GREAT NORTHERN INSURED ANNUITY CORP, S-1/A, 1996-03-22

GREAT NORTHERN INSURED ANNUITY CORP
S-1/A, 1996-03-22

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<PAGE>

Registration No. 33-78812

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

POST-EFFECTIVE AMENDMENT NO. 3

FORM S-1

REGISTRATION STATEMENT
under
the Securities Act of 1933
----------------------------------------------

Great Northern Insured Annuity Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>

<S> <C> <C>
Washington 91-1127115 6312
---------- ---------- ----
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Induxtrial
incorporation or organization) Identification Number) Classification Code Number)

</TABLE>

Two Union Square, Suite 5600
Seattle, Washington 98111-0490
(206) 625-1755
(Address and telephone number of Principal Executive Offices)
-----------------------------------

<TABLE>
<S> <C>
J. NEIL McMURDIE, ESQ. Copy to:
Associate Counsel and Assistant Vice President J. SUMNER JONES, ESQ.
Great Northern Insured Annuity Corporation Jones & Blouch L.L.P.
Two Union Square, Suite 5600 1025 Thomas Jefferson Street, NW
Seattle, Washington 98111-0490 Suite 405 West
206-625-1755 Washington, DC 20037

(Name, address and telephone number of agent for service)
</TABLE>
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION

CROSS REFERENCE SHEET
Pursuant to Regulation S-K, Item 501(b)
<TABLE>
<CAPTION>

Form S-1
Item No. Form S-1 Caption Location in the Prospectus
- -------- ---------------- --------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside Outside Front Cover Page
Front Cover Page of Prospectus.
2. Inside Front and Outside Back Cover Pages Table of Contents Summary
of Prospectus.
3. Summary Information, Risk Factors and Outside Front Cover Page;
Ratio of Earnings to Fixed Charges. Special Terms; Summary
4. Use of Proceeds. Investments Supporting the Fixed
Guarantee Periods
5. Determination of Offering Price. Not Applicable
6. Dilution. Not Applicable
7. Selling Security Holders. Not Applicable
8. Plan of Distribution. Distribution of Contracts
9. Description of Securities to be Registered. Summary; Description of the Contract
10. Interests of Named Experts and Counsel. Legal Matters
11. Information with Respect to the Registrant. Great Northern Insured Annuity
Corporation; Federal Tax Matters; More
Information About GNA; Executive
Officers and Directors; Legal Proceedings
12. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act Liabilities.
</TABLE>
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION
Corporate Office: Two Union Square, P.O. Box 490
Seattle, Washington 98111-0490
(206) 625-1755
Variable Annuity Service Center: 300 Berwyn Park
Berwyn, PA 19312-0031

GNA VARIABLE INVESTMENT ACCOUNT
Group and Individual Deferred Variable Annuity and
Modified Guaranteed Annuity Contracts
Flexible Purchase Payments
Non-Participating

The Deferred Variable Annuity and Modified Guaranteed Annuity Contract described
in this Prospectus ("Contract") is designed to provide annuity payments in
connection with either nonqualified retirement plans or plans qualifying for
special income tax treatment under the Internal Revenue Code, such as individual
retirement accounts and annuities, pension and profit-sharing plans for
corporations and sole proprietorships/partnerships ("H.R. 10" and "Keogh"
plans), tax-sheltered annuities, and deferred compensation plans of state and
local governments and tax-exempt organizations.

The Contract provides for the accumulation of Certificate Values on a variable
and/or fixed basis and the payment of annuity benefits on a fixed basis. The
Contract offers up to eighteen investment options: eight variable and ten fixed.
The variable portion of the Certificate Value will vary according to the
investment performance of the Sub-accounts of GNA Variable Investment Account
(the "Separate Account"). The Separate Account is a Separate Account
established by Great Northern Insured Annuity Corporation ("GNA" or the
"Company").

The assets of each Sub-Account are invested in shares of two funds (together the
"Funds"), GNA Variable Series Trust, a mutual fund having four investment
portfolios (the GNA Growth Portfolio, the GNA Value Portfolio, the GNA
Government Portfolio and the GNA Adjustable Rate Portfolio) and Variable
Investment Trust, also a mutual fund having four investment portfolios available
for investment (the GE Fixed Income Portfolio, the GE International Equity
Portfolio, the GE U.S. Equity Portfolio and the GE Money Market Portfolio) (see
the accompanying Prospectuses of the Funds). Fixed Certificate Values may be
accumulated under Fixed Guarantee Periods for a specified number of years
ranging from one to ten.

PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE SEPARATE ACCOUNT AND THE VARIABLE PORTION OF THE
CONTRACT THAT A PROSPECTIVE PURCHASER SHOULD KNOW BEFORE INVESTING. IT SHOULD BE
ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE FUNDS.

THESE SECURITIES ARE NOT DEPOSITS WITH, OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK OR ANY AFFILIATE THEREOF, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY.

Additional information about the Contracts and Separate Account is contained in
a Statement of Additional Information, dated the same date as this Prospectus,
which has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon request by writing the Company's Variable Annuity
Service Center at the address on the cover of this Prospectus or telephoning 1-
800-455-0870. The table of contents for the Statement of Additional Information
is included on page 47 of this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is May 1, 1996
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----
<S> <C>
DEFINITIONS..........................................................

SUMMARY..............................................................
FEE TABLE AND EXAMPLE................................................
ACCUMULATION UNIT VALUES.............................................
GENERAL INFORMATION..................................................
Great Northern Insured Annuity Corporation.........................
GNA Variable Investment Account....................................
The Funds..........................................................

DESCRIPTION OF THE CONTRACTS.........................................

ACCUMULATION PROVISIONS..............................................
Purchase Payments...................................................
Variable Accumulation...............................................
Fixed Accumulation..................................................
Transfers Among Investment Options..................................
Special Transfer Services...........................................
Withdrawals.........................................................
Special Withdrawal Services.........................................
Telephone Transactions..............................................
Market Value Adjustment.............................................
Death Benefit.......................................................

ANNUITY PROVISIONS...................................................
General.............................................................
Annuity Date........................................................
Annuity Options.....................................................
Amount of Fixed Annuity Payments....................................
Amount of Variable Annuity Payments.................................
Transfers After Annuity Date........................................
Death Benefit on or After Annuity Date..............................

OTHER CONTRACT PROVISIONS............................................
Proof of Age, Sex and Survival......................................
Misstatement of Age or Sex..........................................
Ownership...........................................................
Beneficiary.........................................................
Notices and Elections...............................................
Amendment of Contract and Certificates..............................
Free Look Right.....................................................
Company Approval....................................................

CHARGES AND DEDUCTIONS...............................................
Withdrawal Charges..................................................
Administration Charges..............................................
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Page
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<S> <C>
Mortality and Expense Risk Charge
Taxes..............................................................

FEDERAL TAX MATTERS..................................................
Introduction.......................................................
GNA's Tax Status...................................................
Tax Status of the Certificate......................................

Federal Tax Considerations.........................................

Qualified Plans....................................................

INVESTMENTS SUPPORTING THE FIXED
GUARANTEE PERIODS..................................................

MORE INFORMATION ABOUT GNA...........................................
History and Business...............................................
Selected Financial Data............................................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.......................................................

Investments........................................................

Competition........................................................
Government Regulation..............................................
New Accounting Standards...........................................

EXECUTIVE OFFICERS AND DIRECTORS.....................................
Executive Compensation.............................................

GENERAL MATTERS......................................................
Performance Data...................................................

Financial Statements...............................................

Restrictions Under the Texas Optional
Retirement Program...............................................

Distribution of Contracts..........................................
Legal Proceedings..................................................
Legal Matters......................................................

Experts............................................................
Registration Statements............................................

STATEMENT OF ADDITIONAL
INFORMATION--Table of Contents.....................................

APPENDIX A: State Premium Taxes......................................

APPENDIX B: Examples of Market Value
Adjustments........................................................
</TABLE>

In most states the Contract offered by this Prospectus is a group contract. The
group Contract may be issued to a broker-dealer or other financial institution
for a group consisting of clients of the broker-dealer or financial institution.
The Contract may also be issued to any other organized group acceptable to us,
including a trust established for account holders of a broker-dealer or other
financial institution. In certain states where the group Contract is not
approved for sale, an individual Contract may be available.

No person has been authorized to give any information or to make any
representation other than that contained in this Prospectus in connection with
the offer contained in this Prospectus and, if given or made, such information
or representation must not be relied upon as having been authorized. This
Prospectus does not constitute an offer of, or solicitation of an offer to
acquire, any Contracts or interests therein offered by this Prospectus in any
jurisdiction to anyone to whom it is unlawful to make such an offer or
solicitation in such jurisdiction.

Each Participant will be furnished at least once each year prior to his or her
Annuity Date a statement showing his or her Certificate Value, the Accumulation
Values for each Sub-account and the Fixed MGA Account Value. The statement will
not include financial statements.
<PAGE>

DEFINITIONS

Accumulation Unit--A unit of measure that is used to calculate the Accumulation
Value for each Variable Sub-account before the Annuity Date.

Accumulation Value--The number of Accumulation Units of a Variable Sub-account
credited to a Certificate multiplied by the Accumulation Unit value for that
Sub-Account.

Annuitant--The person whose age determines the Annuity Date and upon whose
continuation of life annuity payments may depend. The Participant is the
Annuitant unless another person designated is living. If there are joint
Annuitants, references herein shall mean the two Annuitants, the age of the
Annuitant shall refer to the age of the older Annuitant.

Annuity Date--The date on which annuity payments are to start.

Annuity Payment Option--The method selected by the Participant for annuity
payments made by the Company. If the Participant has not selected an Annuity
Payment Option, GNA will provide a Fixed Annuity with payments guaranteed for 10
years and for the lifetime of the Annuitant, if the Annuitant lives more than 10
years.

Beneficiary--The person to whom payment is to be made on the death of the
Participant (or other appropriate individual).

Certificate Anniversary*--Each anniversary of the Certificate Date.

Certificate Date*--The date on which a premium is credited by GNA for a
Participant as shown on the Certificate Schedule.

Certificate Year*--The year starting on the Certificate Date or a Certificate
Anniversary and ending on the day just prior to the next Certificate
Anniversary.

Certificate Value*--The sum of the Accumulation Values for all Variable Sub-
accounts and the Fixed MGA Account Value.

Contract--The group or individual deferred variable annuity and modified
guaranteed annuity contract offered by this Prospectus.

Fixed MGA Account Value--The sum of the values in Fixed Guarantee Periods.

Fixed Guarantee Period--An account maintained for a Participant corresponding to
a specified interest rate and Guarantee Period (from one to ten years) selected
by the Participant for each allocation to the Fixed MGA Account.

Fixed Annuity--An Annuity Payment Option with payments which are predetermined
and guaranteed as to dollar amount.

Funds--The mutual funds designated as eligible investments for the Separate
Account and the Contracts.

Guarantee Period--The period of years for which a rate of interest is guaranteed
to be credited to a Fixed Guarantee Period.

Nonqualified Certificate*--A Certificate issued in connection with a
Nonqualified Plan.

Nonqualified Plan--A retirement plan not eligible for favorable tax treatment
under Section 401, 403, 408 or 457 of the Internal Revenue Code.

Notice--Information GNA has received and recorded at its Variable Annuity
Service Center which is written, signed and dated by the Participant and
acceptable by GNA in its sole discretion.

3
<PAGE>

Participant*--The person, persons or entity participating under the Contract to
whom a Certificate has been issued and who is entitled to the rights stated in
the Certificate.

Portfolios--The separate investment portfolios of the Funds designated as
eligible investments for the Separate Account and the Contracts.

Qualified Certificate*--A Certificate issued in connection with a Qualified
Plan.

Qualified Plan--A retirement plan that receives favorable tax treatment under
Section 401, 403, 408 or 457 of the Internal Revenue Code.

Separate Account--A segregated account of the Company that is not commingled
with the Company's general assets and obligations.

Variable Sub-account(s)--One or more of the Variable Sub-accounts of the
Separate Account. Each Variable Sub-account is invested in shares of a different
Portfolio.

Valuation Date--Any date on which the New York Stock Exchange is open for
trading and the net asset value of a Portfolio is determined.

Valuation Period--Any period from one Valuation Date to the next, measured from
the time on each such date that the net asset value of a Portfolio is
determined.

Withdrawal Value--The amount available for a cash withdrawal, which is the
Certificate Value less any withdrawal charge, plus or minus any market value
adjustment, taxes or Certificate Maintenance Fee.

*In the case of individual Contracts, unless the context otherwise requires, the
words "Certificate," "Certificate Anniversary," "Certificate Date," "Certificate
Value," "Certificate Year," "Nonqualified Certificate" and "Qualified
Certificate" mean respectively "Contract," "Contract Anniversary," "Contract
Date," "Contract Value," "Contract Year," "Nonqualified Contract" and "Qualified
Contract" and the word "Participant" means "Owner."

SUMMARY

Variable Annuity Service Center--All communications concerning the Contracts and
Certificates should be addressed to the Company's Variable Annuity Service
Center at 300 Berwyn Park, Berwyn, PA 19312-0031.

The Contract--The Contract offered by this Prospectus is a flexible purchase
payment group or individual deferred variable annuity and modified guaranteed
annuity contract. The group Contract may be purchased by any employer, entity or
other organized group acceptable to GNA. Under a group Contract, specific
accounts are maintained for each Participant, and a Certificate is issued to the
Participant summarizing his or her rights and benefits under the Contract. In
states where the group Contract is not approved for sale and an individual
Contract is available, the individual Contract may be purchased by any person or
entity acceptable to GNA.

Retirement Plans--The Contract may be issued pursuant to either Nonqualified
Plans or Qualified Plans. (See "FEDERAL TAX MATTERS--Qualified Plans.")

Purchase Payments--The minimum initial purchase payment for which a Certificate
may be issued is $2000. Subsequent purchase payments allocated to the Variable
Sub-accounts must be at least $500 ($100 for automatic payment plans).
Subsequent purchase payments allocated to Fixed Guarantee Periods must be at
least $2000. Subsequent purchase payments may be made at any time prior to the
Annuity Date. (See "Accumulation Provisions--Purchase Payments.")

Investment Options--Purchase payments may be allocated among the eighteen
investment options currently available under the Contract: eight Variable Sub-
accounts and ten Fixed Guarantee Periods. The Variable Sub-accounts invest in
shares of a corresponding Portfolio: the GNA Growth Portfolio, the GNA Value
Portfolio, the GNA Government Portfolio and the GNA Adjustable Rate Portfolio of
GNA Variable Series Trust and the GE

4
<PAGE>

Fixed Income Portfolio, the GE International Equity Portfolio, the GE U.S.
Equity Portfolio and the GE Money Market Portfolio of the Variable Investment
Trust (see the accompanying Prospectuses of the Funds).

The portion of the Certificate Value based on the Variable Sub-accounts will
reflect the investment performance of the underlying Portfolios selected. (See
"GNA Variable Investment Account.")

Purchase payments of at least $2000 may also be allocated to Fixed Guarantee
Periods. GNA guarantees the principal value of purchase payments allocated to a
Fixed Guarantee Period and the rate of interest credited thereto for the term of
a selected Guarantee Period ranging from one to ten years. Certain withdrawals
from the Fixed Guarantee Periods will be subject to a market value adjustment.
(See "Accumulation Provisions--Market Value Adjustment.")

Transfers--Prior to the Annuity Date, amounts may be transferred among the
Variable Sub-accounts and the Fixed Guarantee Periods. A transfer from a Fixed
Guarantee Period may be made only once in each Certificate Year; transfers from
a Variable Sub-account in excess of six in any Certificate Year may be subject
to a $25 charge. The amount transferred must be at least $1000 or the
Participant's entire interest in the Variable Sub-account or Fixed Guarantee
Period if the value of such interest is less than $1500. No transfer may be made
if it would result in a remaining Accumulation Value or Fixed Guarantee Period
Value of less than $500. GNA reserves the right to terminate, suspend or modify
the transfer privileges at any time and without Notice. (See "Accumulation
Provisions--Transfers Among Investment Options.")

Withdrawals--Prior to the earlier of the Annuity Date or the death of any person
whose death causes the payment of a death benefit, the Participant may withdraw
all or a portion of the Certificate's Withdrawal Value. The Withdrawal Value is
the Certificate Value less any withdrawal charge, plus or minus any market value
adjustment, less any applicable taxes or certificate maintenance charge. The
minimum amount of any withdrawal is $1000. For any partial withdrawal, the
remaining Accumulation Value for each Variable Sub-account and the remaining
value of each Fixed Guarantee Period must be at least $500, and the remaining
Certificate Value must be at least $2000.

The Participant may specify the Variable Sub-accounts or Fixed Guarantee Periods
from which a partial withdrawal is to be made. In the absence of a
specification, the partial withdrawal will be made from each Variable Sub-
account and Fixed Guarantee Period in the same proportion that the Accumulation
Value for each Variable Sub-account and the value of each Fixed Guarantee Period
bear to the Certificate Value. Fixed Guarantee Periods of the same duration
shall be considered together for withdrawal purposes and amounts withdrawn shall
be taken out on a first-in, first out basis. (See "Accumulation Provisions--
Withdrawals.")

Withdrawal Charge--A withdrawal charge and the certificate maintenance charge
may be imposed in connection with a withdrawal. The withdrawal charge is
computed as a percentage of the purchase payment deemed withdrawn, based on the
number of complete years since the purchase payment was made, ranging from 5%
for purchase payments made within two years of the withdrawal to 2% for purchase
payments made within five years of the withdrawal. No withdrawal charge will
apply to a withdrawal of purchase payments made five or more years prior to the
withdrawal. For purposes of computing the charge, amounts withdrawn will be
deemed to be purchase payments in the order made and thereafter any Certificate
Value in excess of purchase payments made. (See "CHARGES AND DEDUCTIONS--
Withdrawal Charges.") A withdrawal may be subject to a penalty tax. (See
"FEDERAL TAX MATTERS.")

Free Withdrawal Amount--Each Certificate Year the Participant may withdraw up to
10 percent of the Certificate Value at the time of withdrawal free of the
withdrawal charge. This free withdrawal privilege is available only on the first
withdrawal made during the Certificate Year. Amounts withdrawn from Fixed
Guarantee Periods as part of the free withdrawal are subject to the market value
adjustment. (See "CHARGES AND DEDUCTIONS--Withdrawal Charges.")

Market Value Adjustment--Whenever a withdrawal is made from a Fixed Guarantee
Period, or an amount is taken from a Fixed Guarantee Period to be applied to
effect an annuity, prior to the end of the Guarantee Period, a market value
adjustment will be made based on the amount withdrawn.

5
<PAGE>

Because of the market value adjustment provision of the Contract, you bear the
investment risk that the guaranteed interest rates GNA offers at the time you
make a withdrawal or start receiving annuity payments may be higher than the
guaranteed interest rate of the Fixed Guarantee Period from which the amount
withdrawn or annuitized is taken with the result that the amount available for
you to receive or to have applied to an annuity may be substantially reduced.
(See "Accumulation Provisions--Market Value Adjustment.")

Other Charges--Each year GNA will deduct a Certificate Maintenance Charge of
$40. GNA will waive the charge if at the time of the assessment the Certificate
Value is $40,000 or greater. GNA will also deduct from the assets of the
Separate Account a mortality and expense risk charge and an administration
charge at annual rates of 1.25% and .15%, respectively. (See "CHARGES AND
DEDUCTIONS.")

Death Benefit--If the Participant or a non-spouse Joint Participant dies prior
to the Annuity Date, GNA will pay to the Beneficiary the greater of the
Certificate Value or the minimum death benefit as of the Valuation Period in
which both due proof of death and a payment election are received by GNA. On the
effective date of the Certificate, the minimum death benefit is equal to the
initial purchase payment. For each subsequent purchase payment the minimum death
benefit is increased by the amount of the payment, and for each withdrawal the
minimum death benefit is decreased by the amount (net of withdrawal charges) of
the withdrawal. On each "Reset Date," if the then Certificate Value is greater
than the minimum death benefit, the minimum death benefit is reset to equal the
then Certificate Value. Reset Dates are the fifth Certificate Anniversary and
each Certificate Anniversary which is a five-year interval from the fifth
Certificate Anniversary.

If the Participant is not a person, the death benefit described above will be
paid to the Beneficiary if the Annuitant (or the first to die if joint
Annuitants) dies prior to the Annuity Date. If the Participant is a person but
is not the Annuitant, the Participant must select a new Annuitant, and if no
Annuitant is selected within 30 days of the death of the Annuitant, the
Participant will become the Annuitant. No death benefit is payable on the death
of a spouse Joint Participant. If the Annuitant dies after the Annuity Date, any
guaranteed amounts remaining unpaid will be paid to the Beneficiary under the
same method of distribution in force at the date of death. If no Beneficiary
survives the Annuitant, payment will be made to the Participant. For additional
provisions affecting payment of the death benefit, see "Beneficiary" under
"Other Provisions" on page 21. (See "Accumulation Provisions--Death Benefit"
and "Annuity Provisions--Death Benefit on or After Annuity Date."

Annuity Payments--Under the Contract, only Fixed Annuity Payment Options are
available. Periodic annuity payments will begin on the Annuity Date. The
Participant selects the Annuity Date, frequency of payment and annuity payment
option. GNA may from time to time make other Annuity Payment Options available,
including options on a variable basis. (See "Annuity Provisions.")

Free-Look Right--Within the number of days of receipt of a Certificate as shown
on the Certificate Schedule, the Participant may cancel the Certificate by
returning it to GNA. (See "Free Look Right" under "Other Contract
Provisions.")

FEE TABLE AND EXAMPLE

The following table and Example are designed to assist Contract holders and
Participants in understanding the various costs and expenses that Participants
bear directly and indirectly. The table reflects expenses of the Separate
Account and the underlying Portfolios. It does not reflect any market value
adjustment. In addition to the items listed in the following table, premium
taxes may be applicable to certain Certificates. The items listed under
"Participant Transaction Expenses" and "Separate Account Annual Expenses"
are more completely described in this Prospectus (see "CHARGES AND
DEDUCTIONS"). The items listed under "Portfolio Annual Expenses" are
described in detail in the accompanying Fund Prospectuses to which reference
should be made.

