GOLDEN AMERICAN LIFE INSURANCE CO /NY/, 424B3, 2001-01-05

GOLDEN AMERICAN LIFE INSURANCE CO /NY/
424B3, 2001-01-05

Previous: DLJ MORTGAGE ACCEPTANCE CORP, 424B5, 2001-01-05

Next: CYBEROPTICLABS INC, 8-K, 2001-01-05

Registration No. 333-52320
Filed under Rule 424(b)(3)

|
| [GOLDENSELECT GUARANTEE ANNUITY PROFILE AND PROSPECTUS appears down
| the left margin]
|
|
|
|
| PROFILE AND PROSPECTUS FOR GOLDENSELECT GUARANTEE ANNUITY
|
| Deffered Modified Guarantee Annuity Contract, December 29, 2000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| [ING VARIABLE ANNUITIES appears down left margin]
|
|
|
|
|
|
|
|
|
|
|
|
| Golden American Life Insurance Company ING VARIABLE ANNUITIES
|
|
<PAGE>

ING VARIABLE ANNUITIES

GOLDEN AMERICAN LIFE INSURANCE COMPANY

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

PROFILE OF

GOLDENSELECT GUARANTEE ANNUITY

DEFERRED MODIFIED GUARANTEED ANNUITY CONTRACT

DECEMBER 29, 2000

----------------------------------------------------------------------
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.
----------------------------------------------------------------------
-------------------------------------------------------------------------------

1.THE ANNUITY CONTRACT
The Contract offered in this prospectus is a deferred modified guaranteed
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 a fixed account of Golden American with guaranteed interest periods.
We currently offer guaranteed interest periods of 1, 3, 5, 6, 7, 8, 9 and
10 years in the fixed account. We set the interest rates in the fixed
account periodically. 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 applicable interest
period. If you withdraw an amount in excess of the free withdrawal amount
more than 30 days before the applicable maturity date, we will apply a
surrender charge and market value adjustment. A market value adjustment
could increase or decrease your contract value and/or the amount you take
out.

The Contract, like all deferred 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 on the annuity
start date, which is the date you start receiving regular annuity
payments from your Contract.

You determine (1) the amount of your premium payment, (2) the guarantee
period, (3) the type of annuity to be paid after the accumulation phase,
(4) the beneficiary who will receive the death benefits, and (5) the
amount and frequency of withdrawals.

GUARANTEE ANNUITY PROFILE PROSPECTUS BEGINS AFTER
108944 PAGE 4 OF THIS PROFILE

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>
<CAPTION>
-----------------------------------------------------------------------------------------
ANNUITY OPTIONS
-----------------------------------------------------------------------------------------
<S> <C> <C>
Option 1 Income for a fixed Payments are made for a specified number of
period years to you or your beneficiary.
-----------------------------------------------------------------------------------------

Option 2 Income for Payments are made for the rest of your
life with a life or longer for a specified period
period such as 10 or 20 years or until the
certain 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 such period if you
should die during the period.
-----------------------------------------------------------------------------------------

Option 3 Joint life Payments are made for your life and
income the life of another person (usually
your spouse).
-----------------------------------------------------------------------------------------
</TABLE>

You will also be able to choose 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 other available
options may be fixed or variable. If variable and subject to the
Investment Company Act of 1940, it will comply with requirements of such
Act. 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 a payment of $5,000 or more ($1,500
for a qualified Contract) up to and including age 90. A 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").

IRAs and other qualified plans already have the tax-deferral feature
found in this Contract. For an additional cost, the Contract provides
other benefits including death benefits and the ability to receive a
lifetime income. See "Expenses" in this profile.

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 FIXED ACCOUNT
You can direct your money into the fixed account with guaranteed interest
periods of 1, 3, 5, 6, 7, 8, 9 or 10 years. Not all guarantee periods
may be available at all times. An investment in the fixed account earns
a fixed interest rate.

108944 2 GUARANTEE ANNUITY PROFILE

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

We deduct a surrender charge and apply a market value adjustment if you
surrender your Contract or withdraw an amount exceeding the free
withdrawal amount. The free withdrawal amount is equal to the prior 12
months' interest earned and not previously withdrawn. The surrender
charge varies by the length of the guarantee period selected, beginning
with 8% during year 1 and reducing by 1% per year to the earlier of the
end of the guarantee period or the 8th policy year. No surrender charge
or market value adjustment is imposed upon a surrender made during the
30-day period immediately preceding the end of a guarantee period.

The surrender charge period resets at the beginning of each guarantee
period. Upon withdrawal, it is charged against the remaining contract
value and is based on the amount of the withdrawal. Upon surrender, a
surrender charge and a market value adjustment will be applied
retroactively with respect to any free withdrawal amount previously
withdrawn within the same contract year as the surrender. The following
table shows the schedule of the surrender charge that will apply.

COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+
SINCE START OF | | | | | | | |
GUARANTEE PERIOD | | | | | | | |
| | | | | | | |
SURRENDER CHARGE 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0%

6.TAXES
Under a qualified Contract, your premium is generally a pre-tax
contribution and accumulates on a tax-deferred basis. Premium 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, your premium is paid with after-tax
dollars, and any earnings will accumulate tax-deferred. You will be taxed
on these earnings, but not on the premium, 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 at your request.

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 taxable earnings
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 4. Withdrawals above the free withdrawal amount taken
more than 30 days before the applicable maturity date may be subject to a
surrender charge and market value adjustment. Income taxes and a penalty
tax may apply to amounts withdrawn.

8.DEATH BENEFIT
The death benefit is payable when the first of the following persons dies
before the annuity start date: 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
written notice and due proof of death, as well as required claim forms,
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.

108944 3 GUARANTEE ANNUITY PROFILE

The death benefit is equal to the contract value as of the date we
receive due proof of death and any other paperwork we may require. The
amount of the death benefit could be reduced by premium taxes owed and
withdrawals not previously deducted. No surrender charge or market value
adjustment is applied to the death benefit.

9.OTHER INFORMATION
FREE LOOK. If you cancel the Contract within 10 days after you receive
it, you will receive a refund of the adjusted contract value. We
determine your contract value at the close of business on the day we
receive your written refund request. For purposes of the refund during
the free look period, (i) we adjust your contract value for any market
value adjustment, and (ii) then we include a refund of any charges
deducted from your contract value. Because of 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 adjusted contract value) in which case you will not be subject
to any market value adjustment risk during the free look period. Also,
under certain circumstances, you may be entitled to a longer free look
period.

TRANSFER OF CONTRACT VALUE. You may transfer your contract value to
another guarantee period during the 30 day period starting 30 days before
the end of the current guarantee period and ending upon the end of the
current guarantee period ("Transfer Period") without application of a
surrender charge or market value adjustment. Keep in mind that no
transfers are permitted other than during the Transfer Period.

NO PROBATE. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
See "Federal Tax Considerations -- Taxation of Death Benefit Proceeds" in
the prospectus for the Contract.

SYSTEMATIC WITHDRAWALS. This Contract also offers systematic
withdrawals. During the accumulation phase, you can arrange to have money
sent to you at regular intervals throughout the year. Systematic
withdrawals in excess of the free withdrawal amount will be subject to
surrender charge and market value adjustment. Of course, any applicable
income and penalty taxes will apply on amounts withdrawn.

10.INQUIRIES
If you need more information after reading this profile and the
prospectus, please contact us at:

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

or your registered representative.

108944 4 GUARANTEE ANNUITY PROFILE

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

GOLDEN AMERICAN LIFE INSURANCE COMPANY

DEFERRED MODIFIED GUARANTEED ANNUITY PROSPECTUS
GOLDENSELECT GUARANTEE ANNUITY

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

DECEMBER 29, 2000

This prospectus describes GoldenSelect Guarantee Annuity, a
group and individual deferred modified guaranteed 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 single
premium payment in the fixed account with guaranteed interest
periods. Your contract value will vary to reflect interest
credited. We will credit your contract value with a fixed rate of
interest. We set the interest rates periodically. You currently
may choose a guaranteed interest period of 1, 3, 5, 6, 7, 8, 9
and 10 years, although we may not offer all these periods in the
future. 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 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 guaranteed interest periods are available. You
have a right to return a Contract within 10 days after you
receive it for a refund of the adjusted contract value (which may
be more or less than the premium payment you paid), or, if
required by your state, the original amount of your premium
payment. Longer free look periods apply in some states and in
certain situations.

This prospectus provides information that you should know
before investing and should be kept for future 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 THIS CONTRACT IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY ANY BANK OR BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

108944

This page intentionally left blank.

--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
PAGE

Index of Special Terms 1
Fees and Expenses 2
Financial Statements 2
Golden American Life Insurance Company 2
The Fixed Account 2
Selecting a Guaranteed Interest Period 3
Guaranteed Interest Rates 3
Renewal Interest Rates 3
Withdrawals 3
Market Value Adjustment 4
The Annuity Contract 5
Contract Date and Contract Year 5
Annuity Start Date 5
Contract Owner 5
Joint Owner 5
Annuitant 5
Beneficiary 6
Change of Contract Owner or Beneficiary 6
Purchase and Availability of the Contract 6
Crediting of Premium Payment 6
Administrative Procedures 7
Contract Value 7
Cash Surrender Value 7
Surrendering to Receive the Cash Surrender Value 7
The Fixed Account 7
Other Important Provisions 7
Withdrawals 8
Regular Withdrawals 8
Systematic Withdrawals 8
Fixed Dollar Systematic Withdrawal Feature 9
IRA Withdrawals 9
Death Benefit 10
Death Benefit During the Accumulation Phase 10
Death Benefit During the Income Phase 10
Required Distributions upon Contract Owner's Death 10
Charges and Fees 11
Charges Deducted from the Contract Value 11
Surrender Charge 11
Waiver of Surrender Charge for Extended Medical
Coverage 11
Free Withdrawal Amount 12
Surrender Charge for Excess Withdrawals 12
Premium Taxes 12

108944 i

--------------------------------------------------------------------------------
TABLE OF CONTENTS (CONTINUED)
--------------------------------------------------------------------------------

PAGE

The Annuity Options 12
Annuitization of Your Contract 12
Selecting the Annuity Start Date 13
Frequency of Annuity Payments 13
The Annuity Options 13
Income for a Fixed Period 13
Income for Life with a Period Certain 13
Joint Life Income 14
Payment When Named Person Dies 14
Other Contract Provisions 14
Reports to Contract Owners 14
Suspension of Payments 14
In Case of Errors in Your Application 14
Assigning the Contract as Collateral 14
Contract Changes-Applicable Tax Law 15
Free Look 15
Group or Sponsored Arrangements 15
Selling the Contract 15
Other Information 16
State Regulation 16
Legal Proceedings 16
Legal Matters 16
Experts 16
Federal Tax Considerations 16
More Information About Golden American Life Insurance
Company 21
Unaudited Financial Statements of Golden American Life
Insurance Company 45
Financial Statements of Golden American Life Insurance
Company 55
Appendix A
Market Value Adjustment Examples A1
Appendix B
Surrender Charge for Excess Withdrawals Example B1

108944 ii

--------------------------------------------------------------------------------
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
Annuitant 5
Annuity Start Date 5
Cash Surrender Value 7
Contract Date 5
Contract Owner 5
Contract Value 7
Contract Year 5
Free Withdrawal Amount 8
Market Value Adjustment 4

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
Annuity Start Date Annuity Commencement Date
Contract Owner Owner or Certificate Owner
Contract Value Accumulation Value
Free Look Period Right to Examine Period
Guaranteed Interest Period Guarantee Period
Withdrawals Partial Withdrawals

108944 1

--------------------------------------------------------------------------------
FEES AND EXPENSES
--------------------------------------------------------------------------------

CONTRACT OWNER TRANSACTION EXPENSES*

Surrender Charge:

COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+
SINCE START OF | | | | | | | |
GUARANTEE PERIOD | | | | | | | |
| | | | | | | |
SURRENDER CHARGE 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0%

* A Market Value Adjustment may apply to certain transactions.
This may increase or decrease your contract value and/or your
surrender amount. In addition, if you withdraw money from your
Contract, or if you begin receiving annuity payments, we may
deduct a premium tax charge of 0% to 3.5% to pay to your state.

FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements of Golden
American for the nine months ended September 30, 2000, and the audited
consolidated financial statements of Golden American for the years
ended December 31, 1999, 1998 and 1997 are included in this
prospectus.

--------------------------------------------------------------------------------
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 based in The Netherlands. 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 distributor of the Contracts, and other interests.
Our principal office is located at 1475 Dunwoody Drive, West Chester,
Pennsylvania 19380.

--------------------------------------------------------------------------------
THE FIXED ACCOUNT
--------------------------------------------------------------------------------

Assets supporting your contract value are invested in our Fixed
Account. Your premium payment (less withdrawals and less applicable
premium taxes, if any) will earn interest at the initial guarantee
rate which is an annual effective rate of interest. You may select the
duration of your initial guarantee period from among the durations
offered by us. The duration you select will determine your initial
guarantee rate. We currently offer guaranteed interest periods of 1,
3, 5, 6, 7, 8, 9 and 10 years, although we may not offer all these
periods in the future. We will credit your premium payment with a
guaranteed interest rate for the interest period you select, so long
as you do not withdraw money before the end of the guaranteed interest
period. Each guaranteed interest period ends on its maturity date
which is the last day of the last contract year in the guarantee
period.

If you surrender, withdraw, or annuitize your investment before the 30
day period prior to the end of the guaranteed interest period, we will
apply a Market Value Adjustment to the amount of the transaction in
excess of the free withdrawal amount. A Market Value Adjustment could
increase or decrease the amount you surrender, withdraw, 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.

108944 2

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

SELECTING A GUARANTEED INTEREST PERIOD
A guaranteed interest period is the period that a rate of interest is
guaranteed to be credited to your contract value. We may at any time
decrease or increase the number of guaranteed interest periods
offered.

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

GUARANTEED INTEREST RATES
The interest rate to be credited to your contract value is guaranteed
as long as you do not take your money out until the period beginning
30 days before the applicable maturity date. We do not have a specific
formula for establishing the guaranteed interest rates for the
different guaranteed interest periods. We determine guaranteed
interest rates at our sole discretion. To find out the current
guaranteed interest rate for a guaranteed interest period you are
interested in, please contact our Customer Service Center or your
registered representative. 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.

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.

RENEWAL INTEREST RATES
Unless you elect to surrender your contract, a subsequent guarantee
period will automatically begin at the end of a guarantee period.
We may not offer the same guarantee interest periods for renewal as
for initial periods. If offered at the time of your renewal, each
subsequent guarantee period will be of the same duration as the
previous guarantee period unless you elect in writing, on any day
within the 30 day period preceding the end of the current guarantee
period, a guarantee period of a different duration from among those
offered by us at that time. At least 30 calendar days before the
maturity date of the current guarantee period, or earlier if required
by state law, we will send you a notice of the guaranteed interest
periods that are available. If you do not elect a different guarantee
period, and your current guaranteed interest period is not available
as a renewal period or would go beyond the annuity start date, we will
transfer your contract value to the next shortest guaranteed interest
period which does not go beyond the annuity start date. Your
contract value will then earn interest at a guarantee rate that we
have declared for that duration. The guarantee rate for the guarantee
period automatically applied in these circumstances may be higher or
lower than the guarantee rate for longer durations.

The contract value at the beginning of any renewal guarantee period
will be equal to the contract value at the end of the guarantee period
just ending. This contract value, less withdrawals made after the
beginning of the subsequent guarantee period, will earn interest
compounded annually at the renewal guarantee rate.

WITHDRAWALS
During the accumulation phase, you may withdraw a portion of your
contract value. Beginning 28 days after the contract date, you may
make systematic withdrawals of only the interest earned during the
prior month, quarter or year, depending on the frequency chosen, under
our systematic withdrawal option. A withdrawal

108944 3

may be subject to a
Market Value Adjustment and, in some cases, a surrender charge (see
"Charges and Fees"). Be aware that withdrawals may have federal income
tax consequences, including a 10% penalty tax.

MARKET VALUE ADJUSTMENT
A Market Value Adjustment may decrease, increase or have no effect on
your contract value. We will apply a Market Value Adjustment to
amounts in excess of the free withdrawal amount (i) whenever you
withdraw money (unless made within the 30 day period before the
maturity date of the applicable guaranteed interest period) and (ii) if
on the annuity start date a guaranteed interest period does not end on
or within 30 days of the annuity start date. The Market Value
Adjustment resets at the start of each guarantee period.

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

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

where:

"I" is the Index Rate (as defined below), determined at the
beginning of the current guarantee period;

"J" is the Index Rate, determined at the time of surrender or
withdrawal, for a security with time to maturity equal to
the number of years (fractional years rounded up to the next
full year) remaining in the guarantee period from the date of
surrender or withdrawal; and

"N" is the number of days from the date of surrender or withdrawal
to the end of the current guarantee period.

---------------------
* For contracts issued in Florida, the factor is

N/365
((1+I)/(1+J+.0025)) -1.

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
an 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 or annuitization, we will add or subtract any Market Value
Adjustment from the amount surrendered or annuitized. In the event of
a partial withdrawal or annuitization, we will add or subtract any
Market Value Adjustment from the total amount withdrawn or annuitized
in order to provide the amount requested. If a negative Market Value
Adjustment exceeds your contract value, we will consider your request
to be a full surrender or annuitization.

Several examples which illustrate how the market value adjustment
works are included in Appendix A.

108944 4

-------------------------------------------------------------------------------
THE ANNUITY CONTRACT
-------------------------------------------------------------------------------

The Contract described in this prospectus is a deferred fixed annuity
contract. The Contract provides a means for you to invest in the Fixed
Account of the Company.

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 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.
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.

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, 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

108944 5

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. 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 90. The single premium payment must be
$5,000 or more ($1,500 for qualified Contracts). Under certain
circumstances, we may waive the minimum premium payment requirement.

