CG VARIABLE ANNUITY SEPARATE ACCOUNT, 485BPOS, 2000-05-10

CG VARIABLE ANNUITY SEPARATE ACCOUNT
485BPOS, 2000-05-10

Previous: AXA FINANCIAL INC, SC 13G/A, 2000-05-10

Next: OMEGA HEALTHCARE INVESTORS INC, 4, 2000-05-10

<PAGE>

As filed with the Securities and Exchange Commission on May 10, 2000
Registration Nos. 033-48137
811-6691

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- ------------------------------------------------------------------------------

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 11 /x/

And

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 13 /x/

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
(Exact Name of Registrant)

Connecticut General Life Insurance Company
(Name of Depositor)

Mark A. Parsons, Esquire
Connecticut General Life Insurance Company
900 Cottage Grove Road, Hartford, Connecticut 06152-2215
(860) 726-6000
(Name and Address of Agent of Service)

Copies to:
Richard T. Choi, Esq.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W. Suite 825
Washington, D.C. 20036

Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness of the Registration Statement
- ------------------------------------------------------------------------------

It is proposed that this filing will become effective:
/x/ immediately upon filing pursuant to paragraph (b) of Rule 485
/ / on (date), pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/ / on (date) pursuant to paragraph (a) of Rule 485

Title of Securities Being Registered:
Units of Interest in the Separate Account under flexible payment deferred
variable annuity contracts.

<PAGE>

AIM/CIGNA Heritage Variable Annuity

Issued by

Connecticut General Life Insurance Company

Through

CG Variable Annuity Separate Account

Mailing Address: For New York Customers
Only Mailing Address:
Customer Service Center
P.O. Box 94039 Customer Service Center
Palatine, IL 60094-4039 P.O. Box 94038
Telephone: 800-776-6978 Palatine, IL 60094-4038
Fax: 847-402-9543 Telephone: 800-692-4682
Fax: 847-402-4361

This Prospectus describes the AIM/CIGNA Heritage Variable Annuity, an individual
and group flexible payment deferred variable annuity contract (the "Contract").
We are no longer offering the Contract for new sales. If you already own a
Contract, you may continue to make additional premium payments.

This Prospectus contains important information about the Contract and the
Variable Account that you should know before investing.

If you would like more information about the AIM/CIGNA Heritage Variable
Annuity, you can obtain a free copy of the Statement of Additional Information
("SAI") dated May , 2000. Please call, or write to us, at the numbers shown
above.

The SAI has been filed with the Securities and Exchange Commission ("SEC") and
is legally a part of this prospectus. The table of contents of the SAI is
included at the end of this Prospectus.

Please note that the Contract and the Portfolios:
o Are not bank deposits
o Are not federally insured
o Are not endorsed by any bank or government agency
o Are not guaranteed to achieve their investment goals
o Involve risks, including possible loss of premiums.

This prospectus must be accompanied by the current prospectus of AIM Variable
Insurance Funds. You should read it before you invest and retain it for future
reference. All Portfolios may not be available. Please call your Financial
Advisor or the Customer Service Center to check availability.

You may direct your premium payments, as well as any money accumulated in your
Contract, into the variable sub-accounts of the CG Variable Annuity Separate
Account (the "Variable Account") and/or the fixed account with guaranteed
interest periods.

The Variable Account is divided into variable sub-accounts. Each variable
sub-account invests exclusively in one Portfolio of the AIM Variable Insurance
Funds. You may choose to invest in any of the following 17 Portfolios:

o AIM V.I. Aggressive Growth Fund
o AIM V.I. Balanced Fund
o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
o AIM V.I. Dent Demographic Trends Fund
o AIM V.I. Diversified Income Fund
o AIM V.I. Global Growth and Income Fund
o AIM V.I. Global Utilities Fund
o AIM V.I. Government Securities Fund
o AIM V.I. Growth Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. High Yield Fund
o AIM V.I. International Equity Fund
o AIM V.I. Money Market Fund
o AIM V.I. Telecommunications and Technology Fund
o AIM V.I. Value Fund

Your investments in the variable sub-accounts are not guaranteed and will vary
in value with the investment performance of the Portfolios you select. You bear
the entire investment risk for all amounts you allocate to the Variable Account.
<PAGE>

We will credit the money you direct to the fixed sub-accounts with a fixed rate
of interest for the duration of the guaranteed period you choose. We set
interest rates periodically and will not set them below 3% annually. The
interest earned on your money as well as your principal is guaranteed as long as
you keep it in the fixed sub-accounts until the end of the guaranteed period.
Money that you withdraw or transfer before the end of the guaranteed period will
be subject to a Market Value Adjustment. A Market Value Adjustment may increase
or decrease your Contract's value.

The Contract offers you the right to receive monthly annuity payments beginning
on the Annuity Date you select. You can receive annuity payments on a fixed or
variable basis, or a combination of both.

The Securities and Exchange Commission has not approved these securities or
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.

<PAGE>

TABLE OF CONTENTS

Definitions...................................................................

Summary.......................................................................

Overview..................................................................
Premium Payments..........................................................
The Fixed Account.........................................................
The Variable Account......................................................
Transfers.................................................................
Cash Withdrawals..........................................................
Free Partial Withdrawals..................................................
Annuity Payments..........................................................
Death Benefit.............................................................
Additional Features.......................................................
Charges and Deductions....................................................
Owner Inquiries...........................................................

Expense Table................................................................

The Company, the Fixed Account, the Variable Account and the Fund.............

The Company...............................................................
The Administrator.........................................................
The Fixed Account.........................................................
The Variable Account......................................................
The Fund and the Portfolios...............................................

Premium Payments and Account Values During the Accumulation Period............

Premium Payments..........................................................
Your Annuity Account.....................................................
Allocating Your Premium Payments..........................................
Fixed Accumulation Value..................................................
Guaranteed Periods........................................................
Guaranteed Interest Rates.................................................
Variable Accumulation Value...............................................
Variable Accumulation Units...............................................
Variable Accumulation Unit Value..........................................

Optional Features.............................................................

Dollar Cost Averaging.....................................................
Automatic Rebalancing.....................................................

Transfer Privilege............................................................

Transfers During the Accumulation Period..................................
Transfers During the Annuity Period.......................................

Access to Your Money..........................................................

Cash Withdrawals..........................................................
Minimum Value Requirement.................................................
Section 403(b) Annuities..................................................

Death Benefits................................................................

Election and Effective Date of Election...................................
Payment of Death Benefit..................................................
Amount of Death Benefit...................................................
Surrender of the Contracts....................................................

Annuity Provisions............................................................

Annuity Date..............................................................
Election -Change of Annuity Option........................................
Annuity Options...........................................................
Fixed Annuity Payments....................................................
Variable Annuity Payments.................................................

Fixed Annuity Options.........................................................

Life Annuity Option.......................................................
Life Annuity with Certain Period Option...................................
Cash Refund Life Annuity Option...........................................
Annuity Certain Option....................................................

Variable Annuity Options......................................................

Variable Life Annuity Option..............................................
Variable Life Annuity with Certain Period Option..........................
Variable Annuity Certain Option...........................................
Additional Annuity Options................................................
Determination of Annuity Payments.........................................

Expenses......................................................................

Withdrawal Charges........................................................
Free Partial Withdrawal...................................................
Annuity Account Fee.......................................................
Administrative Fee........................................................
Premium Taxes.............................................................
Charge for Mortality and Expense Risks....................................
Market Value Adjustment...................................................

Other Contract Provisions.....................................................

Deferral of Payment.......................................................
Designation and Change of Beneficiary.....................................
Exercise of Contract Rights...............................................
Transfer of Ownership.....................................................
Death of Owner............................................................
Voting Fund Shares........................................................
Adding, Deleting or Substituting Investments..............................
Change in Operation of the Variable Account...............................
Modifying the Contract....................................................
Periodic Reports..........................................................

Federal Tax Matters...........................................................

Taxation of Non-Qualified Contracts.......................................
Taxation of Qualified Contracts...........................................
Possible Tax Law Changes..................................................

Distribution of the Contracts.................................................
Historical Performance Data...................................................
Condensed Financial Information...............................................
Table of Contents for the Statement of Additional Information.................

<PAGE>

Definitions

The following special terms are used throughout this Prospectus:

ACCOUNT VALUE: The total value in your Contract. It is equal to the value you
have in the Variable Account plus your value in the fixed account.

ACCUMULATION PERIOD: The time from the date we issue the Contract until the
earliest of: (i) the Annuity Date; (ii) the date on which we pay the death
benefit; or (iii) the date on which you surrender or annuitize the Contract.

ANNUITANT: The person or persons you identify on whose life we will make the
first annuity payment.

ANNUITY ACCOUNT: An account we establish for you to which we credit all your
premium payments, net investment gains and interest, and from which we deduct
charges and investment losses.

ANNUITY DATE: The date on which we begin to pay annuity payments to you.

ANNUITY OPTION: The method by which we make annuity payments to you.

BENEFICIARY: The person or entity having the right to receive the death benefit
set forth in the Contract.

BUSINESS DAY: Every day on which the New York Stock Exchange ("NYSE") is open
for business. It is also called a "Valuation
Date."

CERTIFICATE: (For Group Contract only) The document which confirms your coverage
under the Contract.

CONTRACT YEARS and CONTRACT ANNIVERSARIES: 12-month periods we measure from the
Date of Issue.

DATE OF ISSUE: The date on which the Contract became effective.

DUE PROOF OF DEATH: Any proof of death we find satisfactory, for example, an
original certified copy of an official death certificate or an original
certified copy of a decree of a court of competent jurisdiction as to the
finding of death.

FIXED ACCOUNT: Allocation options under the Contract, other than the Variable
Account, that provide a guarantee of principal and minimum interest. Fixed
account assets are our general assets.

FUND: AIM Variable Insurance Funds.

GUARANTEED PERIOD AMOUNT: That portion of your account value that you allocate
to a specific guaranteed period with a specified expiration date. It includes
any interest we credit to that amount.

GUARANTEED INTEREST RATE: The interest rate we credit on a compound annual basis
during a guaranteed period.

GUARANTEED PERIOD: The period for which we credit a guaranteed interest rate to
any amounts which you allocate to a fixed sub-account. In most states, you may
elect a period from one to ten years.

INDEX RATE: An index rate based on the Treasury Constant Maturity Series
published by the Federal Reserve Board.

IN WRITING: A written form that we find satisfactory and we receive at our
Customer Service Center.

MARKET VALUE ADJUSTMENT: An amount we add to or subtract from certain
transactions involving your interest in the fixed account. The amount of the
adjustment reflects the impact of changing interest rates.

NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which does not receive favorable federal income
tax treatment.

OWNER, YOU, or YOUR: The persons entitled to the ownership rights stated in the
Contract. The Certificate Owner under a group
contract.

PAYEE: A person who receives payments under the Contract.

PORTFOLIO: An underlying mutual fund in which a variable sub-account invests.
Each Portfolio is a separate investment series of the Fund which is an
investment company registered with the SEC.

PREMIUM PAYMENT: Any amount you pay to us as consideration for the benefits the
Contract provides.

QUALIFIED CONTRACT: A Contract used in connection with a retirement plan which
receives favorable federal income tax treatment under Sections 401, 403, 408, or
457 of the Code.

SEVEN YEAR ANNIVERSARY: The seventh Contract Anniversary and each succeeding
Contract Anniversary occurring at any seven year interval thereafter, for
example, the 14th, 21st and 28th Contract Anniversaries.

SUB-ACCOUNT: That portion of the fixed account associated with a specific
guaranteed period and guaranteed interest rate and each portion of the Variable
Account which invests in a specific Portfolio of the Fund.

SURRENDER: When you elect to end your Contract and receive your account value in
a lump sum payment. Your account value will be reduced by any applicable
withdrawal charges, contract fees, or premium taxes, and may be either increased
or reduced by any market value adjustment that we apply.

VALUATION DATE: Every day on which the New York Stock Exchange ("NYSE") is open
for business.

VALUATION PERIOD: The period of time over which we determine the change in the
value of the variable sub-accounts in order to price Variable Accumulation Units
and Annuity Units. Each Valuation Period begins at the close of normal trading
on the NYSE (usually 4:00 p.m. Eastern time) on each Valuation Date and ends at
the close of the NYSE on the next Valuation Date. A Valuation Period may be more
than one day.

VARIABLE ACCOUNT: A separate account divided into variable sub-accounts. Each
sub-account invests exclusively in shares of a specific Portfolio of the AIM
Variable Insurance Funds. The assets in the Variable Account are owned by
Connecticut General Life Insurance Company.

VARIABLE ACCUMULATION UNIT: A unit of measure we use to calculate the value of
the variable sub-accounts.

WE, US, OUR or CG LIFE: Connecticut General Life Insurance Company. Our Home
Office is located at 900 Cottage Grove Road, Bloomfield, CT.

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

Terms Used in This Prospectus Corresponding Term Used in the Contract

Account value Annuity Account Value
Annuity option Income Payments
Fixed sub-account Fixed Account Sub-Account
Variable sub-account Variable Account Sub-Account

<PAGE>

Summary

This summary provides only a brief overview of the more important features of
the Contract. The Contract is more fully described in the rest of this
Prospectus. Please read the entire Prospectus carefully.

Overview

We designed the AIM/CIGNA Heritage variable annuity contract as a way for you to
invest on a tax-deferred basis in the sub-accounts of the Variable Account and
the fixed account. We intend the Contract to be used to accumulate money for
retirement or other long-term purposes. The Contract can be used in connection
with retirement and tax-deferred plans, some of which may qualify as retirement
programs under Sections 401, 403, 408, or 457 of the Code.

We are no longer offering the Contract for sale.

The Contract, like all deferred annuity contracts, has two phases: the
"accumulation period" and the "income phase." During the accumulation period,
your earnings accumulate on a tax-deferred basis and are generally taxed as
income when you take them out of the Contract. The income phase occurs when you
begin receiving regular annuity payments from your Contract on the Annuity Date.
The money you can accumulate during the accumulation period, as well as the
annuity payment option you choose, will determine the dollar amount of any
annuity payments you receive during the income phase.

Premium Payments

Additional payments you direct into a guaranteed period of the fixed account
must be at least $500. The minimum payment you can place in a variable
sub-account is $100. We must approve any premium payment greater than
$1,000,000.

The Fixed Account

You may direct your premium payments into any of the sub-accounts available in
the fixed account. We set interest rates at our sole discretion and guarantee a
minimum interest rate of three percent (3%) per year, compounded annually. There
is no assurance that guaranteed interest rates will exceed 3% per year.

Each fixed sub-account guarantees interest at a specified rate for a particular
period ranging from one to ten years. But you must keep your money in the
sub-account for the length of the guaranteed period in order to receive the
guaranteed interest rate. If you withdraw or transfer amounts from a fixed
sub-account before the end of the guaranteed interest period, we will apply a
Market Value Adjustment that could increase or decrease your contract value. We
guarantee, however, that you will be credited with an interest rate of at least
3% per year, compounded annually, on amounts you allocated to the fixed account,
regardless of any effects of the Market Value Adjustment. We do not apply a
Market Value Adjustment to the death benefit or annuity payments.

The Variable Account

The Variable Account is divided into sub-accounts. Each variable sub-account
uses its assets to purchase, at net asset value, shares of a specific Portfolio
of the AIM Variable Insurance Funds. You may invest in any of the following 17
Portfolios of the Fund through this Contract:

<PAGE>

Depending on market conditions, you can earn or lose the money you invest in any
of the Portfolios through the variable sub-accounts. We reserve the right to
offer other investment choices in the future. All Portfolios may not be
available in all states. Please call to determine whether a particular Portfolio
is available.

Transfers

You may transfer money among the fixed and variable sub-accounts before the
Annuity Date. All transfers are subject to the following conditions:

o transfers from any variable or fixed sub-account must be at least $100;

o transfers to a fixed sub-account must be at least $500; and

o if your account value remaining in a fixed sub-account is less than $500 or
less than $50 in a variable sub-account, then the entire account value
within the sub-account must be transferred.

In addition, we may restrict the number and dollar amount of transfers from a
fixed sub-account. We will subject transfers from a fixed sub-account to a
Market Value Adjustment, unless the transfer is made on the expiration date of
the fixed sub-account. After the Annuity Date, we may permit transfers among the
variable sub-accounts subject to certain conditions.

Cash Withdrawals

At any time before the Annuity Date, you may take your money out of the
Contract. Each cash withdrawal must be at least $50. Withdrawal charges, annuity
account fees, premium taxes and a Market Value Adjustment may apply. After the
Annuity Date, we do not permit withdrawals under most Annuity Options.

You may have to pay federal income taxes and a penalty tax on any withdrawals.

Free Partial Withdrawals

Each Contract Year you may withdraw up to 15% of the total amount of the premium
payments you have paid without paying a withdrawal charge.

Annuity Payments

The Contract allows you to receive income under one of 7 annuity payment
options. You may choose from fixed payments options, variable payment options,
or a combination of both. Annuity payments will begin on the first day of the
month following the Annuity Date you selected and specified in the Contract
application.

If you select a variable payment option, the dollar amount of the annuity
payments you receive will go up or down depending on the investment results of
the Portfolios in which you invest at that time. If you choose to have any
portion of your annuity payments come from the fixed account, the payment amount
will be fixed and guaranteed by us.

Annuity payments may be subject to Federal income taxes.

Death Benefit

If an Owner dies before the Annuity Date, we will pay a death benefit to the
surviving Owner, if any, otherwise the Beneficiary. If the deceased Owner (or
any Annuitant if an Owner is a non-natural person) dies on or after the Annuity
Date, we will not pay a death benefit unless the Annuity Option you select
provides for a death benefit. If there is no designated Beneficiary living on
the date of death of the Owner, CG Life will pay the Death Benefit upon receipt
of due proof of the death of both the owner and the designated Beneficiary in
one sum to the estate of the Owner. The death benefit we will pay before the
Annuity Date generally equals the greatest of:
<PAGE>

o the account value on the date we deem the death benefit election to be
effective;

o the sum of all premium payments under the Contract, minus all partial
withdrawals;

o your account value on the Seven Year Anniversary immediately preceding the
date on which the death benefit election is deemed effective, adjusted for any
subsequent premium payments, partial withdrawals and applicable charges;

o the amount that would have been paid if a full surrender occurred during
the day when the death benefit election is deemed effective, including any
applicable withdrawal charges and Market Value Adjustment; and

o the Maximum Anniversary Value, adjusted for any subsequent premium payments
and partial withdrawals.

Additional Features

Enhanced Dollar Cost Averaging

You can arrange to have money automatically transferred monthly from any of the
variable sub-accounts or the One-Year fixed sub-account to your choice of
variable and fixed sub-accounts. Dollar cost averaging does not guarantee a
profit and does not
protect against a loss if market prices decline.

Automatic Rebalancing

We will, upon your request, automatically transfer amounts among the variable
sub-accounts on a regular basis to maintain a desired allocation of your Account
Value among the variable sub-accounts.

Expenses

Contingent Deferred Sales Charge

We do not deduct a sales charge from your premium payments. However, if you
withdraw any part of your account value during the accumulation period, we may
deduct a withdrawal charge (contingent deferred sales charge) on any amount you
withdraw that exceeds the Free Withdrawal Amount described herein. The
withdrawal charge is 7% of the premium payment if you make the withdrawal during
the first year after you paid the premium, decreasing by 1% each year. After we
have held the premium payment for seven years, the withdrawal charge on that
amount of premium is 0%. For purposes of computing the withdrawal charges,
amounts are withdrawn in the order in which they are received by us, that is,
the oldest premium payment first. We adjust withdrawals from the fixed account
by the withdrawal charges and by any applicable Market Value Adjustment.
Withdrawal charges may be waived in certain cases.

Market Value Adjustment

A cash withdrawal or transfer from a fixed sub-account during the accumulation
period may be subject to a Market Value Adjustment. The Market Value Adjustment
will reflect the relationship between the value of a government securities index
at the time a cash withdrawal or transfer is made, and the value of that index
at the time you paid the premium payments being withdrawn or transferred. The
index is published by the Federal Reserve Board and reflects yields on U.S.
Government securities of various maturities. The Market Value Adjustment may
cause the amount you withdraw or transfer to be higher or lower. The Market
Value Adjustment applies to transfers from the fixed account unless the transfer
is made at the end of a guaranteed period.

A Market Value Adjustment may also apply to death benefit payments, but only if
it would increase the death benefit. The Market Value Adjustment is not applied
against a withdrawal or transfer which occurs on the Expiration Date of a
guaranteed period, nor is it applied if it would decrease a death benefit
payment. The Market Value Adjustment may be waived in certain cases.

Annuity Account Fee

During the accumulation period, we deduct an annual Annuity Account Fee of $35
from your account value on the last business day of each calendar year, or if
you surrender your Contract. After the Annuity Date, we deduct an annual Annuity
Account Fee of $35, in approximately equal amounts, from each variable annuity
payment you receive during the year. We do not deduct an Annuity Account Fee
from fixed annuity payments. State law may require us to reduce the $35 Annuity
Account Fee. During the accumulation period, we do not deduct this fee if, when
the deduction is to be made, your account value is $100,000 or more.

Administrative Fee

On each business day, we deduct an administrative fee equal to an annual rate of
0.10% of the daily net assets you have in the Variable Account. We deduct this
fee to cover our administrative expenses.

Mortality and Expense Risk Charge

On each business day, we deduct a mortality and expense risk charge equal to an
annual rate of 1.25% of the daily net assets you have in the Variable Account.
We deduct this fee to cover the mortality and expense risks we assume under the
Contract.

Taxes

Some states and other governmental entities charge premium and other taxes
ranging up to 3.5% on contracts issued by insurance companies. We are
responsible for paying these taxes and will make a deduction from your annuity
value to pay for them. We will deduct any such taxes when you surrender,
withdraw or annuitize, or if we pay a death benefit. We only charge you premium
taxes if your state requires us to pay premium taxes.

Fund Charges

Each Portfolio incurs administrative expenses and pays investment advisory fees
to its investment adviser. These advisory fees and other Portfolio charges and
expenses are indirectly passed on to you.
<PAGE>

Owner Inquiries

Please direct any questions or requests for additional information to:

Customer Service Center: P.O. Box 94039 Palatine, IL 60094-4039
Tel: 800-776-6978 Fax: 847-402-9543

For New York Customers Only:

Customer Service Center
P.O. Box 94038 Palatine, IL 60094-4038
Tel: 800-692-4682 Fax: 847-402-4361

<PAGE>

Expense Table

The following Expense Table and examples will help you understand the costs and
expenses that you will bear, directly and indirectly, by investing in the
Variable Account. For more information, you should read "Contract Charges and
Fees" below and consult the Fund's Prospectus. The examples do not include any
taxes or tax penalties you may be required to pay if you surrender your
Contract.

Owner Transactions Expenses

Sales Load on Purchases...................................................0%
Maximum Deferred Sales Charge on Withdrawals
(as a percentage of your premium payment)(1)..................7.0%
Transfer Fee.............................................................. $0
Annual Annuity Account Fee(2)..................................$35 per contract

Variable Account Annual Expenses

(as a percentage of average Variable Account assets)

Mortality and Expense Risk Fee...........................................1.25%
Administrative Fee.......................................................0.10%
Total Separate Account Annual Expenses........................1.35%

(1) You may withdraw the Free Withdrawal Amount from your Annuity Account once
each Contract Year without a withdrawal charge if you have not previously
withdrawn all premium payments. The withdrawal charge on the remaining portion
is equal to a percentage of the premium payment you withdraw and ranges from 7%
to 0%, depending upon the length of time between our acceptance of the premium
payment you are withdrawing and your withdrawal. After we hold the premium
payment for seven years, you may withdraw that premium payment without a
withdrawal charge.

(2) We waive the Annuity Account Fee for account values of $100,000 or more as
of the date on which we deduct the charge.

AIM Variable Insurance Funds Annual Expenses
<TABLE>
<S> <C> <C> <C> <C> <C>

(as a percentage of Portfolio average net assets after fee waivers and
reimbursements)(1)

Name of Portfolio Management Fees Other Expenses Total Annual
Expenses

AIM V.I. Aggressive Growth Fund (2) 0.00% 1.19% 1.19%
AIM V.I. Balanced Fund (2) 0.65% 0.56% 1.21%
AIM V.I. Blue Chip Fund 0.75% 0.55% 1.30%
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73%
AIM V.I. Capital Development Fund (2) 0.00% 1.23% 1.23%
AIM V.I. Dent Demographic Trends Fund 0.85% 0.55% 1.40%
AIM V.I. Diversified Income Fund 0.60% 0.23% 0.83%
AIM V.I. Global Growth and Income Fund(2) 0.97% 0.37% 1.34%
AIM V.I. Global Utilities Fund 0.65% 0.49% 1.14%
AIM V.I. Government Securities Fund 0.50% 0.40% 0.90%
AIM V.I. Growth Fund 0.63% 0.10% 0.73%
AIM V.I. Growth and Income Fund 0.61% 0.16% 0.77%
AIM V.I. High Yield Fund(2) 0.35% 0.79% 1.14%
AIM V.I. International Equity Fund 0.75% 0.22% 0.97%
AIM V.I. Money Market Fund 0.40% 0.20% 0.60%
AIM V.I. Telecommunications and Technology Fund 1.00% 0.27% 1.27%
AIM V.I. Value Fund 0.61% 0.15% 0.76%
</TABLE>

(1) Figures shown in the table are for the year ended December 31, 1999, except
for the AIM V.I. Blue Chip, Dent Demographic Trends, Global Growth and
Income, and Telecommunications and Technology Funds which commenced
operations on December 29, 1999, December 29, 1999, October 15, 1999 and
October 15, 1999 respectively. For these Portfolios, the management fee,
other expenses and total annual fund operating expenses are based on
estimates for the Funds' first full fiscal year.

(2) Absent voluntary reductions and reimbursements for certain
Portfolios, management fees, other expenses, and total annual fund
expenses expressed as a percentage of average net assets of the
Portfolios would have been as follows:

Management Other Total Annual
Fund Fee Expenses Fund Expenses
<S> <C> <C> <C>
AIM V.I. Aggressive Growth Fund 0.80% 1.62% 2.42%
AIM V.I. Balanced Fund 0.75% 0.56% 1.31%
AIM V.I. Capital Development Fund 0.75% 2.67% 3.42%
AIM V.I. Global Growth and Income Fund 1.00% 0.37% 1.37%
AIM V.I. High Yield Fund 0.63% 0.79% 1.42%

</TABLE>

<PAGE>

EXAMPLES

An Owner would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets (and assuming all premium payments are allocated to the
Variable Account):
<TABLE>
<S> <C> <C> <C> <C> <C>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

1. If the Contract is surrendered at the end
of the applicable time period:

Variable Sub-Accounts

AIM V.I. Aggressive Growth $93 $155 $219 $412
AIM V.I. Balanced $82 $122 $164 $308
AIM V.I. Blue Chip $82 $121 $163 $307
AIM V.I. Capital Appreciation $75 $102 $131 $243
AIM V.I. Capital Development $104 $185 $266 $497
AIM V.I. Dent Demographic Trends $83 $124 $168 $317
AIM V.I. Diversified Income $76 $105 $136 $253
AIM V.I. Global Growth and Income $83 $126 $171 $322
AIM V.I. Global Utilities $80 $116 $154 $288
AIM V.I. Government Securities $76 $105 $136 $252
AIM V.I. Growth $76 $104 $134 $248
AIM V.I. Growth and Income $75 $101 $130 $241
AIM V.I. High Yield $83 $125 $169 $319
AIM V.I. International Equity $78 $109 $144 $268
AIM V.I. Money Market $74 $99 $126 $233
AIM V.I. Telecommunications and Technology $83 $126 $170 $321
AIM V.I. Value $75 $102 $131 $242

2. If the Contract is not surrendered or if it is annuitized:
AIM V.I. Aggressive Growth $39 $119 $201 $412
AIM V.I. Balanced $28 $86 $146 $308
AIM V.I. Blue Chip $28 $85 $145 $307
AIM V.I. Capital Appreciation $21 $66 $113 $243
AIM V.I. Capital Development $50 $149 $248 $497
AIM V.I. Dent Demographic Trends $29 $88 $150 $317
AIM V.I. Diversified Income $22 $69 $118 $253
AIM V.I. Global Growth and Income $29 $90 $153 $322
AIM V.I. Global Utilities $26 $80 $136 $288
AIM V.I. Government Securities $22 $69 $118 $252
AIM V.I. Growth $22 $68 $116 $248
AIM V.I. Growth and Income $21 $65 $112 $241
AIM V.I. High Yield $29 $89 $151 $319
AIM V.I. International Equity $24 $73 $126 $268
AIM V.I. Money Market $20 $63 $108 $233
AIM V.I. Telecommunications and Technology $29 $90 $152 $321
AIM V.I. Value $21 $66 $113 $242
</TABLE>

These tables are intended to assist you in understanding the costs and expenses
that you will incur, directly or indirectly, by investing in the Variable
Account. These include the expenses of the Portfolios of the AIM Variable
Insurance Funds. See the Fund Prospectus. In addition to the expenses listed
above, premium taxes may be applicable.