6
<PAGE>

Participant Transaction Expenses

Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>

Number of Complete Years Withdrawal Charge
------------------------ -----------------
Since Purchase Payment Made Percentage
--------------------------- ----------
<S> <C>
0 5%
1 5%
2 4%
3 3%
4 2%
5+ 0%
Annual Contract Fee $40/1/
</TABLE>
<TABLE>
<S> <C>
Separate Account Annual Expenses
(as a percentage of average account value)

Mortality and expense risk fees ...................................... 1.25%
Administration fee--asset based ...................................... 0.15%
Total Separate Account Annual Expenses.............................. 1.40%
</TABLE>

Portfolio Annual Expenses
(as a percentage of Portfolio average net assets)

Portfolio Management Fees *Other Expenses Total Annual Expenses
- --------- --------------- --------------- ---------------------
<S> <C> <C> <C>
GNA Growth .80% .30% 1.10%
GNA Value .80% .31% 1.11%
GNA Government .55% .34% .89%
GNA Adjustable Rate .40% .30% .70%
GE International Equity* .80% .40% 1.20%
GE U.S. Equity* .50% .30% .80%
GE Fixed Income* .45% .30% .75%
GE Money Market* .25% .25% .50%
- -----------------------
</TABLE>

*For each Portfolio of the Variable Investment Trust, "Other Expenses" includes
an administrative charge of .05%.

Example

A Participant would pay the following expenses on a $1,000 investment, assuming
5% annual return on assets, if the Participant:
<TABLE>
<CAPTION>
annuitized or did not
surrender his or her
surrendered his or her Certificate at the end
Certificate at the end of of the applicable
the applicable period: period:
------------------------- ----------------------
Portfolio 1 3 5 10 1 3 5 10
--------- Year Year Year Year Year Year Year Year
----- ----- ----- ----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GNA Growth $72 $120 $164 $322 $27 $84 $146 $322
GNA Value $72 $120 $164 $323 $27 $85 $147 $323
GNA Government $70 $113 $152 $299 $25 $78 $135 $299
GNA Adjustable Rate $68 $107 $142 $278 $23 $72 $125 $278
GE International
Equity $73 $123 $169 $333 $28 $87 $151 $333
GE U.S. Equity $69 $110 $148 $289 $24 $75 $130 $289
GE Fixed Income $68 $109 $145 $284 $24 $73 $127 $284
GE Money Market $66 $101 $131 $255 $21 $65 $114 $255
</TABLE>

For purposes of presenting the foregoing Example, GNA has made certain
assumptions mandated by the Securities and Exchange Commission (the
"Commission"). GNA has assumed that there are no exchanges or other

- ----------
/1/ The certificate maintenance charge is waived if at the time of assessment
the Certificate Value is $40,000 or more.

7
<PAGE>

transactions and that the "Other Expenses" line item under "Portfolio Annual
Expenses" will remain the same. Such assumptions, which are mandated by the
Commission in an attempt to provide prospective investors with standardized data
with which to compare various annuity contracts, do not take into account
certain features of the Contract and prospective changes in the size of the
Portfolio which may operate to change the expenses borne by Participants.
Consequently, the amounts listed in the Example above should not be considered a
representation of past or future expenses, and actual expenses borne by
Participants may be greater or lesser than those shown.

In addition, for purposes of calculating the values in the above Example, GNA
has translated the $40 certificate maintenance charge listed under "Annual
Contract Fee" to a 0.12% annual asset charge based on an estimated average
Certificate Value of $25,000, with the additional assumption that the charge is
waived on 25% of all Certificates due to the waiver in place for Certificates
with a Certificate Value of $40,000 or greater. This estimate is based on sales
information from annuities sold by GNA.

ACCUMULATION UNIT VALUES

The Accumulation Unit Values and the number of Accumulation Units outstanding
for each Variable Sub-account for the periods shown are as follows:
<TABLE>
<S> <C>
GNA Growth 1995

. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 13.154
. December 31, Units...... 221,675.041558
GNA Value
. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 12.592
. December 31, Units...... 158,124.112269
GNA Government
. January 3* Unit Value... $ 9.996
. December 31 Unit Value.. $ 11.441
. December 31, Units...... 120,988.166975
GNA Adjustable Rate
. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 10.998
. December 31, Units...... 7,535.253952
GE International Equity
. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 11.614
. December 31, Units...... 88,199.568780
GE U.S. Equity
. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 13.369
. December 31, Units...... 128,448.286686
GE Fixed Income
. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 11.526
. December 31, Units...... 81,369.894632
GE Money Market
. January 3* Unit Value... $ 10.001
. December 31 Unit Value.. $ 10.429
. December 31, Units...... 237,634.647996
</TABLE>

* Commencement

The above summary is qualified in its entirety by the detailed information
appearing elsewhere in this Prospectus and Statement of Additional Information
and the accompanying Prospectuses and Statements of Additional

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Information for the Funds, to which reference should be made. This Prospectus
generally describes only the variable aspects of the Contract, except where
fixed aspects are specifically mentioned.

GENERAL INFORMATION

Great Northern Insured Annuity Corporation

GNA is a stock life insurance company organized under the laws of the State of
Washington in 1980. It is a wholly owned subsidiary of General Electric Capital
Assurance Company ("GE Capital Assurance"), a wholly owned subsidiary of GNA
Corporation which in turn is a wholly owned subsidiary of General Electric
Capital Corporation ("GE Capital"). GNA's principal office is located at Two
Union Square, Suite 5600, Seattle, Washington. GE Capital, a New York
corporation, is a diversified financial services company whose subsidiaries
consist of specialty insurance, equipment management and consumer and commercial
financing businesses. GE Capital's parent, General Electric Company, founded
more than 100 years ago by Thomas Edison, is the world's largest manufacturer of
jet engines, engineering plastics, medical diagnostic equipment and large-size
electric power generation equipment.

GNA Variable Investment Account

The Company established the Separate Account in 1981 as a Separate Account under
Washington law. The income, gains and losses, whether or not realized, from
assets of the Separate Account are, in accordance with the Contracts, credited
to or charged against the Separate Account without regard to other income, gains
or losses of the Company. Nevertheless, all obligations arising under the
Contracts are general corporate obligations of the Company. Assets of the
Separate Account may not be charged with liabilities arising out of any other
business of the Company.

The Separate Account is registered with the Commission under the Investment
Company Act of 1940 ("1940 Act") as a unit investment trust. A unit investment
trust is a type of investment company which invests its assets in specified
securities, such as the shares of one or more investment companies. Registration
under the 1940 Act does not involve supervision by the Commission of the
management or investment policies or practices of the Separate Account.

There are currently eight Variable Sub-accounts within the Separate Account
available under the Contracts: the Growth Sub-account, the Value Sub-account,
the Government Sub-account, the Adjustable Rate Sub-account, the International
Equity Sub-account, the Fixed Income Sub-account, the U.S. Equity Sub-account
and the Money Market Sub-account. The Company reserves the right to add other
Sub-accounts, make available other Separate Accounts established by GNA or an
affiliated company, eliminate existing Sub-accounts, combine Sub-accounts with
other Sub-accounts or other Separate Accounts or transfer assets in one Sub-
account to another Sub-account or to another Separate Account established by the
Company or an affiliated company. The Company will not eliminate existing Sub-
accounts or combine Sub-accounts without the prior approval of the appropriate
state or federal regulatory authorities. The Company reserves the right to
deregister the Separate Account under the 1940 Act, make any change required by
the 1940 Act or operate the Separate Account as a management investment company
under the 1940 Act.

The Funds

The assets of each Variable Sub-account of the Separate Account are invested in
shares of a corresponding Portfolio: the GNA Growth Portfolio, the GNA Value
Portfolio, the GNA Government Portfolio and the GNA Adjustable Rate Portfolio of
GNA Variable Series Trust and the GE Fixed Income Portfolio, the GE
International Equity Portfolio, the GE U.S. Equity Portfolio and the GE Money
Market Portfolio of the Variable Investment Trust. The GNA Variable Series Trust
and the Variable Investment Trust are each registered under the 1940 Act as an
open-end management investment company. Each of the Portfolios is diversified
for purposes of the 1940 Act.

The investment adviser of GNA Variable Series Trust is GNA Capital Management,
Inc., a wholly-owned subsidiary of GNA Corporation. Pursuant to its advisory
agreement with the Trust, GNA Capital Management, Inc. has retained Value Line,
Inc. to act as the portfolio manager of the GNA Growth Portfolio, Duff & Phelps

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Investment Management Co. as the portfolio manager of the GNA Value Portfolio
and Standish, Ayer & Wood, Inc., as the portfolio manager of the GNA Adjustable
Rate Portfolio. GNA Capital Management, Inc. directly manages the GNA Government
Portfolio. The Variable Investment Trust receives investment advisory services
from GE Investment Management Incorporated, a wholly-owned subsidiary of General
Electric Company.

The following is a brief description of each Portfolio:

The GNA Growth Portfolio. The investment objective of the Growth Portfolio is to
provide long-term growth of capital. In seeking long-term growth of capital, the
Portfolio will invest primarily in companies whose earnings and/or assets are
expected to grow at a rate above the average for the Standard & Poor's 500 Stock
Index (the "S&P 500 Stock Index") over the long term.

The GNA Value Portfolio. The investment objective of the Value Portfolio is to
provide long-term growth of capital and an above-average level of dividend
income by investing in equity securities. In seeking an above-average level of
dividend income, the Portfolio will invest primarily in companies with
established operating histories, potential for dividend growth and low price-to-
earnings ratios relative to the S&P 500 Stock Index.

The GNA Government Portfolio. The investment objective of the Government
Portfolio is to produce a high level of current income consistent with safety of
principal. The Portfolio will seek to achieve its investment objective by
investing primarily in obligations issued or guaranteed by the U.S. Government
or by its agencies or instrumentalities, having remaining maturities of one year
or more.

The GNA Adjustable Rate Portfolio. The investment objective of the Adjustable
Rate Portfolio is to produce a high level of current income consistent with
limiting fluctuations in the net asset value of Portfolio shares. The Portfolio
will seek to achieve its investment objective by investing primarily in
adjustable rate securities, including, but not limited to, adjustable rate
mortgage securities.

The GE Fixed Income Portfolio. The investment objective of GE Fixed Income
Portfolio is to seek maximum income consistent with prudent investment
management and the preservation of capital. In seeking to achieve its investment
objective, the Portfolio invests in various types of fixed income instruments.

The GE International Equity Portfolio. The investment objective of GE
International Equity Portfolio is long-term growth of capital, which the
Portfolio seeks to achieve by investing primarily in foreign equity securities.

The GE U.S. Equity Portfolio. The investment objective of GE U.S. Equity
Portfolio is long-term growth of capital, which the Portfolio seeks to achieve
through investment primarily in equity securities of U.S. companies.

The GE Money Market Portfolio. The investment objective of GE Money Market
Portfolio is to seek a high level of current income consistent with the
preservation of capital and the maintenance of liquidity.

If shares of a Portfolio are no longer available for investment or in GNA's
judgment investment in a Portfolio becomes inappropriate to the purposes of the
Contract, GNA may eliminate the shares of the Portfolio and substitute shares of
another portfolio or another open-end registered investment company.
Substitution may be made with respect to both existing investments and the
investment of future purchase payments. However, no such substitution will be
made without Notice to the Contract holder and prior approval of the Commission
to the extent required by the 1940 Act.

GNA will vote shares of the Portfolios held in the Separate Account at meetings
of shareholders of the Portfolio in accordance with voting instructions received
from the persons having the voting interest under the Certificates. The number
of Portfolio shares for which voting instructions may be given will be
determined by GNA in the manner described below, not more than 90 days prior to
the meeting of the Portfolio. Fund proxy material will be distributed to each
person having the voting interest under the Certificate together with
appropriate forms for giving voting instructions. Portfolio shares held in the
Separate Account that are attributable to Contracts and as to which no timely
instructions are received will be voted by GNA in proportion to the instructions
received. Portfolio shares that are not attributable to Contracts will be voted
by GNA in its discretion.

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Prior to the Annuity Date, the person having the voting interest under a
Certificate is the Participant and the number of votes as to each Portfolio for
which voting instructions may be given is determined by dividing the
Certificate's Accumulation Value for the Variable Sub-account in which such
Portfolio shares are held by the net asset value per share of that Portfolio.
After the Annuity Date, the person having the voting interest under a
Certificate is the Annuitant and the number of votes as to each Portfolio for
which voting instructions may be given is determined by dividing the reserve for
the Annuity Payment Option allocated to the Variable Sub-account in which such
Portfolio shares are held by the net asset value per share of that Portfolio.
Generally, the number of votes tends to decrease as annuity payments progress
since the amount of reserves attributable to an Annuity Payment Option under a
Certificate will usually decrease after the commencement of annuity payments.
GNA reserves the right to make any changes in the voting rights described above
that may be permitted by the federal securities laws or regulations or
interpretations of these laws or regulations.

A full description of the Portfolios, including the investment objectives,
policies and restrictions of the Portfolios, is contained in the Prospectuses
for the Funds which accompany this Prospectus and should be read by a
prospective purchaser before investing.

DESCRIPTION OF THE CONTRACTS

In most states the Contract offered by this Prospectus is a group Contract. The
group contract is an allocated contract pursuant to which specific accounts are
maintained for each Participant. The group Contract may be issued to a broker-
dealer or other financial institution for a group consisting of clients of the
broker-dealer or financial institution. The Contract may also be issued to any
other organized group acceptable to us, including a trust established for
account holders of a broker-dealer or other financial institution. In certain
states where the group Contract is not approved for sale, an individual Contract
may be available.

The Contract may be issued in connection with either Nonqualified Plans or
certain Qualified Plans. Qualified Plans include individual retirement accounts
and annuities, pension and profit-sharing plans for corporations and sole
proprietorships/partnerships ("H.R. 10" and "Keogh" plans), tax-sheltered
annuities, and deferred compensation plans of state and local governments and
tax-exempt organizations.

A person, or in the case of a group Contract an eligible member of a group to
which a Contract has been issued, may become a Participant by completing an
application and forwarding payment of a purchase payment to us. The application
is subject to GNA's acceptance. GNA reserves the right to accept or reject any
Contract or Certificate application in its sole discretion. The rights and
benefits of a Participant under a Contract are summarized in a Certificate
issued to the Participant. Provisions of the Contract are controlling. All
rights and benefits of a Participant under a group Contract may be exercised
without the consent of the Contract holder. Provisions of any plan in connection
with which a Contract has been issued may restrict a person's eligibility to
purchase or participate under the Contract, the minimum or maximum amount of the
purchase payment, and the Participant's ability to exercise the rights and/or
receive the benefits provided under the Contract. In the case of a group
Contract, GNA reserves the right to terminate a Contract as to eligible members
of the group not accepted as Participants at the time of termination.

ACCUMULATION PROVISIONS

Purchase Payments

Purchase payments are paid to GNA at its Variable Annuity Service Center at the
address set forth on the application contained in this Prospectus. The minimum
initial purchase payment is $2000. Subsequent purchase payments may be made at
any time in amounts of at least $500, except that any portion of a purchase
payment to be allocated to a Fixed Guarantee Period must be $2000. GNA may
arrange by separate agreement for purchase payments as small as $100 to be
automatically withdrawn from a Participant's bank account on a periodic basis.

Purchase payments are allocated among the Variable Sub-accounts and the Fixed
Guarantee Periods of the Fixed MGA Account in accordance with the percentages
designated by the Participant in the application. The Participant may change the
allocation of subsequent purchase payments at any time upon written Notice to
the Company or by telephone in accordance with the Company's telephone transfer
procedures. No more than eight Variable Sub-accounts and ten Fixed Guarantee
Periods may be selected for allocation at any one time. The minimum allocation

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to a Fixed Guarantee Period is $2000. Any allocation to a Fixed Guarantee Period
which would result in a total Fixed MGA Account Value exceeding $500,000
requires GNA's prior approval.

Variable Accumulation

Accumulation Units. GNA will determine the Accumulation Value for each Variable
Sub-account to which the Participant allocates purchase payments. Purchase
payments and transfers to a Variable Sub-account are credited to the
Participant's Certificate in the form of Accumulation Units.

The number of Accumulation Units to be credited with respect to each Variable
Sub-account to which a purchase payment is allocated is determined by dividing
the net purchase payment allocated to that Variable Sub-account by the value of
the Accumulation Unit for that Variable Sub-account for the Valuation Period
during which the purchase payment is received at the Company's Variable Annuity
Service Center complete with all necessary information or, in the case of the
first purchase payment, pursuant to the procedures described below. The number
of Accumulation Units to be credited with respect to a Variable Sub-account to
which a transfer is made is determined by dividing the amount transferred to
that Variable Sub-account by the value of the Accumulation Unit for that
Variable Sub-account for the Valuation Period during which the amount is
transferred.

Initial purchase payments received by mail will usually be credited in the
Valuation Period during which the payment was received at GNA's Variable Annuity
Service Center, and in any event not later than two business days after receipt
of a properly completed application and all information necessary for processing
of the application. The applicant will be informed of any deficiencies in an
application if it cannot be processed and the purchase payment credited within
two business days after receipt. If the deficiencies are not remedied within
five business days, the purchase payment will be returned promptly to the
applicant, unless the applicant specifically consents to GNA's retaining the
purchase payment until all necessary information is received. Initial purchase
payments received by wire transfer from broker-dealers will be credited in the
Valuation Period during which received where such broker-dealers have made
special arrangements with GNA for the collection and forwarding of applications.

Value of Accumulation Units. The value of Accumulation Units for each Variable
Sub-account will vary from one Valuation Period to the next depending upon the
investment results of the Variable Sub-account. The value of an Accumulation
Unit for each Variable Sub-account was arbitrarily set at $10 for the first
Valuation Period under Certificates issued by GNA. The value of an Accumulation
Unit for any subsequent Valuation Period is determined by multiplying the value
of an Accumulation Unit for the immediately preceding Valuation Period by the
net investment factor for such Variable Sub-account (described below) for the
Valuation Period for which the value is being determined.

Net Investment Factor. The net investment factor is an index used to measure the
investment performance of a Variable Sub-account from one Valuation Period to
the next. The net investment factor for each Variable Sub-account for any
Valuation Period is determined by dividing (a) by (b) and subtracting (c) from
the result:

Where (a) is:

(1) the net asset value per share of a Portfolio share held in the Variable
Sub-account determined at the end of the current Valuation Period, plus

(2) the per share amount of any dividend or capital gain distributions made by
the Portfolio on shares held in the Variable Sub-account if the "ex-dividend"
date occurs during the current Valuation Period.

Where (b) is:

the net asset value per share of a Portfolio share held in the Variable Sub-
account determined as of the end of the immediately preceding Valuation Period.

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Where (c) is:

a factor representing the charges deducted from the Variable Sub-account for
administration and mortality and expense risks. Such factor is equal on an
annual basis to 1.40%: (0.15% for administration and 1.25% for mortality and
expense risks).

The net investment factor may be greater or less than or equal to one;
therefore, the value of an Accumulation Unit may increase, decrease or remain
the same.

GNA reserves the right to adjust the foregoing formula to make provision for any
change in tax law that requires it to pay tax on capital gains in the Separate
Account or any charge that may be assessed against the Separate Account for
assessments of federal premium taxes or federal, state or local excise, profits
or income taxes measured or attributable to its receipt of purchase payments.

Fixed Accumulation

Fixed Guarantee Periods. There are ten fixed investment options under the
Contract. Each Fixed Guarantee Period provides for the accumulation of value at
a fixed rate of interest for a Guarantee Period ranging from one to ten years.
The Participant selects the Guarantee Period for each purchase payment or
portion thereof allocated to the Fixed MGA Account. Not more than ten Fixed
Guarantee Periods may be selected for allocation at any one time. Generally, the
longer the Guarantee Period, the higher the interest rate will be, but this will
not always be the case.

A new Fixed Guarantee Period is established on each date that purchase payments
are allocated or values transferred to the Fixed MGA Account. Once a Certificate
Year, the Participant may transfer amounts from a Fixed Guarantee Period subject
to certain restrictions described below and a market value adjustment, if
applicable. In addition, the value of a Fixed Guarantee Period may be withdrawn,
subject to certain restrictions described below and any applicable market value
adjustment, withdrawal charge or certificate maintenance charge. Withdrawals may
be subject to a 10% penalty tax under the Internal Revenue Code.

The fixed portion of a Participant's Certificate Value, sometimes referred to as
the Fixed MGA Account Value, is the sum of the values of each Fixed Guarantee
Period under the Certificate. The value of each Fixed Guarantee Period is equal
to the amount allocated or transferred to that Fixed Guarantee Period, plus
credited interest, less any taxes previously deducted, less the amount of any
certificate maintenance charge previously deducted, less any amounts previously
transferred or withdrawn from the Fixed Guarantee Period (including any transfer
or withdrawal charges arising from any previous transfer or withdrawal) and plus
or minus any market value adjustment arising from any previous transfer or
withdrawal.

A guaranteed interest rate is quoted for each Fixed Guarantee Period. Unless GNA
states otherwise, the guaranteed rate will be credited to the Fixed Guarantee
Period daily using a 365-day year. (No interest will be credited for February
29.) GNA's determination of the guaranteed interest rates for the different
Guarantee Periods will be influenced by, but not necessarily correspond to,
interest rates available on fixed income investments which it may acquire with
the purchase payments it receives under the Contracts. See "Investments
Supporting the Fixed Guarantee Periods" on page 31. GNA will also consider
other factors in determining the guaranteed rates, including regulatory and tax
requirements, sales commissions and administrative expenses, general economic
trends and competitive factors. GNA management will make the final determination
of the guaranteed rates it declares. GNA cannot predict or guarantee the level
of future guaranteed rates.

At the end of a Guarantee Period, the Participant may select a new Fixed
Guarantee Period for the reinvestment of account values or may transfer such
values to a Variable Sub-account. Any such reinvestment or transfer will not be
treated as a transfer for purposes of the limits on the number of transfers that
are allowed. The minimum amount necessary to start a new Fixed Guarantee Period
is $2000.

GNA will notify the Participant of his or her right to make the selection at
least forty-five days prior to the end of the Guarantee Period. Interest rates
for reinvestments are guaranteed to be the same as the guaranteed interest rates
then being offered for new Certificates, but there is no guaranteed minimum
interest rate. If no Notice is received prior to the end of the Guarantee
Period, the Fixed Guarantee Period Value will be transferred to the Money

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Market Sub-account. A Participant may leave Notice on file giving instructions
for the reinvestment of all Fixed Guarantee Periods. If Notice is given to start
a new Guarantee Period with less than $2000, the amount will be reinvested in
the Money Market Sub-account.

