
withdrawn received within 8 years prior to the date of the
withdrawal.

You need to submit to us a written request specifying the Fixed
Interest Allocations or subaccounts from which amounts are to be
withdrawn, otherwise the withdrawal will be made on a pro rata basis
from all of the subaccounts in which you are invested. If there is
not enough contract value in the subaccounts, we will deduct the
balance of the withdrawal from your Fixed Interest Allocations
starting with the guaranteed interest periods nearest their maturity
dates until we have honored your request. We will apply a Market
Value Adjustment to any withdrawal from your Fixed Interest
Allocation taken more than 30 days before its maturity date. We will
determine the contract value as of the close of business on the day
we receive your withdrawal request at our Customer Service Center.
The contract value may be more or less than the premium payments
made.

For administrative purposes, we will transfer your money to a
specially designated subaccount (currently, the Liquid Asset
subaccount) prior to processing the withdrawal. This transfer will
not effect the withdrawal amount you receive.

We offer the following three withdrawal options:

REGULAR WITHDRAWALS
After the free look period, you may make regular withdrawals. Each
withdrawal must be a minimum of $100. We will apply a Market Value
Adjustment to any regular withdrawal from a Fixed Interest Allocation
that is taken more than 30 days before its maturity date.

SYSTEMATIC WITHDRAWALS
You may choose to receive automatic systematic withdrawals on a
monthly, quarterly, or annual basis from the contract value in the
subaccounts in which you are invested or from your Fixed Interest
Allocations. You may elect payments to start as early as 28 days
after the contract date. You choose the date on which the
withdrawals will be made but this date cannot be later than the 28th
day of the month. If you do not choose a date, we will make the
withdrawals on the same calendar day of each month as the contract
date. Each withdrawal payment must be at least $100.

The amount of your withdrawal can either be a (i) fixed dollar
amount, or (ii) an amount based on a percentage of the premiums not
previously withdrawn from the subaccounts in which you are invested.
Both options are subject to the following maximums:

FREQUENCY MAXIMUM PERCENTAGE
Monthly 0.833%
Quarterly 2.50%
Annually 10.00%

If you select a fixed dollar amount and the amount to be
systematically withdrawn would exceed the applicable maximum
percentage of your premiums not previously withdrawn on the
withdrawal date, we will reduce the amount withdrawn so that it
equals such percentage. If you select a percentage and the amount to
be systematically withdrawn based on that percentage would be less
than the minimum of $100, we will increase the amount to $100
provided it does not exceed the maximum percentage. If it is below
the maximum percentage we will send the $100. If it is above the
maximum percentage we will send the amount and then cancel the
option.

Systematic withdrawals from Fixed Interest Allocations are limited to
interest earnings during the prior month, quarter, or year, depending
on the frequency you choose. Systematic withdrawals are not subject
to a Market Value Adjustment, unless you choose the fixed payment
option discussed below and the payments exceed your interest
earnings. A Fixed Interest Allocation may not participate in both
the systematic withdrawal option and the dollar cost averaging
program at the same time.

You may choose an option available under our systematic withdrawal
program that will allow you to receive systematic payments in fixed
amounts. Under this option, you choose the amount of the fixed
systematic withdrawal which may total up to 10% of your cumulative
premium payments, or in amounts calculated to satisfy Section 72(q)
or 72(t) of the Tax Code. Since the amount of the systematic fixed
payment under this option may exceed the Free Withdrawal Amount, (i)
a surrender charge would apply to the extent the systematic payment
exceeds the Free Withdrawal Amount, and (ii) a Market Value
Adjustment would apply to the extent the systematic payment exceeds
interest earnings on your Fixed Interest Allocations. Under this
option, we apply the surrender charge and any Market Value Adjustment
directly to your contract value (rather than the systematic payment)
so that the amount of your systematic withdrawals remain the amount
you requested.

Subject to the above, you may change the amount or percentage of your
systematic withdrawal once each contract year or cancel this option
at any time by sending satisfactory notice to our Customer Service
Center at least 7 days before the next scheduled withdrawal date.
You may elect to have this option commence in a contract year where a
regular withdrawal has been taken but you may not change the amount
or percentage

of your withdrawals in any contract year during which
you have previously taken a regular withdrawal. You may not elect
this if you are taking IRA withdrawals.

IRA WITHDRAWALS
If you have a non-Roth IRA Contract and will be at least age 70 1/2
during the current calendar year, you may elect to have distributions
made to you to satisfy requirements imposed by Federal tax law. IRA
withdrawals provide payout of amounts required to be distributed by
the Internal Revenue Service rules governing mandatory distributions
under qualified plans. We will send you a notice before your
distributions commence. You may elect to take IRA withdrawals at
that time, or at a later date. You may not elect IRA withdrawals and
participate in systematic withdrawals at the same time. If you do
not elect to take IRA withdrawals, and distributions are required by
Federal tax law, distributions adequate to satisfy the requirements
imposed by Federal tax law may be made. Thus, if you are
participating in systematic withdrawals, distributions under that
option must be adequate to satisfy the mandatory distribution rules
imposed by federal tax law.

You may choose to receive IRA withdrawals on a monthly, quarterly or
annual basis. Under this option, you may elect payments to start as
early as 28 days after the contract date. You select the day of the
month when the withdrawals will be made, but it cannot be later than
the 28th day of the month. If no date is selected, we will make the
withdrawals on the same calendar day of the month as the contract
date.

You may request that we calculate for you the amount that is required
to be withdrawn from your Contract each year based on the information
you give us and various choices you make. For information regarding
the calculation and choices you have to make, see the Statement of
Additional Information. The minimum dollar amount you can withdraw
is $100. When we determine the required IRA withdrawal amount for a
taxable year based on the frequency you select, if that amount is
less than $100, we will pay $100. At any time where the IRA
withdrawal amount is greater than the contract value, we will cancel
the Contract and send you the amount of the cash surrender value.

You may change the payment frequency of your IRA withdrawals once
each contract year or cancel this option at any time by sending us
satisfactory notice to our Customer Service Center at least 7 days
before the next scheduled withdrawal date.

An IRA withdrawal in excess of the amount allowed under systematic
withdrawals will be subject to a Market Value Adjustment.

CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED
WITH TAKING WITHDRAWALS. You are responsible for determining that
withdrawals comply with applicable law. A withdrawal made before the
taxpayer reaches age 59 1/2 may result in a 10% penalty tax. See
"Federal Tax Considerations" for more details.

[Shaded Section Header]
- ----------------------------------------------------------------------
TRANSFERS AMONG YOUR INVESTMENTS
- ----------------------------------------------------------------------

You may transfer your contract value among the subaccounts in which
you are invested and your Fixed Interest Allocations at the end of
the free look period until the annuity start date. We currently do
not charge you for transfers made during a contract year, but reserve
the right to charge $25 for each transfer after the twelfth transfer
in a contract year. We also reserve the right to limit the number of
transfers you may make and may otherwise modify or terminate transfer
privileges if required by our business judgement or in accordance
with applicable law. We will apply a Market Value Adjustment to
transfers from a Fixed Interest Allocation taken more than 30 days
before its maturity date, unless the transfer is made under the
dollar cost averaging program.

Transfers will be based on values at the end of the business day in
which the transfer request is received at our Customer Service
Center.

The minimum amount that you may transfer is $100 or, if less, your
entire contract value held in a subaccount or a Fixed Interest
Allocation.

To make a transfer, you must notify our Customer Service Center and
all other administrative requirements must be met. Any transfer
request received after 4:00 p.m. eastern time or the close of the New
York Stock Exchange will be effected on the next business day.
Account B and the Company will not be liable for following
instructions communicated by telephone that we reasonably believe to
be genuine. We require personal identifying information to process a
request for transfer made over the telephone.

DOLLAR COST AVERAGING
You may elect to participate in our dollar cost averaging program if
you have at least $1,200 of contract value in the (i) Limited
Maturity Bond subaccount or the Liquid Asset subaccount, or (ii) a
Fixed Interest Allocation with either a 6-month or a 1-year
guaranteed interest period. These subaccounts or Fixed Interest
Allocations serve as the source accounts from which we will, on a
monthly basis, automatically transfer a set dollar amount of money to
other subaccounts selected by you. We also may offer DCA Fixed
Interest Allocations, which are 6-month and 1-year Fixed Interest
Allocations available exclusively for use with the dollar cost
averaging program. The DCA Fixed Interest Allocations require a
minimum premium payment of $1,200 directed into a DCA Fixed Interest
Allocation.

The dollar cost averaging program is designed to lessen the impact of
market fluctuation on your investment. Since we transfer the same
dollar amount to other subaccounts each month, more units of a
subaccount are purchased if the value of its unit is low and less
units are purchased if the value of its unit is high. Therefore, a
lower than average value per unit may be achieved over the long term.
However, we cannot guarantee this. When you elect the dollar cost
averaging program, you are continuously investing in securities
regardless of fluctuating price levels. You should consider your
tolerance for investing through periods of fluctuating price levels.

Unless you have a DCA Fixed Interest Allocation, you elect the dollar
amount you want transferred under this program. Each monthly
transfer must be at least $100. If your source account is the
Limited Maturity Bond subaccount, the Liquid Asset subaccount or a 1-
year Fixed Interest Allocation, the maximum amount that can be
transferred each month is your contract value in such source account
divided by 12. If your source account is a 6-month Fixed Interest
Allocation, the maximum amount that can be transferred each month is
your contract value in such source account divided by 6. You may
change the transfer amount once each contract year. If you have a
DCA Fixed Interest Allocation, there is no minimum or maximum
transfer amount; we will transfer all your money allocated to that
source account into the subaccount(s) in equal payments over the
selected 6-month or 1-year period. The last payment will include
earnings accrued over the course of the selected period.

Transfers from a Fixed Interest Allocation or a DCA Fixed Interest
Allocation under the dollar cost averaging program are not subject to
a Market Value Adjustment. However, if you terminate the dollar cost
averaging program for a DCA Fixed Interest Allocation and there is
money remaining in the DCA Fixed Interest Allocation, we will
transfer the remaining money to the Liquid Asset subaccount. Such
transfer will trigger a Market Value Adjustment if the transfer is
made more than 30 days before the maturity date of the DCA Fixed
Interest Allocation.

If you do not specify the subaccounts to which the dollar amount of
the source account is to be transferred, we will transfer the money
to the subaccounts in which you are invested on a proportional basis.
The transfer date is the same day each month as your contract date.
If, on any transfer date, your contract value in a source account is
equal or less than the amount you have elected to have transferred,
the entire amount will be transferred and the program will end. You
may terminate the dollar cost averaging program at any time by
sending satisfactory notice to our Customer Service Center at least 7
days before the next transfer date. A Fixed Interest Allocation or
DCA Fixed Interest Allocation may not participate in the dollar cost
averaging program and in systematic withdrawals at the same time.

We may in the future offer additional subaccounts or withdraw any
subaccount or Fixed Interest Allocation to or from the dollar cost
averaging program, stop offering DCA Fixed Interest Allocations or
otherwise modify, suspend or terminate this program. Of course, such
change will not affect any dollar cost averaging programs in
operation at the time.

AUTOMATIC REBALANCING
If you have at least $10,000 of contract value invested in the
subaccounts of Account B, you may elect to have your investments in
the subaccounts automatically rebalanced. We will transfer funds
under your Contract on a quarterly, semi-annual, or annual calendar
basis among the subaccounts to maintain the investment blend of your
selected subaccounts. The minimum size of any allocation must be in
full percentage points. Rebalancing does not affect any amounts that
you have allocated to the Fixed Account. The program may be used in
conjunction with the systematic withdrawal option only if withdrawals
are taken pro rata. Automatic rebalancing is not available if you
participate in dollar cost averaging. Automatic rebalancing will not
take place during the free look period.

To participate in automatic rebalancing, send satisfactory notice to
our Customer Service Center. We will begin the program on the last
business day of the period in which we receive the notice. You may
cancel the program at any time. The program will automatically
terminate if you choose to reallocate your contract value among the
subaccounts or if you make an additional premium payment or partial
withdrawal on other than a pro rata basis. Additional premium
payments and partial withdrawals effected on a pro rata basis will
not cause the automatic rebalancing program to terminate.

[Shaded Section Header]
- ----------------------------------------------------------------------
DEATH BENEFIT
- ----------------------------------------------------------------------

DEATH BENEFIT DURING THE ACCUMULATION PHASE
During the accumulation phase, a death benefit is payable when either
the annuitant (when a contract owner is not an individual), the
contract owner or the first of joint owners dies. Assuming you are
the contract owner, your beneficiary will receive a death benefit
unless the beneficiary is your surviving spouse and elects to
continue the Contract. The death benefit value is calculated at the
close of the business day on which we receive proof of death at our
Customer Service Center. If your beneficiary elects to delay receipt
of the death benefit until a date after the time of death, the amount
of the benefit payable in the future may be affected. The proceeds
may be received in a single sum or applied to any of the annuity
options. If we do not receive a request to apply the death benefit
proceeds to an annuity option, we will make a single sum
distribution. We will generally pay death benefit proceeds within 7
days after our Customer Service Center has received sufficient
information to make the payment.

The death benefit applies on the first person to die of the contract
owner, joint owner, or annuitant (if a contract owner is not an
individual). Assuming you are the contract owner, if you die during
the accumulation phase, your beneficiary will receive a death benefit
unless the beneficiary is the surviving spouse and elects to continue
the Contract.

If you or the annuitant (if a contract owner is not an individual)
die before the annuity start date, we determine the death benefit as
follows.

If you are AGE 67 OR YOUNGER at the time of purchase, the death
benefit is the greatest of:

1) the contract value;

2) the total premium payments made under the Contract after
subtracting any withdrawals;

3) the cash surrender value; or

If you are BETWEEN AGES 68 AND 75 at the time of purchase, the death
benefit is the greatest of:

1) the contract value;

2) the total premium payments made under the Contract after
subtracting any withdrawals;

3) the cash surrender value; or

4) the contract value (plus subsequent premiums less subsequent
withdrawals) determined on the 8th contract anniversary but on
or before your death.

If you are AGE 76 OR OLDER at the time of purchase, the death benefit
is the greater of:

1) the contract value; or

2) the cash surrender value.

In all cases described above, amounts could be reduced by premium
taxes owed and withdrawals not previously deducted.

DEATH BENEFIT DURING THE INCOME PHASE
If any contract owner or the annuitant dies after the annuity start
date, we will pay the beneficiary any certain benefit remaining under
the annuity in effect at the time.

[Shaded Section Header]
- ----------------------------------------------------------------------
CHARGES AND FEES
- ----------------------------------------------------------------------

We deduct the charges described below to cover our cost and expenses,
services provided and risks assumed under the Contracts. We incur
certain costs and expenses for distributing and administrating the
Contracts, for paying the benefits payable under the Contracts and
for bearing various risks associated with the Contracts. The amount
of a charge will not always correspond to the actual costs
associated. For example, the surrender charge collected may not
fully cover all of the distribution expenses incurred by us with the
service or benefits provided. In the event there are any profits
from fees and charges deducted under the Contract, we may use such
profits to finance the distribution of contracts.

CHARGE DEDUCTION SUBACCOUNT
You may elect to have all charges against your contract value
deducted directly from a single subaccount designated by the Company.
Currently we use the Liquid Asset subaccount for this purpose. If
you do not elect this option, or if the amount of the charges is
greater than the amount in the designated subaccount, the charges
will be deducted as discussed below. You may cancel this option at
any time by sending satisfactory notice to our Customer Service
Center.

CHARGES DEDUCTED FROM THE CONTRACT VALUE
We deduct the following charges from your contract value:

SURRENDER CHARGE. We will deduct a contingent deferred sales
charge (a "surrender charge") if you surrender your Contract or if
you take a withdrawal in excess of the Free Withdrawal Amount during
the 8-year period from the date we receive and accept a premium
payment. The surrender charge is based on a percentage of each
premium payment. This charge is intended to cover sales expenses
that we have incurred. We may in the future reduce or waive the
surrender charge in certain situations and will never charge more

than the maximum surrender charges. The percentage of premium
payments deducted at the time of surrender or excess withdrawal
depends on the number of complete years that have elapsed since that
premium payment was made. We determine the surrender charge as a
percentage of each premium payment as follows:

COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+
SINCE PREMIUM PAYMENT | | | | | | | |
SURRENDER CHARGE 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0%

We will waive the surrender charge in most states in the following
events: (i) you begin receiving qualified extended medical care on or
after the first contract anniversary for at least 45 days during a 60
day period and your request for the surrender or withdrawal, together
with all required documentation is received at our Customer Service
Center during the term of your care or within 90 days after the last
day of your care; or (ii) you are first diagnosed by a qualifying
medical professional, on or after the first contract anniversary, as
having a qualifying terminal illness. We have the right to require
an examination by a physician of our choice. If we require such an
examination, we will pay for it. You are required to send us
satisfactory written proof of illness. See your Contract for more
information. The waiver of surrender charge may not be available in
all states.

FREE WITHDRAWAL AMOUNT. The Free Withdrawal Amount is the total
of (i) your cumulative earnings (which is your contract value less
premium payments received and prior withdrawals), and (ii) 10% of
premium payments not previously withdrawn received within 8 years
prior to the date of the withdrawal.

SURRENDER CHARGE FOR EXCESS WITHDRAWALS. We will deduct a
surrender charge for excess withdrawals. We consider a withdrawal to
be an "excess withdrawal" when the amount you withdraw in any
contract year exceeds the Free Withdrawal Amount. Where you are
receiving systematic withdrawals, any combination of regular
withdrawals taken and any systematic withdrawals expected to be
received in a contract year will be included in determining the
amount of the excess withdrawal. Such a withdrawal will be
considered a partial surrender of the Contract and we will impose a
surrender charge and any associated premium tax. We will deduct such
charges from the contract value in proportion to the contract value
in each subaccount or Fixed Interest Allocation from which the excess
withdrawal was taken. In instances where the excess withdrawal
equals the entire contract value in such subaccounts or Fixed
Interest Allocations, we will deduct charges proportionately from all
other subaccounts and Fixed Interest Allocations in which you are
invested. ANY WITHDRAWAL FROM A FIXED INTEREST ALLOCATION MORE THAN
30 DAYS BEFORE ITS MATURITY DATE WILL TRIGGER A MARKET VALUE
ADJUSTMENT.

For the purpose of calculating the surrender charge for an excess
withdrawal: a) we treat premiums as being withdrawn on a first-in,
first-out basis; and b) amounts withdrawn which are not considered an
excess withdrawal are not considered a withdrawal of any premium
payments. We have included an example of how this works in Appendix
C. Although we treat premium payments as being withdrawn before
earnings for purpose of calculating the surrender charge for excess
withdrawals, the federal tax law treats earnings as withdrawn first.

PREMIUM TAXES. We may make a charge for state and local premium
taxes depending on the contract owner's state of residence. The tax
can range from 0% to 3.5% of the premium. We have the right to change
this amount to conform with changes in the law or if the contract
owner changes state of residence.

We deduct the premium tax from your contract value on the annuity
start date. However, some jurisdictions impose a premium tax at the
time that initial and additional premiums are paid, regardless of
when the annuity payments begin. In those states we may defer
collection of the premium taxes from your contract value and deduct
it on surrender of the Contract, on excess withdrawals or on the
annuity start date.

ADMINISTRATIVE CHARGE. We deduct an annual administrative charge
on each Contract anniversary, or if you surrender your Contract prior
to a Contract anniversary, at the time we determine the cash
surrender value payable to you. The amount deducted is $30 per
Contract. We deduct the charge proportionately from all subaccounts
in which you are invested. If there is no contract value in those
subaccounts, we will deduct the charge from your Fixed Interest
Allocations starting with the guaranteed interest periods nearest
their maturity dates until the charge has been paid.

TRANSFER CHARGE. We currently do not deduct any charges for
transfers made during a contract year. We have the right, however,
to assess up to $25 for each transfer after the twelfth transfer in a
contract year. If such a charge is assessed, we would deduct the
charge from the subaccounts and the Fixed Interest Allocations from
which each such transfer is made in proportion to the amount being
transferred from each such subaccount and Fixed Interest Allocation
unless you have chosen to have all charges deducted from a single
subaccount. The charge will not apply to any transfers due to the
election of dollar cost averaging, automatic rebalancing and
transfers we make to and from any subaccount specially designated by
the Company for such purpose.

CHARGES DEDUCTED FROM THE SUBACCOUNTS
MORTALITY AND EXPENSE RISK CHARGE. The mortality and expense risk
charge is equivalent, on an annual basis, to 1.25% of the assets you
have in each subaccount. The charge is deducted on each business day
at the rate of .003446% for each day since the previous business day.

ASSET-BASED ADMINISTRATIVE CHARGE. We will deduct a daily charge
from the assets in each subaccount, to compensate us for a portion of
the administrative expenses under the Contract. The daily charge is
at a rate of .000411% (equivalent to an annual rate of 0.15%) on the
assets in each subaccount.

TRUST EXPENSES
There are fees and charges deducted from each investment portfolio of
the Trusts. Please read the respective Trust prospectus for details.

[Shaded Section Header]
- ----------------------------------------------------------------------
THE ANNUITY OPTIONS
- ----------------------------------------------------------------------

ANNUITIZATION OF YOUR CONTRACT
If the annuitant and contract owner are living on the annuity start
date, we will begin making payments to the contract owner under an
income plan. We will make these payments under the annuity option
chosen. You may change annuity option by making a written request to
us at least 30 days before the annuity start date. The amount of the
payments will be determined by applying your contract value adjusted
for any applicable Market Value Adjustment on the annuity start date
in accordance with the annuity option you chose.

You may also elect an annuity option on surrender of the Contract for
its cash surrender value or you may choose one or more annuity
options for the payment of death benefit proceeds while it is in
effect and before the annuity start date. If, at the time of the
contract owner's death or the annuitant's death (if the contract
owner is not an individual), no option has been chosen for paying
death benefit proceeds, the beneficiary may choose an annuity option
within 60 days. In all events, payments of death benefit proceeds
must comply with the distribution requirements of applicable federal
tax law.

The minimum monthly annuity income payment that we will make is $20.
We may require that a single sum payment be made if the contract
value is less than $2,000 or if the calculated monthly annuity income
payment is less than $20.

For each annuity option we will issue a separate written agreement
putting the annuity option into effect. Before we pay any annuity
benefits, we require the return of your Contract. If your Contract
has been lost, we will require that you complete and return the
applicable lost Contract form. Various factors will affect the

level of annuity benefits, such as the annuity option chosen, the
applicable payment rate used and the investment performance of the
portfolios and interest credited to the Fixed Interest Allocations.

Our current annuity options provide only for fixed payments. Fixed
annuity payments are regular payments, the amount of which is fixed
and guaranteed by us. Some fixed annuity options provide fixed
payments either for a specified period of time or for the life of the
annuitant. The amount of life income payments will depend on the
form and duration of payments you chose, the age of the annuitant or
beneficiary (and gender, where appropriate), the total contract value
applied to purchase a Fixed Interest Allocation, and the applicable
payment rate.

Our approval is needed for any option where:

(1) The person named to receive payment is other than the contract
owner or beneficiary;

(2) The person named is not a natural person, such as a
corporation; or

(3) Any income payment would be less than the minimum annuity
income payment allowed.

SELECTING THE ANNUITY START DATE
You select the date on which the annuity payments commence. The
annuity start date must be at least 5 years from the contract date
but before the month immediately following the annuitant's 90th
birthday, or 10 years from the contract date, if later. If, on the
annuity start date, a surrender charge remains, the elected annuity
option must include a period certain of at least 5 years.

If you do not select an annuity start date, it will automatically
begin in the month following the annuitant's 90th birthday, or 10
years from the contract date, if later.

If the annuity start date occurs when the annuitant is at an advanced
age, such as over age 85, it is possible that the Contract will not
be considered an annuity for federal tax purposes. See "Federal Tax
Considerations" and the Statement of Additional Information. For a
Contract purchased in connection with a qualified plan, other than a
Roth IRA, distributions must commence not later than April 1st of the
calendar year following the calendar year in which you attain age 70
1/2 or, in some case, retire. Distributions may be made through
annuitization or withdrawals. Consult your tax advisor.

FREQUENCY OF ANNUITY PAYMENTS
You choose the frequency of the annuity payments. They may be
monthly, quarterly, semi-annually or annually. If we do not receive
written notice from you, we will make the payments monthly. There
may be certain restrictions on minimum payments that we will allow.