We may also change the minimum initial premium requirement for certain
group or sponsored arrangements. Any 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 PAYMENT
We will process your premium payment within 2 business days after
receipt, if the application and all information necessary for
processing the Contract are complete. In certain states we also accept
premium payments by wire order. Wire transmittals must be accompanied
by sufficient electronically transmitted data. We may retain your
premium payment 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.

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.

108944 6

(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 5 days
of the premium payment. If we do not receive the application or
form within 5 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 or your representative, 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. We may require additional
information before complying with your request (e.g., signature
guarantee).

ADMINISTRATIVE PROCEDURES
We may accept a request for Contract service in writing, by telephone,
or other approved electronic means, subject to our administrative
procedures, which vary depending on the type of service requested and
may include proper completion of certain forms, providing appropriate
identifying information, and/or other administrative requirements.

CONTRACT VALUE
We determine your contract value on a daily basis beginning on the
contract date. Your contract value is the sum of the premium payment
plus credited interest, minus any withdrawals (including any Market
Value Adjustment applied to such withdrawal), contract fees, and
premium taxes. If you surrender your contract during the 30-day
period preceding a maturity date, you will receive the contract
value.

CASH SURRENDER VALUE
The cash surrender value is the amount you receive when you surrender
the Contract, other than during the 30-day period prior to a maturity
date. The cash surrender value will fluctuate daily based on the
interest credited to the contract value 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 after receipt of all paperwork required in order
for us to process your surrender. Once paid, all benefits under the
Contract will be terminated. 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.

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

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

108944 7

-------------------------------------------------------------------------------
WITHDRAWALS
-------------------------------------------------------------------------------

Any time during the accumulation phase and before the death of the
owner, you may withdraw all or part of your money. Keep in mind that
your contract value after the withdrawal must equal or exceed $1,000
or we will treat the withdrawal request as a request to surrender the
Contract. We deduct a surrender charge if you surrender your Contract
or withdraw an amount exceeding the free withdrawal amount. The free
withdrawal amount is equal to the prior 12 months' interest earned and
not previously withdrawn. The surrender charge varies by the length of
the guarantee period selected, beginning with 8% during year 1 and
reducing by 1% per year to the end of the guarantee period. No
surrender charge is imposed upon a surrender made during the 30-day
period immediately preceding the end of a guarantee period. The
surrender charge period resets at the beginning of each guarantee
period. It is charged against the contract value and is based on the
amount of the withdrawal.

We will apply a Market Value Adjustment to any withdrawal in excess of
the free withdrawal amount taken prior to the 30 day period before the
maturity date. Definitive guidance on the proper federal tax treatment
of the Market Value Adjustment has not been issued. You may want to
discuss the potential tax consequences of a market value adjustment
with your tax adviser. 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 payment made.

Upon surrender, surrender charges and a Market Value Adjustment will
be applied retroactively with respect to any free withdrawal amount
previously withdrawn within the same contract year as the surrender.

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 surrender charge
and Market Value Adjustment to any regular withdrawal in excess of the
free withdrawal amount that is taken prior to the 30 day period before
the maturity date.

SYSTEMATIC WITHDRAWALS
You may choose to receive automatic systematic withdrawal payments.
Systematic withdrawals are limited to interest earnings during the
prior month, quarter, or year, depending on the frequency you chose.
Systematic withdrawals are not subject to a Market Value Adjustment,
unless you have added the Fixed Dollar Systematic Withdrawal Feature
discussed below and the payments exceed the free withdrawal amount.

Systematic withdrawals under the Fixed Dollar Systematic Withdrawal
Feature are available only in connection with Section 72(q) or 72(t)
distributions.

Systematic withdrawals may be taken monthly, quarterly or annually.
You decide when you would like systematic payments to start as long as
they start at least 28 days after your contract date. You also select
the date on which the systematic withdrawals will be made, but this
date cannot be later than the 28th day of the month. If you have
elected to receive systematic withdrawals but have not chosen a date,
we will make the withdrawals on the same calendar day of each month as
your contract date. If your contract date is after the 28th , your
systematic withdrawal will be made on the 28th day of each month.

Each systematic withdrawal amount must be a minimum of $100. The
amount of your systematic withdrawal can either be (1) a fixed dollar
amount, or (2) an amount based on a percentage of the interest earned
and not previously withdrawn, but in either case is limited to
interest earnings. If your systematic withdrawal is a fixed dollar
amount and the amount to be withdrawn would exceed the applicable free
withdrawal amount on any withdrawal date, we will automatically reduce
the amount withdrawn so that it equals such free withdrawal amount.
Thus, your fixed dollar systematic withdrawals will never exceed the
free withdrawal amount. If you want fixed dollar systematic
withdrawals to exceed the free withdrawal amount and are willing to
incur associated surrender charges, consider the Fixed Dollar
Systematic Withdrawal Feature which you may add to your regular
systematic withdrawal program.

108944 8

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. The systematic withdrawal
option may 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 the systematic
withdrawal option if you are taking IRA withdrawals.

FIXED DOLLAR SYSTEMATIC WITHDRAWAL FEATURE. You may add the Fixed
Dollar Systematic Withdrawal Feature to your regular fixed dollar
systematic withdrawal program. This feature allows you to receive a
systematic withdrawal in a fixed dollar amount regardless of any
surrender charges or Market Value Adjustment. Systematic withdrawals
under the Fixed Dollar Systematic Withdrawal Feature are available
only in connection with Section 72(q) or 72(t) distributions. You
choose the amount of the fixed systematic withdrawals. We will assess
a surrender charge and Market Value Adjustment on the withdrawal date
if the withdrawal exceeds the free withdrawal amount on the withdrawal
date. We will apply the surrender charge and any Market Value Adjustment
directly to your contract value (rather than to the
systematic withdrawal) so that the amount of each systematic
withdrawal remains fixed.

Flat dollar systematic withdrawals which are intended to satisfy the
requirements of Section 72(q) or 72(t) of the Tax Code may exceed the
free withdrawal amount. Such withdrawals are subject to surrender
charges and Market Value Adjustment when they exceed the applicable
free withdrawal amount.

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 ADVISER REGARDING THE TAX CONSEQUENCES ASSOCIATED
WITH TAKING WITHDRAWALS. You are responsible for determining that
withdrawals comply with applicable law. A withdrawal made before

108944 9

the taxpayer reaches age 59 1/2 may result in a 10% penalty tax. See
"Federal Tax Considerations" for more details.

-------------------------------------------------------------------------------
DEATH BENEFIT
-------------------------------------------------------------------------------

DEATH BENEFIT DURING THE ACCUMULATION PHASE
During the accumulation phase, a death benefit is payable when either,
the contract owner or the first of joint owners dies, or the annuitant
dies (when a contract owner is not an individual). 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 is equal to the contract value. The
death benefit value is calculated at the close of the business day on
which we receive written notice and due proof of death, as well as any
required paperwork, at our Customer Service Center. Amounts could be
reduced by a charge for premium taxes owed and withdrawals not
previously deducted.

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. For information
on required distributions under federal income tax laws, you should
see "Required Distributions upon Contract Owner's Death."

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.

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.

REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH
We will not allow any payment of benefits provided under a non-
qualified 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 death benefit 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 fails to make a timely election as described in this
paragraph. If the owner's beneficiary is a nonspouse, the distribution
provisions

108944 10

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.

-------------------------------------------------------------------------------
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 administering 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.

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
guarantee period. The free withdrawal amount is equal to the prior 12
months' interest earned and not previously withdrawn. The surrender
charge is charged against the contract value and is based on the
amount of the withdrawal. 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 deducted at the
time of surrender or excess withdrawal depends on the number of
complete years that have elapsed since the beginning of the guarantee
period.

The surrender charge varies by the length of the guarantee period
selected, beginning with 8% during year 1 and reducing by 1% per year
earlier of the to the end of the guarantee period or the 8th policy
year. No surrender charge is imposed upon a surrender made during the
30-day period immediately preceding the end of a guarantee period.

The surrender charge period resets at the beginning of each guarantee
period. Upon withdrawal, it is charged against the remaining contract
value and is based on the amount of the withdrawal. Upon surrender, a
surrender charge and a Market Value Adjustment will be applied
retroactively with respect to any free withdrawal amount previously
withdrawn within the same contract year as the surrender. The
following table shows the schedule of the surrender charge that will
apply.

COMPLETE YEARS ELAPSED 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+
SINCE START OF | | | | | | | |
GUARANTEE PERIOD | | | | | | | |
| | | | | | | |
SURRENDER CHARGE 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0%

WAIVER OF SURRENDER CHARGE FOR EXTENDED MEDICAL CARE. 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

108944 11

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. No surrender charge or Market Value
Adjustment applies to withdrawals made during the 30 day period prior
to the end of a guarantee interest period. The interest earned during
the prior 12 months and not previously withdrawn may be withdrawn
without surrender charge or Market Value Adjustment.

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. ANY
EXCESS WITHDRAWAL MORE THAN 30 DAYS BEFORE A MATURITY DATE WILL
TRIGGER A MARKET VALUE ADJUSTMENT.

PREMIUM TAXES. We may make a charge for state and local premium
taxes depending on your state of residence. The tax can range from 0%
to 3.5% of the premium payment. We have the right to change this
amount to conform with changes in the law or if you change your 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 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 when you surrender the
Contract, when you take an excess withdrawal, or on the annuity start
date.

-------------------------------------------------------------------------------
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 your 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,

108944 12

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 and the applicable
payment rate used.

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 under applicable law), the
total contract value applied, 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 annuity start date, which is the date on which the
annuity payments commence. The annuity start date must be at least 1
year 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." 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. You should consult
your tax adviser for tax advice.

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 3 annuity options shown below. Payments under Options 1,
2 and 3 are fixed. The contract value can be applied to any other
annuitization plan that we choose to offer on the annuity start date.
Annuity payments under other available options may be fixed and/or
variable.

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

108944 13

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.

The contract value can be applied to any other annuitization plan that
we choose to offer on the annuity start date. Annuity payments under
other available options may be fixed and/or variable. If variable and
subject to the Investment Company Act of 1940 it will comply with
requirements of such Act.

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.

For other available options, the annuity option agreement will state
the amount we will pay, if any.

-------------------------------------------------------------------------------
OTHER CONTRACT PROVISIONS
-------------------------------------------------------------------------------

REPORTS TO CONTRACT OWNERS
We will send you an annual report within 31 days after the end of each
contract year. The report will show the contract value, cash surrender
value, and the death benefit as of the end of the contract year. The
report will also show the amounts deducted from or added to the
contract value since the last report. You have 30 days to notify our
Customer Service Center of any errors or discrepancies contained in
the report or in any confirmation notices. We will also send you any
other reports, notices or documents we are required by law to furnish
to you.

SUSPENSION OF PAYMENTS
The Company reserves the right to delay payment 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 you should 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.

108944 14

CONTRACT CHANGES -- APPLICABLE TAX LAW
We have the right to make changes in the Contract to continue to
qualify the Contract as an annuity under applicable federal tax law.
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, (i) we
adjust your contract value for any Market Value Adjustment, and (ii)
then we include a refund of any charges deducted from your contract
value. Because of 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 adjusted
contract value) in which case you will not be subject to investment
risk 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.

GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce any
surrender charges. We may also change the minimum premium payment
requirement, or offer an alternative or reduced death benefit.

SELLING THE CONTRACT
Directed Services, Inc. is the principal underwriter and distributor
of the Contract as well as for other contracts by Golden American. We
pay Directed Services 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. Directed Services receives a
maximum of 5% commission, and passes through 100% of the commission to
the broker-dealer whose registered representative sold the contract.

--------------------------------------------------------------------------------
UNDERWRITER COMPENSATION
--------------------------------------------------------------------------------
NAME OF PRINCIPAL AMOUNT OF COMMISSION TO OTHER
UNDERWRITER BE PAID COMPENSATION

Directed Services, Inc. Maximum of 5% Reimbursement of any
of premium payment covered expenses
except when incurred
combined by registered
with commissions representatives
on renewal of a in connection
guarantee period with the
or annual distribution
trail of the Contracts.
commissions.
--------------------------------------------------------------------------------

Certain sales agreements may provide for a combination of a certain
percentage of commission at the time of sale, upon the start of a new
guarantee period or an annual trail commission (which when combined
could exceed 5% of total premium payments).

108944 15

-------------------------------------------------------------------------------
OTHER INFORMATION
-------------------------------------------------------------------------------

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 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 materially adverse impact on the Company.

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 appearing in this
prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
appearing in this prospectus 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.

-------------------------------------------------------------------------------
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 whose 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

108944 16

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
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity
contract for federal income tax purposes, the Code requires any
nonqualified 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 you paid for the
contract less any nontaxable withdrawals) 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.

108944 17

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 conditions
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.

108944 18

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.

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 IRA
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 any
Roth IRA. A 10% penalty tax may apply to amounts attributable to a
conversion from an IRA if they are distributed during the five taxable
years beginning with the year in which the conversion was made.

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.

108944 19

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). You should consult a tax adviser with respect to legislative
developments and their effect on the Contract.

108944 20

--------------------------------------------------------------------------------
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"), according 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>
<CAPTION>
SELECTED GAAP BASIS FINANCIAL DATA
(IN THOUSANDS)

POST-MERGER
-------------- ------------ ------------- --------------
For the Period For the Period
January 1, For the Year For the Year October 25,
2000 through Ended Ended 1997 through
September 30, December 31, December 31, December 31,
2000 1999 1998 1997
-------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Annuity and Interest
Sensitive Life

Product Charges................. $ 106,892 $ 82,935 $ 39,119 $ 3,834
Net Income (Loss) before
Federal Income Tax ............. $ 27,886 $ 19,737 $ 10,353 $ (279)
Net Income (Loss)................... $ 18,084 $ 11,214 $ 5,074 $ (425)
Total Assets........................ $ 11,835,937 $ 9,392,857 $ 4,754,623 $ 2,446,395
Total Liabilities................... $ 11,256,283 $ 8,915,008 $ 4,400,729 $ 2,219,082
Total Stockholder's Equity.......... $ 579,654 $ 477,849 $ 353,894 $ 227,313
</TABLE>

<TABLE>
<CAPTION>
POST-ACQUISITION | PRE-ACQUISITION
-------------- -------------- | ------------------------------
For the Period For the Period | For the Period
January 1,1997 August 14, | January 1, For the Year
through 1996 through | 1996 through Ended
October 24, December 31, | August 13, December, 31,
1997 1996 | 1996 1995
-------------- -------------- | --------------- -------------
<S> <C> <C> | <C> <C>
Annuity and Interest |
Sensitive Life Product Charges................. $ 18,288 $ 8,768 | $ 12,259 $ 18,388
Net Income (Loss) before |
Federal Income Tax............................. $ (608) $ 570 | $ 1,736 $ 3,364
Net Income (Loss).................................. $ 729 $ 350 | $ 3,199 $ 3,364
Total Assets....................................... N/A $ 1,677,899 | N/A $1,203,057
Total Liabilities.................................. N/A $ 1,537,415 | N/A $1,104,932
Total Stockholder's Equity......................... N/A $ 140,484 | N/A $ 98,125
</TABLE>

108944 21

BUSINESS ENVIRONMENT

The current business and regulatory environment presents many challenges to the
insurance industry. The variable annuity competitive environment remains intense
and is dominated by a number of large highly rated insurance companies.
Increasing competition from traditional insurance carriers as well as banks and
mutual fund companies offers consumers many choices. However, overall demand for
variable insurance products remains strong for several reasons including: strong
stock market performance over the last four years; relatively low interest
rates; an aging U.S. population that is increasingly concerned about retirement,
estate planning, and 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.

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 is also provided. This analysis should be read
jointly with the consolidated financial statements, the related notes, and the
Cautionary Statement Regarding Forward-Looking Statements, which appear
elsewhere in this report. Golden American reports 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 OPERATION

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 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

108944 22

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 included for
the period January 1, 1997 through October 24, 1997 are presented on the
Post-Acquisition basis of accounting.

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 FIRST NINE MONTHS OF 2000 COMPARED TO THE SAME PERIOD OF 1999

PREMIUMS

<TABLE>
<CAPTION>
PERCENTAGE DOLLAR
NINE MONTHS ENDED SEPTEMBER 30 2000 CHANGE CHANGE 1999
---------- ---------- ----------- ----------
(Dollars in millions)
<S> <C> <C> <C> <C>
Variable annuity premiums:
Separate account................................. $ 682.7 (61.7)% $ (1,100.8) $ 1,783.5
Fixed account.................................... 503.2 (6.7) (36.2) 539.4
---------- ------- ----------- ----------
Total variable annuity premiums...................... 1,185.9 (49.0) (1,137.0) 2,322.9
Variable life premiums............................... 1.5 (78.3) (5.5) 7.0
---------- ------- ----------- ----------
Total premiums....................................... $ 1,187.4 (49.0)% $ (1,142.5) $ 2,329.9
========== ======= =========== ==========
</TABLE>

For the Companies' variable contracts, premiums collected are not reported as
revenues, but as deposits to insurance liabilities. Revenues for these products
are recognized over time in the form of investment spread and product charges.

Variable annuity separate account premiums decreased 61.7% during the first nine
months of 2000 compared to the same period of 1999. This decrease is completely
due to premium reductions included in the variable annuity separate account
premiums of $1,772.1 million and $72.1, million for the first nine months of
2000 and 1999, respectively, related to modified coinsurance agreements.

Variable life premiums decreased 78.3% in the first nine months of 2000 from the
same period of 1999. In August 1999, Golden American discontinued offering
variable life products.

Premiums, net of reinsurance, for variable products from
a significant broker/dealer having at least ten percent of total sales for the
nine months ended September 30, 2000 totaled $139.3 million, or 12% of total
premiums ($664.2 million, or 29% from two significant broker/dealers for the
nine months ended September 30, 1999).