These examples reflect the annual $35 Annuity Account Fee as an annual charge of
0.07% of assets, based on an average account value of $50,000.

The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.

Condensed Financial Information is found at the end of this prospectus.

<PAGE>

The Company, the Fixed Account, the Variable Account and the Fund

The Company

Connecticut General Life Insurance Company (CG Life) is a stock life insurance
company incorporated in Connecticut in 1865. Our Home Office mailing address is
Hartford, Connecticut 06152. Our telephone number is (860) 726-6000. We do
business in fifty states, the District of Columbia and Puerto Rico. We issue
group and individual life and health insurance policies and annuities. We have
various wholly owned subsidiaries which are generally engaged in the insurance
business.

We are a wholly owned subsidiary of Connecticut General Corporation, Hartford,
Connecticut. Connecticut General Corporation is wholly owned by CIGNA Holdings
Inc., Philadelphia, Pennsylvania which is in turn wholly owned by CIGNA
Corporation, Philadelphia, Pennsylvania. Connecticut General Corporation is the
holding company of various insurance companies, one of which is CG Life.

The Administrator

Allstate Life Insurance Company and Allstate Life Insurance Company of New York
(together, "Allstate") perform certain administrative functions relating to the
Contracts, the fixed account, and the variable account. Allstate will, among
other things, maintain the books and records of the sub-accounts, the variable
account, and the fixed account. Allstate will also maintain records of the name,
address, contract number, Annuity Account value, and any other information
necessary to operate and administer the Contracts. Allstate is responsible for
servicing the Contracts, including the payment of benefits, and contract
administration.

The Fixed Account

The fixed account is part of our general account and is made up of our general
assets, other than those held in any separate account. Interests in the fixed
account have not been registered under the Securities Act of 1933 (the "1933
Act"), and neither the fixed account nor our general account has been registered
under the Investment Company Act of 1940 (the "Act"). Therefore, neither the
fixed account nor any interest therein is generally subject to regulation under
the provisions of the 1933 Act or the Act. Accordingly, we have been advised
that the staff of the SEC has not reviewed the disclosure in this Prospectus
relating to the fixed account.

The assets in the fixed sub-accounts are part of our general account assets and
are available to fund the claims of all our creditors and to fund benefits under
the Contract. You do not participate in the investment performance of the fixed
account's assets or our general account. Instead, we credit a specified rate of
interest, declared in advance, to amounts you allocate to the fixed account. We
guarantee this rate to be at least 3% per year. We may credit interest at a rate
greater than 3% per year, but we are not obligated to do so.

You may direct your premium payments, and any portion of your account value, to
any available fixed sub-account. Each fixed sub-account credits guaranteed
interest rates for a guaranteed interest period. Currently, 3 guaranteed periods
range from one to ten years, although we may offer different guaranteed periods
in the future. When you direct money to a fixed sub-account, you select the
number of years (the guaranteed period) during which you will keep money in that
fixed sub-account. You may select one or more fixed sub-accounts at any one
time. If you keep your money in the fixed sub-account for the length of the
sub-account's guaranteed period, we will credit interest at the rate we
specified for that sub-account.

But if you withdraw, or transfer, any money from the sub-account before its
expiration date for any reason, we will apply a Market Value Adjustment to the
amount you withdraw (see "Market Value Adjustment"). We may also apply a
withdrawal charge. We guarantee, however, that you will be credited with an
interest rate of at least 3% per year, compounded annually, on amounts you
allocate to any fixed sub-account, regardless of any effects of the Market Value
Adjustment. The Market Value Adjustment will not reduce the amount available for
withdrawal or transfer to an amount less than the initial amount you allocated
or transferred to the fixed sub-account plus compound interest of 3% per year.
(However, if we apply a withdrawal charge, the amount you receive may be less
than your original allocation credited with 3% compounded interest per year.) We
reserve the right to defer the payment or transfer of amounts you withdraw from
the fixed account for up to six (6) months from the date we receive a proper
request for such withdrawal or transfer.

The Variable Account

The Contract permits you to invest in the Portfolios through the variable
sub-accounts. Your account value and/or variable annuity payments will reflect
the investment performance of the Portfolios in which you invest through the
variable sub-accounts. The values of the shares of the Portfolios held by the
Variable Account will fluctuate and are subject to the risks of changing
economic conditions as well as the risk that the Fund's management may not make
necessary changes in its Portfolios to anticipate changes in economic
conditions. Therefore, you bear the entire investment risk that the Contract's
basic objectives may not be realized and that the adverse effects of inflation
may not be lessened. We cannot guarantee that the total surrender proceeds or
the aggregate amount of annuity payments you receive will equal or exceed the
premium payments you make.

We established the Variable Account as a separate account on May 15, 1992,
pursuant to a resolution of our Board of Directors. Under Connecticut insurance
law, the income, gains or losses of the Variable Account are credited to or
charged against the assets of the Variable Account without regard to our other
income, gains, or losses. Assets we maintain in the Variable Account, equal to
the reserves and other contract liabilities with respect to the Variable
Account, will not be charged with any liabilities arising out of any of our
other business. All obligations arising under the Contract, including the
promise to make annuity payments, are our general corporate obligations.

Effective January 1, 1998, CG Life contracted the administrative servicing
obligations with respect to its individual variable annuity business to The
Lincoln National Life Insurance Company (Lincoln Life) and Lincoln Life &
Annuity Company of New York (LLANY). Effective September 1, 1998, Lincoln Life
and LLANY subcontracted the administrative servicing obligations with respect to
the variable annuity business included in the Variable Account to Allstate.
Although CG Life was responsible for all Contract terms and conditions, Lincoln
Life and LLANY were responsible for servicing the individual annuity contracts,
including the payment of benefits, oversight of investment management and
contract administration, until these services were transitioned to the Allstate
Companies on April 12, 1999.

<PAGE>

The Variable Account is registered with the SEC as a unit investment trust under
the Act and meets the definition of a separate account under the federal
securities laws. Registration with the SEC does not involve their supervision of
our management or investment practices or policies, or those of the Variable
Account.

The Variable Account is divided into variable sub-accounts. Each variable
sub-account invests exclusively in shares of a specific Portfolio of the Fund.
All amounts you allocate to the Variable Account will be used to purchase shares
of the Portfolios in accordance with your instructions at their net asset value.
Any and all distributions the Fund makes with respect to the shares held by the
Variable Account will be reinvested to purchase additional shares at their net
asset value.

We will make deductions from the Variable Account for cash withdrawals, annuity
payments, death benefits, annuity account fees, and any applicable taxes by
redeeming the number of Portfolio shares at their net asset value that equals
the amount to be deducted. The Variable Account will purchase and redeem
Portfolio shares on an aggregate basis. The Variable Account will be fully
invested in Portfolio shares at all times.

The Fund and the Portfolios

AIM Variable Insurance Funds (the "Fund") is an open-end investment management
company registered under the Act. Shares of the Portfolios of the Fund are
offered to both registered and unregistered separate accounts of insurance
companies and to certain pension and retirement plans. The general public may
not purchase shares of the Portfolios.

A I M Advisors, Inc. ("AIM"), the Fund's investment adviser, its affiliates, and
any insurance companies with separate accounts investing in the Fund must report
certain potential and existing conflicts of interests to the Fund's Board of
Trustees. These include any potential or existing conflicts between the
interests of owners/participants of variable annuity contracts and owners of
variable life insurance contracts that invest in shares of the Fund. The Board
of Trustees, a majority of whom are not "interested persons" of the Fund, as
that term is defined in the Act, will monitor the Fund to identify any such
irreconcilable material conflicts and to determine what action, if any, the
Fund, AIM, or its affiliates should take.

You may invest in any of the following (17) Portfolios of the Fund:
<TABLE>
<S> <C> <C> <C>

Portfolio Investment Objective(s)

AIM V.I. Aggressive Growth Fund** Long-term growth of capital

AIM V.I. Balanced Fund As high a total return as possible, consistent with preservation of capital

AIM V.I. Blue Chip Fund Long-term growth of capital with a secondary objective of current income

AIM V.I. Capital Appreciation Fund Growth of capital

AIM V.I. Capital Development Fund Long-term growth of capital

AIM V.I. Dent Demographic Trends Fund Long-term growth of capital together with current income

AIM V.I. Diversified Income Fund High level of current income

AIM V.I. Global Growth and Income Fund Long-term growth of capital

AIM V.I. Global Utilities Fund High level of current income and a secondary objective of growth of capital

AIM V.I. Government Securities Fund High level of current income consistent with reasonable concern for
safety of principal

AIM V.I. Growth Fund Growth of capital

AIM V.I. Growth and Income Fund Growth of capital with a secondary objective of current income

AIM V.I. High Yield Fund High level of current income

AIM V.I. International Equity Fund Long-term growth of capital

AIM V.I. Money Market Fund As high a level of current income as is consistent with the preservation
of capital and liquidity

AIM V.I. Telecommunications and
Technology Fund Long-term growth of capital

AIM V.I. Value Fund Long-term growth of capital

</TABLE>

The Fund pays advisory fees to AIM for its services pursuant to an investment
advisory agreement. AIM, a Delaware corporation, also serves as investment
adviser to certain other investment companies.
<PAGE>

The investment objectives and policies of the Portfolios may be similar to other
portfolios and mutual funds managed by the same investment adviser that are sold
directly to the public. You should not expect that the investment results of the
other portfolios or mutual funds will be similar to those of the underlying
Portfolios.

There is no assurance that any Portfolio will achieve its stated investment
objective. Each Portfolio's investment objective may be changed by the Funds'
Board of Trustees without shareholder approval. A more detailed description of
the Fund, the Portfolios, their investment objectives, policies and restrictions
and expenses is found in the Fund's Prospectus and SAI. You should read the
Fund's Prospectus carefully before you invest.

<PAGE>

Premium Payments and Account Values During the Accumulation Period

Premium Payments

All premium payments must be paid to us or to our authorized agent. When you
apportion your premium payments among the sub-accounts, the minimum you can put
into a fixed sub-account is $500; the minimum for a variable sub-account is
$100.

We may reduce the minimum premium payment requirements under group contracts if
premium payments are paid through employee payroll deduction. We may also reduce
the minimum premium payment requirements if you use the Contract under a program
that qualifies under Section 403 or 408 of the Code. We must pre-approve any
premium payment in excess of $1,000,000.

If we receive any premium payment at our Customer Services Center before the
closing time of the New York Stock Exchange (usually 4 p.m. Eastern Time), we
will credit the payment to your Annuity Account the same day we receive it.
Otherwise, we will credit your payment on the next business day.

We reserve the right in our sole discretion not to accept a premium payment. In
addition, we may postpone the payment of any amount under the Contract which is
derived, all or in part, from any premium payment you paid by check or draft
until we determine the check or draft has been honored.

Your Annuity Account

Each premium payment you make will be credited to your Annuity Account. The
value of your Annuity Account for any Valuation Period is equal to the sum of
your variable accumulation value plus your fixed accumulation value.

The Annuity Account shall continue in full force until the earliest of:

o the Annuity Date;
o the date we pay all death benefits under the Contract;
o the date you surrender the Contract; or
o the date your account value no longer meets the Minimum Value
Requirement described below.

Cash withdrawals may cause us to discontinue your Annuity Account.

Allocating Your Premium Payments

We will allocate your premium payments as you specify. If you wish to change
your allocation instructions, you must do so in writing. You must make
allocations to multiple sub-accounts in whole percentages.

If your allocation instructions would place less than to $500 in a fixed
sub-account, we will promptly ask you for further instructions regarding how we
should apportion the premium.

Fixed Accumulation Value

The fixed accumulation value of your Annuity Account for any Valuation Period is
equal to the sum of the values of all the fixed sub-accounts to which you have
allocated money.

Guaranteed Periods

You may allocate your premium payments, or transfer your account value, to any
fixed sub-account we offer. Each fixed sub-account will credit guaranteed
interest rates for the length of a guaranteed period ranging from one to ten
years. The length of the sub-account's guaranteed period will affect the rate of
interest we credit to the sub-account.

Your money in a fixed sub-account will earn interest at a guaranteed interest
rate during the sub-account's guaranteed period, unless you withdraw value
before the guaranteed period expires. The guaranteed period starts on the date
we accept a premium payment or, in the case of a transfer, on the effective date
of the transfer. The guaranteed period expires on the date that equals its start
date plus the number of calendar years in the guaranteed period.

We will credit interest daily at a rate equivalent to a compound annual rate. We
will set the interest rate from time to time. A renewal and/or a transfer will
begin a new fixed sub-account for the guaranteed period you select. Amounts you
allocate at different times to fixed sub-accounts with the same guaranteed
period may have different interest rates. Each fixed sub-account will be treated
separately for purposes of determining whether to apply a Market Value
Adjustment.

We will notify you in writing before the expiration date for any guaranteed
period. We will automatically roll over the amount in an expiring sub-account
into a sub-account with the same guaranteed period, unless you notify us
otherwise. Transfers at the end of a guaranteed period do not count as transfers
(See "Transfers" in this Prospectus) and are not subject to restrictions on
fixed account transfers.
<PAGE>

Guaranteed Interest Rates

From time to time, we will set current guaranteed interest rates for the
guaranteed periods of the fixed account. We will set interest rates at our
discretion. We have no specific formula for determining the rates we declare.
Once you allocate money to a fixed sub-account for a guaranteed period, the
interest rate is guaranteed for the entire duration of the guaranteed period.
Any amount you withdraw from the sub-account will be subject to any applicable
withdrawal charges, Annuity Account Fees, Market Value Adjustment, premium taxes
or other fees. We will also apply a Market Value Adjustment to amounts you
transfer out of a fixed sub-account before the end of the guaranteed period.

The guaranteed interest rate will not be less than 3% per year compounded
annually, regardless of any Market Value Adjustment we may apply. We have no
obligation to declare a rate greater than 3%. You assume the risk that we will
not declare interest rates greater than 3%.

Variable Accumulation Value

The variable accumulation value of your Annuity Account for any Valuation Period
is equal to the sum of the value of all Variable Accumulation Units credited to
your Annuity Account.

Variable Accumulation Units

We credit premium payments to your Annuity Account in the form of Variable
Accumulation Units. We determine the number of Variable Accumulation Units we
credit by dividing the dollar amount you allocate to the particular variable
sub-account by the Variable Accumulation Unit Value for the particular
sub-account for the Valuation Period during which we receive and accept the
premium payment.

Variable Accumulation Unit Value

We established the initial Variable Accumulation Unit Value for each sub-account
at $10. We recalculate the Variable Accumulation Unit Value for each sub-account
at the close of each Valuation Date. The Variable Accumulation Unit Value will
reflect the investment performance of the underlying Portfolio in which the
sub-account invests, the deduction of the mortality and expense risk charge and
the deduction of the Administrative Fee.

For a detailed discussion of how we determine Variable Accumulation Unit Value,
see the SAI.

Optional Features

You may elect to enroll in either of the following programs. However, you may
not be enrolled in both programs at the same time.

Dollar Cost Averaging

Dollar Cost Averaging is a program which allows you to systematically transfer a
specific dollar amount each month from any variable sub-account or the One-Year
fixed sub-account to one or more variable sub-accounts. By transferring set
amounts on a regular schedule, instead of transferring the total amount at one
particular time, you may reduce the risk of investing in the portfolios only
when the price is high.

You may select Dollar Cost Averaging by having at least $1,000 in a variable or
One-Year fixed sub-account. You must transfer at least $50 per month. You may
enroll in this program at any time by calling us or by providing us the
information we request on the Dollar Cost Averaging election form.

You must have sufficient value in the variable or One-Year fixed sub-account. We
do not permit transfers to or from any fixed sub-account other than the One-Year
fixed sub-account under Dollar Cost Averaging. We may, at our sole discretion,
waive Dollar Cost Averaging minimum deposit and transfer requirements.

Dollar Cost Averaging will terminate when any of the following occurs:

o the number of designated transfers has been completed;
o the value of the variable or the One-Year fixed sub-account is insufficient
to complete the next transfer;
o you request termination by telephone or in writing(we must receive
such request at least one week before the next scheduled transfer date to
take effect that month); or
o you surrender the Contract.

The Dollar Cost Averaging program is not available following the Annuity Date.
We do not currently charge for Dollar Cost Averaging but we may do so.

We do not control the Fund and cannot guarantee that it will accept transfers
under the Dollar Cost Averaging program. We reserve the right to discontinue or
change this program at any time.

We do not guarantee that the dollar cost averaging program will result in
annuity account values which equal or exceed the value of your Premium Payments.
The Dollar Cost Averaging program may not achieve its objective. We do not
guarantee that the program will result in a profit, or protect against loss, nor
do we guarantee that it produces better results than a single lump-sum
investment.
<PAGE>

Automatic Rebalancing

Automatic Rebalancing is an option which periodically restores to a
pre-determined level the percentage of annuity value allocated to each variable
sub-account (e.g., 20% Money Market, 50% Growth, 30% Utilities). This
pre-determined level will be the allocation you initially selected when you
purchased the Contract, unless you subsequently change it. You may change the
Automatic Rebalancing allocation at any time by submitting a request to us In
Writing.

If you elect Automatic Rebalancing, all premium payments you allocate to the
variable sub-accounts must be subject to Automatic Rebalancing. The fixed
sub-account is not available for Automatic Rebalancing.

You may choose to rebalance monthly, quarterly, semi annually or annually. Once
the rebalancing option is activated, any variable sub-account transfers you
execute outside of the rebalancing option will immediately terminate the
Automatic Rebalancing option. Any subsequent premium payment or withdrawal that
modifies the net account balance within each variable sub-account may also cause
the Automatic Rebalancing option to terminate. We will confirm any such
termination to you. You may terminate the Automatic Rebalancing option or
re-enroll at any time by calling or writing us.

The Automatic Rebalancing program is not available following the Annuity Date.
We do not currently charge for Automatic Rebalancing but we may do so.

Transfer Privilege

Transfers During the Accumulation Period

During the Accumulation Period you may transfer all or part of your account
value to one or more variable or fixed sub-accounts. Transfers from the fixed
sub-accounts are subject to the following conditions:

o you must transfer at least $100 unless you are transferring the entire value
of the sub-account;
o sub-account the amount you transfer to any fixed sub-account must
be at least $500;
o there must be at least $500 remaining in the sub-account after the
transfer; and
o transfers may be subject to a Market Value Adjustment.

Amounts you transfer into a fixed sub-account will earn interest at the
guaranteed interest rate we declare for that guaranteed period as of the
effective date of the transfer. We also may defer transfers of amounts from the
fixed account for a period not greater than six (6) months from the date we
receive the transfer request.

Transfers from the variable sub-accounts are subject to the following
conditions:

o you must transfer at least $100 unless you are transferring the entire value
of the sub-account;

o the amount you transfer to any variable sub-account must be at least $100; and

o there must be at least $50 remaining in the sub-account after the transfer.

We may otherwise restrict the transfer privilege in any way or eliminate it
entirely. Transfer requests in writing must be on a form we find acceptable.

Telephone Transfers. We will allow telephone transfers automatically.

We will take the following procedures to confirm that instructions we receive by
telephone are genuine.

o before a service representative accepts any request, the representative will
ask the caller for specific information to validate the request;
o we will record all calls; and
o we will confirm In Writing all transactions we perform.

We are not liable for any loss, cost or expense for acting on telephone
instructions which we believe are genuine, if we act in accordance with these
procedures.

A transfer from a fixed sub-account before its expiration date will be subject
to a Market Value Adjustment. Transfers involving Variable Accumulation Units
will be subject to any conditions the Fund imposes. A transfer from a variable
sub-account will be effective on the date we receive the request for transfer,
provided we receive the request before 4:00 p.m. Eastern Time on a day which the
New York Stock Exchange is open for business. Otherwise, the transfer will
become effective on the next day the New York Stock Exchange is open for
business. Under current law, there will not be any tax liability to you for
making a transfer.

Transfers During the Annuity Period

After the Annuity Date, the Payee receiving variable annuity payments may
transfer value among the variable sub-accounts in which the Contract is
invested. The request must be in writing. We will exchange the value of the
number of Annuity Units from the variable sub-accounts you specify for other
Annuity Units, so that the value of an annuity payment made on the date of the
exchange will not be affected by the exchange. Each Payee is limited to three
exchanges per Contract Year after the Annuity Date. Such exchanges may be made
only between variable sub-accounts. We will make exchanges using the Annuity
Unit values for the Valuation Period during which we receive the request for
exchange.
<PAGE>

Access to Your Money

Cash Withdrawals

During the accumulation period, you may request a cash withdrawal. Any
withdrawal from the Variable Account will be effective on the date that we
receive it, so long as we receive the request by 4:00 p.m. Eastern Time. We will
process your withdrawal request within seven days of our receipt of your
request.

You may request a full surrender or a partial cash withdrawal. A request for a
partial withdrawal will result in the cancellation of a portion of your account
value equal to the dollar amount of the cash withdrawal payment, plus or minus
any applicable Market Value Adjustment, plus any applicable withdrawal charge
and premium taxes. Upon request, we will advise you of the amounts that we would
pay to you if you request a full surrender or partial withdrawal.

A partial cash withdrawal must be at least $50. When electing such a partial
withdrawal, you must tell us:

o the amount to be withdrawn; and
o the sub-accounts from which to take the money.

Partial withdrawals may not reduce the total account value below $1,000. If you
do not specify the sub-accounts from which we should take the withdrawal, we
will withdraw the requested amount pro-rata from each variable and fixed
sub-account you maintain. If such a pro-rata withdrawal reduces the value of any
fixed sub-account below $500, or any variable sub-account balance below $50, we
will transfer the value of those sub-accounts to that variable sub-account where
you maintain the highest value, or to the fixed account if there is no variable
sub-account where you maintain a balance greater than $50.

All cash withdrawals from any fixed sub-account will be subject to the Market
Value Adjustment, except those which become effective upon the expiration date
of the sub-account's guaranteed period. If you make a partial cash withdrawal,
we will assess any applicable withdrawal charge, Market Value Adjustment, and
premium taxes pro-rata against the amounts you have remaining in each
sub-account. If you request a full surrender of the Contract, we will assess any
applicable withdrawal charges, Market Value Adjustment, Annuity Account Fee, and
premium taxes against the amount you withdraw. We will deduct the Annuity
Account Fee and any applicable Market Value Adjustment from the Annuity Account
before we apply any withdrawal charge.

We may defer the payment of amounts withdrawn or transferred from the fixed
account for a period not to exceed six (6) months from the date we receive your
written request for such withdrawal or transfer.

Cash withdrawals from a variable sub-account will result in the cancellation of
Variable Accumulation Units from your Annuity Account. These Variable
Accumulation Units will have an aggregate value on the effective date of the
withdrawal equal to the total amount by which we reduce the account value (which
amount will include any applicable withdrawal charge). We will base the
cancellation of such units on the Variable Accumulation Unit values of the
variable sub-accounts at the end of the Valuation Period during which we receive
your cash withdrawal request.

Income taxes, federal tax penalties and other restrictions may apply to any
withdrawals you make. See "Federal Tax Matters".

Minimum Value Requirement

If you request a partial withdrawal which would cause your account value to fall
to less than $1,000, then we will treat the partial withdrawal as a request for
a full surrender. We will terminate your Contract as if you surrendered the
Contract if you do not make premium payments under the Contract for three
consecutive years and the account value has fallen below $1,000 during this
period. Before we exercise this right to terminate, we will give you thirty (30)
days notice and the opportunity to make an additional premium payment to
increase the account value above the minimum amount. On termination, you will
receive the amount which we would have paid had the Contract been fully
surrendered. We may also transfer any fixed sub-account balance which has a
value below $500 and any variable sub-account balance which has a value below
$50 to that variable sub-account where you maintain the highest value or to the
fixed account if there is no variable sub-account where you maintain a balance
greater than $50.

Section 403(b) Annuities

The Code imposes restrictions on cash withdrawals if your Contract is used with
Section 403(b) annuities. In order for such a Contract to receive tax deferred
treatment, the Contract must provide that cash withdrawals of amounts
attributable to salary reduction contributions (other than withdrawals of
accumulation account value as of December 31, 1988 ("Pre-1989, Salary Reduction
Account Value") may be made only when you attain age 59 1/2, separate from
service with the employer, die or become disabled (within the meaning of Section
72(m)(7) of the Code). These restrictions apply to any growth or interest on or
after January 1, 1989, on Pre-1989 Salary Reduction Account Values, salary
reduction contributions made on or after January 1, 1989, and any growth or
interest on such contributions ("Restricted Account Values").

Withdrawals of Restricted Account Values are also permitted in cases of
financial hardship, but only to the extent of contributions; earnings on
contributions cannot be withdrawn for hardship reasons. Hardship (and other)
withdrawals may be subject to a 10% tax penalty, in addition to any withdrawal
charge, Market Value Adjustment, Annuity Account Fee, and premium taxes
applicable under the Contract.
<PAGE>

Under the terms of a particular Section 403(b) plan, you may be entitled to
transfer all or a portion of the account value to one or more alternative
funding options. You should consult the documents governing your plan and the
person who administers the plan for information as to such investment
alternatives.

With respect to the restrictions on withdrawals from the Variable Account, we
are relying upon a no-action letter dated November 28, 1988, from the staff of
the Commission to the American Council of Life Insurance. We have complied or
will comply with the requirements of that no-action letter.

Death Benefits

In the event of the death of any Owner before the Annuity Date, we will pay a
death benefit to the surviving Owner, if any, otherwise the Beneficiary upon
receipt of due proof of the Owner's death. If there is no designated Beneficiary
living on the date of the Owner's death, we will, upon receipt of due proof of
death of both the Owner and the designated Beneficiary, pay the death benefit in
one lump sum to the Owner's estate. If the death of any Annuitant occurs on or
after the Annuity Date, no death benefit will be payable under the Contract
except as may be provided under the Annuity Option elected.

Election and Effective Date of Election

During your lifetime and before the Annuity Date, you may elect in writing to
have the death benefit applied under the Annuity Options for the Beneficiary
after the Owner's death.

If no death benefit payment method is in effect on the date of the Owner's
death, the Beneficiary may elect:

o to receive the death benefit in the form of a single cash payment; or

o to have the death benefit applied under the Annuity Options (on the Annuity
Date).

The Beneficiary must make the election to us in writing. Your election of an
Annuity Option specifying the method by which the death benefit shall be paid
will become effective on the date we receive it. Any Annuity Option the
Beneficiary elects will become effective on the later of:

o the date we receive the election; or
o the date we receive due proof of the Owner's death.

If we do not receive the Beneficiary's election within 60 days following the
date we receive due proof of the Owner's death, the Beneficiary will be deemed
to have elected on such 60th day to receive the death benefit in the form of a
single cash payment.

The Annuity Option you or the Beneficiary elect may be restricted by the Code.
See "Federal Tax Matters" for further discussion.

Payment of Death Benefit

If the Beneficiary requests the death benefit to be paid in cash, subject to our
receipt of due proof of death, we will make payment within seven days of the
date the election becomes effective or is deemed to become effective. If we will
pay the death benefit in one lump sum to the Owner's estate, we will make the
payment within seven (7) days of the date we receive due proof of the death of
the Owner and/or the designated Beneficiary, as applicable. We may defer any
such payment of amounts derived from the Variable Account in accordance with the
Act. If we must make payment under any of the Annuity Options, the Annuity Date
will be thirty (30) days following the effective date or the deemed effective
date of the election. We will maintain your Annuity Account in effect until the
Annuity Date.

Spousal Continuation

If the death benefit is payable to your spouse, your spouse may elect to receive
the death benefit or may continue the Contract in the Accumulation Period as if
the death had not occurred. If the surviving spouse continues the Contract in
the Accumulation Period, the following conditions apply:

o On the day the Contract is continued, the account value will be the death
benefit as determined at the end of the Valuation Period during which we receive
due proof of death.

o The surviving spouse may make a single withdrawal of any amount within one
year of the date of death without incurring a withdrawal charge or Market Value
Adjustment. (This feature may not be available in all states. Please consult
with your representative for further information).

o Prior to the Annuity Date, the amount of the death benefit of the continued
Contract will be the greatest of:

o The account value on the date we determine the amount of the death
benefit; or

o The sum of all premium payments reduced by the sum of all
partial withdrawals; or

o The amount that would have been payable in the event of a full
surrender of the Annuity Account on the date the death benefit
election is effective or is deemed to become effective.

Other death benefit alternatives in the Contract (including the Maximum
Anniversary Value feature described immediately below) will no longer apply if
the surviving spouse chooses to continue the Contract.