THE ANNUITY OPTIONS
We offer the 4 annuity options shown below. Payments under Options
1, 2 and 3 are fixed. Payments under Option 4 may be fixed or
variable. For a fixed annuity option, the contract value in the
subaccounts is transferred to the Company's general account.

OPTION 1. INCOME FOR A FIXED PERIOD. Under this option, we make
monthly payments in equal installments for a fixed number of years
based on the contract value on the annuity start date. We guarantee
that each monthly payment will be at least the amount stated in your
Contract. If you prefer, you may request that payments be made in
annual, semi-annual or quarterly installments. We will provide you
with illustrations if you ask for them. If the cash surrender value
or contract value is applied under this option, a 10% penalty tax may
apply to the taxable portion of each income payment until the
contract owner reaches age 59 1/2.

OPTION 2. INCOME FOR LIFE WITH A PERIOD CERTAIN. Payment is made
for the life of the annuitant in equal monthly installments and
guaranteed for at least a period certain such as 10 or 20 years.
Other periods certain may be available to you on request. You may
choose a refund period instead. Under this arrangement,

income is
guaranteed until payments equal the amount applied. If the person
named lives beyond the guaranteed period, payments continue until his
or her death. We guarantee that each payment will be at least the
amount specified in the Contract corresponding to the person's age on
his or her last birthday before the annuity start date. Amounts for
ages not shown in the Contract are available if you ask for them.

OPTION 3. JOINT LIFE INCOME. This option is available when there
are 2 persons named to determine annuity payments. At least one of
the persons named must be either the contract owner or beneficiary of
the Contract. We guarantee monthly payments will be made as long as
at least one of the named persons is living. There is no minimum
number of payments. Monthly payment amounts are available if you ask
for them.

OPTION 4. ANNUITY PLAN. The contract value can be applied to any
other annuitization plan that we choose to offer on the annuity start
date.

PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any
amounts still due as provided in the annuity agreement between you
and Golden American. The amounts we will pay are determined as
follows:

(1) For Option 1, or any remaining guaranteed payments under
Option 2, we will continue payments. Under Options 1 and 2,
the discounted values of the remaining guaranteed payments may
be paid in a single sum. This means we deduct the amount of
the interest each remaining guaranteed payment would have
earned had it not been paid out early. The discount interest
rate is never less than 3% for Option 1 and for Option 2 per
year. We will, however, base the discount interest rate on
the interest rate used to calculate the payments for Options 1
and 2 if such payments were not based on the tables in the
Contract.

(2) For Option 3, no amounts are payable after both named persons
have died.

(3) For Option 4, the annuity option agreement will state the
amount we will pay, if any.

[Shaded Section Header]
- ----------------------------------------------------------------------
OTHER CONTRACT PROVISIONS
- ----------------------------------------------------------------------

REPORTS TO CONTRACT OWNERS
We will send you a quarterly report within 31 days after the end of
each calendar quarter. The report will show the contract value, cash
surrender value, and the death benefit as of the end of the calendar
quarter. The report will also show the allocation of your contract
value and reflects the amounts deducted from or added to the contract
value since the last report. We will also send you copies of any
shareholder reports of the investment portfolios in which Account B
invests, as well as any other reports, notices or documents we are
required by law to furnish to you.

SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any
payment or determination of values on any business day (1) when the
New York Stock Exchange is closed; (2) when trading on the New York
Stock Exchange is restricted; (3) when an emergency exists as
determined by the Securities and Exchange Commission so that the sale
of securities held in Account B may not reasonably occur or so that
the Company may not reasonably determine the value of Account B's net
assets; or (4) during any other period when the Securities and
Exchange Commission so permits for the protection of security
holders. We have the right to delay payment of amounts from a Fixed
Interest Allocation for up to 6 months.

IN CASE OF ERRORS IN YOUR APPLICATION
If an age or sex given in the application or enrollment form is
misstated, the amounts payable or benefits provided by the Contract
shall be those that the premium payment would have bought at the
correct age or sex.

ASSIGNING THE CONTRACT AS COLLATERAL
You may assign a non-qualified Contract as collateral security for a
loan but understand that your rights and any beneficiary's rights may
be subject to the terms of the assignment. An assignment may have
federal tax consequences. You must give us satisfactory written
notice at our Customer Service Center in order to make or release an
assignment. We are not responsible for the validity of any
assignment.

CONTRACT CHANGES APPLICABLE TAX LAW
We have the right to make changes in the Contract to continue to
qualify the Contract as an annuity. You will be given advance notice
of such changes.

FREE LOOK
You may cancel your Contract within your 10-day free look period. We
deem the free look period to expire 15 days after we mail the
Contract to you. Some states may require a longer free look period.
To cancel, you need to send your Contract to our Customer Service
Center or to the agent from whom you purchased it. We will refund
the contract value. For purposes of the refund during the free look
period, your contract value (i)

is adjusted for any market value
adjustment (if you have invested in the fixed account), and (ii)
includes a refund of any charges deducted from your contract value.
Because of the market risks associated with investing in the
portfolios and the potential positive or negative effect of the
market value adjustment, the contract value returned may be greater
or less than the premium payment you paid. Some states require us to
return to you the amount of the paid premium (rather than the
contract value) in which case you will not be subject to investment
risk during the free look period. In these states, your premiums
designated for investment in the subaccounts will be allocated during
the free look period to a subaccount specially designated by the
Company for this purpose (currently, the Liquid Asset subaccount).
We may, in our discretion, require that premiums designated for
investment in the subaccounts from all other states as well as
premiums designated for a Fixed Interest Allocation be allocated to
the specially designated subaccount during the free look period.
Your Contract is void as of the day we receive your Contract and
cancellation request. We determine your contract value at the close
of business on the day we receive your written request. If you keep
your Contract after the free look period, we will put your money in
the subaccount(s) chosen by you, based on the accumulation unit value
next computed for each subaccount, and/or in the Fixed Interest
Allocation chosen by you.

GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce any
surrender, administration, and mortality and expense risk charges.
We may also change the minimum initial and additional premium
requirements, or offer an alternative or reduced death benefit.

SELLING THE CONTRACT
Directed Services, Inc. is principal underwriter and distributor of
the Contract as well as for other contracts issued through Account B
and other separate accounts of Golden American. We pay Directed
Services Inc. for acting as principal underwriter under a
distribution agreement which in turn pays the writing agent. The
principal address of Directed Services is 1475 Dunwoody Drive, West
Chester, Pennsylvania 19380.

Directed Services enters into sales agreements with broker-dealers to
sell the Contracts through registered representatives who are
licensed to sell securities and variable insurance products. These
broker-dealers are registered with the SEC and are members of the
National Association of Securities Dealers, Inc. DSI receives a
maximum of 7.75% commission, and passes through 100% of the
commission to the broker-dealer whose registered representative sold
the contract.

[Shaded Table Header]

Underwriter Compensation

|----------------------------------------------------------------------------|
| NAME OF PRINCIPAL | AMOUNT OF | OTHER |
| UNDERWRITER | COMMISSION TO BE PAID | COMPENSATION |
| | | |
| Directed Services, Inc. | Maximum of 7.75% | Reimbursement of any |
| | of any initial | covered expenses incurred|
| | or additional | by registered |
| | premium payments | representatives in |
| | except when combined | connection with |
| | with some annual | the distribution |
| | trail commissions. | of the Contracts. |
|----------------------------------------------------------------------------|

Certain sales agreements may provide for a combination of a certain
percentage of commission at the time of sale and an annual trail
commission (which when combined could exceed 7.75% of total premium
payments).

[Shaded Section Header]
- ----------------------------------------------------------------------
OTHER INFORMATION
- ----------------------------------------------------------------------

VOTING RIGHTS
We will vote the shares of a Trust owned by Account B according to
your instructions. However, if the Investment Company Act of 1940 or
any related regulations should change, or if interpretations of it or
related regulations should change, and we decide that we are
permitted to vote the shares of a Trust in our own right, we may
decide to do so.

We determine the number of shares that you have in a subaccount by
dividing the Contract's contract value in that subaccount by the net
asset value of one share of the portfolio in which a subaccount
invests. We count fractional votes. We will determine the number of
shares you can instruct us to vote 180 days or less before a Trust's
meeting. We will ask you for voting instructions by mail at least 10
days before the meeting. If we do not receive your instructions in
time, we will vote the shares in the same proportion as the
instructions received from all Contracts in that subaccount. We will
also vote shares we hold in Account B which are not attributable to
contract owners in the same proportion.

YEAR 2000 PROBLEM
Like other business organizations and individuals around the world,
Golden American and Account B could be adversely affected if the
computer systems doing the accounts processing or on which Golden
American and/or Account B relies do not properly process and
calculate date-related information related to the end of the year
1999. This is commonly known as the Year 2000 (or Y2K) Problem.
Golden American is taking steps that it believes are reasonably
designed to address the Year 2000 Problem with respect to the
computer systems that it uses and to obtain satisfactory assurances
that comparable steps are being taken by its and Account B's major
service providers. At this time, however, we cannot guarantee that
these steps will be sufficient to avoid any adverse impact on Golden
American and Account B.

STATE REGULATION
We are regulated by the Insurance Department of the State of
Delaware. We are also subject to the insurance laws and regulations
of all jurisdictions where we do business. The variable Contract
offered by this prospectus has been approved where required by those
jurisdictions. We are required to submit annual statements of our
operations, including financial statements, to the Insurance
Departments of the various jurisdictions in which we do business to
determine solvency and compliance with state insurance laws and
regulations.

LEGAL PROCEEDINGS
The Company, like other insurance companies, may be involved in
lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been
sought and/or material settlement payments have been made. We
believe that currently there are no pending or threatened lawsuits
that are reasonably likely to have a material adverse impact on the
Company or Account B.

LEGAL MATTERS
The legal validity of the Contracts was passed on by Myles R.
Tashman, Esquire, Executive Vice President, General Counsel and
Secretary of Golden American. Sutherland Asbill & Brennan LLP of
Washington, D.C. has provided advice on certain matters relating to
federal securities laws.

EXPERTS
The audited financial statements of Golden American Life Insurance
Company and Account B appearing or incorporated by reference in the
Statement of Additional Information and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon appearing or incorporated by reference in
the Statement of Additional Information and in the Registration
Statement and are included or incorporated by reference in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.

[Shaded Section Header]
- ----------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS
- ----------------------------------------------------------------------

The following summary provides a general description of the federal
income tax considerations associated with this Contract and does not
purport to be complete or to cover all tax situations. This
discussion is not intended as tax advice. You should consult your
counsel or other competent tax advisers for more complete
information. This discussion is based upon our understanding of the
present federal income tax laws. We do not make any representations
as to the likelihood of continuation of the present federal income
tax laws or as to how they may be interpreted by the IRS.

TYPES OF CONTRACTS: NON-QUALIFIED OR QUALIFIED
The Contract may be purchased on a non-tax-qualified basis or
purchased on a tax-qualified basis. Qualified Contracts are designed
for use by individuals whom premium payments are comprised solely of
proceeds from and/or contributions under retirement plans that are
intended to qualify as plans entitled to special income tax treatment
under Sections 401(a), 403(b), 408, or 408A of the Code. The
ultimate effect of federal income taxes on the amounts held under a
Contract, or annuity payments, depends on the type of retirement
plan, on the tax and employment status of the individual concerned,
and on our tax status. In addition, certain requirements must be
satisfied in purchasing a qualified Contract with proceeds from a tax-
qualified plan and receiving distributions from a qualified Contract
in order to continue receiving favorable tax treatment. Some
retirement plans are subject to distribution and other requirements
that are not incorporated into our Contract administration
procedures. Contract owners, participants and beneficiaries are
responsible for determining that contributions, distributions and
other transactions with respect to the Contract comply with
applicable law. Therefore, you should seek competent legal and tax
advice regarding the suitability of a Contract for your particular
situation. The following discussion assumes that qualified Contracts
are purchased with proceeds from and/or contributions under
retirement plans that qualify for the intended special federal income
tax treatment.

TAX STATUS OF THE CONTRACTS
DIVERSIFICATION REQUIREMENTS. The Code requires that the
investments of a variable account be "adequately diversified" in
order for the Contracts to be treated as annuity contracts for
federal income tax purposes. It is intended that Account B, through
the subaccounts, will satisfy these diversification requirements.

In certain circumstances, owners of variable annuity contracts have
been considered for federal income tax purposes to be the owners of
the assets of the separate account supporting their contracts due to
their ability to exercise investment control over those assets. When
this is the case, the contract owners have been currently taxed on
income and gains attributable to the separate account assets. There
is little guidance in this area, and some features of the Contracts,
such as the flexibility of a contract owner to allocate premium
payments and transfer contract values, have not been explicitly
addressed in published rulings. While we believe that the Contracts
do not give contract owners investment control over Account B assets,
we reserve the right to modify the Contracts as necessary to prevent
a contract owner from being treated as the owner of the Account B
assets supporting the Contract.

REQUIRED DISTRIBUTIONS. In order to be treated as an annuity
contract for federal income tax purposes, the Code requires any non-
qualified Contract to contain certain provisions specifying how your
interest in the Contract will be distributed in the event of your
death. The non-qualified Contracts contain provisions that are
intended to comply with these Code requirements, 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 applicable requirements when such
requirements are clarified by regulation or otherwise.

Other rules may apply to Qualified Contracts.

The following discussion assumes that the Contracts will qualify as
annuity contracts for federal income tax purposes.

TAX TREATMENT OF ANNUITIES
IN GENERAL. We believe that if you are a natural person you will
generally not be taxed on increases in the value of a Contract until
a distribution occurs or until annuity payments begin. (For these
purposes, the agreement to assign or pledge any portion of the
contract value, and, in the case of a qualified Contract, any portion
of an interest in the qualified plan, generally will be treated as a
distribution.)

TAXATION OF NON-QUALIFIED CONTRACTS
NON-NATURAL PERSON. The owner of any annuity contract who is not
a natural person generally must include in income any increase in the
excess of the contract value over the "investment in the contract"
(generally, the premiums or other consideration paid for the
contract) during the taxable year. There are some exceptions to this
rule and a prospective contract owner that is not a natural person
may wish to discuss these with a tax adviser. The following
discussion generally applies to Contracts owned by natural persons.

WITHDRAWALS. When a withdrawal from a non-qualified Contract
occurs, the amount received will be treated as ordinary income
subject to tax up to an amount equal to the excess (if any) of the
contract value (unreduced by the amount of any surrender charge)
immediately before the distribution over the contract owner's
investment in the Contract at that time. The tax treatment of market
value adjustments is uncertain. You should consult a tax adviser if
you are considering taking a withdrawal from your Contract in
circumstances where a market value adjustment would apply.
In the case of a surrender under a non-qualified Contract, the amount
received generally will be taxable only to the extent it exceeds the
contract owner's investment in the Contract.

PENALTY TAX ON CERTAIN WITHDRAWALS. In the case of a distribution
from a non-qualified Contract, there may be imposed a federal tax
penalty equal to 10% of the amount treated as income. In general,
however, there is no penalty on distributions:

o made on or after the taxpayer reaches age 59 1/2;

o made on or after the death of a contract owner;

o attributable to the taxpayer's becoming disabled; or

o made as part of a series of substantially equal periodic
payments for the life (or life expectancy) of the taxpayer.

Other exceptions may be applicable under certain circumstances and
special rules may be applicable in connection with the exceptions
enumerated above. A tax adviser should be consulted with regard to
exceptions from the penalty tax.

ANNUITY PAYMENTS. Although tax consequences may vary depending on
the payment option elected under an annuity contract, a portion of
each annuity payment is generally not taxed and the remainder is
taxed as ordinary income. The non-taxable portion of an annuity
payment is generally determined in a manner that is designed to allow
you to recover your investment in the Contract ratably on a tax-free
basis over the expected stream of annuity payments, as determined
when annuity payments start. Once your investment in the Contract
has been fully recovered, however, the full amount of each annuity
payment is subject to tax as ordinary income.

TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed
from a Contract because of your death or the death of the annuitant.
Generally, such amounts are includible in the income of recipient as
follows: (i) if distributed in a lump sum, they are taxed in the
same manner as a surrender of the Contract, or (ii) if distributed
under a payment option, they are taxed in the same way as annuity
payments.

TRANSFERS, ASSIGNMENTS, EXCHANGES AND ANNUITY DATES OF A CONTRACT.
A transfer or assignment of ownership of a Contract, the designation
of an annuitant, the selection of certain dates for commencement of
the annuity phase, or the exchange of a Contract may result in
certain tax consequences to you that are

not discussed herein. A
contract owner contemplating any such transfer, assignment or
exchange, should consult a tax advisor as to the tax consequences.

WITHHOLDING. Annuity distributions are generally subject to
withholding for the recipient's federal income tax liability.
Recipients can generally elect, however, not to have tax withheld
from distributions.

MULTIPLE CONTRACTS. All non-qualified deferred annuity contracts
that are issued by us (or our affiliates) to the same contract owner
during any calendar year are treated as one non-qualified deferred
annuity contract for purposes of determining the amount includible in
such contract owner's income when a taxable distribution occurs.

TAXATION OF QUALIFIED CONTRACTS
The Contracts are designed for use with several types of qualified
plans. The tax rules applicable to participants in these qualified
plans vary according to the type of plan and the terms and
contributions of the plan itself. Special favorable tax treatment
may be available for certain types of contributions and
distributions. Adverse tax consequences may result from:
contributions in excess of specified limits; distributions before age
59 1/2 (subject to certain exceptions); distributions that do not
conform to specified commencement and minimum distribution rules; and
in other specified circumstances. Therefore, no attempt is made to
provide more than general information about the use of the Contracts
with the various types of qualified retirement plans. Contract
owners, annuitants, and beneficiaries are cautioned that the rights
of any person to any benefits under these qualified retirement plans
may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract, but we shall
not be bound by the terms and conditions of such plans to the extent
such terms contradict the Contract, unless the Company consents.

DISTRIBUTIONS. Annuity payments are generally taxed in the same
manner as under a non-qualified Contract. When a withdrawal from a
qualified Contract occurs, a pro rata portion of the amount received
is taxable, generally based on the ratio of the contract owner's
investment in the Contract (generally, the premiums or other
consideration paid for the Contract) to the participant's total
accrued benefit balance under the retirement plan. For Qualified
Contracts, the investment in the Contract can be zero. For Roth
IRAs, distributions are generally not taxed, except as described
below.

For qualified plans under Section 401(a) and 403(b), the Code
requires that distributions generally must commence no later than the
later of April 1 of the calendar year following the calendar year in
which the contract owner (or plan participant) (i) reaches age 70 1/2
or (ii) retires, and must be made in a specified form or manner. If
the plan participant is a "5 percent owner" (as defined in the Code),
distributions generally must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner
(or plan participant) reaches age 70 1/2. For IRAs described in
Section 408, distributions generally must commence no later than the
later of April 1 of the calendar year following the calendar year in
which the contract owner (or plan participant) reaches age 70 1/2.
Roth IRAs under Section 408A do not require distributions at any time
before the contract owner's death.

WITHHOLDING. Distributions from certain qualified plans generally
are subject to withholding for the contract owner's federal income
tax liability. The withholding rates vary according to the type of
distribution and the contract owner's tax status. The contract owner
may be provided the opportunity to elect not to have tax withheld
from distributions. "Eligible rollover distributions" from section
401(a) plans and section 403(b) tax-sheltered annuities are subject
to a mandatory federal income tax withholding of 20%. An eligible
rollover distribution is the taxable portion of any distribution from
such a plan, except certain distributions that are required by the
Code or distributions in a specified annuity form. The 20%
withholding does not apply, however, if the contract owner chooses a
"direct rollover" from the plan to another tax-qualified plan or IRA.

Brief descriptions of the various types of qualified retirement plans
in connection with a Contract follow. We will endorse the Contract
as necessary to conform it to the requirements of such plan.

REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH
We will not allow any payment of benefits provided under the Contract
which do not satisfy the requirements of Section 72(s) of the Code.

If any owner of a non-qualified contract dies before the annuity
start date, the payable to the beneficiary will be distributed as
follows: (a) the death benefit must be completely distributed within
5 years of the contract owner's date of death; or (b) the
beneficiary may elect, within the 1-year period after the contract
owner's date of death, to receive the death benefit in the form of an
annuity from us, provided that (i) such annuity is distributed in
substantially equal installments over the life of such beneficiary or
over a period not extending beyond the life expectancy of such
beneficiary; and (ii) such distributions begin not later than 1 year
after the contract owner's date of death.

Notwithstanding (a) and (b) above, if the sole contract owner's
beneficiary is the deceased owner's surviving spouse, then such
spouse may elect to continue the Contract under the same terms as
before the contract owner's death. Upon receipt of such election
from the spouse at our Customer Service Center: (1) all rights of
the spouse as contract owner's beneficiary under the Contract in
effect prior to such election will cease; (2) the spouse will become
the owner of the Contract and will also be treated as the contingent
annuitant, if none has been named and only if the deceased owner was
the annuitant; and (3) all rights and privileges granted by the
Contract or allowed by Golden American will belong to the spouse as
contract owner of the Contract. This election will be deemed to have
been made by the spouse if such spouse makes a premium payment to the
Contract or fails to make a timely election as described in this
paragraph. If the owner's beneficiary is a nonspouse, the
distribution provisions described in subparagraphs (a) and (b) above,
will apply even if the annuitant and/or contingent annuitant are
alive at the time of the contract owner's death.

If we do not receive an election from a nonspouse owner's beneficiary
within the 1-year period after the contract owner's date of death,
then we will pay the death benefit to the owner's beneficiary in a
cash payment within five years from date of death. We will determine
the death benefit as of the date we receive proof of death. We will
make payment of the proceeds on or before the end of the 5-year
period starting on the owner's date of death. Such cash payment will
be in full settlement of all our liability under the Contract.

If the contract owner dies after the annuity start date, we will
continue to distribute any benefit payable at least as rapidly as
under the annuity option then in effect. All of the contract owner's
rights granted under the Contract or allowed by us will pass to the
contract owner's beneficiary.

If the Contract has joint owners we will consider the date of death
of the first joint owner as the death of the contract owner and the
surviving joint owner will become the contract owner of the Contract.

CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS
Section 401(a) of the Code permits corporate employers to establish
various types of retirement plans for employees, and permits self-
employed individuals to establish these plans for themselves and
their employees. These retirement plans may permit the purchase of
the Contracts to accumulate retirement savings under the plans.
Adverse tax or other legal consequences to the plan, to the
participant, or to both may result if this Contract is assigned or
transferred to any individual as a means to provide benefit payments,
unless the plan complies with all legal requirements applicable to
such benefits before transfer of the Contract. Employers intending
to use the Contract with such plans should seek competent advice.

INDIVIDUAL RETIREMENT ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to
an individual retirement program known as an "Individual Retirement
Annuity" or "IRA." These IRAs are subject to limits on the amount
that can be contributed, the deductible amount of the contribution,
the persons who may be eligible, and the time when distributions
commence. Also, distributions from certain other types of qualified
retirement plans may be "rolled over" or transferred on a tax-
deferred basis into an IRA. There are significant restrictions on
rollover or transfer contributions from Savings Incentive Match Plans
(SIMPLE), under which certain employers may provide contributions to
IRAs on behalf of their employees, subject to special restrictions.
Employers may

establish Simplified Employee Pension (SEP) Plans to
provide IRA contributions on behalf of their employees. Sales of the
Contract for use with IRAs may be subject to special requirements of
the IRS.

ROTH IRAS
Section 408A of the Code permits certain eligible individuals to
contribute to a Roth IRA. Contributions to a Roth IRA, which are
subject to certain limitations, are not deductible, and must be made
in cash or as a rollover or transfer from another Roth IRA or other
IRA. A rollover from or conversion of an IRA to a Roth IRA may be
subject to tax, and other special rules may apply. Distributions
from a Roth IRA generally are not taxed, except that, once aggregate
distributions exceed contributions to the Roth IRA, income tax and a
10% penalty tax may apply to distributions made (1) before age 59 1/2
(subject to certain exceptions) or (2) during the five taxable years
starting with the year in which the first contribution is made to the
Roth IRA.

TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section
501(c)(3) organizations and public schools to exclude from their
gross income the premium payments made, within certain limits, on a
Contract that will provide an annuity for the employee's retirement.
These premium payments may be subject to FICA (social security) tax.
Distributions of (1) salary reduction contributions made in years
beginning after December 31, 1988; (2) earnings on those
contributions; and (3) earnings on amounts held as of the last year
beginning before January 1, 1989, are not allowed prior to age 59
1/2, separation from service, death or disability. Salary reduction
contributions may also be distributed upon hardship, but would
generally be subject to penalties.

OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the federal tax
consequences under the Contracts are not exhaustive, and special
rules are provided with respect to other tax situations not discussed
in this prospectus. Further, the federal income tax consequences
discussed herein reflect our understanding of current law, and the
law may change. Federal estate and state and local estate,
inheritance and other tax consequences of ownership or receipt of
distributions under a Contract depend on the individual circumstances
of each contract owner or recipient of the distribution. A competent
tax adviser should be consulted for further information.

POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is
always the possibility that the tax treatment of the Contracts could
change by legislation or other means. It is also possible that any
change could be retroactive (that is, effective before the date of
the change). A tax adviser should be consulted with respect to
legislative developments and their effect on the Contract.

[Shaded Section Header]
- --------------------------------------------------------------------------
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------

SELECTED FINANCIAL DATA

The following selected financial data prepared in accordance with
generally accepted accounting principles ("GAAP") for Golden
American should be read in conjunction with the financial
statements and notes thereto included in this Prospectus.

On October 24, 1997, PFHI Holdings, Inc. ("PFHI"), a Delaware
corporation, acquired all of the outstanding capital stock of
Equitable of Iowa Companies ("Equitable of Iowa"), pursuant to a
merger agreement among Equitable of Iowa, PFHI and ING Groep N.V.
(the "ING acquisition"). On August 13, 1996, Equitable of Iowa
acquired all of the outstanding capital stock of BT Variable,
Inc., then the parent of Golden American (the "Equitable
acquisition"). For financial statement purposes, the ING
acquisition was accounted for as a purchase effective October 25,
1997 and the Equitable acquisition was accounted for as a purchase
effective August 14, 1996. As a result, the financial data
presented below for periods after October 24, 1997, are presented
on the Post-Merger new basis of accounting, for the period August
14, 1996 through October 24, 1997, are presented on the Post-
Acquisition basis of accounting, and for August 13, 1996 and prior
periods are presented on the Pre-Acquisition basis of accounting.

<TABLE>

SELECTED GAAP BASIS FINANCIAL DATA
(IN THOUSANDS)
Post-Merger | Post-Acquisition | Pre-Acquisition
------------------------------|---------------------------------|---------------------------------------
For the Period | For the Period For the Period | For the Period
For the Year October 25, | January 1, August 14, 1996 | January 1, For the Years
Ended 1997 through | 1997 through 1996 through | 1996 through Ended December 31,
December 31, December 31, | October 24, December 31, | August 13, ----------------------
1998 1997 | 1997 1996 | 1996 1995 1994
------------ -------------- | -------------- --------------- | -------------- ---------- ----------
<S> <C> <C> | <C> <C> | <C> <C> <C>
Annuity and Interest | |
Sensitive Life | |
Product Charges....... $ 39,119 $ 3,834 | $18,288 $ 8,768 | $12,259 $ 18,388 $ 17,519
Net Income before | |
Federal Income Tax.... $ 10,353 $ (279) | $ (608) $ 570 | $ 1,736 $ 3,364 $ 2,222
Net Income (Loss)....... $ 5,074 $ (425) | $ 729 $ 350 | $ 3,199 $ 3,364 $ 2,222
Total Assets............ $4,752,533 $2,446,395 | N/A $1,677,899 | N/A $1,203,057 $1,044,760
Total Liabilities....... $4,398,639 $2,219,082 | N/A $1,537,415 | N/A $1,104,932 $ 955,254
Total Stockholder's | |
Equity................ $ 353,894 $ 227,313 | N/A $ 140,484 | N/A $ 98,125 $ 89,506

</TABLE>

BUSINESS ENVIRONMENT

The current business and regulatory environment remains
challenging for the insurance industry. The variable annuity
competitive environment is intense and is dominated by a number of
large variable product companies with strong distribution, name
recognition and wholesaling capabilities. Increasing competition
from traditional insurance carriers as well as banks and mutual
fund companies offer consumers many choices. However, overall
demand for variable products remains strong for several reasons
including: strong stock market performance over the last five
years; relatively low interest rates; an aging U. S. population
that is increasingly concerned about retirement and estate
planning, as well as maintaining their standard of living in
retirement; and potential reductions in government and employer-
provided benefits at retirement as well as lower public confidence
in the adequacy of those benefits.

In October of 1997, Golden American introduced three new variable
annuity products (GoldenSelect Access, GoldenSelect ES II and
GoldenSelect Premium Plus) which have contributed significantly to
sales.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

The purpose of this section is to discuss and analyze Golden
American Life Insurance Company's ("Golden American") consolidated
results of operations. In addition, some analysis and information
regarding financial condition and liquidity and capital resources
has also been provided. This analysis should be read jointly with
the consolidated financial statements, related notes and the
Cautionary Statement Regarding Forward-Looking Statements, which
appear elsewhere in this report. The Companies report financial
results on a consolidated basis. The consolidated financial
statements include the accounts of Golden American and its wholly
owned subsidiary, First Golden American Life Insurance Company of
New York ("First Golden," and collectively with Golden American,
the "Companies").

RESULTS OF OPERATIONS

MERGER. On October 23, 1997, Equitable of Iowa Companies'
("Equitable") shareholders approved an Agreement and Plan of
Merger ("Merger Agreement") dated July 7, 1997 among Equitable,
PFHI Holdings, Inc. ("PFHI") and ING Groep N.V. ("ING"). On
October 24, 1997, PFHI, a Delaware corporation, acquired all of
the outstanding capital stock of Equitable according to the Merger
Agreement. PFHI is a wholly owned subsidiary of ING, a global
financial services holding company based in The Netherlands.
Equitable, an Iowa corporation, in turn owned all the outstanding
capital stock of Equitable Life Insurance Company of Iowa
("Equitable Life") and Golden American and their wholly owned
subsidiaries. In addition, Equitable owned all the outstanding
capital stock of Locust Street Securities, Inc., Equitable
Investment Services, Inc. (subsequently dissolved), Directed
Services, Inc. ("DSI"), Equitable of Iowa Companies Capital Trust,
Equitable of Iowa Companies Capital Trust II and Equitable of Iowa
Securities Network, Inc. (subsequently renamed ING Funds
Distributor, Inc.). In exchange for the outstanding capital stock
of Equitable, ING paid total consideration of approximately $2.1
billion in cash and stock and assumed approximately $400 million
in debt. As a result of this transaction, Equitable of Iowa
Companies was merged into PFHI, which was simultaneously renamed
Equitable of Iowa Companies, Inc. ("EIC" or "Parent"), a Delaware
corporation.

For financial statement purposes, the change in control of the
Companies through the ING merger was accounted for as a purchase
effective October 25, 1997. This merger resulted in a new basis of
accounting reflecting estimated fair values of assets and
liabilities at the merger date. As a result, the Companies'
financial statements for periods after October 24, 1997 are
presented on the Post-Merger new basis of accounting.

The purchase price was allocated to EIC and its subsidiaries with
$227.6 million allocated to the Companies. Goodwill of $1.4
billion was established for the excess of the merger cost over the
fair value of the assets and liabilities of EIC with $151.1
million attributed to the Companies. Goodwill resulting from the
merger is being amortized over 40 years on a straight-line basis.
The carrying value will be reviewed periodically for any
indication of impairment in value.

CHANGE IN CONTROL--ACQUISITION. On August 13, 1996, Equitable
acquired all of the outstanding capital stock of BT Variable, Inc.
("BT Variable") and its wholly owned subsidiaries, Golden American
and DSI. After the acquisition, the BT Variable, Inc. name was
changed to EIC Variable, Inc. On April 30, 1997, EIC Variable,
Inc. was liquidated and its investments in Golden American and DSI
were transferred to Equitable, while the remainder of its net
assets were contributed to Golden American. On December 30, 1997,
EIC Variable, Inc. was dissolved.

For financial statement purposes, the change in control of Golden
American through the acquisition of BT Variable was accounted for
as a purchase effective August 14, 1996. This acquisition resulted
in a new basis of accounting reflecting estimated fair values of
assets and liabilities at the acquisition date. As a result, the
Companies' financial statements for the period August 14, 1996
through October 24, 1997 are presented on the Post-Acquisition
basis of accounting and for August 13, 1996 and prior periods are
presented on the Pre-Acquisition basis of accounting.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

The purchase price was allocated to the three companies purchased
- - BT Variable, DSI, and Golden American. The allocation of the
purchase price to Golden American was approximately $139.9
million. Goodwill of $41.1 million was established for the excess
of the acquisition cost over the fair value of the assets and
liabilities and attributed to Golden American. At June 30, 1997,
goodwill was increased by $1.8 million due to the adjustment of
the value of a receivable existing at the acquisition date. Before
the ING merger, goodwill resulting from the acquisition was being
amortized over 25 years on a straight-line basis.

The following analysis combines Post-Merger and Post-Acquisition
activity for 1997.

PREMIUMS

</TABLE>

For the Companies' variable contracts, premiums collected are not
reported as revenues, but are reported as deposits to insurance
liabilities. Revenues for these products are recognized over time
in the form of investment income and product charges.
Variable annuity separate account premiums increased 419.7% in
1998 primarily due to increased sales of the Premium Plus product
introduced in October of 1997 and the increased sales levels of
the Companies' other products. The fixed account portion of the
Companies' variable annuity premiums increased 85.1% in 1998.

Variable life premiums decreased 11.4% in 1998. Total premiums
increased 238.7% in 1998.

During 1998, the Companies' sales were further diversified among
broker/dealers. Premiums, net of reinsurance, for variable
products from two significant broker/dealers having at least ten
percent of total sales for the year ended December 31, 1998
totaled $580.7 million, or 27% of premiums ($328.2 million, or 53%
from two significant broker/dealers for the year ended December
31, 1997).

REVENUES

</TABLE>

Total revenues increased 72.3%, or $38.0 million, to $90.5 million
in 1998. Annuity and interest sensitive life product charges
increased 76.8%, or $17.0 million, to $39.1 million in 1998 due to
additional fees earned from the increasing block of business under
management in the separate accounts and an increase in surrender
charge revenues. This increase was partially offset by the
elimination of the unearned revenue reserve related to in force
acquired business at the merger date, which resulted in lower
annuity and interest sensitive life product charges compared to
Post-Acquisition levels.

Golden American provides certain managerial and supervisory
services to DSI. The fee paid to Golden American for these
services, which is calculated as a percentage of average assets in
the variable separate accounts, was $4.8 million for 1998 and $2.8
million for 1997.

Net investment income increased 58.6%, or $15.7 million, to $42.5
million in 1998 from $26.8 million in 1997 due to growth in
invested assets. During 1998, the Company had net realized losses
on investments of $1.5 million, which includes a $1.0 million
write down of two impaired bonds, compared to gains of $0.1
million in 1997. Other income increased $4.9 million to $5.6
million in 1998 due primarily to income received under a modified
coinsurance agreement with an unaffiliated reinsurer as a result
of increased sales.

EXPENSES

<TABLE>
POST-MERGER COMBINED POST-MERGER | POST-ACQUISITION
For the Period | For the Period
For the Year For the Year October 25, 1997 | January 1, 1997
ended ended through | through
December 31, 1998 December 31, 1997 December 31, 1997 | October 24, 1997
----------------- ----------------- ----------------- | ----------------
(Dollars in millions) |
<S> <C> <C> <C> | <C>
Insurance benefits |
and expenses: |
Annuity and interest |
sensitive life |
benefits: |
Interest credited to |
account balances.. $94.9 $26.7 $7.4 | $19.3
Benefit claims |
incurred in excess |
of account |
balances.......... 2.1 0.1 -- | 0.1
Underwriting, |
acquisition, and |
insurance expense: |
Commission.......... 121.2 36.3 9.4 | 26.9
General Expenses.... 37.6 17.3 3.4 | 13.9
Insurance taxes..... 4.1 2.3 0.5 | 1.8
Policy acquisition |
costs deferred (197.8) (42.7) (13.7) | (29.0)
Amortization: |
Deferred policy |
acquisition |
costs........... 5.1 2.6 0.9 | 1.7
Value of purchased |
insurance in |
force........... 4.7 6.1 0.9 | 5.2
Goodwill............ 3.8 2.0 0.6 | 1.4
------ ----- ----- | -----
$ 75.7 $50.7 $ 9.4 | $41.3
====== ===== ===== | =====

</TABLE>

Total insurance benefits and expenses increased 49.2%, or $25.0
million, in 1998 from $50.7 million in 1997. Interest credited to
account balances increased 255.4%, or $68.2 million, in 1998 from
$26.7 in 1997. The extra credit bonus on the Premium Plus product
introduced in October of 1997 generated a $51.6 million increase
in interest credited during 1998 compared to 1997. The remaining
increase in interest credited relates to higher account balances
associated with the Companies' fixed account option within its
variable products.

Commissions increased 234.2%, or $84.9 million, in 1998 from $36.3
million in 1997. Insurance taxes increased 77.0%, or $1.8 million,
in 1998 from $2.3 million in 1997. Changes in commissions and
insurance taxes are generally related to changes in the level of
variable product sales. Insurance taxes are impacted by several
other factors, which include an increase in FICA taxes primarily
due to bonuses. Most costs incurred as the result of new sales
including the extra credit bonus have been deferred, thus having
very little impact on current earnings.

General expenses increased 117.7%, or $20.3 million, in 1998 from
$17.3 million in 1997. Management expects general expenses to
continue to increase in 1999 as a result of the emphasis on
expanding the salaried wholesaler distribution network. The
Companies use a network of wholesalers to distribute products and
the salaries of these wholesalers are included in general
expenses. The portion of these salaries and related expenses that
varies with production levels is deferred thus having little
impact on current earnings. The increase in general expenses was
partially offset by reimbursements received from Equitable Life,
an affiliate, for certain advisory, computer and other resources
and services provided by Golden American.

At the merger date, the Companies' deferred policy acquisition
costs ("DPAC"), previous balance of value of purchased insurance
in force ("VPIF") and unearned revenue reserve were eliminated and
a new asset of $44.3 million representing VPIF was established for
all policies in force at the merger date. During 1998,

VPIF was adjusted to reduce amortization by $0.2 million to reflect
changes in the assumptions related to the timing of future gross
profits. VPIF decreased $2.6 million in the second quarter of 1998
to adjust the value of other receivables recorded at the time of
merger and increased $0.2 million in the first quarter of 1998 as
the result of an adjustment to the merger costs. The amortization
of VPIF and DPAC increased $1.1 million, or 13.0%, in 1998. During
the second quarter of 1997, VPIF was adjusted by $2.3 million to
reflect narrower spreads than the gross profit model assumed.
Based on current conditions and assumptions as to the impact of
future events on acquired policies in force, the expected
approximate net amortization relating to VPIF as of December 31,
1998 is $4.3 million in 1999, $4.0 million in 2000, $3.9 million
in 2001, $3.7 million in 2002 and $3.3 million in 2003. Actual
amortization may vary based upon changes in assumptions and
experience.

Amortization of goodwill for the year ended December 31, 1998
totaled $3.8 million compared to $2.0 million for the year ended
December 31, 1997. Goodwill resulting from the merger is being
amortized on a straight-line basis over 40 years.

Interest expense on the $25 million surplus note issued December
1996 and expiring December 2026 was $2.1 million for the year
ended December 31, 1998, unchanged from the same period of 1997.
In addition, Golden American incurred interest expense of $0.2
million in 1998 compared to $0.5 million in 1997 on the line of
credit with Equitable which was repaid with a capital
contribution. Golden American also paid $1.8 million in 1998 to
ING America Insurance Holdings, Inc. ("ING AIH") for interest on
the reciprocal loan agreement. Interest expense on the revolving
note payable with SunTrust Bank, Atlanta was $0.3 million for the
year ended December 31, 1998.

INCOME. Net income for 1998 was $5.1 million, an increase of $4.8
million from $0.3 million in 1997.
Comprehensive income for 1998 was $3.9 million, an increase of
$1.8 million from $2.1 million in 1997.

1997 COMPARED TO 1996

The following analysis combines Post-Merger and Post-Acquisition
activity for 1997 and Post-Acquisition and Pre-Acquisition
activity for 1996 for comparison purposes. Such a comparison does
not recognize the impact of the purchase accounting and goodwill
amortization except for the periods after August 13, 1996.

PREMIUMS

<TABLE>

</TABLE>

<TABLE>

</TABLE>

Variable annuity separate account and variable life premiums
increased 59.6% and 10.1%, respectively in 1997. During 1997,
stock market returns, a relatively low interest rate environment
and flat yield curve have made returns provided by variable
annuities and mutual funds more attractive than fixed rate
products such as certificates of deposits and fixed annuities. The
fixed account portion of Golden American's variable annuity
premiums increased 29.7% in 1997 due to Golden American's
marketing emphasis on fixed rates during the second and third
quarters. Premiums, net of reinsurance, for variable products
from two significant broker/dealers having at least ten percent of
total sales for the year ended December 31, 1997, totaled $328.2
million, or 53% of premiums ($298.0 million or 67% from two
significant broker/dealers for the year ended December 31, 1996).

REVENUES

<TABLE>

<TABLE>
POST-ACQUISITION | COMBINED | PRE-ACQUISITION
-------------------|-------------------|-----------------
For the Period | | For the Period
August 14, 1996 | For the Year | January 1, 1996
through | ended | through
December 31, 1996 | December 31, 1996 | August 13, 1996
-------------------|-------------------|-----------------
(Dollars in millions)
<S> <C> | <C> | <C>
Annuity and interest sensitive | |
life product charges......... $ 8.8 | $21.0 | $12.2
Management fee revenue......... 0.9 | 2.3 | 1.4
Net investment income.......... 5.8 | 10.8 | 5.0
Realized gains (losses) on | |
investments.................. -- | (0.4) | (0.4)
Other income 0.5 | 0.6 | 0.1
----- | ----- | -----
$16.0 | $34.3 | $18.3
===== | ===== | =====

</TABLE>

Total revenues increased 53.3%, or $18.2 million, to $52.5 million
in 1997. Annuity and interest sensitive life product charges
increased 5.2%, or $1.1 million in 1997 due to additional fees
earned from the increasing block of business under management in
the Separate Accounts and an increase in the collection of
surrender charges.

Golden American provides certain managerial and supervisory
services to DSI. This fee, calculated as a percentage of average
assets in the variable separate accounts, was $2.8 million for
1997 and $2.3 million for 1996.

Net investment income increased 148.3%, or $16.0 million, to $26.8
million in 1997 from $10.8 million in 1996 due to growth in
invested assets. During 1997, the Company had net realized gains
on the disposal of investments, which were the result of voluntary
sales, of $0.1 million compared to net realized losses of $0.4
million in 1996.

EXPENSES

<TABLE>

POST-MERGER | COMBINED | POST-ACQUISITION
-------------------|-------------------|-----------------
For the Period | | For the Period
October 25, 1997 | For the Year | January 1, 1997
through | ended | through
December 31, 1997 | December 31, 1997 | October 24, 1997
-------------------|-------------------|-----------------
(Dollars in millions)
<S> <C> | <C> | <C>
Insurance benefits and | |
expenses: | |
Annuity and interest | |
sensitive life benefits: | |
Interest credited to account | |
balances................... $ 7.4 | $ 26.7 | $ 19.3
Benefit claims incurred in | |
excess of account balances. -- | 0.1 | 0.1
Underwriting, acquisition and | |
insurance expenses: | |
Commissions.................. 9.4 | 36.3 | 26.9
General expenses............. 3.4 | 17.3 | 13.9
Insurance taxes.............. 0.5 | 2.3 | 1.8
Policy acquisition costs | |
deferred................... (13.7) | (42.7) | (29.0)
Amortization: | |
Deferred policy acquisition | |
costs...................... 0.9 | 2.6 | 1.7
Present value of in force | |
acquired................... 0.9 | 6.1 | 5.2
Goodwill..................... 0.6 | 2.0 | 1.4
------ | ------ | ------
$ 9.4 | $ 50.7 | $ 41.3
====== | ====== | ======

</TABLE>

<TABLE>

POST-ACQUISITION | COMBINED | PRE-ACQUISITION
-------------------|-------------------|-----------------
For the Period | | For the Period
August 14, 1996 | For the Year | January 1, 1996
through | ended | through
December 31, 1996 | December 31, 1996 | August 13, 1996
-------------------|-------------------|-----------------
(Dollars in millions)
<S> <C> | <C> | <C>
Insurance benefits and | |
expenses: | |
Annuity and interest sensitive | |
life benefits: | |
Interest credited to account | |
balances.................. $ 5.7 | $ 10.1 | $ 4.4
Benefit claims incurred in | |
excess of account | |
balances.................. 1.3 | 2.2 | 0.9
Underwriting, acquisition and | |
insurance expenses: | |
Commissions................. 9.9 | 26.5 | 16.6
General expenses............ 5.9 | 15.3 | 9.4
Insurance taxes............. 0.7 | 1.9 | 1.2
Policy acquisition costs.... | |
deferred (11.7) | (31.0) | (19.3)
Amortization: | |
Deferred policy acquisition | |
costs..................... 0.2 | 2.6 | 2.4
Present value of in force | |
acquired.................. 2.7 | 3.7 | 1.0
Goodwill.................... 0.6 | 0.6 | --
------ | ------ | ------
$ 15.3 | $ 31.9 | $ 16.6
====== | ====== | ======

</TABLE>

Total insurance benefits and expenses increased 59.3%, or $18.8
million, in 1997 from $31.9 million in 1996. Interest credited to
account balances increased 164.4%, or $16.6 million, in 1997 as a
result of higher account balances associated with the Company's
fixed account option within its variable products.

Commissions increased 37.3%, or $9.8 million, in 1997 from $26.5
million in 1996. Insurance taxes increased 23.3%, or $0.4
million, in 1997 from $1.9 million in 1996. Increases and
decreases in commissions and insurance taxes are generally related
to changes in the level of variable product sales. Insurance taxes
are also impacted by several other factors which include an
increase in FICA taxes primarily due to bonuses and an increase in
state licenses and fees. Most costs incurred as the result of new
sales have been deferred, thus having very little impact on
earnings.

General expenses increased 12.6%, or $2.0 million, in 1997 from
$15.3 million in 1996 due in part to certain expenses associated
with the merger occurring on October 24, 1997. In addition, the
Company uses a network of wholesalers to distribute its products
and the salaries of these wholesalers are included in general
expenses. The portion of these salaries and related expenses
which vary with sales production levels are deferred, thus having
little impact on earnings. This increase in general expenses was
partially offset by reimbursements received from Equitable Life,
an affiliate, for certain advisory, computer and other resources
and services provided by Golden American. Management expects
general expenses to continue to increase in 1998 as a result of
the emphasis on expanding the salaried wholesaler distribution
network.

During the second quarter of 1997, present value of in force
acquired ("PVIF") was unlocked by $2.3 million to reflect narrower
current spreads than the gross profit model assumed. The
Company's deferred policy acquisition costs ("DPAC"), previous
balance of PVIF and unearned revenue reserve, as of the merger
date, were eliminated and an asset of $44.3 million representing
PVIF was established for all policies in force at the merger date.
The amortization of PVIF and DPAC increased $2.4 million, or
37.1%, in 1997. Based on current conditions and assumptions as to
the impact of future events on acquired policies in force, the
expected approximate net amortization for the next five years,
relating to the PVIF as of December 31, 1997, is $6.2 million in
1998, $6.0 million in 1999, $5.6 million in 2000, $5.0 million in
2001 and $4.2 million in 2002. Certain expense estimates inherent
in the cost of the merger

may change resulting in changes of the
allocation of the purchase price. If changes occur, the impact
could result in changes to PVIF and the related amortization and
deferred taxes. Actual amortization may vary based upon changes in
assumptions and experience. The elimination of the unearned
revenue reserve related to in force acquired at the
merger/acquisition dates will result in lower annuity and interest
sensitive life product charges compared to pre-merger/pre-
acquisition levels.

Amortization of goodwill for the year ended December 31, 1997
totaled $2.0 million compared to $0.6 million for the year ended
December 31, 1996. Goodwill resulting from the merger is being
amortized on a straight-line basis over 40 years and is expected
to total approximately $3.8 million annually.