Transfers Among Investment Options

Prior to the Annuity Date a Participant may transfer amounts among the available
investment options subject to the following. The minimum amount which can be
transferred from a Variable Sub-account or Fixed Guarantee Period is $1000 or
the entire value of the Participant's interest in that Variable Sub-account or
Fixed Guarantee Period if such interest is less than $1500. If after the
transfer the amount remaining in the Variable Sub-account or Fixed Guarantee
Period is less than $500, GNA will transfer the entire amount instead of the
requested amount. Any transfer from a Fixed Guarantee Period prior to the end of
its Guarantee Period may be subject to a market value adjustment. (See "Market
Value Adjustment" below.)

If a Participant makes more than six transfers in a Certificate Year from or
between Variable Sub-accounts, each additional transfer may be subject to a $25
charge to cover the administrative costs associated with the transfer. A
transfer from or between Fixed Guarantee Periods may be made only once in a
Certificate Year. If GNA should permit more than one such transfer, it reserves
the right to assess the $25 charge for that transfer. The transfer charge will
be deducted from the amount transferred if the entire amount of the
Participant's interest in the Variable Sub-account or Fixed Guarantee Period is
being transferred. Otherwise the charge will be deducted from the Variable Sub-
account or Fixed Guarantee Period from which the transfer is made. If a transfer
is made from more than one Variable Sub-account or Fixed Guarantee Period, the
transfer charge will be allocated among such Variable Sub-accounts or Fixed
Guarantee Periods in the same proportion as the allocation of the total amount
to be transferred, except that any transfer from Fixed Guarantee Periods of the
same duration shall be considered together for transfer purposes, and amounts
shall be transferred on a first-in, first-out basis.

Any transfer to a Fixed Guarantee Period initiates a new Fixed Guarantee Period.
A transfer that would result in there being more than ten Fixed Guarantee
Periods or eight Variable Sub-accounts will not be allowed. Any transfer that
would result in a total of more than $500,000 in all Fixed Guarantee Periods
requires the prior approval of GNA. GNA reserves the right to at any time and
without prior Notice to terminate, suspend or modify the transfer privilege. GNA
may also delay transfers from any Variable Sub-account in the circumstances
described below for the postponement of payment of withdrawals.

Special Transfer Services

Dollar Cost Averaging

GNA administers a Dollar Cost Averaging ("DCA") program which enables a
Participant to pre-authorize a periodic exercise of certain of the transfer
rights described above. Participants entering into a DCA agreement instruct GNA
to transfer monthly or quarterly a predetermined dollar amount from any one
Variable Sub-account to any other Variable Sub-accounts (not to exceed five)
until the amount in the Variable Sub-account is exhausted or the Participant
cancels the program. The DCA program is generally suitable for Participants
making a substantial purchase payment to the Contract and who desire to control
the risk of investing at the top of a market cycle. The DCA program allows such
investments to be made in equal installments over time in an effort to reduce
such risk. The minimum amount that may be transferred is $1000 per transfer. To
initiate the program the Certificate Value based on the Variable Sub-account
from which the transfers are to be made must be sufficient to provide for
transfer payments for at least one year. Transfers pursuant to the program will
not be counted against the six free transfers allowed each Certificate Year.
Information concerning the program and its restrictions may be obtained from
GNA's Variable Annuity Service Center.

Automatic Asset Allocation

GNA provides an Automatic Asset Allocation service pursuant to which a
Participant specifies the portion of his or her total Sub-account Values to be
allocated among various Sub-accounts. Each quarter-year period GNA will send a
statement to the Participant indicating the specified allocations, the current
allocation of Sub-account Values and any reallocation of the current values to
conform them to the specified allocations. If no objection is made to GNA within
the prescribed time, GNA will reallocate current Sub-account Values so that they
will conform to the

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allocations previously specified by the Participant. The Dollar Cost Averaging
program and Systematic Withdrawal Plan will not be available to Participants in
the Automatic Asset Allocation service.

Withdrawals

Prior to the earlier of the Annuity Date or the death of any person whose death
causes payment of the death benefit, the Participant may withdraw all or a
portion of the Withdrawal Value of his or her Certificate upon Notice to GNA's
Variable Annuity Service Center. The Certificate's Withdrawal Value is the
Certificate Value less any withdrawal charge, plus or minus the market value
adjustment for amounts withdrawn from Fixed Guarantee Periods, less any
applicable taxes and less the certificate maintenance charge if a full
withdrawal is made on a date other than December 31. Withdrawals may have tax
consequences, including the possibility of being subject to a penalty tax. For
certain Qualified Certificates, exercise of the withdrawal right may require the
consent of the Participant's spouse under the Internal Revenue Code and
regulations promulgated by the Treasury Department. Under Tax-Sheltered
Annuities, withdrawals attributable to contributions made pursuant to a salary
reduction agreement may be made only after the Participant reaches age 591/2 or
in other limited circumstances. (See "FEDERAL TAX MATTERS.") For full
withdrawals, surrender of the Certificate may be required.

In the case of a total withdrawal, GNA will pay the Withdrawal Value as of the
date of receipt of the request at its Variable Annuity Service Center, and the
Certificate will be canceled. In the case of a partial withdrawal, GNA will pay
the amount requested and withdraw an amount equal to the amount requested plus
the withdrawal charge, plus any applicable taxes, plus or minus any market value
adjustment. (See "CHARGES AND DEDUCTIONS.")

When making a partial withdrawal, the Participant should specify the Variable
Sub-accounts or Fixed Guarantee Periods from which the withdrawal is to be made.
The amount requested from a Variable Sub-account or Fixed Guarantee Period may
not exceed the value thereof minus any applicable withdrawal charge, minus any
applicable taxes, plus or minus any market value adjustment. If the Participant
does not specify the Variable Sub-account or Fixed Guarantee Period from which
the partial withdrawal is to be taken, the partial withdrawal will be made from
each Variable Sub-account and Fixed Guarantee Period in the same proportion that
the Accumulation Value for each Variable Sub-account and the value of each Fixed
Guarantee Period bear to the Certificate Value, except that Fixed Guarantee
Periods of the same duration shall be considered together for withdrawal
purposes, and amounts withdrawn shall be taken out on a first-in, first-out
basis.

There is no limit on the frequency of partial withdrawals; however, the minimum
amount of any withdrawal is $1000. For any partial withdrawal, the remaining
Accumulation Value for each Variable Sub-account and the remaining value of each
Fixed Guarantee Period must be at least $500, and the remaining Certificate
Value must be at least $2000. If after the withdrawal (including the deduction
of any withdrawal charge and the application of any market value adjustment) the
remaining Accumulation Value for any Variable Sub-account or the remaining value
of any Fixed Guarantee Period from which the transfer is to be made is less than
$500, GNA will treat the partial withdrawal as a withdrawal of the entire amount
of the Participant's interest in the investment option. If a partial withdrawal
(including the deduction of any withdrawal charge and the application of any
market value adjustment) would reduce the Certificate Value to less than $2000,
GNA will treat the partial withdrawal as a request for a total withdrawal of the
Withdrawal Value.

The amount of any withdrawal from a Variable Sub-account will be paid promptly
and in any event within seven days of receipt of the request in proper form at
GNA's Variable Annuity Service Center, except that GNA reserves the right to
suspend or postpone payment of the amount for any period when: (1) the New York
Stock Exchange is closed (other than customary weekend and holiday closings),
(2) trading on the New York Stock Exchange is restricted, (3) an emergency
exists as a result of which disposal of securities held in the Separate Account
is not reasonably practicable or it is not reasonably practicable to determine
the value of the Separate Account's net assets, or (4) the Commission, by order,
so permits for the protection of security holders; provided that applicable
rules and regulations of the Commission shall govern as to whether the
conditions described in (2) and (3) exist.

The amount of any withdrawal from a Fixed Guarantee Period is subject to GNA's
right to suspend or postpone payment of the amount for up to six months from the
date it receives Notice at its Variable Annuity Service Center. If payment is
deferred pursuant to this right, GNA will pay interest as required by the law of
the Participant's state of residence at that time.

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Special Withdrawal Services

Systematic Withdrawal Plan

GNA administers a Systematic Withdrawal Plan ("SWP") which enables a
Participant to pre-authorize a periodic exercise of the withdrawal rights
described above. Participants entering into an SWP agreement may instruct GNA to
withdraw a level dollar amount from specified investment options on a monthly or
quarterly basis, provided the Certificate Value satisfies certain minimums and
the dollar amount of each withdrawal is at least $100. The total of SWP
withdrawals in a Certificate Year is limited generally to not more than 10% of
the Certificate Value at the beginning of each Certificate Year. If an
unscheduled withdrawal is made while participating in an SWP, such withdrawal
will not be eligible for the free withdrawal privilege. If the SWP is
terminated, it may not be reinstated until the next Certificate Anniversary
pursuant to a new application. An SWP is not available if one is participating
in the Dollar Cost Averaging program, the Automatic Asset Allocation service or
if purchase payments are being automatically deducted from a bank account on a
periodic basis. SWP withdrawals will be free of withdrawal charges, but if made
from a Fixed Guarantee Period, will be subject to a market value adjustment. SWP
withdrawals may also be subject to the 10% federal tax penalty on early
withdrawals and to income tax. (See "FEDERAL TAX MATTERS.") Participants
interested in an SWP may elect to participate in this program on their
application or by separate application. Participants may obtain a separate
application and full information concerning the program and its restrictions
from their securities dealer or the Variable Annuity Service Center.

Telephone Transactions

Participants are permitted to request transfers and withdrawals by telephone.
GNA will not be liable for following instructions communicated by telephone that
it reasonably believes to be genuine. To be permitted to request a transfer or
withdrawal by telephone, a Participant elects the option by executing an
appropriate authorization form provided by GNA upon request. GNA will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine and may only be liable for any losses due to unauthorized or fraudulent
instructions where it fails to employ its procedures properly. Such procedures
include the following. Upon telephoning a request, Participants will be asked to
provide their account number, and if not available, their social security
number. For the Participant's and GNA's protection, all conversations with
Participants will be tape recorded. All telephone transactions will be followed
by a confirmation statement of the transaction.

Market Value Adjustment

Whenever a withdrawal is made from a Fixed Guarantee Period, or an amount is
taken from a Fixed Guarantee Period to be applied to effect an annuity, prior to
the end of the Guarantee Period, a market value adjustment will be made based on
the amount withdrawn. (See "Death Benefit" below.)

The market value adjustment GNA makes will depend on the remaining time in the
Guarantee Period of the Fixed Guarantee Period from which the amount is to be
taken and on the change in the guaranteed interest rates offered by us that has
occurred since establishment of the Fixed Guarantee Period. The market value
adjustment may be either positive or negative, depending on the relationship of
(1) the current guaranteed interest rate for a period equal to the time
remaining in the Fixed Guarantee Period, which rate is interpolated (on a
straight line basis) from the rates currently offered by GNA for Fixed Guarantee
Periods with Guarantee Periods closest to such period, to (2) the guaranteed
interest rate for the Fixed Guarantee Period. If the current guaranteed interest
rate of (1) above is lower than the guaranteed rate of (2), there will be a
positive market value adjustment; if (1) is higher than (2), there will be a
negative market value adjustment. If the adjustment is positive, the additional
amount will be provided by us. If negative, the amount deducted will be retained
by us for GNA's own benefit.

The amount of the market value adjustment is based on the relationship of the
guaranteed interest rates currently offered by us to the guaranteed interest
rate credited to the affected Fixed Guarantee Period. If the remaining

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<PAGE>

period of time in the Fixed Guarantee Period is a whole number of years, GNA
uses the guaranteed interest rate currently offered by us for a Fixed Guarantee
Period equal to the number of remaining years. If the remaining period of time
in the Fixed Guarantee Period is not a whole number of years, GNA derives an
interest rate from the guaranteed interest rates currently offered for the Fixed
Guarantee Periods nearest the remaining period of time. This derivation is by
straight-line interpolation, except where the remaining period of time is less
than one year in which case GNA uses the current guaranteed rate for a Guarantee
Period of one year. If, for example, the remaining period is 5.20 years, the
interpolated guaranteed interest rate GNA will use is equal to the sum of four-
fifths of the five year rate and one-fifth of the six year rate. If the five
year rate were 5.25% and the six year rate were 5.50%, the interpolated rate
would be 5.30%, 5.25% times .80 plus 5.50% times .20.

The amount of the market value adjustment is determined from the following
formula:

A X 1+B n/365
[( --- ) -1 ]
1+C

where "A" is the total amount withdrawn from the Fixed Guarantee Period, "B"
is the guaranteed interest rate (expressed as a decimal) for the Fixed Guarantee
Period, "C" is the guaranteed interest rate that GNA is now offering for a
Guarantee Period of a duration of years equal to "n"/365 or that is
interpolated for "n"/365 based on the guaranteed interest rates GNA is now
offering for Guarantee Periods nearest "n"/365, and "n" is the remaining
number of days in the Guarantee Period of the Fixed Guarantee Period from which
the amount withdrawn or annuitized is taken.

For example, assume that a full withdrawal of the Variable Value of $10,000 is
made from a Fixed Guarantee Period with 1,898 days (5.20 years) remaining in an
initial Guarantee Period of ten years and a guaranteed interest rate of 5%.
Assume also that the guaranteed interest rates currently offered for Guarantee
Periods of 5 and 6 years are 5.25% and 5.50%, respectively. "C" is equal to
5.30%, the sum of 5.25% times .80 and 5.50% times .20. The market value
adjustment is:

$10,000 X 1.050 5.20 = $ -147.26
[( ----- ) -1 ]
1.053

Since this figure is a negative number and the withdrawal is a full withdrawal,
it is subtracted from the amount withdrawn, resulting in a net payment (assuming
no withdrawal charge) of $9,852.74 ($10,000--$147.26). If "C" had been 4.70%,
instead of 5.30%, the market value adjustment would have been +$149.90, which
would have been added to the amount withdrawn, resulting in a net payment of
$10,149.90.

The greater the difference in interest rates, the greater the effect of the
market value adjustment. If in the above example "C" had been 6%, 7% and 8%,
the market value adjustment would have been -$480.94, -$934.56 and -$1,362.64,
respectively. The market value adjustment is also affected by the remaining
period in the Fixed Guarantee Period from which the withdrawal is made, which is
"n" in the formula. Thus, if in the first example above (C = 5.30%) "n"/365
were 3.2 or 1.2, the market value adjustment would be -$90.88 or -$34.18,
respectively. Tables showing the impact of the market value adjustment and
withdrawal charge on hypothetical full withdrawals are set forth in Appendix B.

Death Benefit

If the Participant or a non-spouse Joint Participant dies prior to the Annuity
Date, GNA will pay to the Beneficiary the greater of the Certificate Value or
the minimum death benefit as of the Valuation Period in which both due proof of
death and a payment election are received by GNA. The minimum death benefit on
the effective date of the Certificate is equal to the initial purchase payment.
For each subsequent purchase payment the minimum death benefit is increased by
the amount of the payment, and for each withdrawal the minimum death benefit is
decreased by the amount (net of withdrawal charges) of the withdrawal. On each
"Reset Date," if the then Certificate Value is greater than the minimum death
benefit, the minimum death benefit is reset to equal the then

17
<PAGE>

Certificate Value. Reset Dates are the fifth Certificate Anniversary and each
Certificate Anniversary which is a five-year interval from the fifth Certificate
Anniversary.

If the Participant is not an individual, the death benefit described above will
be paid to the Beneficiary if the Annuitant (or the first to die if joint
Annuitants) dies prior to the Annuity Date. If the Participant is an individual
but is not the Annuitant, the Participant must select a new Annuitant, and if no
Annuitant is selected within 30 days of the death of the Annuitant, the
Participant will become the Annuitant. No death benefit is payable on the death
of a spouse Joint Participant.

Payment will be made in a lump sum unless an Annuity Payment Option is chosen.
An Annuity Payment Option election must be chosen within 60 days of the date of
death. For tax consequences of a lump sum payment, see "FEDERAL TAX MATTERS--
Federal Tax Considerations." The Beneficiary must receive the death benefit
within five years of the date of death. If an Annuity Payment Option is chosen,
annuity payments must begin within one year of the date of death, or such later
date as the law may allow, and the option must limit payments to a period not
exceeding the Beneficiary's lifetime or life expectancy. If the Beneficiary is
the surviving spouse of the deceased Participant or of the deceased Annuitant if
the Participant is not a person, such Beneficiary may choose to continue the
Certificate in force, in which event no death benefit will be paid. A spouse
Joint Participant and the surviving spouse where the Annuitant and joint
Annuitant are spouses and the Participant is not a person are automatically
deemed to be the Beneficiary regardless of any Beneficiary designation.

Death benefits will be paid within seven days of receipt of due proof of death
and payment election at GNA's Variable Annuity Service Center, subject to
postponement under the same circumstances that payment of withdrawals may be
postponed. (See "Withdrawals" above.)

If GNA has not received the Beneficiary's election, it may pay the death benefit
in a single sum six (6) months after the date GNA receives due proof of death.
Prior to his or her death, a Participant may make elections regarding payment
options for the Beneficiary which will be binding upon the Beneficiary.

If the Annuitant dies after the Annuity Date, any guaranteed amounts remaining
unpaid will be paid to the Beneficiary under the same method of distribution in
force at the date of death. If no Beneficiary survives the Annuitant, payment
will be made to the Participant. For additional provisions affecting payment of
the death benefit, see "Beneficiary" under "Other Contract Provisions" on
page 21.

ANNUITY PROVISIONS

General

Annuity payments will commence on the Annuity Date and will be paid to the
Annuitant unless the Participant asks that the payment be made to another payee
and GNA agrees. The Participant is the Annuitant unless another person
designated as Annuitant is living. A Participant who is not a person must name a
living person as Annuitant.

Any applicable premium taxes, if not previously paid, will be paid at the
Annuity Date. Premium taxes imposed by states and local jurisdictions currently
range from 0% to 3.5% depending on the tax treatment of the Certificate.

Annuity Date. The Participant may select the Annuity Date and an Annuity Payment
Option. If he or she does not do so, the Annuity Date will be the first or
fifteenth day of the calendar month immediately following the later of (i) the
Certificate Anniversary immediately after the Annuitant's 85th birthday or (ii)
ten years after the effective date of the Certificate, and the Annuity Payment
Option will be a life annuity with a 10-year guarantee. (For Qualified
Contracts, the Annuity Date generally may not be later than April 1 of the year
after the year in which the Annuitant attains age 701/2.)

The Participant may change the Annuity Date or the Annuity Payment Option on
written Notice received at GNA's Variable Annuity Service Center at least 30
days prior to the current Annuity Date.

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<PAGE>

Annuity Options

Annuity benefits are available under the Contract on a fixed basis. Any one of
the following Annuity Payment Options may be selected. GNA may make other
Annuity Payment Options, including variable Annuity Payment Options, available
from time to time. Treasury regulations may preclude the availability of certain
Annuity Payment Options in connection with certain Qualified Contracts.

Payments for a Fixed Period: Payments will be made for the period chosen. The
period must be at least 10 years.

*Life Annuity: Payments will be made during the life of the Annuitant. Payments
will cease with the last payment due prior to the Annuitant's death.

Life Annuity With Payments for a Certain Period: Payments will be made for the
guaranteed period chosen (5, 10, 15 or 20 years) and as long thereafter as the
Annuitant lives.

*Joint and Survivor Life Annuity: Payments will be made during the lifetimes of
the Annuitant and a designated second person. Payments will continue as long as
either is living.

*THESE OPTIONS ARE LIFE ANNUITIES UNDER WHICH IT IS POSSIBLE FOR YOU TO RECEIVE
ONLY ONE ANNUITY PAYMENT IF THE ANNUITANT (OR THE ANNUITANT AND A DESIGNATED
SECOND PERSON) DIES AFTER THE FIRST PAYMENT, OR TO RECEIVE ONLY TWO ANNUITY
PAYMENTS IF THE ANNUITANT (OR THE ANNUITANT AND A DESIGNATED SECOND PERSON) DIES
AFTER THE SECOND PAYMENT, AND SO ON.

Amount of Fixed Annuity Payments

Determining Amount of Fixed Annuity Payments. The amount of Fixed Annuity
payments is determined by applying the Adjusted Certificate Value to the Fixed
Annuity payment tables contained in the Contract. The Adjusted Certificate Value
is the Certificate Value immediately preceding the Annuity Date, plus or minus
the market value adjustment applicable to Fixed Guarantee Periods which are not
at the end of their Guarantee Periods, less any applicable taxes and less any
pro-rata share of the certificate maintenance charge if the Annuity Date is not
December 31. The amount of each Fixed Annuity payment will remain constant.

Minimum Annuity Payments. Annuity payments will be made monthly unless you
choose less frequent payments. But if any payment would be less than $100 GNA
may change the frequency so payments are at least $100 each. If the Certificate
Value to be applied at the Annuity Date is less than $2,500, GNA may elect to
pay that amount in a lump sum. For tax consequences of a lump sum payment, see
"Annuity Payments" under "Federal Tax Considerations" on page 28.

Annuity Tables. GNA's Fixed Annuity payment tables show the minimum guaranteed
amount of each monthly payment for each $1,000 according to the age and sex of
the Annuitant at the Annuity Date. The tables are based on the 1983 Table "a"
for Individual Annuity Valuation with interest at 3%, except for Certificates
issued in certain states or in connection with certain employer-sponsored plans
where sex-based tables may not be used. If GNA is offering better payment rates
for similar annuities at the Annuity Date, such rates will be substituted for
the rates in the Fixed Annuity payment table.

Amount of Variable Annuity Payments

If GNA should agree to make annuity payments available on a variable basis, the
following shall apply:

Determination of Amount of the First Variable Annuity Payment. The first
variable annuity payment is determined by applying that portion of the Adjusted
Certificate Value used to purchase a variable annuity to the variable annuity
payment tables contained in the Contract. The tables are based on the 1983-a
Individual Annuity Valuation and reflect an assumed interest rate of 4% per
year.

Annuity Units and the Determination of Subsequent Variable Annuity Payments.
Variable annuity payments subsequent to the first will be based on the
investment performance of the Variable Sub-accounts selected. The amount of such
subsequent payments is determined by dividing the amount of the first annuity
payment from each

19
<PAGE>

Variable Sub-account by the then current annuity unit value for such Variable
Sub-account to establish the number of annuity units which will thereafter be
used to determine payments. This number of annuity units for each Variable Sub-
account is then multiplied by the annuity unit value for that Sub-account, and
the resulting amounts for each Variable Sub-account are then totaled to arrive
at the amount of the payment to be made. The number of annuity units remains
constant during the annuity payment period, but the dollar amount of the
payments will vary.