Amount of Death Benefit

We do not assess Market Value Adjustment or withdrawal charges against amounts
which we apply toward payment of a death benefit. We determine the amount of the
death benefit as of the effective date or deemed effective date of the death
benefit election (not as of the date of death). Unless there is a transfer of
ownership, the death benefit is equal to the greater of:

o the account value for the Valuation Period during which the death benefit
election is effective or deemed to become effective;

o the sum of all premium payments under the Contract, minus the sum of all
partial withdrawals from the Contract;

o your account value on the Seven Year Anniversary immediately preceding the
date the death benefit election is effective or is deemed to become effective,
adjusted for any subsequent premium payments and partial withdrawals and
charges;

o the amount that would have been payable in the event of a full surrender of
the Contract including surrender charges and any applicable Market Value
Adjustment on the date the death benefit election is effective or is deemed to
become effective; or

o the Maximum Anniversary Value between the "Enhanced Death Benefit Endorsement"
effective date and the date we calculate the death benefit, adjusted for
any subsequent premium payments, partial withdrawals and applicable charges.

On each Contract Anniversary, the "Maximum Anniversary Value" is equal to the
greater of the account value of the most recently calculated Maximum Anniversary
Value. Premium payments will increase the Maximum Anniversary Value dollar for
dollar. Partial withdrawals will reduce the Maximum Anniversary Value according
to a withdrawal adjustment, described below.

The calculation of the Maximum Anniversary Value will begin on your first
Contract Anniversary after the endorsement effective date. Unless the death
benefit becomes payable, we will recalculate the Maximum Anniversary Value until
the first Contract Anniversary after the 75th birthday of the Owner, or five
years from the endorsement effective date, whichever is later. After that date,
we will recalculate the Maximum Anniversary Value only for premium payments and
withdrawals. The Maximum Anniversary Value will never be greater than the
maximum death benefit allowed by any state non-forfeiture laws that govern the
Contract.

The withdrawal adjustment is equal to: (i) the withdrawal adjustment divided by
(ii) the account value immediately prior to the withdrawal, with the result
multiplied by (iii) the value of the Maximum Anniversary Value immediately prior
to the withdrawal.

Surrender of the Contracts

At any time before the Annuity Date, you may elect to surrender the Contract and
receive a cash payment. On the Surrender Date, we will cancel your Annuity
Account and we will pay the account value, minus any applicable withdrawal
charges, Annuity Account Fee, and premium taxes, and plus or minus any
applicable Market Value Adjustment. We will make the payment to you within seven
days of the Surrender Date in the form of a cash payment. We may be permitted to
defer any such payment of amount derived from the Variable Account in accordance
with the Act. We may defer the payment of amounts withdrawn from the fixed
account for a period not greater than 6 months from the date we receive your
written request for such withdrawal.
<PAGE>

Following a surrender of the Contract, or if the Contract terminates for any
other reason, all your rights, and those of the Annuitant, and Beneficiary will
terminate.

Income taxes, federal tax penalties and other restrictions may apply to any
surrender. See "Federal Tax Matters."

Annuity Provisions

Annuity Date

Annuity payments will begin on the first day of the month following the Annuity
Date you selected and specified in the Contract Application or Order to
Purchase. You may change this date from time to time by notifying us in
writing. We must receive notice of each change at least 45 days before the then
current Annuity Date.

o The new Annuity Date must be a date which is: at least 30 days after the
effective date of the change;
o the first day of a month; and
o not later than the first day of the first month following the o Annuitant's
90th birthday.

These requirements may be restricted, in the case of a Qualified Contract, by
the particular retirement plan or by applicable law. You may also change the
Annuity Date by electing an Annuity Option as described in the death benefit
section of this Prospectus.

On the Annuity Date, we will cancel your Annuity Account and we will apply the
account value, minus any applicable Annuity Account Fee and premium taxes, to
provide an annuity under one or more of the options described below. We will not
impose any Market Value Adjustment or withdrawal charges upon amounts applied to
purchase an annuity. You may not request payments under the Contract's cash
withdrawal provisions on or after the Annuity Date.

Since the Contract offered by this Prospectus may be issued in connection with
retirement plans which meet the requirements of Section 401, 403, 408, or 457 of
the Code, as well as certain non-qualified plans, you should refer to the terms
of the particular plan for any limitations or restrictions on the Annuity Date.

Election - Change of Annuity Option

During your lifetime and before the Annuity Date, you may elect one or more of
the Annuity Options described below, or any other Annuity Option to which we
agree. You may also change any election, but we must receive notice in writing
of any election or any change of election at least 45 days before the Annuity
Date.

If no election is in effect on the 30th day before the Annuity Date and you use
the Contract in connection with a retirement plan which meets the requirements
of either Section 401 (including Section 401(k)), Section 403, Section 408(c),
Section 408(k), or Section 457 of the Code, we will conclude that you elected
the Joint and Survivor Annuity described below or Life Annuity, whichever is
applicable, if required by such retirement plan. If you do not use the Contract
in connection with one of these plans, we will conclude that you have elected
Life Annuity with 120 Monthly Payments Certain.

At any time you may request annuitization in writing of your account value under
any of the Annuity Options described below. We will not impose a withdrawal
charge or Market Value Adjustment at the time payments under the Annuity Option
begin. Such annuitization will automatically result in a change in the Annuity
Date to the date payments commence under the Annuity Option you elect.

You should refer to the terms of your particular retirement plan and any
applicable legislation for any limitations or restrictions on the options which
you may elect. We do not permit a change of Annuity Option after the Annuity
Date.

Annuity Options

The Contract provides for seven different Annuity Options which are described
below. Four are fixed annuity options, and three are variable annuity options.
You may elect a fixed annuity, a variable annuity, or a combination of both. If
electing a combination, you must specify what part of the Annuity Account we
should apply to each fixed and variable annuity Option. If we do not receive
your election by the 30th day before the Annuity Date, we will determine the
portion of the Annuity Account to be applied to a fixed annuity and/or a
variable annuity on a pro-rata basis based on the composition of your Annuity
Account on the Annuity Date. (Any amounts in the Variable Account will be
applied to a variable annuity, and amounts in the fixed account will be applied
to a fixed annuity.) We will base variable annuity payments on the variable
sub-accounts you select, or on how you allocate the account value among the
variable sub-accounts.

Fixed Annuity Payments

A fixed annuity provides for Annuity Option payments which will remain constant.
Payments will be made under the terms of the Annuity Option you elected. The
effect of choosing a fixed annuity is that we will set the amount of each
payment on the Annuity Date and that amount will not change. If you select a
fixed annuity, we will transfer to our general account any amounts in the
Variable Account that we use to provide the fixed annuity.
<PAGE>

We will fix the amount of the annuity payments by the fixed annuity provisions
you select and, for some options, the Annuitant's settlement age (determined in
accordance with the Contract). We determine the amount of each fixed annuity
payment by applying the Annuity Payment Rates found in the Contract to the
portion of the account value allocated to the fixed annuity Option you select,
or, we will use the Annuity Payment Rates we use on the Annuity Date if they are
more favorable to the Payee. The rates found in the Contract show, for each
$1,000 applied, the dollar amount of the monthly fixed annuity payment. We may
change this rate with respect to Contracts purchased after the effective date of
such change (see "Modification").

Variable Annuity Payments

If you choose to receive variable annuity payments, the dollar amount of the
payments will fluctuate or vary in dollar amount, based on the investment
performance of the variable sub-accounts in which you invest. The variable
annuity purchase rate tables in the Contract reflect an assumed interest rate of
3%, so if the actual net investment performance of the variable sub-account is
less than this rate, then the dollar amount of the actual annuity payments will
decrease. If the actual net investment performance of the variable sub-account
is higher than this rate, then the dollar amount of the actual annuity payments
will increase. If the net investment performance exactly equals the 3% rate,
then the dollar amount of the actual annuity payments will remain constant.

We determine the amount of the first variable annuity payment by the variable
annuity provisions you select and, for some options, the Annuitant's settlement
age of the Annuitant (determined in accordance with the Contract). We determine
all variable annuity payments other than the first by means of Annuity Units
credited to the Contract with respect to the particular payee. We determine the
number of Annuity Units to be credited in respect of a particular variable
sub-account by dividing that portion of the first variable annuity payment
attributable to that sub-account by the Annuity Unit Value of that variable
sub-account for the Valuation Period which ends immediately preceding the
Annuity Date. The number of Annuity Units of each sub-account credited with
respect to the particular payee then remains fixed unless an exchange of Annuity
Units is made pursuant to the "Transfer Privilege - Annuity Period" section. The
dollar amount of each variable annuity payment after the first may increase,
decrease or remain constant, and equals the sum of the amounts determined by
multiplying the number of Annuity Units of a particular variable sub-account for
the Valuation Period, which ends immediately preceding the due date of each
subsequent payment, by the Annuity Unit Value for that sub-account, for the
first Valuation Period occurring on or immediately before the first day of each
month. We deduct the annual Annuity Account Fee, pro-rata, from each variable
annuity payment.

You may choose to receive annuity payments under any one of the Annuity Options
described below. We may consent to other plans of payment before the Annuity
Date.

If you use the Contract in connection with a retirement plan which meets the
requirements of either Section 401 (including Section 401(k)), Section 403,
Section 408(c), Section 408(k), or Section 457 of the Code, we will offer a
Joint and Survivor Annuity under the Contract. A Joint and Survivor Annuity
provides for monthly payments payable during the joint lifetime of the Payee and
a designated second person and during the lifetime of the survivor. During the
lifetime of the survivor we will determine the monthly payment payable in the
same manner as during the joint lifetime of the Payee and the designated second
person.

Fixed Annuity Options

Life Annuity Option

We make monthly payments to the Payee during the Annuitant's lifetime ending
with the last payment due before the Annuitant's death. Under this option, we
will make only one payment if the Annuitant dies before we make the second
payment, we will make only two payments if the Annuitant dies before we make the
third payment, etc.

Life Annuity with Certain Period Option

We will make monthly payments to the Payee for a fixed period of 60, 120, 180,
or 240 months (as selected) and for as long thereafter as the Annuitant lives.

Cash Refund Life Annuity Option

We make monthly payments to the Payee during the Annuitant's lifetime ending
with the last payment due before the Annuitant's death provided that, at the
Annuitant's death, the Payee will receive an additional payment equal to the
excess, if any, of the initial value of the proceeds we apply under this option
over the dollar amount of payments we have already paid.

Annuity Certain Option

We pay monthly payments for the number of years selected which may be from 5 to
30 years.

Variable Annuity Options

Variable Life Annuity Option

We make monthly payments to the Payee during the Annuitant's lifetime, ending
with the last payment due before the Annuitant's death. Under this option, we
will make only one payment if the Annuitant dies before we make the second
payment, we will make only two payments if the Annuitant dies before we make the
third payment, etc.
<PAGE>

Variable Life Annuity with Certain Period Option

We make monthly payments to the Payee for a fixed period of 60, 120, 180, or 240
months (as selected), and for as long thereafter as the Annuitant lives.

Variable Annuity Certain Option

We make monthly payments for the number of years you select which may be from 5
to 30 years. At any time during the period we make payments, the Annuitant may
elect to withdraw a portion or all of the future payments to which the Payee is
entitled. Upon withdrawal, the amount of the future payments will be commuted
and paid in one sum. A withdrawal may be taken at any time after annuitization
which does not exceed the total value of the variable annuity certain on the
withdrawal date. The minimum amount you may withdraw is $1,000. We determine the
value of the variable annuity certain by first converting your number of annuity
units into dollars based on the value of the annuity units. Thereafter, we
divide the dollar value by an annuity certain payment factor to obtain the total
value of the variable annuity certain. We determine the annuity certain payment
factor by calculating the number of monthly payments remaining from the date of
withdrawal to the end of the variable annuity certain period and discounting
such payments to a present value using an assumed interest rate of 3%. The
Annuitant may elect that the Payee receives all or a portion of this present
value.

Additional Annuity Options

You may settle any proceeds payable under the Contract, under any other method
of settlement including joint and senior settlement options under joint life
annuities) we offer at the time of the request.

Determination of Annuity Payments

On the Annuity Date, we will apply the adjusted value of the fixed account and
the Variable Account to provide for payments under the selected Annuity Option.
The adjusted value will be equal to:

o the account value at the end of the Valuation Period which ends immediately
preceding the Annuity Date;

o reduced by a proportionate amount of the Annuity Account Fee to reflect the
time elapsed between the last day of the prior contract year and the day
before the Annuity Date; and

o reduced by any premium or similar taxes.

If the amount to be applied under any annuity option is less than $5,000, or if
the monthly annuity payment payable in accordance with such option is less than
$50, we will pay the amount in a single payment to the Payee you designate.

Expenses

We assess charges under the Contract offered by this Prospectus in four ways:

o as withdrawal charges (contingent deferred sales charges);

o as deductions for Contract administration expenses and, if applicable, for
premium taxes; and

o as charges against the assets of the Variable Account for the assumption of
mortality and expense risks and for administrative expenses.

In addition, certain deductions are made from the assets of the Fund for
investment management fees and expenses. These fees and expenses are fully
described in the Fund's Prospectus and its SAI.

Withdrawal Charges

We do not make a deduction for sales charges from a premium payment. However, if
you make a cash withdrawal of a premium payment, we may assess a withdrawal
charge (contingent deferred sales charge). The length of time between our
acceptance of the premium payment deemed withdrawn and the receipt of a
withdrawal request determines the withdrawal charge. This charge will be used to
cover certain expenses relating to the sale of the Contract including
commissions paid to sales personnel, the costs of preparation of sales
literature, other promotional costs and acquisition expenses.

Each premium payment has its own time period for purposes of assessing a
withdrawal charge. For purposes of computing the withdrawal charge, we deem
amounts to be withdrawn in the order in which we received them. For example, we
will make withdrawals from the oldest premium payment we have accepted first.
After these amounts are exhausted, we will make withdrawals from the second
oldest premium payment we have accepted, and so on until you withdraw all of
your premium payments. After you withdraw all premium payments, we will deem
further withdrawals to be from net investment results attributable to such
premium payments, if any.
<PAGE>

Subject to the Free Partial Withdrawal described below, we will assess the
following withdrawal charge to premium payment amounts you withdraw from your
Annuity Account (adjusted by any applicable Market Value Adjustment):

WITHDRAWAL
CHARGE

<TABLE>

PERCENTAGE YEAR APPLICABLE

7%........................... During 1st Year since premium payment accepted
6%........................... During 2nd Year since premium payment accepted
5%........................... During 3rd Year since premium payment accepted
4%........................... During 4th Year since premium payment accepted
3%........................... During 5th Year since premium payment accepted
2%........................... During 6th Year since premium payment accepted
1%........................... During 7th Year since premium payment accepted
0%........................... Thereafter

</TABLE>

When you make a withdrawal, we will deduct any applicable Annuity Account Fee
from, and make any Market Value Adjustment to, your Annuity Account before we
apply any withdrawal charge. We then assess the withdrawal charge against the
amounts remaining in your Annuity Account. If your Annuity Account is allocated
among more than one sub-account, we will assess the withdrawal charge pro-rata
against the amounts remaining within the sub-accounts from which the withdrawal
occurred. If the sub-accounts from which the withdrawal occurred do not contain
sufficient amounts to satisfy the withdrawal charge, we will assess the
deficiency pro-rata against all amounts remaining within the sub-accounts. If a
cash withdrawal causes the entire value of the Annuity Account to be withdrawn
(i.e., a complete surrender), then we will deduct the withdrawal charge from the
amount paid. We will not impose the withdrawal charge on a premium payment you
withdraw after the end of the seventh year from the date we accept such premium
payment, nor do we impose the withdrawal charge upon payment of the death
benefit or upon amounts applied to an Annuity Option.

We may, upon notice to you, modify the withdrawal charges, provided that such
modification shall apply only to your Annuity Account established after the
effective date of such modification (see "Modification"). For examples of
withdrawals, surrenders, withdrawal charges and the Market Value Adjustment, see
the SAI.

Free Partial Withdrawal

During each Contract Year before the Annuity Date you may withdraw a portion of
the premium payments you paid without being assessed a withdrawal charge. Your
request must be In Writing. This privilege continues until you withdraw all
premium payments you paid to the your Annuity Account. You may withdraw up to
15% of the total amount of your premium payments without a withdrawal charge
each Contract Year. The amount must be at least $50.

You must specify the sub-accounts from which the amount will be withdrawn. If
you do not specify the sub-accounts from which the withdrawal will occur, the
Company will withdraw the amount pro-rata from all your sub-accounts.

A Free Partial Withdrawal may have federal income tax consequences. See "Federal
Tax Matters."

Annuity Account Fee

On the last Valuation Date of each calendar year, we deduct an annual policy
administration fee, the Annuity Account Fee, on a pro-rata basis from all of
your sub-accounts. The Annuity Account Fee equals $35. This fee partially
reimburses us for administrative expenses relating to the issue and maintenance
of the Contract and your Annuity Account.

We will pro rate your initial Annuity Account Fee for the calendar year during
which you established your Annuity Account, to reflect the shorter initial
period. Thereafter, we will assess the full $35 Annuity Account Fee annually. If
you surrender the Contract, we will deduct a $35 Annuity Account Fee. On the
Annuity Date, we will reduce the account value by a proportionate amount of the
Annuity Account Fee to reflect the time elapsed between the previous December 31
and the day before the Annuity Date. After the Annuity Date, we will deduct an
annual $35 Annuity Account Fee, in approximately equal amounts, from each
variable annuity payment you receive during the year. We will not deduct Annuity
Account Fee from fixed annuity payments. If applicable state law requires, we
will reduce the $35 Annuity Account Fee to a lesser amount. We will waive the
annual Annuity Account Fee each year that your account value is at least
$100,000 on the last Valuation Date of that year.

Administrative Fee

On each Valuation Date, we deduct an Administrative Fee from the assets you have
in each variable sub-account to partially reimburse us for administrative
expenses relating to the issue and maintenance of the Contract and your Annuity
Account. This charge currently has an effective annual rate of 0.10% (equal to a
daily rate of 0.000275834% of the assets in each sub-account). There is no
necessary relationship between the administrative charges imposed and the amount
of expenses that may be attributable to any single Owner's Annuity Account.

Premium Taxes

We will deduct premium tax equivalents (including any related retaliatory
taxes), if any, and any other taxes due under the Contract. We currently deduct
any such taxes at the time you withdraw or annuitize account value, or any
portion thereof, (although the deduction could, in the future, be taken from
premium payments). Currently these taxes range from 0% to 3.5% of the amount of
premium paid depending upon your state of residence.
<PAGE>

We do not currently deduct federal, state or local taxes other than state
premium taxes. However, we may charge for such taxes in the future or for other
economic burdens resulting from the application of any tax laws that we
determine to be attributable to the Contract.

Charge for Mortality and Expense Risks

The mortality risk we assume arises from the contractual obligation to continue
to make annuity payments to one or more Payees regardless of how long the
Annuitant lives and regardless of how long all annuitants as a group live. This
assures each annuitant that neither the longevity of fellow annuitants nor an
improvement in the life expectancy generally will have an adverse effect on the
amount of any annuity payment received under the Contract. We assume this
mortality risk by virtue of annuity rates incorporated into the Contract. These
rates cannot be changed. We also assume a mortality risk in connection with the
death benefits. The expense risk we assumed is the risk that the administrative
charges assessed under the Contract may be insufficient to cover the actual
total administrative expenses we incur.

For assuming these risks, we deduct a charge from value you have in the Variable
Account at the end of each Valuation Period at an effective annual rate of 1.25%
(calculated at a daily rate of 0.003447920% of the assets in the Variable
Account). If the deduction is insufficient to cover our actual costs for
mortality and expense risks, we will bear the loss. Conversely, if the deduction
proves more than sufficient, we will profit from the excess. We expect to
realize a profit from this charge. We do not make a deduction for these risks
from the fixed account.

We assume the risk that withdrawal charges assessed under the Contract may be
insufficient to compensate us for the costs of distributing the Contract. In the
event the withdrawal charges prove to be insufficient to cover actual
distribution expenses, the deficiency will be met from our general corporate
funds, which may include amounts derived from the mortality and expense risk
charge.

The Contract provides that we may modify the mortality and expense risk charges;
however, such modification shall apply only with respect to Contracts issued
after the effective date of such modification.

Market Value Adjustment

Any cash withdrawal, surrender or transfer from a fixed sub-account, other than
a withdrawal, surrender or transfer at the expiration date of the guaranteed
period, will be subject to a Market Value Adjustment. We will apply the Market
Value Adjustment to the amount you withdraw or transfer after we deduct any
applicable Annuity Account Fee and before we deduct any applicable withdrawal
charge.

The Market Value Adjustment generally reflects the relationship between the
Index Rate (based upon the Treasury Constant Maturity Series published by the
Federal Reserve) in effect at the time you initially allocated an amount to a
fixed sub-account's guaranteed period under the Contract and the Index Rate in
effect at the time you withdraw or transfer the amount from the fixed
sub-account. It also reflects the time remaining in the fixed sub-account's
guaranteed period. Generally, if the Index Rate at the time of withdrawal or
transfer is more than .50% lower than the Index Rate at the time the premium
payment was allocated, then the application of the Market Value Adjustment will
result in higher payment upon withdrawal or transfer. Similarly, if the Index
Rate at the time of withdrawal or transfer is higher than the Index Rate at the
time the premium payment was allocated (or less than 0.50% lower), the
application of the Market Value Adjustment will generally result in a lower
payment upon withdrawal or transfer.

We apply the following formula to compute the Market Value Adjustment:

(1 + A)N(th)

(1 + B)N(th)

Where:

A = an Index Rate (based on the Treasury Constant Maturity Series
published by the Federal Reserve) for a security with time to
maturity equal to the sub-account's guaranteed period, determined
at the beginning of the guaranteed period. We use an Index Rate
declared for the Friday occurring within the calendar week which
is two weeks earlier than the calendar week during which the
guaranteed period begins.

B = an Index Rate (based on the Treasury Constant Maturity Series
published by the Federal Reserve) for a security with time to
maturity equal to the sub-account's guaranteed period, determined
at the time of withdrawal or transfer, plus a 0.50% adjustment
(unless otherwise limited by applicable state law). This
adjustment builds into the formula a factor representing direct
and indirect costs to us associated with liquidating general
account assets in order to satisfy surrender requests. This
adjustment of 0.50% has been added to the denominator of the
formula because it is anticipated that a substantial portion of
the general account assets will be in relatively illiquid
securities. Thus, in addition to direct transaction costs, if we
must sell such securities (e.g., because of surrenders), the
market price may be lower. Accordingly, even if interest rates
decline, there will not be a positive adjustment until this
factor is overcome, and then any adjustment will be lower than
otherwise, to compensate for this factor. Similarly, if interest
rates rise, any negative adjustment will be greater than
otherwise, to compensate for this factor. If interest rates stay
the same, this factor will result in a small but negative Market
Value Adjustment. If Index Rates "A" and "B" are within 0.25% of
each other when the Index Rate Factor is determined, no such
percentage adjustment to "B" will be made. We use an Index Rate
declared for the Friday occurring within the calendar week which
is two weeks earlier than the calendar week during which the
withdrawal, surrender or transfer occurs.
<PAGE>

N = The number of years remaining in the guaranteed period
(e.g., 1 year and 73 days = 1 + (73 divided by 365) = 1.2 years).

Straight line interpolation is used for periods to maturity not quoted.

See the SAI for examples of the application of the Market Value Adjustment.

Waiver of Withdrawal Charge and Market Value Adjustment

Pursuant to the "Contract Endorsement for Waiver of Charges," we will waive any
withdrawal charge and Market Value Adjustment prior to the Annuity Date if any
Owner (or Annuitant, if the Owner is not a natural person):

1. is first confined after the Endorsement Effective Date to a Long
Term Care Facility or Hospital for at least 90 consecutive days,
confinement is prescribed by a Physician and is Medically
Necessary, and the request for a withdrawal and adequate written
proof of confinement are received by us no later than 120 days
after discharge; or

2. is first diagnosed by a Physician as having a Terminal Illness
after the Endorsement Effective Date and we receive a request for
a withdrawal and adequate written proof of the diagnosis. We may
require a second opinion at our expense by a Physician that we
choose.

Please refer to your Contract endorsement for the meaning of, and limitations
imposed by, the terms "Hospital," "Long Term Care Facility," "Medically
Necessary," "Physician," and Terminal Illness."

This feature may not be available in all states. Please consult with your
representative for further information.

Other Contract Provisions

Deferral of Payment

We may defer the calculation and payment of partial withdrawal and full
surrender values, transfers or death benefits from any variable sub-account
during any period:

o when the New York Stock Exchange is closed other than customary week-end and
holiday closings; or

o when trading on the New York Stock Exchange is restricted as the Commission
determines; or

o when an emergency exists as a result of which:
(a) disposal of securities held by the Fund is not reasonably practicable or
(b) it is not reasonably practicable to determine the value of the net
assets of the Fund; or

o when the Commission may by order permit for the protection of security
holders.

We may defer the payment or transfer of amounts you withdraw from any fixed
sub-account for a period not greater than 6 months from the date we receive
written request for such withdrawal or transfer. If payment or transfer is
deferred beyond thirty (30) days, we will pay interest of at least 3% per year
on amounts so deferred.

In addition, payment of the amount of any withdrawal derived, all or in part,
from any premium payment paid to us by check or draft may be postponed until we
determine the check or draft has been honored.

Designation and Change of Beneficiary

The Beneficiary designated in your Contract Specifications will remain in effect
unless you change it. You have the sole right to change any Beneficiary. Subject
to the rights of an irrevocable Beneficiary, you may change or revoke your
Beneficiary designation at any time while you are living by filing with us a
beneficiary designation or revocation in writing. The change or revocation will
not be binding upon us until we record it. The change or revocation will take
effect as of the date on which you sign the beneficiary designation or
revocation, but the change or revocation will be without prejudice to us with
regard to any payment we made or any action we took before recording the change
or revocation.

You should refer to the terms of your particular retirement plan and any
applicable legislation for any restrictions on the beneficiary designation.

Exercise of Contract Rights

The Contract shall belong to you. You may expressly reserve all Contract rights
and privileges. You may exercise such rights and privileges without the consent
of the Beneficiary (other than an irrevocable Beneficiary) or any other person.
You may exercise such rights and privileges only during your lifetime and before
the Annuity Date, except as otherwise provided in the Contract.

Unless provided otherwise, the Annuitant becomes the Payee on and after the
Annuity Date. If the Annuitant predeceases you before the Annuity Date, you
become the Annuitant until you designate a new Annuitant in writing. The
Beneficiary becomes the Payee on the death of the Annuitant after the Annuity
Date. Such Payees may thereafter exercise such rights and privileges, if any, of
ownership which continue.

Transfer of Ownership

The owner of a Non-Qualified Contract may transfer the ownership of the Contract
before the Annuity Date. A transfer of ownership will not be binding upon us
until we receive and record written notification. When we record such
notification, the change will take effect as of the effective date you
specified. The change will be without prejudice to us regarding any payment we
made or any action we took before recording the change.

You may not transfer ownership of a Qualified Contract except to:

o the Annuitant;
o a trustee or successor trustee of a pension or profit sharing trust which is
qualified under Section 401 of the Code;
o the employer of the Annuitant provided that the Qualified Contract after
transfer is maintained under the terms of a retirement plan qualified under
Section 403(a) of the Code for the benefit of the Annuitant;
<PAGE>

o the trustee of an individual retirement account plan qualified under
Section 408 of the Code for the benefit of the Owner; or
o as otherwise permitted from time to time by laws and regulations governing
the retirement or deferred compensation plans for which a Qualified
Contract may be issued.

Subject to the foregoing, a Qualified Contract may not be sold, assigned,
transferred, discounted or pledged as collateral for a loan or as security for
the performance of an obligation or for any other purpose to any person other
than us.

A transfer of ownership may have federal income tax consequences. See "Federal
Tax Matters".

Death of Owner

If any Owner of a Non-Qualified Contract dies before the Annuity Date, we must
distribute the death benefit payable under the Contract, if any, to the
surviving Owner, if any, otherwise the Beneficiary, if then alive, either:

o within five years after the deceased Owner's date of death; or

o over some period not greater than the Beneficiary's life or expected life,
with annuity payments beginning within one year after the deceased Owner's
date of death.

If any Owner is not an individual, a change in or death of any annuitant will be
considered the death of an Owner.

The person named as your Beneficiary in the Contract Application shall be
considered the designated beneficiary for the purposes of Section 72(s )of the
Code and if no person then living has been so named, then the Annuitant shall
automatically be the designated beneficiary for this purpose. In all cases, any
such designated beneficiary shall not be entitled to exercise any rights
prohibited by applicable federal income tax law.

These mandatory distribution requirements may not apply when the Beneficiary is
the deceased Owner's spouse, if the spouse elects to continue the Contract in
the spouse's own name, as Owner.

If the Payee dies on or after the Annuity Date and before the entire
accumulation under such Owner's Annuity Account has been distributed, the
remaining portion of such Owner's Annuity Account, if any, must be distributed
at least as rapidly as the method of distribution then in effect. Similar rules
may apply with respect to Qualified Contract.