Interest expense on the $25 million surplus note issued December
1996 was $2.0 million for the year ended December 31, 1997.
Interest on any line of credit borrowings was charged at the rate
of Equitable's monthly average aggregate cost of short-term funds
plus 1.00%. During 1997, the Company paid $0.6 million to
Equitable for interest on the line of credit.

NET INCOME. Net income on a combined basis for 1997 was $0.3
million, a decrease of $3.2 million, or 91.4%, from 1996.

FINANCIAL CONDITION

RATINGS. During 1998, the Companies' ratings were upgraded by
Standard & Poor's Rating Services ("Standard & Poor's") from AA to
AA+. During the first quarter of 1999, the Companies' ratings were
upgraded by Duff & Phelps Credit Rating Company from AA+ to AAA.

INVESTMENTS. The financial statement carrying value and amortized
cost basis of the Companies' total investments increased 72.3% and
72.6%, respectively, in 1998. All of the Companies' investments,
other than mortgage loans, are carried at fair value in the
Companies' financial statements. As such, growth in the carrying
value of the Companies' investment portfolio included changes in
unrealized appreciation and depreciation of fixed maturities as
well as growth in the cost basis of these securities. Growth in
the cost basis of the Companies' investment portfolio resulted
from the investment of premiums from the sale of the Companies'
fixed account option. The Companies manage the growth of insurance
operations in order to maintain adequate capital ratios. To
support the fixed account option of the Companies' variable
insurance products, cash flow was invested primarily in fixed
maturities, short-term investments and mortgage loans.

At December 31, 1998, the Companies had no investment in default.
At December 31, 1998, the Companies' investment portfolio had a
yield of 6.4%. The Companies estimate the total investment
portfolio, excluding policy loans, had a fair value approximately
equal to 100.2% of its amortized cost value for accounting
purposes at December 31, 1998.

Fixed Maturities: At December 31, 1998, the Companies had fixed
maturities with an amortized cost of $739.8 million and an
estimated fair value of $742.0 million. The individual securities
in the Companies' fixed maturities portfolio (at amortized cost)
include investment grade securities, which include securities
issued by the U.S. government, its agencies and corporations that
are rated at least A- by Standard & Poor's ($477.4 million or
64.5%), that are rated BBB+ to BBB- by Standard & Poor's ($124.0
million or 16.8%) and below investment grade securities which are
securities issued by corporations that are rated BB+ to B- by
Standard & Poor's ($51.6 million or 7.0%). Securities not rated by
Standard & Poor's had a National Association of Insurance
Commissioners ("NAIC") rating of 1, 2 or 3 ($86.8 million or
11.7%). The Companies' fixed maturity investment portfolio had a
combined yield at amortized cost of 6.5% at December 31, 1998.

The Companies classify 100% of securities as available for sale.
Net unrealized appreciation of fixed maturities of $2.2 million
was comprised of gross appreciation of $6.7 million and gross
depreciation of $4.5 million. Net unrealized holding gains on
these securities, net of adjustments to VPIF, DPAC and deferred
income taxes of $1.0 million was included in stockholder's equity
at December 31, 1998.

At December 31, 1998, the amortized cost value of the Companies'
total investment in below investment grade securities, excluding
mortgage-backed securities, was $52.7 million, or 5.9%, of the
Companies' investment portfolio. The Companies intend to purchase
additional below investment grade securities but do not expect the
percentage of the portfolio invested in such securities to exceed
10% of the investment portfolio. At December 31, 1998, the yield
at amortized cost on the Companies' below investment grade
portfolio was 7.9% compared to 6.4% for the Companies' investment
grade corporate bond portfolio. The Companies estimate the fair
value of the below investment grade portfolio was $51.7 million,
or 98.1% of amortized cost value, at December 31, 1998.

Below investment grade securities have different characteristics
than investment grade corporate debt securities. Risk of loss upon
default by the borrower is significantly greater with respect to
below investment grade securities than with other corporate debt
securities. Below investment grade securities are generally
unsecured and are often subordinated to other creditors of the
issuer. Also, issuers of below investment grade securities usually
have higher levels of debt and are more sensitive to adverse
economic conditions, such as a recession or increasing interest
rates, than are investment grade issuers. The Companies attempt to
reduce the overall risk in the below investment grade portfolio,
as in all investments, through careful credit analysis, strict
investment policy guidelines, and diversification by company and
by industry.

The Companies analyze the investment portfolio, including below
investment grade securities, at least quarterly in order to
determine if the Companies' ability to realize the carrying value
on any investment has been impaired. For debt and equity
securities, if impairment in value is determined to be other than
temporary (i.e. if it is probable the Companies will be unable to
collect all amounts due according to the contractual terms of the
security), the cost basis of the impaired security is written down
to fair value, which becomes the new cost basis. The amount of the
write-down is included in earnings as a realized loss. Future
events may occur, or additional or updated information may be
received, which may necessitate future write-downs of securities
in the Companies' portfolio. Significant write-downs in the
carrying value of investments could materially adversely affect
the Companies' net income in future periods.

In 1998, fixed maturities designated as available for sale with a
combined amortized cost of $145.3 million were called or repaid by
their issuers. In total, net pre-tax losses from sales, calls and
repayments of fixed maturity investments amounted to $0.5 million
in 1998.

During the fourth quarter of 1998, Golden American determined that
the carrying value of two of its bonds exceeded their estimated
net realizable value. As a result, Golden American recognized a
total pre-tax loss of approximately $1.0 million to reduce the
carrying value of the bonds to their combined net realizable value
of $2.9 million.

Equity Securities: Equity securities represent 1.6% of the
Companies' investment portfolio. At December 31, 1998, the
Companies owned equity securities with a cost of $14.4 million and
an estimated fair value of $11.5 million. Net unrealized
depreciation of equity securities was comprised entirely of gross
depreciation of $2.9 million. Equity securities are primarily
comprised of the Companies' investment in shares of the mutual
funds underlying the Companies' registered separate accounts.

Mortgage Loans: Mortgage loans represent 10.9% of the Companies'
investment portfolio. Mortgages outstanding were $97.3 million at
December 31, 1998 with an estimated fair value of $99.8 million.
The Companies' mortgage loan portfolio includes 57 loans with an
average size of $1.7 million and average seasoning of 0.9 years if
weighted by the number of loans. The Companies' mortgage loans are
typically secured by occupied buildings in major metropolitan
locations and not speculative developments and are diversified by
type of property and geographic location. Mortgage loans on real
estate have been analyzed by geographical location with
concentrations by state identified as California (12% in 1998 and
1997), Utah (11% in 1998, 13% in 1997) and Georgia (10% in 1998,
11% in 1997). There are no other concentrations of mortgage loans
in any state exceeding ten percent at December 31, 1998 and 1997.
Mortgage loans on real estate have also been analyzed by
collateral type with significant concentrations

identified in office buildings (36% in 1998, 43% in 1997), industrial
buildings (32% in 1998, 33% in 1997) and retail facilities (20% in
1998, 15% in 1997). At December 31, 1998, the yield on the Companies'
mortgage loan portfolio was 7.3%.

At December 31, 1998, no mortgage loan was delinquent by 90 days
or more. The Companies' loan investment strategy is consistent
with other life insurance subsidiaries of EIC. The insurance
subsidiaries have experienced a historically low default rate in
their mortgage loan portfolios.

OTHER ASSETS. Accrued investment income increased $3.2 million
during 1998 due to an increase in the overall size of the
portfolio resulting from the investment of premiums allocated to
the fixed account option of the Companies' variable products.

DPAC represents certain deferred costs of acquiring insurance
business, principally first year commissions and interest bonuses,
extra credit bonuses and other expenses related to the production
of new business after the merger. The Companies' DPAC and previous
balance of VPIF were eliminated as of the merger date, and an
asset representing VPIF was established for all policies in force
at the merger date. VPIF is amortized into income in proportion to
the expected gross profits of in force acquired business in a
manner similar to DPAC amortization. Any expenses which vary
directly with the sales of the Companies' products are deferred
and amortized. At December 31, 1998, the Companies had DPAC and
VPIF balances of $205.0 million and $36.0 million, respectively.
VPIF decreased $2.6 million in the second quarter of 1998 for an
adjustment to the value of other receivables recorded at the time
of the merger and increased $0.2 million in the first quarter of
1998 for an adjustment made to the merger costs.

Property and equipment increased $5.8 million during 1998, due to
installation of a new policy administration system, introduction
of an imaging system as well as the growth in the business.

Goodwill totaling $151.1 million, representing the excess of the
acquisition cost over the fair value of net assets acquired, was
established at the merger date. Accumulated amortization of
goodwill through December 31, 1998 was $4.4 million.

Other assets increased $5.5 million during 1998 due mainly to an
increase in amounts due from an unaffiliated reinsurer under a
modified coinsurance agreement.

At December 31, 1998, the Companies had $3.4 billion of separate
account assets compared to $1.6 billion at December 31, 1997. The
increase in separate account assets resulted from market
appreciation and growth in sales of the Companies' variable
annuity products, net of redemptions.

At December 31, 1998, the Companies had total assets of $4.8
billion, an increase of 94.3% over total assets at December 31,
1997.

LIABILITIES. In conjunction with the volume of variable annuity
sales, the Companies' total liabilities increased $2.2 billion, or
98.2%, during 1998 and totaled $4.4 billion at December 31, 1998.
Future policy benefits for annuity and interest sensitive life
products increased $375.8 million, or 74.4%, to $881.1 million
reflecting premium growth in the Companies' fixed account option
of its variable products. Market appreciation and premium growth,
net of redemptions, accounted for the $1.7 billion, or 106.3%,
increase in separate account liabilities to $3.4 billion at
December 31, 1998.

On December 30, 1998, Golden American issued a $60 million, 7.25%
surplus note to Equitable Life which matures on December 29, 2028.

On December 17, 1996, Golden American issued a $25 million, 8.25%
surplus note to Equitable which matures on December 17, 2026. As a
result of the Merger Agreement, the surplus note is now payable to
EIC.

Golden American maintained a line of credit agreement with
Equitable to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under the agreement,
which became

effective December 1, 1996 and expired on December
31, 1997, Golden American could borrow up to $25 million. At
December 31, 1997, $24.1 million was outstanding under this
agreement. The outstanding balance was repaid by a capital
contribution.

Other liabilities increased $15.3 million from $17.3 million at
December 31, 1997, due primarily to increases in accounts payable,
outstanding checks, guaranty fund assessment liability and pension
liability.

The effects of inflation and changing prices on the Companies'
financial position are not material since insurance assets and
liabilities are both primarily monetary and remain in balance. An
effect of inflation, which has been low in recent years, is a
decline in purchasing power when monetary assets exceed monetary
liabilities.

STOCKHOLDER'S EQUITY. Additional paid-in capital increased $122.6
million, or 54.5%, from December 31, 1997 to $347.6 million at
December 31, 1998 primarily due to capital contributions from the
Parent.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of the Companies to generate sufficient
cash flows to meet the cash requirements of their operating,
investing and financing activities. The Companies' principal
sources of cash are variable annuity premiums and product charges,
investment income, maturing investments, proceeds from debt
issuance and capital contributions made by the Parent. Primary
uses of these funds are payments of commissions and operating
expenses, interest and extra premium credits, investment
purchases, repayment of debt, as well as withdrawals and
surrenders.

Net cash used in operating activities was $63.9 million in 1998
compared to $4.8 million in 1997. Annually, the Companies have
predominantly had negative cash flows from operating activities
since Golden American started issuing variable insurance products
in 1989. These negative operating cash flows result primarily from
the funding of commissions and other deferrable expenses related
to the continued growth in the variable annuity product line of
Golden American. The 1998 increase in net cash used in operating
activities resulted principally from the introduction of Golden
American's extra premium credit product in October 1997. In 1998,
$54.4 million in extra premium credits was added to contract
holders' account values versus $2.8 million in 1997.

Net cash used in investing activities was $390.0 million during
1998 as compared to $198.5 million in 1997. This increase is
primarily due to greater net purchases of fixed maturities
resulting from an increase in funds available from net fixed
account deposits. Net purchases of fixed maturities reached $331.3
million in 1998 versus $135.3 million in 1997. Net purchases of
mortgage loans on real estate, on the other hand, declined to
$12.6 million from $51.2 million in the prior year. In 1998, net
purchases of short-term investments were unusually high due to the
investment of the remaining proceeds of Golden American's $60.0
million surplus note issued on December 30, 1998.

Net cash provided by financing activities was $439.5 million
during 1998 as compared to $218.6 million during the prior year.
In 1998, net cash provided by financing activities was positively
impacted by net fixed account deposits of $520.8 million compared
to $303.6 million in 1997. This increase was partially offset by
net reallocations to the Companies' separate accounts, which
increased to $239.7 million from $110.1 million during the prior
year. In 1998, other important sources of cash provided by
financing activities were $98.4 million of capital contributions
from the Parent and $60.0 million of proceeds from the issuance of
a surplus note on December 30, 1998. The Companies have used part
of the proceeds of the surplus note to repay outstanding short-
term debt.

The Companies' liquidity position is managed by maintaining
adequate levels of liquid assets, such as cash or cash equivalents
and short-term investments. Additional sources of liquidity
include borrowing facilities to meet short-term cash requirements.
Golden American maintains a $65.0 million reciprocal loan
agreement with ING AIH and the Companies have established an $85.0
million revolving note

facility with SunTrust Bank, Atlanta.
Management believes that these sources of liquidity are adequate
to meet the Companies' short-term cash obligations.

Based on current trends, the Companies expect to continue to use
net cash in operating activities, given the continued growth of
the variable annuity product line. It is anticipated that a
continuation of capital contributions from the Parent and the
issuance of additional surplus notes will cover these net cash
outflows. It is ING's policy to ensure that adequate capital and
surplus is provided for the Companies and additional funds will be
contributed to the Companies in 1999.

During the first quarter of 1999, Golden American's operations
were moved to a new site in West Chester, Pennsylvania. Golden
American currently occupies 65,000 square feet of leased space and
has made commitments for an additional 60,000 square feet to be
added during 1999 to be occupied by itself and its affiliates.
Previously, Golden American's home office operations were housed
in leased locations in Wilmington, Delaware and various locations
in Pennsylvania, which are being leased on a short-term basis for
use in the transition to the new office building. Golden
American's New York subsidiary is housed in leased space in New
York, New York. The Companies intend to spend approximately $7.0
million on capital needs for 1999.

The ability of Golden American to pay dividends to its Parent is
restricted. Prior approval of insurance regulatory authorities is
required for payment of dividends to the stockholder which exceed
an annual limit. During 1999, Golden American cannot pay dividends
to its Parent without prior approval of statutory authorities.

Under the provisions of the insurance laws of the State of New
York, First Golden cannot distribute any dividends to its
stockholder unless a notice of its intent to declare a dividend
and the amount of the dividend has been filed at least thirty days
in advance of the proposed declaration. If the Superintendent
finds the financial condition of First Golden does not warrant the
distribution, the Superintendent may disapprove the distribution
by giving written notice to First Golden within thirty days after
the filing. The management of First Golden does not anticipate
paying any dividends to Golden American during 1999.

The NAIC's risk-based capital requirements require insurance
companies to calculate and report information under a risk-based
capital formula. These requirements are intended to allow
insurance regulators to monitor the capitalization of insurance
companies based upon the type and mixture of risks inherent in a
company's operations. The formula includes components for asset
risk, liability risk, interest rate exposure and other factors.
The Companies have complied with the NAIC's risk-based capital
reporting requirements. Amounts reported indicate that the
Companies have total adjusted capital well above all required
capital levels.

Reinsurance: At December 31, 1998, Golden American had
reinsurance treaties with four unaffiliated reinsurers and one
affiliated reinsurer covering a significant portion of the
mortality risks under its variable contracts. Golden American
remains liable to the extent its reinsurers do not meet their
obligations under the reinsurance agreements.

Year 2000 Readiness Disclosure: Based on and in conjunction with
a 1997 study and an ongoing analysis of computer software and
hardware, the Companies have assessed their exposure to the Year
2000 change of the century date issue. Some of the Companies'
computer programs were originally written using two digits rather
than four to define a particular year. As a result, these computer
programs contain "time sensitive" software that may recognize "00"
as the year 1900 rather than the year 2000, which could cause
system failure or miscalculations resulting in disruptions to
operations. These disruptions could include, but are not limited
to, a temporary inability to process transactions. To a lesser
extent, the Companies depend on various non-information technology
systems, which could also fail or misfunction as a result of the
Year 2000.

The Companies have developed a plan to address the Year 2000 issue
in a timely manner. The following schedule details the plan's
phases, progress towards completion and actual or estimated
completion dates:

<TABLE>
% Complete as of Actual/Estimated
Phases March 15, 1999 Completion Dates
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assessment and Development of the steps to be taken
- --------------------------
to address Year 2000 systems issues.................. 100% 12/31/1997
Remediation of business critical systems to address
- -----------
Year 2000 issues..................................... 100% 2/28/1999
Remediation of non-critical systems to address
- -----------
Year 2000 issues..................................... 76-99% 6/01/1999
Testing of business critical systems.................. 100% 3/05/1999
- -------
Testing of non-critical systems and integrated testing
- -------
of hardware and infrastructure....................... 25-50% 6/15/1999
Point-to-Point Testing of external interfaces with
- ----------------------
third party computer systems that communicate
with the Companies' systems.......................... 50-75% 4/30/1999
Implementation of tested business critical software
- --------------
addressing Year 2000 systems issues.................. 100% 3/05/1999
Implementation of tested non-critical software
- --------------
addressing Year 2000 systems issues.................. 25-50% 6/30/1999
Contingency Plan...................................... 76-99% 6/01/1999
- ----------------
</TABLE>

The Companies' operations could be adversely affected if
significant customers, suppliers and other third parties,
including underlying mutual funds, would be unable to transact
business in the Year 2000 and thereafter as a result of the Year
2000 issue. To mitigate the effect of outside influences and other
dependencies relative to the Year 2000, the Companies have
identified and contacted these third parties to obtain assurances
that necessary steps are being taken to prepare for the Year 2000.
The Companies will continue these communications and establish
compliance checkpoints through the Year 2000 transition.

Management believes the Companies' systems are or will be
substantially compliant by Year 2000. Golden American has charged
to expense approximately $335,000 during 1998 for the Year 2000
project. The Companies anticipate charging to expense an
additional $200,000 to $300,000 in 1999 which includes upgrade and
internal resources costs.

Despite the Companies' efforts to modify or replace "time
sensitive" computer and information systems, the Companies could
experience a disruption to their operations as a result of the
Year 2000. The Companies are currently developing a contingency
plan to address the content of third party compliance statements
and any systems that may malfunction despite the testing being
performed. The contingency plan is anticipated to be completed by
June 1, 1999.

The Year 2000 project costs and completion dates are based on
management's best estimates. These estimates were derived using
numerous assumptions of future events, including the continued
availability of resources, third party Year 2000 compliance and
other factors. There is no guarantee these estimates will be
achieved and actual results could materially differ from those
anticipated. Specific factors that might cause such material
differences include, but are not limited to, the availability and
cost of trained personnel, the ability to locate and correct all
relevant computer codes and other uncertainties.

It is the Companies' intention to make every reasonable effort to
achieve business continuity through appropriate planning, testing
and establishing contingency scenarios; however, the Companies do
not make any representations because of many unknown factors
beyond the control of the Companies.

MARKET RISK AND RISK MANAGEMENT

Asset/liability management is integrated into many aspects of the
Companies' operations, including investment decisions, product
development and crediting rates determination. As part of the risk
management process, different economic scenarios are modeled,
including cash flow testing required for insurance regulatory
purposes, to determine that existing assets are adequate to meet
projected liability cash flows. Key variables include
contractholder behavior and the variable separate accounts'
performance.

Contractholders bear the majority of the investment risks related
to the variable products. Therefore, the risks associated with the
investments supporting the variable separate accounts are assumed
by contractholders, not by the Companies (subject to, among other
things, certain minimum guarantees). The Companies' products also
provide certain minimum death benefits that depend on the
performance of the variable separate accounts. Currently the
majority of death benefit risks are reinsured, which protects the
Companies from adverse mortality experience and prolonged capital
market decline.

A surrender, partial withdrawal, transfer or annuitization made
prior to the end of a guarantee period from the fixed account may
be subject to a market value adjustment. As the majority of the
liabilities in the fixed account are subject to market value
adjustment, the Companies do not face a material amount of market
risk volatility. The fixed account liabilities are supported by a
portfolio principally composed of fixed rate investments that can
generate predictable, steady rates of return. The portfolio
management strategy for the fixed account considers the assets
available for sale. This enables the Companies to respond to
changes in market interest rates, changes in prepayment risk,
changes in relative values of asset sectors and individual
securities and loans, changes in credit quality outlook and other
relevant factors. The objective of portfolio management is to
maximize returns, taking into account interest rate and credit
risks as well as other risks. The Companies' asset/liability
management discipline includes strategies to minimize exposure to
loss as interest rates and economic and market conditions change.

On the basis of these analyses, management believes there is no
material solvency risk to the Companies. With respect to a 10%
drop in equity values from year-end 1998 levels, variable separate
account funds, which represent 80% of the in force, pass the risk
in underlying fund performance to the contract holder (except for
certain minimum guarantees that are mostly reinsured). With
respect to interest rate movements up or down 100 basis points
from year-end 1998 levels, the remaining 20% of the in force are
fixed account funds and almost all of these have market value
adjustments which provide significant protection against changes
in interest rates.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Any forward-looking statement contained herein or in any other
oral or written statement by the Companies or any of their
officers, directors or employees is qualified by the fact that
actual results of the Companies may differ materially from such
statement, among other risks and uncertainties inherent in the
Companies' business, due to the following important factors:

1. Prevailing interest rate levels and stock market performance,
which may affect the ability of the Companies to sell their
products, the market value and liquidity of the Companies'
investments and the lapse rate of the Companies' policies,
notwithstanding product design features intended to enhance
persistency of the Companies' products.

2. Changes in the federal income tax laws and regulations which
may affect the relative tax advantages of the Companies'
products.

3. Changes in the regulation of financial services, including
bank sales and underwriting of insurance

products, which may affect the competitive environment for the
Companies' products.

4. Increasing competition in the sale of the Companies' products.

5. Other factors that could affect the performance of the
Companies, including, but not limited to, market conduct
claims, litigation, insurance industry insolvencies,
availability of competitive reinsurance on new business,
investment performance of the underlying portfolios of the
variable products, variable product design and sales volume by
significant sellers of the Companies' variable products.

6. To the extent third parties are unable to transact business in
the Year 2000 and thereafter, the Companies' operations could
be adversely affected.

OTHER INFORMATION

SEGMENT INFORMATION. During the period since the acquisition by
Bankers Trust, September 30, 1992 to date of this Prospectus,
Golden American's operations consisted of one business segment,
the sale of annuity and life insurance products. Golden American
and its affiliate DSI are party to in excess of 140 sales
agreements with broker-dealers, three of whom, Locust Street
Securities, Inc., Vestax Securities Corporation, and Multi-
Financial Securities Corporation, are affiliates of Golden
American. Two broker-dealers produce 10% or more of Golden
American's product sales.

REINSURANCE. Golden American reinsures its mortality risk
associated with the Contract's guaranteed death benefit with one
or more appropriately licensed insurance companies. Golden
American also, effective June 1, 1994, entered into a reinsurance
agreement on a modified coinsurance basis with an affiliate of a
broker-dealer which distributes Golden American's products with
respect to 25% of the business produced by that broker-dealer.

RESERVES. In accordance with the life insurance laws and
regulations under which Golden American operates, it is obligated
to carry on its books, as liabilities, actuarially determined
reserves to meet its obligations on outstanding Contracts.
Reserves, based on valuation mortality tables in general use in
the United States, where applicable, are computed to equal amounts
which, together with interest on such reserves computed annually
at certain assumed rates, make adequate provision according to
presently accepted actuarial standards of practice, for the
anticipated cash flows required by the contractual obligations and
related expenses of Golden American.

COMPETITION. Golden American is engaged in a business that is
highly competitive because of the large number of stock and mutual
life insurance companies and other entities marketing insurance
products comparable to those of Golden American. There are
approximately 2,350 stock, mutual and other types of insurers in
the life insurance business in the United States, a substantial
number of which are significantly larger than Golden American.