The value of an annuity unit for each Variable Sub-account for any Valuation
Period is determined by multiplying the annuity unit value for the immediately
preceding Valuation Period by the net investment factor for that Variable Sub-
account for the Valuation Period for which the annuity unit value is being
calculated and by a factor to neutralize the assumed interest rate.

A 4% assumed interest rate is built into the annuity tables used to determine
the first variable annuity payment. A higher assumption would mean a larger
first annuity payment, but more slowly rising subsequent payments when actual
investment performance exceeds the assumed rate, and more rapidly falling
subsequent payments when actual investment performance is less than the assumed
rate. A lower assumption would have the opposite effect. If the actual net
investment performance is 4% annually, annuity payments will be level.

Transfers After Annuity Date. After the Annuity Date, the Annuitant, or such
other person that has been designated as payee with the agreement of GNA, may
transfer all or part of the investment upon which variable annuity payments are
based from one Variable Sub-account to another. All such transfers will be
subject to the restrictions described above for transfers during the period
prior to the Annuity Date. No transfers are allowed from amounts supporting
Fixed Annuity Payment Options. The result of a transfer between Variable Sub-
accounts will be such that the dollar amount of a variable annuity payment made
on the date of the transfer will be unaffected by the fact of the transfer. No
transfers are allowed to or from amounts supporting Fixed Annuity Payment
Options.

Death Benefit on or After Annuity Date

If annuity payments have been selected based on an Annuity Payment Option
providing for payments for a guaranteed period, and the Annuitant dies on or
after the Annuity Date, GNA will make the remaining guaranteed payments to the
Beneficiary. Such payments will be made as rapidly as under the method of
distribution being used as of the date of the Annuitant's death. If no
Beneficiary is living, GNA will commute any unpaid guaranteed payments to a
single sum (on the basis of the interest rate used in determining the payments)
and pay that single sum to the estate of the last to die of the Annuitant and
the Beneficiary.

OTHER CONTRACT PROVISIONS

Proof of Age, Sex and Survival. GNA may require satisfactory proof of the age,
sex or survival of any person on whose continued life any payment under a
Certificate depends.

Misstatement of Age or Sex. If the age or sex of an Annuitant or joint Annuitant
is misstated, annuity payments will be adjusted to reflect the correct age and
sex. GNA will deduct any overpayments it has made as the result of the
misstatement from the next payments due, and it will charge interest on the
overpayment at the rate of 6% per year. GNA will pay in full with the next
payment due any underpayment resulting from the misstatement together with
interest on the underpayment at the rate of 6% per year.

Ownership. The Participant is entitled to exercise all rights described in his
or her Certificate unless otherwise provided or as may be restricted by the
provisions of any plan in connection with which the Contract or Certificate has
been issued. The Participant may name a Joint Participant. A Participant and
spouse Joint Participant may exercise rights on behalf of the other, except for
changes of Participant or Joint Participant. A Participant and non-spouse Joint
Participant must exercise rights jointly. A Participant may change the
Participant by Notice to the Company. GNA may impose limits on the age of a new
Participant. Such change will take effect as of the date the Notice was signed,
except that GNA will not be liable for any payments made or actions taken prior
to its receipt of the Notice. Special restrictions apply to Qualified Contracts
and Certificates.

In the case of Nonqualified Contracts and Certificates, a Participant may make a
collateral assignment of his or her rights to a creditor as security for a debt
by Notice. The rights of an assignee have priority over the rights of a
Beneficiary. GNA assumes no liability for any payments made or actions taken
before its receipt of the Notice, nor

20
<PAGE>

will it be responsible for the validity or sufficiency of any assignment. There
may be significant tax consequences associated with an assignment, and a
Participant should consult a competent tax advisor before making any assignment.

In the case of Qualified Contracts and Certificates, the rights of a Participant
generally may not be assigned, pledged or transferred, and joint participation
in a Certificate is not permitted.

Beneficiary. The Beneficiary is the person or persons named in the Certificate
application to whom payment is to be made upon the death of the Participant (or
other appropriate individual) or Annuitant. A spouse Joint Participant and the
surviving spouse where the Annuitant and joint Annuitant are spouses and the
Participant is not a person are automatically deemed to be the Beneficiary
regardless of any Beneficiary designation. Unless a Beneficiary has been
irrevocably designated, the Beneficiary may be changed by Notice prior to the
time a death benefit is payable. A Beneficiary may be named irrevocably, in
which case a change in Beneficiary can be made only with the Beneficiary's
consent.

The estate or heirs of a Beneficiary who dies prior to the death which causes
the payment of a death benefit have no rights to any portion of the death
benefit. If no Beneficiary survives a sole Participant, payment will be made to
the Participant's estate. If any Beneficiary dies within 15 days after the death
which causes the payment of the death benefit and before GNA makes payment,
payment will be made as if that Beneficiary had died before the death which
causes the payment of the death benefit.

The Participant may designate both primary beneficiaries and contingent
beneficiaries. If there is more than one primary Beneficiary entitled to a death
benefit, payment will be made to them in equal shares unless otherwise
designated. A contingent Beneficiary is entitled to payment only if there are no
surviving primary beneficiaries. If there is more than one contingent
Beneficiary entitled to a death benefit, payment will be made to them in equal
shares unless otherwise designated. If a surviving spouse Joint Participant, as
primary Beneficiary, dies prior to receiving the entire death benefit, payment
will be made to any then surviving contingent Beneficiary instead of to the
spouse Joint Participant's estate, unless the spouse Joint Participant has
designated otherwise.

Certain restrictions in the application of the foregoing provisions may apply in
the case of Qualified Contracts or Certificates.

Notices and Elections. Unless otherwise agreed to by GNA, all Notices, changes
and choices available under a Certificate must be in writing, dated, signed by
the proper party, received at GNA's Variable Annuity Service Center and
acceptable to it in its sole discretion to be effective. When recorded by GNA,
Notices, changes and choices relating to beneficiaries will take effect as of
the date signed unless GNA has already acted in reliance on the prior status.

Amendment of Contract and Certificates. At any time GNA may amend the Contract
and the Certificates as required to conform to any applicable law, regulation or
ruling issued by a government agency.

Free Look Right. A Participant may cancel his or her Certificate within the time
period set forth on the Certificate Schedule following his or her receipt of the
Certificate by delivering or mailing it to GNA at its Variable Annuity Service
Center or to the agent through whom it was purchased. GNA will refund the
Certificate Value computed at the end of the Valuation Period during which the
Certificate was received by GNA, and the Certificate will be void as if it had
never been in force. In states where required, GNA will refund the purchase
payment rather than the Certificate Value. GNA reserves the right to allocate
all purchase payments allocated to a Variable Sub-account to the Money Market
Sub-account until the expiration of 7 days from the end of the free look period.
If GNA so allocates payments, it will refund the greater of purchase payments or
the Certificate Value. No transfers or partial withdrawals may be made during
the free look period. GNA reserves the right to reject an application from any
person who, in connection with a prior application, previously exercised his or
her free look right.

Company Approval. GNA reserves the right to accept or reject any Contract or
Certificate application at its sole discretion.

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<PAGE>

CHARGES AND DEDUCTIONS

Charges and deductions under the Certificates are assessed against purchase
payments, Certificate Values or annuity payments. There are no deductions from
purchase payments, except for premium taxes in certain states. In addition,
there are deductions from and expenses paid out of the assets of the Portfolios
that are described in the accompanying Prospectuses of the Funds.

Withdrawal Charges

If a withdrawal is made from the Certificate before the Annuity Date, a
withdrawal charge (contingent deferred sales charge) may be assessed against
amounts withdrawn attributable to purchase payments that have been in the
Certificate less than five complete years. There is no withdrawal charge with
respect to earnings accumulated under the Certificate, certain free withdrawal
amounts described below or purchase payments that were made five years or more
before the withdrawal date. In no event may the total withdrawal charges exceed
5% of total purchase payments. The amount of the withdrawal charge and when it
is assessed is discussed below:

The amount of the withdrawal charge is calculated by multiplying the amount of
the purchase payment being liquidated by the applicable withdrawal charge
percentage obtained from the following table.
<TABLE>
<CAPTION>

The total withdrawal charge will be the sum of the withdrawal charges for the
purchase payments being liquidated.

Each withdrawal from a Certificate is allocated, first, to the "free withdrawal
amount," second, to remaining purchase payments which have not been withdrawn
previously on a first-in first-out basis, and, third, to any remaining
Certificate Value.

On the first withdrawal in any Certificate Year, the Participant may withdraw
free of any withdrawal charge an amount equal to 10% of the Certificate Value at
the time of the withdrawal. The free withdrawal amount is non-cumulative and
does not apply to subsequent withdrawals in a Certificate Year. Any part of the
free withdrawal taken from a Fixed Guarantee Period will still be subject to a
market value adjustment.

The withdrawal charge is deducted from the Certificate Value remaining after the
Participant is paid the amount requested, except in the case of a complete
withdrawal when it is deducted from the amount otherwise payable. In the case of
a partial withdrawal, the amount requested from any Variable Sub-account or
Fixed Guarantee Period may not exceed the value of that account minus any
applicable withdrawal charge, minus any applicable taxes, and in the case of
withdrawals from a Fixed Guarantee Period, plus or minus the amount of the
market value adjustment. The withdrawal charge will be subtracted from the
Variable Sub-accounts and Fixed Guarantee Periods from which the withdrawal was
made in the same proportion that the amount withdrawn from each Variable Sub-
account or Fixed Guarantee Period bears to the total amount withdrawn, except
that Fixed Gurantee Periods of the same duration shall be considered together
for withdrawal purposes, and amounts withdrawn shall be taken out on a first-in,
first-out basis.

There is no withdrawal charge on distributions made as a result of the death of
the Participant or Annuitant, and no withdrawal charges are imposed on or after
the Annuity Date.

The amount collected from the withdrawal charge will be used to reimburse GNA
for the compensation paid to cover selling concessions to broker-dealers,
preparation of sales literature and other expenses related to sales activity.

22
<PAGE>

The withdrawal charge is computed without regard to the application of any
market value adjustment to the amount withdrawn, so that in the event of a
negative market value adjustment, the charge will be determined on the basis of
the full amount withdrawn, including the amount payable to GNA as a result of
the market value adjustment. Conversely, in the event of a positive market value
adjustment, the charge will not be assessed against any increased amount
attributable to the positive market value adjustment. For examples of
calculation of the withdrawal charge, see Appendix B.

From time to time GNA may agree in writing to reduce the amount of the
withdrawal charge, the period during which it applies, or both, when
Certificates are sold to individuals, entities or groups of individuals in a
manner that reduces GNA's sales expenses. GNA will consider such factors as (a)
the size and type of group, (b) the amount of purchase payments expected to be
received, and/or (c) other transactions where sales expenses are reduced. In no
event will reduction or elimination of the withdrawal charge be permitted where
such reduction or elimination will be unfairly discriminatory to any person.

Example of Withdrawal Charge. The application of the withdrawal charge to the
Fixed MGA Account Value, and the interplay between the withdrawal charge and the
market value adjustment provisions, may be illustrated by the following example.
(It may be less if a free withdrawal amount is available.) Assume a Participant
wishes to make a partial withdrawal that will result in a net payment to him or
her of $6,000, such withdrawal to be made from two Fixed Guarantee Periods, one
with a Guarantee Period of ten years, the other with a Guarantee Period of seven
years, and each having a value of $5,000. Assume further that the Participant
directs that the partial withdrawal be taken from the Fixed Guarantee Period
having the ten-year Guarantee Period to the maximum extent possible and the
remainder taken from the Fixed Guarantee Period having the seven year Guarantee
Period. Assume also that the market value adjustment applied to the ten-year
Guarantee Period operates to reduce its value by 20% and that the adjustment
applied to the seven-year Guarantee Period operates to reduce its value by 15%.
Finally, assume that less than two years have elapsed since the purchase
payments were made and that the withdrawal is deemed to be a withdrawal of
purchase payments and not investment gain, so that the applicable percentage
charge is 5% of the amount withdrawn. The net amount available to the
Participant from the Fixed Guarantee Period with the ten-year Guarantee Period
is $3,750, because of a negative market value adjustment of $1,000 (20% of
$5,000) and a withdrawal charge of $250 (5% of $5,000). The remaining portion of
the amount requested, $2,250, is taken from the Fixed Guarantee Period with the
seven-year Guarantee Period, the amount withdrawn being the amount necessary to
generate a net payment of $2,250 after application of the market value
adjustment and the withdrawal charge. This amount -- $2,812.50 -- is reduced by
a negative market value adjustment of $421.88 (15% of $2,812.50) and a
withdrawal charge of $140.62 (5% of $2,812.50) to provide the net payment of
$2,250.

Administration Charges

Certificate Maintenance Charge. Each year GNA will deduct a certificate
maintenance charge of $40 as partial compensation for the cost of providing all
administrative services attributable to the Contracts and Certificates and the
operations of the Separate Account and the Company in connection with the
Contracts and Certificates. GNA will waive the charge if at the time of the
assessment the Certificate Value is $40,000 or greater.

Prior to the Annuity Date, the certificate maintenance charge is deducted on
December 31 of each year, except for the first Certificate Year when a pro-rata
portion of the charge will be deducted on December 31. It is withdrawn from the
Participant's interest in each Variable Sub-account and Fixed Guarantee Period
in the same proportion that the Accumulation Value for each Variable Sub-account
and the value of each Fixed Guarantee Period bears to the Certificate Value. If
a full withdrawal of the Certificate's Withdrawal Value is made on a day other
than December 31, the $40 certificate maintenance charge will be deducted from
the amount paid. If the Annuity Date is not December 31, a pro-rata portion of
the charge is deducted on the Annuity Date.

The amount of the certificate maintenance charge may be reduced or eliminated
when sales of the Certificates are made to individuals, entities or groups of
individuals in such a manner that results in savings of administration expenses.
The entitlement to such a reduction or elimination of this charge will be
determined by GNA considering the size and type of group and other circumstances
which could result in reduced administrative expenses. In no event will
reduction or elimination of the certificate maintenance charge be permitted
where such reduction or elimination will be unfairly discriminatory to any
person.

Administration Charge. A daily charge at an annual rate of 0.15% of the average
daily value of each Variable Sub-account is deducted from each Variable Sub-
account to reimburse GNA for administrative expenses. This asset-

23
<PAGE>

based administrative charge is not deducted from the Fixed MGA Account Value.
The charge will be reflected in the Certificate Value as a proportionate
reduction in the Accumulation Value for each Variable Sub-account. Because this
administrative charge is a percentage of assets rather than a flat amount,
larger Certificate Values will in effect pay a higher proportion of this charge
than smaller Certificate Values.

GNA does not expect to recover from the administration charges any amount in
excess of its accumulated administrative expenses. Even though administrative
expenses may increase, GNA guarantees that it will not increase the amount of
the administration fees as to outstanding Certificates.

Mortality and Expense Risk Charge

The mortality risk assumed by GNA is the risk that Annuitants may live for a
longer period of time than estimated. GNA assumes this mortality risk by virtue
of annuity rates incorporated into the Contract which cannot be changed as to
outstanding Certificates. This assures each Annuitant that his longevity will
not have an adverse effect on the amount of annuity payments. Also, GNA
guarantees that if the Annuitant dies before the maturity date, it will pay a
death benefit. (See "DEATH BENEFIT BEFORE ANNUITY DATE") The expense risk
assumed by GNA is the risk that the administration charges or withdrawal charge
may be insufficient to cover actual expenses.

To compensate it for assuming these risks, GNA deducts from each Variable Sub-
account a daily charge at an annual rate of 1.25% of the average daily value of
the Variable Sub-account, consisting of .75% for the mortality risk and .50% for
the expense risk. The mortality and expense risk charge is not assessed against
the Fixed MGA Account Value. The charge will be reflected in the Certificate
Value as a proportionate reduction in the Accumulation Value for each Variable
Sub-account. The rate of the mortality and expense risk charge cannot be
increased. If the charge is insufficient to cover the actual cost of the
mortality and expense risks undertaken, GNA will bear the loss. Conversely, if
the charge proves more than sufficient, the excess will be profit to GNA and
will be available for any proper corporate purpose including, among other
things, payment of distribution expenses.

Taxes

Any taxes, fees or assessments paid to a governmental entity relating to a
Certificate will be deducted from purchase payments or the Certificate Value.
GNA will determine when taxes have resulted from the investment experience of
the Separate Account, GNA's receipt of purchase payments or the commencement of
annuity payments. GNA may pay premium taxes when due and deduct that amount from
the Certificate Value at a later date. The amount deducted will depend on the
premium tax assessed in the applicable state. State premium taxes currently
range from 0% to 3.5% depending on the jurisdiction and the tax status of the
Contract or Certificate and are subject to change by the legislature or other
authority. (See "APPENDIX A: State Premium Taxes.")

FEDERAL TAX MATTERS

Introduction

The Contracts are designed for use in connection with retirement plans that do
not qualify for special federal income tax treatment under the Internal Revenue
Code or plans that qualify for special income tax treatment under the Internal
Revenue Code, such as individual retirement accounts and annuities, pension and
profit-sharing plans for corporations and sole proprietorships /partnerships
("H.R. 10" and "Keogh" plans), tax-sheltered annuities, and deferred
compensation plans of state and local governments and tax-exempt organizations.
The ultimate effect of federal income taxes on Certificate Value, on annuity
payments and on the economic benefit to the Participant, Annuitant or
Beneficiary depends on GNA's tax status, on the type of retirement plan for
which the Contract or Certificate is purchased and on the tax and employment
status of the individual concerned. The following discussion is general in
nature and is not intended as tax advice. Each person concerned should consult a
competent tax adviser. No attempt is made to consider any applicable state or
other tax laws. This discussion is based on GNA's understanding of current
federal income tax laws as currently interpreted. No representation is made
regarding the likelihood of continuation of those laws or of the current
interpretations by the Internal Revenue Service. GNA MAKES NO GUARANTEE
REGARDING THE TAX STATUS OF ANY CONTRACT OR CERTIFICATE OR ANY TRANSACTION
INVOLVING THE CONTRACTS OR CERTIFICATES.

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GNA's Tax Status

GNA is taxed as a life insurance company under the Internal Revenue Code. It
owns all assets supporting its obligations under the Contracts, and any income
earned on those assets is considered GNA's income. Since the operations of the
Separate Account are a part of, and are taxed with, the operations of GNA, the
Separate Account is not separately taxed as a "regulated investment company"
under Subchapter M of the Code. Under existing federal income tax laws,
investment income and capital gains of the Separate Account are not taxed to the
extent they are applied to increase reserves under a Contract or Certificate.
Since, under the Contracts, investment income and realized capital gains of the
Separate Account are automatically applied to increase reserves, GNA does not
anticipate that it will incur any federal income tax liability attributable to
the Separate Account, and therefore it does not intend to make provision for any
such taxes. If GNA is taxed on investment income or capital gains of the
Separate Account, then it may impose a charge against the Separate Account in
order to make provision for such taxes.

Tax Status of the Certificates

In General. Under existing provisions of the Code, except as described below,
any increase in the Certificate Value is generally not taxable to the
Participant or Annuitant until received, either in the form of annuity payments,
as contemplated by the Contract, or in some other form of distribution. However,
this rule applies only if (1) the Participant is an individual, (2) the
investments of the Separate Account are "adequately diversified" in accordance
with Treasury Department regulations, and (3) GNA, rather than the Participant,
is considered the owner of the assets of the Separate Account for federal tax
purposes.

Non-Natural Owner. As a general rule, deferred annuity contracts held by "non-
natural persons" such as a corporation, trust or other similar entity, as
opposed to a natural person (i.e., an individual), are not treated as annuity
contracts for federal tax purposes. The investment income on such contracts is
taxed as ordinary income that is received or accrued by the owner of the
contract during the taxable year. There are several exceptions to this general
rule for non-natural contract owners. First, contracts will generally be treated
as held by a natural person if the nominal owner is a trust or other entity
which holds the contract as an agent for a natural person. However, this special
exception will not apply in the case of any employer who is the nominal owner of
an annuity contract under a nonqualified deferred compensation arrangement for
its employees.

In addition, exceptions to the general rule for non-natural contract owners will
apply with respect to (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (2) certain Qualified Contracts, (3)
contracts purchased by employers upon the termination of certain Qualified
Plans, (4) certain contracts used in connection with structured settlement
agreements, and (5) contracts purchased with a single premium when the annuity
starting date is no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity period.

Diversification Requirements. For a contract to be treated as an annuity for
federal income tax purposes, the investments of the Separate Account must be
"adequately diversified" in accordance with Treasury Regulations. The
Secretary of the Treasury has issued regulations which prescribe standards for
determining whether the investments of the Separate Account are "adequately
diversified." If the Separate Account failed to comply with these
diversification standards, a contract would not be treated as an annuity
contract for federal income tax purposes and the contract owner would be taxable
currently on the excess of the contract value over the premiums paid for the
contract.

Although GNA does not control the investments of the Portfolios, it expects that
the Portfolios will comply with such regulations so that the Separate Account
will be considered "adequately diversified."

Ownership Treatment. In certain circumstances, variable annuity contract owners
may be considered the owners, for federal income tax purposes, of the assets of
the separate account used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
contract owners' gross income. The Internal Revenue Service (the "Service")
has stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the owner possesses incidents
of ownership in those assets, such as the ability to exercise investment control
over the assets. In addition, the Treasury Department

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<PAGE>

announced, in connection with the issuance of regulations concerning investment
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a separate account
may cause the investor, rather than the insurance company, to be treated as the
owner of the assets in the account." This announcement also stated that guidance
would be issued by way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular sub-accounts [of a
separate account] without being treated as owners of the underlying assets." As
of the date of this Prospectus, no such guidance has been issued.

The ownership rights under the Contracts and Certificates are similar to, but
different in certain respects from, those described by the Service in rulings in
which it was determined that contract owners were not owners of separate account
assets. For example, Participants have the choice of more investment options to
which to allocate purchase payments and Certificate Values, and may be able to
transfer among investment options more frequently than in such rulings. These
differences could result in the Participant being treated as the owner of the
assets of the Separate Account. In addition, GNA does not know what standards
will be set forth in the regulations or rulings which the Treasury Department
has stated it expects to issue. GNA therefore reserves the right to modify the
Contract and Certificates as necessary to attempt to prevent the Participants
from being considered owners of the assets of the Separate Account.