Voting Fund Shares

We will vote Fund shares held by the variable sub-accounts at the Fund's
shareholder meetings, and to the extent required by law, will follow voting
instructions received from persons having the right to give voting instructions.
You are the person having the right to give voting instructions before the
Annuity Date. The number of Fund shares as to which each such person is entitled
to give instructions will be determined as of a date not more than 90 days
before each such meeting. Before the Annuity Date, we determine the number of
Fund shares as to which voting instructions may be given to us by dividing the
value of all of the Variable Accumulation Units of the particular sub-account
credited to your Annuity Account by the net asset value of one Fund share as of
the same date. The Fund is not required to, and does not intend to, hold annual
or other regular meetings of shareholders.

If you elect a variable annuity Option, then after the Annuity Date, the Payee
has the right to give voting instructions. The number of votes decreases as we
make annuity payments and as the Contract reserves decrease. The person's number
of votes will be determined by dividing the Contract reserve you allocate to a
variable sub-account by the net asset value per share of the corresponding Fund
Portfolio. There are no voting rights associated with the fixed account or a
fixed annuity before or after the Annuity Date.

We will vote any shares attributable to us, and Fund shares for which we receive
no timely voting instructions, in the same proportion as the shares for which we
receive instructions. We must receive voting instructions at least one day
before the shareholders meeting for them to be considered timely.

Owners participating under Qualified Contracts may be subject to other voting
provisions of the particular plan. Individuals who contribute to plans which the
Contract funds may be entitled to instruct you as to how to instruct us to vote
the Fund shares attributable to their contributions. Such plans may also provide
the additional extent, if any, to which you shall follow voting instructions of
persons with rights under the plans. If we do not receive voting instructions
from any such person with respect to a particular employee's Annuity Account,
you may instruct us as to how to vote the number of Fund shares for which
instructions may be given.

Neither we, nor the Variable Account, are under any duty to provide information
concerning the voting instruction rights of persons who may have such rights
under plans, other than rights afforded by the Act. Nor are we under any duty to
inquire as to the instructions we receive, or to your authority or the authority
of others to instruct the voting of Fund shares. The instructions you give will
be valid as they affect the Variable Account, us, and any others having voting
instruction rights with respect to the Variable Account, except where we or the
Variable Account have actual knowledge to the contrary.

We will provide all Fund proxy material, together with an appropriate form to be
used to give voting instructions, to each person we know to have the right to
give voting instructions, at least ten days before each meeting of the Fund's
shareholders. If the Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, and as a result we determine
that we are permitted to vote the Fund's shares in our own right, we may do so.
Fund shares that we (or our affiliates) hold, in which you or other persons
entitled to vote have no beneficial interest, may be voted by the shareholder
thereof (us or our affiliates) in its sole discretion.
<PAGE>

Adding, Deleting or Substituting Investments

We do not control the Fund and cannot guarantee that it or any of its Portfolios
will be available for investment in the future or that it or any Portfolio will
accept premium payments or transfers. In the event the Fund or any Portfolio is
not available, we reserve the right to make changes in the Variable Account and
its investments. We may take reasonable action to secure a comparable or
otherwise appropriate funding vehicle, although we are not required to do so and
may not actually do so. In the unlikely event that the Fund is not available in
the future and a substitute funding vehicle is not obtained, then we may
maintain all Annuity Account values in the fixed account. If the Fund or other
funding vehicle restricts or refuses to accept transfers or other transactions,
then we may change, modify, or revoke transfer privileges under the Contract.

We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares of the Fund that
are held by the Variable Account (or any variable sub-account thereof) or that
the Variable Account (or any variable sub-account thereof) may purchase. We may
eliminate the shares of any of the Fund's Portfolios and substitute shares of
another Portfolio or any other investment vehicle of another open-end,
registered investment company if:

o laws or regulations are changed;
o shares of the Fund or of a Portfolio are no longer available for
investment; or
o we determine that further investment in any Portfolio should become
inappropriate in view of the purposes of the Variable Account.

If any of these events occurs, substitution of any shares attributable to your
interest in a variable sub-account of the Variable Account shall occur only
after notice and prior approval by the Commission to the extent required.
Nothing contained herein shall prevent the Variable Account from purchasing
other securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests Owners
make. We shall make any appropriate endorsement to the Contract to reflect any
substitution pursuant to this provision.

We may establish new sub-accounts when, in our sole discretion, marketing, tax,
investment or other conditions warrant. Any new sub-accounts may be made
available to existing Owners on a basis we determine. Each additional
sub-account will purchase shares in a Portfolio of the Fund or in another mutual
fund or investment vehicle. We may also eliminate one or more sub-accounts if,
in our sole discretion, marketing, tax, investment or other conditions warrant
such change. In the event we eliminate any sub-account, we will notify you and
request a reallocation of the amounts invested in the eliminated sub-account.

Change in Operation of the Variable Account

At our election, and if we determined that it is in the best interests of
persons having voting rights under the Contract, we may operate the Variable
Account as a management company under the Act or any other form permitted by
law; deregister the Variable Account under the Act in the event registration is
no longer required (deregistration of the Variable Account requires an order by
the Commission); or combine the Variable Account with one or more other separate
accounts. To the extent permitted by applicable law, we also may transfer the
assets of the Variable Account associated with the Contract to another account
or accounts. In the event of any change in the operation of the Variable Account
pursuant to this provision, we may make appropriate endorsement to the Contract
to reflect the change and take such other action as may be necessary and
appropriate to effect the change.

Modifying the Contract

If we modify the Contract we will give notice to you (or the Payees after the
Annuity Date). We may modify the Contract if such modification:

o is necessary to make the Contract or the Variable Account comply with, or take
advantage of, any law or regulation issued by a governmental agency to which
we or the Variable Account are subject; or

o is necessary to attempt to assure continued qualification of the Contract
under the Code or other federal or state laws relating to retirement annuities
or annuity contracts; or

o is necessary to reflect a change in the operation of the Variable Account or
its sub-accounts; or

o provides additional Variable Account and/or fixed accumulation options.

If we modify the Contract, we may make appropriate endorsement in the Contract.

In addition, upon notice to you, we may modify the Contract to change the
withdrawal charges, Annuity Account Fees, mortality and expense risk charges,
the tables used in determining the amount of the first monthly fixed annuity
payment, and the formula used to calculate the Market Value Adjustment. Such
modification shall apply only to Contracts established after the effective date
of such modification. In order to exercise our modification rights in these
particular instances, we must notify you of such modification in writing. All of
the charges and the annuity tables which are provided in the Contract before any
such modification will remain in effect permanently, unless approved by us, with
respect to Contracts established before the effective date of such modification.
<PAGE>

Periodic Reports

At least once each calendar year, we will provide you with a report showing the
account value at the end of the preceding calendar year, all transactions during
the calendar year, the current account value, the number of Accumulation Units
in each variable sub-account, the applicable Variable Accumulation Unit Values
as of the date of the report and the interest rate credited to the fixed
sub-accounts. In addition, each person having voting rights in the Variable
Account and a Portfolio or Portfolios will receive such reports as may be
required by the Act and the 1933 Act. We will also send such statements
reflecting transactions in the Annuity Account as may be required by applicable
laws, rules and regulations.

Federal Tax Matters

The following discussion is general in nature and is not intended as tax advice.
Each person concerned should consult a competent tax advisor. No attempt is made
to consider any applicable state tax or other tax laws.

Taxation of Non-Qualified Contracts

Non-Natural Person. If a non-natural person (e.g., a corporation or a trust)
owns a Non-Qualified Contract, the taxpayer generally must include in income any
increase in the excess of the account value over the investment in the Contract
(generally, the premiums or other consideration paid for the contract) during
the taxable year. There are some exceptions to this rule and a prospective owner
that is not a natural person should 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 account value immediately before the distribution
over the Owner's investment in the Contract (generally, the premiums or other
consideration paid for the Contract, reduced by any amount previously
distributed from the Contract that was not subject to tax) at that time. The
account value immediately before a withdrawal may have to be increased by any
positive Market Value Adjustments which result from a withdrawal. There is,
however, no definitive guidance on the proper tax treatment of Market Value
Adjustments, and you may want to discuss the potential tax consequences of a
Market Value Adjustment with your tax adviser. 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 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 ten
percent 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 an 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 apply under certain circumstances and special rules may
apply in connection with the exceptions listed above. You should consult a tax
adviser with regard to exceptions from the penalty tax.

Annuity Payments. Although tax consequences may vary depending on the payout
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 the 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 payout option, they are taxed in the same way as
annuity payments.

Transfers, Assignments or Exchanges of a Contract. A transfer or assignment of
ownership of a Contract, the designation of an annuitant, the selection of
certain maturity dates, or the exchange of a Contract may result in certain tax
consequences to you that are not discussed herein. An 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 annuity contracts that are issued by us (or our
affiliates) to the same owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in such
owner's income when a taxable distribution occurs.

Taxation of Qualified Contracts

The tax rules applicable to Qualified Contracts vary according to the type of
retirement plan and the terms and conditions of the plan. Your rights under a
Qualified Contract may be subject to the terms of the retirement plan itself,
regardless of the terms of the Qualified Contract. Adverse tax consequences may
result if you do not ensure that contributions, distributions and other
transactions with respect to the Contract comply with the law.
<PAGE>

Individual Retirement Accounts (IRAs), as defined in Sections 219 and 408 of the
Internal Revenue Code (Code), permit individuals to make annual contributions of
up to the lesser of $2,000 or 100% of adjusted gross income. The contributions
may be deductible in whole or in part, depending on the individual's income.
Distributions from certain pension plans may be "rolled over" into an IRA on a
tax-deferred basis without regard to these limits. Amounts in the IRA (other
than nondeductible contributions) are taxed when distributed from the IRA. A 10%
penalty tax generally applies to distributions made before age 59-1/2, unless
certain exceptions apply. The Internal Revenue Service has not reviewed the
Contract for qualification as an IRA, and has not addressed in a ruling of
general applicability whether a death benefit provision such as the provision in
the Contract comports with IRA qualification requirements.

Corporate pension and profit-sharing plans under Section 401(a) of the Code
allow corporate employers to establish various types of retirement plans for
employees, and self-employed individuals to establish qualified plans for
themselves and their employees. Adverse tax consequences to the retirement plan,
the participant or both may result if the Contract is transferred to any
individual as a means to provide benefit payments, unless the plan complies with
all the requirements applicable to such benefits prior to transferring the
Contract. The Contract includes a Death Benefit that in some cases may exceed
the greater of the premium payments or the account value. The Death Benefit
could be characterized as an incidental benefit, the amount of which is limited
in any pension or profit-sharing plan. Because the Death Benefit may exceed this
limitation, employers using the Contract in connection with such plans should
consult their tax adviser.

Tax Sheltered Annuities under section 403(b) of the Code allow 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.

Section 457 Plans, while not actually providing for a qualified plan as that
term is normally used, provides for certain deferred compensation plans with
respect to service for state governments, local governments, political
subdivisions, agencies, instrumentalities and certain affiliates of such
entities, and tax exempt organizations. The Contract can be used with such
plans. Under such plans a participant may specify the form of investment in
which his or her participation will be made. All such investments, however, are
owned by and are subject to, the claims of the general creditors of the
sponsoring employer. In general, all amounts received under a section 457 plan
are taxable and are subject to federal income tax withholding as wages.

Other Tax Issues. Qualified Contracts have minimum distribution rules
that govern the timing and amount of distributions. You should refer to your
retirement plan, adoption agreement, or consult a tax advisor for more
information about these distribution rules.

Distributions from Qualified Contracts generally are subject to withholding for
the Owner's federal income tax liability. The withholding rate varies according
to the type of distribution and the Owner's tax status. The Owner will be
provided the opportunity to elect not to have tax withheld from distributions.

"Eligible rollover distributions" from section 401(a) plans 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 such as distributions required by the Code or
distributions in a specified annuity form. The 20% withholding does not apply,
however, if the Owner chooses a "direct rollover" from the plan to another
tax-qualified plan or IRA.

Possible Tax Law Changes

Although the likelihood of legislative changes is uncertain, there is always the
possibility that the tax treatment of the Contract could change by legislation
or otherwise. Consult a tax adviser with respect to legislative developments and
their effect on the Contract.

We have the right to modify the contract in response to legislative changes that
could otherwise diminish the favorable tax treatment that annuity contract
owners currently receive. We make no guarantee regarding the tax status of any
contact and do not intend the above discussion as tax advice.

Distribution of the Contracts

Sagemark Consulting, Inc. ("Sagemark"), formerly known as CIGNA Financial
Advisors, Inc., located at 350 Church Street, Hartford, Connecticut 06103, is
the principal underwriter and the distributor of the Contract. As of January 1,
1998, Sagemark, formerly a wholly owned subsidiary of CIGNA Corporation, became
a wholly owned subsidiary of The Lincoln National Life Insurance Company
("Lincoln Life") an Indiana corporation, whose principal businesses are
insurance and financial services. Lincoln Life is wholly owned by Lincoln
National Corporation, a publicly-held insurance holding company domiciled in
Indiana. Sagemark may enter into contracts with various broker-dealers to aid in
the distribution of the Contract. The commissions paid to dealers are no greater
than 6.75% of premium payments.

Historical Performance Data

We may from time to time disclose the current annualized yield of the Money
Market variable sub-account for a 7-day period in a manner which does not take
into consideration any realized or unrealized gains or losses on shares of the
AIM V.I. Money Market Portfolio or on its portfolio securities. Yield figures
will not reflect withdrawal charges or premium taxes. We compute the current
annualized yield by determining the net change (exclusive of realized gains and
losses on the sale of securities and unrealized appreciation and depreciation)
at the end of the 7-day period in the value of a hypothetical account having a
balance of one variable accumulation unit of the Money Market variable
sub-account at the beginning of the 7-day period, dividing such net change in
account value by the value of the account at the beginning of the period to
determine the base period return, and annualizing this quotient on a 365-day
basis. The net change in account value reflects (i) net income from the
Portfolio attributable to the hypothetical account; and (ii) charges and
deductions imposed under a Contract that are attributable to the hypothetical
account.
<PAGE>

We may also disclose the effective yield of the Money Market variable
sub-account for the same 7-day period, determined on a compounded basis. We
calculate the effective yield by compounding the unannualized base period return
by adding one to the base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result.

We may also advertise or disclose the current annualized yield of one or more of
the variable sub-accounts of the Variable Account (except the Money Market
variable sub-account) for 30-day periods. The annualized yield of a variable
sub-account refers to income generated by the variable sub-account over a
specific 30-day period. Because the yield is annualized, the yield a variable
sub-account generates during the 30-day period is assumed to be generated each
30-day period over a 12-month period. We compute the yield by dividing the net
investment income per variable accumulation unit earned during the period by the
maximum offering price per unit on the last day of the period. The yield
calculations do not reflect the effect of any premium taxes or withdrawal
charges that may be applicable to a particular Contract.

We may also advertise or disclose annual average total returns for one or more
variable sub-accounts for various periods of time. The standardized total return
of a sub-account refers to return quotations assuming an investment has been
held in the variable sub-account for various periods of time including, but not
limited to, one year, five years, and ten years (if the variable sub-account has
been in operation for those periods), and a period measured from the date the
variable sub-account commenced operations. Total returns represent the average
annual compounded rates of return that would equate the initial amount invested
to the redemption value of that investment as of the last day of each of the
periods for which total return quotations are provided. Accordingly, the total
return quotations will reflect not only income but also changes in principal
(i.e., variable accumulation unit) value, whereas the yield figures will only
reflect income. The standardized total return quotations reflect the withdrawal
charge, but the standardized yield figures will not.

We may from time to time also disclose average annual total returns in a
non-standard format in conjunction with the standard format described above. The
non-standard format will be identical to the standard format except that the
withdrawal charge percentage is assumed to be 0%. We may from time to time also
disclose cumulative total returns in conjunction with the standard format
described above. The cumulative returns will be calculated assuming that the
withdrawal charge is 0%.

We will only advertise non-standard performance data if we also disclose the
standard performance data. Performance will vary from time to time and
historical results will not be representative of future performance. Performance
information may not provide a basis for comparison with other investments or
other investment companies using a different method of calculating performance.
Current yield is not fixed and varies with changes in investment income and
variable accumulation unit values. The Money Market variable sub-account's yield
will be affected if it experiences a net inflow of new money which is invested
at interest rates different from those being earned on its then-current
investments. An investor's principal in a variable sub-account and a variable
sub-account's return are not guaranteed and will fluctuate according to market
conditions. And, as noted above, advertised performance data figures will be
historical figures for a contract during the Accumulation Period.

We may also from time to time use advertising which includes hypothetical
illustrations to compare the difference between the growth of a taxable
investment and a tax-deferred investment in a variable annuity.

For additional information regarding how we calculate performance data, please
refer to the SAI.

<PAGE>

Condensed Financial Information

The following tables show the Accumulation Unit Values and the number of
Accumulation Units outstanding for each of the nine sub-accounts available under
the Contract. During 1995, the Variable Account changed its fiscal year end from
January 31 to December 31, effective in the year beginning January 1, 1996.
Accordingly, the information which follows includes the eleven months transition
period ended December 31, 1995.
<TABLE>
<S> <C> <C> <C> <C>

AIM V.I. Aggressive Growth Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year

12/31/99 $-- ---

- ----------------------------------------------------------------------------------------------------
AIM V.I. Balanced Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year

12/31/99 $-- ---

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

AIM V.I. Blue Chip Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year

12/31/99 $-- ---

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

AIM V.I. Capital Appreciation Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $34.720 11,571,957
12/31/98 $24.337 14,259,245
12/31/97 $20.678 16,027,198
12/31/96 $18.467 16,934,302
12/31/95 $15.924 13,216,713
1/31/95 $11.736 7,513,807
1/31/94 $12.380 __________________

- ----------------------------------------------------------------------------------------------------
AIM V.I. Capital Development Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $-- ---

- -------------------------------------------------------------------------------------------------------
AIM V.I. Dent Demographic Trends Sub-acount

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $-- ---

- -----------------------------------------------------------------------------------------------------
AIM V.I. Diversified Income Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $13.430 3,524,878
12/31/98 $13.885 4,464,714
12/31/97 $13.588 4,695,148
12/31/96 $12.591 4,290,852
12/31/95 $11.585 3,747,828
1/31/95 $9.931 2,442,031
1/31/94 $10.749 __________________

- ----------------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $25.120 789,220
12/31/98 $19.066 850,446
12/31/97 $16.591 921,883
12/31/96 $13.826 796,782
12/31/95 $12.508 571,320
1/31/95 $10.235 190,264
1/31/94 $-- __________________

- ---------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $12.240 1,745,100
12/31/98 $12.575 2,172,332
12/31/97 $11.832 1,926,036
12/31/96 $11.089 1,864,171
12/31/95 $10.991 1,672,986
1/31/95 $9.775 1,214,456
1/31/94 $10.260 __________________

<PAGE>

- ---------------------------------------------------------------------------------------------------
AIM V.I. Growth Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $35.970 8,060,152
12/31/98 $26.960 9,036,202
12/31/97 $20.376 9,603,064
12/31/96 $16.281 9,484,547
12/31/95 $13.978 7,342,011
1/31/95 $10.491 4,337,355
1/31/94 $11.448 __________________

- ----------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $32.760 6,002,927
12/31/98 $24.739 6,735,903
12/31/97 $19.639 7,046,189
12/31/96 $15.835 5,709,782
12/31/95 $13.385 2,779,812
1/31/95 $10.216 622,513
1/31/94 $-- __________________

- ------------------------------------------------------------------------------------------------------
AIM V.I. High Yield Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year

12/31/99 $-- ---

- ------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $28.640 6,796,498
12/31/98 $18.723 8,137,165
12/31/97 $16.434 9,290,316
12/31/96 $15.578 9,121,429
12/31/95 $13.156 6,249,610
1/31/95 $10.738 5,124,627
1/31/94 $12.296 __________________

- -------------------------------------------------------------------------------------------------------
AIM V.I. Money Market Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year
12/31/99 $12.390 3,917,971
12/31/98 $11.994 3,737,115
12/31/97 $11.571 3,829,515
12/31/96 $11.156 4,855,567
12/31/95 $10.775 6,071,486
1/31/95 $10.378 2,979,228
1/31/94 $10.084 __________________

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

AIM V.I. Telecommunications and Technology Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year

12/31/99 $-- ---
- ----------------------------------------------------------------------------------------------------------
AIM V.I. Value Sub-account

Accumulation Unit Value Number of Accumulation
at End of Year Units at End of Year

12/31/99 $35.930 15,219,966
12/31/98 $28.037 17,453,096
12/31/97 $21.464 18,682,024
12/31/96 $17.591 18,443,298
12/31/95 $15.505 16,590,052
1/31/95 $11.522 9,479,495
1/31/94 $11.922 __________________

</TABLE>

<PAGE>

Table of Contents for the Statement of Additional Information

The following is the Table of Contents for the Statement of Additional
Information:

TABLE OF CONTENTS

Page
The Contracts -- General Provisions
The Contracts
Loans
Non-Participating Contracts
Misstatement of Age
Assignment
Evidence of Survival
Endorsement of Annuity Payments
Tax Status of the Contracts
Diversification Requirements
Owner Control
Required Distributions
Taxation of the Company
Investment Experience
Variable Accumulation Unit Value and Variable Accumulation Value
Net Investment Factor
Sample Calculations and Tables
Variable Account Calculations
Fixed Account Calculation -- Withdrawal Charge and Market Value
Adjustment Tables
Sample Calculations for Male Age 35 at Issue
State Regulation of the Company.
Administration
Distribution of the Contracts.
Custody of Assets.
Historical Performance Data.
Money Market Variable Sub-account Yield
Other Variable Sub-account Yields
Standard Variable Sub-account Total Returns
Non-Standard Variable Sub-account Total Returns
Adjusted Historic Portfolio Performance
Legal Matters
Legal Proceedings
Experts
Financial Statements

<PAGE>

Statement of Additional Information

For the

AIM/CIGNA Heritage Variable Annuity

Issued through

CG Variable Annuity Separate Account

Offered by

Connecticut General Life Insurance Company

Mailing Address:

Customer Service Center
P.O. Box 94039
Palatine, IL 60094-4039
Telephone: 800-776-6978
Fax: 847-402-9543

For New York Customers Only
Customer Service Center
P.O. Box 94038
Palatine, IL 60094-4038
Telephone: 800-692-4682
Fax: 847-402-4361

This Statement of Additional Information ("Statement") supplements the
information in the current Prospectus for the Variable Annuity Contracts (the
"Contracts") offered by Connecticut General Life Insurance Company ("CG Life" or
the "Company") through CG Variable Annuity Separate Account. You may obtain a
copy of the Prospectus dated May 10, 2000, by calling or writing to Customer
Service Center at the mailing address shown above. Terms used in this Statement
have the same meaning as in the Prospectus for the Contracts.

This Statement is not a prospectus. It should be read only in conjunction with
the Prospectus for the Contracts and CG Variable Annuity Separate Account.

Except as otherwise noted, this Statement uses the same defined terms as the
Prospectus.

Dated May 10, 2000

<PAGE>

Table of Contents
Page

<S> <C>
The Contracts -- General Provisions
The Contracts
Loans
Non-Participating Contracts
Misstatement of Age
Assignment
Evidence of Survival
Endorsement of Annuity Payments
Tax Status of the Contracts
Diversification Requirements
Owner Control
Required Distributions
Taxation of the Company
Investment Experience
Variable Accumulation Unit Value and Variable Accumulation Value
Net Investment Factor
Sample Calculations and Tables
Variable Account Calculations
Fixed Account Calculation-Withdrawal Charge and Market Value Adjustment Tables
Sample Calculations for Male Age 35 at Issue
State Regulation of the Company
Administration
Distribution of the Contracts
Custody of Assets
Historical Performance Data
Money Market Variable Sub-account Yield
Other Variable Sub-account Yields
Standard Variable Sub-account Total Returns
Non-Standard Variable Sub-account Total Returns
Adjusted Historic Portfolio Performance
Legal Matters
Legal Proceedings
Experts
Financial Statements
</TABLE>

<PAGE>

In order to supplement the description in the Prospectus, the following provides
additional information about CG Life and the Contracts which may be of interest
to a you, the Contract Owner.

The Contracts -- General Provisions

The Contracts

A Contract, attached riders, amendments, any application, and any applications,
for additional amounts, form the entire contract. Only the President, a Vice
President, an Assistant Vice President, a Secretary, a Director, or an Assistant
Director of the Company may change or waive any provision in a Contract. Any
changes or waivers must be in writing.

We may change or amend the Contracts, if such change or amendment is necessary
for the Contracts to comply with or take advantage of any state or Federal law,
rule or regulation.

Loans

The Contracts do not permit loans.

Non-Participating Contracts

The Contracts do not participate or share in our profits or surplus earnings.

Misstatement of Age

If the age of the Annuitant is misstated, then we will adjust the amounts
payable by us to those amounts that the Premium Payments would have purchased
for the correct age. We will make these adjustments according to our effective
rates on the Date of Issue. If we overcharge, then we will charge our next
payments succeeding the adjustment, with interest at the rate of 6% per year,
compounded annually. We will pay any underpayment in a lump sum.

Assignment

During the lifetime of the Annuitant, you, the Owner, may assign any rights
under a Contract as security for a loan or other reasons. This does not change
the ownership of a Contract, but your rights and the rights of any Beneficiary
are subject to the terms of the assignments. An assignment will not bind us
until the original assignment or a certified copy has been filed at the Customer
Service Center. We are not responsible for the validity of the assignment. An
assignment may have income tax consequences. You may not assign rights under
Qualified Contracts.

Evidence of Survival

We reserve the right to require evidence of the survival of any Payee at the
time any payment to that Payee is due under the following Annuity Options: Life
Annuity (fixed); Life Annuity with Certain Period (fixed); Cash Refund Life
Annuity (fixed); Variable Life Annuity; Variable Life Annuity with Certain
Period.

Endorsement of Annuity Payments

Allstate Life Insurance Company and Allstate Life Insurance Company of New York
("Allstate"), the administrator of the Contract, will send each annuity payment
by check. The Payee must personally endorse each check. We may require proof of
the Annuitant's survival.

Tax Status of the Contracts

Diversification Requirements

The Code requires that the investments of each investment division of the
separate account underlying the contracts be "adequately diversified" in order
for the contracts to be treated as annuity contracts for Federal income tax
purposes. It is intended that the Variable Account, through the Fund and its
portfolios, will satisfy these diversification requirements.

Owner Control

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

Required Distributions

In order to be treated as an annuity contract for Federal income tax purposes,
section 72(s) of the Internal Revenue Code requires any Non-Qualified Contract
to contain certain provisions specifying how your interest in the Contract will
be distributed in the event of the death of a holder of the Contract.
Specifically, section 72(s) requires that (a) if any Owner dies on or after the
annuity starting date, but prior to the time the entire interest in the Contract
has been distributed, the entire interest in the Contract will be distributed at
least as rapidly as under the method of distribution being used as of the date
of such Owner's death; and (b) if any Owner dies prior to the annuity starting
date, the entire interest in the Contract will be distributed within five years
after the date of such Owner's death. These requirements will be considered
satisfied as to any portion of a Owner's interest which is payable to or for the
benefit of a designated beneficiary and which is distributed over the life of
such designated beneficiary or over a period not extending beyond the life
expectancy of that beneficiary, provided that such distributions begin within
one year of the Owner's death. The designated beneficiary refers to a natural
person designated by the Owner as a beneficiary and to whom ownership of the
Contract passes by reason of death. However, if the designated beneficiary is
the surviving spouse of the deceased Owner, the Contract may be continued with
the surviving spouse as the new Owner. If any Owner is not an individual, a
change in or death of any annuitant will be treated as the death of an Owner for
these purposes.
<PAGE>

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 requirements may
apply to Qualified Contracts.

Taxation of the Company

We are presently taxed as a life insurance company under part I of Subchapter L
of the Internal Revenue Code of 1986, as amended. The Variable Account is
treated as part of us and, accordingly, will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. We do not expect
to incur any federal income tax liability with respect to investment income and
net capital gains arising from the activities of the Variable Account retained
as part of the reserves under the Contract. Based on this expectation, we
anticipate that no charges will be made against the Variable Account for federal
income taxes. If, in future years, we incur any federal income taxes or other
economic burden with respect to the Variable Account or the Contracts, then we
may charge for those amounts attributed to the Variable Account.

Investment Experience

On any Valuation Date, the Variable Account value is equal to the totals of the
values allocated to the Contract in each variable sub-account. The portion of
your Annuity Account Value held in any variable sub-account equals the number of
sub-account units allocated to a Contract multiplied by the sub-account
accumulation unit value as described below.

Variable Accumulation Unit Value and Variable Accumulation Value

When we receive a Premium Payment we will credit that portion of the Premium
Payment to be allocated to the variable sub-accounts to the Variable Account in
the form of Variable Accumulation Units. We determine how many Variable
Accumulation Units to credit by dividing the dollar amount allocated to a
particular sub-account by the Variable Accumulation Unit Value for that
particular sub-account during the Valuation Period that we receive the Premium
Payment. For the initial Premium Payment, we use the Valuation Period during
which we accept the Premium Payment.