108944 23

REVENUES

<TABLE>
<CAPTION>
PERCENTAGE DOLLAR
NINE MONTHS ENDED SEPTEMBER 30 2000 CHANGE CHANGE 1999
--------- ---------- ----------- ----------
(Dollars in millions)
<S> <C> <C> <C> <C>
Annuity and interest sensitive
life product charges............................. $ 106.9 93.7% $ 51.7 $ 55.2
Management fee revenue............................... 15.6 130.1 8.8 6.8
Net investment income................................ 47.9 12.2 5.2 42.7
Realized losses on investments....................... (4.5) (104.5) (2.3) (2.2)
Net income from modified coinsurance
agreements....................................... 220.2 3,184.4 213.8 6.4
Other income......................................... 1.3 30.0 0.3 1.0
-------- ------- -------- --------
$ 387.4 252.6% $ 277.5 $ 109.9
======== ======= ======== ========
</TABLE>

Total revenues increased 252.6% in the first nine months of 2000 from the same
period in 1999. Annuity and interest sensitive life product charges increased
93.7% in the first nine months of 2000 due to additional fees earned from the
increasing block of business under management in the variable separate accounts.

Golden American provides certain managerial and supervisory services to Directed
Services, Inc. ("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 $15.6 million and $6.8 million for the first nine months of 2000
and 1999, respectively. This increase is due to the increasing assets in the
variable separate account and renegotiation of the fee paid by DSI to Golden
American.

Net investment income increased 12.2% in the first nine months of 2000
due to growth in average invested assets for the first nine months of 2000 as
compared to the same period in 1999. The Companies had $4.5 million of realized
losses in the first nine months of 2000 on the sale of fixed maturities and the
writedown of an impaired investment, compared to losses of $2.2 million in the
same period of 1999 resulting from the writedown of two fixed maturities in the
second quarter of 1999 and from the sale of investments in the first nine months
of 1999.

Net income from modified coinsurance agreements increased by $213.8 million to
$220.2 million for the first nine months of 2000 as compared to the first nine
months of 1999. This was primarily due to a modified coinsurance agreement which
was entered into during the second quarter of 2000, with an affiliate, Equitable
Life Insurance Company of Iowa ("Equitable Life"), covering a part of business
issued in 2000. This reinsurance agreement contributed $102.9 million to other
income in the third quarter of 2000 and $214.7 in the first nine months of 2000,
which was offset by a corresponding release of deferred policy acquisition costs
and reimbursement of non-deferrable costs related to policies reinsured under
this agreement.

EXPENSES

Total insurance benefits and expenses increased $247.6 million, or 255.6%, to
$344.5 million in the first nine months of 2000. Interest credited to account
balances increased $21.9 million, or 17.4%, to $147.3 million in the first nine
months of 2000. The premium credit on the Premium Plus product increased $19.9
million to $105.6 million in the first nine months of 2000. The bonus interest
on the fixed account decreased $0.4 million to $7.2 million during the first
nine months of 2000. The remaining increase in interest credited relates to
lower account balances associated with the Companies' fixed account options
within the variable products relative to the balances at September 30, 1999.

Commissions increased $25.5 million, or 19%, to $160.1 million in the first nine
months of 2000. Insurance taxes, state licenses, and fees increased $0.7
million, or 20%, to $4.0 million in the first nine months of 2000. Changes in
commissions and insurance taxes, state licenses, and fees are generally related
to changes in the level and composition of variable product sales. Insurance
taxes, state licenses, and fees are impacted by several other factors, which
include an increase in FICA taxes primarily due to incentive bonuses. Most costs
incurred as the result of new sales are deferred, thus having very little impact
on current earnings.

108944 24

General expenses increased $13.6 million, or 28.7%, to $61.2 million in the
first nine months of 2000. Management expects general expenses to continue to
increase in 2000 as a result of the emphasis on expanding the salaried
wholesaler distribution network, the growth in sales, and the increased amounts
in force. The Companies use a network of wholesalers to distribute products, and
the salaries and sales bonuses of these wholesalers are included in general
expenses. The portion of these salaries and related expenses that varies
directly with production levels is deferred thus having little impact on current
earnings. The increase in general expenses was partially offset by
reimbursements received from the following affiliates: DSI, Equitable Life, ING
Mutual Funds Management Co., LLC, Security Life of Denver Insurance Company,
Southland Life Insurance Company, and United Life & Annuity Insurance Company,
for certain advisory, computer, and other resources and services provided by the
Companies.

During the first nine months of 2000 and 1999, value of purchased insurance in
force ("VPIF") was adjusted to increase amortization by $0.7 million in each
period, respectively, to reflect changes in the assumptions related to the
timing of estimated gross profits. Amortization of deferred policy acquisition
costs ("DPAC") increased $29.8 million, or 151.4%, in the first nine months of
2000. This increase resulted from the deferral of expenses associated with the
large sales volume experienced since September 30, 1999. Deferred policy
acquisition costs decreased $157.1 million or 64.2% in the first nine months of
2000. During the second quarter of 2000, a modified coinsurance agreement was
entered into which resulted in a $213.0 million release of previously deferred
policy acquisition costs for the first nine months of 2000. Based on current
conditions and assumptions as to the impact of future events on acquired
policies in force, the expected net amortization relating to VPIF as of
September 30, 2000 is $0.9 million for the remainder of 2000, $3.5 million in
2001, $3.3 million in 2002, $2.8 million in 2003, $2.2 million in 2004, and $1.7
million in 2005. Actual amortization may vary based upon changes in assumptions
and experience.

Interest expense increased 169.7%, or $9.4 million, to $15.0 million in the
first nine months of 2000. Interest expense on a $25 million surplus note issued
December 1996 and expiring December 2026 was $1.5 million for the first nine
months of 2000, unchanged from the same period of 1999. Interest expense on a
$60 million surplus note issued in December 1998 and expiring December 2028 was
$3.3 million for the first nine months of 2000, unchanged from the same period
of 1999. Interest expense on a $75 million surplus note, issued September 1999
and expiring September 2029 was $4.4 million for the first nine months of 2000.
Interest expense on a $50 million surplus note, issued December 1999 and
expiring December 2029 was $3.1 million for the first nine months of 2000.
Interest expense on a $35 million surplus note issued December 1999 and expiring
December 2029 was $2.3 million for the first nine months of 2000. Golden
American also paid $0.4 million in 2000 and $0.7 million in 1999 to ING America
Insurance Holdings, Inc. ("ING AIH") for interest on a reciprocal loan
agreement. Interest expense on a revolving note payable with SunTrust Bank,
Atlanta was $36,000 and $109,000 for the first nine months of 2000 and 1999,
respectively.

INCOME

Net income was $18.1 million for the first nine months of 2000, an increase of
$14.5 million, or 409.3% from the same period of 1999.

Comprehensive income for
the first nine months of 2000 was $21.8 million, an increase of $21.8 million
from comprehensive loss of $18,000 in the same period of 1999.

108944 25

1999 COMPARED TO 1998

PREMIUMS

<TABLE>
<CAPTION>
PERCENTAGE DOLLAR
FOR THE YEAR ENDED DECEMBER 31 1999 CHANGE CHANGE 1998
---------- ---------- ----------- ----------
(Dollars in millions)
<S> <C> <C> <C> <C>
Variable annuity premiums:
Separate account................................. $2,511.7 71.9% $1,050.5 $1,461.2
Fixed account.................................... 770.7 30.9 182.0 588.7
-------- ---- -------- --------
Total variable annuity premiums...................... 3,282.4 60.1 1,232.5 2,049.9
Variable life premiums............................... 8.6 (37.8) (5.2) 13.8
-------- ---- -------- --------
Total premiums....................................... $3,291.0 59.5% $1,227.3 $2,063.7
======== ==== ======== ========
</TABLE>

Variable annuity separate account premiums increased 71.9% in 1999. The fixed
account portion of the Companies' variable annuity premiums increased 30.9% in
1999. These increases resulted from increased sales of the Premium Plus variable
annuity product.

Variable life premiums decreased 37.8% in 1999. In August 1999, Golden American
discontinued offering variable life products.

Premiums, net of reinsurance, for
variable products from two significant broker/dealers each having at least ten
percent of total sales for the year ended December 31, 1999 totaled $918.4
million, or 28% of premiums compared to $528.9 million, or 26%, from two
significant broker/dealers for the year ended December 31, 1998.

REVENUES

<TABLE>
<CAPTION>
PERCENTAGE DOLLAR
FOR THE YEAR ENDED DECEMBER 31 1999 CHANGE CHANGE 1998
---------- ---------- ----------- ----------
(Dollars in millions)
<S> <C> <C> <C> <C>
Annuity and interest sensitive life product
charges.......................................... $ 82.9 112.0% $43.8 $39.1
Management fee revenue............................... 10.1 112.5 5.3 4.8
Net investment income................................ 59.2 39.3 16.7 42.5
Realized gains (losses) on investments............... (2.9) 96.1 (1.4) (1.5)
Other income......................................... 10.8 94.4 5.2 5.6
------- ---- ----- -----
$ 160.1 77.0% $69.6 $90.5
======= ==== ===== =====
</TABLE>

Total revenues increased 77.0%, or $69.6 million, to $160.1 million in 1999.
Annuity and interest sensitive life product charges increased 112.0%, or $43.8
million, to $82.9 million in 1999, primarily due to additional fees earned from
the increasing block of business in the separate accounts.

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 $10.1
million for 1999 and $4.8 million for 1998.

Net investment income increased 39.3%, or $16.7 million, to $59.2 million in
1999 from $42.5 million in 1998, due to growth in invested assets from December
31, 1998, increasing interest rates, and a relative increase in below investment
grade investments.

108944 26

During 1999, the Company had net realized losses on investments of $2.9 million,
which includes a $1.6 million write down of two impaired fixed maturities,
compared to net realized losses on investments of $1.5 million in 1998 which
included a $1.0 million write down of two impaired fixed maturities.

Other income increased $5.2 million to $10.8 million in 1999, due primarily to
income received under a modified coinsurance agreement with an unaffiliated
reinsurer.

EXPENSES

<TABLE>
<CAPTION>
PERCENTAGE DOLLAR
FOR THE YEAR ENDED DECEMBER 31 1999 CHANGE CHANGE 1998
---------- ---------- ----------- ----------
(Dollars in millions)
Insurance benefits and expenses: Annuity and interest sensitive life benefits:

<S> <C> <C> <C> <C>
Interest credited to account balances.......... $ 175.9 85.4% $ 81.0 $ 94.9
Benefit claims incurred in excess of
account balances............................. 6.3 200.2 4.2 2.1
Underwriting, acquisition, and insurance
expenses:
Commissions.................................... 188.4 55.5 67.2 121.2
General expenses............................... 60.2 60.2 22.6 37.6
Insurance taxes, state licenses, and fees...... 4.0 (4.0) (0.1) 4.1
Policy acquisition costs deferred.............. (346.4) 75.1 (148.6) (197.8)
Amortization:
Deferred policy acquisition costs............ 33.1 543.3 28.0 5.1
Value of purchased insurance in force........ 6.2 32.0 1.5 4.7
Goodwill..................................... 3.8 -- -- 3.8
------- ---- ------- --------
$ 131.5 73.7% $ 55.8 $ 75.7
======= ==== ======= ========
</TABLE>

Total insurance benefits and expenses increased 73.7%, or $55.8 million, in 1999
from $75.7 million in 1998. Interest credited to account balances increased
85.4%, or $81.0 million, in 1999 from $94.9 million in 1998. The premium credit
on the Premium Plus variable annuity product increased $69.3 million to $123.8
million at December 31, 1999. The bonus interest on the fixed account increased
$3.0 million to $10.9 million at December 31, 1999. The remaining increase in
interest credited relates to higher account balances associated with the
Companies' fixed account options within the variable products.

Commissions increased 55.5%, or $67.2 million, in 1999 from $121.2 million in
1998. Insurance taxes, state licenses, and fees decreased 4.0%, or $0.1 million,
in 1999 from $4.1 million in 1998. Changes in commissions and insurance taxes,
state licenses, and fees are generally related to changes in the level and
composition of variable product sales. Insurance taxes, state licenses, and fees
are impacted by several other factors, which include an increase in FICA taxes
primarily due to bonuses and expenses for the triennial insurance department
examination of Golden American, which were offset by a decrease in 1999 of
guaranty fund assessments paid. Most costs incurred as the result of sales have
been deferred, thus having very little impact on current earnings.

General expenses increased 60.2%, or $22.6 million, in 1999 from $37.6 million
in 1998. Management expects general expenses to continue to increase in 2000 as
a result of the emphasis on expanding the salaried wholesaler distribution
network and the growth in sales. The Companies use a network of wholesalers to
distribute products, and the salaries and sales bonuses of these wholesalers are
included in general expenses. The portion of these salaries and related expenses
that varies directly with production levels is deferred thus having little
impact on current earnings. The increase in general expenses was partially
offset by reimbursements received from DSI, Equitable Life, ING Mutual Funds
Management Co., LLC, an affiliate, Security Life of Denver Insurance Company, an
affiliate, Southland Life Insurance Company, an affiliate, and United Life &
Annuity Insurance Company, an affiliate, for certain advisory, computer, and
other resources and services provided by Golden American.

108944 27

The Companies' previous balances of deferred policy acquisition costs ("DPAC"),
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 1999, VPIF was
adjusted to increase amortization by $0.7 million to reflect changes in the
assumptions related to the timing of estimated gross profits. During 1998, VPIF
decreased $2.7 million to adjust the value of other receivables and increased
$0.2 million as a result of an adjustment to the merger costs. 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. Amortization of DPAC
increased $28.0 million, or 543.3%, in 1999. This increase resulted from growth
in policy acquisition costs deferred from $197.8 million at December 31, 1998 to
$346.4 million at December 31, 1999, which was generated by expenses associated
with the large sales volume experienced since December 31, 1998. 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, 1999 is $4.0 million in 2000, $3.6 million in 2001, $3.3 million
in 2002, $2.8 million in 2003, and $2.3 million in 2004. Actual amortization may
vary based upon changes in assumptions and experience.

Interest expense increased 102.6%, or $4.5 million, in 1999 from $4.4 million in
1998. Interest expense on a $25 million surplus note issued December 1996 and
expiring December 2026 was $2.1 million for the year ended December 31, 1999,
unchanged from the same period of 1998. Interest expense on a $60 million
surplus note issued in December 1998 and expiring December 2028 was $4.3 million
for the year ended December 31, 1999. Interest expense on a $75 million surplus
note, issued September 30, 1999 and expiring September 29, 2029 was $1.5 million
for the year ended December 31, 1999. Golden American also paid $0.8 million in
1999 and $1.8 million in 1998 to ING America Insurance Holdings, Inc. ("ING
AIH") for interest on a reciprocal loan agreement. Interest expense on a
revolving note payable with SunTrust Bank, Atlanta was $0.2 million and $0.3
million for the years ended December 31, 1999 and 1998, respectively. In
addition, Golden American incurred interest expense of $0.2 million in 1998 on a
line of credit with Equitable.

INCOME

Net income for 1999 was $11.2 million, an increase of $6.1 million from $5.1
million for 1998.

Comprehensive income for 1999 was $3.0 million, a decrease of $0.9 million from
comprehensive income of $3.9 million for 1998.

1998 COMPARED TO 1997

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

PREMIUMS
<TABLE>
<CAPTION>

POST-MERGER COMBINED POST-MERGER POST-ACQUISITION

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

For the Period For the Period
October 25, January 1,
For the Year For the Year 1997 1997
ended ended through through
December 31, December 31, December 31, October 24,
1998 1997 1997 1997

----------------- ----------------- ---------------- -----------------
(Dollars in millions)
<S> <C> <C> <C> <C>
Variable annuity premiums:
Separate account........................ $ 1,513.3 $ 291.2 $ 111.0 $ 180.2
Fixed account........................... 588.7 318.0 60.9 257.1
---------- --------- --------- ---------
2,102.0 609.2 171.9 437.3
Variable life premiums...................... 13.8 15.6 1.2 14.4
---------- --------- --------- ---------
Total premiums.............................. $ 2,115.8 $ 624.8 $ 173.1 $ 451.7
========== ========= ========= =========
</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.

108944 28

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 $528.9 million, or 26% of premiums ($328.2 million, or
53% from two significant broker/dealers for the year ended December 31, 1997).

REVENUES

<TABLE>
<CAPTION>
POST-MERGER COMBINED POST-MERGER POST-ACQUISITION
----------------- ----------------- ---------------- -----------------

For the Period For the Period
October 25, January 1,
For the Year For the Year 1997 1997
ended ended through through
December 31, December 31, December 31, October 24,
1998 1997 1997 1997

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

(Dollars in millions)
<S> <C> <C> <C> <C>
Annuity and interest sensitive life
product charges......................... $ 39.1 $ 22.1 $ 3.8 $ 18.3
Management fee revenue...................... 4.8 2.8 0.5 2.3
Net investment income....................... 42.5 26.8 5.1 21.7
Realized gains (losses)
on investments.......................... (1.5) 0.1 -- 0.1
Other income................................ 5.6 0.7 0.3 0.4
---------- --------- --------- ---------
$ 90.5 $ 52.5 $ 9.7 $ 42.8
========== ========= ========= =========
</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.

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
included 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.

108944 29

EXPENSES
<TABLE>
<CAPTION>

POST-MERGER COMBINED POST-MERGER POST-ACQUISITION

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

For the Period For the Period
October 25, January 1,
For the Year For the Year 1997 1997
ended ended through through
December 31, December 31, December 31, October 24,
1998 1997 1997 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 expenses:

Commissions............................. 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 related 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 were 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

108944 30

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.

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.

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.