Death Benefits. Furthermore, in order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Internal Revenue Code requires
any Nonqualified Contract to provide that (a) if any owner dies on or after the
annuity commencement date but prior to the time the entire interest in the
contract has been distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of that owner's death; and (b) if any owner dies prior to the
Annuity Date the entire interest in the Contract will be distributed within five
years after the date of the owner's death. These requirements will be considered
satisfied as to any portion of the 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 the beneficiary, provided that such distributions begin
within one year of that owner's death. The owner's "designated beneficiary" is
the person designated by the owner as a beneficiary and to whom ownership of the
contract passes by reason of death and must be a natural person. However, if the
owner's "designated beneficiary" is the surviving spouse of the owner, the
contract may be continued with the surviving spouse as the new owner.

The Nonqualified Contracts contain provisions which are intended to comply with
the requirements of Section 72(s) of the Internal Revenue Code, although no
regulations interpreting these requirements have yet been issued. GNA intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Internal Revenue Code Section 72(s) when clarified by
regulation or otherwise.

Other rules may apply to Contracts and Certificates issued in connection with
Qualified Plans.

THE FOLLOWING DISCUSSION ASSUMES THAT THE CERTIFICATES WILL QUALIFY AS ANNUITY
CONTRACTS FOR FEDERAL INCOME TAX PURPOSES, THAT GNA WILL BE TREATED AS THE OWNER
OF SEPARATE ACCOUNT ASSETS, AND THAT PARTICIPANTS ARE NATURAL PERSONS

Federal Tax Considerations

Withdrawals. In the case of a partial withdrawal or surrender under a Qualified
Certificate under Section 72(e) of the Internal Revenue Code, a ratable portion
of the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the Participant's total accrued benefit or
balance under the retirement plan. The "investment in the contract" generally
equals the portion, if any, of any purchase payments paid by or on behalf of any
individual under a Certificate which was not excluded from the individual's
gross income. For Qualified Certificates, a Participant's "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions under Qualified Certificates.

With respect to Nonqualified Certificates, partial withdrawals are generally
treated as taxable income to the extent that the Certificate Value immediately
before the withdrawal exceeds the "investment in the contract" at that time.
Although there is no definitive guidance on this subject, it appears that the
Certificate Value immediately before a partial withdrawal must be increased by
any positive market value adjustments that result from such a withdrawal.

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<PAGE>

In the case of a full withdrawal under a Nonqualified Certificate, under Section
72(e) amounts received are generally treated as taxable income to the extent the
net amount received exceeds the "investment in the contract" at that time.

Annuity Payments. Although tax consequences may vary depending on the Annuity
Payment Option elected under the Certificate, under Internal Revenue Code
Section 72(b), generally gross income does not include that part of any amount
received as an annuity under an annuity contract that bears the same ratio to
such amounts as the investments in the contract bears to the expected return at
the Annuity Date. In this respect (prior to recovery of the investment in the
contract), there is generally no tax on the amount of each payment which
represents the same ratio that the "investment in the contract" bears to the
total expected value of the annuity payments for the term of the payments;
however, the remainder of each income payment is taxable. In all cases, after
the "investment in the contract" is recovered, the full amount of any
additional annuity payments is taxable.

Penalty Tax on Certain Withdrawals. In the case of a distribution under a
Nonqualified Certificate, there may be imposed a federal penalty tax equal to
10% of the amount treated as taxable income. In general, however, there is no
penalty tax on distributions: (1) made on or after the date on which the
Participant attains age 591/2; (2) made as a result of death or disability of
the Participant; or (3) received in substantially equal periodic payments over
the life or life expectancy of the Participant (or joint life or life expectancy
of the Participant and a designated Beneficiary). In certain circumstances,
other exceptions may apply. Other tax penalties may apply to certain
distributions under a Qualified Certificate.

Taxation of Death Benefit Proceeds. Amounts may be distributed from a
Certificate because of the death of a Participant or an Annuitant. Generally,
such amounts are includible in the income of the recipient as follows: (1) if
distributed in a lump sum, they are taxed in the same manner as a full
withdrawal of the Certificate, as described above, or (2) if distributed under
an Annuity Payment Option, they are taxed in the same manner as annuity
payments, as described above.

Transfers, Assignments, or Exchanges of a Certificate. A transfer of ownership
of a Certificate; the designation of an Annuitant, payee, or other beneficiary
who is not also the Participant; the selection of certain Annuity Dates; or the
exchange of a Certificate may result in certain tax consequences to Participants
that are not discussed herein. The assignment, pledge, or agreement to assign or
pledge any portion of the Certificate Value (and in the case of a Qualified
Certificate any portion of an interest in the Qualified Plan) generally will be
treated as a distribution. The taxable portion of a distribution (in the form of
a single sum payment or an annuity) is taxable as ordinary income. A Participant
contemplating any transfer, assignment, or exchange of his or her interest under
a Certificate should contact a competent tax adviser with respect to the
potential tax effects of such a transaction.

Multiple Contracts. All nonqualified annuity contracts entered into after
October 21, 1988 that are issued by GNA (or its affiliates) to the same owner
during any calendar year are treated as one annuity contract for purposes of
determining the amounts includable in gross income under Section 72(e) of the
Internal Revenue Code. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e)
through the serial purchase of annuity contracts or otherwise. Congress has also
indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity contract and a separate deferred
annuity contract as a single annuity contract under its general authority to
prescribe rules as may be necessary to enforce the income tax laws.

Withholding. Pension and annuity distributions generally are subject to
withholding for the recipient's federal income tax liability at rates that vary
according to the type of distribution and the recipient's tax status.
Recipients, however, generally are provided the opportunity to elect not to have
tax withheld from distributions. As of January 1, 1993, GNA is generally
required to withhold on distributions under certain Qualified Contracts or
Certificates.

Possible Tax Legislation. A recent budget proposal included a provision
modifying the taxation of certain nonqualified annuities. This proposal would
have adversely affected annuities that do not have "substantial life
contingencies" by taxing income as it is credited to the annuity. The proposal
would have applied to annuities purchased on or after the date of enactment.
Although Congress is not now actively considering this or any other proposal
regarding annuities, there is no way of knowing if legislation reflecting this
proposal (or any other proposal affecting the taxation of annuities) will be
enacted at some future time, or the extent to which any change would be
retroactive in effect (i.e., effective prior to the date of enactment).

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<PAGE>

Other Tax Consequences. As noted above, the foregoing discussion of the federal
income tax consequences under the Certificates is not exhaustive and special
rules are provided with respect to other tax situations not discussed in this
Prospectus. Further, the federal income tax consequences discussed herein
reflect GNA's understanding of current law and the law, or its interpretation by
the Internal Revenue Service, may change. Federal estate and state and local
income, estate, inheritance, and other tax consequences of ownership or receipt
of distribution under a Contract or Certificate depend on the individual
circumstances of each Participant or recipient of the distribution. A competent
tax adviser should be consulted for further information.

Qualified Plans

The Contract or Certificates may be issued in connection with plans qualifying
for special tax treatment under the Code. The tax rules applicable to
Participants in such plans vary according to the type of plan and the terms and
conditions of the plan itself. Special favorable tax treatment may be available
for certain types of contributions and distributions. Adverse tax consequences
may result from contributions in excess of specified limits; distributions prior
to age 591/2 (subject to certain exceptions); distributions that do not conform
to specified commencement and minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances. Therefore, no attempt is made to provide more than general
information about the use of the Contracts and Certificates with such plans.
Participants, Annuitants and Beneficiaries are cautioned that the rights of any
person to any benefits under plans may be subject to the terms and conditions of
the plans themselves, regardless of the terms and conditions of the Contract.
Some retirement plans are subject to distribution and other requirements that
are not incorporated into our Contract administration procedures. Owners,
Participants and Beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are brief descriptions of the
various types of plans in connection with which GNA will issue a Contract or
Certificate. When issued in connection with such a plan, a Contract or
Certificate will be amended as necessary to conform to the requirements of the
Code.

Individual Retirement Annuities and Individual Retirement Accounts. Section 408
of the Internal Revenue Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity or
Individual Retirement Account (each hereinafter referred to as "IRA"). IRAs
are subject to limits on the amount that may be contributed, the contributions
that may be deducted from taxable income, the persons who may be eligible and
the time when distributions may commence. Also, distributions from certain other
types of plans qualifying for special tax treatment may be "rolled over" on a
tax-deferred basis into an IRA. Sales of the Contracts and Certificates for use
with IRAs may be subject to special disclosure requirements of the Internal
Revenue Service. Purchasers of the Contract or Certificates thereunder for use
with IRAs will be provided with supplemental information required by the
Internal Revenue Service or other appropriate agency. Such purchasers will have
the right to revoke their purchase within 7 days of the earlier of the
establishment of the IRA or their purchase. 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.
Purchasers should seek competent advice as to the suitability of the Contract
for use with IRAs.

Tax-Sheltered Annuities. Section 403(b) of the Internal Revenue Code permits
public school employees and employees of certain types of religious, charitable,
educational and scientific organizations specified in Section 501(c)(3) of the
Code to purchase annuity contracts and, subject to certain limitations, exclude
the amount of premiums from gross income for tax purposes. These annuity
contracts are commonly referred to as "Tax-Sheltered Annuities." Premiums
excluded from gross income will be subject to FICA taxes. Purchasers using the
Contracts or Certificates as Tax-Sheltered Annuities should seek competent
advice as to eligibility, limitations on permissible amounts of premiums and tax
consequences on distribution. Withdrawals under Tax-Sheltered Annuities which
are attributable to contributions made pursuant to salary reduction agreements
are prohibited unless made after the Participant attains age 591/2, upon the
Participant's separation of service, upon the Participant's death or disability,
or for an amount not greater than the total of such contributions in the case of
hardship. Effective January 1, 1993, distributions under Tax-Sheltered Annuities
are generally subject to mandatory income tax withholding. (At the present time,
GNA will issue a Tax-Sheltered Annuity only when the funds are directly
transferred from an existing Tax-Sheltered Annuity.)

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<PAGE>

Restrictions under the Texas Optional Retirement Program. Under applicable state
law, Participants in the Texas Optional Retirement Program ("ORP") may
withdraw their interest in an annuity contact issued under the ORP only upon (1)
termination of employment in the Texas public institutions of higher education,
(2) retirement, or (3) death. A Participant in the ORP (or the Participant's
estate if the Participant has died) will be required to obtain a certificate of
termination from the employer or a certificate of death before distributions can
be made.

Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and Profit-
Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate employers
to establish various types of tax-favored retirement plans for employees. The
Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly
referred to as "H.R. 10" or "Keogh," permits self-employed individuals also
to establish such tax-favored retirement plans for themselves and their
employees. These retirement plans may permit the purchase of the Contracts to
accumulate retirement savings under the plans. Adverse tax or other legal
consequences to the plan, to the Participant or to both may result if a
Certificate is assigned or transferred to any individual as a means to provide
benefit payments, unless the plan complies with all legal requirements
applicable to such benefits prior to transfer of the Certificate. Employers
intending to use the Contract or Certificates in connection with such plans
should seek competent advice.

Deferred Compensation Plans of State and Local Governments and Tax-Exempt
Organizations. Section 457 of the Code permits employees of state and local
governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants in
an eligible deferred compensation plan. To the extent the Contracts or
Certificates are used in connection with an eligible plan, employees are
considered general creditors of the employer and the employer as owner of the
Certificates has the sole right to the proceeds under the Contract. Generally,
with respect to purchase payments made after February 28, 1986, a Contract or
Certificate purchased by a state or local government or a tax-exempt
organization will not be treated as an annuity contract for federal income tax
purposes. Those who intend to use the Contracts or Certificates in connection
with such plans should seek competent advice.

INVESTMENTS SUPPORTING THE FIXED GUARANTEE PERIODS

GNA's General Account assets must be invested in accordance with applicable
state laws. These laws govern the nature and quality of investments that may be
made by life insurance companies and the percentage of their assets that may be
committed to any particular type of investment. In general, these laws permit
investments, within specified limits and subject to certain qualifications, in
federal, state, and municipal obligations, corporate bonds, preferred stocks,
real estate mortgages, real estate and certain other investments. All of GNA's
General Account assets are available to meet its obligations under the
Contracts.

Purchase payments received under the Contracts and Certificates and allocated to
Fixed Guarantee Periods will be held in a "nonunitized" separate account
established by GNA under the laws of Washington. A nonunitized separate account
is a separate account in which the contract owner or participant does not
participate in the performance of the assets through unit values or otherwise.
Any favorable performance on the assets held in the separate account accrues
solely to GNA's benefit. GNA reserves the right, subject to applicable state
law, to transfer all assets allocated to the separate account to its General
Account and to hold thereafter all assets supporting the Contract reserves and
other Contract liabilities in its General Account. Regardless of whether such
assets are held in a separate account or GNA's General Account, all benefits
available to Participants under the Contracts are guaranteed by GNA, and all of
its assets, except those assets GNA allocates to certain other separate accounts
it uses for other contracts, support those guarantees.

GNA intends to invest assets supporting the Contract reserves and other Contract
liabilities related to the Fixed Guarantee Periods, whether held in a separate
account or its General Account, in securities that, in the aggregate, have
characteristics, especially cash flow patterns, reasonably related to the
characteristics of the liabilities under the Contract. GNA will primarily invest
in investment-grade fixed income securities including:

Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the United
States Government.

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Public and/or private placement corporate debt securities that have an
investment grade rating at the time of purchase, within the four highest grades
assigned by Moody's Investors Services, Inc. (Aaa, Aa, A or Baa) or Standard &
Poor's Corporation (AAA, AA, A or BBB).

Mortgage-backed securities collateralized by real estate mortgage loans, or
securities collateralized by other assets, that are insured or guaranteed by
the Federal Home Loan Mortgage Association, the Federal National Mortgage
Association or the Government National Mortgage Association, or that have an
investment grade at time of purchase within the four highest ratings as
described in the above paragraph.

Commercial paper, cash or cash equivalents, and other short-term investments
having a maturity of less than one year that are considered by GNA's management
to have investment quality comparable to securities having the ratings stated
above.

In addition, interest rate swaps, futures, options, rate caps and other hedging
instruments may be used solely for non-speculative hedging purposes. Anticipated
use of these financial instruments shall be limited to protecting the value of
the assets supporting the Fixed Guarantee Periods, but use of such instruments
may enhance yield.

ALTHOUGH THE FOREGOING GENERALLY DESCRIBES GNA'S INVESTMENT STRATEGY FOR THE
ASSETS SUPPORTING GNA'S OBLIGATIONS UNDER THE FIXED PORTION OF THE CONTRACTS,
GNA IS NOT OBLIGATED TO INVEST THOSE ASSETS ACCORDING TO ANY PARTICULAR STRATEGY
EXCEPT AS MAY BE REQUIRED BY STATE INSURANCE LAWS NOR WILL THE GUARANTEED
INTEREST RATES GNA ESTABLISHES BE DETERMINED BY THE PERFORMANCE OF THE
NONUNITIZED SEPARATE ACCOUNT. THE INVESTMENT STRATEGIES FOR ASSETS SUPPORTING
THE VARIABLE PORTION OF THE CONTRACTS ARE DESCRIBED IN THE ACCOMPANYING
PROSPECTUSES OF THE FUNDS

MORE INFORMATION ABOUT GNA

History and Business

Great Northern Insured Annuity Corporation (GNA or the Company) was incorporated
as a stock life insurance company organized under the laws of the State of
Washington on June 4, 1980, and began writing business pursuant to licensing on
October 15, 1980. On June 30, 1983, The Weyerhaeuser Company (Weyerhaeuser)
acquired a controlling interest in GNA. In October 1984, GNA Corporation, a
stock holding company, was formed to hold GNA's stock. Weyerhaeuser exchanged
its shares of GNA stock for shares of GNA Corporation.

Pursuant to a Stock Purchase Agreement dated January 5, 1993, by and between
Weyerhaeuser and General Electric Capital Corporation (GE Capital), 100% of the
outstanding capital stock of GNA Corporation was sold to GE Capital effective
April 1, 1993.

Effective July 14, 1993, GE Capital acquired 100% of the outstanding capital
stock of United Pacific Life Insurance Company (United Pacific Life). GE
Capital transferred controlling ownership of United Pacific Life to GNA.
Subsequently, United Pacific Life's name was changed to General Electric Capital
Assurance Company (GE Capital Assurance). GE Capital Assurance, a Delaware life
insurer, is licensed in the District of Columbia, and all states except Maine
and New York.

On February 1, 1990, GNA acquired 100% of the outstanding stock of First GNA
Life Insurance Company of New York (First GNA). Subsequent to the acquisition
of United Pacific Life, GNA merged First GNA with United Pacific Reliance Life
Insurance Company of New York, a wholly owned subsidiary of United Pacific
Life. The merged company is 48% owned by GNA and 52% by GE Capital Assurance.
Effective February 1, 1996, First GNA's name was changed to GE Capital Life
Assurance Company of New York (GE Capital Life). GE Capital Life issues
deferred and immediate annuities and life insurance in the state of New York.

Effective October 1, 1995, GNA was party to a reorganization involving GNA
Corporation and certain of its life insurance company subsidiaries. As part of
the reorganization, GNA became a wholly-owned subsidiary of GE Capital
Assurance, and GE Capital Assurance became a wholly-owned subsidiary of GNA
Corporation.

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Previously, all of GE Capital Assurance's voting common stock was owned by GNA.
The reorganization allows all life insurance company subsidiaries of GNA
Corporation to file a consolidated federal tax return.

GNA is licensed in the District of Columbia and all states except Maine, New
Hampshire, New York and Vermont. GNA markets primarily fixed-rate deferred
annuities, immediate annuities and variable deferred annuities primarily through
banks, thrifts and other financial institutions. Three financial institutions
accounted for 79% of all deferred and immediate annuity contracts issued during
1995.

Deferred Fixed-Rate Annuities. The predominant form of deferred annuities
require either single premium or flexible premium payments and have a minimum
annual guaranteed crediting rate. After the initial guarantee period, the
crediting rate may be changed periodically. The policy owner is permitted to
withdraw all or part of the premium paid plus interest credited, less a
surrender charge for withdrawals during the initial penalty period of one to
eight years. The surrender charge is initially 5% to 8% of the contract value
and decreases over the penalty period. Some deferred annuities provide for
penalty-free partial withdrawals of the accumulated interest credited or up to
10% annually of the accumulation value. GNA also markets a Modified Guaranteed
Annuity Contract (MGA) that offers ten different guarantee periods and allows
investors to increase earnings potential by combining different interest rates
under one product. Early withdrawals under the MGA are subject to a market
value adjustment. In 1995, GNA issued $709.5 million in deferred annuities. At
December 31, 1995, deferred annuities comprised $5,452.5 million of total
liabilities for future annuity and contract benefits.

Immediate Annuities. GNA's immediate annuities are designed to provide a series
of periodic payments for a fixed length of time or for life, according to the
annuitant's choice at the time of issue. Once the payments have begun, the
amount, frequency and length of time for which they are payable are fixed. A
primary form of immediate annuities, the structured settlement annuity, is
usually sold as part of a settlement resulting from a personal injury or
wrongful death claim to provide scheduled payments to an injured person or
his/her dependents. Structured settlement annuities are generally long-term and
cannot be surrendered. In 1995, GNA issued $276.5 million in immediate
annuities. At December 31, 1995, immediate annuities comprised $461.5 million
of total liabilities for future annuity and contract benefits.

Deferred Variable Annuities. GNA markets a deferred variable annuity that
offers customers a different degree of potential for return by offering eighteen
investment options: eight different mutual fund portfolios and a fixed MGA
account with ten different guaranteed interest rate periods. Performance of the
mutual fund portfolios selected determines the variable account value.
Customers may withdraw all or a portion of their account value, subject to
certain charges for early withdrawals. The withdrawal charge is initially 5%
and decreases over the five year penalty period. Customers may also make
penalty-free partial withdrawals of up to 10% annually of their accumulated
account value. Withdrawals from the fixed MGA account guarantee periods are
also subject to market value adjustments. GNA deducts annual charges for
mortality and expense risk and administration costs equal to 1.4% of the account
balance. In 1995, GNA issued $17.9 million in variable deferred annuities.

GNA leases office space in Seattle, Washington. GNA is reimbursed by its
subsidiaries and affiliates for rent based on direct and indirect allocation
methods. All owned properties were acquired through foreclosure and are held
for sale.

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Selected Financial Data

The following selected financial data should be read in conjunction with the
financial statements and notes thereto included in this Prospectus.
Selected Financial Data
(Dollars in millions)
<TABLE>
<CAPTION>

Year ended December 31
---------------------------------------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
---------------------------------------------------------------------------------
Pro forma Pro forma
(unaudited) (unaudited)
(1) (1)
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income $ 444.5 $ 391.6 $ 784.7 $ 837.8 $ 579.8 $ 406.4 $ 421.6
Income before income taxes 39.1 70.6 62.0 107.7 57.0 53.6 53.8
and minority interest
Net income 26.7 44.0 26.3 47.5 34.1 33.6 35.3
Total assets 6,926.5 6,578.0 6,926.5 13,100.2 13,160.1 5,973.9 5,167.9
Shareholder's interest 631.7 607.3 631.7 794.2 754.0 326.3 304.7
excluding net unrealized
investment gain/(loss)
Net unrealized investment 29.9 (166.7) 29.9 (528.8) (16.3) (.5) -
gain/(loss)
Total shareholder's interest 661.6 440.6 661.6 265.4 737.7 325.8 304.7
</TABLE>

(1) Unaudited pro forma results reflect the Reorganization as if it had occurred
at the beginning of the period.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

(1) Results of Operations

GNA derives substantially all its income from earnings on investments offset by
interest credited to policyholders of predominantly deferred and immediate
annuities, operating expenses, acquisition costs and taxes. Funds received for
the purchase of immediate annuities with life contingencies, including options
elected under annuity contracts, are reported as premium income. Other income
is primarily surrender fees on deferred annuity policies.