The Variable Accumulation Unit Value for each Variable sub-account was
established at $10.00 for the first Valuation Period of the particular Variable
sub-account. We determine the Variable Accumulation Unit Value for the
particular Variable Account sub-account for any subsequent Valuation Period by
multiplying the Variable Accumulation Unit Value for the particular variable
sub-account for the immediately preceding Valuation Period by the Net Investment
Factor for the particular Variable Sub-account for such subsequent Valuation
Period. The Variable Accumulation Unit Value for each Variable sub-account for
any Valuation Period is the value determined as of the end of the particular
Valuation Period and may increase, decrease, or remain constant from Valuation
Period to Valuation Period.

The variable accumulation value of the Annuity Account, if any, for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each variable sub-account credited to the Variable Account for such
Valuation Period. The variable accumulation value of each variable sub-account
is determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Variable sub-account by the Variable Accumulation Unit Value of
the particular variable sub-account for such Valuation Period.

Net Investment Factor

The Net Investment Factor is an index applied to measure the investment
performance of a variable sub-account from one Valuation Period to the next. The
Net Investment Factor may be greater or less than or equal to 1.0; therefore,
the value of a Valuable Accumulation Unit may increase, decrease, or remain the
same.

The Net Investment Factor for any variable sub-account for any Valuation Period
is determined by dividing (a) by (b) and then subtracting (c) from the result
where:

(a) is the net result of:

(1) the net asset value of a Fund Portfolio share held in
the variable sub-account determined as of the end of the
Valuation Period, plus

(2) the per share amount of any dividend or other distribution
declared on the Fund portfolio shares held in the variable
sub-account if the "ex-dividend" date occurs during the Valuation
Period, plus or minus

(3) a per share credit or charge with respect to any taxes that we
pay or reserve for during the Valuation Period which we determine
to be attributable to the operation of the Variable Account
Sub-account.

(b) is the net asset value of the Fund portfolio shares held in the variable
sub-account determined as of the end of the preceding Valuation Period; and

(c) is the total of charges for mortality and expense risks, and the
administrative expense fee during the Valuation Period.

<PAGE>

Sample Calculations and Tables

Variable Account Calculations

Variable Accumulation Unit Value Calculation. Assume the net asset value of
a Fund portfolio share at the end of the current Valuation Period is $16.50; and
its value at the end of the immediately preceding Valuation Period was $16.46;
the Valuation Period is one day; and no dividends or distributions caused Fund
shares to go "ex-dividend" during the current Valuation Period. $16.50 divided
by $16.46 is 1.002430134. Subtracting the one day risk factor for mortality and
expense risks and the administrative expense charge of .00003723754 (the daily
equivalent of the current total charge of 1.35% on an annual basis) gives a net
investment factor of 1.00239289646. If the value of the Variable Accumulation
Unit for the immediately preceding Valuation Period had been $14.7036925, the
value for the current Valuation Period would be $14.73887691 ($14.7036925 X
1.00239289646).

Variable Annuity Unit Value Calculation. The assumptions in the above
example exist. Also assume that the value of an Annuity Unit for the immediately
preceding Valuation Period had been $13.5791357. If the first variable annuity
payment is determined by using an assumed interest rate of 3% per year, the
value of the Annuity Unit for the current Valuation Period would be $13.61016662
[$13.5791357 X 1.00239289646 (the net investment factor) X 0.999892552].
0.999892552 is the factor, for a one day Valuation Period, that neutralizes the
assumed interest rate of four percent (4%) per year used to establish the
Annuity Payment Rates found in the Contract.

Variable Annuity Payment Calculation. Assume that a Participant's Variable
Annuity Account is credited with 5319.7531 Variable Accumulation Units of a
particular variable sub-account; that the Variable Accumulation Unit Value and
the Annuity Unit Value for the particular variable sub-account for the Valuation
Period which ends immediately preceding the Annuity Date are $14.7036925 and
$13.5791357 respectively; that the Annuity Payment Rate for the age and option
elected is $6.52 per $1,000; and that the Annuity Unit Value on the day prior to
the second variable annuity payment date is $13.61017004. The first variable
annuity payment would be $509.99 (5319.7531 X $14.7036925 X 6.52 divided by
1,000). The number of Annuity Units credited would be 37.5569 ($509.99 divided
by $13.5791357) and the second variable annuity payment would be $511.16
(37.5569 X $13.61017004).

Fixed Account Calculation - Withdrawal Charge and Market Value Adjustment Tables

The following example illustrates the detailed calculations for a $100,000
deposit into the Fixed Account with a guaranteed rate of 8% for a duration of
five years. The intent of the example is to show the effect of the Market Value
Adjustment ("MVA") and the 3% minimum guarantee under various interest rates on
the calculation of the cash surrender value. The effect of the MVA is reflected
in the index rate factor in column (2) and the minimum 3% guarantee is shown
under column (4) under the "Surrender Value Calculation". The effect of the
withdrawal charge and any taxes, such as premium taxes, is not shown. The
"Market Value Adjustment Tables" and "Minimum Value Calculation" contain the
explicit calculation of the index factors and the 3% minimum guarantee
respectively.

Sample Calculations for Male Age 35 at Issue

<TABLE>

Cash Surrender Values

Single premium.................................... $100,000
Premium taxes..................................... 0
Withdrawals....................................... None
Guaranteed period................................. 5 years
Guaranteed interest rate.......................... 8%
Annuity date...................................... Age 70
Index rate A...................................... 7.5%
Index rate B...................................... 8.00% end of policy year 1
7.75% end of policy year 2
7.00% end of policy year 3
6.50% end of policy year 4
Percentage adjustment to B........................ 0.5%
</TABLE>

<TABLE>

Surrender Value Calculation

(1) (2) (3) (4) (5) (6) (7)
Annuity Index Rate Adjusted Minimum Greater of Surrender Surrender
Contract Year Value Factor Annuity Value Value (3) & (4) Charge Value
----- ------ ------------- ----- --------- ------ -----

1...............$107,965 0.963640 $104,039 $102,965 $104,039 $5,950 $98,089
2...............$116,567 0.993056 $115,758 $106,019 $115,758 $5,100 $110,658
3...............$125,858 1.000000 $125,858 $109,165 $125,858 $4,250 $121,608
4...............$135,891 1.004673 $136,526 $112,404 $136,526 $3,400 $133,126
5...............$146,727 1.000000 $146,727 $115,742 $146,727 $2,550 $144,177

</TABLE>

<PAGE>

Annuity Value Calculation

Contract Year Annuity Value
- ------------------------------------------------------------------
1........................................ $100,000 X 1.08 - $35 = $107,965
2........................................ $107,965 X 1.08 - $35 = $116,567
3........................................ $116,567 X 1.08 - $35 = $125,858
4........................................ $125,858 X 1.08 - $35 = $135,891
5........................................ $135,891 X 1.08 - $35 = $146,727

<TABLE>

Surrender Charge Calculation

(1) (2) (3)
--- --- ---
Surrender Surrender Surrender

Contract Year Charge Factor Charge Factor Charge
- ----------------------------------------------------------------------------------------------------
1........................ 0.07 0.0595 $5,950
2........................ 0.06 0.0510 $5,100
3........................ 0.05 0.0425 $4,250
4........................ 0.04 0.0340 $3,400
5........................ 0.03 0.0255 $2,550
---- ------ ------

Market Value Adjustment Tables

Interest Rate Factor Calculation

(1) (2) (3) (4) (5)
Index Index Adjusted (1+A)
Contract Year Rate A Rate B Index Rate B N (1+B)
- ------------------------------------------------------------------------------------------------------------------------

1.......................... 7.5% 8.00 8.50 4 0.963640
2.......................... 7.5% 7.75 7.75 3 0.993056
3.......................... 7.5% 7.00 7.50 2 1.000000
4.......................... 7.5% 6.50 7.00 1 1.004673
5......................... 7.5% NA NA 0 NA

</TABLE>

Minimum Value Calculation

Contract Year Minimum Value
- ---------------------------------------------------------------
1................................... $100,000 X 1.03 - $35 = $102,965
2................................... $102,965 X 1.03 - $35 = $106,019
3................................... $106,019 X 1.03 - $35 = $109,165
4................................... $109,165 X 1.03 - $35 = $112,404
5................................... $112,404 X 1.03 - $35 = $115,742

State Regulation of CG Life

CG Life, a Connecticut corporation, is subject to regulation by the Connecticut
Department of Insurance. We file an annual statement with the Connecticut
Department of Insurance each year covering our operations and reporting on the
financial condition as of December 31 of the preceding year. Periodically, the
Connecticut Department of Insurance or other authorities examine our liabilities
and reserves and the Variable Account. The Connecticut Department of Insurance
also periodically conducts a full examination of our operations. In addition, we
are subject to the insurance laws and regulations of other states within which
we are licensed to operate.

The law of the state in which the Contract is delivered governs the Contract.
The values and benefits of each Contract are at least equal to those required by
such state.

Administration

Allstate performs certain administrative functions relating to the Contracts,
the fixed account, and the variable account. These functions include, among
other things, maintaining the books and records of the Variable Account, the
fixed account, and the sub-accounts, and maintaining records of the name,
address, taxpayer identification number, contract number, Annuity Account number
and type, the status of each Annuity Account and other pertinent information
necessary to the administration and operation of the Contracts. Allstate is
responsible for servicing the Contracts, including the payment of benefits, and
contract administration.

Distribution of the Contracts

We are no longer offering new Contracts for sale. The Contracts have been sold
by licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. ("NASD") and who have entered
into distribution agreements with the Company and the principal underwriter for
the Variable Account, Sagemark Consulting, Inc. ("Sagemark"), Hartford,
Connecticut. Sagemark is registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as a broker-dealer and is a member of
the NASD. Sagemark also acts as the principal underwriter for certain other
separate accounts. We pay commissions and other distribution compensation. Those
payments will not be more than 6.75% of premium payments. Sagemark received
$2,217,462 in deferred sales charges attributable to the Variable Account
portion of the Contracts during the year ended December 31, 1997; $287,589.23
during the year ended December 31, 1998;and $70,841.29 during the year ended
December 31, 1999.

<PAGE>

As of January 1, 1998, Sagemark, formerly CIGNA Financial Advisors, Inc., a
wholly owned subsidiary of CIGNA Corporation, became a wholly owned subsidiary
of The Lincoln National Life Insurance Company ("Lincoln Life"), an Indiana
corporation, whose principal businesses are insurance and financial services.
Lincoln Life is wholly owned by Lincoln National Corporation, a publicly-held
insurance holding company domiciled in Indiana.

The Prospectus describes the sales charges that apply to the Contracts. There
are no variations in sales load.

Custody of Assets

We are the Custodian of the Variable Account's assets. We or our agent will
purchase the Fund's shares at net asset value according to the Purchasers'
instructions. We will redeem the Fund's shares at net asset value in order to
meet the Variable Account's contractual obligations, pay charges relative to the
Variable Account or make adjustments for annuity reserves held in the Variable
Account. We hold the variable sub-accounts' assets separate and apart from the
assets of any of our other segregated asset accounts and separate and apart from
our general account assets. We maintain records of all purchases and redemptions
of shares of the Fund held by each of the variable sub-accounts of the Variable
Account. Our fidelity bond provides additional protection for the Variable
Account's assets. The fidelity bond covers the acts of our officers and
employees. Its value as of May 1, 2000, is $100,000,000.

Historical Performance Data

Money Market Variable Sub-account Yield

We may disclose the current annualized yield of the Money Market Variable
Sub-account, which invests in the Money Market Portfolio, for a 7-day period in
a manner which does not take into consideration any realized or unrealized gains
or losses on shares of the Money Market Fund or on its portfolio securities. We
compute this current annualized yield by determining the net change (exclusive
of realized gains and losses on the sale of securities, unrealized appreciation
and depreciation, and income other than investment income) at the end of the
7-day period in the value of a hypothetical account having a balance of one unit
of the Money Market Variable Sub-account at the beginning of the 7-day period,
dividing such net change in account value by the value of the account at the
beginning of the period to determine the base period return, and annualizing
this quotient on a 365-day basis. The net change in account value reflects (i)
net income from the Money Market Portfolio attributable to the hypothetical
account; and (ii) charges and deductions imposed under a Contract that are
attributable to the hypothetical account.

We may also disclose the effective yield of the Money Market Variable
Sub-account for the same 7-day period, determined on a compounded basis. We
calculate the effective yield by compounding the unannualized base period return
by adding one to the base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result.

We calculate the effective yield by compounding the unannualized base period
return according to the following formula:

Effective Yield = [(Base Period Return + 1)(365/7)] - 1

The yield on amounts held in the Money Market Variable Sub-account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Variable Sub-account's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the Money Market Portfolio, the types and quality of portfolio securities
held by the Money Market Portfolio and its operating expenses. The yield figures
do not reflect withdrawal charges or premium taxes.

Other Variable Sub-account Yields

We may advertise or disclose the current annualized yield of one or more of the
variable sub-accounts of the Variable Account (except the Money Market Variable
Sub-account) for 30-day periods. The annualized yield of a variable sub-account
refers to income that the variable sub-account generates over a specific 30-day
period. Because the yield is annualized, the yield generated by a variable
sub-account during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. We compute the yield by dividing the net
investment income per accumulation unit earned during the period by the maximum
offering price per unit on the last day of the period, according to the
following formula:

Yield = 2 [(a - b + 1)(6) - 1]

Where:

a = net investment income earned during the period by the particular portfolio
attributable to shares owned by the variable sub-account.
b = expenses accrued for the period.
c = the average daily number of accumulation units outstanding during the
period.
d = the maximum offering price per accumulation unit on the last day of the
period.

Because the Variable Account imposes charges and deductions, a variable
sub-account's yield will be lower than the yield for its corresponding Fund. The
yield calculations do not reflect the effect of any premium taxes or withdrawal
charges that may apply to a particular Contract. Withdrawal charges range from
7% to 1% of the amount withdrawn on total Premium Payments paid, less prior
partial surrenders, depending on the Contract Year of surrender.

The yield on amounts held in the variable sub-accounts normally fluctuates over
time. Therefore, the disclosed yield for any given past period does not indicate
or represent future yields or rates of return. The types and quality of the
Fund's investments and its operating expenses affect a variable sub-account's
actual yield.

Standard Variable Sub-account Total Returns

We may advertise or disclose annual average total returns for one or more of the
variable sub-accounts for various periods of time. When a variable sub-account
has been in operation for 1, 5 and 10 years, respectively, we will provide the
total return for these periods. We may also disclose total returns for other
periods of time. Total returns represent the average annual compounded rates of
return that would equate the initial amount invested to the redemption value of
that investment on the last day of each of the periods.

We calculate total returns using variable sub-account Unit Values that we
calculate on each Valuation Period. We base variable sub-account Unit Values on
the performance of the Sub-account's underlying portfolio, reduced by the
mortality and expense risk charge, the administrative expense charge, and the
Annuity Account Fee. The Annuity Account Fee is reflected by dividing the total
amount of such charges collected during the year that are attributable to the
Variable Account by the total average net assets of all the variable
sub-accounts. We deduct the resulting percentage from the return in calculating
the ending redeemable value. These figures do not reflect any premium taxes,
charges or credits for market value adjustments. Total return calculations
reflect the effect of withdrawal charges that may apply to a particular period.
We will then calculate the total return according to the following formula:

P(l + T)(n) = ERV

Where:

P = A hypothetical initial Premium Payment of $1,000.

T = Average annual total return.

n = Number of years in the period.

ERV = Ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five or ten-year period, at
the end of the one, five or ten-year period (or fractional
portion thereof).

<PAGE>

Non-Standard Variable Sub-account Total Returns

We may disclose average annual total returns in a non-standard format in
conjunction with the standard format described above. The non-standard format
will be identical to the standard format except that we assume that the
withdrawal charge percentage is 0%.

We may also disclose cumulative total returns in conjunction with the standard
format described above. We calculate the cumulative returns by using the
following formula and assuming that the withdrawal charge percentage is 0%.

CTR = (ERV/P) - 1

Where:

CTR = The cumulative total return net of variable sub-account recurring charges
for the period.

ERV = The ending redeemable value of the hypothetical investment
made at the beginning of the one, five or ten-year period, at the
end of the one, five or ten-year period (or fractional portion
thereof).

P = A hypothetical initial payment of $10,000

Non-standard performance data will only be advertised if standard
performance data is also disclosed.

Adjusted Historical Portfolio Performance

We may also disclose yield and total return for the Fund's Portfolios, including
for periods before the date that the Variable Account began operations. For
periods prior to the date the Variable Account commenced operations, adjusted
historical portfolio performance information will be calculated based on the
performance of the Portfolios and the assumption that the variable sub-accounts
were in existence for the same periods as those of the Portfolios, with some or
all of the charges equal to those currently assessed against the variable
sub-accounts.

<PAGE>

We may also use advertisements that include hypothetical illustrations comparing
the difference between the growth of a taxable investment and a tax-deferred
investment in a variable annuity.

Legal Matters

Mark A. Parsons, Chief Counsel, Retirement and Investment Services Division,
CIGNA Corporation, has passed upon all matters of Connecticut law pertaining to
the Contracts. This includes the Contracts' validity and our right to issue the
Contracts under Connecticut Insurance Law and any other applicable state
insurance or securities laws.

Legal Proceedings

There are no material legal or administrative proceedings pending or known to
be contemplated, other than ordinary routine litigation incidental to the
business, to which we and the Variable Account are parties or to which any of
our property is subject. The Company, its direct parent, Connecticut General
Corporation, its indirect parent, CIGNA, and its affiliate, CIGNA Health
Corporation, and several health care industry competitors have has proposed
class action lawsuits filed against them by a coalition of plaintiffs'
attorneys. These lawsuit allege violations under RICO and ERISA.

The Company's reinsurance operations include a 55% share in the primary layer of
a workers' compensation reinsurance pool, which was managed by Unicover Managers
Inc. ("Unicover") until recently. The poole had obtained reinsurance for a
significant (retrocessional) coverage of the pool. Two of the retrocessionaires
have commenced arbitration against Unicover and the pool members seeding
recission or damages. In addition, these retrocessionaires have separately
asserted that the Company participates in an upper layer of reinsurance for the
pool, which the Company denies. Resolution of these matters is likely to take
some time.

Although the outcome of these matters is uncertain, the Company does not expect
them to result in losses material to the Company's results of operation,
liquidity or financial condition. The principal underwriter, Sagemark, is not
engaged in any material litigation of any nature.

Experts

The consolidated financial statements of Connecticut General Life Insurance
Company as of December 31, 1999 and 1998, and for each of the three years in the
period ended December 31, 1999, included in this Statement of Additional
Information and registration statement have been so included in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.

The statement of net assets of the Variable Account as of December 31, 1999 and
the related statements of operations and changes in net assets for the year then
ended that appear in this Statement of Additional Information have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report
appearing herein, and are included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

The statement of changes in net assets of the Variable Account for the year
ended December 31, 1998, included in this Statement of Additional Information
and registration statement, have been so included in reliance on the report of
Ernst & Young LLP, independent auditors, given on the authority of said firm
as experts in accounting and auditing.

Financial Statements

The financial statements of the Variable Account as of December 31, 1999 and for
each of the periods in the two years then ended, the consolidated financial
statements of CG Life as of December 31, 1999 and 1998 and for each of the three
years in the period ended December 31, 1999 and the accompanying Independent
Auditors' Reports appear in the pages that follow. The financial statements CG
Life included herein should be considered only as bearing upon the ability of
the CG Life to meet its obligations under the Contracts. You should not consider
them as bearing on the investment performance of the assets held in the Variable
Account, or on the Guaranteed Interest Rate that we credit during a Guaranteed
Period.

<PAGE>
CONNECTICUT GENERAL LIFE

INSURANCE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999

<PAGE>

Report of Independent Accountants

To the Board of Directors and Shareholder of
Connecticut General Life Insurance Company

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, comprehensive income and changes in
shareholder's equity and of cash flows present fairly, in all material respects,
the financial position of Connecticut General Life Insurance Company and its
subsidiaries at December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 8, 2000

PwC

<PAGE>

Connecticut General Life Insurance Company

Consolidated Statements of Income

- -------------------------------------------------------------------------------
(In millions)

For the years ended December 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Revenues

Premiums and fees $ 6,573 $ 5,683 $ 5,376
Net investment income 2,421 2,637 3,139
Other revenues 111 427 10

Realized investment gains 7 93 45
------------ ------------ ----------
------------ ------------ ----------
Total revenues 9,112 8,840 8,570
------------ ------------ ----------
------------ ------------ ----------
Benefits, Losses and Expenses

Benefits, losses and settlement expenses 6,062 5,802 5,917
Policy acquisition expenses 45 44 122
Other operating expenses 1,945 1,763 1,618
------------ ------------ ----------
------------ ------------ ----------
Total benefits, losses and expenses 8,052 7,609 7,657
------------ ------------ ----------
------------ ------------ ----------
Income Before Income Taxes 1,060 1,231 913
------------ ------------ ----------
------------ ------------ ----------
Income taxes (benefits):
Current 268 636 347
Deferred 90 (211) (49)
------------ ------------ ----------
Total taxes 358 425 298
------------ ------------ ----------
Net Income $ 702 $ 806 $ 615
- ---------------------------------------------------------------------------------- --- ------------ --- ------------ --- ----------
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

<PAGE>

Connecticut General Life Insurance Company

Consolidated Balance Sheets

(In millions)

As of December 31, 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Assets
Investments:

Fixed maturities, at fair value (amortized cost, $16,521; $16,820) $ 16,313 $ 18,067
Mortgage loans 8,980 8,875
Policy loans 3,007 6,091
Real estate 775 712
Equity securities, at fair value (cost, $57; $62) 62 47
Other long-term investments 184 159
Short-term investments 66 85
----------- -----------
Total investments 29,387 34,036
Cash and cash equivalents 636 1,026
Accrued investment income 379 494
Premiums and accounts receivable 1,048 939
Reinsurance recoverables 7,251 7,278
Deferred policy acquisition costs 208 187
Property and equipment 406 365
Deferred income taxes 933 865

Current income taxes 17 -
Other assets 373 236
Goodwill and other intangibles 706 730
Separate account assets 38,459 34,648
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
Total assets $ 79,803 $ 80,804
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
Liabilities

Contractholder deposit funds $ 26,599 $ 30,614
Future policy benefits 7,757 8,286
Unpaid claims and claim expenses 1,434 1,286
Unearned premiums 149 162
----------- -----------
Total insurance and contractholder liabilities 35,939 40,348
Accounts payable, accrued expenses and other liabilities 2,464 2,523

Current income taxes - 65
Separate account liabilities 37,921 34,340
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
Total liabilities 76,324 77,276
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
Contingencies - Note 13
Shareholder's Equity

Common stock (6 shares issued) 30 30
Additional paid-in capital 1,120 1,072
Net unrealized (depreciation) appreciation, fixed maturities $ (28) $ 243
Net unrealized (depreciation), equity securities (17) (25)
Net translation of foreign currencies 1 2
----------- -----------
Accumulated other comprehensive (loss) income (44) 220
Retained earnings 2,373 2,206
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
Total shareholder's equity 3,479 3,528
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------
Total liabilities and shareholder's equity $ 79,803 $ 80,804
- ----------------------------------------------------------------------- --- ----------- -- ----------- -- ----------- -- -----------

The Notes to Financial Statements are an integral part of these statements.
</TABLE>

<PAGE>

Connecticut General Life Insurance Company

Consolidated Statements of Comprehensive Income

and Changes in Stockholder's Equity

(In millions)

For the years ended December 31, 1999 1998 1997
- --------------------------------------------------- --------------------------- -------------------------- ------------------------
Compre- Share- Compre- Share- Compre- Share-
hensive holder's hensive holder's hensive holder's
Income Equity Income Equity Income Equity
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Common Stock $ 30 $ 30 $ 30
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- ------
Additional Paid-In Capital, beginning of year 1,072 766 766
Net assets contributed by parent 48 306 -
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Additional Paid-In Capital, end of year 1,120 1,072 766
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Accumulated Other Comprehensive Income, beginning

of year 220 258 191
Net unrealized (depreciation) appreciation,
fixed maturities $ (271) (271) $ (39) (39) $ 69 69
Net unrealized appreciation (depreciation),
equity securities 8 8 1 1 (1) (1)
---------- --------- ---------
Net unrealized (depreciation)
appreciation on investments (263) (38) 68
Net translation of foreign currencies (1) (1) - - (1) (1)
---------- --------- ---------
Other comprehensive (loss) income (264) (38) 67
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Accumulated Other Comprehensive (Loss) Income,

end of year (44) 220 258
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Retained Earnings, beginning of year 2,206 3,392 3,177

Net income 702 702 806 806 615 615
Dividends declared (535) (1,992) (400)
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Retained Earnings, end of year 2,373 2,206 3,392
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
Total Comprehensive Income and

Shareholder's Equity $ 438 $ 3,479 $ 768 $ 3,528 $ 682 $ 4,446
- --------------------------------------------------- -- ---------- -- ---------- -- --------- --- --------- --- --------- --- -------
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

<PAGE>

Connecticut General Life Insurance Company

Consolidated Statements of Cash Flows

(In millions)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

For the years ended December 31, 1999 1998 1997
- ----------------------------------------------------------------------------------- -- ------------ --- ------------ --- ----------
- ----------------------------------------------------------------------------------- -- ------------ --- ------------ --- ----------
Cash Flows from Operating Activities

Net Income $ 702 $ 806 $ 615
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Insurance liabilities 22 67 78
Reinsurance recoverables 31 (7) 68
Deferred policy acquisition costs (21) (12) (97)
Premiums and accounts receivable (238) (179) 106
Accounts payable, accrued expenses, other liabilities and current income
taxes (30) 149 41
Deferred income taxes 90 (211) (49)
Other assets (32) (339) (54)
Depreciation and goodwill amortization 154 113 88
Gain on sale of business (95) (418) -
Other, net 88 (50) (99)
------------ ------------ ----------
------------ ------------ ----------
Net cash provided by (used in) operating activities 671 (81) 697
------------ ------------ ----------
------------ ------------ ----------
Cash Flows from Investing Activities
Proceeds from investments sold:
Fixed maturities 2,336 2,869 1,583
Mortgage loans 758 1,052 807
Policy loans 272 382 -
Equity securities 24 15 14
Other (primarily short-term investments) 5,958 6,822 6,848
Investment maturities and repayments:
Fixed maturities 2,404 2,797 2,394
Mortgage loans 426 421 601
Investments purchased:
Fixed maturities (4,293) (3,881) (4,339)
Mortgage loans (1,381) (1,611) (1,426)
Equity securities (17) (7) (9)
Other (primarily short-term investments) (5,945) (7,652) (6,309)
Sale of individual life insurance and annuity business, net proceeds - 1,295 -
Other, net (358) (274) (102)
------------ ------------ ----------
------------ ------------ ----------
Net cash provided by investing activities 184 2,228 62
------------ ------------ ----------
------------ ------------ ----------
Cash Flows from Financing Activities

Deposits and interest credited to contractholder deposit funds 7,585 7,050 7,634
Withdrawals and benefit payments from contractholder deposit funds (8,296) (7,106) (7,023)
Dividends paid to parent (535) (1,992) (400)
Other, net 1 4 (47)
------------ ------------ ----------
Net cash (used in) provided by financing activities (1,245) (2,044) 164
------------ ------------ ----------
- ----------------------------------------------------------------------------------- -- ------------ --- ------------ --- ----------
Net (decrease) increase in cash and cash equivalents (390) 103 923
Cash and cash equivalents, beginning of year 1,026 923 -
- ----------------------------------------------------------------------------------- -- ------------ --- ------------ --- ----------
Cash and cash equivalents, end of year $ 636 $ 1,026 $ 923
-- ------------ --- ------------ --- ----------
- -----------------------------------------------------------------------------------
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds $ 337 $ 520 $ 402
Interest paid $ 3 $ 3 $ 5
- ----------------------------------------------------------------------------------- -- ------------ --- ------------ --- ----------
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

<PAGE>

Notes to Financial Statements

Note 1 - Description of Business

Connecticut General Life Insurance Company and its subsidiaries (collectively
referred to as "Connecticut General") provide group life and health insurance
and retirement and investment products and services. Connecticut General
operates throughout the United States and in selected international locations.
Connecticut General is an indirect wholly-owned subsidiary of CIGNA Corporation
(CIGNA).

Note 2 - Summary of Significant Accounting Policies

A. Basis of Presentation

The consolidated financial statements include the accounts of Connecticut
General and all significant subsidiaries. These consolidated financial
statements were prepared in conformity with generally accepted accounting
principles. Amounts recorded in the financial statements reflect management's
estimates and assumptions about medical costs, interest rates and other factors.
Significant estimates are discussed in these Notes. Certain reclassifications
have been made to prior years' amounts to conform to the 1999 presentation.