SERVICE AGREEMENTS. Beginning in 1994 and continuing until August
13, 1996, Bankers Trust (Delaware), a subsidiary of Bankers Trust
New York Corporation ("BT New York Corporation"), and Golden
American became parties to a service agreement pursuant to which
Bankers Trust (Delaware) agreed to provide certain accounting,
actuarial, tax, underwriting, sales, management and other services
to Golden American. Expenses incurred by Bankers Trust (Delaware)
in relation to this service agreement were reimbursed by Golden
American on an allocated cost basis. Charges billed to Golden
American by Bankers Trust (Delaware) pursuant to the service
agreement for 1996 through its termination as of August 13, 1996
and 1995 were $0.5 million and $0.8 million, respectively.

Pursuant to a service agreement between Golden American and
Equitable Life, Equitable Life provides certain administrative,
financial and other services to Golden American. Equitable Life
billed Golden American and its subsidiary First Golden American
Life Insurance Company of New York ("First Golden"), $1.1 million
in 1998 under this service agreement.

Golden American provides to DSI certain of its personnel to
perform management, administrative and clerical services and the
use of certain facilities. Golden American charges DSI for such
expenses and all other general and administrative costs, first on
the basis of direct charges when identifiable, and the remainder
allocated based on the estimated amount of time spent by Golden
American's employees on behalf of DSI. In the opinion of
management, this method of cost allocation is reasonable. In
1995, the service agreement between DSI and Golden American was
amended to provide for a management fee from DSI to Golden
American for managerial and supervisory services provided by
Golden American. This fee, calculated as a percentage of average
assets in the variable separate accounts, was $4.8 million, $2.8
million and $2.3 million for the years of 1998, 1997 and 1996,
respectively.

Since January 1, 1998, Golden American and First Golden have had
an asset management agreement with ING Investment Management LLC
("ING IM"), an affiliate, in which ING IM provides asset
management services for a fee, payable quarterly. For the year
ended December 31, 1998, Golden American and First Golden incurred
fees of $1.5 million under this agreement. Prior to 1998, Golden
American and First Golden had a service agreement with Equitable
Investment Services, Inc. ("EISI"), an affiliate, in which EISI
provided investment management services. Golden American and First
Golden paid fees of $1.0 million for 1997 and $72,000 for the
period from August 14, 1996 through December 31, 1996,
respectively.

Since 1997, Golden American has provided certain advisory,
computer and other resources and services to Equitable Life. Fees
for these services totaled $5.8 million for 1998 and $4.3 million
for 1997.

DISTRIBUTION AGREEMENT. Under a distribution agreement, DSI acts
as the principal underwriter (as defined in the Securities Act of
1933 and the Investment Company Act of 1940, as amended) of the
variable insurance products issued by Golden American which as of
December 31, 1998, are sold primarily through two broker/dealer
institutions. For the years 1998, 1997 and 1996, commissions paid
by Golden American to DSI aggregated $117.5 million, $36.4 million
and $27.1 million, respectively.

EMPLOYEES. Golden American, as a result of its Service Agreement
with Bankers Trust (Delaware) and EIC Variable, had very few
direct employees. Instead, various management services were
provided by Bankers Trust (Delaware), EIC Variable and Bankers
Trust New York Corporation, as described above under "Service
Agreement." The cost of these services were allocated to Golden
American. Since August 14, 1996, Golden American has hired
individuals to perform various management services and has looked
to Equitable of Iowa and its affiliates for certain other
management services.

Certain officers of Golden American are also officers of DSI, and
their salaries are allocated among both companies. Certain
officers of Golden American are also officers of other Equitable
of Iowa subsidiaries. See "Directors and Executive Officers."

PROPERTIES. Golden American's principal office is located at 1475
Dunwoody Drive, West Chester, Pennsylvania 19380, where all of
Golden American's records are maintained. This office space is
leased.

STATE REGULATION. Golden American is subject to the laws of the
State of Delaware governing insurance companies and to the
regulations of the Delaware Insurance Department (the "Insurance
Department"). A detailed financial statement in the prescribed
form (the "Annual Statement") is filed with the Insurance
Department each year covering Golden American's operations for the
preceding year and its financial condition as of the end of that
year. Regulation by the Insurance Department includes periodic
examination to determine contract liabilities and reserves so that
the Insurance Department may certify that these items are correct.
Golden American's books and accounts are subject to review by the
Insurance Department at all times. A full examination of Golden
American's operations is conducted periodically by the Insurance
Department and under the auspices of the NAIC.

In addition, Golden American is subject to regulation under the
insurance laws of all jurisdictions in which it operates. The
laws of the various jurisdictions establish supervisory agencies
with broad administrative powers with respect to various matters,
including licensing to transact business, overseeing trade
practices, licensing agents, approving contract forms,
establishing reserve

requirements, fixing maximum interest rates
on life insurance contract loans and minimum rates for
accumulation of surrender values, prescribing the form and content
of required financial statements and regulating the type and
amounts of investments permitted. Golden American is required to
file the Annual Statement with supervisory agencies in each of the
jurisdictions in which it does business, and its operations and
accounts are subject to examination by these agencies at regular
intervals.

The NAIC has adopted several regulatory initiatives designed to
improve the surveillance and financial analysis regarding the
solvency of insurance companies in general. These initiatives
include the development and implementation of a risk-based capital
formula for determining adequate levels of capital and surplus.
Insurance companies are required to calculate their risk-based
capital in accordance with this formula and to include the results
in their Annual Statement. It is anticipated that these standards
will have no significant effect upon Golden American. For
additional information about the Risk-Based Capital adequacy
monitoring system and Golden American, see "Management's
Discussion and Analysis Results of Operations"

In addition, many states regulate affiliated groups of insurers,
such as Golden American, and its affiliates, under insurance
holding company legislation. Under such laws, inter-company
transfers of assets and dividend payments from insurance
subsidiaries may be subject to prior notice or approval, depending
on the size of the transfers and payments in relation to the
financial positions of the companies involved.

Under insurance guaranty fund laws in most states, insurers doing
business therein can be assessed (up to prescribed limits) for
contract owner losses incurred by other insurance companies which
have become insolvent. Most of these laws provide that an
assessment may be excused or deferred if it would threaten an
insurer's own financial strength. For information regarding
Golden American's estimated liability for future guaranty fund
assessments, see Note 11 of Notes to Financial Statements.

Although the federal government generally does not directly
regulate the business of insurance, federal initiatives often have
an impact on the business in a variety of ways. Certain insurance
products of Golden American are subject to various federal
securities laws and regulations. In addition, current and
proposed federal measures which may significantly affect the
insurance business include regulation of insurance company
solvency, employee benefit regulation, removal of barriers
preventing banks from engaging in the insurance business, tax law
changes affecting the taxation of insurance companies and the tax
treatment of insurance products and its impact on the relative
desirability of various personal investment vehicles.

DIRECTORS AND OFFICERS
NAME (AGE) POSITION(S) WITH THE COMPANY
- ---------- ----------------------------
Barnett Chernow (49) President and Director
Myles R. Tashman (56) Director, Executive Vice President,
General Counsel and Secretary
R. Brock Armstrong (52) Director
Michael W. Cunningham (50) Director
Linda B. Emory (60) Director
Phillip R. Lowery (46) Director
James R. McInnis (51) Executive Vice President
Stephen J. Preston (41) Executive Vice President and Chief
Actuary
E. Robert Koster (40) Senior Vice President and Chief Financial
Officer
Patricia M. Corbett (34) Treasurer
David L. Jacobson (49) Senior Vice President and Assistant
Secretary
William B. Lowe (35) Senior Vice President
Ronald R. Blasdell (45) Senior Vice President
Steven G. Mandel (39) Senior Vice President

Each director is elected to serve for one year or until the next
annual meeting of shareholders or until his or her successor is
elected. Some directors are directors of insurance company
subsidiaries of Golden American's parent, Equitable of Iowa. The
principal positions of Golden American's directors and senior
executive officers for the past five years are listed below:

Mr. Barnett Chernow became President and Director of Golden
American Life Insurance Company ("Golden American") and President
of First Golden American Life Insurance Company of New York
("First Golden") in April 1998. From 1993 to 1998, Mr. Chernow
served as Executive Vice President of Golden American. He was
elected to serve as Executive Vice President and Director of First
Golden in September 1996.

Mr. Myles R. Tashman joined Golden American in August 1994 as
Senior Vice President and was named Executive Vice President,
General Counsel and Secretary effective January 1, 1996. He was
elected to serve as a Director of Golden American in January 1998.
He also serves as a Director, Executive Vice President, General
Counsel and Secretary of First Golden.

Mr. R. Brock Armstrong was appointed to serve as President and
Chairman of The GCG Trust in February 1999. He was also elected
to serve as Director of Golden American Life Insurance Company
Director and President of Equitable Life Insurance Company of Iowa
in April 1999. He has served as Director and Chairman of the
Board of First Golden American Life Insurance Company of New York
since December 1998, and as Group Executive of ING Group since
October 1998. Mr. Armstrong was Senior Vice President, The
Prudential Insurance Company of America, April 1997 to October
1998; Executive Vice President, London Insurance Group, August
1994 to April 1997; and President and Chief Financial Officer of
Security First Group, August 1991 to August 1994.

Mr. Michael W. Cunningham became a Director of Golden American and
First Golden in April 1999. Also, he has served as a Director of
Life of Georgia and Security Life of Denver since 1995.
Currently, he serves as Executive Vice President and Chief
Financial Officer of ING North America Insurance Corporation, and
has worked for them since 1991.

Ms. Linda B. Emory became a Director of Golden American in April
1999. Since September 1995, she has served as a Director for Life
Insurance Company of Georgia, Southland Life Insurance Company,
Security Life of Denver, Midwestern United Life Insurance Company,
First ING of New York and Columbine Insurance Company. Also, she
is an Executive Vice President of ING North America Insurance
Corporation.

Mr. Phillip R. Lowery became a Director of Golden American in
April 1999. He has served as Executive Vice President and Chief
Actuary for ING FSI North America since 1990.

Mr. James R. McInnis joined Golden American in December, 1997 as
Executive Vice President. From 1982 through November 1997, he held
several positions with the Endeavor Group and was President upon
his departure.

Mr. E. Robert Koster was elected Senior Vice President and Chief
Financial Officer of Golden American in September 1998. From
August, 1984 to September, 1998 he has held various positions with
ING companies in The Netherlands.

Ms. Patricia M. Corbett was elected Treasurer of Golden American
in December 1998. She joined Equitable Life Insurance Company of
Iowa in 1987 and is currently Treasurer and Assistant Vice
President of Equitable Life and USG Annuity & Life Company.

Mr. David L. Jacobson joined Golden American in November 1993 as
Senior Vice President and Assistant Secretary.

Mr. Stephen J. Preston joined Golden American in December, 1993 as
Senior Vice President, Chief Actuary and Controller. He became an
Executive Vice President and Chief Actuary in June 1998.

Mr. William B. Lowe joined Equitable Life as Vice President, Sales
& Marketing in January 1994. He became a Senior Vice President,
Sales & Marketing, of Golden American in August 1997. He was also
President of Equitable of Iowa Securities Network, Inc. until
October 1998.

Mr. Steven G. Mandel joined Golden American in October 1988 and
became a Senior Vice President in June 1998.

Mr. Ronald R. Blasdell joined Golden American in February 1994 and
became a Senior Vice President in June 1998.

COMPENSATION TABLES AND OTHER INFORMATION

The following sets forth information with respect to the Chief
Executive Officer of Golden American as well as the annual salary
and bonus for the next five highly compensated executive officers
for the fiscal year ended December 31, 1998. Certain executive
officers of Golden American are also officers of DSI. The salaries
of such individuals are allocated between Golden American and DSI.
Executive officers of Golden American are also officers of DSI.
The salaries of such individuals are allocated between Golden
American and DSI pursuant to an arrangement among these companies.
Throughout 1995 and until August 13, 1996, Terry L. Kendall served
as a Managing Director at Bankers Trust New York Corporation.
Compensation amounts for Terry L. Kendall which are reflected
throughout these tables prior to August 14, 1996 were not charged
to Golden American, but were instead absorbed by Bankers Trust New
York Corporation.

EXECUTIVE COMPENSATION TABLE

The following table sets forth information with respect to the
annual salary and bonus for Golden American's Chief Executive
Officers and the five other most highly compensated executive
officers for the fiscal year ended December 31, 1998.

<TABLE>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION
------------------- ------------------------ ------------
RESTRICTED SECURITIES
NAME AND STOCK AWARDS UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) OPTIONS(3)
- ------------------ ---- ------ -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Barnett Chernow, 1998 $284,171 $105,375 8,000
President 1997 $234,167 $ 31,859 $277,576 4,000
1996 $207,526 $150,000 $ 7,755(4)

James R. McInnis, 1998 $250,004 $626,245 2,000
Executive Vice
President

Keith Glover, 1998 $250,000 $145,120 3,900
Executive Vice
President

Myles R. Tashman, 1998 $189,337 $ 54,425 3,500
Executive Vice 1997 $181,417 $ 25,000 $165,512 5,000
President, 1996 $176,138 $ 90,000 $ 5,127(4)
General Counsel
and Secretary

Stephen J. Preston, 1998 $173,870 $ 32,152 3,500
Executive Vice 1997 $160,758 $ 16,470
President 1996 $156,937 $ 58,326
and Chief Actuary

</TABLE>

<TABLE>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION
------------------- ------------------------ ------------
RESTRICTED SECURITIES
NAME AND STOCK AWARDS UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) OPTIONS(3)
- ------------------ ---- ------ -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Paul R. Schlaack, 1998 $406,730 $210,600
Former Chairman 1997 $351,000 $249,185 $1,274,518 19,000 $15,000
and Vice President 1996 $327,875 $249,185 $ 245,875 19,000 $15,000
Terry L. Kendall, 1998 $145,237 $181,417
Former President 1997 $362,833 $ 80,365 $ 644,844 16,000
and CEO 1996 $288,298 $400,000 $11,535(4)

</TABLE>

(1) The amount shown relates to bonuses paid in 1998, 1997
and 1996.
(2) Restricted stock awards granted to executive officers
vested on October 24, 1997 with the change in control of
Equitable of Iowa.
(3) Awards comprised of qualified and non-qualified stock
options. All options were granted with an exercise price equal
to the then fair market value of the underlying stock. All
options vested with the change in control of Equitable of Iowa
and were cashed out for the difference between $68.00 and the
exercise price.
(4) In 1996, Contributions were made by the Company on behalf
of the employee to PartnerShare, the deferred compensation
plan sponsored by Bankers Trust New York Corporation and its
affiliates for the benefit of all Bankers Trust employees, in
February of 1996 to employees on record as of December 31,
1996, after an employee completed one year of service with the
company. This contribution could be in the form of deferred
compensation and/or a cash payment. In 1996, Mr. Kendall
received $9,000 of deferred compensation and $2,535 of cash
payment from the plan; Mr. Chernow received $6,000 of
deferred compensation and $1,755 of cash payment from the
plan; Mr. Tashman received $4,000 of deferred compensation and
$1,127 of cash payment from the plan.

OPTION GRANTS IN LAST FISCAL YEAR (1998)

<TABLE> POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION
UNDERLYING EMPLOYEES EXERCISE TERM (3)
OPTIONS IN FISCAL OR BASE EXPIRATION ------------------
NAME GRANTED(1) YEAR PRICE (2) DATE 5% 10%
- ---- ---------- ----- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Barnett Chernow 8,000 11.99 $60.518 5/26/2003 $164,016 $362,433
James R. McInnis 2,000 3.00 $60.518 5/26/2003 $ 41,004 $ 90,608
Keith Glover 3,900 5.85 $60.518 5/26/2003 $ 79,958 $176,686
Myles R. Tashman 3,500 5.25 $60.518 5/26/2003 $ 71,758 $158,564
Stephen J. Preston 3,500 5.25 $60.518 5/26/2003 $ 71,758 $158,564

</TABLE>

(1) Stock appreciation rights granted on May 26, 1198 to the
officers of Golden American have a three-year vesting period
and an expiration date as shown.
(2) The base price was equal to the fair market value of
ING's stock on on the date of grant.
(3) Total dollar gains based on indicated rates of
appreciation of share price over a the five year term of the
rights.

Directors of Golden American receive no additional compensation
for serving as a director.

[Shaded Section Header]
- --------------------------------------------------------------------------
FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholder
Golden American Life Insurance Company

We have audited the accompanying consolidated balance sheets of
Golden American Life Insurance Company as of December 31, 1998 and
1997, and the related consolidated statements of operations,
changes in stockholder's equity, and cash flows for the year ended
December 31, 1998 and for the periods from October 25, 1997
through December 31, 1997, January 1, 1997 through October 24,
1997, August 14, 1996 through December 31, 1996 and January 1,
1996 through August 13, 1996. 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. 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 consolidated financial
position of Golden American Life Insurance Company at December 31,
1998 and 1997, and the consolidated results of its operations and
its cash flows for the year ended December 31, 1998 and for the
periods from October 25, 1997 through December 31, 1997, January
1, 1997 through October 24, 1997, August 14, 1996 through December
31, 1996 and January 1, 1996 through August 13, 1996 in conformity
with generally accepted accounting principles.

/S/Ernst & Young LLP

Des Moines, Iowa
February 12, 1999

GOLDEN AMERICAN LIFE INSURANCE
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

<TABLE>
POST-MERGER
------------------------------------
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for
sale, at fair value (cost:
1998 - $739,772; 1997 -
$413,288)...................... $ 741,985 $ 414,401
Equity securities, at fair value
(cost: 1998 - $14,437; 1997 -
$4,437)........................ 11,514 3,904
Mortgage loans on real estate.... 97,322 85,093
Policy loans..................... 11,772 8,832
Short-term investments........... 41,152 14,460
---------- ----------
Total investments.................. 903,745 526,690
Cash and cash equivalents.......... 6,679 21,039
Due from affiliates................ 2,983 827
Accrued investment income.......... 9,645 6,423
Deferred policy acquisition costs.. 204,979 12,752
Value of purchased insurance in
force............................ 35,977 43,174
Current income taxes recoverable... 628 272
Deferred income tax asset.......... 31,477 36,230
Property and equipment, less
allowances for depreciation
of $801 in 1998 and $97 in 1997.. 7,348 1,567
Goodwill, less accumulated
amortization of $4,408 in 1998
and $630 in 1997................. 146,719 150,497
Other assets....................... 6,239 755
Separate account assets............ 3,396,114 1,646,169
---------- ----------
Total assets....................... $4,752,533 $2,446,395
========== ==========

</TABLE>

See accompanying notes.

GOLDEN AMERICAN LIFE INSURANCE
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

<TABLE>
POST-MERGER
------------------------------------
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities and accruals:
Future policy benefits:
Annuity and interest sensitive life
products......................... $ 881,112 $ 505,304
Unearned revenue reserve........... 3,840 1,189
Other policy claims and benefits... -- 10
---------- ----------
884,952 506,503

Line of credit with affiliate....... -- 24,059
Surplus notes....................... 85,000 25,000
Due to affiliates................... -- 80
Other liabilities................... 32,573 17,271
Separate account liabilities........ 3,396,114 1,646,169
---------- ----------
4,398,639 2,219,082

Commitments and contingencies

Stockholder's equity:
Common stock, par value $10 per share,
authorized,issued and outstanding
250,000 shares................... 2,500 2,500
Additional paid-in capital......... 347,640 224,997
Accumulated other comprehensive
income (loss).................... (895) 241
Retained earnings (deficit)........ 4,649 (425)
---------- ----------
Total stockholder's equity.......... 353,894 227,313
Total liabilities and stockholder's
equity............................ $4,752,533 $2,446,395
========== ==========

</TABLE>

See accompanying notes.

GOLDEN AMERICAN LIFE INSURANCE
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)

<TABLE>

POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION
------------------------------------ | ----------------------------------- | ---------------
For the period | For the period For the period | For the period
For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996
ended through | through through | through
December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996
----------------- ----------------- | ---------------- ----------------- | ---------------
<S> <C> <C> | <C> <C> | <C>
REVENUES: | |
Annuity and interest sensitive | |
life product charges........ $ 39,119 $ 3,834 | $ 18,288 $ 8,768 | $12,259
Management fee revenue....... 4,771 508 | 2,262 877 | 1,390
Net investment income........ 42,485 5,127 | 21,656 5,795 | 4,990
Realized gains (losses) on | |
investments................. (1,491) 15 | 151 42 | (420)
Other income................. 5,569 236 | 426 486 | 70
--------- -------- | -------- ------- | -------
90,453 9,720 | 42,783 15,968 | 18,289
| |
| |
INSURANCE BENEFITS AND EXPENSES: | |
Annuity and interest sensitive | |
life benefits: | |
Interest credited to account | |
balances..................... 94,845 7,413 | 19,276 5,741 | 4,355
Benefit claims incurred in | |
excess of account balances... 2,123 -- | 125 1,262 | 915
Underwriting, acquisition | |
and insurance expenses: | |
Commissions.................. 121,171 9,437 | 26,818 9,866 | 16,549
General expenses............. 37,577 3,350 | 13,907 5,906 | 9,422
Insurance taxes.............. 4,140 450 | 1,889 672 | 1,225
Policy acquisition costs | |
deferred................... (197,796) (13,678) | (29,003) (11,712) | (19,300)
Amortization: | |
Deferred policy acquisition | |
costs..................... 5,148 892 | 1,674 244 | 2,436
Value of purchased insurance | |
in force.................. 4,724 948 | 5,225 2,745 | 951
Goodwill..................... 3,778 630 | 1,398 589 | --
--------- --------- | -------- ------ | -------
75,710 9,442 | 41,309 15,313 | 16,553
| |
Interest expense............... 4,390 557 | 2,082 85 | --
--------- --------- | -------- ------ | -------
80,100 9,999 | 43,391 15,398 | 16,553
--------- --------- | -------- ------ | -------
Income (loss) before income | |
taxes........................ 10,353 (279) | (608) 570 | 1,736
| |
Income taxes................... 5,279 146 | (1,337) 220 | (1,463)
--------- --------- | -------- ------ | -------
Net income (loss).............. $ 5,074 $ (425) | $ 729 $ 350 | $ 3,199
========= ========= | ======== ======= | ========

</TABLE>

See accompanying notes.

GOLDEN AMERICAN LIFE INSURANCE
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(Dollars in thousands)

<TABLE>

Accumulated
Redeemable Additional Other Retained Total
Common Preferred Paid-in Comprehensive Earnings Stockholder's
Stock Stock Capital Income (Loss) (Deficit) Equity
------------------------------------------------------------------------------
PRE-ACQUISITION
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996........ $2,500 $50,000 $ 45,030 $ 658 $ (63) $ 98,125
Comprehensive income:
Net income...................... -- -- -- -- 3,199 3,199
Change in net unrealized
investment gains (losses)..... -- -- -- (1,175) -- (1,175)
Comprehensive income............. 2,024
Preferred stock dividends........ -- -- -- -- (719) (719)
------ ------- -------- ------- ------ ---------
Balance at August 13, 1996........ $2,500 $50,000 $ 45,030 $ (517) $2,417 $ 99,430
====== ======= ======== ======== ====== =========
</TABLE>

<TABLE>
------------------------------------------------------------------------------
POST-ACQUISITION
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at August 14, 1996........ $2,500 $50,000 $ 87,372 -- -- $139,872
Comprehensive income:
Net income...................... -- -- -- -- $ 350 350
Change in net unrealized
investment gains (losses)...... -- -- -- $ 262 -- 262
Comprehensive income............. 612
Contribution of preferred stock
to additional paid-in capital... -- (50,000) 50,000 -- -- --
------ ------- -------- ------- ------ --------
Balance at December 31, 1996...... 2,500 -- 137,372 262 350 140,484
Comprehensive income:
Net income...................... -- -- -- -- 729 729
Change in net unrealized
investment gains (losses)...... -- -- -- 1,543 -- 1,543
Comprehensive income............. 2,272
Contribution of capital.......... -- -- 1,121 -- -- 1,121
------ ------- -------- ------- ------ --------
Balance at October 24, 1997 $2,500 -- $138,493 $1,805 $1,079 $143,877
====== ======= ======== ====== ====== ========
</TABLE>

<TABLE>
------------------------------------------------------------------------------
POST-MERGER
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 25, 1997....... $2,500 -- $224,997 -- -- $227,497
Comprehensive income loss:
Net loss....................... -- -- -- -- $ (425) (425)
Change in net unrealized
investment gains (losses)...... -- -- -- $ 241 -- 241
Comprehensive loss............... (184)
------ ------- -------- ------- ------ --------
Balance at December 31, 1997...... 2,500 -- 224,997 241 (425) 227,313
Comprehensive income:
Net income...................... -- -- -- -- 5,074 5,074
Change in net unrealized
investment gains (losses)...... -- -- -- (1,136) -- (1,136)
Comprehensive income............. 3,938
Contribution of capital.......... -- -- 122,500 -- -- 122,500
Other............................ -- -- 143 -- -- 143
------ ------- -------- ------- ------ --------
Balance at December 31, 1998...... $2,500 -- $347,640 $ (895) $4,649 $353,894
====== ======= ======== ======= ====== ========
</TABLE>

See accompanying notes.