1995 Compared to 1994
- ---------------------

Effective October 1, 1995, GNA was party to a reorganization (the
Reorganization) in which GNA became a wholly-owned subsidiary of GE Capital
Assurance and GE Capital Assurance became a wholly-owned subsidiary of GNA
Corporation. Previously, all of GE Capital Assurance's voting stock was owned
by GNA; therefore, GNA's results of operations include GE Capital Assurance and
subsidiaries' results for 9 months of 1995 and 12 months of 1994.

Net investment income decreased $53.1 million to $784.7 million. This is
primarily related to the Reorganization described above, which reduced earning
assets by $6,506.8 million. As a result of the Reorganization, net investment
income excluded GE Capital Assurance and subsidiaries' fourth quarter net
investment income of $114.7 million. The remaining $61.6 million increase is
primarily attributable to higher invested assets and reinvestment of net
investment proceeds in higher yielding securities.

Net realized investment gains (losses) - As part of the Company's
asset/liability risk management, net realized investment losses were $14.4
million during 1995, compared to a $6.3 million gain in 1994.

Premiums increased $59.5 million to $177.1 million. This increase primarily
relates to increased sales of GNA's structured settlement product of $67.3
million, introduced in June of 1994, offset by the effects of the Reorganization
of $7.8 million.

32
<PAGE>

Interest credited on policyholder deposits decreased $27.2 million to $462.2
million. The decrease was primarily related to the Reorganization as interest
crediting rates remained relatively consistent with 1994.

Change in policy reserves increased $54.1 million to $174.5 million. Policy
reserves related to life contingent products increased primarily from new
structured settlement premiums and growth in annuitizations of life contingent
products.

Annuity and surrender benefits decreased $24.2 million to $136.7 million.
Offsetting the effects of the Reorganization, which decreased benefits by $40.8
million, annuity and surrender benefits increased by $16.6 million. This
increase is due to structured settlements benefits and increased tax free
exchanges.

Commissions decreased $9.9 million to $42.9 million. This decrease is
primarily due to decreased product sales of $125.1 million to $987.4 million.

General expenses increased $24.4 million to $71.2 million. This increase is
primarily related to an accrual for guaranty association assessments of $20.4
million recorded in the fourth quarter of 1995. These assessments levied by
various state regulators help to ensure payments to policyholders of impaired or
insolvent companies.

Amortization of intangibles is a result of the GNA and GE Capital Assurance
acquisitions. The Company established goodwill and present value of future
profits (PVFP) assets in connection with the acquisitions. For the years ended
December 31, 1995 and 1994, goodwill amortization was $4.8 million and $7.8
million, respectively. The decrease is primarily related to the fact that after
the Reorganization, the goodwill balance of GE Capital Assurance was dividended
out and the related amortization was not included in GNA's operations for the
fourth quarter of 1995.

PVFP represents the present value of estimated gross profits embedded in
acquired contracts, and is estimated using actuarial methods and assumptions
related to future investment income yields, interest credited rates, contract
maintenance expenses, persistency rates and surrender fees. Amortization will
be based on periodic estimates of realized and remaining gross profits. Net
PVFP amortization for the years ended December 31, 1995 and 1994 was $52.4
million and $50.0 million, respectively.

Increase in deferred acquisition costs decreased $20.2 million to $42.9 million
primarily as a result of lower commissions and an increase of $10.3 million in
amortization of the related balance sheet account.

Provision for income taxes. The effective tax rate for 1995 decreased from
41.5% to 39.5% primarily due to lower state taxes caused by the Reorganization.

Minority interest decreased $4.3 million to $11.2 million primarily due to the
fact that in the fourth quarter of 1995, after the effects of the
Reorganization, there was no longer minority interest recorded in GNA's
financial statements. The minority interest previously recorded represented GNA
Corporation's proportional ownership of GE Capital Assurance.

1994 Compared to 1993
- ---------------------

Net investment income increased $258.0 million to $837.8 million. This change
is attributable to additional investment income from GE Capital Assurance during
1994, as well as growth in earning assets from $12,264.2 million to $12,828.2
million. Overall investment yields have also increased as interest rates
continued to rise throughout the year.

Premiums increased $91.6 million to $117.6 million. This growth is
attributable to the introduction of GNA's structured settlement product in the
second quarter of 1994 and an increase in annuitization to life contingent
products from single premium deferred annuity products.

Interest credited on policyholder deposits increased $77.5 million to $489.4
million. Of the increase, GE Capital Assurance accounted for $91.0 million
which was partially offset by lower interest crediting rates on policyholder
deposits.

33
<PAGE>

Change in policy reserves increased $95.7 million to $120.4 million. Policy
reserves related to life contingent products increased primarily from new
structured settlement premiums and growth in annuitizations of life contingent
products.

Annuity and surrender benefits increased $88.6 million to $160.9 million due to
the acquisition of GE Capital Assurance and its related life contingent product
mix. The mature block of business in GE Capital Assurance results in higher
benefit payments.

Commissions increased $25.0 million to $52.8 million. This increase is a
result of sales volumes increasing $418.6 million to $1,112.5 million during
1994.

General expenses for 1994 were essentially the same as 1993. The additional
expense volume of GE Capital Assurance was mitigated by economies of scale which
maintained general expense levels.

Amortization of intangibles is a result of the GNA and GE Capital Assurance
acquisitions. The Company established goodwill of $150.6 million and PVFP of
$381.6 million in connection with the acquisitions. For the years ended
December 31, 1994 and 1993, goodwill amortization was $7.8 million and $2.0
million, respectively. The increase in goodwill amortization for the year ended
December 31, 1994 results from the inclusion of GE Capital Assurance for twelve
months compared to six months in 1993, and the adjustments for the impact of
certain tax elections related to the acquisition of GNA.

Net PVFP amortization for the years ended December 31, 1994 and 1993 was $50.0
million and $17.7 million, respectively. Amortization of PVFP has increased due
to inclusion of twelve months of amortization in 1994 compared to nine months in
1993 for GNA and five and one-half months for GE Capital Assurance.

Increase in deferred acquisition costs increased $27.0 million to $63.1 million
due to increased sales volumes and related commissions.

Provision for income taxes. The effective tax rate for 1994 increased from
28.6% to 41.5% primarily due to the non-deductible effects of goodwill
amortization and the effects in 1993 of the corporate tax rate change from 34%
to 35%.

Minority interest in net income increased $9.8 million to $15.5 million due to
the full year accrual of a cumulative dividend on GE Capital Assurance's
preferred stock. GE Capital Assurance's preferred stock was issued September
29, 1993 to GNA Corporation.

(2) Liquidity and Capital Resources

The Company's liquidity requirements are met by funds from operations and
investment activity. Premiums and policyholder deposits are invested in assets
that generally have durations similar to the Company's liabilities. Funds from
investment activity included principal and interest payments from the bond and
mortgage portfolio as well as sales, calls and maturities of certain securities.
As of December 31, 1995, investments subject to certain call provisions totaled
$156.1 million; and mortgage-backed securities subject to prepayment risk
totaled $1,661.6 million.

The Company is restricted by Washington State as to the amount of dividends it
may pay within a given calendar year to its parent without regulatory consent.
That restriction is the greater of statutory net gain from operations for the
year or 10% of the statutory surplus at the end of the year, subject to a
maximum equal to statutory earned surplus. As of December 31, 1995,
approximately $78.3 million was available for dividend payments in 1996.

(3) Segment Information

GNA's operations consist of the sale of annuity and life insurance products
which is considered a single segment/line of business. GNA is not dependent upon
any single customer and no single customer accounted for more than 10% of its
revenues in 1994.

34
<PAGE>

Investments

Fixed Maturities. The Company's assets must be invested in accordance with
requirements of applicable state laws and regulations regarding the nature and
quality of investments that may be made by life insurance companies and the
percentage of its assets that may be held in certain types of investments. At
December 31, 1995, approximately 44.7% of the fixed maturities were in corporate
issues and U.S. Treasuries with expected maturities within five years and
another 32.8% in securities backed by residential mortgages. At December 31,
1995, the Company did not hold any fixed maturity securities, other than
securities issued or guaranteed by the U.S. government, which exceeded 10% of
shareholder's interest before net unrealized investment gains (losses).
Approximately 23.5%, 20% and 8.4% of the portfolio were concentrated in the
manufacturing, financial and utility industries, respectively. As of December
31, 1995, 1.5% of the Company's portfolio was rated below investment grade and
no bonds were in default as to interest and principal.

All of the Company's fixed maturities were designated as available-for-sale at
December 31, 1995 and 1994. Accordingly, such investments were reported at fair
value. Unrealized gains and losses, net of the effects of present value of
future profits, deferred acquisition costs, minority interest and deferred
taxes, have been included in shareholder's interest as of December 31, 1995 and
1994. Shareholder's interest included net unrealized gains of $29.9 million and
net unrealized losses of $528.8 million at December 31, 1995 and 1994,
respectively, a difference primarily due to an increase in the fair value of
fixed maturities, principally resulting from lower interest rates and the
effects of the Reorganization.

Mortgage-backed securities are subject to risks associated with variable
prepayments. This may result in these securities having a different actual
maturity than planned at the time of purchase. Prepayment speeds are generally
dependent on the relative sensitivity of the underlying mortgages backing the
assets to changing interest rates and the repayment priority of the securities
in the overall securitization structure. Under certain circumstances, the
Company has purchased higher risk securities which do not compromise the safety
of the general portfolio, but rather serve to mitigate the Company's risk
exposure to changing interest rates. There are negligible default risks in the
mortgage-backed securities portfolio as a whole, as the vast majority of the
assets are either guaranteed by U.S. government sponsored entities or are
supported in the securitization structure by junior securities enabling the
assets to achieve high investment grade status.

Mortgage Loans. At December 31, 1995, the mortgage loan portfolio consisted of
1,161 mortgage loans on commercial real estate properties, 47% of which are
located in California. The loans, which were originated through a network of
mortgage bankers, were made only on completed, leased properties and have loan-
to-value ratios at the date of origination of less than 75%. GNA does not
engage in construction lending or land loans. In conjunction with the GE
Capital acquisition of GNA, loans and real estate with a book value of $47.4
million were sold to Weyerhaeuser Company. At December 31, 1995, four mortgage
loans representing $3.9 million were in default as to interest and principal and
ten mortgage loans totaling $8.5 million have been restructured.

Real Estate Owned. All real estate holdings totaling $1.1 million are a result
of mortgage loan foreclosure. In 1995, GNA acquired one real estate property
through foreclosure. Properties are currently reported at net realizable value.
Real estate owned decreased in 1995 by $5.2 million due to the sale of three
properties. At December 31, 1995, the Company holds two properties for which
management intends to market in an orderly fashion to maximize their value.

Other Invested Assets. The Company's other invested assets consist of GNA's
equity investment in GE Capital Life of $123.6 million and investments in mutual
fund portfolios offered in conjunction with the deferred variable annuities of
$40.4 million.

Competition

The Company is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
marketing insurance products. There are approximately 1,700 stock, mutual and
other types of insurers in the life insurance business in the United States, a
significant number of which are substantially larger than GNA. As of December
31, 1995, the Company has 482 employees. In addition, the

35
<PAGE>

Company has 230 retail sales agents selling the Company's products through an
affiliated company, GNA Insurance Services, Inc.

A.M. Best assigned to GNA an A + (Superior) rating. Duff & Phelps reaffirmed
the Company's AA (Very High) rating, and Standard & Poor's reaffirmed an AA
(Excellent) rating based on the Company's high claims paying ability and
excellent asset quality.

Government Regulation

GNA is subject to the laws of the State of Washington governing insurance
companies and to the regulations of the Washington Insurance Department. In
addition, GNA is subject to regulation under the insurance laws of other
jurisdictions in which the Company operates. Regulation by other supervisory
agencies includes licensing to transact business, overseeing trade practices,
licensing agents, approving policy forms, establishing reserve requirements,
fixing maximum interest rates on life insurance policy loans and minimum rates
for accumulation of surrender values, prescribing the form and content of
required financial statements and regulating the type and amounts of investments
permitted. The Company's books and accounts are subject to review by each
Insurance Department and other supervisory agencies at all times, and GNA files
annual statements with these agencies. A full examination of the Company's
operations is conducted periodically by various Insurance Departments and may
include the participation of the insurance departments of other states in which
GNA conducts business. Recent examinations have not resulted in significant
findings.

In addition, many states regulate affiliated groups of insurers (including GNA)
under insurance holding company legislation. Under such laws, intercompany
transactions, including transfers of assets and dividend payments from insurance
subsidiaries, may be subject to prior notice or approval, depending on the size
of the transfers and payments in relation to the financial positions of the
companies involved. Due to the Company's volume of California business, GNA is
considered a California commercially domiciled insurer under California
insurance holding company law.

The National Association of Insurance Commissioners (NAIC) has adopted Risk-
Based Capital (RBC) requirements to evaluate the adequacy of statutory capital
and surplus in relation to risks associated with: (i) asset quality, (ii)
insurance risk, (iii) interest rate risk, and (iv) other business factors. The
RBC formula is designed as an early warning tool for the states to identify
possible under-capitalized companies for the purpose of initiating regulatory
action. In the course of its operations, the Company monitors the level of its
RBC and it exceeds the minimum required levels.

Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed (up to prescribed limits) for policyholder losses
incurred by insolvent companies. GNA has estimated assessments related to known
insolvencies, primarily Executive Life Insurance Company, and has recorded a
liability of $38.2 million at December 31, 1995 related to this estimated
liability. The amount of any future assessments related to future insolvencies
under these laws, however, cannot be reasonably estimated. Most of these laws
do provide that an assessment may be excused or deferred if it would threaten an
insurer's own financial strength.

Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit regulation,
removal of barriers preventing banks from engaging in the insurance business,
tax law changes affecting the taxation of insurance companies and the tax
treatment of insurance products and the taxation impact on the relative
desirability of various investment vehicles.

New Accounting Standards

Accounting for Creditors for Impairment of a Loan, and the related SFAS No.
118, Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures, on January 1, 1995. The adoption of these Statements had no effect
on earnings or financial position as the same level of allowance for losses was
appropriate under both the previous accounting policy and the newly adopted
policy.

36
<PAGE>

SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of, requires, among other things, that certain long-
lived assets be reviewed for impairment whenever events or circumstances
indicate that the carrying amount of an asset may not be recoverable. An
impairment loss is recognized if, upon such review, the sum of expected future
cash flows is less than the carrying amount of the asset. An impairment loss is
measured based on the difference between the carrying amount of the asset and
its fair value. The effect of adopting SFAS No. 121 is not expected to be
material. Adoption is required by no later than the first quarter of 1996.

SFAS No. 122, Accounting for Mortgage Servicing Rights, requires that rights to
service mortgage loans be recognized when the underlying loans are sold. The
standard also requires that capitalized mortgage servicing rights be assessed
for impairment by individual risk stratum based on the fair value of such
rights. The effect of adopting SFAS No. 122 is not expected to be material.
Adoption is required by no later than the first quarter of 1996.

EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>

Position with GNA(1) and
------------------------
Name (Age) Principal Occupation for Last Five Years
- --------------------------- ----------------------------------------
<S> <C>
Patrick E. Welch Director, President and Chief Executive Officer of
(48) GNA Corporation and its subsidiaries since 1992.
Executive Vice President and Chief Operating
Officer of GNA Corporation and its subsidiaries
1991-92.

Hans L. Carstensen, III Director and Chief Marketing Officer of GNA since
(48) 1994. Senior Vice President of GNA since 1987.

Stephen P. Joyce Director and Senior Vice President of GNA since
(39) 1995. Vice President - Business Development GE
Capital Corporation 1994-95. President - Monogram
Retailer Credit, GE Capital Corporation 1990-94.

Victor C. Moses Director since 1994 and Senior Vice President,
(47) Business Development, and Chief Actuary of GNA
since 1993. Senior Vice President and Chief
Financial Officer of GNA 1991-93.

Geoffrey S. Stiff Director of GNA since 1994 and Senior Vice
(43) President and Chief Financial Officer of GNA
Corporation and its subsidiaries since 1993. Vice
President, Chief Financial Officer and Director of
Employers Reinsurance Corporation 1987-93.

Charles A. Kaminski Director since 1994 and Senior Vice President of
(47) GNA since 1993. Vice President of Investments of
GNA 1992-93. Vice President and Director of
Baring America Asset Management, 1984-91.

Kenneth F. Starr Director since 1994 and Senior Vice President of
(46) GNA since 1993. Vice President of GNA 1982-93.

Debora Dyer Horvath Senior Vice President and Chief Information
(41) Officer President of GNA since 1995. Vice
President of GNA 1993-95. Manager, GE Lighting
1982-93.

Marycatherine Yeagley Senior Vice President of GNA since 1995. Vice
(48) President of GNA 1990-95.

John W. Attey Vice President, Counsel and Acting Secretary of
(36) GNA since 1995. Associate Counsel and Assistant
Vice President of GNA 1989-1994.

</TABLE>

37
<PAGE>

Position with GNA(1) and
------------------------
Name (Age) Principal Occupation for Last Five Years
- --------------------------- ----------------------------------------
<S> <C>
Thomas W. Casey Vice President and Controller of GNA since 1993.
(33) Technical Adviser, GE Capital Corporation 1992-93.
Assistant Vice President, Citibank, 1990-92.

Scott Curtis Vice President of GNA Securities, Inc. since 1996.
(33) Sales and Marketing Director of GNA 1993-96.
Regional Marketing Director of GNA 1991-93.

Christopher M. Gregory Vice President of GNA since 1988.
(34)

James Hedreen Vice President of GNA since 1996. Assistant Vice
(32) President of GNA 1994-96. Manager of GNA
1993-94. Assistant Vice President of Merrill
Lynch Insurance Group 1991-93.

Pamela A. Hughes Vice President of GNA since 1992. Regional
(36) Marketing Director of GNA 1986-92.

Craig F. Likkel Vice President and Actuary of GNA since 1995.
(42) Consulting Actuary - Milliman and Robertson, Inc.
1991-1995.

Laurence M. Richmond Vice President of GNA since 1986.
(48)

J. Michael Singleton Vice President of GNA since 1985.
(55)

Patricia C. Vaselakos Vice President of GNA since 1994. Program and
(41) Regional Marketing Director of GNA 1990-94

Edward J. Wiles, Jr. Vice President, Counsel and Assistant Secretary of
(48) GNA since 1989.

Jeffrey I. Hugunin Treasurer of GNA since 1994. Vice President and
(33) Treasurer of Federal Home Life Insurance Company
and it subsidiaries since 1992. General
Accounting Manager HBJ Insurance Companies 1987-92.

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

(1) Each director is elected to serve until the next annual meeting of
shareholders or until his or her successor is elected and shall have
qualified.

Executive Compensation

GNA's Executive Officers may also serve as officers of one or more of GNA's
affiliated companies. In those cases allocations have been made as to each such
individual's time devoted to his duties as an executive officer of GNA and its
subsidiaries. The following table shows the compensation paid or awarded to, or
earned by, based on these allocations, GNA's Chief Executive Officer and its
four most highly compensated Executive Officers other than the Chief Executive
Officer.

38
<PAGE>

Summary Compensation Table
<TABLE>
<CAPTION>

Annual Compensation
------------------- Long Term
Name and Other Annual ---------------
Principal Position Year Salary Bonus Compensation(1) Compensation(2)
------------------ ----- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Patrick E. Welch 1995 $141,960 $ 52,500 $ 4,246 $77,550
President and Chief Executive 1994 119,700 39,900 3,136 72,200
Officer 1993 135,000 47,250 6,415 56,250
Hans L. Carstensen, III 1995 98,800 42,000 3,248 66,000
Senior Vice President, and Chief 1994 70,500 28,500 1,416 37,500
Marketing Officer 1993 176,000 76,000 8,610 96,000
Pamela A. Hughes 1995 96,360 116,208 34,326 -0-
Vice President 1994 71,601 23,310 4,892 -0-
1993 63,000 -0- 5,204 -0-
Laurence M. Richmond 1995 99,000 36,000 5,499 15,000
Vice President 1994 64,000 26,000 3,976 10,000
1993 59,200 26,000 4,093 10,000
J. Michael Singleton 1995 85,200 27,600 5,685 -0-
Vice President 1994 74,250 22,000 3,911 -0-
1993 68,750 19,250 5,437 -0-
</TABLE>

(1) Other annual compensation includes car allowance, car expense reimbursement,
group term life insurance premiums and moving expense reimbursement.

(2) Not included in the above table is an annuity plan available to certain of
GNA's officers which provides for annual payments for a ten year period in
the amount of $25,000 after the completion of ten years of employment
following the date of the award. Each of the officers listed in the Summary
Compensation Table above has received two awards payable as follows: Patrick
E. Welch -$50,000 commencing August 1, 1993; Hans L. Carstensen - $25,000
commencing July 1, 1995 and $25,000 commencing May 1, 1997; Pamela A.
Hughes -$25,000 commencing May 1, 2002; Laurence M. Richmond - $25,000
commencing December 1, 1993; and James M. Singleton - $25,000 commencing
January 1, 1996. An officer's interest in the plan benefits vests at a rate
of 10% ($2500) for each year following the date of the award. If an officer
dies during the vesting period, his or her estate will receive 100% of the
annual payment beginning on the commencement date. If an officer otherwise
terminates employment during the vesting period, he or she will be entitled
to receive at the commencement date only the vested portion of the plan
benefit as of the date of termination.

In connection with the acquisition by GE Capital of all of the outstanding
stock of GNA Corporation, The Weyerhaeuser Company, at no cost to GNA, made
commitments to certain of GNA's officers, including each of the officers listed
in the above table except Pamela A. Hughes, for a bonus to be paid if the
officer were still employed by GNA on April 15, 1994 (one year from the closing
date of the acquisition). Each of the eligible officers listed above received
the bonus.

No Executive Officer participates in the formulation of his or her
compensation. The compensation of Executive Officers is determined by the
compensation committee at GNA and the individual to whom the Officer reports and
is approved by the parent company of GNA Corporation.

GENERAL MATTERS

Performance Data

From time to time the Separate Account may publish advertisements containing
performance data relating to its Variable Sub-accounts. Performance data will
consist of total return quotations, which will always include quotations for
recent one year and, when applicable, five and ten year periods and, where less
than five or ten years, for the period subsequent to the date each Variable Sub-
account first became available for investment. Such quotations for such periods
will be the average annual rates of return required for an initial purchase
payment of $1,000 to equal the actual Certificate Value attributable to such
purchase payment on the last day of the period, after reflection of all charges.
Performance figures used by the Separate Account are based on the actual
historical performance of its Variable Sub-accounts for specified periods, and
the figures are not intended to indicate future

39
<PAGE>

performance. More detailed information on the computations is set forth in the
Statement of Additional Information.