B. Recent Accounting Pronouncements

Insurance-related assessments. Connecticut General adopted Statement of Position
(SOP) 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments," as of January 1, 1999. Issued by the American Institute of
Certified Public Accountants, this SOP guides companies in measuring and
recording liabilities for insolvency fund and other insurance-related
assessments, such as workers' compensation second injury funds, medical risk
pools and charges for operating expenses of state regulatory bodies. The
cumulative effect of adopting the SOP was not material.

Internal use software. In 1999, Connecticut General adopted SOP 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." This SOP specifies the types of costs that must be capitalized
and amortized over the software's expected useful life and the types of costs
that must be immediately recognized as expense. Implementation of this SOP did
not have a material effect on results of operations, liquidity or financial
condition. The effect of this pronouncement on Connecticut General's financial
statements in future periods will vary based on the level of software
development costs incurred.

Derivative instruments and hedging activities.

In 1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 requires that derivatives be reported on the
balance sheet at fair value. Changes in fair value are recognized in net income
or, for derivatives that hedge market risk related to future cash flows, in
accumulated other comprehensive income. Companies are required to implement SFAS
No. 133 by the first quarter of 2001, showing the cumulative effect of adoption
in net income and accumulated other comprehensive income. Connecticut General
has not determined whether it will adopt these changes before the required
implementation date or what their effect will be.

C. Financial Instruments

In the normal course of business, Connecticut General enters into transactions
involving various types of financial instruments. These financial instruments
include investments (such as fixed maturities and equity securities), short and
long-term debt, and off-balance-sheet instruments (such as investment and loan
commitments and financial guarantees). These instruments may change in value due
to interest rate and market fluctuations, and most have credit risk. Connecticut
General evaluates and monitors each financial instrument individually and, when
management considers it appropriate, uses certain derivative instruments or
obtains collateral or other forms of security to limit risk of loss.

Most financial instruments that are subject to fair value disclosure
requirements (such as fixed maturities and equity securities) are carried in the
financial statements at amounts that approximate fair value. At the end of 1999
and 1998, the fair values of mortgage loans, contractholder deposit funds
(non-insurance products), and long-term debt were not materially different from
their carrying amounts. Fair values of off-balance-sheet financial instruments
were not material.

Fair values of financial instruments are based on quoted market prices when
available. When market prices are not available, management estimates fair value
based on discounted cash flow analyses, which use current interest rates for
similar financial instruments with comparable terms and credit

<PAGE>

Notes to Financial Statements (Continued)

quality. Management estimates the fair value of liabilities for contractholder
deposit funds using the amount payable on demand and, for those deposit funds
not payable on demand, using discounted cash flow analyses. In many cases, an
estimate of the fair value of a financial instrument may differ significantly
from the amount that could be realized if the instrument were sold immediately.

D. Investments

Connecticut General's accounting policies for investment assets are discussed
below.

Fixed maturities and mortgage loans. Investments in fixed maturities include
bonds, mortgage- and other asset-backed securities and redeemable preferred
stocks. These investments are classified as available for sale and are carried
at fair value. Fixed maturities are considered impaired, and amortized cost is
written down to fair value, when management expects a decline in value to
persist.

Mortgage loans are carried at unpaid principal balances. Impaired loans are
carried at the fair value of the underlying collateral. Mortgage loans are
considered impaired when it is probable that Connecticut General will not
collect all amounts due according to the terms of the loan agreement.

When an investment is current, Connecticut General recognizes interest income
when it is earned. Connecticut General stops recognizing interest income on
fixed maturities and mortgage loans when they are delinquent or restructured for
troubled borrowers to modify basic financial terms, such as to reduce the
interest rate or extend the maturity date. Net investment income on these
investments is recognized only when payment is received.

Real estate. Investment real estate can be held to produce income or for sale.

Connecticut General carries real estate held to produce income at depreciated
cost less any write-downs to fair value due to impairment. Depreciation is
generally calculated using the straight-line method based on the estimated
useful life of each asset.

Connecticut General acquires most real estate held for sale through foreclosure
of mortgage loans. At the time of foreclosure, properties are valued at fair
value less estimated costs to sell, and are reclassified from mortgage loans to
real estate held for sale. After foreclosure, these investments are carried at
the lower of fair value at foreclosure or current fair value less estimated
costs to sell, and are no longer depreciated. Valuation reserves reflect changes
in fair value after foreclosure. Connecticut General rehabilitates, re-leases,
and sells foreclosed properties held for sale, a process that usually takes from
two to four years, unless management considers a near-term sale preferable.

Connecticut General uses several methods to determine the fair value of real
estate, but relies primarily on discounted cash flow analyses and, in some
cases, third-party appraisals.

Equity securities and short-term investments. Connecticut General classifies
equity securities and short-term investments as available for sale and carries
them at fair value, which for short-term investments approximates cost. Equity
securities include common and non-redeemable preferred stocks.

Policy loans. Policy loans are carried at unpaid principal balances.

Investment gains and losses. Realized investment gains and losses result from
sales, investment asset write-downs and changes in valuation reserves and are
based on specifically identified assets. Connecticut General's net income does
not include gains and losses on investment assets related to experience-rated
pension policyholders' contracts and participating life insurance policies
(policyholder share) because these amounts generally accrue to the
policyholders.

Unrealized gains and losses on investments carried at fair value are included in
accumulated other comprehensive income, net of policyholder share and deferred
income taxes.

Derivative financial instruments. Note 4(F) discusses Connecticut General's
accounting policies for derivative financial instruments.

E. Cash and Cash Equivalents

Cash equivalents consist of short-term investments that mature in three months
or less at the time of purchase.

F. Reinsurance Recoverables

Reinsurance recoverables are estimates of amounts that Connecticut General will
receive from reinsurers.

<PAGE>
Notes to Financial Statements (Continued)

Allowances are established for amounts owed to
Connecticut General under reinsurance contracts that management believes will
not be received.

G. Deferred Policy Acquisition Costs

Acquisition costs consist of commissions, premium taxes, and other costs that
Connecticut General incurs to acquire new business. Acquisition costs for:

o contractholder deposit funds and universal life products are deferred and
amortized in proportion to the present value of total estimated gross
profits over the expected lives of the contracts.

o annuity and other individual life insurance products are deferred and
amortized, generally in proportion to the ratio of annual revenue to the
estimated total revenues over the contract periods.

o other products are expensed as incurred.

Management estimates future revenues less expected claims on products that carry
deferred policy acquisition costs. If that estimate is less than the deferred
costs, Connecticut General reduces deferred policy acquisition costs and records
an expense.

H. Property and Equipment

Property and equipment are carried at cost less accumulated depreciation. When
applicable, cost includes interest, real estate taxes and other costs incurred
during construction. Connecticut General calculates depreciation principally
using the straight-line method based on the estimated useful life of each asset.
Accumulated depreciation was $506 million at December 31, 1999, and $490 million
at December 31, 1998.

I. Other Assets

Other assets consist primarily of various insurance-related assets.

J. Goodwill and Other Intangibles

Goodwill represents the excess of the cost of businesses acquired over the fair
value of their net assets. Other intangible assets primarily represent purchased
customer lists and provider contracts.

Connecticut General amortizes goodwill and other intangibles on a straight-line
basis over periods ranging from five to 40 years. Management revises
amortization periods if it believes there has been a change in the length of
time that the intangibles will continue to have value. Accumulated amortization
was $167 million at December 31, 1999, and $143 million at December 31, 1998.

For businesses that have recorded goodwill, management analyzes historical and
estimated future income or undiscounted cash flows. If such results are lower
than the amount recorded as goodwill, Connecticut General reduces goodwill and
records an expense.

K. Separate Accounts

Separate account assets and liabilities are policyholder funds maintained in
accounts with specific investment objectives. These accounts are carried at
market value. The investment income, gains and losses of these accounts
generally accrue to the policyholders and are not included in Connecticut
General's revenues and expenses.

L. Contractholder Deposit Funds

Liabilities for contractholder deposit funds include deposits received from
customers for investment-related and universal life products and investment
earnings on their fund balances. These liabilities are adjusted to reflect
administrative charges, policyholder share of unrealized appreciation or
depreciation on investment assets and, for universal life fund balances,
mortality charges.

M. Unpaid Claims and Claim Expenses

Liabilities for unpaid claims and claim expenses are estimates of payments to be
made under health and dental coverages for reported claims and for losses
incurred but not yet reported. Management develops these estimates using
actuarial methods based upon historical data for payment patterns, cost trends,
product mix, seasonality, utilization of health care services and other relevant
factors. When estimates change, Connecticut General records the adjustment in
benefits, losses and settlement expenses.

N. Future Policy Benefits

Future policy benefits are liabilities for estimated future obligations under
traditional life and health policies and annuity products currently in force.
Management develops these estimates using premium assumptions for group annuity
policies and assumes receipt of premiums until benefits are paid for individual
life policies. These estimation techniques rely on assumptions as to future

<PAGE>
Notes to Financial Statements (Continued)

investment yield, mortality and withdrawals that allow for adverse deviation.

Future policy benefits for individual life insurance and annuity policies are
computed using interest rate assumptions that generally decline over the first
20 years and range from 2% to 11%. Mortality, morbidity, and withdrawal
assumptions are based on either Connecticut General's own experience or industry
actuarial tables.

O. Unearned Premiums

Premiums for group life, accident, and health insurance are recognized as
revenue on a pro rata basis over the contract period. The unrecognized portion
of these premiums is recorded as unearned premiums.

P. Other Liabilities

Other liabilities consist principally of postretirement and postemployment
benefits and various insurance-related liabilities, including amounts related to
reinsurance contracts and guaranty fund assessments that management can
reasonably estimate.

Q. Translation of Foreign Currencies

Connecticut General's foreign operations primarily use the local currencies as
their functional currencies. Connecticut General uses exchange rates as of the
balance sheet date to translate assets and liabilities.

The translation gain or loss on functional currencies, net of applicable taxes,
is generally reflected in accumulated other comprehensive income. Connecticut
General uses average exchange rates during the year to translate revenues and
expenses.

R. Premiums and Fees, Revenues and Related Expenses

Premiums for group life, accident and health insurance are recognized as revenue
on a pro rata basis over the contract period. Benefits, losses and settlement
expenses are recognized when incurred.

Premiums for individual life insurance and individual and group annuity
products, excluding universal life and investment-related products, are
recognized as revenue when due. Benefits, losses and settlement expenses are
matched with premiums.

Revenue for investment-related products is recognized as follows:

o Net investment income on assets supporting investment-related products is
recognized as earned.

o Contract fees, which are based upon related administrative expenses, are
assessed against the customer's fund balance ratably over the contract
year.

Benefit expenses for investment-related products consist primarily of income
credited to policyholders in accordance with contract provisions.

Revenue for universal life products is recognized as follows:

o Net investment income on assets supporting universal life products is
recognized as earned. o Fees for mortality are recognized ratably over the
policy year. o Administration fees are recognized as services are provided.

o Surrender charges are recognized as earned.

Benefit expenses for universal life products consist of benefit claims in excess
of policyholder account balances which are recognized when filed, and amounts
credited in accordance with contract provisions.

S. Participating Business

Connecticut General's participating life insurance policies entitle
policyholders to earn dividends that represent a portion of the earnings of
Connecticut General's life insurance subsidiaries. Participating insurance in
force accounted for approximately 7% of Connecticut General's total life
insurance in force at the end of 1999, 1998 and 1997.

T. Income Taxes

Connecticut General and its domestic subsidiaries are included in the
consolidated United States federal income tax return filed by CIGNA. The
provision for federal income tax is calculated as if Connecticut General were
filing a separate federal income tax return. Connecticut General generally
recognizes deferred income taxes when assets and liabilities have different
values for financial statement and tax reporting purposes (temporary
differences).

<PAGE>
Notes to Financial Statements (Continued)

Note 7 contains detailed information about Connecticut General's income taxes.

Note 3 - Disposition

Connecticut General conducts regular strategic and financial reviews of its
businesses to ensure that capital is used effectively. As a result of its
review, Connecticut General sold its individual life insurance and annuity
business for cash proceeds of $1.4 billion as of January 1, 1998. The sale
generated an after-tax gain of $773 million. Of this amount, $202 million was
recognized at the time of sale. The remaining gain was deferred because the
principal agreement to sell this business was an indemnity reinsurance
arrangement. The deferred portion is being recognized at the rate that earnings
from the sold business would have been expected to emerge, primarily over
fifteen years on a declining basis.

Connecticut General recognized $62 million of the deferred gain in 1999 and $66
million of the deferred gain in 1998.

As part of the sale, Connecticut General transferred invested assets of $5.4
billion and various other assets and liabilities, and recorded a reinsurance
recoverable of $5.8 billion for insurance liabilities retained.

In 1997, revenues for the sold business were $972 million and net income was
$102 million.

Note 4 - Investments

A. Fixed Maturities

The amortized cost and fair value by contractual maturity periods for fixed
maturities, including policyholder share, were as follows at December 31, 1999:

- ------------------------------------------------------------------
Amortized Fair

(In millions) Cost Value
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Due in one year or less $ 992 $ 990
Due after one year through five
years 3,912 3,858
Due after five years through ten
years 3,997 3,949
Due after ten years 2,260 2,366
Mortgage- and other asset-backed
securities 5,360 5,150
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total $ 16,521 $ 16,313
- ------------------------------------------------------------------

Actual maturities could differ from contractual maturities because issuers may
have the right to call or prepay obligations, with or without penalties. Also,
in some cases Connecticut General may extend maturity dates.

Gross unrealized appreciation (depreciation) on fixed maturities, including
policyholder share, by type of issuer was as follows:

- ------------------------------------------------------------------
December 31, 1999

- ------------------------------------------------------------------
- ------------------------------------------------------------------
Amortized Unrealized Unrealized Fair

(In millions) Cost AppreciationDepreciation Value

- ------------------------------------------------------------------
- ------------------------------------------------------------------
Federal

government and

agency bonds $ 481 $ 130 $ (3)$ 608
State and local

government bonds 167 6 (6) 167
Foreign

government bonds 192 2 (9) 185
Corporate

securities 10,321 225 (343) 10,203
Federal agency
mortgage-backed

securities 760 10 (8) 762
Other
mortgage-backed

securities 1,633 15 (69) 1,579
Other
asset-backed

securities 2,967 20 (178) 2,809
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total $ 16,521 $ 408 $ (616)$ 16,313
- ------------------------------------------------------------------

- ------------------------------------------------------------------
December 31, 1998
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Amortized Unrealized Unrealized Fair

(In millions) Cost AppreciationDepreciation Value
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Federal
government and

agency bonds $ 568 $ 407 $ - $ 975
State and local

government bonds 145 20 - 165
Foreign

government bonds 147 7 (9) 145
Corporate

securities 10,256 733 (94) 10,895
Federal agency
mortgage-backed
securities 1,301 45 (1) 1,345
Other
mortgage-backed
securities 1,679 51 (10) 1,720
Other
asset-backed
securities 2,724 121 (23) 2,822
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total $ 16,820 $ 1,384 $ (137) $ 18,067
- ------------------------------------------------------------------

At December 31, 1999, Connecticut General had commitments to purchase $36
million of fixed maturities. Most of these commitments are to purchase unsecured
investment grade bonds, bearing interest at a fixed market rate. These bond
commitments are diversified by issuer and maturity date. Connecticut General
expects to disburse approximately 75% of the committed amount in 2000.
<PAGE>

Notes to Financial Statements (Continued)

B. Mortgage Loans and Real Estate

Connecticut General's mortgage loans and real estate investments are diversified
by property type and location. Mortgage loans are also diversified by borrower.
These loans, which are secured by the related property, are generally made at
less than 75% of the property's value.

At December 31, the carrying values of mortgage loans and real estate
investments, including policyholder share, were as follows:

- -----------------------------------------------------------------
(In millions) 1999 1998
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Mortgage loans $8,980 $ 8,875
-------------- --------------
-------------- --------------
Real estate:
Held for sale 297 326
Held to produce income 478 386
-------------- --------------
-------------- --------------
Total real estate 775 712
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Total $9,755 $ 9,587
- -----------------------------------------------------------------

At December 31, mortgage loans and real estate investments consist of the
following property types and geographic regions:

Retail facilities $ 3,018 $ 3,145
Office buildings 4,081 3,814
Apartment buildings 1,191 1,283
Industrial 670 -
Hotels 488 450
Other 307 895
-------------- --------------
- ------------------------------------------------------------------
Total $ 9,755 $ 9,587
- ------------------------------------------------------------------
- ---------------------------------- ------------------------------
Geographic region:

Central $ 2,721 $ 3,051
Pacific 2,941 2,683
Middle Atlantic 1,653 1,510
South Atlantic 1,531 1,348
New England 909 995
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total $ 9,755 $ 9,587
- ------------------------------------------------------------------

Mortgage loans. At December 31, 1999, scheduled mortgage loan maturities were as
follows (in billions): $1.0 in 2000, $0.8 in 2001, $1.1 in 2002, $1.6 in 2003,
$1.3 in 2004, and $3.2 thereafter. Actual maturities could differ from
contractual maturities for several reasons. Borrowers may have the right to
prepay obligations, with or without prepayment penalties; the maturity date may
be extended; and loans may be refinanced.

At December 31, 1999, Connecticut General had commitments to extend credit under
commercial mortgage loan agreements of approximately $111 million, most of which
were at a fixed market rate of interest. These loan commitments are diversified
by property type and geographic region. Connecticut General expects to disburse
approximately all of the committed amount in 2000.

At December 31, impaired mortgage loans and valuation reserves were as follows:

- ------------------------------------------------------------------
(In millions) 1999 1998
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Impaired loans with no valuation
reserves $ 184 $ 132
Impaired loans with valuation
reserves 52 24
-------------- --------------
Total impaired loans 236 156
Less valuation reserves (11) (6)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Net impaired loans $ 225 $ 150
- ------------------------------------------------------------------

During the year ended December 31, changes in reserves for impaired mortgage
loans, including policyholder share, were as follows:

- ------------------------------------------------------------------
(In millions) 1999 1998
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Reserve balance - January 1 $ 6 $ 44
Transfers to foreclosed real
estate - (21)
Charge-offs upon sales - (9)
Net change in valuation reserves 5 (8)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Reserve balance - December 31 $ 11 $ 6
- ------------------------------------------------------------------

Impaired mortgage loans, before valuation reserves, averaged approximately $183
million in 1999, and $285 million in 1998. Interest income recorded and cash
received on impaired loans were approximately $19 million in 1999 and $12
million in 1998.

During 1999, Connecticut General refinanced approximately $96 million of its
mortgage loans at current market rates for borrowers unable to obtain
alternative financing, compared to $126 million in 1998.

Real estate. During 1999, non-cash investing activities included $13 million of
real estate acquired through foreclosure of mortgage loans, compared to $32
million for 1998 and $81 million for 1997. The total of valuation reserves and
cumulative write-downs related to real estate, including policyholder share, was
$143 million at the end of 1999, compared to $171 million at the end of 1998.
Net investment income from real estate held for sale was $6 million for 1999 and
$8 million for 1998. Write-downs upon foreclosure and changes in valuation
reserves were not material for 1999 or 1998.
<PAGE>
Notes to Financial Statements (Continued)

C. Short-Term Investments and Cash Equivalents

Short-term investments and cash equivalents were primarily debt
securities--principally corporate securities of $398 million, asset-backed
securities of $133 million and federal government bonds of $77 million at
December 31, 1999. Connecticut General held $963 million in corporate
securities, $68 million of federal government bonds and $24 million of
asset-backed securities at December 31, 1998.

D. Net Unrealized Appreciation (Depreciation) on Investments

Unrealized appreciation (depreciation) on investments carried at fair value at
December 31 was as follows:

- ----------------------------------------------------------------
(In millions) 1999 1998
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Unrealized appreciation:
Fixed maturities $ 408 $ 1,384
Equity securities 7 10
------------- --------------
------------- --------------
415 1,394
------------- --------------
------------- --------------
Unrealized depreciation:
Fixed maturities (615) (137)
Equity securities (2) (25)
------------- --------------
------------- --------------
(617) (162)
------------- --------------
(202) 1,232
Less policyholder-related amounts (150) 880
------------- --------------
------------- --------------
Shareholder net unrealized

appreciation (depreciation) (52) 352
Income tax expense (benefit) (7) 134
------------- --------------
- ----------------------------------------------------------------
Net unrealized appreciation

(depreciation) $ (45) $ 218
- ----------------------------------------------------------------

Changes in net unrealized appreciation (depreciation) on investments for the
years ended December 31 were as follows:

(depreciation), net of taxes (264) 89 69
--------------------------------
--------------------------------
(Losses) gains realized in net
income (1) 195 1
Tax expense - 68 -
--------------------------------
--------------------------------
(Losses) gains realized in net
income, net of taxes (1) 127 1
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $ (263) $ (38) $ 68
- ------------------------------------------------------------------
E. Non-Income Producing Investments

At December 31, the carrying values of investments, including policyholder
share, that were non-income producing during the preceding 12 months were as
follows:

- ------------------------------------------------------------------
(In millions) 1999 1998
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Fixed maturities $ 7 $ 22
Mortgage loans 1 2
Real estate 76 68
Other long-term investments 25 -
- ------------------------------------------------------------------
Total $ 109 $ 92
- ------------------------------------------------------------------

F. Derivative Financial Instruments

Connecticut General's investment strategy is to manage the characteristics of
investment and other assets--such as duration, yield, currency, and
liquidity--to reflect the varying characteristics of the related insurance,
contractholder and other liabilities. In implementing its investment strategy,
Connecticut General substantially limits its use of derivative instruments to
hedging applications designed to limit interest rate, foreign exchange, and
equity price risks. The effects of derivatives were not material for 1999, 1998
or 1997.

Hedge accounting treatment. Accounting rules provide that companies may only use
hedge accounting when it is probable that there will be a high correlation
between the changes in fair value or cash flow of a derivative instrument and
the changes in fair value or cash flow of the related hedged asset or liability.
These changes are recognized together in net income and generally offset each
other.

When hedge accounting treatment does not apply, Connecticut General records the
derivative at fair value. Changes in fair value are then recognized in net
income, or in contractholder liabilities for certain derivatives associated with
experience-rated pension policyholders.

Credit risk. Connecticut General routinely monitors exposure to credit risk
associated with swap and option contracts, and diversifies the portfolio among
approved dealers of high credit quality to limit risk.

Derivative instruments used. The table below presents information about the
nature and accounting treatment of Connecticut General's derivative financial
instruments, and includes their

<PAGE>
Notes to Financial Statements (Continued)

underlying notional amounts (in millions) at December 31:

<PAGE>

- ------------------------ --------------------- ------------------------ ------------------------ ------------------------ --------
Notional

Instrument Risk Hedged Purpose Cash Flows Accounting Policy Amounts:
1999
1998

- ------------------------ --------------------- ------------------------ ------------------------ ------------------------ ---------
Swaps Interest rate and Connecticut General Connecticut General Fair value is reported $350
foreign currency hedges the interest or periodically exchanges currently in fixed
risk foreign currency cash cash flow differences maturities and net $351
flows of fixed between variable and interest cash flows
maturities to match fixed interest rates are reported in net
associated liabilities or between two investment income.
(currency swaps are currencies for both
primarily Canadian principal and interest.
dollars, Japanese yen,
Swiss francs, euros
and pounds sterling).
- ------------------------ ------------------------ ------------------------ --------
- ------------------------ --------------------- ------------------------ ------------------------ ------------------------ --------
Forward Swaps Interest rate risk Connecticut General Connecticut General Fair value is reported $1,793
hedges fair value periodically exchanges currently in long-term
changes of fixed the difference between investments, with
maturity and mortgage variable and fixed changes in -
loan investments held rate asset cash flows, contractholder deposit
primarily for beginning at a future funds.
experience-rated date.
pension policyholders.

- ------------------------
- ------------------------ --------------------- ------------------------ ------------------------ ------------------------ ---------
Written and Purchased Primarily equity Connecticut General Connecticut General Fair values are Written
Options risk writes reinsurance receives (pays) an reported currently in $2,275
contracts to minimize up-front fee and other liabilities and
customers' market periodically pays other assets, with
risks and purchases (receives) unfavorable changes reported in $1,087
reinsurance contracts changes in variable other revenues or
to minimize the market annuity account values other operating
risks assumed. These based on underlying expenses.
contracts are mutual funds when
accounted for as account holders elect
written and purchased to receive periodic Purchased
options. income payments. $1,822

$872

- ------------------------ --------------------- ------------------------ ------------------------ ------------------------ --------
</TABLE>

G. Other

As of December 31, 1999 and 1998, Connecticut General did not have a
concentration of investments in a single issuer or borrower exceeding 10% of
shareholder's equity.

Note 5 - Investment Income and Gains and Losses

A. Net Investment Income

The components of net investment income, including policyholder share, for the
year ended December 31 were as follows:

- ------------------------------------------------------------------
(In millions) 1999 1998 1997
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Fixed maturities $ 1,336 $ 1,386 $ 1,648
Equity securities 2 1 8
Mortgage loans 754 739 885
Policy loans 257 459 532
Real estate 148 142 183
Other long-term investments 22 19 17
Short-term investments 39 18 28
---------- --------- ---------
---------- --------- ---------
2,558 2,764 3,301
Less investment expenses 137 127 162
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Net investment income $ 2,421 $ 2,637 $ 3,139
- ------------------------------------------------------------------

Net investment income attributable to policyholder contracts, which is included
in Connecticut General's revenues and is primarily offset by amounts included in
benefits, losses and settlement expenses, was approximately $1.4 billion for
1999, $1.6 billion for 1998, and $1.7 billion for 1997. Net investment income
for separate accounts, which is not reflected in Connecticut General's revenues,
was $1.7 billion

<PAGE>
Notes to Financial Statements (Continued)

for 1999, $1.5 billion for 1998, and $1.4 billion for 1997.

Fixed maturities and mortgage loans on non-accrual status, including
policyholder share, were as follows at December 31:

- ------------------------------------------------------------------
(In millions) 1999 1998
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Delinquent $ 12 $ 28
Restructured 176 181
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total non-accrual investments $ 188 $ 209
- ------------------------------------------------------------------

In 1999, net investment income was $9 million higher than net interest income
would have been under the original terms of these securities, reflecting
collections of unrecognized interest income. For 1998 and 1997, net investment
income would have been higher by $8 million and $11 million in those years if
interest on these non-accrued investments would have been recognized in
accordance with their original terms.

B. Realized Investment Gains and Losses

Realized gains (losses) on investments, excluding policyholder share, for the
year ended December 31 were as follows:

- ------------------------------------------------------------------
(In millions) 1999 1998 1997
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Fixed maturities $ (3) $ 34 $ (3)
Equity securities 2 3 4
Mortgage loans (1) 22 4
Real estate 5 10 28
Other 4 24 12
---------- --------- ---------
---------- --------- ---------
7 93 45
Income tax (benefit) expense (1) 33 8
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Net realized investment gains $ 8 $ 60 $ 37
- ------------------------------------------------------------------

Realized investment gains and losses included impairments in the value of
investments, net of recoveries, of $9 million in 1999 and $25 million in 1997.
In 1998, realized investment gains and losses included recoveries in the value
of investments, net of impairments, of $5 million.

Realized investment gains that are not reflected in Connecticut General's
revenues for the year ended December 31 were as follows:

Sales of available-for-sale fixed maturities and equity securities, including
policyholder share, for the year ended December 31 were as follows:

Note 6 - Shareholder's Equity and Dividend Restrictions

The Connecticut Insurance Department, which regulates Connecticut General,
prescribes accounting practices to determine statutory net income and surplus
(shareholder's equity). The prescribed accounting practices differ in a number
of ways from generally accepted accounting principles. Connecticut General's
statutory net income for the year ended, and surplus as of, December 31 were as
follows:

- -----------------------------------------------------------------
(In millions) 1999 1998 1997
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Net income $ 747 $ 824 $ 417
Surplus $ 1,981 $ 1,789 $ 2,182
- -----------------------------------------------------------------

Connecticut General is subject to restrictions that limit the amount of annual
dividends or other distributions (such as loans or cash advances) available to
their shareholders without prior approval of regulatory authorities. The maximum
dividend distribution that Connecticut General may make during 2000 without
prior approval is approximately $0.7 billion. The amount of restricted net
assets as of December 31, 1999 was approximately $2.7 billion.

Connecticut General's capital stock consisted of 5,978,322 shares of common
stock authorized and outstanding as of December 31, 1999 and 1998 (par value
$5).

Note 7 - Income Taxes

Connecticut General's net deferred tax assets of $933 million as of December 31,
1999, and $865 million as of December 31, 1998, reflect management's belief that
Connecticut General's taxable income in future years will be sufficient to
realize the net deferred tax asset. This determination is based on Connecticut
General's earnings history and future expectations.