GOLDEN AMERICAN LIFE INSURANCE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

<TABLE>

POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION
------------------------------------ | ----------------------------------- | ---------------
For the period | For the period For the period | For the period
For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996
ended through | through through | through
December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996
----------------- ----------------- | ---------------- ----------------- | ---------------
<S> <C> <C> | <C> <C> | <C>
OPERATING ACTIVITIES | |
Net income (loss)............ $ 5,074 $ (425) | $ 729 $ 350 | $ 3,199
Adjustments to reconcile net | |
income (loss) to net cash | |
provided by (used in) | |
operations: | |
Adjustments related to annuity | |
and interest sensitive life | |
products: | |
Interest credited and other | |
charges on interest | |
sensitive products........ 94,690 7,361 | 19,177 5,106 | 4,472
Change in unearned | |
revenues.................. 2,651 1,189 | 3,292 2,063 | 2,084
Decrease (increase) in | |
accrued investment income.. (3,222) 1,205 | (3,489) (877) | (2,494)
Policy acquisition costs | |
deferred................... (197,796) (13,678) | (29,003) (11,712) | (19,300)
Amortization of deferred | |
policy acquisition costs... 5,148 892 | 1,674 244 | 2,436
Amortization of value of | |
purchased insurance in | |
force...................... 4,724 948 | 5,225 2,745 | 951
Change in other assets, | |
other liabilities and | |
accrued income taxes....... 9,891 4,205 | (8,944) (96) | 4,672
Provision for depreciation | |
and amortization........... 8,147 1,299 | 3,203 1,242 | 703
Provision for deferred | |
income taxes............... 5,279 146 | 316 220 | (1,463)
Realized (gains) losses on | |
investments................ 1,491 (15) | (151) (42) | 420
--------- -------- | -------- -------- | ---------
Net cash provided by (used | |
in)operating activities..... (63,923) 3,127 | (7,971) (757) | (4,320)
| |
INVESTING ACTIVITIES | |
Sale, maturity or repayment | |
of investments: | |
Fixed maturities - available | |
for sale 145,253 9,871 | 39,622 47,453 | 55,091
Mortgage loans on real | |
estate..................... 3,791 1,644 | 5,828 40 | --
Short-term investments-net.. -- -- | 11,415 2,629 | 354
--------- -------- | -------- -------- | ---------
149,044 11,515 | 56,865 50,122 | 55,445
Acquisition of investments: | |
Fixed maturities - available | |
for sale................... (476,523) (29,596) | (155,173) (147,170) | (184,589)
Equity securities........... (10,000) (1) | (4,865) (5) | --
Mortgage loans on real | |
estate..................... (16,390) (14,209) | (44,481) (31,499) | --
Policy loans - net.......... (2,940) (328) | (3,870) (637) | (1,977)
Short-term investments-net.. (26,692) (13,244) | -- -- | --
--------- -------- | -------- -------- | ---------
(532,545) (57,378) | (208,389) (179,311) | (186,566)
Purchase of property and | |
equipment................... (6,485) (252) | (875) (137) | --
--------- -------- | -------- -------- | ---------
Net cash used in investing | |
activities.................. (389,986) (46,115) | (152,399) (129,326) | (131,121)

</TABLE>
See accompanying notes.

GOLDEN AMERICAN LIFE INSURANCE
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in thousands)

<TABLE>

POST-MERGER | POST-ACQUISITION | PRE-ACQUISITION
------------------------------------ | ----------------------------------- | ---------------
For the period | For the period For the period | For the period
For the year October 25,1997 | January 1,1997 August 14, 1996 | January 1, 1996
ended through | through through | through
December 31, 1998 December 31, 1997 | October 24, 1997 December 31, 1996 | August 13, 1996
----------------- ----------------- | ---------------- ----------------- | ---------------
<S> <C> <C> | <C> <C> | <C>
FINANCING ACTIVITIES | |
Proceeds from issuance of | |
surplus note................ $ 60,000 -- | -- $ 25,000 | --
Proceeds from reciprocal loan | |
agreement borrowings........ 500,722 -- | -- -- | --
Repayment of reciprocal loan | |
agreement borrowings........ (500,722) -- | -- -- | --
Proceeds from revolving | |
note payable................ 108,495 -- | -- -- | --
Repayment of revolving note | |
payable..................... (108,495) -- | -- -- | --
Proceeds from line of credit | |
borrowings.................. -- $10,119 | $ 97,124 -- | --
Repayment of line of credit | |
borrowings................... -- (2,207) | (80,977) -- | --
Receipts from annuity and | |
interest sensitive life | |
policies credited to | |
account balances............ 593,428 62,306 | 261,549 116,819 | $149,750
Return of account balances | |
on annuity and interest | |
sensitive life policies..... (72,649) (6,350) | (13,931) (3,315) | (2,695)
Net reallocations to Separate | |
Accounts (239,671) (17,017) | (93,069) (10,237) | (8,286)
Contributions of capital by | |
parent...................... 98,441 -- | 1,011 -- | --
Dividends paid on preferred | |
stock....................... -- -- | -- -- | (719)
Net cash provided by | |
financing activities........ 439,549 46,851 | 171,707 128,267 | 138,050
| |
Increase (decrease) in cash | |
and cash equivalents........ (14,360) 3,863 | 11,337 (1,816) | 2,609
Cash and cash equivalents at | |
beginning of period......... 21,039 17,176 | 5,839 7,655 | 5,046
Cash and cash equivalents at | |
end of period............... $ 6,679 $21,039 | $ 17,176 $ 5,839 | $ 7,655
| |
SUPPLEMENTAL DISCLOSURE | |
OF CASH FLOW INFORMATION | |
Cash paid during the period | |
for: | |
Interest.................... $ 4,305 $ 295 | $ 1,912 -- | --
Income taxes................ 99 -- | 283 -- | --
Non-cash financing activities: | |
Non-cash adjustment to | |
additional paid-in capital | |
for adjusted merger costs.. 143 -- | -- -- | --
Contribution of property and | |
equipment from EIC Variable, | |
Inc. net of $353 of | |
accumulated depreciation... -- -- | 110 -- | --
Contribution of capital from | |
parent to repay line of | |
credit borrowings.......... 24,059 -- | -- -- | --

</TABLE>

See accompanying notes.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include Golden American Life
Insurance Company ("Golden American") and its wholly owned
subsidiary, First Golden American Life Insurance Company of New
York ("First Golden," and with Golden American, collectively, the
"Companies"). All significant intercompany accounts and
transactions have been eliminated.

ORGANIZATION

Golden American, a wholly owned subsidiary of Equitable of Iowa
Companies, Inc., offers variable insurance products and is
licensed as a life insurance company in the District of Columbia
and all states except New York. On January 2, 1997 and December
23, 1997, First Golden became licensed to sell insurance products
in New York and Delaware, respectively. The Companies' products
are marketed by broker/dealers, financial institutions and
insurance agents. The Companies' primary customers are consumers
and corporations.

On October 24, 1997, PFHI Holding, Inc. ("PFHI"), a Delaware
corporation, acquired all of the outstanding capital stock of
Equitable of Iowa Companies ("Equitable") according to the terms
of an Agreement and Plan of Merger ("Merger Agreement") dated July
7, 1997 among Equitable, PFHI and ING Groep N.V. ("ING"). PFHI is
a wholly owned subsidiary of ING, a global financial services
holding company based in The Netherlands. As a result of this
transaction, Equitable was merged into PFHI, which was
simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or
the "Parent"), a Delaware corporation. See Note 6 for additional
information regarding the merger.

On August 13, 1996, Equitable acquired all of the outstanding
capital stock of BT Variable, Inc. (subsequently known as EIC
Variable, Inc.) and its wholly owned subsidiaries, Golden American
and Directed Services, Inc. ("DSI") from Whitewood Properties
Corporation ("Whitewood"). See Note 7 for additional information
regarding the acquisition.

For financial statement purposes, the ING merger was accounted for
as a purchase effective October 25, 1997 and the change in control
of Golden American through the acquisition of BT Variable, Inc.
was accounted for as a purchase effective August 14, 1996. The
merger and acquisition resulted in new bases of accounting
reflecting estimated fair values of assets and liabilities at
their respective dates. As a result, the Companies' financial
statements for the periods after October 24, 1997 are presented on
the Post-Merger new basis of accounting, for the period August 14,
1996 through October 24, 1997 are presented on the Post-
Acquisition basis of accounting, and for August 13, 1996 and prior
periods are presented on the Pre-Acquisition basis of accounting.

INVESTMENTS

Fixed Maturities: The Companies account for their investments
under the Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity
Securities," which requires fixed maturities to be designated as
either "available for sale," "held for investment" or "trading."
Sales of fixed maturities designated as "available for sale" are
not restricted by SFAS No. 115. Available for sale securities are
reported at fair value and unrealized gains and losses on these
securities are included directly in stockholder's equity, after
adjustment for related changes in value

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

of purchased insurance in
force ("VPIF"), deferred policy acquisition costs ("DPAC") and
deferred income taxes. At December 31, 1998 and 1997, all of the
Companies' fixed maturities are designated as available
for sale, although the Companies are not precluded from
designating fixed maturities as held for investment or trading at
some future date.

Securities determined to have a decline in value that is other
than temporary are written down to estimated fair value, which
becomes the new cost basis by a charge to realized losses in the
Companies' Statements of Operations. Premiums and discounts are
amortized/accrued utilizing a method which results in a constant
yield over the securities' expected lives. Amortization/accrual of
premiums and discounts on mortgage and other asset-backed
securities incorporates a prepayment assumption to estimate the
securities' expected lives.

Equity Securities: Equity securities are reported at estimated
fair value if readily marketable. The change in unrealized
appreciation and depreciation of marketable equity securities (net
of related deferred income taxes, if any) is included directly in
stockholder's equity. Equity securities determined to have a
decline in value that is other than temporary are written down to
estimated fair value, which then becomes the new cost basis by a
charge to realized losses in the Companies' Statements of
Operations.

Mortgage Loans: Mortgage loans on real estate are reported at cost
adjusted for amortization of premiums and accrual of discounts. If
the value of any mortgage loan is determined to be impaired (i.e.,
when it is probable the Companies will be unable to collect all
amounts due according to the contractual terms of the loan
agreement), the carrying value of the mortgage loan is reduced to
the present value of expected future cash flows from the loan
discounted at the loan's effective interest rate, or to the loan's
observable market price, or the fair value of the underlying
collateral. The carrying value of impaired loans is reduced by the
establishment of a valuation allowance which is adjusted at each
reporting date for significant changes in the calculated value of
the loan. Changes in this valuation allowance are charged or
credited to income.

Other Investments: Policy loans are reported at unpaid principal.
Short-term investments are reported at cost, adjusted for
amortization of premiums and accrual of discounts.

Realized Gains and Losses: Realized gains and losses are
determined on the basis of specific identification and average
cost methods for manager initiated and issuer initiated disposals,
respectively.

Fair Values: Estimated fair values, as reported herein, of
conventional mortgage-backed securities not actively traded in a
liquid market and publicly traded fixed maturities are estimated
using a third party pricing system. This pricing system uses a
matrix calculation assuming a spread over U.S. Treasury bonds
based upon the expected average lives of the securities. Fair
values of private placement bonds are estimated using a matrix
that assumes a spread (based on interest rates and a risk
assessment of the bonds) over U.S. Treasury bonds. Estimated fair
values of equity securities which consist of the Companies'
investment in its registered separate accounts are based upon the
quoted fair value of the securities comprising the individual
portfolios underlying the separate accounts.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

CASH AND CASH EQUIVALENTS

For purposes of the accompanying Statements of Cash Flows, the
Companies consider all demand deposits and interest-bearing
accounts not related to the investment function to be cash
equivalents. All interest-bearing accounts classified as cash
equivalents have original maturities of three months or less.

DEFERRED POLICY ACQUISITION COSTS

Certain costs of acquiring new insurance business, principally
first year commissions and interest bonuses, extra credit bonuses
and other expenses related to the production of new business, have
been deferred. Acquisition costs for variable annuity and variable
life products are being amortized generally in proportion to the
present value (using the assumed crediting rate) of expected
future gross profits. This amortization is adjusted
retrospectively when the Companies revise their estimate of
current or future gross profits to be realized from a group of
products. DPAC is adjusted to reflect the pro forma impact of
unrealized gains and losses on fixed maturities the Companies have
designated as "available for sale" under SFAS No. 115.

VALUE OF PURCHASED INSURANCE IN FORCE

As a result of the merger and the acquisition, a portion of the
purchase price related to each transaction was allocated to the
right to receive future cash flows from existing insurance
contracts. This allocated cost represents VPIF which reflects the
value of those purchased policies calculated by discounting
actuarially determined expected future cash flows at the discount
rate determined by the purchaser. Amortization of VPIF is charged
to expense in proportion to expected gross profits of the
underlying business. This amortization is adjusted retrospectively
when the Companies revise the estimate of current or future gross
profits to be realized from the insurance contracts acquired. VPIF
is adjusted to reflect the pro forma impact of unrealized gains
and losses on available for sale fixed maturities. See Notes 6 and
7 for additional information on VPIF resulting from the merger and
acquisition.

PROPERTY AND EQUIPMENT

Property and equipment primarily represent leasehold improvements,
office furniture, certain other equipment and capitalized computer
software and are not considered to be significant to the
Companies' overall operations. Property and equipment are reported
at cost less allowances for depreciation. Depreciation expense is
computed primarily on the basis of the straight-line method over
the estimated useful lives of the assets.

GOODWILL

Goodwill was established as a result of the merger and is being
amortized over 40 years on a straight-line basis. Goodwill
established as a result of the acquisition was being amortized
over 25 years on a straight-line basis. See Notes 6 and 7 for
additional information on the merger and acquisition.

FUTURE POLICY BENEFITS

Future policy benefits for divisions with fixed interest
guarantees of the variable products are established utilizing the
retrospective deposit accounting method. Policy reserves represent
the premiums received plus accumulated interest, less mortality
and administration charges. Interest credited to these policies
ranged from 3.00% to 10.00% during 1998, 3.30% to 8.25% during
1997 and 4.00% to 7.25% during 1996. The unearned revenue reserve
represents unearned distribution fees. These distribution fees
have been deferred and are amortized over the life of the
contracts in proportion to expected gross profits.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

SEPARATE ACCOUNTS

Assets and liabilities of the separate accounts reported in the
accompanying Balance Sheets represent funds separately
administered principally for variable annuity and variable life
contracts. Contractholders, rather than the Companies, bear the
investment risk for the variable products. At the direction of the
contractholders, the separate accounts invest the premiums from
the sale of variable products in shares of specified mutual funds.
The assets and liabilities of the separate accounts are clearly
identified and segregated from other assets and liabilities of the
Companies. The portion of the separate account assets equal to the
reserves and other liabilities of variable annuity and variable
life contracts cannot be charged with liabilities arising out of
any other business the Companies may conduct.

Variable separate account assets are carried at fair value of the
underlying investments and generally represent contractholder
investment values maintained in the accounts. Variable separate
account liabilities represent account balances for the variable
annuity and variable life contracts invested in the separate
accounts; the fair value of these liabilities is equal to their
carrying amount. Net investment income and realized and unrealized
capital gains and losses related to separate account assets are
not reflected in the accompanying Statements of Operations.

Product charges recorded by the Companies from variable products
consist of charges applicable to each contract for mortality and
expense risk, cost of insurance, contract administration and
surrender charges. In addition, some variable annuity and all
variable life contracts provide for a distribution fee collected
for a limited number of years after each premium deposit. Revenue
recognition of collected distribution fees is amortized over the
life of the contract in proportion to its expected gross profits.
The balance of unrecognized revenue related to the distribution
fees is reported as an unearned revenue reserve.

DEFERRED INCOME TAXES

Deferred tax assets or liabilities are computed based on the
difference between the financial statement and income tax bases of
assets and liabilities using the enacted marginal tax rate.
Deferred tax assets or liabilities are adjusted to reflect the pro
forma impact of unrealized gains and losses on equity securities
and fixed maturities the Companies have designated as available
for sale under SFAS No. 115. Changes in deferred tax assets or
liabilities resulting from this SFAS No. 115 adjustment are
charged or credited directly to stockholder's equity. Deferred
income tax expenses or credits reflected in the Companies'
Statements of Operations are based on the changes in the deferred
tax asset or liability from period to period (excluding the SFAS
No. 115 adjustment).

DIVIDEND RESTRICTIONS
Golden American's ability to pay dividends to its Parent is
restricted. Prior approval of insurance regulatory authorities is
required for payment of dividends to the stockholder which exceed
an annual limit. During 1999, Golden American cannot pay dividends
to its Parent without prior approval of statutory authorities.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

SEGMENT REPORTING

As of December 31, 1998, the Companies adopted the SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 superseded SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise." SFAS No. 131
establishes standards for the way public business enterprises
report information about operating segments in annual financial
statements and requires enterprises to report selected information
about operating segments in interim financial reports. SFAS No.
131 also establishes standards for related disclosures about
products and services, geographic areas and major customers.

The Companies manage their business as one segment, the sale of
variable products designed to meet customer needs for tax-
advantaged methods of saving for retirement and protection from
unexpected death. Variable products are sold to consumers and
corporations throughout the United States. The adoption of SFAS
No. 131 did not affect the results of operations or financial
position of the Companies.

USE OF ESTIMATES

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions affecting the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.

Management is required to utilize historical experience and
assumptions about future events and circumstances in order to
develop estimates of material reported amounts and disclosures.
Included among the material (or potentially material) reported
amounts and disclosures that require extensive use of estimates
and assumptions are (1) estimates of fair values of investments in
securities and other financial instruments, as well as fair values
of policyholder liabilities, (2) policyholder liabilities, (3)
deferred policy acquisition costs and value of purchased insurance
in force, (4) fair values of assets and liabilities recorded as a
result of merger and acquisition transactions, (5) asset valuation
allowances, (6) guaranty fund assessment accruals, (7) deferred
tax benefits (liabilities) and (8) estimates for commitments and
contingencies including legal matters, if a liability is
anticipated and can be reasonably estimated. Estimates and
assumptions regarding all of the proceeding are inherently subject
to change and are reassessed periodically. Changes in estimates
and assumptions could materially impact the financial statements.

RECLASSIFICATIONS

Certain amounts in the financial statements for the periods ended
within the years ended December 31, 1997 and 1996 have been
reclassified to conform to the December 31, 1998 financial
statement presentation.

2. BASIS OF FINANCIAL REPORTING

The financial statements of the Companies differ from related
statutory-basis financial statements principally as follows: (1)
acquisition costs of acquiring new business are deferred and
amortized over the life of the policies rather than charged to
operations as incurred; (2) an asset representing the present
value of future cash flows from insurance contracts acquired was
established as a result of the merger/acquisition and is amortized
and charged to expense; (3) future policy benefit reserves for
divisions with fixed interest guarantees of the variable products
are based on full account values, rather than the greater of cash
surrender value or amounts derived from discounting methodologies
utilizing statutory interest rates; (4) reserves are reported
before reduction for reserve credits related to

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

2. BASIS OF FINANCIAL REPORTING (continued)

reinsurance ceded
and a receivable is established, net of an allowance for
uncollectible amounts, for these credits rather than presented net
of these credits; (5) fixed maturity investments are designated as
"available for sale" and valued at fair value with unrealized
appreciation/depreciation, net of adjustments to value of
purchased insurance in force, deferred policy acquisition costs
and deferred income taxes (if applicable), credited/charged
directly to stockholder's equity rather than valued at amortized
cost; (6) the carrying value of fixed maturities is reduced to
fair value by a charge to realized losses in the Statements of
Operations when declines in carrying value are judged to be other
than temporary, rather than through the establishment of a formula-
determined statutory investment reserve (carried as a liability),
changes in which are charged directly to surplus; (7) deferred
income taxes are provided for the difference between the financial
statement and income tax bases of assets and liabilities; (8) net
realized gains or losses attributed to changes in the level of
interest rates in the market are recognized when the sale is
completed rather than deferred and amortized over the remaining
life of the fixed maturity security; (9) a liability is
established for anticipated guaranty fund assessments, net of
related anticipated premium tax credits, rather than capitalized
when assessed and amortized in accordance with procedures
permitted by insurance regulatory authorities; (10) revenues for
variable products consist of policy charges applicable to each
contract for the cost of insurance, policy administration charges,
amortization of policy initiation fees and surrender charges
assessed rather than premiums received; (11) the financial
statements of Golden American's wholly owned subsidiary are
consolidated rather than recorded at the equity in net assets;
(12) surplus notes are reported as liabilities rather than as
surplus; and (13) assets and liabilities are restated to fair
values when a change in ownership occurs, with provisions for
goodwill and other intangible assets, rather than continuing to be
presented at historical cost.

The net loss for Golden American as determined in accordance with
statutory accounting practices was $68,002,000 in 1998, $428,000
in 1997 and $9,188,000 in 1996. Total statutory capital and
surplus was $183,045,000 at December 31, 1998 and $76,914,000 at
December 31, 1997.

3. INVESTMENT OPERATIONS

INVESTMENT RESULTS

Major categories of net investment income are summarized below:

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

3. INVESTMENT OPERATIONS (continued)

<TABLE>

</TABLE>

Realized gains (losses) on investments are as follows:

<TABLE>

The change in unrealized appreciation (depreciation) of securities
at fair value is as follows:

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

3. INVESTMENT OPERATIONS (continued)

<TABLE>

At December 31, 1998 and December 31, 1997, amortized cost, gross
unrealized gains and losses and estimated fair values of fixed
maturities, all of which are designated as available for sale, are
as follows:

<TABLE>
POST-MERGER
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
U.S. government and governmental
agencies and authorities............. $ 13,568 $ 182 $ (8) $ 13,742
Foreign governments................... 2,028 8 -- 2,036
Public utilities...................... 67,710 546 (447) 67,809
Corporate securities.................. 365,569 4,578 (2,658) 367,489
Other asset-backed securities......... 99,877 281 (1,046) 99,112
Mortgage-backed securities............ 191,020 1,147 (370) 191,797
-------- ------ ------- --------
Total................................. $739,772 $6,742 $(4,529) $741,985
======== ====== ======= ========

DECEMBER 31, 1997
U.S. government and governmental
agencies and authorities............ $ 5,705 $ 5 $ (1) $ 5,709
Foreign governments................... 2,062 -- (9) 2,053
Public utilities...................... 26,983 55 (4) 27,034
Corporate securities.................. 259,798 1,105 (242) 260,661
Other asset-backed securities......... 3,155 32 -- 3,187
Mortgage-backed securities............ 115,585 202 (30) 115,757
-------- ------ ------- --------
Total................................. $413,288 $1,399 $ (286) $414,401
======== ====== ======= ========

</TABLE>

At December 31, 1998, net unrealized investment gains on fixed
maturities designated as available for sale totaled $2,213,000.
Appreciation of $1,005,000 was included in stockholder's equity at
December 31,

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

3. INVESTMENT OPERATIONS (continued)

1998 (net of an adjustment of $203,000 to VPIF, an
adjustment of $455,000 to DPAC and deferred income taxes of
$550,000). Short-term investments with maturities of 30 days or
less have been excluded from the above schedules. Amortized cost
approximates fair value for these securities.
Amortized cost and estimated fair value of fixed maturities
designated as available for sale, by contractual maturity, at
December 31, 1998 are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment
penalties.