Financial Statements

Financial statements of the Company are included in this Prospectus. Financial
statements of the Separate Account are included in the Statement of Additional
Information.

Restrictions Under the Texas Optional Retirement Program

Section 36.105 of the Texas Education Code permits Participants in the Texas
Optional Retirement Program ("ORP") to withdraw their interest in a variable
annuity contract issued under the ORP only upon (1) termination of employment in
the Texas public institutions of higher education, (2) retirement, or (3) death.
Accordingly, a Participant in the ORP, or the Participant's estate if the
Participant has died, will be required to obtain a certificate of termination
from the employer or a certificate of death before the Certificate can be
terminated. The foregoing restrictions on withdrawal do not apply in the event a
Participant in the ORP transfers the Certificate Value to another contract or
another qualified custodian during the period of participation in the ORP.

Distribution of Contracts

GNA has entered into an agreement with GNA Distributors, Inc. pursuant to which
GNA Distributors, Inc. will act as the principal underwriter of the Contracts
and use its best efforts to promote the sale of the Contracts and Certificates
thereunder. GNA Distributors, Inc. is registered with the Securities and
Exchange Commission as a broker-dealer under the Securities Exchange Act of 1934
("1934 Act") and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). GNA Distributors, Inc. will arrange for distribution
of the Contracts and Certificates primarily by other broker-dealers registered
under the 1934 Act and members of the NASD, including GNA Securities, Inc. Sales
of the Contracts and Certificates will be made by registered representatives of
such broker-dealers (or individuals not otherwise required to be registered) who
are also licensed insurance agents, either individually or through various
licensed insurance agencies. GNA or GNA Distributors, Inc. will pay a commission
up to a maximum of six and one-fourth percent (6.25%) of each premium payment.
In some instances there may also be paid a commission based on reinvested
premium and/or Certificate Value on a certain date. GNA Distributors, Inc. and
GNA Securities, Inc. are wholly owned subsidiaries of GNA Corporation.

Legal Proceedings

There is no material pending litigation to which the Company is a party or of
which any of the Company's property is the subject, and there are no legal
proceedings contemplated by any governmental authorities against the Company of
which management has any knowledge.

Legal Matters

Certain legal matters concerning the federal securities laws applicable to the
issue and sale of the Contracts and Certificates have been passed upon by
Messrs. Jones & Blouch L.L.P., 1025 Thomas Jefferson Street NW, Suite 405 West,
Washington, DC 20007-0805. The organization of GNA and its authority to issue
the Contracts and the validity of the form of the Contracts have been passed
upon by J. Neil McMurdie, Associate Counsel and Assistant Vice President of GNA.

Experts

GNA's consolidated financial statements for the years ended December 31, 1995,
1994 and 1993 included in this Prospectus have been audited by GNA's independent
public accountants (KPMG Peat Marwick LLP as of and for the years ended December
31, 1995 and 1994, and the nine months ended December 31, 1993, and Arthur
Andersen LLP for the three months ended March 31, 1993), as indicated in their
reports with respect thereto and are included herein in reliance upon the
authority of said firms as experts in accounting and auditing in giving said
reports.

40
<PAGE>

The report of KPMG Peat Marwick LLP covering the accompanying consolidated
financial statements of GNA contains an explanatory paragraph stating that as a
result of the acquisition of the company's parent, GNA Corporation, the
consolidated financial information for the period after the acquisition is
presented on a different cost basis than that for the periods before the
acquisition and, therefore, is not comparable.

The Separate Account's financial statements for the year ended December 31,
1995, have been audited by KPMG Peat Marwick LLP, as indicated in their report
with respect thereto, and are included in the Statement of Additional
Information in reliance upon the authority of said firm as experts in accounting
and auditing.

Registration Statements

Registration statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended with respect to the
Contracts. This Prospectus does not contain all information set forth in the
registration statements, their amendments and exhibits, to all of which
reference is made for further information concerning us and the Contracts.
Statements contained in this Prospectus as to the content of the Contracts and
other legal instruments are summaries. For a complete statement of the terms
thereof, reference is made to the instruments as filed in the registration
statements.

STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>

Table of Contents
Page
----
<S> <C>
Performance Data......... 2

Services................. 4
Servicing Agent........ 4
Principal Underwriter.. 4

Financial Statements..... 4
</TABLE>

41
<PAGE>

APPENDIX A

State Premium Taxes

Premium taxes vary according to the state and are subject to change. In many
jurisdictions there is no tax at all. For current information, a tax adviser
should be consulted.

TAX RATE
------ -------------------------
QUALIFIED NONQUALIFIED
STATE ---------- -------------
- --------------- Contracts Contracts
---------- -------------
<S> <C> <C>
ALABAMA........ 1.00% 1.00%
CALIFORNIA..... .50% 2.35%
DISTRICT OF
COLUMBIA...... 2.25% 2.25%
KANSAS......... .00 2.00%
KENTUCKY....... 2.00% 2.00%
MAINE.......... .00 2.00%
MISSISSIPPI.... .00 2.00%
NEVADA......... .00 3.50%
NORTH
CAROLINA...... .00 1.90%
PUERTO RICO.... 1.00% 1.00%
SOUTH DAKOTA... .00 1.25%
WEST VIRGINIA.. 1.00% 1.00%
WYOMING........ .00 1.00%
</TABLE>

42
<PAGE>

APPENDIX B

Examples of Market Value Adjustments

The table below is designed to show the impact of the market value adjustment
and withdrawal charge on a single premium of $10,000. It assumes the premium is
allocated to a Sub-account with a 10-year Guarantee Period with a guaranteed
rate of interest of 5%.

The market value adjustments are based on interpolated current interest rates
(defined in the Contract as "C") of 3%, 5% and 7%. The Net Sub-account Values
shown in the table are the maximum amounts available as cash withdrawals.
Withdrawal charges shown are based on the withdrawal charge table set forth
under "Charges and Deductions--Withdrawal Charges" in the Prospectus. The
withdrawal charges shown also assume no partial withdrawals have been made, and
thus the 10% free partial withdrawal is available. Values shown in the table
have been rounded to the nearest dollar, and therefore the figures under the Net
Sub-account Value columns may not equal the sum of corresponding figures under
the Sub-account Value, Market Value Adjustment and Withdrawal Charge columns.

The five percent guaranteed interest rate assumed in the table is used for
purposes of illustration only and should not be considered a representation of
the interest rate GNA will guarantee for 10-year Guarantee Periods. Further, the
three, five and seven percent interest rates on which the figures in the table
have been based should not be considered a prediction as to the extent the
current rates GNA uses may vary over the ten year period assumed in the table.

VARIABLE ANNUITY FIXED MGA ACCOUNT
<TABLE>
<CAPTION>

Market Value Adjustments, Withdrawal Charges and Net Sub-account Values for a
10-year Sub-account With a Guaranteed Interest Rate of 5% Based on Interpolated
Current Interest Rates of:

5% 3% 5% 7%
- ----------------------- --------------------- --------------------- ---------------------
End of Market Net Market Net Market Net
Certifi- Sub- Value With- Sub- Value With- Sub- Value With- Sub-
cate account Adjust- drawal account Adjust- drawal account Adjust- drawal account
Year Value ment Charge Value ment Charge Value ment Charge Value
- ---------- ----- ---- ------ ----- ---- ------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 1,984 448 12,037 0 448 10,053 (1,640) 448 8,413
2 11,025 1,834 445 12,414 0 445 10,580 (1,545) 445 9,035
3 11,576 1,668 354 12,891 0 354 11,223 (1,432) 354 9,790
4 12,155 1,487 264 13,378 0 264 11,892 (1,301) 264 10,590
5 12,763 1,288 174 13,877 0 174 12,588 (1,149) 174 11,439
6 13,401 1,072 0 14,473 0 0 13,401 (974) 0 12,427
7 14,071 836 0 14,907 0 0 14,071 (774) 0 13,297
8 14,775 579 0 15,354 0 0 14,775 (547) 0 14,227
9 15,513 301 0 15,815 0 0 15,513 (290) 0 15,223
10 16,289 0 0 16,289 0 0 16,289 0 0 16,289
- ------
</TABLE>

The formulas used in determining the amounts shown in the above table are as
follows:

(1) Market Value Adjustment Factor (MVAF)=(1 + Guaranteed Interest Rate) n/365-1
----------------------------

1 + Current Interest Rate

(2) Maximum Free Withdrawal Amount (MFW) = 10% of current Sub-account Value.
MFW is subject to MVA but not to withdrawal charge.

(3) Market Value Adjustment (MVA) = [(Sub-Account Value) x MVAF].

(4) Withdrawal Charge (WC) = [(Premium - MFW) x Withdrawal Charge Percent].

(5) Net Sub-Account Value = [(Sub-Account Value + MVA-WC)]

43
<PAGE>

FINANCIAL STATEMENTS
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Contents
<TABLE>
<CAPTION>

Page
----
<S> <C>
Pro Forma Financial Statements:
Great Northern Insured Annuity Corporation and Subsidiaries
December 31, 1995 (unaudited)
Description of Pro Forma Financial Statements...................
Pro Forma Consolidated Statement of Income for the Year
Ended December 31, 1995......................................
Notes to Pro Forma Financial Statements.........................

Consolidated Financial Statements:
Great Northern Insured Annuity Corporation and Subsidiaries
Independent Auditors' Report.................................
Consolidated Balance Sheets as of December 31, 1995 1994.....
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993...........................
Consolidated Statements of Shareholder's Interest for
the Years Ended December 31, 1995, 1994 and 1993............
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993.....................
Notes to Consolidated Financial Statements...................
</TABLE>
<PAGE>

DESCRIPTION OF
PRO FORMA FINANCIAL STATEMENTS
(Dollar amounts in millions)
(Unaudited)

Effective October 1, 1995, Great Northern Insured Annuity Corporation ("GNA")
was party to a reorganization (the "Reorganization") involving GNA Corporation
and certain of its life insurance company subsidiaries. The Reorganization
allows all life insurance company subsidiaries of GNA Corporation to file a
consolidated federal tax return.

Prior to the Reorganization, General Electric Capital Assurance Company's ("GE
Capital Assurance") voting common stock was owned by GNA and its preferred and
nonvoting common stock was owned by GNA Corporation. As part of the
Reorganization, GNA became a wholly-owned subsidiary of GE Capital Assurance and
GE Capital Assurance became a wholly-owned subsidiary of GNA Corporation. In
order for GE Capital Assurance to become the direct parent of GNA, GNA
Corporation contributed all the stock of GNA to GE Capital Assurance in exchange
for voting shares of GE Capital Assurance. GNA distributed its holdings of GE
Capital Assurance common stock to GE Capital Assurance with the result that GE
Capital Assurance is now wholly-owned by GNA Corporation.

The accompanying unaudited Pro Forma Financial Statement is based on the
Consolidated Statements of Income of GNA and GE Capital Assurance for the year
ended December 31, 1995, after giving effect to the transaction and the
adjustments detailed in the accompanying Notes to Pro Forma Financial
Statements. The Pro Forma Statement of Income is presented as if the
Reorganization had occurred January 1, 1995. The Pro Forma results are presented
for informational purposes only, and it should be noted that GNA's actual future
financial statements will reflect the effects of the Reorganization as of and
from October 1, 1995.

F-1
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(Dollar amounts in millions)
<TABLE>
<CAPTION>

Pro Forma Adjustments Pro Forma
------------------------
GE Capital Other
GNA Assurance(A) (B) GNA
--- ------------- ---- ---
<S> <C> <C> <C> <C>
Revenues:
Net Investment Income $784.7 ($343.9) $ 3.7 $444.5
Net realized investment gains (losses) (14.4) 20.5 6.1
Premiums 177.1 (9.4) 167.7
Surrender fee and other income 16.7 (3.6) 13.1
------ ------- ----- ------
Total revenues 964.1 (336.4) 3.7 631.4
------ ------- ----- ------

Benefits and expenses:
Interest Credited 462.2 (161.7) 300.5
Change in Policy Reserves 174.5 (8.0) 166.5
Annuity and surrender benefits 136.7 (116.3) 20.4
Commissions 42.9 (10.3) 32.6
General Expenses 71.2 (12.4) 58.8
Amortization of intangibles, net 57.5 (11.9) 45.6
Increase in deferred acquisition costs, net (42.9) 10.8 (32.1)
------ ------- ----- ------

Total Benefits and expenses 902.1 (309.8) - 592.3
------ ------- ----- ------

Income before income taxes
and minority interest 62.0 (26.6) 3.7 39.1

Provision for income taxes (24.5) 12.1 (12.4)
------ ------- ----- ------
Income before minority interest 37.5 (14.5) 3.7 26.7

Minority Interest (11.2) 3.2 8.0 -
------ ------- ----- ------
Net Income $ 26.3 ($11.3) $11.7 $ 26.7
------ ------- ----- ------
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
statements.

F-2
<PAGE>

Notes to Pro Forma Statements
(Unaudited)

Note 1:

The basis of presentation for the unaudited pro forma financial results is
contained on page F-1 and should be read in conjunction the notes hereto.

Note 2:

A. To record the effects of the distribution of GE Capital Assurance
capital stock to GNA's parent.

B. To eliminate the effects of minority interest and to record equity income
adjustments related to GNA's 48% equity investment in GE Capital Life
Assurance Company of New York ("GE Capital Life")(formerly First GNA Life
Insurance Company of New York) from January 1, 1995 to September 30, 1995.
Following the Reorganization, GE Capital Life will be accounted for on the
equity method.

F-3
<PAGE>

[LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE]

3100 Two Union Square
601 Union Street
Seattle, WA 98101-2327

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Directors
Great Northern Insured Annuity Corporation:

We have audited the accompanying consolidated balance sheets of Great Northern
Insured Annuity Corporation and subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, shareholder's interest, and
cash flows for the years then ended and the nine-month period ended December 31,
1993. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Great Northern
Insured Annuity Corporation and subsidiaries as of December 31, 1995 and 1994,
and the results of their operations and their cash flows for the years then
ended and the nine-month period ended December 31, 1993 in conformity with
generally accepted accounting principles.

As discussed in note 1 to the consolidated financial statements, effective April
1, 1993, General Electric Capital Corporation acquired all of the outstanding
stock of the Company's parent, GNA Corporation, in a business combination
accounted for as a purchase. As a result of the acquisition, the consolidated
financial information for the periods after the acquisition is presented on a
different cost basis than that for the period before the acquisition and,
therefore, is not comparable.

Seattle, Washington /s/ KPMG Peat Marwick LLP
January 19, 1996

F-4

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Great Northern Insured Annuity Corporation:

We have audited the accompanying consolidated statements of income,
shareholder's interest and cash flows of Great Northern Insured Annuity
Corporation (a Washington Corporation) and subsidiaries for the three months
ended March 31, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of Great Northern Insured Annuity
Corporation and subsidiaries' operations and their cash flows for the three
months ended March 31, 1993 in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen & Co.

ARTHUR ANDERSEN & CO.

Seattle, Washington
July 14, 1993

F-5
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ASSETS 1995 1994
------ -------- ---------
<S> <C> <C>
Investments:
Fixed maturities, at fair value (amortized cost of
$4,942.2 in 1995 and $11,322.5 in 1994)................. $5,064.6 $10,281.3
Mortgage loans, net of valuation allowance of $35.3 in
1995 and $32.0 in 1994.................................. 1,282.4 1,352.1
Real estate owned........................................ 1.1 6.3
Policy loans............................................. 3.9 88.6
Short-term investments................................... 28.1 58.7
Other invested assets.................................... 164.0 --
-------- ---------
Total investments...................................... 6,544.1 11,787.0
Cash....................................................... 1.9 29.2
Accrued investment income.................................. 85.6 196.3
Deferred acquisition costs................................. 88.8 92.1
Intangible assets.......................................... 156.3 562.7
Deferred income tax benefit................................ -- 404.7
Other assets............................................... 32.2 28.2
Separate account assets.................................... 17.6 --
-------- ---------
Total assets........................................... $6,926.5 $13,100.2
======== =========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S INTEREST
--------------------------------------
<S> <C> <C>
Liabilities:
Future annuity and contract benefits..................... $5,977.9 $12,206.5
Policy and contract claims............................... 89.5 105.5
Other policyholder liabilities........................... 73.6 93.6
Deferred income tax liability............................ 2.2 --
Accounts payable and accrued expenses.................... 104.1 149.6
Separate account liabilities............................. 17.6 --
-------- ---------
Total liabilities...................................... 6,264.9 12,555.2
-------- ---------
Minority interest.......................................... -- 279.6
Shareholder's interest:
Common stock, $100 par value. Authorized, issued and
outstanding 25,000 shares............................... 2.5 2.5
Additional paid-in capital............................... 541.9 719.4
Net unrealized investment gain (loss).................... 29.9 (528.8)
Retained earnings........................................ 87.3 72.3
-------- ---------
Total shareholder's interest........................... 661.6 265.4
-------- ---------
Total liabilities and shareholder's interest........... $6,926.5 $13,100.2
======== =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

(DOLLAR AMOUNTS IN MILLIONS)

<TABLE>
<CAPTION>
1993
-----------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
------ ------ ------------ ----------
(POST-
ACQUISITION)
<S> <C> <C> <C> <C>
Revenues:
Net investment income................................................................ $784.7 $837.8 $477.2 $102.6
Net realized investment gains (losses)............................................... (14.4) 6.3 4.3 .1
Premiums............................................................................. 177.1 117.6 23.4 2.6
Surrender fee and other income....................................................... 16.7 11.2 8.9 2.8
------ ------ ------ ------
Total revenues..................................................................... 964.1 972.9 513.8 108.1
------ ------ ------ ------
Benefits and expenses:
Interest credited.................................................................... 462.2 489.4 331.4 80.5
Change in policy reserves............................................................ 174.5 120.4 23.0 1.7
Annuity and surrender benefits....................................................... 136.7 160.9 71.3 1.0
Commissions.......................................................................... 42.9 52.8 20.3 7.5
General expenses..................................................................... 71.2 46.8 32.5 12.0
Amortization of intangibles, net..................................................... 57.5 58.0 19.8 --
Increase in deferred acquisition costs, net.......................................... (42.9) (63.1) (27.2) (8.9)
------ ------ ------ ------
Total benefits and expenses........................................................ 902.1 865.2 471.1 93.8
------ ------ ------ ------
Income before income taxes and minority interest................................... 62.0 107.7 42.7 14.3
Provision for income taxes............................................................. 24.5 44.7 12.2 5.0
------ ------ ------ ------
Income before minority interest.................................................... 37.5 63.0 30.5 9.3
Minority interest...................................................................... 11.2 15.5 5.7 --
------ ------ ------ ------
Net income......................................................................... $ 26.3 $ 47.5 $ 24.8 $ 9.3
- --------------------------------------------------
====== ====== ====== ======
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S INTEREST

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

(DOLLAR AMOUNTS IN MILLIONS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL UNREALIZED TOTAL
------------- PAID-IN INVESTMENT RETAINED SHAREHOLDER'S
SHARES AMOUNT CAPITAL GAINS (LOSSES) EARNINGS INTEREST
------ ------ ---------- -------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1992................... 35,150 $2.0 $ 175.1 $ (.5) $149.2 $ 325.8
Net income............ -- -- -- -- 9.3 9.3
Net unrealized
investment gains..... -- -- -- 2.4 -- 2.4
------ ---- ------- ------- ------ -------
Balances at March 31,
1993................... 35,150 2.0 175.1 1.9 158.5 337.5
====== ==== ======= ======= ====== =======
Balances at April 1,
1993 (post-
acquisition)........... 25,000 2.5 543.8 -- -- 546.3
Net income............ -- -- -- -- 24.8 24.8
Capital contribution
of GE Capital
Assurance............ -- -- 182.9 -- -- 182.9
Net unrealized
investment losses.... -- -- -- (16.3) -- (16.3)
------ ---- ------- ------- ------ -------
Balances at December 31,
1993................... 25,000 2.5 726.7 (16.3) 24.8 737.7
Net income............ -- -- -- -- 47.5 47.5
Purchase price
adjustments.......... -- -- (7.3) -- -- (7.3)
Net unrealized
investment losses.... -- -- -- (512.5) -- (512.5)
------ ---- ------- ------- ------ -------
Balances at December 31,
1994................... 25,000 2.5 719.4 (528.8) 72.3 265.4
Net income............ -- -- -- -- 26.3 26.3
Dividend of GE Capital
Assurance............ -- -- (175.2) -- (11.3) (186.5)
Purchase price
adjustments.......... -- -- (2.3) -- -- (2.3)
Net unrealized
investment gain...... -- -- -- 558.7 -- 558.7
------ ---- ------- ------- ------ -------
Balances at December 31,
1995................... 25,000 $2.5 $ 541.9 $ 29.9 $ 87.3 $ 661.6
====== ==== ======= ======= ====== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-8
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

(DOLLAR AMOUNTS IN MILLIONS)

<TABLE>
<CAPTION>
1993
----------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
--------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income...................... $ 26.3 $ 47.5 $ 24.8 $ 9.3
--------- --------- --------- -------
Adjustments to reconcile net
income to net cash provided by
operating activities:
Minority interest............. 11.2 15.5 5.7 --
Equity in undistributed
earnings of GE Capital Life.. (1.3) -- -- --
Increase in future policy
benefits..................... 636.7 609.8 357.0 82.2
Net realized investment
(gains) losses............... 14.4 (6.3) (4.3) (.1)
Amortization of investment
premiums and discounts....... 61.4 83.6 80.5 22.8
Amortization of intangibles... 57.5 58.0 19.4 .4
Change in certain assets and
liabilities:
Decrease (increase) in:
Accrued investment income. (6.5) 6.5 (.9) (4.3)
Deferred acquisition
costs.................... (42.9) (63.1) (27.2) (8.9)
Deferred income tax
benefit.................. 4.0 30.2 (5.5) --
Other assets.............. 12.6 (10.7) (3.0) 4.5
Increase (decrease) in:
Other policyholder
liabilities.............. (25.7) 122.7 (34.3) 18.4
Accounts payable and
accrued expenses......... 24.1 (13.0) 53.8 (5.8)
--------- --------- --------- -------
Total adjustments......... 745.5 833.2 441.2 109.2
--------- --------- --------- -------
Net cash provided by
operating activities..... 771.8 880.7 466.0 118.5
--------- --------- --------- -------
Cash flows from investing
activities:
Proceeds from investments in
fixed maturities and real
estate......................... 1,735.6 1,970.8 3,912.0 280.5
Principal collected on mortgage
loans.......................... 124.4 93.1 117.1 7.1
Purchases of fixed maturities... (1,846.5) (2,413.7) (4,741.8) (725.7)
Mortgage loan originations...... (159.9) (389.2) (104.0) (37.0)
Dividends received.............. 7.1 -- -- --
--------- --------- --------- -------
Net cash used in investing
activities............... (139.3) (739.0) (816.7) (475.1)
--------- --------- --------- -------
Cash flows from financing
activities:
Proceeds from issue of
investment contracts........... 810.3 994.9 489.4 178.5
Redemption and benefit payments
on investment contracts........ (1,469.2) (1,220.6) (604.4) (117.6)
Cash received upon contribution
of GE Capital Assurance........ -- -- 540.4 --
Cash distributed in conjunction
with dividend of GE Capital
Assurance...................... (31.5) -- -- --
Short-term borrowings........... -- (5.0) 5.0 --
--------- --------- --------- -------
Net cash provided by (used
in) financing activities. (690.4) (230.7) 430.4 60.9
--------- --------- --------- -------
Net increase (decrease) in
cash and cash
equivalents.............. (57.9) (89.0) 79.7 (295.7)
Cash and cash equivalents at
beginning of period.............. 87.9 176.9 97.2 392.9
--------- --------- --------- -------
Cash and cash equivalents at end
of period........................ $ 30.0 $ 87.9 $ 176.9 $ 97.2
========= ========= ========= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-9
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(DOLLAR AMOUNTS IN MILLIONS)

(1) ACQUISITIONS, REORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

(a) Acquisitions

Effective April 1, 1993, General Electric Capital Corporation (GE Capital),
all of whose common stock is indirectly owned by General Electric Company,
completed the acquisition of 100% of GNA Corporation's capital stock from
Weyerhaeuser Company and Weyerhaeuser Financial Services Inc. for a purchase
price of $577.4. For tax return purposes, the parties to this purchase have
agreed to treat the purchase as an acquisition of assets. Effective July 14,
1993, GE Capital acquired 100% of the issued and outstanding capital stock of
United Pacific Life Insurance Company and four of its seven wholly-owned
subsidiaries from Reliance Insurance Company and its parent company, Reliance
Group Holdings, Inc. for a purchase price of $514.6 in cash (collectively, the
Acquisitions). The Acquisitions have been accounted for using the purchase
method of accounting. Accordingly, each acquisition's purchase price has been
allocated to the assets acquired and the liabilities assumed based on their
estimated fair values at their respective acquisition dates. The consolidated
statements of income, shareholder's interest, and cash flows include the
effects of purchase adjustments as of their respective acquisition dates.
During 1994, United Pacific Life Insurance Company was renamed General
Electric Capital Assurance Company (GE Capital Assurance).