Through 1983, a portion of Connecticut General's statutory income was not
subject to current income taxation, but was accumulated in a designated

<PAGE>
Notes to Financial Statements (Continued)

policyholders' surplus account. Additions to the account were no longer
permitted beginning in 1984. Connecticut General's existing account balance of
$450 million would result in a $158 million tax liability only if it were
distributed to shareholders or exceeded a prescribed amount. Accordingly,
Connecticut General has not provided taxes on this amount, as management has
determined, it is remote these conditions will be met. However, see Note 13 for
further information regarding this matter.

CIGNA's federal income tax returns are routinely audited by the Internal Revenue
Service (IRS). In management's opinion, adequate tax liabilities have been
established for all years. Income taxes and deferred tax balances for the years
ended December 31, 1999 and 1998 reflect state income taxes. State income taxes
were not material in 1997.

The tax effect of temporary differences which give rise to deferred income tax
assets and liabilities as of December 31 were as follows:

Other insurance and

contractholder liabilities $ 142 $ 119
Employee and retiree benefit
plans 190 214
Deferred gain on sale of
business 235 290
Investments, net 327 356
Policy acquisition expenses 108 111
Unrealized appreciation on

investments 7 -
-------------- --------------
Total Deferred tax assets 1,009 1,090
-------------- --------------
Deferred tax liabilities:

Unrealized appreciation on

investments - 134
Depreciation and amortization 68 67
Other 8 24
------------------------------
Total deferred tax liabilities 76 225
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Net deferred income tax assets $ 933 $ 865
- ------------------------------------------------------------------
The components of income taxes for the year ended December 31 were as follows:

- ------------------------------------------------------------------
(In millions) 1999 1998 1997
- ------------------------------------------------------------------
Current taxes:

U.S. income $ 258 $ 617 $ 344
Foreign income 6 5 3
State income 4 14 -
---------- --------- ---------
---------- --------- ---------
268 636 347
---------- --------- ---------
---------- --------- ---------
Deferred taxes (benefits):

U. S. income 90 (205) (49)
State income - (6) -
---------- --------- ---------
---------- --------- ---------
90 (211) (49)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total income taxes $ 358 $ 425 $ 298
- ------------------------------------------------------------------

Total income taxes for the year ended December 31 were different from the amount
computed using the nominal federal income tax rate of 35% for the following
reasons:

- ------------------------------------------------------------------
(In millions) 1999 1998 1997
- ------------------------------------------------------------------
Tax expense at nominal rate $ 371 $ 431 $ 320
Tax-exempt interest income (4) (4) (5)
Dividends received deduction (9) (13) (7)
Amortization of goodwill 5 5 4
State income tax (net of
federal income tax benefit) 3 5 -
Resolved federal tax audit
issues - - (13)
Other (8) 1 (1)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total income taxes $ 358 $ 425 298
- ------------------------------------------------------------------

Note 8 - Pension and Other Postretirement Benefit Plans

A. Pension and Other Postretirement Benefit Plans

Connecticut General provides pension and certain health care and life insurance
benefits to eligible retired employees and agents, spouses and other eligible
dependents through various plans. The expenses of retirement plans are allocated
to Connecticut General along with other benefit cost allocations.

Pension benefits are provided through a plan sponsored by CIGNA covering most
domestic employees and by a separate pension plan for former agents. CIGNA funds
the pension plans at least at the minimum amount required by the Employee
Retirement Income Security Act of 1974. Allocated pension cost for Connecticut
General was $19 million in 1999 and 1998 and $24 million in 1997. The plans had
deposits with Connecticut General totaling approximately $2.1 billion at
December 31, 1999 and $2.8 billion at December 31, 1998.

Expense for post retirement benefits other than pensions allocated to
Connecticut General totaled $6 million for 1999 and $2 million for 1998. The
other post retirement benefit liability included in accounts payable, accrued
expenses and other liabilities, was $377 million as of December 31, 1999 and
$387 million as of December 31, 1998.

B. 401(k) Plans

CIGNA sponsors various 401(k) plans in which CIGNA matches a portion of
employees' pre-tax

<PAGE>
Notes to Financial Statements (Continued)

contributions. Employees may invest in one or more of the
following funds: CIGNA common stock fund, several diversified stock funds, a
bond fund and a fixed-income fund.

CIGNA may elect to increase its matching contributions if CIGNA's annual
performance meets certain targets. A substantial amount of CIGNA's matching
contributions are invested in the CIGNA common stock fund. Connecticut General's
allocated expense for these plans was $20 million for 1999, $22 million for 1998
and $15 million for 1997.

Note 9 - Reinsurance

In the normal course of business, Connecticut General enters into agreements
with other insurance companies to assume and cede reinsurance. Reinsurance is
ceded primarily to limit losses from large exposures and to permit recovery of a
portion of direct losses. Reinsurance does not relieve the originating insurer
of liability. Connecticut General evaluates the financial condition of its
reinsurers and monitors their concentrations of credit risk (arising from
similar geographic regions, activities, or economic characteristics).

At December 31, 1999, Connecticut General had a reinsurance recoverable of $6.0
billion from Lincoln National Corporation that arose as a result of the sale of
Connecticut General's individual life insurance and annuity business to Lincoln
through an indemnity reinsurance transaction. See Note 3 for information about
this sale.

Failure of reinsurers to indemnify Connecticut General, whether because of
reinsurer insolvencies or contract disputes, could result in losses. However,
management does not expect charges for unrecoverable reinsurance to have a
material effect on Connecticut General's results of operations, liquidity or
financial condition.

In Connecticut General's consolidated income statements, premiums and fees were
net of ceded premiums, and benefits, losses and settlement expenses were net of
reinsurance recoveries, in the following amounts:

Direct $4,248 $ 3,763 $ 3,119
Assumed 651 286 255
Ceded (105) (237) (266)
- ------------------------------------------------------------------
Net earned premiums and fees $4,794 $ 3,812 $ 3,108
- ------------------------------------------------------------------

- ------------------------------------------------------------------
Long-duration contracts
Premiums and fees:

Direct $1,750 $ 1,998 $ 1,979
Assumed 635 564 522
Ceded (606) (691) (233)
- ------------------------------------------------------------------
Net earned premiums and fees $1,779 $ 1,871 $ 2,268
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Reinsurance recoveries
Individual life insurance and
annuity business sold $362 $ 550 $ -
Other 194 149 340
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total $556 $ 699 $ 340
- ------------------------------------------------------------------

The effects of reinsurance on written premiums and fees for short-duration
contracts were not materially different from the amounts shown in the above
table.

Ceded premiums and reinsurance recoveries associated with the individual life
and insurance businesses sold were $462 million and $362 million for 1999, and
$741 million and $550 million for 1998.

Note 10 - Leases and Rentals

Rental expenses for operating leases, principally for office space, amounted to
$42 million in 1999 and 1998, and $76 million in 1997.

As of December 31, 1999, future net minimum rental payments under non-cancelable
operating leases were approximately $230 million, payable as follows (in
millions): $39 in 2000, $35 in 2001, $32 in 2002, $28 in 2003, $24 in 2004, and
$72 thereafter.

Note 11 - Segment Information

Operating segments are based on Connecticut General's internal reporting
structure. Segments generally reflect groups of related products. Connecticut
General presents segment information as follows:

Employee Health Care, Life and Disability Benefits, which combines Connecticut
General's Health Care and Group Insurance segments, offers a range of indemnity
group health and managed care

<PAGE>
Notes to Financial Statements (Continued)

products and services through guaranteed cost,
experience rated and alternative funding arrangements such as administrative
services only and minimum premium plans. This segment also offers group life and
disability coverages.

Employee Retirement Benefits and Investment Services provides investment
products and professional services primarily to sponsors of qualified pension,
profit sharing and retirement savings plans. This segment also provides certain
corporate and variable life insurance products.

Other Operations consists of deferred gain recognized from the sale of the
individual life insurance and annuity business; corporate life insurance on
which policy loans are outstanding (leveraged corporate life insurance); life,
accident and health reinsurance operations; settlement annuity business; and
certain new business initiatives.

Connecticut General measures the financial results of its segments using
operating income (net income excluding after-tax realized investment results).
Connecticut General determines operating income for each segment consistent with
the accounting policies for the consolidated financial statements. Connecticut
General allocates other corporate general, administrative and systems expenses
on systematic bases. Income taxes are generally computed as if each segment were
filing separate income tax returns.

Connecticut General's operations are not materially dependent on one or a few
customers, brokers or agents.

Summarized segment financial information for the year ended and as of December
31 was as follows:

Premiums and fees and other
revenues $ 5,769 $ 5,012 $ 4,307
Net investment income 267 290 286
---------- --------- ---------
---------- --------- ---------
Segment revenues $ 6,036 $ 5,302 $ 4,593
Income tax expense $ 174 $ 114 $ 108
Operating income $ 315 $ 195 $ 190
Assets under management:
Invested assets $ 3,341 $ 3,519 $ 3,761
Separate account assets 2,038 1,702 1,440
---------- --------- ---------
---------- --------- ---------
Total $ 5,379 $ 5,221 $ 5,201
--------------------------------
--------------------------------
Employee Retirement Benefits
and Investment Services

Premiums and fees and other
revenues $ 251 $ 239 $ 205
Net investment income 1,596 1,605 1,653
---------- --------- ---------
---------- --------- ---------
Segment revenues $ 1,847 $ 1,844 $ 1,858
Income tax expense $ 124 $ 113 $ 99
Operating income $ 258 $ 245 $ 229
Assets under management:
Invested assets $ 19,645 $ 20,511 $ 20,759
Separate account assets 33,534 30,717 26,678
---------- --------- ---------
---------- --------- ---------
Total $ 53,179 $ 51,228 $ 47,437
--------------------------------
--------------------------------
Other Operations
Premiums and fees and other

revenues $ 664 $ 859 $ 874
Net investment income 558 742 1,200
---------- --------- ---------
---------- --------- ---------
Segment revenues $ 1,222 $ 1,601 $ 2,074
Income tax expense $ 61 $ 165 $ 83
Operating income $ 121 $ 306 $ 159
Assets under management:
Invested assets $ 6,401 $ 10,006 $ 16,181
Separate account assets 2,887 2,229 1,099
---------- --------- ---------
---------- --------- ---------
Total $ 9,288 $ 12,235 $ 17,280
- ------------------------------------------------------------------
<PAGE>
Notes to Financial Statements (Continued)

Realized investment gains $ 7 $ 93 45
Income tax (benefit) expense (1) 33 8
---------- --------- ---------
---------- --------- ---------
Realized investment gains, net
of taxes $ 8 $ 60 $ 37
--------------------------------
--------------------------------
Total

Premiums and fees and other
revenues $ 6,684 $ 6,110 $ 5,386
Net investment income 2,421 2,637 3,139
Realized investment gains 7 93 45
---------- --------- ---------
---------- --------- ---------
Total revenues $ 9,112 $ 8,840 $ 8,570
Income tax expense $ 358 $ 425 $ 298

Operating income $ 694 $ 746 $ 578
Realized investment gains, net
of taxes 8 60 37
---------- --------- ---------
---------- --------- ---------

Net income $ 702 $ 806 $ 615
Assets under management

Invested assets $ 29,387 $ 34,036 $ 40,701
Separate account assets 38,459 34,648 29,217
---------- --------- ---------
---------- --------- ---------
Total $ 67,846 $ 68,684 $ 69,918
- ------------------------------------------------------------------

Premiums and fees and other revenues by product type were as follows for the
year ended December 31:

- ------------------------------------------------------------------
(In millions) 1999 1998 1997
- ------------------------------------------------------------------
Medical and Dental 4,388 3,566 2,883
Group Life 1,282 1,363 1,355
Other 1,014 1,181 1,148
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total $ 6,684 $ 6,110 $ 5,386
- ------------------------------------------------------------------

Connecticut General's foreign activities, including premiums and fees, net
income, translation adjustments, transaction losses and long-lived assets for
the years ended and as of December 31, 1999, 1998 and 1997 were not material.

Note 12 - Related Party Transactions

Connecticut General has assumed the settlement annuity and group pension
business written by Life Insurance Company of North America (LINA), an
affiliate. Reserves held by Connecticut General for this business were $1.5
billion at December 31, 1999 and $1.7 billion at December 31, 1998.

Effective January 1, 1999, the Company entered into a contract to assume certain
accident and health business from CIGNA Life Insurance Company of New York, an
affiliate. During 1999, the Company assumed $439.1 million of premiums and held
reserves of $34.6 million at December 31, 1999.

Connecticut General cedes long-term disability business to LINA. Reinsurance
recoverables from LINA were $787 million at December 31, 1999 and $834 million
at December 31, 1998. In 1999, as part of this reinsurance arrangement, LINA
paid an experience refund of $32.5 million on an after tax basis to the Company
related to the period 1992-1994.

Effective January 1, 1998, Connecticut General assumed insurance reserves
totaling $85 million, along with a corresponding amount of invested and other
assets, under a coinsurance arrangement assigned from Healthsource Insurance
Company, an affiliate. In addition, Connecticut General was assigned the
responsibility for administering self-funded employee benefit plan products from
Healthsource Provident Administrators, Inc. (HPA), another affiliate. As part of
this assignment, net assets of approximately $304 million were transferred to
Connecticut General from HPA.

The Company has entered into an arrangement with International Rehabilitation
Services Inc. to receive certain rehabilitation, utilization review and medical
review services. The Company paid $70.1 million in 1999 and $47.7 million in
1998 for these services.

The Company, along with other CIGNA subsidiaries, has entered into an
arrangement with CIGNA Investments, Inc. for investment advisory services. Fees
paid by the Company during 1999 totaled $29.5 million and $30.6 million in 1998.

The Company has an arrangement with CIGNA Health Corporation and its
subsidiaries and affiliates to provide managed care provider networks and other
administrative services for group health benefit plans insured or administered
by the Company. Fees paid by the Company totaled $772 million in 1999 and $685
million in 1998.

Connecticut General had lines of credit available from affiliates totaling $600
million at December 31, 1999 and $600 million at December 31, 1998. All
borrowings are payable upon demand with interest rates equivalent to CIGNA's
average monthly short-term borrowing rate plus 1/4 of 1%. Interest expense was
$0.2 million in 1999, $1.5 million in 1998 and $0.2 million in 1997. As of
December 31, 1999 and 1998 there were no borrowings outstanding under such
lines.

Connecticut General extended lines of credit to affiliates totaling $600 million
at December 31, 1999 and 1998. All loans are payable upon demand with

<PAGE>
Notes to Financial Statements (Continued)

interest rates equivalent to CIGNA's short-term borrowing rate. There were no
amounts outstanding as of December 31, 1999 or 1998.

Connecticut General, together with other CIGNA subsidiaries, has entered into a
pooling arrangement known as the CIGNA Corporate Liquidity Account (the Account)
for the purpose of increasing earnings on short-term investments. Withdrawals
from the Account, up to the total amount of the participant's investment in the
Account, are allowed on a demand basis. Connecticut General had balances in the
Account of $0.8 billion at December 31, 1999 and $1.1 billion at December 31,
1998.

CIGNA allocates to Connecticut General its share of operating expenses incurred
at the corporate level. Connecticut General also allocates a portion of its
operating expenses to affiliated companies for whom it performs certain
administrative services.

Note 13 - Contingencies

A. Financial Guarantees

Connecticut General is contingently liable for various financial guarantees
provided in the ordinary course of business. Connecticut General also secures
reinsurance to recover a portion of amounts paid in connection with a financial
guarantee.

Specialty life reinsurance contracts.

Connecticut General has entered into specialty life reinsurance contracts that
contain certain guarantees for variable annuities. One type of reinsurance
contract guarantees minimum income benefits based on unfavorable changes in
account values. The other type guarantees a minimum death benefit, also based on
unfavorable changes in account values. The variable annuity account values are
based on underlying domestic equity and bond mutual fund investments.

Those reinsurance contracts that guarantee minimum income benefits are accounted
for as written options. Connecticut General has purchased reinsurance from third
parties which substantially reduces the risk of these contracts. See Note 4 (f)
for additional information.

For those reinsurance contracts that guarantee minimum death benefits, reserves
are established in amounts adequate to meet the estimated future obligations.
These estimates are based on various assumptions as to equity market conditions
and premiums, as well as interest, mortality and lapse rates, allowing for
adverse deviation. As of December 31, 1999, the amount of recorded liabilities
was $83 million, compared to recorded liabilities of $52 million as of December
31, 1998.

Management is reviewing alternatives to manage the associated equity market and
interest rate risks for contracts that guarantee minimum death benefits. As part
of this review, Connecticut General is considering whether to modify certain
reserve assumptions for the contracts. The guarantees under these contracts and
changes that could result from this review could adversely affect Connecticut
General's consolidated results of operations in future periods. However,
management does not expect them to have a material adverse effect on Connecticut
General's liquidity or financial condition.

Separate account contracts. Connecticut General guarantees a minimum level of
benefits for certain separate account contracts. If assets in these separate
accounts are insufficient to fund minimum policy benefits, Connecticut General
is obligated to pay the difference.

As of December 31, 1999, Connecticut General guaranteed minimum benefits of $4.9
billion for separate account contracts, compared to $5.1 billion at the end of
1998. The management fee that Connecticut General charges to separate accounts
includes a guarantee fee. These fees are recognized in income as earned.

Connecticut General establishes a liability if management believes that
Connecticut General will be required to make a payment under a separate account
contract guarantee. No such liabilities were required as of December 31, 1999 or
1998. If Connecticut General becomes obligated to make payments as a result of
these guarantees, those obligations may adversely affect Connecticut General's
results of operations in future periods. However, management does not expect
these guarantee obligations to have a material adverse effect on Connecticut
General's liquidity or financial condition.

Industrial revenue bonds. As of December 31, 1999 and 1998, Connecticut General
guaranteed $85 million of industrial revenue bond issues. These bond issues will
be outstanding for up to 16 more years. If the issuers default, Connecticut
General will

<PAGE>
Notes to Financial Statements (Continued)

be required to make periodic payments based on the original terms
of the bonds. Unlike many debt obligations, an event of default under these
bonds will not cause all scheduled principal and interest payments to be due
immediately.

Connecticut General limits its exposure to credit risk due to default by the
primary borrower by reviewing the creditworthiness of guaranteed parties and by
monitoring credit conditions regularly. Connecticut General establishes a
reserve if management believes that Connecticut General will be required to make
a payment under a financial guarantee.

B. Regulatory and Industry Developments

Connecticut General's businesses are subject to a changing social, economic,
legal, legislative and regulatory environment. Some of the more significant
current issues that may affect Connecticut General's businesses include:

o efforts to expand tort liability of health plans;
o proposed class action lawsuits targeting health care companies;
o initiatives to increase health care regulation;
o initiatives to restrict insurance pricing and the application of
underwriting standards; and
o efforts to revise federal tax laws.

Health care regulation. Efforts are underway in the federal and state
legislatures and in the courts to increase regulation of the health care
industry and change its operational practices. Regulatory and operational
changes could have an adverse effect on Connecticut General's health care
activities if they reduce marketplace competition and innovation or result in
increased medical or administrative costs without improving the quality of care
or member satisfaction.

Other regulatory changes that have been under consideration and that could have
an adverse effect on Connecticut General's health care operations include:

o mandated benefits or services that increase costs without improving the
quality of care;
o managed care reform and patients' bill of rights legislation;
o loss of the ERISA preemption of state tort laws through legislative
actions and court decisions;
o changes in ERISA regulations imposing increased administrative burdens
and costs;
o restrictions on the use of prescription drug formularies; and
o privacy legislation that interferes with the ability to properly use
medical information for research, coordination of medical care and disease
management.

Federal budget proposals. The Administration's proposed budget for fiscal year
2001 would tax amounts previously accumulated in a policyholders' surplus
account. If enacted, Connecticut General will record additional income tax
expense of $158 million. (See Note 7 to the Financial Statements for more
information.)

The proposed budget also would restrict the tax benefits for corporations owning
nonleveraged corporate life insurance policies. If enacted as proposed,
Connecticut General does not anticipate that this provision will have a material
effect on its consolidated results of operations, liquidity, or financial
condition, but it could have a material adverse effect on the results of
operations of the Employee Retirement Benefits and Investment Services segment.

Tax benefits for corporate-owned life insurance. In 1996, Congress passed
legislation implementing a three-year phase-out period for tax deductibility of
policy loan interest for most leveraged corporate life insurance products. As a
result, management expects revenues and operating income associated with these
products to continue to decline. In 1999, revenues of $350 million, and
operating income of $32 million, were from products that are affected by this
legislation.

Statutory accounting principles. In 1998, the NAIC adopted standardized
statutory accounting principles. Although many states have indicated their
intent to adopt these principles, Connecticut, in which Connecticut General is
domiciled, has not formally adopted them. As a result, Connecticut General has
not determined the timing or effect of implementing these principles.

Insolvency funds. Various states maintain funds to pay the obligations of
insolvent insurance companies. These funds are financed with assessments against
all insurance companies writing business in that state. In some states,
insurance companies can recover a portion of these assessments through a
reduction in future premium taxes. Connecticut General recorded pre-tax charges
for continuing operations of $8 million for 1999, $18

<PAGE>
Notes to Financial Statements (Continued)

million for 1998 and $28
million for 1997 for insolvency fund and other insurance-related assessments
that can be reasonably estimated, before giving effect to future premium tax
recoveries.

Although future assessments and payments may adversely affect results of
operations in future periods, management does not expect these amounts to have a
material adverse effect on Connecticut General's liquidity or financial
condition.

C. Class Action Lawsuits and Other Litigation

Connecticut General, its direct parent, Connecticut General Corporation, its
indirect parent, CIGNA, and its affiliate, CIGNA Health Corporation, and several
health care industry competitors have had proposed class action lawsuits filed
against them by a coalition of plaintiffs' attorneys. These lawsuits allege
violations under RICO and ERISA. Connecticut General is routinely involved in
numerous lawsuits arising, for the most part, in the ordinary course of the
business of administering and insuring employee benefit programs. Although the
outcome of litigation is always uncertain, Connecticut General does not believe
that any litigation currently threatened or pending involving Connecticut
General will result in losses that differ from recorded reserves by amounts that
would be material to results of operations, liquidity or financial condition.

<PAGE>

--------------------------------------------
CG VARIABLE ANNUITY

SEPARATE ACCOUNT

FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999
AND FOR THE PERIODS ENDED DECEMBER 31, 1999
AND DECEMBER 31, 1998, AND INDEPENDENT
AUDITORS' REPORTS

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholder of Allstate Life Insurance Company and
Contractholders of CG Variable Annuity Separate Account:

We have audited the accompanying statement of net assets of CG Variable
Annuity Separate Account as of December 31, 1999 (including the assets of
each of the individual sub-accounts which comprise the Account as disclosed
in Note 1), and the related statements of operations and changes in net assets
for the year then ended for each of the individual sub-accounts which
comprise the Account. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1999 by correspondence with the
account custodians. 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, such financial statements present fairly, in all material
respects, the financial position of CG Variable Annuity Separate Account as
of December 31, 1999 (including the assets of each of the individual
sub-accounts which comprise the Account), and the results of operations for
each of the individual sub-accounts and the changes in their net assets for
the year then ended in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP

Chicago, Illinois
March 27, 2000

<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors of The Lincoln National Life Insurance Company
and
Contract Owners of CG Variable Annuity Separate Account

We have audited the accompanying statement of changes in net assets of CG
Variable Annuity Separate Account ("Variable Account") (comprised of the AIM
V.I. Capital Appreciation, AIM V.I. Diversified Income, AIM V.I. Global
Utilities, AIM V.I. Government Securities, AIM V.I. Growth, AIM V.I. Growth and
Income, AIM V.I. International Equity, AIM V.I. Money Market, AIM V.I. Value
subaccounts) for the year ended December 31, 1998. This financial statement is
the responsibility of the Variable Account's management. Our responsibility is
to express an opinion on this financial statement based on our audit.

We conducted our audit 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 statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statement referred to above presents fairly, in
all material respects, the changes in net assets of each of the respective
subaccounts constituting the CG Variable Annuity Separate Account for the year
ended December 31, 1998, in conformity with accounting principles generally
accepted in the United States.

/s/ Ernst & Young LLP

Fort Wayne, Indiana
April 2, 1999

<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
December 31, 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Allocation to Sub-Accounts investing in the AIM Variable Insurance Funds:
Capital Appreciation, 11,292,375 shares (cost $175,373,962) $ 401,782,119
Diversified Income, 4,707,214 shares (cost $48,853,414) 47,355,223
Global Utilities, 869,570 shares (cost $11,508,453) 19,826,180
Government Securities, 2,009,345 shares (cost $21,401,418) 21,359,351
Growth, 8,989,411 shares (cost $137,041,499) 289,908,045
Growth and Income, 6,225,830 shares (cost $91,747,626) 196,673,688
International Equity, 6,645,341 shares (cost $94,435,268) 194,641,756
Money Market, 48,529,267 shares (cost $48,529,267) 48,529,267
Value, 16,322,977 shares (cost $245,821,589) 546,818,920
----------------
Total Assets $ 1,766,894,549
================
</TABLE>

See notes to financial statements

3
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------

AIM Variable Insurance Funds Sub-Accounts
----------------------------------------------------------------------------

For the Year Ended December 31, 1999
----------------------------------------------------------------------------

Capital Diversified Global Government
Appreciation Income Utilities Securities Growth
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 8,620,209 $ 3,018,516 $ 308,559 $ 677,209 $10,343,556
Charges from Connecticut General Life Insurance
Company
Mortality and expense risk (4,466,474) (727,945) (230,504) (323,033) (3,448,642)
------------- ------------- ------------- ------------- -------------
Net investment income (loss) 4,153,735 2,290,571 78,055 354,176 6,894,914
------------- ------------- ------------- ------------- -------------

REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 88,123,727 19,317,125 3,716,792 10,097,459 46,064,872
Cost of investments sold 53,404,718 18,507,326 2,550,171 9,578,935 25,756,015
------------- ------------- ------------- ------------- -------------
Net realized gains (losses) 34,719,009 809,799 1,166,621 518,524 20,308,857
------------- ------------- ------------- ------------- -------------
Change in unrealized gains (losses) 84,979,856 (4,912,266) 3,653,909 (1,659,421) 48,298,080
------------- ------------- ------------- ------------- -------------
Net gains (losses) on investments 119,698,865 (4,102,467) 4,820,530 (1,140,897) 68,606,937
------------- ------------- ------------- ------------- -------------

CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 123,852,600 $ (1,811,896) $ 4,898,585 $ (786,721) $75,501,851
============= ============= ============= ============= =============
</TABLE>

See notes to financial statements.

4
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------

AIM Variable Insurance Funds Sub-Accounts
-----------------------------------------------------------

For the Year Ended December 31, 1999
-----------------------------------------------------------

Growth International Money
and Income Equity Market Value
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,634,495 $ 6,477,816 $ 2,307,247 $ 9,206,966
Charges from Connecticut General Life Insurance
Company
Mortality and expense risk (2,359,413) (2,017,750) (675,614) (6,883,729)
------------- ------------- ------------- -------------
Net investment income (loss) (724,918) 4,460,066 1,631,633 2,323,237
------------- ------------- ------------- -------------

REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 32,366,014 38,011,154 49,907,019 92,280,655
Cost of investments sold 18,652,509 25,062,175 49,907,019 50,124,230
------------- ------------- ------------- -------------
Net realized gains (losses) 13,713,505 12,948,979 - 42,156,425
------------- ------------- ------------- -------------
Change in unrealized gains (losses) 37,214,762 51,632,116 - 83,245,135
------------- ------------- ------------- -------------
Net gains (losses) on investments 50,928,267 64,581,095 - 125,401,560
------------- ------------- ------------- -------------

CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $50,203,349 $ 69,041,161 $ 1,631,633 $ 127,724,797
============= ============= ============= =============
</TABLE>

See notes to financial statements.

5
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------------

AIM Variable Insurance Funds Sub-Accounts
-----------------------------------------------------------------------------------

Capital Appreciation Diversified Income Global Utilities
--------------------------- --------------------------- ---------------------------

1999 1998 1999 1998 1999 1998
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 4,153,735 $ 4,840,796 $ 2,290,571 $ 3,139,306 $ 78,055 $ 159,429
Net realized gains (losses) 34,719,009 21,973,089 809,799 1,873,511 1,166,621 1,322,170
Change in unrealized gains (losses) 84,979,856 26,522,568 (4,912,266) (3,580,234) 3,653,909 689,626
------------- ------------- ------------- ------------- ------------- -------------

Change in net assets resulting from operations 123,852,600 53,336,453 (1,811,896) 1,432,583 4,898,585 2,171,225
------------- ------------- ------------- ------------- ------------- -------------
FROM CAPITAL TRANSACTIONS
Deposits 2,431,546 6,622,951 901,759 2,575,258 66,713 722,067
Benefit payments and withdrawals (47,803,218) (31,097,125) (7,866,548) (6,231,656) (2,427,453) (1,239,604)
Transfers among the sub-accounts
and with the Fixed Account - net (23,727,110) (13,321,565) (5,859,429) 342,581 1,073,952 (772,360)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets resulting
from capital transactions (69,098,782) (37,795,739) (12,824,218) (3,313,817) (1,286,788) (1,289,897)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS 54,753,818 15,540,714 (14,636,114) (1,881,234) 3,611,797 881,328

NET ASSETS AT BEGINNING OF PERIOD 347,028,301 331,487,587 61,991,337 63,872,571 16,214,383 15,333,055
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD $ 401,782,119 $ 347,028,301 $ 47,355,223 $ 61,991,337 $ 19,826,180 $ 16,214,383
============= ============= ============= ============= ============= =============
</TABLE>

See notes to financial statements.