FINANCIAL CONDITION

RATINGS. Currently, the Companies' ratings are A+ by A. M. Best Company, AAA by
Duff & Phelps Credit Rating Company, and AA+ by Standard & Poor's Rating
Services ("Standard & Poor's").

INVESTMENTS. The financial statement carrying
value and amortized cost basis of the Companies' total investments decreased
slightly during the first nine months of 2000. All of the Companies'
investments, other than mortgage loans on real estate, are carried at fair value
in the Companies' financial statements. The decrease in the carrying value of
the Companies' investment portfolio was due to changes in unrealized
appreciation and depreciation of investments offset by net sales. The decrease
in the cost basis of the Companies' investment portfolio resulted from net
transfers to the separate accounts. The Companies manage the growth of insurance
operations in order to maintain adequate capital ratios. To support the fixed
account options of the Companies' variable insurance products, cash flow is
invested primarily in fixed maturities and mortgage loans on real estate.

At September 30, 2000, the Companies had no investments in default. At September
30, 2000, the Companies' investments had a yield of 6.7%. The Companies estimate
the total investment portfolio, excluding policy loans, had a fair value
approximately equal to 98.3% of amortized cost value at September 30, 2000.

FIXED MATURITIES: At September 30, 2000, the Companies had fixed maturities with
an amortized cost of $798.9 million and an estimated fair value of $784.8
million. The Companies classify 100% of securities as available for sale. Net
unrealized depreciation of fixed maturities of $14.1 million was comprised of
gross appreciation of $1.7 million and gross depreciation of $15.8 million. Net
unrealized holding losses on these securities, net of adjustments for VPIF,
DPAC, and deferred income taxes of $4.9 million, were included in stockholder's
equity at September 30, 2000.

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 Rating Services
("Standard & Poor's") ($527.7 million or 66.0%), that are rated BBB+ to BBB- by
Standard & Poor's ($130.1 million or 16.3%), and below investment grade
securities, which are securities issued by corporations that are rated BB+ to B-
by Standard & Poor's ($53.0 million or 6.5%). Securities not rated by Standard &
Poor's had a National Association of Insurance Commissioners ("NAIC") rating of
1, 2, 3, 4, or 5 ($88.1 million or 11.6%). The Companies' fixed maturity
investment portfolio had a combined yield at amortized cost of 6.7% at September
30, 2000.

108944 31

Fixed maturities rated BBB+ to BBB- may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity of the issuer to make principal and
interest payments than is the case with higher rated fixed maturities.

At September 30, 2000, the amortized cost value of the Companies' total
investments in below investment grade securities, excluding mortgage-backed
securities, was $71.5 million, or 7.0%, of the Companies' investment portfolio.
The Companies intend to purchase additional below investment grade securities,
but do not expect the percentage invested in such securities to exceed 10% of
the investment portfolio. At September 30, 2000, the yield at amortized cost on
the Companies' below investment grade portfolio was 8.1% compared to 6.5% for
the Companies' investment grade corporate bond portfolio. The Companies estimate
the fair value of the below investment grade portfolio was $67.5 million, or
94.4% of amortized cost value, at September 30, 2000.

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.

During the first nine months of 2000, fixed maturities
designated as available for sale with a combined amortized cost of $163.3
million were sold, called, or repaid by their issuers. In total, net pre-tax
losses from sales, calls, and repayments of fixed maturity investments amounted
to $4.5 million in the first nine months of 2000.

During the second quarter of
2000, Golden American determined that the carrying value of an impaired bond
exceeded its estimated net realizable value. As a result, at June 30, 2000,
Golden American recognized a total pre-tax loss of approximately $142,000 to
reduce the carrying value of the bond to its net realizable value of $329,000.

EQUITY SECURITIES: Equity securities represent 0.9% of the Companies' investment
portfolio. At September 30, 2000, the Companies owned equity securities with a
cost of $9.7 million and an estimated fair value of $8.8 million. Net unrealized
depreciation of equity securities was comprised entirely of gross depreciation
of $0.9 million. Equity securities are comprised of investments in shares of
mutual funds underlying the Companies' registered separate accounts.

MORTGAGE LOANS ON REAL ESTATE: Mortgage loans on real estate
represent 10.1% of the Companies' investment portfolio.
Mortgages outstanding were $104.5 million at September 30,
2000 with an estimated fair value of $102.4 million. The Companies'
mortgage loan portfolio is comprised of 59 loans with an average size of
$1.8 million and average seasoning of 0.6 years if weighted by the number of
loans. The Companies' mortgage loans on real estate are typically secured by
occupied buildings in major metropolitan locations and not speculative
developments and are diversified by type of property and geographic location. At
September 30, 2000, the yield on the Companies' mortgage loan portfolio was
7.3%.

108944 32

At September 30, 2000, no mortgage loan on real estate was delinquent by
90 days or more. The Companies' loan investment strategy is consistent with
other life insurance subsidiaries of ING in the United States. The insurance
subsidiaries of EIC have experienced a historically low default rate in their
mortgage loan portfolios.

OTHER ASSETS. DPAC represents certain deferred costs
of acquiring new insurance business, principally first year commissions and
interest bonuses, premium credits, and other expenses related to production
after October 24, 1997 ("ING merger date"). The Companies' previous balances of
DPAC and VPIF were eliminated as of the ING merger date, and an asset
representing VPIF was established for all policies in force at the ING 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. During the second quarter of 2000, a modified
coinsurance agreement was entered into which resulted in a $213.0 million
release of previously deferred policy acquisition costs. At September 30, 2000,
the Companies had DPAC and VPIF balances of $564.0 million and $28.9 million,
respectively.

Goodwill totaling $151.1 million, representing the excess of the acquisition
cost over the fair value of net assets acquired, was established as a result of
the merger with ING. Accumulated amortization of goodwill through September 30,
2000 was $11.0 million.

Due from affiliates increased $9.2 million or 1438.4% to $9.8 million during the
first nine months of 2000. This is mainly due to an increased receivable for
management fee revenues. The increase is due to higher management fees in the
current year as well as the timing of the receivable settlement.

Other assets increased $1.2 million from December 31, 1999, due to an increase
in the receivable for securities sold and an increase in prepaid expenses.

At September 30, 2000, the Companies had $10.0 billion of separate account
assets compared to $7.6 billion at December 31, 1999. The increase in
separate account assets resulted from market appreciation, transfers from
the fixed account options, and sales of the Companies' variable annuity
products, net of redemptions.

At September 30, 2000, the Companies had total assets of $11.8 billion, a 26.0%
increase from December 31, 1999.

LIABILITIES. Future policy benefits for annuity
and interest sensitive life products decreased 9.1%, to $939.0 million due to
net transfers to the variable accounts. Market appreciation, net transfers from
the fixed account to the variable account options, and premiums, net of
redemptions, accounted for the $2.4 billion, or 32.1%, increase in separate
account liabilities to $10.0 billion at September 30, 2000.

On December 30, 1999, Golden American issued a $50 million, 8.179% surplus note
to Equitable Life, which matures on December 29, 2029. On December 8, 1999,
Golden American issued a $35 million, 8.0% surplus note to First Columbine Life
Insurance Company, an affiliate, which matures on December 7, 2029. On September
30, 1999, Golden American issued a $75 million, 7.75% surplus note to ING AIH,
which matures on September 29, 2029. On December 30, 1999, ING AIH assigned the
surplus note to Equitable Life. On December 30, 1998, Golden American issued a
$60 million, 7.2% surplus note to Equitable Life, which matures on December 29,
2028. On December 17, 1996, Golden American issued a $25 million, 8.2% surplus
note to Equitable of Iowa Companies, which matures on December 17, 2026. As a
result of the ING merger, the surplus note is now payable to EIC.

Due to affiliates increased $12.5 million or 98.1% to $25.1 million during the
first nine months of 2000. This is mainly due to the overpayment of the cash
settlement for the modified co-insurance agreement with a related party.

Other liabilities decreased $5.9 million or 11.1% to $47.3 million during the
first nine months of 2000 due to the timing of account transfers, as well as the
timing of the settlement of investment transactions.

In conjunction with the volume of variable annuity sales, the Companies' total
liabilities increased $2.3 billion, or 26.3%, during the first nine months of
2000 and totaled $11.3 billion at September 30, 2000.

108944 33

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 stockholder's equity when monetary
assets exceed monetary liabilities.

STOCKHOLDER'S EQUITY. Additional paid-in capital increased $80.0 million,
or 17.1%, from December 31, 1999 to $548.6 million at September 30, 2000,
due to a capital contribution 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 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 premium
credits, investment purchases, repayment of debt, as well as withdrawals and
surrenders.

Net cash provided by operating activities was $142.9 million in the first nine
months of 2000 compared to net cash used of $60.0 million in the same period of
1999. 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 products. However, during the first nine months of 2000, Golden
American received $214.7 million in conjunction with the modified coinsurance
agreement with an affiliate, resulting in positive cash flow from operating
activities.

Net cash provided by investing activities was $15.0 million during the first
nine months of 2000 as compared to net cash used of $111.3 million in the same
period of 1999. This change from prior year is primarily due to net sales of
fixed maturities and equity securities, the net repayment of policy loans and a
reduction in purchases of property and equipment. These sources of cash were
partially offset by an increase in net purchases of short-term investments and
mortgages during the first nine months of 2000 as compared to the same period in
1999. Net sales of fixed maturities reached $53.1 million during the first nine
months of 2000 compared to net purchases of $79.7 million in the same period of
1999. Net purchases of short term investments reached $37.6 million in the first
nine months of 2000 versus $25.4 million during the same period in 1999. Net
purchases of mortgage loans on real estate were $4.7 million during the first
nine months of 2000 versus net sales of $3.2 million during the first nine
months of 1999.

Net cash used in financing activities was $162.4 million during
the first nine months of 2000 compared to net cash provided by financing
activities of $177.5 million during the same period in 1999. The net
reallocations to the Companies' separate accounts, which increased to $620.6
million from $439.2 million during the prior year, contributed to the increased
use of cash in financing activities. The issue of surplus notes of $75.0 million
in September, 1999 also added to the decrease of cash flow from financing
activities, as did a decrease in capital contributions of $20.0 million to $80.0
million in the first nine months of 2000.

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 which expired on July 31,
2000. As of July 31, 2000, the SunTrust Bank, Atlanta revolving note facility
was extended to July 30, 2001. Management believes 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 sales.
It is anticipated that a continuation of capital contributions from the Parent,
the issuance of additional surplus notes, and/or modified coinsurance agreements
will cover these net cash outflows. ING AIH is committed to the sustained growth
of Golden American. During 2000, ING AIH will maintain Golden American's
statutory capital and surplus at the end of each quarter at a level

108944 34

such that: 1) the ratio of Total Adjusted Capital divided by Company Action
Level Risk Based Capital exceeds 300%; 2) the ratio of Total Adjusted Capital
(excluding surplus notes) divided by Company Action Level Risk Based Capital
exceeds 200%; and 3) Golden American's statutory capital and surplus exceeds
the "Amounts Accrued for Expense Allowances Recognized in Reserves" as disclosed
on page 3, Line 13A of Golden American's statutory statement.

During the first quarter of 1999, Golden American's operations were moved to a
new site in West Chester, Pennsylvania. Golden American occupies 105,000 square
feet of leased space; an affiliate occupies 20,000 square feet. Golden
American's New York subsidiary is housed in leased space in New York, New York.
The Companies intend to spend approximately $0.5 million on capital needs during
the remainder of 2000.

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 2000, 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, Golden American,
unless a notice of its intent to declare a dividend and the amount of the
dividend has been filed with the New York Insurance Department at least thirty
days in advance of the proposed declaration. If the Superintendent of the New
York Insurance Department 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
dividends to Golden American during 2000.

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 the Companies have total
adjusted capital well above all required capital levels.

REINSURANCE. At September 30, 2000, 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.

The reinsurance treaties that covered the nonstandard minimum guaranteed death
benefits for new business have been terminated for business issued after
December 31, 1999. The Companies are currently pursuing additional alternative
reinsurance arrangements for new business issued after December 31, 1999. There
can be no assurance that such alternative arrangements will be available. The
reinsurance covering business in force at December 31, 1999 will continue to
apply in the future.

IMPACT OF YEAR 2000. In prior years, the Companies discussed the nature and
progress of plans to become Year 2000 ready. In late 1999, the Companies
completed remediation and testing of systems. As a result of those planning and
implementation efforts, the Companies experienced no significant disruptions in
mission critical information technology and non-information technology systems
and believe those systems successfully responded to the Year 2000 date change.
The Companies are not aware of any material problems resulting from Year 2000
issues, either with products, internal systems, or the products and services of
third parties. The Companies will continue to monitor mission critical computer
applications and those of suppliers and vendors throughout the Year 2000 to
ensure that any latent Year 2000 matters that may arise are addressed promptly.

108944 35

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 insurance 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
June 30, 2000 levels, variable separate account funds, which represent 90% of
the in force, pass the risk in underlying fund performance to the contractholder
(except for certain minimum guarantees). With respect to interest rate movements
up or down 100 basis points from June 30, 2000 levels, the remaining 10% 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, fee
revenue, 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 tax status 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

108944 36

products, variable product design, and sales volume by significant
sellers of the Companies' variable products.

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 variable insurance products.
Golden American and its affiliate DSI are party to in excess of 480 sales
agreements with broker-dealers, five of whom, DSI, Locust Street Securities,
Inc., Vestax Securities Corporation, IFG Network Securities, Inc. and
Multi-Financial Securities Corporation, are affiliates of Golden American.
During the first nine months of 2000, one broker-dealer produced 10% or more of
Golden American's product sales (two broker-dealers as of December 31, 1999).

REINSURANCE. On June 30, 2000, effective January 1, 2000, Golden American
entered into a modified coinsurance agreement with Equitable Life, an affiliate,
covering a considerable portion of Golden American's variable annuities issued
in 2000, excluding those with an interest rate guarantee. The accompanying
financial statements are presented net of the effects of the agreement.

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.

The Companies have a service agreement with Equitable Life, in which Equitable
Life provides administrative and financial services. Under this agreement, the
Companies incurred expenses of $339,000 in the third quarter of 2000 and
$1,006,000 for the first nine months of 2000 ($50,000 and $855,000,
respectively, for the same periods of 1999).

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 third quarter and nine months ended September 30,
2000, the fee was $6.5 million and $15.6 million respectively ($2.7 million and
$6.8 million respectively, for the same periods of 1999).

The Companies have an asset management agreement with ING Investment Management
LLC ("ING IM"), an affiliate, in which ING IM provides asset management and
accounting services. Under the agreement, the Companies record a fee based on
the value of the assets managed by ING IM. The fee is payable quarterly. For the
third quarter and first nine months of 2000, the Companies incurred fees of
$596,000 and $870,000, respectively, under this agreement ($523,000 and $1.6
million, respectively for the same periods of 1999).

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 $1.5 million for the third quarter
of 2000 and $4.8 million for the first nine months of 2000 ($237,000 and
$898,000, respectively, for the same periods of 1999).

The Companies provide resources and services to DSI. Revenues for these
services, which reduced general expenses incurred by the Companies, totaled
$54,000 for the third quarter of 2000, and $162,000 for the first nine months of
2000 ($276,000 and $759,000 respectively, for the same periods of 1999).

108944 37

Golden American provides resources and services to ING Mutual Funds Management
Co., LLC, an affiliate. Revenues for these services, which reduced general
expenses incurred by Golden American, totaled $117,000 for the third quarter of
2000 and $387,000 for the first nine months of 2000 ($159,000 and $376,000,
respectively, for the same periods of 1999).

Golden American provides resources and services to United Life & Annuity
Insurance Company, an affiliate. Revenues for these services, which reduce
general expenses incurred by Golden American, totaled $145,000 for the third
quarter of 2000 and $463,000 for the first nine months of 2000.

The Companies provide resources and services to Security Life of Denver
Insurance Company, an affiliate. Revenues for these services, which reduce
general expenses incurred by the Companies, totaled $65,000 for the third
quarter of 2000 and $173,000 for the first nine months of 2000.

The Companies provide resources and services to Southland Life Insurance
Company, an affiliate. Revenues for these services, which reduce general
expenses incurred by the Companies, totaled $26,000 for the third quarter of
2000 and $78,000 for the first nine months of 2000.

Golden American has a guaranty agreement with Equitable Life, an affiliate. In
consideration of an annual fee, payable September 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 a direct
or indirect guaranty by Equitable Life of the payment of any debt or other
obligation, indebtedness, or liability 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. On
September 30, 2000, Golden American incurred a fee of $7,000, under this
agreement. No annual fee was paid in 1999.

DISTRIBUTION AGREEMENT. DSI, an affiliate, 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 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. The Companies paid commissions to DSI totaling $47.1
million and $156.3 million in the third quarter and the first nine months of
2000, respectively ($50.1 million and $130.4 million, respectively, for the same
periods of 1999).

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

108944 38

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, andits 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
he 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
-------------------------- ----------------------------------------------------
<S> <C>
Barnett Chernow (50) President and Director
Myles R. Tashman (58) Director, Executive Vice President,
General Counsel and Secretary
Michael W. Cunningham (52) Director
Mark A. Tullis (45) Director
Phillip R. Lowery (47) Director
James R. McInnis (52) Executive Vice President and Chief Marketing Officer
Stephen J. Preston (43) Executive Vice President and Chief Actuary
E. Robert Koster (42) Senior Vice President and Chief Financial Officer
Patricia M. Corbett (35) Treasurer and Assistant V.P.
David L. Jacobson (51) Senior Vice President and Assistant Secretary
William L. Lowe (36) Senior Vice President, Sales and Marketing
Ronald R. Blasdell (47) Senior Vice President, Project Implementation
Steven G. Mandel (41) Senior Vice President and Chief Information Officer
Gary F. Haynes (55) Senior Vice President, Operations
</TABLE>

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. Golden American's directors and senior executive officers and
their principal positions for the past five years are listed below:
108944 39

Mr. Barnett Chernow became President of Golden American and First Golden in
April, 1998. From 1996 to 1998, Mr. Chernow served as Executive V.P. of First
Golden. From 1993 to 1998, Mr. Chernow also served as Executive Vice President
of Golden American. He was elected to serve as a director of First Golden in
June, 1996 and Golden American in April, 1998.