POST-MERGER
---------------------------
Amortized Estimated
December 31, 1998 Cost Fair Value
- ----------------------------------------------------------------------
(Dollars in thousands)
Due within one year...................... $ 50,208 $ 50,361
Due after one year through five years.... 310,291 311,943
Due after five years through ten years... 78,264 78,541
Due after ten years...................... 10,112 10,231
448,875 451,076
Other asset-backed securities............ 99,877 99,112
Mortgage-backed securities............... 191,020 191,797
-------- --------
Total.................................... $739,772 $741,985
======== ========

An analysis of sales, maturities and principal repayments of the
Companies' fixed maturities portfolio is as follows:

<TABLE>

Gross Gross Proceeds
Amortized Realized Realized from
Cost Gains Losses Sale
--------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
POST-MERGER
For the year ended December 31, 1998:
Scheduled principal repayments,
calls and tenders...................... $102,504 $ 60 $ (3) $102,561
Sales................................... 43,204 518 (1,030) 42,692
-------- ---- ------- --------
Total................................... $145,708 $578 $(1,033) $145,253
======== ==== ======= ========

For the period October 25, 1997 through
December 31, 1997:
Scheduled principal repayments,
calls and tenders..................... $ 6,708 $ 2 -- $ 6,710
Sales.................................. 3,138 23 -- 3,161
-------- ---- ------- --------
Total.................................. $ 9,846 $ 25 -- $ 9,871
======== ==== ======= ========

</TABLE>

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

3. INVESTMENT OPERATIONS (continued)

<TABLE>

Gross Gross Proceeds
Amortized Realized Realized from
Cost Gains Losses Sale
--------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
POST- ACQUISITION
For the period January 1, 1997 through
October 24, 1997:
Scheduled principal repayments,
calls and tenders..................... $25,419 -- -- $25,419
Sales.................................. 14,052 $153 $ (2) 14,203
------- ---- ---- -------
Total.................................. $39,471 $153 $ (2) $39,622
======= ==== ==== =======
For the period August 14, 1996 through
December 31, 1996:
Scheduled principal repayments,
calls and tenders.................... $ 1,612 -- -- $ 1,612
Sales................................. 45,799 $115 $(73) 45,841
------- ---- ---- -------
Total................................. $47,411 $115 $(73) $47,453
======= ==== ==== =======

PRE-ACQUISITION
For the period January 1, 1996 through
August 13, 1996:
Scheduled principal repayments,
calls and tenders.................... $ 1,801 -- -- $ 1,801
Sales................................. 53,710 $152 $(572) 53,290
------- ---- ----- -------
Total................................. $55,511 $152 $(572) $55,091
======= ==== ===== =======

</TABLE>

Investment Valuation Analysis: The Companies analyze the
investment portfolio at least quarterly in order to determine if
the carrying value of any investment has been impaired. The
carrying value of debt and equity securities is written down to
fair value by a charge to realized losses when an impairment in
value appears to be other than temporary. During the year ended
December 31, 1998, Golden American recognized a loss on two fixed
maturity investments of $973,000. During 1997 and 1996, no
investments were identified as having an other than temporary
impairment.

Investments on Deposit: At December 31, 1998 and 1997, affidavits
of deposits covering bonds with a par value of $6,470,000 and
$6,605,000, respectively, were on deposit with regulatory
authorities pursuant to certain statutory requirements.

Investment Diversifications: The Companies' investment policies
related to the investment portfolio require diversification by
asset type, company and industry and set limits on the amount
which can be invested in an individual issuer. Such policies are
at least as restrictive as those set forth by regulatory
authorities. The following percentages relate to holdings at
December 31, 1998 and December 31, 1997. Fixed maturities included
investments in basic industrials (26% in 1998, 30% in 1997),
conventional mortgage-backed securities (25% in 1998, 13% in
1997), financial companies (19% in 1998, 24% in 1997), other asset-
backed securities (11% in 1998) and various government bonds and
government or agency mortgage-backed securities (5% in 1998, 17%
in 1997). Mortgage loans on real estate have been analyzed

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

3. INVESTMENT OPERATIONS (continued)

by geographical location with concentrations by state identified as
California (12% in 1998 and 1997), Utah (11% in 1998, 13% in 1997)
and Georgia (10% in 1998, 11% in 1997). There are no other
concentrations of mortgage loans in any state exceeding ten
percent at December 31, 1998 and 1997. Mortgage loans on real
estate have also been analyzed by collateral type with significant
concentrations identified in office buildings (36% in 1998, 43% in
1997), industrial buildings (32% in 1998, 33% in 1997) and retail
facilities (20% in 1998, 15% in 1997). Equity securities are not
significant to the Companies' overall investment portfolio.

No investment in any person or its affiliates (other than bonds
issued by agencies of the United States government) exceeded ten
percent of stockholder's equity at December 31, 1998.

4. COMPREHENSIVE INCOME

As of January 1, 1998, the Companies adopted the SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 establishes new
rules for the reporting and display of comprehensive income and
its components; however, the adoption of this statement had no
impact on the Companies' net income or stockholder's equity. SFAS
No. 130 requires unrealized gains or losses on the Companies'
available for sale securities (net of VPIF, DPAC and deferred
income taxes) to be included in other comprehensive income. Prior
to the adoption of SFAS No. 130, unrealized gains (losses) were
reported separately in stockholder's equity. Prior year financial
statements have been reclassified to conform to the requirements
of SFAS No. 130.

Total comprehensive income (loss) for the Companies includes
$1,015,000 for the year ended December 31, 1998 for First Golden
($159,000, $536,000 and $(57,000), respectively, for the periods
October 25, 1997 through December 31, 1997, October 1, 1997
through October 24, 1997 and December 17, 1996 through December
31, 1996). Other comprehensive income excludes net investment
gains (losses) included in net income which merely represent
transfers from unrealized to realized gains and losses. These
amounts total $(2,133,000) in 1998. Such amounts, which have been
measured through the date of sale, are net of income taxes and
adjustments to VPIF and DPAC totaling $705,000 in 1998.

5. FAIR VALUES OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments," requires disclosure of estimated fair value of all
financial instruments, including both assets and liabilities
recognized and not recognized in a company's balance sheet, unless
specifically exempted. SFAS No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments,"
requires additional disclosures about derivative financial
instruments. Most of the Companies' investments, investment
contracts and debt fall within the standards' definition of a
financial instrument. Fair values for the Companies' insurance
contracts other than investment contracts are not required to be
disclosed. In cases where quoted market prices are not available,
estimated fair values are based on estimates using present value
or other valuation techniques. Those techniques are significantly
affected by the assumptions used, including the discount rate and
estimates of future cash flows. Accounting, actuarial and
regulatory bodies are continuing to study the methodologies to be
used in developing fair value information, particularly as it
relates to such things as liabilities for insurance contracts.
Accordingly, care should be exercised in deriving conclusions
about the Companies' business or financial condition based on the
information presented herein.

The Companies closely monitor the composition and yield of
invested assets, the duration and interest credited on insurance
liabilities and resulting interest spreads and timing of cash
flows. These amounts

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

5. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

are taken into consideration in the
Companies' overall management of interest rate risk, which
attempts to minimize exposure to changing interest rates through
the matching of investment cash flows with amounts expected to be
due under insurance contracts. These assumptions may not result
in values consistent with those obtained through an actuarial
appraisal of the Companies' business or values that might arise in
a negotiated transaction.

The following compares carrying values as shown for financial
reporting purposes with estimated fair values:

<TABLE>
POST-MERGER
-----------------------------------------------
December 31, 1998 December 31, 1997
---------------------- -----------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
----------- --------- ---------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities, available
for sale...................... $ 741,985 $ 741,985 $ 414,401 $ 414,401
Equity securities.............. 11,514 11,514 3,904 3,904
Mortgage loans on real estate.. 97,322 99,762 85,093 86,348
Policy loans................... 11,772 11,772 8,832 8,832
Short-term investments......... 41,152 41,152 14,460 14,460
Cash and cash equivalents...... 6,679 6,679 21,039 21,039
Separate account assets........ $3,396,114 $3,396,114 $1,646,169 $1,646,169

LIABILITIES
Annuity products............... 869,009 827,597 493,181 469,714
Surplus notes.................. 85,000 90,654 25,000 28,837
Line of credit with affiliate.. -- -- 24,059 24,059
Separate account liabilities... 3,396,114 3,396,114 1,646,169 1,646,169

</TABLE>

The following methods and assumptions were used by the Companies
in estimating fair values.

Fixed Maturities: Estimated fair values of conventional mortgage-
backed securities not actively traded in a liquid market and
publicly traded securities are estimated using a third party
pricing system. This pricing system uses a matrix calculation
assuming a spread over U.S. Treasury bonds based upon the expected
average lives of the securities.

Equity Securities: Estimated fair values of equity securities,
which consist of the Companies' investment in the portfolios
underlying its separate accounts, are based upon the quoted fair
value of individual securities comprising the individual
portfolios. For equity securities not actively traded, estimated
fair values are based upon values of issues of comparable returns
and quality.

Mortgage Loans on Real Estate: Fair values are estimated by
discounting expected cash flows, using interest rates currently
offered for similar loans.

Policy Loans: Carrying values approximate the estimated fair value
for policy loans.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

5. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

Short-Term Investments and Cash and Cash Equivalents: Carrying
values reported in the Companies' historical cost basis balance
sheet approximate estimated fair value for these instruments due
to their short-term nature.

Separate Account Assets: Separate account assets are reported at
the quoted fair values of the individual securities in the
separate accounts.

Annuity Products: Estimated fair values of the Companies'
liabilities for future policy benefits for the divisions of the
variable annuity products with fixed interest guarantees and for
supplemental contracts without life contingencies are stated at
cash surrender value, the cost the Companies would incur to
extinguish the liability.

Surplus Notes: Estimated fair value of the Companies' surplus
notes were based upon discounted future cash flows using a
discount rate approximating the Companies' return on invested
assets.

Line Of Credit With Affiliate: Carrying value reported in the
Companies' historical cost basis balance sheet approximates
estimated fair value for this instrument.

Separate Account Liabilities: Separate account liabilities are
reported at full account value in the Companies' historical cost
balance sheet. Estimated fair values of separate account
liabilities are equal to their carrying amount.

6. MERGER

Transaction: On October 23, 1997, Equitable's shareholders
approved the Merger Agreement dated July 7, 1997 among Equitable,
PFHI and ING. On October 24, 1997, PFHI, a Delaware corporation,
acquired all of the outstanding capital stock of Equitable
according to the Merger Agreement. PFHI is a wholly owned
subsidiary of ING, a global financial services holding company
based in The Netherlands. Equitable, an Iowa corporation, in turn,
owned all the outstanding capital stock of Equitable Life
Insurance Company of Iowa ("Equitable Life") and Golden American
and their wholly owned subsidiaries. In addition, Equitable owned
all the outstanding capital stock of Locust Street Securities,
Inc. ("LSSI"), Equitable Investment Services, Inc. (subsequently
dissolved), DSI, Equitable of Iowa Companies Capital Trust,
Equitable of Iowa Companies Capital Trust II and Equitable of Iowa
Securities Network, Inc. (subsequently renamed ING Funds
Distributor, Inc.). In exchange for the outstanding capital stock
of Equitable, ING paid total consideration of approximately $2.1
billion in cash and stock and assumed approximately $400 million
in debt. As a result of this transaction, Equitable was merged
into PFHI, which was simultaneously renamed Equitable of Iowa
Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation.
All costs of the merger, including expenses to terminate certain
benefit plans, were paid by the Parent.

Accounting Treatment: The merger was accounted for as a purchase
resulting in a new basis of accounting, reflecting estimated fair
values for assets and liabilities at October 24, 1997. The
purchase price was allocated to EIC and its subsidiaries with
$227,497,000 allocated to the Companies. Goodwill was established
for the excess of the merger cost over the fair value of the net
assets and attributed to EIC and its subsidiaries including Golden
American and First Golden. The amount of goodwill allocated to the
Companies relating to the merger was $151,127,000 at the merger
date and is being amortized over 40 years on a straight-line
basis. The carrying value of goodwill will be reviewed
periodically for any indication of impairment in value. The
Companies' DPAC, previous balance of VPIF and unearned revenue
reserve, as of the merger date, were eliminated and a new asset of
$44,297,000 representing VPIF was established for all policies in
force at the merger date.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

6. Merger (continued)

Value of Purchased Insurance In Force: As part of the merger, a
portion of the acquisition cost was allocated to the right to
receive future cash flows from insurance contracts existing with
the Companies at the merger date. This allocated cost represents
VPIF reflecting the value of those purchased policies calculated
by discounting the actuarially determined expected future cash
flow at the discount rate determined by ING.

An analysis of the VPIF asset is as follows:

POST-MERGER
-------------------------------------
For the period
For the year October 25, 1997
ended through
December 31, 1998 December 31, 1997
----------------- -----------------
(Dollars in thousands)

Beginning balance................. $43,174 $44,297
Imputed interest.................. 2,802 1,004
Amortization...................... (7,753) (1,952)
Changes in assumptions of
timing of future gross profits... 227 --
Net amortization.................. (4,724) (948)
Adjustment for unrealized gains
on available for sale
securities....................... (28) (175)
Adjustment for other receivables
and merger costs................. (2,445) --
Ending balance.................... $35,977 $43,174

Interest is imputed on the unamortized balance of VPIF at a rate
of 7.38% for the year ended December 31, 1998 and 7.03% for the
period October 25, 1997 through December 31, 1997. The
amortization of VPIF, net of imputed interest, is charged to
expense. VPIF decreased $2,664,000 in the second quarter of 1998
to adjust the value of other receivables at merger date and
increased $219,000 in the first quarter of 1998 as a result of an
adjustment to the merger costs. VPIF is adjusted for the
unrealized gains (losses) on available for sale securities; such
changes are included directly in stockholder's equity. Based on
current conditions and assumptions as to the impact of future
events on acquired policies in force, the expected approximate net
amortization relating to VPIF as of December 31, 1998 is
$4,300,000 in 1999, $4,000,000 in 2000, $3,900,000 in 2001,
$3,700,000 in 2002 and $3,300,000 in 2003. Actual amortization may
vary based upon changes in assumptions and experience.

7. ACQUISITION

Transaction: On August 13, 1996, Equitable acquired all of the
outstanding capital stock of BT Variable from Whitewood, a wholly
owned subsidiary of Bankers Trust Company ("Bankers Trust"),
according to the terms of the Purchase Agreement dated May 3, 1996
between Equitable and Whitewood. In exchange for the outstanding
capital stock of BT Variable, Equitable paid the sum of
$93,000,000 in cash to Whitewood in accordance with the terms of
the Purchase Agreement. Equitable also paid the sum of $51,000,000
in cash to Bankers Trust to retire certain debt owed by BT
Variable to Bankers Trust

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

7. Acquisition (continued)

pursuant to a revolving credit
arrangement. After the acquisition, the BT Variable, Inc. name was
changed to EIC Variable, Inc. On April 30, 1997, EIC Variable,
Inc. was liquidated and its investments in Golden American and DSI
were transferred to Equitable, while the remainder of its net
assets were contributed to Golden American. On December 30, 1997,
EIC Variable, Inc. was dissolved.

Accounting Treatment: The acquisition was accounted for as a
purchase resulting in a new basis of accounting, which reflected
estimated fair values for assets and liabilities at August 13,
1996. The purchase price was allocated to the three companies
purchased - BT Variable, DSI and Golden American. The allocation
of the purchase price to Golden American was approximately
$139,872,000. Goodwill was established for the excess of the
purchase price over the fair value of the net assets acquired and
attributed to Golden American. The amount of goodwill relating to
the acquisition was $41,113,000 and was amortized over 25 years on
a straight-line basis until the October 24, 1997 merger with ING.
Golden American's DPAC, previous balance of VPIF and unearned
revenue reserve, as of the acquisition date, were eliminated and
an asset of $85,796,000 representing VPIF was established for all
policies in force at the acquisition date.

Value of Purchased Insurance In Force: As part of the
acquisition, a portion of the acquisition cost was allocated to
the right to receive future cash flows from the insurance
contracts existing with Golden American at the date of
acquisition. This allocated cost represents VPIF reflecting the
value of those purchased policies calculated by discounting the
actuarially determined expected future cash flows at the discount
rate determined by Equitable.

An analysis of the VPIF asset is as follows:

<TABLE>

POST-ACQUISITION | PRE-ACQUISITION
------------------------------------|----------------
For the period For the period | For the period
January 1, 1997 August 14,1996 | January 1, 1996
through through | through
October 24, 1997 December 31, 1996 | August 13, 1996
---------------- ----------------- | ---------------
(Dollars in thousands)
<S> <C> <C> | <C>
Beginning balance................ $83,051 $85,796 | $6,057
------- ------- | ------
Imputed interest................. 5,138 2,465 | 273
Amortization..................... (12,656) (5,210) | (1,224)
Changes in assumption of | ------
timing of gross profits......... 2,293 -- | --
------- ------- |
Net amortization................. (5,225) (2,745) | (951)
Adjustment for unrealized gains |
(losses) on available for sale |
securities...................... (373) -- | 11
------- ------- | ------
Ending balance $77,453 $83,051 | $5,117
======= ======= | ======
</TABLE>

Pre-Acquisition VPIF represents the remaining value assigned to in
force contracts when Bankers Trust purchased Golden American from
Mutual Benefit Life Insurance Company in Rehabilitation ("Mutual
Benefit") on September 30, 1992.

Interest was imputed on the unamortized balance of VPIF at rates
of 7.70% to 7.80% for the period August 14, 1996 through October
24, 1997. The amortization of VPIF net of imputed interest was
charged to expense. VPIF was also adjusted for the unrealized
gains (losses) on available for sale securities; such changes were
included directly in stockholder's equity.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

8. INCOME TAXES

Golden American files a consolidated federal income tax return.
Under the Internal Revenue Code, a newly acquired insurance
company cannot file as part of its parent's consolidated tax
return for 5 years.

At December 31, 1998, the Companies have net operating loss
("NOL") carryforwards for federal income tax purposes of
approximately $50,917,000. Approximately $5,094,000, $3,354,000
and $42,469,000 of these NOL carryforwards are available to offset
future taxable income of the Companies through the years 2011,
2012 and 2013, respectively.

INCOME TAX EXPENSE

Income tax expense (benefit) included in the consolidated
financial statements is as follows:

<TABLE>

</TABLE>

The effective tax rate on income (loss) before income taxes is
different from the prevailing federal income tax rate. A
reconciliation of this difference is as follows:

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

8. INCOME TAXES (continued)

<TABLE>

DEFERRED INCOME TAXES

The tax effect of temporary differences giving rise to the
Companies' deferred income tax assets and liabilities at December
31, 1998 and 1997 is as follows:

POST-MERGER
------------------------------------
December 31, 1998 December 31, 1997
----------------- -----------------
(Dollars in thousands)
Deferred tax assets:
Net unrealized depreciation of
securities at fair value.......... $ 691 --
Future policy benefits............. 66,273 $27,399
Deferred policy acquisition costs.. -- 4,558
Goodwill........................... 16,323 17,620
Net operating loss carryforwards... 17,821 3,044
Other.............................. 1,272 1,548
-------- -------
102,380 54,169

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

8. INCOME TAXES (continued)

POST-MERGER
------------------------------------
December 31, 1998 December 31, 1997
----------------- -----------------
(Dollars in thousands)
Deferred tax liabilities:
Net unrealized appreciation of
securities at fair value.......... -- $ (130)
Fixed maturity securities.......... $ (1,034) (1,665)
Deferred policy acquisition costs.. (55,520) --
Mortgage loans on real estate...... (845) (845)
Value of purchased insurance in
force............................. (12,592) (15,172)
Other.............................. (912) (127)
-------- --------
(70,903) (17,939)
-------- --------
Deferred income tax asset........... $ 31,477 $ 36,230
======== ========

The Companies are required to establish a "valuation allowance"
for any portion of the deferred tax assets management believes
will not be realized. In the opinion of management, it is more
likely than not the Companies will realize the benefit of the
deferred tax assets; therefore, no such valuation allowance has
been established.

9. RETIREMENT PLAN

Defined Benefit Plans: In 1998 and 1997, the Companies were
allocated their share of the pension liability associated with
their employees. The Companies' employees are covered by the
employee retirement plan of an affiliate, Equitable Life. Further,
Equitable Life sponsors a defined contribution plan that is
qualified under Internal Revenue Code Section 401(k). The
following tables summarize the benefit obligations and the funded
status for pension benefits over the two-year period ended
December 31, 1998:

1998 1997
-------- ------
(Dollars in thousands)
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1............ $ 956 $192
Service cost............................... 1,138 682
Interest cost.............................. 97 25
Actuarial loss............................. 2,266 57
Benefit payments........................... (3) --
------ ----
Benefit obligation at December 31.......... $4,454 $956
====== ====

1998 1997
-------- ------
(Dollars in thousands)
FUNDED STATUS
Funded status at December 31............... $(4,454) $(956)
Unrecognized net loss...................... 2,266 --
------- -----
Net amount recognized...................... $(2,188) $(956)
======= =====

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

8. RETIREMENT PLAN (continued)

During 1998 and 1997, the Companies' plan assets were held by
Equitable Life, an affiliate.
The weighted-average assumptions used in the measurement of the
Companies' benefit obligation are as follows:

1998 1997
------ ------
DECEMBER 31
Discount rate................................ 6.75% 7.25%
Expected return on plan assets............... 9.50 9.00
Rate of compensation increase................ 4.00 5.00

The following table provides the net periodic benefit cost for the
fiscal years 1998 and 1997:

<TABLE>
POST-MERGER | POST-ACQUISITION
------------------------------------ | ----------------
For the period | For the period
For the year October 25,1997 | January 1,1997
ended through | through
December 31, 1998 December 31, 1997 | October 24, 1997
----------------- ----------------- | ----------------
(Dollars in thousands)
<S> <C> <C> | <C>
Service cost................ $1,138 $114 | $568
Interest cost............... 97 10 | 15
Amortization of net loss.... -- -- | 1
------ ---- | ----
Net periodic benefit cost... $1,235 $124 | $584
====== ==== | ====
</TABLE>

There were no gains or losses resulting from curtailments or
settlements during 1998 or 1997.

The projected benefit obligation, accumulated benefit obligation
and fair value of plan assets for pension plans with accumulated
benefit obligations in excess of plan assets were $4,454,000,
$3,142,000 and $0, respectively, as of December 31, 1998 and
$956,000, $579,000 and $0, respectively, as of December 31, 1997.

10. RELATED PARTY TRANSACTIONS

Operating Agreements: DSI acts as the principal underwriter (as
defined in the Securities Act of 1933 and the Investment Company
Act of 1940, as amended) and distributor of the variable insurance
products issued by the Companies. DSI is authorized to enter into
agreements with broker/dealers to distribute the Companies'
variable insurance products and appoint representatives of the
broker/dealers as agents. For the year ended December 31, 1998 and
for the periods October 25, 1997 through December 31, 1997 and
January 1, 1997 through October 24, 1997, the Companies paid
commissions to DSI totaling $117,470,000, $9,931,000 and
$26,419,000, respectively ($9,995,000 for the period August 14,
1996 through December 31, 1996 and $17,070,000 for the period
January 1, 1996 through August 13, 1996).

Golden American provides certain managerial and supervisory
services to DSI. The fee paid by DSI for these services is
calculated as a percentage of average assets in the variable
separate accounts. For the year ended December 31, 1998 and for
the periods October 25, 1997 through December 31, 1997 and January
1, 1997 through October 24, 1997, the fee was $4,771,000, $508,000
and $2,262,000, respectively.

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

10. RELATED PARTY TRANSACTIONS (continued)

For the periods August 14, 1996
through December 31, 1996 and January 1, 1996 through August 13,
1996 the fee was $877,000 and $1,390,000, respectively.

Effective January 1, 1998, the Companies have an asset management
agreement with ING Investment Management LLC ("ING IM"), an
affiliate, in which ING IM provides asset management services.
Under the agreement, the Companies record a fee based on the value
of the assets under management. The fee is payable quarterly. For
the year ended December 31, 1998, the Companies incurred fees of
$1,504,000 under this agreement.

Prior to 1998, the Companies had a service agreement with
Equitable Investment Services, Inc. ("EISI"), an affiliate, in
which EISI provided investment management services. Payments for
these services totaled $200,000, $768,000 and $72,000 for the
periods October 25, 1997 through December 31, 1997, January 1,
1997 through October 24, 1997 and August 14, 1996 through December
31, 1996, respectively.