6
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

AIM Variable Insurance Funds Sub-Accounts
-----------------------------------------------------------------------------------

Government Securities Growth Growth and Income
--------------------------- --------------------------- ---------------------------

1999 1998 1999 1998 1999 1998
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 354,176 $ 458,428 $ 6,894,914 $ 12,438,264 $ (724,918) $ 250,480
Net realized gains (losses) 518,524 655,405 20,308,857 10,024,346 13,713,505 7,016,146
Change in unrealized gains (losses) (1,659,421) 340,677 48,298,080 37,942,473 37,214,762 27,560,775
------------- ------------- ------------- ------------- ------------- -------------

Change in net assets resulting from operations (786,721) 1,454,510 75,501,851 60,405,083 50,203,349 34,827,401
------------- ------------- ------------- ------------- ------------- -------------
FROM CAPITAL TRANSACTIONS
Deposits 333,235 851,929 2,090,037 5,635,643 1,427,255 6,571,206
Benefit payments and withdrawals (5,682,942) (3,021,136) (34,659,581) (20,522,678) (22,166,346) (17,333,660)
Transfers among the sub-accounts
and with the Fixed Account - net 179,734 5,242,249 3,357,321 2,375,383 572,737 4,155,669
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets resulting
from capital transactions (5,169,973) 3,073,042 (29,212,223) (12,511,652) (20,166,354) (6,606,785)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS (5,956,694) 4,527,552 46,289,628 47,893,431 30,036,995 28,220,616

NET ASSETS AT BEGINNING OF PERIOD 27,316,045 22,788,493 243,618,417 195,724,986 166,636,693 138,416,077
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD $ 21,359,351 $ 27,316,045 $289,908,045 $243,618,417 $196,673,688 $166,636,693
============= ============= ============= ============= ============= =============
</TABLE>

See notes to financial statements.

7
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

AIM Variable Insurance Funds Sub-Accounts
-----------------------------------------------------------------------------------

International Equity Money Market Value
--------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 4,460,066 $ (929,425) $ 1,631,633 $ 1,645,330 $ 2,323,237 $ 16,522,025
Net realized gains (losses) 12,948,979 9,483,442 - - 42,156,425 17,343,105
Change in unrealized gains (losses) 51,632,116 11,064,361 - - 83,245,135 82,893,346
------------- ------------- ------------- ------------- ------------- -------------

Change in net assets resulting from operations 69,041,161 19,618,378 1,631,633 1,645,330 127,724,797 116,758,476
------------- ------------- ------------- ------------- ------------- -------------
FROM CAPITAL TRANSACTIONS
Deposits 1,267,151 2,843,179 712,067 6,021,063 4,014,717 11,150,776
Benefit payments and withdrawals (20,456,881) (10,969,937) (32,268,982) (22,861,741) (71,967,283) (38,935,120)
Transfers among the sub-accounts
and with the Fixed Account - net (7,563,407) (11,933,394) 33,632,508 15,706,874 (2,280,086) (768,244)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets resulting
from capital transactions (26,753,137) (20,060,152) 2,075,593 (1,133,804) (70,232,652) (28,552,588)
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS 42,288,024 (441,774) 3,707,226 511,526 57,492,145 88,205,888

NET ASSETS AT BEGINNING OF PERIOD 152,353,732 152,795,506 44,822,041 44,310,515 489,326,775 401,120,887
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD $ 194,641,756 $152,353,732 $ 48,529,267 $44,822,041 $546,818,920 $489,326,775
============= ============= ============= ============= ============= =============
</TABLE>

See notes to financial statements.

8
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS

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

1. ORGANIZATION

CG Variable Annuity Separate Account (the "Account"), a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, is a Separate Account of Connecticut
General Life Insurance Company ("CG Life"). The assets of the Account are
legally segregated from those of CG Life.

Effective January 1, 1998, CG Life contracted the administrative servicing
obligations of its individual variable annuity business to the Lincoln
National Life Insurance Company and Lincoln Life & Annuity Company of New
York ("Lincoln Companies"). Effective September 1, 1998, the Lincoln
Companies subcontracted the administrative servicing obligations of the
variable annuity business included in the Account to Allstate Life
Insurance Company ("Allstate Life") and Allstate Life Insurance Company of
New York ("Allstate New York"). Although CG Life is responsible for all
policy terms and conditions, Allstate Life and Allstate New York are
responsible for servicing the individual annuity contracts, including the
payment of benefits, oversight of investment management and contract
administration. These services were transitioned from the Lincoln Companies
on April 12, 1999.

CG Life issues the AIM/CIGNA Heritage Variable Annuity, the deposits of
which are invested at the direction of the contractholders in the
sub-accounts that comprise the Account. Absent any contract provisions
wherein CG Life contractually guarantees either a minimum return or account
value to the beneficiaries of the contractholders in the form of a death
benefit, the contractholders bear the investment risk that the sub-accounts
may not meet their stated objectives. The sub-accounts invest in the
following underlying mutual fund portfolios of the AIM Variable Insurance
Funds (the "Funds").

Capital Appreciation Growth and Income
Diversified Income International Equity
Global Utilities Money Market
Government Securities Value
Growth

CG Life provides insurance and administrative services to the
contractholders for a fee. CG Life also maintains a fixed account ("Fixed
Account"), to which contractholders may direct their deposits and receive a
fixed rate of return. CG Life has sole discretion to invest the assets of
the Fixed Account, subject to applicable law.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

VALUATION OF INVESTMENTS - Investments consist of shares of the Funds and
are stated at fair value based on quoted market prices at December 31,
1999.

INVESTMENT INCOME - Investment income consists of dividends declared by the
Funds and is recognized on the ex-dividend date.

REALIZED GAINS AND LOSSES - Realized gains and losses represent the
difference between the proceeds from sales of portfolio shares by the
Account and the cost of such shares, which is determined on a weighted
average basis.

9
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FEDERAL INCOME TAXES - The Account intends to qualify as a segregated asset
account as defined in the Internal Revenue Code ("Code"). As such, the
operations of the Account are included in the tax return of CG Life. CG
Life is taxed as a life insurance company under the Code. No federal income
taxes are allocable to the Account as the Account did not generate taxable
income.

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

3. EXPENSES

ADMINISTRATIVE EXPENSE CHARGE - CG Life deducts administrative expense
charges daily at a rate equal to .10% per annum of the average daily net
assets of the Account.

ANNUITY ACCOUNT FEE - CG Life deducts an annual maintenance charge of $35
on the last valuation date of each calendar year. This charge will be
waived if total deposits are $100,000 or more on the last valuation date of
that year.

MORTALITY AND EXPENSE RISK CHARGE - CG Life assumes mortality and expense
risks related to the operations of the Account and deducts charges daily at
a rate equal to 1.25% per annum of the daily net assets of the Account. The
mortality and expense risk charge covers insurance benefits available with
the contract and certain expenses of the contract. It also covers the risk
that the current charges will not be sufficient in the future to cover the
cost of administering the contract.

4. UNITS OUTSTANDING AND ACCUMULATION UNIT VALUES

<TABLE>
<CAPTION>
(Units in whole amounts)

Units Outstanding Accumulation Unit Value
December 31, 1999 December 31, 1999
----------------- -----------------
<S> <C> <C>
Investments in the AIM Variable Insurance
Funds Sub-Accounts:
Capital Appreciation 11,571,957 $ 34.72
Diversified Income 3,524,878 13.43
Global Utilities 789,220 25.12
Government Securities 1,745,100 12.24
Growth 8,060,152 35.97
Growth and Income 6,002,927 32.76
International Equity 6,796,498 28.64
Money Market 3,917,971 12.39
Value 15,219,966 35.93
</TABLE>

<PAGE>

PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

All required financial statements are included in Part B of this Registration
Statement.

(b) Exhibits

(1) Resolution of Board of Directors Authorizing Establishment of Registrant.1/

(2) Not Applicable.

(3) Form of Selling Agreement among Connecticut General Life Insurance Company,
CIGNA Financial Advisors, Inc. (as of January 1, 1998, Sagemark Consulting,
Inc.) as principal underwriter, and selling dealers. 1/

(4) (a) Form of Connecticut General Life Insurance Company Variable Annuity
Contract Form Number AN 400, together with Optional Methods of Settlement Riders
(Form Numbers AR 305 and AR 306), Joint Annuitant Rider (From Number B10321) and
CRT Rider (Form B10322). 2/

(b) Enhanced Death Benefit Endorsement Form No. AN400DB

(d) Waiver of Charges Endorsement Form No. AN400TI

(5) Form of Application which may be used in connection with the Contract shown
as Exhibit (4)(a). 1/

(6) (a) Certificate of Incorporation (Charter) of Connecticut General Life
Insurance Company, as amended. 5/

(b) By-Laws of Connecticut General Life Insurance Company. 5/

(7) Not Applicable.

(8) Participation Agreement with AIM.6/

(9) Opinion and Consent of Mark A. Parsons, Esq. 7/

(10) (a) Consent of PricewaterhouseCoopers LLP. 7/

(b) Consent of Ernst & Young LLP. 7/

(11) Not Applicable.

(12) Not Applicable.

(13) Not Applicable.

(14) Not Applicable.

(15) Powers of Attorney for John Cannon, III, Carol M. Olsen and
Jean H. Walker. 7/

1/ Previously filed Registrant's Post-Effective Amendment No. 5 to this Form N-4
Registration Statement filed with the SEC via EDGARLINK on April 23, 1997 (File
No. 33-48137).

<PAGE>

2/ Incorporated herein by reference to the Post-Effective Amendment No. 2 on
Form N-4 of CG Variable Annuity Separate Account II filed with the SEC via
EDGARLINK on June 20, 1995 (File No. 33-83020).

3/ Previously filed in Registrant's Post-Effective Amendment No. 7 to this Form
N-4 Registration Statement filed with the SEC via EDGARLINK on September 23,
1997 (File No. 33-48137).

4/ Previously filed in Registrant's Post-Effective Amendment No. 9 to this Form
N-4 Registration Statement filed with the SEC via EDGARLINK on March 1, 1999
(File No. 33-48137).

5/ Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Form N-4 Registration Statement for CG Variable Life Insurance Separate
Account II filed with the SEC via EDGARLINK on April 28, 1999
(File No. 33-89239).

6/ Incorporated herein by reference to Post-Effective Amendment No. 10 to the
Form N-4 Registration Statement for CG Variable Annuity Separate Account filed
with the SEC via EDGARLINK on April 30, 1999 (File No. 033-48137).

7/ Filed herewith.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

The principal business address of each of the directors and officers of
Connecticut General Life Insurance Company (the "Company") is the Company's Home
Office, 900 Cottage Grove Road, Hartford, Connecticut 06152.

DIRECTORS AND OFFICERS OF DEPOSITOR
<TABLE>
<S> <C> <C>

NAME POSITIONS AND OFFICES WITH DEPOSITOR

Thomas C. Jones.................................... President (Principal Executive Officer) and Director
James Yablecki..................................... Asistant Vice President and Actuary (Principal Financial Officer)
Robert E. Wahlman.................................. Vice President (Principal Accounting Officer)
Susan L. Cooper.................................... Corporate Secretary
Andrew G. Helming.................................. Secretary
Stephen C. Stachelek............................... Vice President and Treasurer
William M. Pastore................................. Director, Chairman of the Board and Senior Vice President
Harold W. Albert................................... Director
John Cannon, III................................... Director, Chief Counsel and Senior Vice President
Carol M. Olsen..................................... Director and Senior Vice President
Marc L. Preminger.................................. Director and Senior Vice President
Patricia L. Rowland................................ Director and Senior Vice President
W. Allen Schaffer, MD.............................. Director and Senior Vice President
Jean H. Walker..................................... Director, Vice President and Actuary
</TABLE>

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT

Incorporated herein by reference to the Form 10-K Report, Commission File
#1-8323, CIGNA Corporation (March 7, 2000).

<PAGE>

ITEM 27. NUMBER OF PURCHASERS

As of February 15, 2000, there were 13,196 non-qualified and 4,535 qualified
owners of Contracts covered by this Registration Statement.

ITEM 28. INDEMNIFICATION

The answer to this Item 28 is incorporated by reference to Item 28 of
Post-Effective Amendment No. 4 to the Form N-4 Registration Statement of CG
Variable Annuity Separate Account II under the Securities Act of 1933 (File No.
33-83020) filed February 26, 1997.

ITEM 29. PRINCIPAL UNDERWRITER

The Registrant's principal underwriter is Sagemark Consulting, Inc.
("Sagemark"), formerly known as CIGNA Financial Advisors, Inc. Deferred sales
charges of $244,704.52 were paid on the Contracts during Registrant's fiscal
year ended December 31, 1999. Sagemark also acts as principal underwriter of
certain other variable annuity contracts and variable life policies issued by
the Company, and by the CIGNA Life Insurance Company. Sagemark's mailing address
is 350 Church Street, Hartford, Connecticut 06103.

The investment companies for which Sagemark acts as a principal underwriter are:

CG Variable Annuity Separate Account

CG Variable Annuity Separate Account II

CG Variable Life Insurance Separate Account I

CG Variable Life Insurance Separate Account II

CIGNA Variable Annuity Separate Account I

DIRECTORS AND OFFICERS OF PRINCIPAL UNDERWRITER
<TABLE>
<S> <C> <C> <C>

NAME POSITIONS AND OFFICES WITH UNDERWRITER

J. Michael Hemp...................................... President
Todd R. Stephenson................................... Senior Vice President and Chief Operating Officer
Carolyn P. Brody..................................... Vice President
Joy P. McConnell..................................... Vice President
Priscilla S. Brown................................... Vice President
Philip L. Holstein................................... Vice President
Karen R. Matheson.................................... Director and Vice President
John M. Behrendt..................................... Vice President
Janet C. Whitney..................................... Vice President and Treasurer
Robert A. Picarello.................................. Chief Counsel and Assistant Secretary
H. Edward Cohen...................................... Assistant Vice President
Karen E. Goldman..................................... Assistant Vice President
C. Suzanne Womack.................................... Secretary
Gil L. Bearman....................................... Assistant Secretary
Brian S. Becker...................................... Assistant Secretary
Renee L. Beeks....................................... Assistant Secretary
Gail Black........................................... Assistant Treasurer
Walter W. Bonham, Jr................................. Assistant Treasurer

</TABLE>

<PAGE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder are currently
maintained by the Administrator, Allstate Life Insurance Company and Allstate
Life Insurance Company of New York, at its processing center in Palatine,
Illinois, and by prior administrator, The Lincoln National Life Insurance
Company at its processing center.

ITEM 31. MANAGEMENT SERVICES

Not applicable.

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes that it will file a post effective amendment to
this registration statement under the Securities Act of 1933 as frequently
as necessary to ensure that the audited financial statements in the
registration statement are never more than 16 months old for so long as
Premium Payments under the Contracts may be accepted.

(b) Registrant undertakes that it will include either (i) a postcard or
similar written communication affixed to or included in the Prospectus that
the applicant can remove to send for a Statement of Additional Information
or (ii) a space in the Contract application that an applicant can check to
request a Statement of Additional Information.

(c) Registrant undertakes to deliver promptly, upon written or oral request
made to Connecticut General Life Insurance Company at the address or phone
number listed in the Prospectus, any Statement of Additional Information and
any financial statements required by Form N-4 to be made available to
applicants or contract owners.

FEES AND CHARGES REPRESENTATION

The Company represents that the fees and charges deducted under the Contracts,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the Company.

SECTION 403(b) REPRESENTATION

Registrant represents that it is relying on a no-action letter dated November
28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88),
regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act of
1940, in connection with redeemability restrictions on Section 403(b) Contracts,
and that paragraphs numbered (1) through (4) of that letter will be complied
with.

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of the Securities
Act Rule 485(b) for effectiveness of this amended registration statement and has
caused this amended Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the Town of Bloomfield and State of
Connecticut on the 8th day of May, 2000.

GC VARIABLE ANNUITY SEPARATE ACCOUNT
(REGISTRANT)

By: /s/ JAMES YABLECKI

James Yablecki
Assistant Vice President & Actuary

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(DEPOSITOR)

BY: /s/ JAMES YABLECKI

James Yablecki
Assistant Vice President

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 11 to this Registration Statement (File No. 33-48137) has been
signed below on May 8, 2000 by the following persons, as officers and directors
of the Depositor, in the capacities indicated:

<TABLE>

<S> <C> <C>
*/s/THOMAS C. JONES President and Director
Thomas C. Jones (Principal Executive Officer)

*/s/JAMES YABLECKI Assistant Vice President and Actuary
James Yablecki (Principal Financial Officer)

*/s/ROBERT E. WHALMAN Vice President
Robert E. Wahlman (Principal Accounting Officer)

*/s/HAROLD W. ALBERT Vice President
Harold W. Albert (Principal Accounting Officer)

*/s/JOHN CANNON, III Director, Chief Counsel and
John Cannon, III Senior Vice President

*/s/WILLIAM M. PASTORE Director, Chairman, and Senior Vice President
William M. Pastore

*/s/CAROL M. OLSEN Director and Senior Vice President
Carol M. Olsen

*/s/MARC L. PREMINGER Director and Senior Vice President
Marc L. Preminger

*/s/JEAN H. WALKER Director, Vice President and Actuary
Jean H. Walker

<PAGE>

</TABLE>

/s/ PATRICIA L. ROWLAND* Director
Patricia L. Rowland

/s/ W. ALLEN SCHAFFER, M.D.* Director
W. Allen Schaffer, M.D.

*By: /s/ MARK A. PARSONS Date: May 8, 2000
Mark A. Parsons
Attorney-in-Fact

<PAGE>

Exhibit Index

Exhibit 4 (b) Copy of Enhanced Death Benefit Endorsement

Exhibit 4 (c) Copy of Spousal Continuation Endorsement

Exhibit 4 (d) Copy of Waiver of Charges Endorsement

Exhibit 9 Opinion and Consent of Mark A. Parsons, Esq.

Exhibit 10(a) Consent of PricewaterhouseCoopers LLP

Exhibit 10(b) Consent of Ernst & Young LLP

Exhibit 10(c) Consent of Deloitte & Touche LLP

Exhibit 15 Powers of Attorney

AN400DB

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

HARTFORD, CONNECTICUT

Enhanced Death Benefit Endorsement

The following replaces the Amount of Death Benefit provision of your Contract as
of ______________ ("Endorsement Effective Date")

Amount of Death Benefit. The Death Benefit is determined as of the effective
date or deemed effective date of the Death Benefit election and is equal to the
greatest of (a) the Annuity Account Value for the Valuation Period during which
the Death Benefit election is effective or is deemed to become effective; (b)
the sum of all the Premium Payment(s) made under the contract less the sum of
all partial withdrawals; (c) the Annuity Account Value on the seven-year
Contract Anniversary immediately preceding the date the Death Benefit election
is effective or is deemed to become effective, adjusted for any subsequent
Premium Payments and partial withdrawals and charges made between the
immediately preceding seven-year Contract Anniversary and the date the Death
Benefit election is effective or is deemed to become effective (as referenced
herein, seven-year Contract Anniversary means the 7th Contract Anniversary and
each succeeding Contract Anniversary occurring at any seven-year interval
thereafter, for example, the 14th and 21st Contract Anniversaries); (d) the
amount that would have been payable in the event of a full surrender of the
Annuity Account on the date the Death Benefit election is effective or is deemed
to become effective or (e) the Maximum Anniversary Value.

For Premium Payments, the Maximum Anniversary Value is equal to the most
recently calculated Maximum Anniversary Value plus any Premium Payments received
after the most recent Contract Anniversary. For partial withdrawals, the Maximum
Anniversary Value is equal to the most recently calculated Maximum Anniversary
Value reduced by a Withdrawal Adjustment, as defined below. On each Contract
Anniversary, the Maximum Anniversary Value is equal to the greater of the
Annuity Account Value or the most recently calculated Maximum Anniversary Value.
In the absence of any withdrawals or Premium Payments, the Maximum Anniversary
Value will be the greatest of all anniversary Annuity Account Values between the
Endorsement Effective Date and the date we calculate the death benefit.

The calculation of the Maximum Anniversary Value will begin on your first
Contract Anniversary after the Endorsement Effective Date. The Maximum
Anniversary Value will be recalculated until the first Contract Anniversary
after the 75th birthday of the owner, or five years from the Endorsement
Effective Date, whichever is later. After that date, the Maximum Anniversary
Value will be recalculated only for Purchase Payments and withdrawals. The
Maximum Anniversary Value will never be greater than the maximum death benefit
allowed by any non-forfeiture laws which govern this Contract.

The Withdrawal Adjustment is equal to (i) divided by (ii), with the result
multiplied by (iii), where: (i) = the withdrawal amount; (ii) = the
Annuity Account Value immediately prior to the withdrawal; and (iii) =
the value of the Maximum Anniversary Value immediately prior to
withdrawal.

Except as specifically altered by this endorsement, all of the provisions and
conditions remain in full force and effect.

[GRAPHIC OMITTED][GRAPHIC OMITTED]

PRESIDENT

<PAGE>

AN400SE

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

HARTFORD, CONNECTICUT

Spousal Continuation Endorsement

The following Spousal Continuation provision is added following the Death
Benefit provision of your Contract as of ____________________________:

Spousal Continuation The surviving spouse of the deceased owner may elect to
receive the Death Benefit or may continue the Contract in the Accumulation
Period as if the death had not occurred. If the Contract is continued in the
Accumulation Period, the following conditions apply:

o On the day the Contract is continued, the Annuity Account Value will be the
Death Benefit as determined at the end of the Valuation Period during which
we receive due proof of death.

o The surviving spouse may make a single withdrawal of any amount within one
year of the date of death without incurring a withdrawal charge or Market
Value Adjustment.

o Prior to the Annuity Date, the Amount of Death Benefit of the
continued Contract will be the greatest of:

o The Annuity Account Value on the date we determine the Amount
of Death Benefit; or

o The sum of all purchase payments reduced by the sum of all
partial withdrawals; or

o The amount that would have been payable in the event of a full
surrender of the Annuity Account on the date the Death Benefit
election is effective or is deemed to become effective.

Any other Death Benefit alternatives in the contract or attached Enhanced Death
Benefit endorsement will no longer apply.

[GRAPHIC OMITTED][GRAPHIC OMITTED]

PRESIDENT

<PAGE>

AN400TI

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

HARTFORD, CONNECTICUT

Contract Endorsement for Waiver of Charges

The following provision is added to your contract and forms a part of the
contract as of ____________ ("Endorsement Effective Date")

We will waive any applicable Withdrawal Charge and Market Value Adjustment prior
to the Payout Start Date if any owner (or annuitant if the owner is not a
natural person):

1. is first confined after Endorsement Effective Date to a Long Term Care
Facility or Hospital for at least 90 consecutive days, confinement is
prescribed by a Physician and is Medically Necessary, and the request for a
withdrawal and adequate written proof of confinement are received by us no
later than 120 days after discharge; or

2. is first diagnosed by a Physician as having a Terminal Illness
after Endorsement Effective Date and a request for a withdrawal and
adequate written proof of the diagnosis are received by us. We may
require a second opinion at our expense by a Physician chosen by us.

"Physician" is a licensed medical doctor (M.D.) or a licensed doctor of
osteopathy (D.O.) practicing within the scope of his or her license. Physician
does not include the individual, a spouse, children, parents, grandparents,
grandchildren, siblings, or in-laws.

"Medically Necessary" means appropriate and consistent with the diagnosis in
accord with accepted standards of practice, and which could not have been
omitted without adversely affecting the individual's condition.

"Terminal Illness" is a condition which is expected to result in death within
one year for 80% of the diagnosed cases.

"Long Term Care Facility" is a facility which:

1. is located in the United States or its territories;
2. is licensed by the jurisdiction in which it is located;
3. provides custodial care under the supervision of a registered nurse
(R.N.); and
4. can accommodate three or more persons.

"Hospital" is a facility which:

1. is licensed as a hospital by the jurisdiction in which it is located;
2. is supervised by a staff of licensed physicians;
3. provides nursing services 24 hours a day by, or under the supervision
of, a registered nurse (R.N.);
4. operates primarily for the care and treatment of sick or injured
persons as inpatients for a charge; and
5. has access to medical, diagnostic and major surgical facilities.

Except as specifically altered by this rider, all of the provisions and
conditions remain in full force and effect.

[GRAPHIC OMITTED][GRAPHIC OMITTED]
PRESIDENT

CONSENT OF ATTORNEYS

Mark A. Parsons
Chief Counsel

Legal Department, S-215
Hartford, CT 06152-2215
Telephone (860) 726-7673
Facsimile: (860) 572-8885

May 10, 2000

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: CG Variable Annuity Separate Account
Connecticut General Life Insurance Company
Post-Effective Amendment Number 11 (File No. 33-48137)

Dear Sirs:

As Chief Counsel of the Retirement and Investment Services Division of CIGNA
Corporation, I am familiar with the actions of the Board of Directors of
Connecticut General Life Insurance Company (the "Company"), establishing the
Account and its method of operation and authorizing the filing of a Registration
Statement under the Securities Act of 1933, (and amendments thereto) for the
securities to be issued by the Account and the Investment Company Act of 1940
for the Account itself.

In the course of preparing this opinion, I have reviewed the Certificate of
Incorporation and the By Laws of the Company, the Board actions with respect to
the Account, and such other matters as I deemed necessary or appropriate. Based
on such review, I am of the opinion that the variable annuity contracts (and
interests therein) which are the subject of the Registration Statement under the
Securities Act of 1933, as amended, for the Account will when issued, be legally
issued and will represent binding obligations of the Company, the depositor for
the Account.

I further consent to the use of this opinion as an Exhibit to Post-Effective
Amendment No. 11 to said Registration Statement and to the reference to me under
the heading "Experts" in said Registrations Statement, as amended.

Very truly yours,

/s/ Mark A. Parsons
Mark A. Parsons

Chief Counsel

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 11 under the Securities
Act of 1933 and Amendment No. 13 under the Investment Company Act of 1940 to the
registration statement on Form N-4 (the "Registration Statement") of our report
dated February 8, 2000 relating to the financial statements of Connecticut
General Life Insurance Company, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Experts" in such "Statement of
Additional Information."

PRICEWATERHOUSECOOPERS LLP
Hartford, Connecticut
May 9, 2000

<PAGE>

Consent of Ernst & Young LLP, Independent Auditors

We consent to the reference to our firm under the caption "Experts" in the Post
Effective Amendment No. 11 to the Registration Statement (Form N-4 No. 33-48137)
and the related Statement of Additional Information appearing therein and
pertaining to CG Variable Annuity Separate Account, and to the use therein of
our report dated April 2, 1999 with respect to the statement of changes in net
assets of CG Variable Annuity Separate Account for the year ended December 31,
1998.

/s/ ERNST & YOUNG LLP

- ---------------------------
Ernst & Young LLP

Fort Wayne, Indiana
May 8, 2000
<PAGE>
INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 11 to Registration
Statement No. 33-48137 of CG Variable Annuity Separate Account of Connecticut
General Life Insurance Company on Form N-4 of our report dated March 27, 2000
relating to the financial statements of CG Variable Annuity Separate Account,
appearing in the Statement of Additional Information (which is incorporated by
reference in the Prospectus of CG Variable Annuity Separate Account of
Connecticut General Life Insurance Company), which is part of such Registration
Statement, and to the reference to us under the heading "Experts" in such
Statement of Additional Information.

Chicago, Illinois
May 8, 2000

POWER OF ATTORNEY

The undersigned hereby authorize Mark A. Parsons to sign their names in their
behalf to any and all amendments to the Registration Statement filed with the
SEC for CG Variable Annuity Separate Account on Form N-4.

Dated in Bloomfield, CT this 10th day of May, 2000.

/s/JOHN CANNON, III
- ------------------------
John Cannon, III
Sr. Vice President

Chief Counsel and Director

<PAGE>

POWER OF ATTORNEY

Dated in Bloomfield, CT this 10th day of May, 2000.

/S/ CAROL M. OLSEN
- ------------------------
Carol M. Olsen
Sr. Vice President and Director

<PAGE>

POWER OF ATTORNEY

Dated in Bloomfield, CT this 10th day of May, 2000.

/S/ JEAN H. WALKER
- ------------------------
Jean H. Walker

Vice President, Actuary and Director