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. 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.

Mr. Mark A. Tullis became a Director of Golden
American and First Golden in December 1999. He has served as Executive Vice
President, Strategy and Operations for ING Americas Region since September 1999.
From June, 1994 to August, 1999, he was with Primerica, serving as Executive
Vice President at the time of his departure.

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

Mr. James R. McInnis joined
Golden American and First Golden 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. 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. He was elected Senior Vice President and Chief Actuary of First Golden in
June, 1996 and elected Executive Vice President in June, 1998.

Mr. E. Robert Koster was elected Senior Vice President and Chief
Financial Officer of Golden American and First Golden 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 Vice
President and Assistant Secretary and became Senior Vice President in December,
1993. He was elected Senior Vice President and Assistant Secretary for First
Golden in June, 1996.

Mr. William L. 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. Ronald R. Blasdell joined Golden American in February, 1994 and became
Senior Vice President, Project Implementation in June, 1998.

Mr. Steven G. Mandel joined Golden American in October 1988 and became
Senior Vice President and Chief Information Officer in June, 1998.

Mr. Gary Haynes rejoined Golden American in April, 1999 as Senior Vice
President, Operations. From August, 1995 to February, 1998, he was with F&G Life
Insurance Company serving as Senior Vice President, Operations at the time of
his departure. He served as Senior Vice President Operations with Golden
American from July, 1994 to August, 1995.

COMPENSATION TABLE 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 four
highly compensated executive officers for the fiscal year ended December 31,
1999. Certain executive officers of Golden American are also officers of DSI and
First Golden. The salaries of such individuals are allocated among Golden
American, DSI and First Golden pursuant to an arrangement among these companies.

108944 40

EXECUTIVE COMPENSATION TABLE

The following table sets forth information with respect to the annual salary and
bonus for Golden American's Chief Executive Officer, the four other most highly
compensated executive officers and the two most highly compensated former
executive officers for the fiscal year ended December 31, 1999.

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
RESTRICTED SECURITIES
NAME AND STOCK AWARDS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS 1 OPTIONS 2 OPTIONS COMPENSATION 3
<S> <C> <C> <C> <C> <C> <C>
Barnett Chernow.......... 1999 $ 300,009 $ 698,380 6,950 $20,464 4
President 1998 $ 284,171 $ 105,375 8,000
1997 $ 234,167 $ 31,859 $ 277,576 4,000

James R. McInnis......... 1999 $ 250,007 $ 955,646 5,550 $15,663 4
Executive Vice 1998 $ 250,004 $ 626,245 2,000
President

Myles R. Tashman......... 1999 $ 199,172 $ 293,831 1,800 $14,598 4
Executive Vice 1998 $ 189,337 $ 54,425 3,500
President, General 1997 $ 181,417 $ 25,000 $ 165,512 5,000
Counsel and Secretary

Stephen J. Preston....... 1999 $ 198,964 $ 235,002 2,050 $12,564 4
Executive Vice 1998 $ 173,870 $ 32,152 3,500
President and Chief 1997 $ 160,758 $ 16,470
Actuary

Steven G. Mandel......... 1999 $ 153,754 $ 261,330 1,400 $11,551 4
Senior Vice 1998 $ 139,169 $ 25,833
President 1997 $ 129,167 $ 25,000

R. Brock Armstrong....... 1999 $ 500,014 $ 500,000 10,175 $23,921 4
Former Chief
Executive Officer

Keith Glover............. 1999 $ 87,475 $ 761,892 $558,541 4, 5
Former Executive 1998 $ 250,000 $ 145,120 3,900
Vice President
--------------------
</TABLE>

1 The amount shown relates to bonuses paid in 1999, 1998, and 1997.

2 Restricted stock awards granted to executive officers vested on
October 24, 1997 with the change in control of Equitable of Iowa.

3 Other compensation for 1999 includes reimbursements to named employee
for participation in company sponsored programs such as tuition
reimbursement, PC purchase assistance program, and other miscellaneous
payments or reimbursements. For 1999, Mr. Chernow received $2,464; Mr.
McInnis received $636; Mr. Tashman received $2,598; Mr. Preston received
$564; Mr. Mandel received $2,251; Mr. Armstrong received $1,421; and Mr.
Glover received $3,089.

4 Other compensation for 1999 includes a business allowance for each named
executive which is required to be applied to specific business expenses
of the named executive.

5 In connection with the termination of his employment, Mr. Glover
received payments and benefits totaling $555,452.

108944 41

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
% OF TOTAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL
SECURITIES GRANTED TO RATES OF STOCK
UNDERLYING EMPLOYEES EXERCISE PRICE APPRECIATION
OPTIONS IN FISCAL OR BASE EXPIRATION FOR OPTION TERM 3
NAME GRANTED 1 YEAR PRICE 2 DATE 5% 10%

<S> <C> <C> <C> <C> <C> <C>
Barnett Chernow........... 2,000 3.18 $54.210 01/04/2004 $ 29,954 $ 66,191
4,950 7.86 $54.210 04/01/2009 $ 168,757 $ 427,664
James R. McInnis.......... 2,550 4.05 $54.210 04/01/2009 $ 86,936 $ 220,312
3,000 4.77 $55.070 10/01/2009 $ 103,900 $ 263,302
Myles R. Tashman.......... 1,800 2.86 $54.210 04/01/2009 $ 61,366 $ 155,514
Stephen J. Preston........ 2,050 3.26 $54.210 04/01/2009 $ 69,889 $ 177,113
Steven G. Mandel.......... 1,400 2.22 $54.210 04/01/2009 $ 47,729 $ 120,955
R. Brock Armstrong........ 10,175 16.16 $54.210 04/01/2009 $ 346,890 $ 879,087
</TABLE>

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

1 Stock appreciation rights granted in 1999 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
the date of grant.

3 Total dollar gains based on indicated rates of appreciation of share
price over the total term of the rights.

108944 42

--------------------------------------------------------------------------------
UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------

For the Nine Months Ended September 30, 2000

108944 43

<TABLE>
<CAPTION>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands, except per share data)

September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair value
(cost: 2000 - $798,855; 1999 - $858,052)......................... $ 784,780 $ 835,321
Equity securities, at fair value (cost: 2000 - $9,671;
1999 - $14,952)..................................................... 8,832 17,330
Mortgage loans on real estate....................................... 104,537 100,087
Policy loans........................................................ 13,126 14,157
Short-term investments.............................................. 117,757 80,191
-------------- ------------
Total investments...................................................... 1,029,032 1,047,086

Cash and cash equivalents.............................................. 9,979 14,380
Reinsurance recoverable................................................ 19,362 14,834
Reinsurance recoverable from affiliate................................. -- --
Due from affiliates.................................................... 9,768 637
Accrued investment income.............................................. 11,511 11,198
Deferred policy acquisition costs...................................... 564,004 528,957
Value of purchased insurance in force ................................. 28,881 31,727
Current income taxes recoverable....................................... -- 35
Deferred income tax asset.............................................. 13,546 21,943
Property and equipment, less allowances for depreciation of
$4,857 in 2000 and $3,229 in 1999................................... 14,153 13,888
Goodwill, less accumulated amortization of $11,020 in 2000
and $8,186 in 1999.................................................. 140,107 142,941
Other assets........................................................... 3,733 2,514
Separate account assets................................................ 9,991,861 7,562,717
-------------- ------------
Total assets........................................................... $ 11,835,937 $ 9,392,857
============== ============

LIABILITIES AND STOCKHOLDER'S EQUITY Policy liabilities and accruals:

Future policy benefits:
Annuity and interest sensitive life products...................... $ 939,865 $ 1,033,701
Unearned revenue reserve.......................................... 6,914 6,300
Other policy claims and benefits.................................... 35 8
-------------- ------------
946,814 1,040,009

Reciprocal loan from affiliate......................................... -- --
Surplus notes.......................................................... 245,000 245,000
Revolving note payable................................................. -- 1,400
Due to affiliates...................................................... 25,062 12,651
Current income taxes payable........................................... 289 --
Other liabilities...................................................... 47,257 53,231
Separate account liabilities........................................... 9,991,861 7,562,717
-------------- ------------
11,256,283 8,915,008
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.......................................... 548,640 468,640
Accumulated other comprehensive loss................................ (5,433) (9,154)
Retained earnings .................................................. 33,947 15,863
-------------- ------------
Total stockholder's equity............................................. 579,654 477,849
-------------- ------------
Total liabilities and stockholder's equity............................. $ 11,835,937 $ 9,392,857
============== ============
</TABLE>

108944 44

<TABLE>
<CAPTION>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands)

For the Nine For the Nine
Months Ended Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Revenues:
Annuity and interest sensitive life product charges................. $ 106,892 $ 55,195
Management fee revenue.............................................. 15,579 6,755
Net investment income............................................... 47,896 42,671
Realized losses on investments...................................... (4,546) (2,215)
Net income from modified coinsurance agreements..................... 220,249 6,443
Other income........................................................ 1,287 1,005
----------- ----------
387,357 109,854

Insurance benefits and expenses: Annuity and interest sensitive life benefits:

Interest credited to account balances............................... 147,277 125,404
Benefit claims incurred in excess of account balances............... 4,083 3,452
Underwriting, acquisition, and insurance expenses:
Commissions......................................................... 160,105 134,585
General expenses.................................................... 61,194 47,551
Insurance taxes, state licenses, and fees........................... 4,047 3,382
Policy acquisition costs deferred................................. (87,753) (244,840)
Amortization:
Deferred policy acquisition costs............................... 49,527 19,699
Value of purchased insurance in force............................. 3,181 4,803
Goodwill.......................................................... 2,834 2,834
----------- ----------
344,495 96,870
Interest expense....................................................... 14,976 5,552
----------- ----------
359,471 102,422
----------- ----------
Income before income taxes............................................. 27,886 7,432

Income taxes........................................................... 9,802 3,881
----------- ----------

Net income............................................................. $ 18,084 $ 3,551
=========== ==========
</TABLE>
See accompanying notes.

108944 45

<TABLE>
<CAPTION>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)

For the Nine For the Nine
Months Ended Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.................... $ 142,933 $ (60,026)

INVESTING ACTIVITIES
Sale, maturity, or repayment of investments:

Fixed maturities - available for sale............................... 158,731 170,548
Equity securities................................................... 5,196 --
Mortgage loans on real estate....................................... 5,118 4,241
Policy loans - net.................................................. 837 --
------------- ------------
169,882 174,789

Acquisition of investments:
Fixed maturities - available for sale............................... (105,606) (250,277)
Mortgage loans on real estate....................................... (9,786) (1,034)
Policy loans - net.................................................. -- (1,682)
Short term investments - net........................................ (37,567) (25,367)
------------- ------------
(152,959) (278,360)
Net purchase of property and equipment................................. (1,898) (7,700)
Issuance of reciprocal loan agreement receivables...................... (16,900) --
Receipt of repayment of reciprocal loan agreement receivables.......... 16,900 --
Net cash provided by (used in) investing activities.................... 15,025 (111,271)
------------- ------------

FINANCING ACTIVITIES

Proceeds from reciprocal loan agreement borrowings..................... 177,900 488,950
Repayment of reciprocal loan agreement borrowings...................... (177,900) (488,950)
Proceeds from revolving note payable................................... 66,100 131,595
Repayment of revolving note payable.................................... (67,500) (131,595)
Receipts from annuity and interest sensitive life
policies credited to account balances............................... 506,412 540,464
Return of account balances on annuity
and interest sensitive life policies................................ (126,803) (98,715)
Net reallocations to Separate Accounts................................. (620,568) (439,223)
Contribution from parent .............................................. 80,000 100,000
------------- ------------
Net cash provided by (used in) financing activities.................... (162,359) 177,526
------------- ------------
Increase (decrease) in cash and cash equivalents....................... (4,401) 6,229

Cash and cash equivalents at beginning of period....................... 14,380 6,679
------------- ------------
Cash and cash equivalents at end of period............................. $ 9,979 $ 12,908
============= ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for........................................
Interest............................................................ $ 18,068 $ 5,078
Taxes............................................................... $ 28 $ 10

See accompanying notes.

108944 46

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
September 30, 2000

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. This Form is being filed with the reduced disclosure format
specified in General Instruction H(1) and (2) of Form 10-Q. Accordingly, the
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All adjustments were of a normal
recurring nature, unless otherwise noted in Management's Discussion and Analysis
and the Notes to Financial Statements. Operating results for the nine months
ended September 30, 2000 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000. These financial statements
should be read in conjunction with the financial statements and related
footnotes included in the Golden American Life Insurance Company's annual report
on Form 10-K for the year ended December 31, 1999.

CONSOLIDATION

The condensed 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 is a wholly owned subsidiary of Equitable of Iowa Companies,
Inc. ("EIC" or the "Parent"). EIC is an indirect wholly owned subsidiary of ING
Groep N.V., a global financial services holding company based in The
Netherlands.

STATUTORY

Net loss for Golden American as determined in accordance with statutory
accounting practices was $6,017,000 and $75,508,000 for the nine months ended
September 30, 2000 and 1999, respectively. Total statutory capital and surplus
was $441,698,000 at September 30, 2000 and $368,928,000 at December 31, 1999.

RECLASSIFICATIONS

Certain amounts in the prior period financial statements have been reclassified
to conform to the September 30, 2000 financial statement presentation.

108944 47

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
September 30, 2000

2. COMPREHENSIVE INCOME

Comprehensive income includes all changes in stockholder's equity during a
period except those resulting from investments by and distributions to the
stockholder. During the third quarters of 2000 and 1999, total comprehensive
income (loss) for the Companies amounted to $14,781,000 and $2,059,000,
respectively, and $21,805,000 and $(18,000) for the nine months ended September
30, 2000 and 1999, respectively. Included in these amounts are total
comprehensive income (loss) for First Golden of $549,000 and $(14,000) for the
third quarters of 2000 and 1999, respectively, and $659,000 and $(258,000) for
the nine months ended September 30, 2000 and 1999, respectively. Other
comprehensive income (loss) excludes net investment gains (losses) included in
net income which merely represent transfers from unrealized to realized gains
and losses. These amounts totaled $(834,000) and $(460,000) during the third
quarters of 2000 and 1999, respectively, and $(1,422,000) and $(2,512,000)
during the nine months ended September 30, 2000 and 1999, respectively. Such
amounts, which have been measured through the date of sale, are net of income
taxes and adjustments for value of purchased insurance in force and deferred
policy acquisition costs totaling $(1,080,000) and $(38,000) for the third
quarters of 2000 and 1999, respectively, and $(3,121,000) and $297,000 for the
nine months ended September 30, 2000 and 1999, respectively.

3. INVESTMENTS

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 impairment in value
appears to be other than temporary. During the second quarter of 2000, Golden
American determined that the carrying value of an impaired bond exceeded its
estimated net realizable value. As a result, at June 30, 2000, Golden American
recognized a total pre-tax loss of approximately $142,000 to reduce the carrying
value of the bond to its net realizable value of $329,000 at June 30, 2000.
During the third quarter of 1999, Golden American determined that the carrying
value of two bonds exceeded their estimated net realizable value. As a result,
at September 30, 1999, Golden American recognized a total pre-tax loss of
$1,639,000 to reduce the carrying value of the bonds to their combined net
realizable value of $1,137,000.

4. RELATED PARTY TRANSACTIONS

Operating Agreements: Directed Services, Inc. ("DSI"), an affiliate, 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. The
Companies paid commissions to DSI totaling $47,073,000 and $156,325,000 in the
third quarter and the first nine months of 2000, respectively ($50,131,000 and
$130,419,000, respectively, for the same periods of 1999).

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 third quarter and nine months ended
September 30, 2000, the fee was $6,521,000 and $15,579,000, respectively
($2,659,000 and $6,755,000, respectively, for the same periods of 1999).

The Companies have an asset management agreement with ING Investment Management
LLC ("ING IM"), an affiliate, in which ING IM provides asset management and
accounting services. Under the agreement, the Companies record a fee based on
the value of the assets managed by ING IM. The fee is payable quarterly. For the
third quarter and first nine months of 2000, the Companies incurred fees of
$596,000 and $1,870,000, respectively, under this agreement ($523,000 and
$1,637,000, respectively, for the same periods of 1999).

108944 48

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
September 30, 2000

4. RELATED PARTY TRANSACTIONS (continued)

Golden American has a guaranty agreement with Equitable Life Insurance Company
of Iowa ("Equitable Life"), an affiliate. In consideration of an annual fee,
payable September 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 a direct or indirect guaranty by Equitable Life
of the payment of any debt or other obligation, indebtedness, or liability 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. On September 30, 2000, Golden American incurred
a fee of $7,000, under this agreement. No annual fee was paid in 1999.

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 $1,534,000 in the third quarter of 2000 and
$4,810,000 for the first nine months of 2000 ($237,000 and $898,000,
respectively, for the same periods of 1999).

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 $339,000 in the third quarter of 2000 and $1,006,000 for the first
nine months of 2000 ($50,000 and $855,000 respectively, for the same periods of
1999).

The Companies provide resources and services to DSI. Revenues for these
services, which reduced general expenses incurred by the Companies, totaled
$54,000 for the third quarter of 2000 and $162,000 for the first nine months of
2000 ($276,000 and $759,000 respectively, for the same periods of 1999).