Golden American has a guaranty agreement with Equitable Life, an
affiliate. In consideration of an annual fee, payable June 30,
Equitable Life guarantees to Golden American that it will make
funds available, if needed, to Golden American to pay the
contractual claims made under the provisions of Golden American's
life insurance and annuity contracts. The agreement is not, and
nothing contained therein or done pursuant thereto by Equitable
Life shall be deemed to constitute, a direct or indirect guaranty
by Equitable Life of the payment of any debt or other obligation,
indebtedness or liability, of any kind or character whatsoever, of
Golden American. The agreement does not guarantee the value of the
underlying assets held in separate accounts in which funds of
variable life insurance and variable annuity policies have been
invested. The calculation of the annual fee is based on risk based
capital. As Golden American's risk based capital level was above
required amounts, no annual fee was payable in 1998 or in 1997.

Golden American provides certain advisory, computer and other
resources and services to Equitable Life. Revenues for these
services, which reduced general expenses incurred by Golden
American, totaled $5,833,000 for the year ended December 31, 1998
($1,338,000 and $2,992,000 for the periods October 25, 1997
through December 31, 1997 and January 1, 1997 through October 24,
1997, respectively). No services were provided by Golden American
in 1996.

The Companies have a service agreement with Equitable Life in
which Equitable Life provides administrative and financial related
services. Under this agreement, the Companies incurred expenses of
$1,058,000 for the year ended December 31, 1998 ($13,000 and
$16,000 for the periods October 25, 1997 through December 31, 1997
and January 1, 1997 through October 24, 1997, respectively).

First Golden provides resources and services to DSI. Revenues for
these services, which reduce general expenses incurred by the
Companies, totaled $75,000 in 1998.

For the year ended December 31, 1998, the Companies had premiums,
net of reinsurance, for variable products from four affiliates,
Locust Street Securities, Inc., Vestax Securities Corporation, DSI
and Multi-Financial Securities Corporation of $122,900,000,
$44,900,000, $13,600,000 and $13,400,000, respectively. The
Companies had premiums, net reinsurance, for variable products
from three affiliates, Locust Street Securities, Inc., Vestax
Securities Corporation and DSI of $9,300,000, $1,900,000 and
$2,100,000 respectively, for the period October 25, 1997 through
December 31, 1997 ($16,900,000, $1,200,000 and $400,000 for the
period January 1, 1997 through October 24, 1997, respectively).

Reciprocal Loan Agreement: Golden American maintains a reciprocal
loan agreement with ING America Insurance Holdings, Inc. ("ING
AIH"), a Delaware corporation and affiliate, to facilitate the
handling of

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

10. RELATED PARTY TRANSACTIONS (continued)

unusual and/or unanticipated short-term cash
requirements. Under this agreement which became effective January
1, 1998 and expires December 31, 2007, Golden American and ING AIH
can borrow up to $65,000,000 from one another. Prior to lending
funds to ING AIH, Golden American must obtain the approval of the
State of Delaware Department of Insurance. Interest on any Golden
American borrowings is charged at the rate of ING AIH's cost of
funds for the interest period plus 0.15%. Interest on any ING AIH
borrowings is charged at a rate based on the prevailing interest
rate of U.S. commercial paper available for purchase with a
similar duration. Under this agreement, Golden American incurred
interest expense of $1,765,000 in 1998. At December 31, 1998,
Golden American did not have any borrowings or receivables from
ING AIH under this agreement.

Line of Credit: Golden American maintained a line of credit
agreement with Equitable to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Under this
agreement which became effective December 1, 1996 and expired
December 31, 1997, Golden American could borrow up to $25,000,000.
Interest on any borrowings was charged at the rate of Equitable's
monthly average aggregate cost of short-term funds plus 1.00%.
Under this agreement, Golden American incurred interest expense of
$211,000 for the year ended December 31, 1998 ($213,000 for the
period October 25, 1997 through December 31, 1997, $362,000 for
the period January 1, 1997 through October 24, 1997 and $85,000
for the period August 14, 1996 through December 31, 1996). The
outstanding balance was paid by a capital contribution.

Surplus Notes: On December 30, 1998, Golden American issued a
7.25% surplus note in the amount of $60,000,000 to Equitable Life.
The note matures on December 29, 2028. The note and related
accrued interest is subordinate to payments due to policyholders,
claimant and beneficiary claims, as well as debts owed to all
other classes of debtors, other than surplus note holders, of
Golden American. Any payment of principal and/or interest made is
subject to the prior approval of the Delaware Insurance
Commissioner. Golden American incurred no interest in 1998.

On December 17, 1996, Golden American issued an 8.25% surplus note
in the amount of $25,000,000 to Equitable. The note matures on
December 17, 2026. The note and related accrued interest is
subordinate to payments due to policyholders, claimant and
beneficiary claims, as well as debts owed to all other classes of
debtors of Golden American. Any payment of principal made is
subject to the prior approval of the Delaware Insurance
Commissioner. Golden American incurred interest totaling
$2,063,000 in 1998 ($344,000 and $1,720,000 for the periods
October 25, 1997 through December 31, 1997 and January 1, 1997
through October 24, 1997, respectively). On December 17, 1996,
Golden American contributed the $25,000,000 to First Golden
acquiring 200,000 shares of common stock (100% of outstanding
stock) of First Golden.

Stockholder's Equity: On September 23, 1996, EIC Variable, Inc.
contributed $50,000,000 of Preferred Stock to the Companies'
additional paid-in capital. During 1998, Golden American received
$122,500,000 of capital contributions from its Parent.

11. COMMITMENTS AND CONTINGENCIES

Contingent Liability: In a transaction that closed on September
30, 1992, Bankers Trust acquired from Mutual Benefit, in
accordance with the terms of an Exchange Agreement, all of the
issued and outstanding capital stock of Golden American and DSI
and certain related assets for consideration with an aggregate
value of $13,200,000 and contributed them to BT Variable. The
transaction involved settlement of pre-existing claims of Bankers
Trust against Mutual Benefit. The ultimate value of these claims
has not yet been determined by the Superior Court of New Jersey
and, prior to August 13, 1996,

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

11. COMMITMENTS AND CONTINGENCIES (continued)

was contingently supported by a
$5,000,000 note payable from Golden American and a $6,000,000
letter of credit from Bankers Trust. Bankers Trust estimated the
contingent liability due from Golden American amounted to $439,000
at August 13, 1996. At August 13, 1996, the balance of the escrow
account established to fund the contingent liability was
$4,293,000.

On August 13, 1996, Bankers Trust made a cash payment to Golden
American in an amount equal to the balance of the escrow account
less the $439,000 contingent liability discussed above. In
exchange, Golden American irrevocably assigned to Bankers Trust
all of Golden American's rights to receive any amounts to be
disbursed from the escrow account in accordance with the terms of
the Exchange Agreement. Bankers Trust also irrevocably agreed to
make all payments becoming due under the Golden American note and
to indemnify Golden American for any liability arising from the
note.

Reinsurance: At December 31, 1998, the Companies had reinsurance
treaties with four unaffiliated reinsurers and one affiliated
reinsurer covering a significant portion of the mortality risks
under variable contracts. The Companies remain liable to the
extent reinsurers do not meet their obligations under the
reinsurance agreements. Reinsurance ceded in force for life
mortality risks were $111,552,000 and $96,686,000 at December 31,
1998 and 1997, respectively. At December 31, 1998, the Companies
have a net receivable of $7,470,000 for reserve credits,
reinsurance claims or other receivables from these reinsurers
comprised of $439,000 for claims recoverable from reinsurers,
$543,000 for a payable for reinsurance premiums and $7,574,000 for
a receivable from an unaffiliated reinsurer. Included in the
accompanying financial statements are net considerations to
reinsurers of $4,797,000, $326,000, $1,871,000, $875,000 and
$600,000 and net policy benefits recoveries of $2,170,000,
$461,000, $1,021,000, $654,000 and $1,267,000 for the year ended
December 31, 1998 and for the periods October 25, 1997 through
December 31, 1997, January 1, 1997 through October 24, 1997,
August 14, 1996 through December 31, 1996 and January 1, 1996
through August 13, 1996, respectively.

Effective June 1, 1994, Golden American entered into a modified
coinsurance agreement with an unaffiliated reinsurer. The
accompanying financial statements are presented net of the effects
of the treaty which increased income by $1,022,000, $265,000,
$335,000, $10,000 and $56,000 for the year ended December 31, 1998
and for the periods October 25, 1997 through December 31, 1997,
January 1, 1997 through October 24, 1997, August 14, 1996 through
December 31, 1996 and January 1, 1996 through August 13, 1996,
respectively.

Guaranty Fund Assessments: Assessments are levied against the
Companies by life and health guaranty associations in most states
in which the Companies are licensed to cover losses of
policyholders of insolvent or rehabilitated insurers. In some
states, these assessments can be partially recovered through a
reduction in future premium taxes. The Companies cannot predict
whether and to what extent legislative initiatives may affect the
right to offset. The associated cost for a particular insurance
company can vary significantly based upon its fixed account
premium volume by line of business and state premiums as well as
its potential for premium tax offset. The Companies have
established an undiscounted reserve to cover such assessments and
regularly reviews information regarding known failures and revises
its estimates of future guaranty fund assessments. Accordingly,
the Companies accrued and charged to expense an additional
$1,123,000 for the year ended December 31, 1998, $141,000 for the
period October 25, 1997 through December 31, 1997, $446,000 for
the period January 1, 1997 through October 24, 1997, $291,000 for
the period August 14, 1996 through December 31, 1996 and $480,000
for the period January 1, 1996 through August 13, 1996. At
December 31, 1998, the Companies have an undiscounted reserve of
$2,446,000 to cover estimated future assessments (net of related
anticipated premium tax credits) and has established an asset
totaling $586,000 for assessments paid which may be recoverable
through future

GOLDEN AMERICAN LIFE INSURANCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998

11. COMMITMENTS AND CONTINGENCIES (continued)

premium tax offsets. The Companies believe this
reserve is sufficient to cover expected future guaranty fund
assessments, based upon previous premiums, and known insolvencies
at this time.

Litigation: The Companies, like other insurance companies, may be
named or otherwise involved in lawsuits, including class action
lawsuits. In some class action and other lawsuits involving
insurers, substantial damages have been sought and/or material
settlement payments have been made. The Companies currently
believe no pending or threatened lawsuits exist that are
reasonably likely to have a material adverse impact on the
Companies.

Vulnerability from Concentrations: The Companies have various
concentrations in its investment portfolio (see Note 3 for further
information). The Companies' asset growth, net investment income
and cash flow are primarily generated from the sale of variable
products and associated future policy benefits and separate
account liabilities. Substantial changes in tax laws that would
make these products less attractive to consumers and extreme
fluctuations in interest rates or stock market returns which may
result in higher lapse experience than assumed could cause a
severe impact to the Companies' financial condition. Two
broker/dealers generated 27% of the Companies' sales (53% by two
broker/dealers during 1997).

Leases: The Companies lease their home office space, certain
other equipment and capitalized computer software under operating
leases which expire through 2018. During the year ended December
31, 1998 and for the periods October 25, 1997 through December 31,
1997, January 1, 1997 through October 24, 1997, August 14, 1996
through December 31, 1996 and January 1, 1996 through August 13,
1996, rent expense totaled $1,241,000, $39,000, $331,000, $147,000
and $247,000, respectively. At December 31, 1998, minimum rental
payments due under all non-cancelable operating leases with
initial terms of one year or more are: 1999 - $1,528,000; 2000 -
$1,429,000; 2001 - $1,240,000; 2002 - $1,007,000; 2003 - $991,000
and 2004 and thereafter - $5,363,000.

Revolving Note Payable: To enhance short-term liquidity, the
Companies have established a revolving note payable effective July
27, 1998 and expiring July 31, 1999 with SunTrust Bank, Atlanta
(the "Bank"). The note was approved by the Boards of Directors of
Golden American and First Golden on August 5, 1998 and September
29, 1998, respectively. The total amount the Companies may have
outstanding is $85,000,000, of which Golden American and First
Golden have individual credit sublimits of $75,000,000 and
$10,000,000, respectively. The note accrues interest at an annual
rate equal to: (1) the cost of funds for the Bank for the period
applicable for the advance plus 0.25% or (2) a rate quoted by the
Bank to the Companies for the advance. The terms of the agreement
require the Companies to maintain the minimum level of Company
Action Level Risk Based Capital as established by applicable state
law or regulation. During the year ended December 31, 1998, the
Companies incurred interest expense of $352,000. At December 31,
1998, the Companies did not have any borrowings under this
agreement.

[Shaded Section Header]
- ----------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- ----------------------------------------------------------------------

TABLE OF CONTENTS

ITEM PAGE
Introduction............................................. 1
Description of Golden American Life Insurance Company.... 1
Safekeeping of Assets.................................... 1
The Administrator........................................ 1
Independent Auditors..................................... 1
Distribution of Contracts................................ 1
Performance Information.................................. 2
IRA Withdrawal Option.................................... 5
Other Information........................................ 6
Financial Statements of Separate Account B............... 6
Appendix - Description of Bond Ratings.................... A-1

<PAGE>
<PAGE>
- ----------------------------------------------------------------------
PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE
STATEMENT OF ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER
THE PROSPECTUS. ADDRESS THE FORM TO OUR CUSTOMER SERVICE CENTER; THE
ADDRESS IS SHOWN ON THE PROSPECTUS COVER.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION
FOR SEPARATE ACCOUNT B.

Please Print or Type:

__________________________________________________
NAME

__________________________________________________
SOCIAL SECURITY NUMBER

__________________________________________________
STREET ADDRESS

__________________________________________________
CITY, STATE, ZIP

G3610 ES II (5/99)

This page intentionally left blank.

APPENDIX A
CONDENSED FINANCIAL INFORMATION

The following tables give (1) the accumulation unit value ("AUV"),
(2) the total number of accumulation units, and (3) the total
accumulation unit value, for each subaccount of Golden American
Separate Account B available under the Contract for the indicated
periods. The subaccounts became available to investors on October 1,
1997, except for the Growth Opportunities and Developing World
subaccounts which became available on February 19, 1998 and the High
Yield Bond and StocksPLUS Growth and Income subaccounts which became
available on May 1, 1998. The starting accumulation unit value are
indicated on the last row of each table. As of May 1, 1999, we no
longer accept new allocations into the All-Growth or Growth
Opportunities subaccounts.

LIQUID ASSET

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $14.33 1,915,614 $27,967 |
| 1997 13.83 101,663 1,406 |
| 10/1/97 13.71 -- -- |
|--------------------------------------------------------------|

LIMITED MATURITY BOND

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $16.77 720,717 $12,086 |
| 1997 15.91 38,089 606 |
| 10/1/97 15.72 -- -- |
|--------------------------------------------------------------|

GLOBAL FIXED INCOME

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $13.09 194,459 $ 2,559 |
| 1997 11.87 7,245 86 |
| 10/1/97 11.99 -- -- |
|--------------------------------------------------------------|

TOTAL RETURN

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $17.72 1,705,367 $30,220 |
| 1997 16.10 81,056 1,305 |
| 10/1/97 15.82 -- -- |
|--------------------------------------------------------------|

EQUITY INCOME

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $21.94 222,483 $ 4,881 |
| 1997 20.55 4,915 101 |
| 10/1/97 20.55 -- -- |
|--------------------------------------------------------------|

FULLY MANAGED

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $20.53 556,323 $11,421 |
| 1997 19.66 31,027 610 |
| 10/1/97 19.49 -- -- |
|--------------------------------------------------------------|

RISING DIVIDENDS

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $22.61 1,613,258 $36,476 |
| 1997 20.09 59,980 1,205 |
| 10/1/97 19.30 -- -- |
|--------------------------------------------------------------|

GROWTH & INCOME

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $17.01 1,362,647 $23,179 |
| 1997 15.41 88,125 1,358 |
| 10/1/97 15.99 -- -- |
|--------------------------------------------------------------|

GROWTH

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $16.29 1,414,571 $23,043 |
| 1997 13.03 108,519 1,414 |
| 10/1/97 15.18 -- -- |
|--------------------------------------------------------------|

VALUE EQUITY

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $18.31 385,276 $ 7,054 |
| 1997 18.28 22,155 405 |
| 10/1/97 18.85 -- -- |
|--------------------------------------------------------------|

RESEARCH

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $22.89 1,574,896 $36,049 |
| 1997 18.87 55,803 1,053 |
| 10/1/97 19.33 -- -- |
|--------------------------------------------------------------|

STRATEGIC EQUITY

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $14.23 190,037 $ 2,704 |
| 1997 14.31 6,778 97 |
| 10/1/97 14.14 -- -- |
|--------------------------------------------------------------|

CAPITAL APPRECIATION

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $14.50 396,745 $ 9,720 |
| 1997 22.05 12,562 277 |
| 10/1/97 21.95 -- -- |
|--------------------------------------------------------------|

MID-CAP GROWTH

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $22.43 812,983 $18,235 |
| 1997 18.52 27,977 518 |
| 10/1/97 18.94 -- -- |
|--------------------------------------------------------------|

SMALL CAP

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $15.37 870,686 $13,382 |
| 1997 12.88 54,115 697 |
| 10/1/97 13.85 -- -- |
|--------------------------------------------------------------|

REAL ESTATE

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $21.74 109,973 $ 2,391 |
| 1997 25.48 11,852 302 |
| 10/1/97 25.25 -- -- |
|--------------------------------------------------------------|

HARD ASSETS

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $14.28 132,451 $ 1,892 |
| 1997 20.57 4,084 84 |
| 10/1/97 24.00 -- -- |
|--------------------------------------------------------------|

DEVELOPING WORLD

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $ 7.28 273,326 $ 1,990 |
| 2/19/98 10.00 -- -- |
|--------------------------------------------------------------|

PIMCO HIGH YIELD BOND

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $10.08 581,282 $ 5,859 |
| 5/1/98 10.00 -- -- |
|--------------------------------------------------------------|

PIMCO STOCKSPLUS GROWTH
AND INCOME

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $11.11 568,785 $ 6,320 |
| 5/1/98 10.00 -- -- |
|--------------------------------------------------------------|

INTERNATIONAL EQUITY

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $10.29 1,354,846 $13,941 |
| 1997 9.90 52,121 516 |
| 10/1/97 11.57 -- -- |
|--------------------------------------------------------------|

ALL-GROWTH

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $15.43 207,489 $ 3,202 |
| 1997 14.28 18,978 271 |
| 10/1/97 15.42 -- -- |
|--------------------------------------------------------------|

GROWTH OPPORTUNITIES

[Table with Shaded Heading ]
|--------------------------------------------------------------|
| STANDARD DEATH BENEFIT |
|--------------------------------------------------------------|
| TOTAL # OF |
| ACCUMULATION |
| AUV AT UNITS AT TOTAL |
| YEAR END (AND YEAR END (AND AUV AT |
| AT BEGINNING OF AT BEGINNING OF AT YEAR END |
| FOLLOWING YEAR) FOLLOWING YEAR) (IN THOUSANDS) |
|--------------------------------------------------------------|
| 1998 $ 9.65 30,018 $ 290 |
| 2/19/98 10.00 -- -- |
|--------------------------------------------------------------|

APPENDIX B
MARKET VALUE ADJUSTMENT EXAMPLES

EXAMPLE #1: FULL SURRENDER EXAMPLE OF A NEGATIVE MARKET VALUE
ADJUSTMENT
Assume $100,000 was allocated to a Fixed Interest Allocation with
a guaranteed interest period of 10 years, a guaranteed interest rate
of 7.5%, an initial Index Rate ("I") of 7%; that a full surrender is
requested 3 years into the guaranteed interest period; that the then
Index Rate for a 7 year guaranteed interest period ("J") is 8%; and
that no prior transfers or withdrawals affecting this Fixed Interest
Allocation have been made.

CALCULATE THE MARKET VALUE ADJUSTMENT

1. The contract value of the Fixed Interest Allocation on the date of
surrender is $124,230
( $100,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0850 ) ^ ( 2,555 / 365 ) - 1 ) = $11,535

Therefore, the amount paid to you on full surrender ignoring any
surrender charge is $112,695 ( $124,230 - $11,535 ).

EXAMPLE #2: FULL SURRENDER EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $100,000 was allocated to a Fixed Interest Allocation with
a guaranteed interest period of 10 years, a guaranteed interest rate
of 7.5%, an initial Index Rate ("I") of 7%; that a full surrender is
requested 3 years into the guaranteed interest period; that the then
Index Rate for a 7 year guaranteed interest period ("J") is 6%; and
that no prior transfers or withdrawals affecting this Fixed Interest
Allocation have been made.

CALCULATE THE MARKET VALUE ADJUSTMENT

1. The contract value of the Fixed Interest Allocation on the date
of surrender is $124,230
($100,000 x 1.075 ^ 3)
2. N = 2,555 ( 365 X 7 )
3. Market Value Adjustment =$124,230 X
(( 1.07 / 1.0650 ) ^ ( 2,555 / 365 ) - 1 ) = $4,141

Therefore, the amount paid to you on full surrender ignoring any
surrender charge is $128,371 ( $124,230 + $4,141 ).

EXAMPLE #3: WITHDRAWAL EXAMPLE OF A NEGATIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Interest Allocation with
a guaranteed interest period of 10 years, a guaranteed interest rate
of 7.5%, an initial Index Rate ("I") of 7%; that a withdrawal of
$112,695 is requested 3 years into the guaranteed interest period;
that the then Index Rate ("J") for a 7 year guaranteed interest
period is 8%; and that no prior transfers or withdrawals affecting
this Fixed Interest Allocation have been made.

First calculate the amount that must be withdrawn from the Fixed
Interest Allocation to provide the amount requested.

1. The contract value of the Fixed Interest Allocation on the date
of withdrawal is $248,459
( $200,000 x 1.075 ^ 3 )
2. N = 2,555 ( 365 x 7 )
3. Amount that must be withdrawn =
(( $112,695 / ( 1.07 / 1.0850 ) ^ (2,555 / 365)) = $124,230

Then calculate the Market Value Adjustment on that amount.

4. Market Value Adjustment = $124,230 x
(( 1.07 / 1.0850 ) ^ (2,555 / 365) - 1) = $11,535

Therefore, the amount of the withdrawal paid to you ignoring any
surrender charge is $112,695, as requested. The Fixed Interest
Allocation will be reduced by the amount of the withdrawal, $112,695,
and also reduced by the Market Value Adjustment of $11,535, for a
total reduction in the Fixed Interest Allocation of $124,230.

EXAMPLE #4: WITHDRAWAL EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Interest Allocation with
a guaranteed interest period of 10 years, a guaranteed interest rate
of 7.5%, an initial Index Rate of 7%; that a withdrawal of $128,371
requested 3 years into the guaranteed interest period; that the then
Index Rate ("J") for a 7 year guaranteed interest period is 6%; and
that no prior transfers or withdrawals affecting this Fixed Interest
Allocation have been made.

First calculate the amount that must be withdrawn from the Fixed
Interest Allocation to provide the amount requested.

1. The contract value of Fixed Interest Allocation on the date of
surrender is $248,459
($200,000 x 1.075 ^ 3)
2. N = 2,555 ( 365 x 7 )
3. Amount that must be withdrawn =
(( $128,371 / ( 1.07 /1.0650) ^ ( 2,555 / 365)) = $124,230

Then calculate the Market Value Adjustment on that amount.

4. Market Value Adjustment = $124,230 x
(( 1.07 /1.0650) ^ ( 2,555 / 365) - 1 ) = $4,141

Therefore, the amount of the withdrawal paid to you ignoring any
surrender charge is $128,371, as requested. The Fixed Interest
Allocation will be reduced by the amount of the withdrawal, $128,371,
but increased by the Market Value Adjustment of $4,141, for a total
reduction in the Fixed Interest Allocation of $124,230.

APPENDIX C

SURRENDER CHARGE FOR EXCESS WITHDRAWALS EXAMPLE

The following assumes you made an initial premium payment of $10,000
and additional premium payments of $10,000 in each of the second and
third contract years, for total premium payments under the Contract
of $30,000. It also assumes a withdrawal at the beginning of the
fifth contract year of 30% of the contract value of $35,000.

In this example, $8,000 (0.10 x $30,000 + $5,000 earnings) is the
maximum free withdrawal amount that you may withdraw during the
contract year without a surrender charge. The total withdrawal would
be $10,500 ($35,000 x .30). Therefore, $2,500 (10,500 - 8,000) is
considered an excess withdrawal of a part of the initial premium
payment of $10,000 and would be subject to a 4% surrender charge of
$100 ($2,500 x .04). This example does not take into account any
Market Value Adjustment or deduction of any premium taxes.

GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a stock company domiciled
in Delaware

G3610 ES II 5/99