Golden American provides resources
and services to United Life & Annuity Insurance Company, an affiliate. Revenues
for these services, which reduced general expenses incurred by Golden American,
totaled $145,000 for the third quarter of 2000 and $463,000 for the first nine
months of 2000.

The Companies provide resources and services to Security Life of Denver
Insurance Company, an affiliate. Revenues for these services, which reduced
general expenses incurred by the Companies, totaled $65,000 for the third
quarter of 2000 and $173,000 for the first nine months of 2000.

The Companies provide resources and services to Southland Life Insurance
Company, an affiliate. Revenues for these services, which reduced general
expenses incurred by the Companies, totaled $26,000 for the third quarter of
2000 and $78,000 for the first nine months of 2000.

For the third quarter of 2000, the Companies received premiums, net of
reinsurance, for variable products sold through five affiliates, Locust Street
Securities, Inc. ("LSSI"), Vestax Securities Corporation ("Vestax"), DSI,
Multi-Financial Securities Corporation ("Multi-Financial"), and IFG Network
Securities, Inc. ("IFG"), of $6,000,000, $700,000, $0, $2,100,000, and
$2,700,000, respectively ($46,600,000, $12,900,000, $0, $11,000,000, and
$4,300,000, respectively, for the same period of 1999). For the first nine
months of 2000, the Companies received premiums, net of reinsurance for variable
products sold through five affiliates, LSSI, Vestax, DSI, Multi-Financial, and
IFG of $73,000,000, $29,000,000, $800,000, $23,200,000, and $11,000,000,
respectively ($121,900,000, $72,000,000, $2,300,000, $24,400,000 and
$20,000,000, respectively, for the same period of 1999).

108944 49

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
September 30, 2000

4. RELATED PARTY TRANSACTIONS (continued)

Modified Coinsurance Agreement: On June 30, 2000, effective January 1, 2000,
Golden American entered into a modified coinsurance agreement with Equitable
Life, an affiliate, covering a considerable portion of Golden American's
variable annuities issued in 2000, excluding those with an interest rate
guarantee. The accompanying financial statements are presented net of the
effects of the agreement.

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 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 Department of Insurance of the
State of Delaware. Interest on any Golden American borrowings is charged at the
rate of ING AIH's cost of funds for the interest period plus 0.1%. 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 $91,000 and
$397,000 for the third quarters of 2000 and 1999, respectively, and $427,000 and
$633,000 for the first nine months of 2000 and 1999, respectively. At September
30, 2000, Golden American had no borrowings from ING AIH under this agreement.

Surplus Notes: On December 30, 1999, Golden American issued an 8.179% surplus
note in the amount of $50,000,000 to Equitable Life. The note matures on
December 29, 2029. Payment of 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. Under this
agreement, Golden American incurred interest expense of $1,020,000 for the third
quarter of 2000 and $3,076,000 for the first nine months of 2000.

On December 8, 1999, Golden American
issued a 7.979% surplus note in the amount of $35,000,000 to First
Columbine Life Insurance Company ("First Columbine"), an affiliate. The
note matures on December 7, 2029. Payment of 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. Under this agreement, Golden American incurred interest expense of
$696,000 for the third quarter of 2000 and $2,271,000 for the first nine months
of 2000.

On September 30, 1999, Golden American issued a 7.75% surplus note in the amount
of $75,000,000 to ING AIH. The note matures on September 29, 2029. Payment of
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. Under this agreement, Golden American
incurred interest expense of $1,449,000 for the third quarter of 2000 and
$4,355,000 for the first nine months of 2000. On December 30, 1999, ING AIH
assigned the note to Equitable Life.

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. Payment
of 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. Under this agreement, Golden American
incurred interest expense of $1,088,000 and $1,088,000 for the third quarters of
2000 and 1999, respectively, and $3,263,000 for the first nine months of 2000,
unchanged from the same period in 1999.

108944 50

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
September 30, 2000

4. RELATED PARTY TRANSACTIONS (continued)

On December 17, 1996, Golden American issued an 8.25% surplus note in the amount
of $25,000,000 to Equitable of Iowa Companies. The note matures on December 17,
2026. Payment of 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 $516,000 for the
quarter ended September 30, 2000, and $1,547,000 for the first nine months of
2000, unchanged from the same periods in 1999.

Stockholder's Equity: During the third quarter of 2000 and first nine months of
2000, Golden American received capital contributions from its Parent of $0 and
$80,000,000, respectively ($20,000,000 and $100,000,000, respectively, for the
same periods of 1999).

5. COMMITMENTS AND CONTINGENCIES

Reinsurance: At September 30, 2000, the Companies had reinsurance treaties with
four unaffiliated reinsurers and one affiliated reinsurer covering a significant
portion of the mortality risks under its variable contracts as of December 31,
1999. Golden American remains liable to the extent its reinsurers do not meet
their obligations under the reinsurance agreements. At September 30, 2000 and
December 31, 1999, the Companies had net receivables of $19,362,000 and
$14,834,000 respectively, for reserve credits, reinsurance claims, or other
receivables from these reinsurers comprised of $2,961,000 and $493,000,
respectively, for claims recoverable from reinsurers, $3,928,000 and $1,201,000,
respectively, for a payable for reinsurance premiums, and $20,329,000 and
$15,542,000, respectively, for a receivable from an unaffiliated reinsurer.
Included in the accompanying financial statements are net considerations to
reinsurers of $6,564,000 for the third quarter of 2000 and $14,472,000 for the
first nine months of 2000 compared to $2,638,000 and $6,656,000 for the same
periods in 1999. Also included in the accompanying financial statements are net
policy benefits of $1,122,000 for the third quarter of 2000 and $2,957,000 for
the first nine months of 2000 compared to $2,569,000 and $4,008,000 for the same
periods in 1999.

On June 30, 2000, effective January 1, 2000, Golden American entered into a
modified coinsurance agreement with Equitable Life, an affiliate, covering a
considerable portion of Golden American's variable annuities issued in 2000,
excluding those with an interest rate guarantee. At September 30, 2000, Golden
American had received a total settlement of $214.7 million under this agreement.
The carrying value of the separate account liabilities covered under this
agreement represent 17.1% of total separate account liabilities outstanding at
September 30, 2000. Golden American remains liable to the extent Equitable Life
does not meet its obligations under the agreement. The accompanying financial
statements are presented net of the effects of the agreement.

The reinsurance treaties that
covered the nonstandard minimum guaranteed death benefits for new business have
been terminated for business issued after December 31, 1999. The Companies are
currently pursuing additional alternative reinsurance agreements for new
business issued after December 31, 1999. There can be no assurance that such
alternative agreements will be available. The reinsurance covering business in
force at December 31, 1999 will continue to apply in the future.

108944 51

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
September 30, 2000

5. COMMITMENTS AND CONTINGENCIES (continued)

Guaranty Fund Assessments: Assessments are levied on 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 offset 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, review information regarding known failures,
and revise estimates of future guaranty fund assessments. Accordingly, the
Companies accrued and charged no expense in the third quarter and $2,000 in the
first nine months of 2000. At September 30, 2000 and December 31, 1999, the
Companies have an undiscounted reserve of $2,450,000, and $2,444,000,
respectively, to cover estimated future assessments (net of related anticipated
premium tax offsets) and have established an asset totaling $692,000 and
$618,000, respectively, for assessments paid which may be recoverable through
future 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 and
arbitrations. In some class action and other actions involving insurers,
substantial damages have been sought and/or material settlement or award
payments have been made. The Companies currently believe no pending or
threatened lawsuits or actions exist that are reasonably likely to have a
material adverse impact on the Companies.

Vulnerability from Concentrations: The
Companies have various concentrations in the investment portfolio. As of
September 30, 2000, the Companies had one investment (other than bonds issued by
agencies of the United States government) exceeding ten percent of stockholder's
equity. The Companies' asset growth, net investment income, and cash flow are
primarily generated from the sale of variable insurance 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 have a severe impact on the
Companies' financial condition. Two broker/dealers, each having at least ten
percent of total sales, generated 27% of the Companies' sales during the third
quarter of 2000 (29% by two broker/dealers in the same period of 1999). One
broker/dealer generated 12% of the Companies' sales during the first nine months
of 2000 (29% by two broker/dealers in the same period of 1999). The Premium Plus
product generated 73% and 74% of the Companies' sales during the third quarter
of 2000 and first nine months of 2000, respectively (79% and 78% in the same
periods of 1999).

Revolving Note Payable: To enhance short-term liquidity, the
Companies established revolving notes payable effective July 27, 1998 and
expiring July 31, 1999 with SunTrust Bank, Atlanta (the "Bank"). As of July 31,
1999, the SunTrust Bank, Atlanta, revolving note facilities were first extended
to July 31, 2000, and as of July 31, 2000, they were extended to July 30, 2001.
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 notes accrue interest at an annual rate equal
to: (1) the cost of funds for the Bank for the period applicable for the advance
plus 0.225% 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 quarters ended September 30, 2000 and 1999, the
Companies incurred interest expense of $0 and $55,000, respectively. During the
nine months ended September 30, 2000 and 1999, the Companies incurred interest
expense of $36,000 and $109,000, respectively. At September 30, 2000, the
Companies did not have any borrowings under these agreements ($1,400,000 at
December 31, 1999).

108944 52

--------------------------------------------------------------------------------
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, 1999 and 1998, and the related
consolidated statements of operations, changes in stockholder's equity, and cash
flows for the years ended December 31, 1999 and 1998 and for the periods from
October 25, 1997 through December 31, 1997, and January 1, 1997 through October
24, 1997. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the consolidated
results of its operations and its cash flows for the years ended December 31,
1999 and 1998 and for the periods from October 25, 1997 through December 31,
1997 and January 1, 1997 through October 24, 1997, in conformity with accounting
principles generally accepted in the United States.

/s/Ernst & Young LLP

Des Moines, Iowa
February 4, 2000

108944 53

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

POST-MERGER
---------------------------
December 31, December 31,
1999 1998
------------ ------------
ASSETS

Investments:
Fixed maturities, available for sale,
at fair value (Cost: 1999 - $858,052;
1998 - $739,772)....................... $835,321 $741,985
Equity securities, at fair value (cost:
1999 - $14,952; 1998 - $14,437)........ 17,330 11,514
Mortgage loans on real estate............ 100,087 97,322
Policy loans............................. 14,157 11,772
Short-term investments................... 80,191 41,152
---------- ----------
Total investments........................... 1,047,086 903,745

Cash and cash equivalents................... 14,380 6,679

Reinsurance recoverable..................... 14,834 7,586

Due from affiliates......................... 637 2,983

Accrued investment income................... 11,198 9,645

Deferred policy acquisition costs........... 528,957 204,979

Value of purchased insurance in force....... 31,727 35,977

Current income taxes recoverable............ 35 628

Deferred income tax asset................... 21,943 31,477

Property and equipment, less allowances for
depreciation of $3,229 in 1999 and $801
in 1998.................................. 13,888 7,348

Goodwill, less accumulated amortization of
$8,186 in 1999 and $4,408 in 1998........ 142,941 146,719

Other assets................................ 2,514 743

Separate account assets..................... 7,562,717 3,396,114
---------- ----------
Total assets................................ $9,392,857 $4,754,623
========== ==========

See accompanying notes.

108944 54

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

POST-MERGER
-----------------------------
December 31, December 31,
1999 1998
-------------- ------------

LIABILITIES AND STOCKHOLDER'S EQUITY

Policy liabilities and accruals:
Future policy benefits:
Annuity and interest sensitive
life products....................... $1,033,701 $881,112
Unearned revenue reserve.............. 6,300 3,840
Other policy claims and benefits......... 8 --
---------- ----------
1,040,009 884,952

Surplus notes.............................. 245,000 85,000
Revolving note payable..................... 1,400 --
Due to affiliates.......................... 9,547 --
Other liabilities.......................... 56,335 34,663
Separate account liabilities............... 7,562,717 3,396,114
---------- ----------
8,915,008 4,400,729

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............... 468,640 347,640
Accumulated other comprehensive loss..... (9,154) (895)
Retained earnings........................ 15,863 4,649
---------- ----------
Total stockholder's equity................. 477,849 353,894
---------- ----------
Total liabilities and stockholder's equity. $9,392,857 $4,754,623
========== ==========

See accompanying notes.

108944 55

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

</TABLE>
<TABLE>
<CAPTION>
POST-
POST-MERGER ACQUISITION
--------------------------------------------|-------------
For the period |or the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | hrough
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
--------------------------------------------|--------------
<S> <C> <C> <C> <C>
Revenues |
Annuity and interest |
sensitive life product |
charges....................... $ 82,935 $ 39,119 $ 3,834 | $18,288
Management fee revenue........... 10,136 4,771 508 | 2,262
Net investment income............ 59,169 42,485 5,127 | 21,656
Realized gains (losses) |
on investments................ (2,923) (1,491) 15 | 151
Other income..................... 10,827 5,569 236 | 426
-------- ------- ------- | -------
160,144 90,453 9,720 | 42,783
|
Insurance benefits and expenses: |
Annuity and interest sensitive |
life benefits: |
Interest credited to account |
balances..................... 175,851 94,845 7,413 | 19,276
Benefit claims incurred in |
excess of account balances... 6,370 2,123 -- | 125
Underwriting, acquisition, and |
insurance expenses: |
Commissions.................... 188,383 121,171 9,437 | 26,818
General expenses............... 60,194 37,577 3,350 | 13,907
Insurance taxes, state |
licenses, and fees........... 3,976 4,140 450 | 1,889
Policy acquisition costs |
deferred..................... (346,396) (197,796) (13,678) | (29,003)
Amortization: |
Deferred policy acquisition |
costs....................... 33,119 5,148 892 | 1,674
Value of purchased insurance |
in force.................... 6,238 4,724 948 | 5,225
Goodwill...................... 3,778 3,778 630 | 1,398
-------- ------- ------- | -------
131,513 75,710 9,442 | 41,309
|
Interest expense.................... 8,894 4,390 557 | 2,082
-------- ------- ------- | -------
140,407 80,100 9,999 | 43,391
-------- ------- ------- | -------
Income (loss) before income taxes... 19,737 10,353 (279) | (608)
|
Income taxes........................ 8,523 5,279 146 | (1,337)
-------- ------- ------- | -------
|
Net income (loss)................... $ 11,214 $ 5,074 $ (425) | $ 729
======== ======= ======= | =======
</TABLE>
See accompanying notes.

108944 56

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

Accumulated
Additional Other Total
Common Paid-in Comprehensive Retained Stockholder's
Stock Capital Income (Loss) Earnings Equity
------------------------------------------------------------
PRE-ACQUISITION
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997..... $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
====== ======== ======= ======= ========

-----------------------------------------------------------
POST-MERGER
-----------------------------------------------------------
Balance at October 25, 1997.... $2,500 $224,997 -- -- $227,497
Comprehensive income:
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.... 2,500 224,997 (895) 4,649 353,894
Comprehensive income:
Net income................... -- -- -- 11,214 11,214
Change in net unrealized
investment gains (losses). -- -- (8,259) -- (8,259)
--------
Comprehensive income........... 2,955
Contribution of Capital........ -- 121,000 -- -- 121,000
------ -------- ------- ------- --------
Balance at December 31,1999.... $2,500 $468,640 $(9,154) $15,863 $477,849
====== ======== ======= ======= ========

</TABLE>
See accompanying notes.

108944 57

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

<TABLE>
<CAPTION>
| POST-
POST-MERGER | ACQUISITION
-------------------------------------------|---------------
For the period | For the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | through
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
------------ ------------ -------------- | --------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES |
Net income (loss)................................. $11,214 $5,074 $(425) | $729
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................ 175,851 94,845 7,413 | 19,276
Charges for mortality and administration..... 524 (233) (62) | (99)
Change in unearned revenues.................. 2,460 2,651 1,189 | 3,292
Increase (decrease) in policy liabilities and |
accruals..................................... 8 (10) 10 | --
Decrease (increase) in accrued investment |
income....................................... (1,553) (3,222) 1,205 | (3,489)
Policy acquisition costs deferred.............. (346,396) (197,796) (13,678) | (29,003)
Amortization of deferred policy |
acquisition costs............................ 33,119 5,148 892 | 1,674
Amortization of value of purchased |
insurance in force........................... 6,238 4,724 948 | 5,225
Change in other assets, due to/from |
affiliates, other liabilities, and accrued |
income taxes................................. 24,845 9,979 4,205 | (8,944)
Provision for depreciation and amortization.... 8,850 8,147 1,299 | 3,203
Provision for deferred income taxes............ 8,523 5,279 146 | 316
Realized (gains) losses on investments......... 2,923 1,491 (15) | (151)
-------- -------- ------- | ---------
Net cash provided by (used in) operating |
activities..................................... (73,394) (63,923) 3,127 | (7,971)
|
INVESTING ACTIVITIES |
Sale, maturity, or repayment of investments: |
Fixed maturities - available for sale.......... 220,547 145,253 9,871 | 39,622
Mortgage loans on real estate.................. 6,572 3,791 1,644 | 5,828
Short-term investments - net................... -- -- -- | 11,415
-------- -------- ------- | ---------
227,119 149,044 11,515 | 56,865
Acquisition of investments: |
Fixed maturities - available for sale.......... (344,587) (476,523) (29,596) | (155,173)
Equity securities.............................. -- (10,000) (1) | (4,865)
Mortgage loans on real estate.................. (9,659) (16,390) (14,209) | (44,481)
Policy loans - net............................. (2,385) (2,940) (328) | (3,870)
Short-term investments - net................... (39,039) (26,692) (13,244) | --
-------- -------- ------- | ---------
(395,670) (532,545) (57,378) | (208,389)
Net purchase of property and equipment............ (8,968) (6,485) (252) | (875)
-------- -------- ------- | ---------
Net cash used in investing activities............. (177,519) (389,986) (46,115) | (152,399)
</TABLE>

See accompanying notes.

108944 58

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

<TABLE>
<CAPTION>
| POST-
POST-MERGER | ACQUISITION
-------------------------------------------|---------------
For the period | For the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | through
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
------------ ------------ -------------- | --------------
<S> <C> <C> <C> <C>
FINANCING ACTIVITIES |
Proceeds from reciprocal loan agreement |
borrowings.............................. $396,350 $500,722 -- | --
Repayment of reciprocal loan agreement |
borrowings.............................. (396,350) (500,722) -- | --
Proceeds from revolving note payable....... 220,295 108,495 -- | --
Repayment of revolving note payable........ (218,895) (108,495) -- | --
Proceeds from surplus note................. 160,000 60,000 -- | --
Proceeds from line of credit borrowings.... -- -- $10,119 | $97,124
Repayment of line of credit borrowings..... -- (5,309) (2,207) | (80,977)
Receipts from annuity and interest |
sensitive life policies credited to |
account balances........................ 773,685 593,428 62,306 | 261,549
Return of account balances on annuity |
and interest sensitive life policies.... (147,201) (72,649) (6,350) | (13,931)
Net reallocations to separate accounts..... (650,270) (239,671) (17,017) | (93,069)
Contributions of capital by parent......... 121,000 103,750 -- | 1,011
-------- -------- ------- | ---------
Net cash provided by financing activities.. 258,614 439,549 46,851 | 171,707
-------- -------- ------- | ---------
|
Increase (decrease) in cash and cash |
equivalents............................. 7,701 (14,360) 3,863 | 11,337
Cash and cash equivalents at |
beginning of period..................... 6,679 21,039 17,176 | 5,839
-------- -------- ------- | ---------
Cash and cash equivalents at |
end of period........................... $14,380 $6,679 $21,039 | $17,176
======== ========= ======= | =========
|
SUPPLEMENTAL DISCLOSURE |
OF CASH FLOW INFORMATION |
Cash paid during the period for: |
Interest................................ $6,392 $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....... -- 18,750 -- | --
</TABLE>
See accompanying notes.

108944 59

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

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 collectively
with Golden American, 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. First Golden is
licensed to sell insurance products in New York and Delaware. 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. ("BT Variable") 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
included for the periods after October 24, 1997 are presented on the Post-Merger
new basis of accounting and for the period January 1, 1997 through October 24,
1997 are presented on the Post-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 of purchased insurance in force ("VPIF"), deferred policy acquisition
costs ("DPAC"), and deferred income taxes. At December 31, 1999 and 1998, 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

108944 60

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

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 becomes the new cost basis by a charge to realized losses in
the Companies' Statements of Operations.

Mortgage Loans On Real Estate: 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.

Fair Values: Estimated fair values, as reported herein, of conventional
mortgage-backed securities not actively traded in a liquid market are estimated
using a third party pricing process. This pricing process uses a matrix
calculation assuming a spread over U.S. Treasury bonds based upon the expected
average lives of the securities. Estimated fair values of publicly traded fixed
maturities are reported by an independent pricing service. 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.

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, premium credit, and other expenses related to
the production of new business, have been deferred. Acquisition costs for
variable insurance 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.

108944 61

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

VALUE OF PURCHASED INSURANCE IN FORCE
As a result of the merger and 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 of the variable products with fixed
interest guarantees 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 11.00% during 1999, 3.00% to
10.00% during 1998, and 3.30% to 8.25% during 1997. 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.

SEPARATE ACCOUNTS
Assets and liabilities of the separate accounts reported in the accompanying
Balance Sheets represent funds separately administered principally for variable
contracts. Contractholders, rather than the Companies, bear the investment risk
for the variable insurance products. At the direction of the contractholders,
the separate accounts invest the premiums from the sale of variable insurance
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 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 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.

108944 62

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

Product charges recorded by the Companies from variable insurance 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 2000, 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, Golden American,
unless a notice of its intent to declare a dividend and the amount of the
dividend has been filed with the New York Insurance Department at least thirty
days in advance of the proposed declaration. If the Superintendent of the New
York Insurance Department 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.

SEGMENT REPORTING
The Companies manage their business as one segment, the sale of variable
insurance products designed to meet customer needs for tax-advantaged saving for
retirement and protection from death. Variable insurance products are sold to
consumers and corporations throughout the United States.

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

108944 63

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

regarding all of the preceding items are inherently subject to change and are
reassessed periodically. Changes in estimates and assumptions could materially
impact the financial statements.

RECLASSIFICATIONS
Certain amounts for the periods ended in the 1998 and 1997 financial statements
have been reclassified to conform to the 1999 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 insurance 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 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 insurance 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 $85,578,000 in 1999, $68,002,000 in 1998, and $428,000
in 1997. Total statutory capital and surplus was $368,928,000 at December 31,
1999 and $183,045,000 at December 31, 1998.

108944 64

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

3. INVESTMENT OPERATIONS

INVESTMENT RESULTS
Major categories of net investment income are summarized below:
<TABLE>
<CAPTION>

POST-MERGER |POST-ACQUISITION
-------------------------------------------|----------------
For the period | For the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | through
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
------------ ------------ -------------- | --------------
(Dollars in thousands)
|
<S> <C> <C> <C> <C>
Fixed maturities............... $50,352 $35,224 $ 4,443 | $18,488
Equity securities.............. 515 -- 3 | --
Mortgage loans on real estate.. 7,074 6,616 879 | 3,070
Policy loans................... 485 619 59 | 482
Short-term investments......... 2,583 1,311 129 | 443
Other, net..................... 388 246 (154) | 24
------- ------- ------- | -------
Gross investment income........ 61,397 44,016 5,359 | 22,507
Less investment expenses....... (2,228) (1,531) (232) | (851)
------- ------- ------- | -------
Net investment income.......... $59,169 $42,485 $ 5,127 | $21,656
======= ======= ======= | =======
</TABLE>

Realized gains (losses) on investments follows:
<TABLE>
<CAPTION>

The change in unrealized appreciation (depreciation) of securities at fair value
follows:
<TABLE>
<CAPTION>

POST-MERGER |POST-ACQUISITION
-------------------------------------------|----------------
For the period | For the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | through
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
------------ ------------ -------------- | --------------
(Dollars in thousands)
|
<S> <C> <C> <C> <C>
|
Fixed maturities, available for |
sale........................... $(24,944) $ 1,100 $ (3,494) | $ 4,197
Equity securities................ 5,301 (2,390) (68) | (462)
-------- -------- -------- | --------
Unrealized appreciation |
(depreciation) of securities.. $(19,643) $ (1,290) $ (3,562) | $ 3,735
======== ======== ======== | ========
</TABLE>

108944 65

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

3. INVESTMENT OPERATIONS (continued)

At December 31, 1999 and December 31, 1998, amortized cost, gross unrealized
gains and losses, and estimated fair values of fixed maturities, all of which
are designated as available for sale, follows:

POST-MERGER
---------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
December 31, 1999
-----------------------------
U.S. government and
governmental agencies
and authorities............ $ 21,363 -- $ (260) $ 21,103
Public utilities.............. 53,754 $ 25 (2,464) 51,315
Corporate securities.......... 396,494 53 (12,275) 384,272
Other asset-backed securities. 207,044 850 (4,317) 203,577
Mortgage-backed securities.... 179,397 39 (4,382) 175,054
-------- ------ -------- --------
Total......................... $858,052 $ 967 $(23,698) $835,321
======== ====== ======== ========

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
======== ====== ======== ========
</TABLE>

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. At December 31, 1999, net unrealized investment loss on fixed
maturities designated as available for sale totaled $22,731,000. Depreciation of
$6,955,000 was included in stockholder's equity at December 31, 1999 (net of
adjustments of $1,785,000 to VPIF, $10,246,000 to DPAC, and $3,745,000 to
deferred income taxes). 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,
1998 (net of adjustments of $203,000 to VPIF, $455,000 to DPAC, and $550,000 to
deferred income taxes).

At December 31, 1999, net unrealized appreciation on equity securities was
comprised entirely of gross appreciation of $2,378,000. At December 31, 1998,
net unrealized depreciation of equity securities was comprised entirely of gross
depreciation of $2,923,000.

Amortized cost and estimated fair value of fixed maturities designated as
available for sale, by contractual maturity, at December 31, 1999 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.

108944 66

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

3. INVESTMENT OPERATIONS (continued)

POST-MERGER
-------------------------
Amortized Estimated
December 31, 1999 Cost Fair Value
---------------------------------------------------------------------
(Dollars in thousands)

Due within one year..................... $ 25,317 $ 25,186
Due after one year through five years... 355,205 344,998
Due after five years through ten years.. 83,004 78,976
Due after ten years..................... 8,085 7,530
-------- --------
471,611 456,690
Other asset-backed securities........... 207,044 203,577
Mortgage-backed securities.............. 179,397 175,054
-------- --------
Total................................... $858,052 $835,321
======== ========

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

Gross Gross Proceeds
Amortized Realized Realized from
Cost Gains Losses Sale
--------- -------- -------- --------
(Dollars in thousands)
POST-MERGER:
<S> <C> <C> <C> <C>
For the year ended December 31, 1999:
Scheduled principal repayments, calls,
and tenders.......................... $141,346 $216 $(174) $141,388
Sales................................... 80,472 141 (1,454) 79,159
-------- ---- ------- --------
Total................................... $221,818 $357 $(1,628) $220,547
======== ==== ======= ========

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
======== ==== ======= ========

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
======== ==== ======= ========
</TABLE>

108944 67

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

3. INVESTMENT OPERATIONS (continued)

During the fourth quarter of 1998, Golden American determined that the carrying
value of two bonds exceeded their estimated net realizable value. As a result,
at December 31, 1998, Golden American recognized a total pre-tax loss of
$973,000 to reduce the carrying value of the bonds to their combined net
realizable value of $2,919,000. During the second quarter of 1999, further
information was received regarding these bonds and Golden American determined
that the carrying value of the two bonds exceeded their estimated net realizable
value. As a result, at June 30, 1999, Golden American recognized a total pre-tax
loss of $1,639,000 to further reduce the carrying value of the bonds to their
combined net realizable value of $1,137,000. During 1997, no investments were
identified as having an other than temporary impairment.

Investments on Deposit: At December 31, 1999 and 1998, affidavits of deposits
covering bonds with a par value of $6,470,000 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, 1999 and December 31, 1998. Fixed maturities included investments in basic
industrials (29% in 1999, 26% in 1998), conventional mortgage-backed securities
(22% in 1999, 25% in 1998), financial companies (16% in 1999, 19% in 1998), and
other asset-backed securities (19% in 1999, 11% in 1998). Mortgage loans on real
estate have been analyzed by geographical location with concentrations by state
identified as California (12% in 1999 and 1998), Utah (10% in 1999, 11% in
1998), and Georgia (9% in 1999, 10% in 1998). There are no other concentrations
of mortgage loans on real estate in any state exceeding ten percent at December
31, 1999 and 1998. Mortgage loans on real estate have also been analyzed by
collateral type with significant concentrations identified in office buildings
(34% in 1999, 36% in 1998), industrial buildings (33% in 1999, 32% in 1998),
retail facilities (19% in 1999, 20% in 1998), and multi-family apartments (10%
in 1999, 8% in 1998). 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, 1999.

4. COMPREHENSIVE INCOME
Comprehensive income includes all changes in stockholder's equity during a
period except those resulting from investments by and distributions to the
stockholder. Total comprehensive income (loss) for the Companies includes
$(452,000) for the year ended December 31, 1999 for First Golden ($1,015,000 for
the year ended December 31, 1998 and $159,000, and $536,000, respectively, for
the periods October 25, 1997 through December 31, 1997 and January 1, 1997
through October 24, 1997). 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 $(1,468,000) in
1999 and $(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 $(1,441,000) in 1999 and $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

108944 68

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

5. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

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 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>
<CAPTION>
POST-MERGER
-----------------------------------------------
December 31, 1999 December 31, 1998
---------------------- ---------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
-------- --------- -------- ---------
(Dollars in thousands)

<S> <C> <C> <C> <C>
ASSETS

Fixed maturities, available for sale.. $ 835,321 $ 835,321 $ 741,985 $ 741,985
Equity securities..................... 17,330 17,330 11,514 11,514
Mortgage loans on real estate......... 100,087 95,524 97,322 99,762
Policy loans.......................... 14,157 14,157 11,772 11,772
Short-term investments................ 80,191 80,191 41,152 41,152
Cash and cash equivalents............. 14,380 14,380 6,679 6,679
Separate account assets............... 7,562,717 7,562,717 3,396,114 3,396,114

LIABILITIES

Annuity products...................... 1,017,105 953,546 869,009 827,597
Surplus notes......................... 245,000 226,100 85,000 90,654
Revolving note payable................ 1,400 1,400 -- --
Separate account liabilities.......... 7,562,717 7,562,717 3,396,114 3,396,114
</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 process. This pricing

108944 69

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

5. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

process 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.

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
current market value.

Revolving note payable: Carrying value reported in the Companies' historical
cost basis balance sheet approximates estimated fair value for this instrument,
as the agreement carries a variable interest rate provision.

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.

108944 70

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

6. MERGER (continued)

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.

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 follows:

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

<S> <C> <C> <C>
Beginning balance........................ $35,977 $43,174 $44,297
------- ------- -------

Imputed interest......................... 2,373 2,802 1,004
Amortization............................. (7,930) (7,753) (1,952)
Changes in assumptions of timing of
gross profits.......................... (681) 227 --
------- ------- -------
Net amortization......................... (6,238) (4,724) (948)
Adjustment for unrealized gains (losses)
on available for sale securities....... 1,988 (28) (175)
Adjustment for other receivables and
merger costs........................... -- (2,445) --
------- ------- -------
Ending balance........................... $31,727 $35,977 $43,174
======= ======= =======
</TABLE>

108944 71

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

6. MERGER (continued)

Interest is imputed on the unamortized balance of VPIF at a rate of 7.33% for
the year ended December 31, 1999, 7.38% for the year ended December 31, 1998,
and 7.03% for the period October 25, 1997 through December 31, 1997. In 1999,
VPIF was adjusted to increase amortization by $681,000 to reflect changes in the
assumptions related to the timing of estimated gross profits. The amortization
of VPIF, net of imputed interest, is charged to expense. VPIF decreased
$2,664,000 during 1998 to adjust the value of other receivables and increased
$219,000 in 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, 1999 is $3,958,000 in 2000, $3,570,000 in 2001, $3,322,000 in
2002, $2,807,000 in 2003, and $2,292,000 in 2004. 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 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.

108944 72

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

7. ACQUISITION (continued)

An analysis of the VPIF asset follows:

POST-ACQUISITION
----------------
For the period
January 1, 1997
through
October 24, 1997
----------------
(Dollars in thousands)

<S> <C>
Beginning balance............ $ 83,051
--------

Imputed interest............. 5,138
Amortization................. (12,656)
Changes in assumption of
timing of gross profits.... 2,293
--------
Net amortization............. (5,225)
Adjustment for unrealized
gains on available for
sale securities............ (373)
--------
Ending balance............... $ 77,453
========
</TABLE>

Interest was imputed on the unamortized balance of VPIF at rates of 7.70% to
7.80% for the period January 1, 1997 through October 24, 1997. The amortization
of VPIF, net of imputed interest, was charged to expense. VPIF was also adjusted
for the unrealized gains on available for sale securities; such changes were
included directly in stockholder's equity.

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
the Parent's consolidated tax return for 5 years.

At December 31, 1999, the Companies have net operating loss ("NOL")
carryforwards for federal income tax purposes of approximately $161,799,000.
Approximately $5,094,000, $3,354,000, $53,310,000, and $100,041,000 of these NOL
carryforwards are available to offset future taxable income of the Companies
through the years 2011, 2012, 2013, and 2014, respectively.

INCOME TAX EXPENSE (BENEFIT)
Income tax expense (benefit) included in the consolidated financial statements
follows:

POST-MERGER |POST-ACQUISITION
--------------------------------------------|----------------
For the period | For the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | through
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
------------ ------------ -------------- | --------------
(Dollars in thousands)
|
Current -- -- -- | $ 12
Deferred $8,523 $5,279 $146 | (1,349)
------ ------ ---- | -------
$8,523 $5,279 $146 | $(1,337)
====== ====== ==== | =======

108944 73

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

8. INCOME TAXES (continued)

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

POST-MERGER |POST-ACQUISITION
---------------------------------------------|-----------------
For the period | For the period
October 25, | January 1,
For the year For the year 1997 | 1997
ended ended through | through
December 31, December 31, December 31, | October 24,
1999 1998 1997 | 1997
------------ ------------ -------------- | -------------
(Dollars in thousands)
|
<S> <C> <C> <C> <C>
Income (loss) before income taxes.. $19,737 $10,353 $(279) | $ (608)
======= ======= ===== =======
|
Income tax (benefit) at federal |
statutory rate.........................$ 6,908 $ 3,624 $ (98) | $ (213)
Tax effect (decrease) of: |
Goodwill amortization............ 1,322 1,322 220 | --
Compensatory stock option and
restricted stock expense....... -- -- -- | (1,011)
Meals and entertainment.......... 199 157 23 | 53
Other items...................... 94 176 1 | (166)
------- ------- ------- | --------
Income tax expense (benefit)....... $ 8,523 $ 5,279 $146 | $ (1,337)
======= ======= ======= | ========
</TABLE>

108944 74

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

8. INCOME TAXES (continued)

DEFERRED INCOME TAXES
The tax effect of temporary differences giving rise to the Companies' deferred
income tax assets and liabilities at December 31, 1999 and 1998 follows:

POST-MERGER
----------------------------
December 31, December 31,
1999 1998
------------ ------------
(Dollars in thousands)

Deferred tax assets:
Net unrealized depreciation of securities
at fair value............................ -- $1,023
Net unrealized depreciation of available
for sale fixed maturities................ $3,745 --
Future policy benefitS..................... 133,494 66,273
Goodwill................................... 16,323 16,323
Net operating loss carryforwards........... 56,630 17,821
Other...................................... 1,333 1,272
------- -------
211,525 102,712
Deferred tax liabilities:
Net unrealized appreciation of securities
at fair value............................ (832) --
Net unrealized appreciation of available
for sale fixed maturities................ -- (332)
Fixed maturity securities.................. (17,774) (1,034)
Deferred policy acquisition costs.......... (154,706) (55,520)
Mortgage loans on real estate.............. (715) (845)
Value of purchased insurance in force...... (10,462) (12,592)
Other...................................... (1,348) (912)
------- -------
(185,837) (71,235)
------- -------
Valuation allowance........................... (3,745) --
------- -------
Deferred income tax asset..................... $21,943 $31,477
======= =======

At December 31, 1999, the Company reported, for financial statement purposes,
unrealized losses on certain investments which have not been recognized for tax
purposes. The Companies have established a valuation allowance against the
deferred income tax assets associated with unrealized depreciation on fixed
maturities available for sale as the Companies are uncertain as to whether their
capital losses, if ever realized, could be utilized to offset future capital
gains.

108944 75

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

9. RETIREMENT PLANS AND EMPLOYEE STOCK COMPENSATION

DEFINED BENEFIT PLANS

In 1999 and 1998, 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, 1999:

1999 1998
-----------------------------------
(Dollars in thousands)

Change in benefit obligation:
Benefit obligation at January 1... $ 4,454 $956
Service cost...................... 1,500 1,138
Interest cost..................... 323 97
Actuarial (gain) loss............. (2,056) 2,266
Benefit payments.................. -- (3)
------- -------
Benefit obligation at December 31. $ 4,221 $ 4,454
======= =======

Funded status:
Funded status at December 31...... $(4,221) $(4,454)
Unrecognized net loss............. 210 2,266
------- -------
Net amount recognized............. $(4,011) $(2,188)
======= =======

The Companies' plan assets were held by Equitable Life, an affiliate. During
1998, the Equitable Life Employee Pension Plan began investing in an undivided
interest of the ING-NA Master Trust (the "Master Trust"). Boston Safe Deposit
and Trust Company holds the Master Trust's investment assets.

The weighted-average assumptions used in the measurement of the Companies'
benefit obligation follows:

December 31 1999 1998
-----------------------------------------------------------------

Discount rate.................... 8.00% 6.75%
Expected return on plan assets... 9.25 9.50
Rate of compensation increase.... 5.00 4.00

108944 76

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

9. RETIREMENT PLANS AND EMPLOYEE STOCK COMPENSATION (continued)

The following table provides the net periodic benefit cost for the fiscal years
1999, 1998, and 1997:
<TABLE>
<CAPTION>

POST-MERGER |POST-ACQUISITION
----------------------------------------------|-----------------
For the year For the year For the period | For the period
ended ended October 25, 1997 | January 1, 1997
December 31, December 31, through | through
1999 1998 December 31, 1997 |October 24, 1997
----------------------------------------------|-----------------
(Dollars in thousands) |
|
<S> <C> <C> <C> | <C>
Service cost................ $1,500 $1,138 $114 | $568
Interest cost............... 323 97 10 | 15
Amortization of net loss.... -- -- -- | 1
------ ------ ---- | ----
Net periodic benefit cost... $1,823 $1,235 $124 | $584
====== ====== ==== | ====
</TABLE>

There were no gains or losses resulting from curtailments or settlements during
1999, 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 $4,221,000, $2,488,000, and $0, respectively, as of December
31, 1999 and $4,454,000, $3,142,000, and $0, respectively, as of December 31,
1998.

During 1997, ING approved the 1997 Phantom Plan for certain key employees. The
Phantom Plan is similar to a standard stock option plan; however, the phantom
share option entitles the holder to a cash benefit in Dutch Guilders linked to
the rise in value of ING ordinary shares on the Amsterdam Stock Exchange. The
plan participants are entitled to any appreciation in the value of ING ordinary
shares over the Phantom Plan option price (strike price) of 53.85 Euros for
options issued on July 1, 1999, 140.40 Dutch Guilders for options issued on May
26, 1998, and 85.10 Dutch Guilders for options issued on May 23, 1997, not the
ordinary shares themselves.

Options are granted at fair value on the date of grant. Options in the Phantom
Plan are subject to forfeiture to ING should the individuals terminate their
relationship with ING before the three-year initial retention period has
elapsed. All options expire five years from the date of grant.

On July 1, 1999, ING issued 34,750 options to employees of Golden American
related to this plan at a strike price of 53.85 Euros.

On May 26, 1998, ING issued 42,400 options related to this plan at a strike
price of 140.40 Dutch Guilders. Since the strike price at December 31, 1998 was
higher than the ING share price, there was no compensation expense related to
these options in 1998.

On May 23, 1997, ING issued 3,500 options related to this plan at a strike price
of 85.10 Dutch Guilders. Since the strike price was lower than the ING share
price at December 31, 1998, Golden American incurred $46,000 of compensation
expense related to these options during 1998.

No expense was recognized in 1999 related to the above options. As of December
31, 1999, 58,250 options remain outstanding.

10. RELATED PARTY TRANSACTIONS

Operating Agreements: DSI, an affiliate, 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

108944 77

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

10. RELATED PARTY TRANSACTIONS (continued)

distribute the Companies' variable insurance products and appoint
representatives of the broker/dealers as agents. For the years ended December
31, 1999 and 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 $181,536,000, $117,470,000, $9,931,000, and $26,419,000,
respectively.

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 years ended December 31, 1999
and 1998 and for the periods October 25, 1997 through December 31, 1997 and
January 1, 1997 through October 24, 1997, the fee was $10,136,000, $4,771,000,
$508,000, and $2,262,000, 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 and accounting 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 years ended December 31, 1999 and 1998, the Companies
incurred fees of $2,227,000 and $1,504,000, respectively, 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 and $768,000
for the periods October 25, 1997 through December 31, 1997 and January 1, 1997
through October 24, 1997, 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 1999 or in 1998.

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 $6,107,000 and $5,833,000 for the
years ended December 31, 1999 and 1998, respectively ($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).

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 $1,251,000 and $1,058,000 for the
years ended December 31, 1999 and 1998, respectively ($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
$387,000 in 1999 and $75,000 in 1998.

Golden American provides resources and services to ING Mutual Funds Management
Co., LLC, an affiliate. Revenues for these services, which reduce general
expenses incurred by Golden American, totaled $244,000 in 1999.

108944 78

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

10. RELATED PARTY TRANSACTIONS (continued)

In 1999, 1998, and 1997, the Companies received 10.0%, 9.6%, and 5.1% of total
premiums, net of reinsurance, for variable products sold through five affiliates
as noted in the following table:
<TABLE>
<CAPTION>

POST-MERGER |POST-ACQUISITION
----------------------------------------------|-----------------
|
For the year For the year For the period | For the period
ended ended October 25, 1997 |January 1, 1997
December 31, December 31, through | through
1999 1998 December 31, 1997|October 24, 1997
------------ ------------ -----------------|----------------
(Dollars in millions)
<S> <C> <C> <C> <C>
|
LSSI.................................. $168.5 $122.9 $9.3 | $16.9
Vestax Securities Corporation......... 88.1 44.9 1.9 | 1.2
DSI................................... 2.5 13.6 2.1 | 0.4
Multi-Financial Securities Corporation 44.1 13.4 -- | --
IFG Network Securities, Inc........... 25.8 3.7 -- | --
------ ------ ----- | -----
Total................................. $329.0 $198.5 $13.3 | $18.5
====== ====== ===== | =====
</TABLE>

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 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 from the Department of Insurance of the
State of Delaware. 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 $815,000 in
1999 and $1,765,000 in 1998. At December 31, 1999 and 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 and $362,000 for the period January 1, 1997 through October 24, 1997). The
outstanding balance was paid by a capital contribution and with funds borrowed
from ING AIH.

108944 79

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

10. RELATED PARTY TRANSACTIONS (continued)

On December 8, 1999, Golden American issued a 7.979% surplus note in the amount
of $35,000,000 to First Columbine Life Insurance Company ("First Columbine"), an
affiliate. The note matures on December 7, 2029. Payment of 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. Under this agreement, Golden American paid no interest in 1999.

On September 30, 1999, Golden American issued a 7.75% surplus note in the amount
of $75,000,000 to ING AIH. The note matures on September 29, 2029. Payment of
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. Under this agreement, Golden American
incurred interest expense of $1,469,000 in 1999. On December 30, 1999, ING AIH
assigned the note to Equitable Life.

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. Payment
of 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. Under this agreement, Golden American
incurred interest expense of $4,350,000 in 1999. 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. Payment of
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 1999, unchanged from 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).

Stockholder'S Equity: During 1999 and 1998, Golden American received capital
contributions from its Parent of $121,000,000 and $122,500,000, respectively.

11. COMMITMENTS AND CONTINGENCIES

Reinsurance: At December 31, 1999, the Companies 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 reinsurers do not meet their obligations under the
reinsurance agreements. Reinsurance ceded in force for life mortality risks were
$119,575,000 and $111,552,000 at December 31, 1999 and 1998, respectively. At
December 31, 1999 and 1998, the Companies have a net receivable of $14,834,000
and $7,586,000, respectively, for reserve credits, reinsurance claims, or

108944 80

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

11. COMMITMENTS AND CONTINGENCIES (continued)

other receivables from these reinsurers comprised of $493,000 and$439,000,
respectively, for claims recoverable from reinsurers, $1,201,000 and $543,000,
respectively, for a payable for reinsurance premiums, and $15,542,000 and
$7,690,000, respectively, for a receivable from an unaffiliated reinsurer.
Included in the accompanying financial statements are net considerations to
reinsurers of $9,883,000, $4,797,000, $326,000, and $1,871,000 and net policy
benefits recoveries of $3,059,000, $2,170,000, $461,000, and $1,021,000 for the
years ended December 31, 1999 and 1998 and for the periods October 25, 1997
through December 31, 1997 and January 1, 1997 through October 24, 1997,
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
$1,729,000, $1,022,000, $265,000, and $335,000 for the years ended December 31,
1999 and 1998 and for the periods October 25, 1997 through December 31, 1997 and
January 1, 1997 through October 24, 1997, respectively.

The reinsurance treaties that covered the nonstandard minimum guaranteed death
benefits for new business have been terminated for business issued after
December 31, 1999. The Companies are currently pursuing alternative reinsurance
arrangements for new business issued after December 31, 1999. There can be no
assurance that such alternative arrangements will be available. The reinsurance
covering business in force at December 31, 1999 will continue to apply in the
future.

Guaranty Fund Assessments: Assessments are levied on 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, review information regarding known failures,
and revise estimates of future guaranty fund assessments. Accordingly, the
Companies accrued and charged to expense an additional $3,000 and $1,123,000 for
the years ended December 31, 1999 and 1998, respectively, $141,000 for the
period October 25, 1997 through December 31, 1997 and $446,000 for the period
January 1, 1997 through October 24, 1997. At December 31, 1999 and 1998, the
Companies have an undiscounted reserve of $2,444,000 and $2,446,000,
respectively, to cover estimated future assessments (net of related anticipated
premium tax credits) and has established an asset totaling $618,000 and
$586,000, respectively, for assessments paid which may be recoverable through
future 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 and
arbitrations. In some class action and other lawsuits involving insurers,
substantial damages have been sought and/or material settlement or award
payments have been made. The Companies currently believe no pending or
threatened lawsuits or actions exist that are reasonably likely to have a
material adverse impact on the Companies.

Vulnerability from Concentrations: The Companies have various concentrations in
the 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 insurance 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, each having at least ten percent of total sales,
generated 28% of the Companies' sales in 1999

108944 81

GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999

11. COMMITMENTS AND CONTINGENCIES (continued)

(26% and 53% by two broker/dealers during 1998 and 1997, respectively).
The Premium Plus product generated 79% of the Companies' sales during 1999
(63% during 1998 and 11% 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 years ended December 31, 1999 and 1998 and for the periods
October 25, 1997 through December 31, 1997 and January 1, 1997 through October
24, 1997, rent expense totaled $2,273,000, $1,241,000, $39,000, and $331,000,
respectively. At December 31, 1999, minimum rental payments due under all
non-cancelable operating leases with initial terms of one year or more are: 2000
- $3,596,000; 2001 - $3,403,000; 2002 - $2,859,000; 2003 - $2,486,000; 2004 -
$2,419,000, and 2005 and thereafter - $42,852,000.

Revolving Note Payable: To enhance short-term liquidity, the Companies
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. As of July 31, 1999, the SunTrust Bank,
Atlanta revolving note facility was extended to July 31, 2000. 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 years ended December 31, 1999 and 1998, the Companies incurred
interest expense of $198,000 and $352,000, respectively. At December 31, 1999,
the Companies had a $1,400,000 note payable to the Bank under this agreement.

108944 82

APPENDIX B

MARKET VALUE ADJUSTMENT EXAMPLES

EXAMPLE #1: FULL SURRENDER -- EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT

Assume a single premium payment of $100,000 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 the
contract value have been made.

CALCULATE THE MARKET VALUE ADJUSTMENT

1. The contract value of the on the date of surrender is
3
$124,230 ($100,000 x 1.075 )

2. N = 2,555 ( 365 x 7 )
2,555/365
3. Market Value Adjustment = $124,230 x [((1.07/1.0850) )-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 a single premium 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 the contract value
have been made.

CALCULATE THE MARKET VALUE ADJUSTMENT

1. The contract value on the date of surrender is
3
$124,230 ($100,000 x 1.075 )

2. N = 2,555 ( 365 x 7 )
2,555/365
3. Market Value Adjustment = $124,230 x [((1.07/1.0650) )-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 single premium 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 the contract value
have been made.

108944 A1

First calculate the amount that must be withdrawn to provide the amount
requested.

1. The contract value on the date of withdrawal is
3
$248,459 ( $200,000 x 1.075 )

2. N = 2,555 ( 365 x 7 )

3. Amount that must be withdrawn =
2,555/365
[$112,695 /((1.07/1.0850) )] = $124,230

Then calculate the Market Value Adjustment on that amount.
2,555/365
4. Market Value Adjustment = $124,230 x [((1.07/1.0850) )-1] = $11,535

Therefore, the amount of the withdrawal paid to you ignoring any surrender
charge is $112,695, as requested. The contract value 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 contract value of $124,230.

EXAMPLE #4: WITHDRAWAL -- EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT

Assume $200,000 a single premium 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 the contract value 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 on the date of surrender is
3
$248,459 ( $200,000 x 1.075 )

2. N = 2,555 ( 365 x 7 )

3. Amount that must be withdrawn =
2,555/365
[$128,371 / ((1.07/1.0650) )] = $124,230

Then calculate the Market Value Adjustment on that amount.
2,555/365
4. Market Value Adjustment = $124,230 x [((1.07/1.0650) )-1] = $4,141

Therefore, the amount of the withdrawal paid to you ignoring any surrender
charge is $128,371, as requested. The contract value 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 contract value of $124,230.

108944 A2

<PAGE>
<PAGE>
APPENDIX B

SURRENDER CHARGE EXAMPLES

EXAMPLE #1: SURRENDER CHARGES PARTIAL WITHDRAWAL IN EXCESS OF FREE
WITHDRAWAL AMOUNT
The following assumes you made an initial single premium payment of
$100,000 into the 10 year guarantee period with an interest rate of
7.50%. It also assumes a withdrawal at the beginning of the fifth
contract year of 20% of the contract value. The accumulation value as
of the beginning of the fifth contract year is $133,546.91. The
interest earned in the last 12 months as of the beginning of the fifth
contract year is $9,317.23.

In this example, $9,317.23 (last 12 months' interest earnings) is the
maximum free withdrawal amount that you may withdraw during the
contract year without a surrender charge. The total withdrawal would
be $26,709.39 ($133,546.91 x .20). Therefore, $17,392.16 ($26,709.39
- $9,317.23) is considered an excess withdrawal and would be subject
to a 4% surrender charge of $695.69 ($17,392.16 x .04).

This example does not take into account any Market Value Adjustment or
deduction of any premium taxes.

EXAMPLE #2: SURRENDER CHARGES FREE PARTIAL WITHDRAWAL FOLLOWED BY
FULL SURRENDER

The following assumes you made an initial single premium payment of
$100,000 into the 10 year guarantee period with an interest rate of
6.00%. It also assumes a free partial withdrawal at the beginning of
the fifth contract year of $7,146.10, followed by a full surrender
183 days later.

The accumulation value as of the beginning of the fifth contract year
is $126,247.70. The interest earned in the last 12 months as of the
beginning of the fifth contract year is $7,146.10. In this example,
$7,146.10 (last 12 months' interest earnings) is the maximum free
withdrawal amount that you may withdraw during the contract year
without a surrender charge. The accumulation value immediately after
the partial withdrawal is $119,101.60.

Assume that 183 days later the policy is surrendered. The
accumulation value has grown to $122,632.40 ($119,101.60 x
(1.06^(183/365))). On full surrender, surrender charges are applied
to all amounts withdrawn in that contract year. The cash surrender
value is calculated as follows.

1.The surrender charge on the free partial withdrawal amount is
$297.75 ($7146.10 x (1/(1-.04)-1)).

2.The adjusted accumulation value is $122,334.65 ($122,632.40 - 297.75).

3.The surrender charge upon surrender is $4,893.39 ($122,334.65 x .04).

4.The cash surrender value is $117,441.26 ($122,334.65 - $4,893.39).

This example does not take into account any Market Value Adjustment or
deduction of any premium taxes.

108944 B1

ING VARIABLE ANNUITIES

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

Guarantee Annuity 108944 12/00