(b) Reorganization

Effective October 1, 1995, Great Northern Insured Annuity Corporation (GNA
or the Company) was party to a reorganization (the Reorganization) involving
GNA Corporation and certain of its life insurance company subsidiaries. The
Reorganization allows all life insurance company subsidiaries of GNA
Corporation to file a consolidated federal tax return.

Prior to the Reorganization, GE Capital Assurance's voting common stock was
owned by GNA and its preferred and nonvoting common stock was owned by GNA
Corporation, thus resulting in minority interest. As part of the
Reorganization, GNA became a wholly-owned subsidiary of GE Capital Assurance
and GE Capital Assurance became a wholly-owned subsidiary of GNA Corporation.
Consequently, there was no minority interest recorded on the balance sheet of
GNA as of December 31, 1995. In order for GE Capital Assurance to become the
direct parent of GNA, GNA Corporation contributed all of the stock of GNA to
GE Capital Assurance in exchange for voting shares of GE Capital Assurance.
GNA distributed its holdings of GE Capital Assurance common stock to GE
Capital Assurance with the result that GE Capital Assurance is now wholly-
owned by GNA Corporation.

The accompanying consolidated financial statements include the accounts of GNA
and its subsidiaries prior to the Reorganization, GE Capital Assurance and First
GNA Life Insurance Company of New York (First GNA), owned 48% by GNA and 52% by
GE Capital Assurance. The results subsequent to the Reorganization include GNA,
as well as its proportionate share of First GNA, accounted for under the equity
method. Effective February 1, 1996, First GNA was renamed GE Capital Life
Insurance Company of New York (GE Capital Life).

Following are pro forma results of operations of GNA for the years ended
December 31, 1995 and 1994, as if the Reorganization had occurred at the
beginning of the period presented:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Total revenues......................................... $ 631.4 $ 509.1
Net income............................................. 26.7 44.0
Total assets........................................... 6,926.5 6,578.0
Total shareholders' interest........................... 661.6 440.6
</TABLE>

F-10
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(c) Basis of Presentation

These consolidated financial statements are prepared on the basis of
generally accepted accounting principles (GAAP) for stock life insurance
companies, which vary in several respects from accounting practices prescribed
or permitted by the Insurance Commissioners of the states of Washington,
Delaware and New York, where the Company and subsidiaries are domiciled.

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect reported amounts and
related disclosures. Actual results could differ from those estimates.

(d) Products

The primary product of the Company is investment type deferred annuities.
The Company has also issued life contingent structured settlement policies,
single premium whole life policies and a limited number of universal life
policies. Investment type immediate annuities are also issued. The Company
considers the sale of annuity and life insurance products to be a single
segment/line of business.

GNA primarily sells its products through banks, thrifts and other financial
institutions. Three financial institutions accounted for 79% of all deferred
and immediate annuity contracts issued during 1995.

GNA has effective registration statements with the Securities and Exchange
Commission for the purposes of marketing Modified Guaranteed Annuity (MGA) and
Group Deferred Variable Annuity products. The MGA offers customers a
guaranteed interest rate for a predetermined time period and subjects
customers to a market value adjustment on early withdrawals. The Group
Deferred Variable Annuity offers customers eighteen investment options: eight
which invest in shares of a corresponding mutual fund portfolio, and ten which
correspond with guaranteed interest rate periods of one to ten years.

(e) Revenues

Investment income is recorded when earned. Investment gains and losses are
calculated on the basis of specific identification. Premiums from the sale of
life contingent annuities are recognized as revenue when contracts are issued.
Surrender charges are recognized as income when the policy is surrendered.

(f) Investments

The Company has designated its fixed maturities as available for sale
beginning December 31, 1993. Those securities are reported at fair value, with
net unrealized gains and losses included in equity, net of effects on the
present value of future profits, deferred acquisition costs, and deferred
income tax. Unrealized losses that are other than temporary are recognized in
earnings.

The Company does not engage in derivatives trading, market-making or other
speculative activities. Any instrument designated but ineffective as a hedge
is marked to market and recognized in operations immediately. The Company uses
interest rate swaps that modify reserve characteristics or designated assets.
The Company requires all options to be designated and accounted for as hedges
of specific assets, liabilities or committed transactions; resulting payments
and receipts are recognized contemporaneously with effects of hedged
transactions. A payment or receipt arising from early termination of an
effective hedge is accounted for as an adjustment to the basis of the hedged
transaction. The Company has no open or outstanding derivative transactions at
December 31, 1995 or 1994.

F-11
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Mortgage and policy loans are stated at the unpaid principal balance of such
loans, net of allowances for probable uncollectible balances.

Foreclosed real estate owned is carried at lower of cost or fair value less
selling costs, giving consideration to current occupancy rates and economic
conditions.

(g) Statements of Cash Flows

All highly liquid investments with an original maturity of three months or
less are classified as short-term investments on the balance sheets and
considered cash equivalents in the statements of cash flows.

During the years 1995 and 1994 and the nine months ended December 31, 1993
and three months ended March 31, 1993, the Company acquired real estate
through foreclosure amounting to $6.6, $1.6, $2.9 and $0.0, respectively, and
paid federal and state income taxes of $1.7, $6.8, $40.9 and $0.2,
respectively. Effective July 14, 1993, the Company received a capital
contribution of $182.9 in the form of GE Capital Assurance's Class A common
stock from GNA Corporation. Effective October 1, 1995, the Company's
shareholder's interest decreased by $186.5 due to the dividend of its
investment in GE Capital Assurance.

(h) Future Annuity and Contract Benefits

Investment Contracts

Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment contracts are recognized by providing a liability equal to the
current account value of the policyholders' contracts. Interest rates credited
to investment contracts are guaranteed for the policy term with renewal rates
determined by management. At December 31, 1995 and 1994, investment contracts
comprised $5,668.2 and $9,769.1, respectively.

Insurance Contracts

Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future benefits
is the present value of such benefits based on mortality, and other
assumptions which were appropriate at the time the policies were issued. These
assumptions are periodically evaluated for potential premium deficiencies. At
December 31, 1995 and 1994, insurance contracts comprised $309.7 and $2,437.4,
respectively.

Interest rate assumptions used in calculating the present value of future
annuity and contract benefits range from 4.0% to 9.0%.

(i) Deferred Acquisition Costs

Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts,
such as commissions, direct advertising and printing, and certain support
costs such as underwriting and policy issue expenses. Acquisition costs
capitalized are determined by actual costs and expenses incurred by product in
the year of issue. For investment contracts, the amortization is based on the
present value of the anticipated gross profits from investments, interest
credited, surrender charges, mortality and maintenance expenses. As actual
gross profits vary from projected, the impact on amortization is included in
net income. For insurance contracts, the acquisition costs are amortized in
relation to the benefit payments.

Recoverability of deferred acquisition costs is evaluated periodically by
comparing the current estimate of expected future gross profits to the
unamortized asset balances. If such comparison indicates that the expected
gross profits will not be sufficient to recover the asset, the difference will
be charged to expense.

F-12
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In conjunction with the Acquisitions, the unamortized deferred acquisition
cost balance existing on the respective purchase dates was eliminated.
Activity in deferred acquisition costs was as follows:

<TABLE>
<CAPTION>
1993
----------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
------ ----- ----------- ----------
<S> <C> <C> <C> <C>
Beginning unamortized balance......................................................... $ 90.2 $27.1 $ -- $255.2
Dividend of GE Capital Assurance...................................................... (26.6) -- -- --
Costs deferred........................................................................ 53.0 62.8 26.4 10.8
Amortization, net..................................................................... (10.1) .3 .7 (1.8)
------ ----- ----- ------
Ending unamortized balance............................................................ 106.5 90.2 27.1 264.2
Cumulative effect of net unrealized investment (gains) losses......................... (17.7) 1.9 -- --
------ ----- ----- ------
Recorded balance...................................................................... $ 88.8 $92.1 $27.1 $264.2
--------------------------------------------------
====== ===== ===== ======
</TABLE>

(j) Intangible Assets

(1) Present Value of Future Profits

In conjunction with the Acquisitions, a portion of the purchase price was
assigned to the right to receive future gross profits arising from existing
insurance and investment contracts. This intangible asset, called the present
value of future profits (PVFP), is actuarially determined based on the present
value of projected future gross profits on contracts acquired.

The method used by the Company to value PVFP is summarized as follows: (1)
identify the future gross profits attributable to certain lines of business,
(2) identify the risks inherent in realizing those gross profits, and (3)
discount these gross profits at the rate of return that the Company believes
it must earn in order to accept the inherent risks.

After PVFP is determined, the amount is amortized, net of accreted interest,
based on the incidence of the expected gross profits. Interest accretes at
rates credited to policyholders on underlying contracts. As actual gross
profits vary from projection, the impact on amortization is included in net
income.

Recoverability of PVFP is evaluated periodically by comparing the current
estimate of expected future gross profits to the unamortized asset balances.
If such comparison indicates that the expected gross profits will not be
sufficient to recover PVFP, the difference will be charged to expense.

Activity in PVFP was as follows:

<TABLE>
<CAPTION>
APRIL 1-
DECEMBER 31,
1995 1994 1993
------ ------ ------------
<S> <C> <C> <C>
Beginning unamortized balance.................. $313.9 $363.9 $322.2
Dividend of GE Capital Assurance............... (74.0)
GE Capital Assurance purchase, July 15, 1993... -- -- 59.4
Interest accrued at 4.8% in 1995 and 4.9% in
1994 and 5.5% in 1993......................... 15.4 17.8 14.2
Amortization................................... (67.8) (67.8) (31.9)
------ ------ ------
Ending unamortized balance..................... 187.5 313.9 363.9
Cumulative effect of net unrealized investment
gains (losses)................................ (65.1) 101.2 (10.2)
------ ------ ------
Recorded balance............................... $122.4 $415.1 $353.7
====== ====== ======
</TABLE>

F-13
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Amortization of PVFP, net of accretion, as a percent of the unamortized PVFP
balance for the next five years is estimated as follows:

(2) Goodwill

In conjunction with the Acquisitions, $150.6 of goodwill was recorded and
will be amortized over 25 years. This asset has been adjusted to reflect the
final GNA purchase price. In conjunction with the Reorganization, goodwill was
reduced by $103.4. During the years ended December 31, 1995 and 1994 and the
period April 1 through December 31, 1993, $4.8, $7.8 and $2.0, respectively,
was amortized. As of December 31, 1995, the unamortized balance of goodwill
was $32.6. Goodwill in excess of associated expected operating cash flows is
considered to be impaired and is written down to fair value.

(k) Federal Income Tax

The Company is included with GE Capital Assurance in a life insurance
consolidated federal income tax return. Prior to April 1, 1993, the Company
was included in the consolidated federal income tax return of the Weyerhauser
Company. Current and deferred taxes are allocated by applying the asset and
liability method of accounting for deferred income taxes to members of the
group as if each member was a separate taxpayer. Intercompany balances are
settled annually.

(l) Separate Accounts

The separate account assets and liabilities represent funds held for the
exclusive benefit of the Deferred Variable Annuity contract owners. The
Company receives mortality risk fees and administration fees from the variable
annuity mutual fund portfolios and separate account assets.

(m) Reclassifications

Certain reclassifications have been made to the 1994 and 1993 consolidated
financial statements to conform to the 1995 presentation. These
reclassifications have no effect on reported net income or financial position.

(2)INVESTMENTS

(a) Fixed Maturities

At December 31, the amortized cost, gross unrealized gains and losses, and
fair value of the Company's fixed maturities available-for-sale portfolio were
as follows:

<TABLE>
<CAPTION>
GROSS
UNREALIZED
AMORTIZED ------------- FAIR
1995 COST GAINS LOSSES VALUE
---- --------- ------ ------ --------
<S> <C> <C> <C> <C>
United States debt securities and agency
issues...................................... $ 140.6 $ 13.1 $ (.7) $ 153.0
Corporate debt securities.................... 3,162.2 99.5 (11.7) 3,250.0
Mortgage-backed securities................... 1,639.4 44.2 (22.0) 1,661.6
-------- ------ ------ --------
Totals................................... $4,942.2 $156.8 $(34.4) $5,064.6
======== ====== ====== ========
</TABLE>

F-14
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
GROSS
UNREALIZED
AMORTIZED --------------- FAIR
1994 COST GAINS LOSSES VALUE
---- --------- ----- --------- ---------
<S> <C> <C> <C> <C>
United States debt securities and agency
issues................................... $ 838.3 $ -- $ (143.6) $ 694.7
State debt securities..................... 8.9 -- (.3) 8.6
Foreign debt securities................... 21.1 -- (2.3) 18.8
Corporate debt securities................. 8,199.8 2.3 (734.0) 7,468.1
Redeemable preferred stock................ 16.8 -- (4.1) 12.7
Mortgage-backed securities................ 2,237.6 13.7 (172.9) 2,078.4
--------- ----- --------- ---------
Totals................................ $11,322.5 $16.0 $(1,057.2) $10,281.3
========= ===== ========= =========
</TABLE>

At December 31, 1995, approximately 23.5%, 20% and 8.4% of the Company's
investment portfolio is comprised of securities issued by the manufacturing,
financial and utility industries, respectively, the vast majority of which are
rated investment grade, and which are senior secured bonds. This portfolio is
widely diversified among various geographic regions in the United States, and
is not dependent on the economic stability of one particular region.

At December 31, 1995, the Company did not hold any fixed maturity securities,
other than securities issued or guaranteed by the U.S. government, which
exceeded 10% of shareholder's interest before net unrealized investment gains
(losses).

As required by law, the Company has investments on deposit of $2.9 and $5.0
at December 31, 1995 and 1994, respectively, with governmental authorities and
banks for the protection of policyholders.

For the years ended December 31, the sources of investment income of the
Company were as follows:

<TABLE>
<CAPTION>
1993
--------------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
------ ------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Fixed maturities................................................................ $666.8 $724.9 $398.7 $ 76.9
Mortgage loans.................................................................. 122.3 105.7 76.1 24.9
Other........................................................................... 2.3 13.7 5.2 2.2
------ ------ ------ ------
Gross investment income......................................................... 791.4 844.3 480.0 104.0
Investment expense.............................................................. (6.7) (6.5) (2.8) (1.4)
------ ------ ------ ------
investment income........................................................... $784.7 $837.8 $477.2 $102.6
====== ====== ====== ======
</TABLE>

For the years ended December 31, the Company realized sales proceeds, gross
investment gains and losses as follows:

<TABLE>
<CAPTION>
1993
--------------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
------ ------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Sales proceeds................................................................. $998.9 $860.1 $2,591.4 $15.7
------ ------ -------- -----
Gross realized investment:
Gains.......................................................................... $ 16.6 $ 17.5 $ 35.3 $ .9
Losses......................................................................... (31.0) (11.2) (31.0) (.8)
-------------------------------------------------- ------ ------ -------- -----
Net realized investment gains (losses)......................................... $(14.4) $ 6.3 $ 4.3 $ .1
====== ====== ======== =====
</TABLE>

The additional proceeds from investments result from principal collected on
mortgage-backed securities, maturities, calls and sinking payments.

F-15
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Fixed maturities are considered available for sale. Accordingly, fixed
maturities are accounted for at fair value through shareholder's interest, net
of the following adjustments:

<TABLE>
<CAPTION>
1995 1994
------ ---------
<S> <C> <C>
Fixed maturities...................................... $122.4 $(1,041.2)
Other invested assets................................. 5.2 --
Deferred acquisition costs............................ (17.7) 1.9
Present value of future profits....................... (65.1) 101.2
Deferred income taxes................................. (14.9) 328.3
Minority interest..................................... -- 81.0
------ ---------
Net unrealized investment gain (loss)............. $ 29.9 $ (528.8)
====== =========
</TABLE>

The maturity distribution of the fixed maturities portfolio at December 31
was as follows:

<TABLE>
<CAPTION>
1995 1994
------------------ -------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Due in one year or less.............. $ 345.8 $ 345.7 $ 257.7 $ 254.7
Due between one year through five
years............................... 1,873.6 1,916.2 3,093.2 2,917.0
Due between five years through ten
years............................... 636.7 655.6 2,922.5 2,635.4
Due after ten years.................. 446.7 485.5 2,811.5 2,395.8
-------- -------- --------- ---------
Subtotals........................ 3,302.8 3,403.0 9,084.9 8,202.9
Mortgage-backed securities........... 1,639.4 1,661.6 2,237.6 2,078.4
-------- -------- --------- ---------
Totals........................... $4,942.2 $5,064.6 $11,322.5 $10,281.3
======== ======== ========= =========
</TABLE>

The evaluation of investment and credit risk is undertaken by a number of
rating services, such as Standard & Poor's Corporation and Moody's Investors
Services. These services assign a letter rating to each security on the basis
of their evaluation. Bonds with ratings ranging from AAA to BBB are generally
regarded as investment grade securities. Some agencies and treasuries (that
is, those securities issued by the United States government or an agency
thereof) are not rated, but all are considered to be investment grade
securities. Finally, some securities, such as private placements, have not
been assigned a rating by any rating service and are therefore categorized as
"not rated"; this has neither positive nor negative implications regarding the
value of the security.

The fixed maturities portfolio at December 31 consisted of the following
classes of securities:

<TABLE>
<CAPTION>
1995 1994
---------------- -----------------
FAIR FAIR
VALUE PERCENT VALUE PERCENT
-------- ------- --------- -------
<S> <C> <C> <C> <C>
Agencies and treasuries................... $1,377.2 27.2% $ 2,015.5 19.6%
AAA....................................... 283.7 5.6 390.2 3.8
AA........................................ 214.7 4.3 792.0 7.7
A......................................... 1,546.3 30.5 2,948.4 28.7
BBB....................................... 1,225.6 24.2 3,166.9 30.8
BB........................................ 71.0 1.4 429.6 4.2
B......................................... 5.2 .1 67.8 .7
Not rated................................. 340.9 6.7 470.9 4.5
-------- ----- --------- -----
Totals................................ $5,064.6 100.0% $10,281.3 100.0%
======== ===== ========= =====
</TABLE>

At December 31, 1995, there were no bonds in default as to interest and
principal.

F-16
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(b) Mortgage Loans

At December 31, 1995 and 1994, the Company's mortgage loan portfolio
consisted of 1,161 and 1,226, respectively, first mortgage loans on commercial
real estate properties. The loans, which are originated by the Company through
a network of mortgage bankers, are made only on completed, leased properties
and have a maximum loan-to-value ratio of 75% at the date of origination. The
Company does not engage in construction lending or land loans.

The Company originated $18.5, $62.3 and $30.9 of mortgages secured by real
estate in California, which represent 13%, 16% and 22% of total originations
for the years ended December 31, 1995, 1994 and 1993, respectively. At
December 31, 1995 and 1994, respectively, the Company held $519.2 and $558.3
in mortgages secured by real estate in California; this is 40% of the total
mortgage portfolio, for both years

On January 1, 1995, GNA adopted Statement of Financial Accounting Standards
(SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, and the
related SFAS No. 118, Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosures. There was no effect of adopting the Statements on
1995 results of operations or financial position because the allowance for
losses established under the previous accounting policy continued to be
appropriate following the accounting change. The Statements require
disclosures of impaired loans--loans for which it is probable that the lender
will be unable to collect all amounts due according to original contractual
terms of the loan agreement, based on current information and events. At
December 31, 1995, loans that required disclosure as impaired amounted to
$16.2. For $3.2 of such loans, the required allowance for losses was $0.1. The
remaining $13.0 of loans represents the recorded investment in loans that are
fully recoverable, but only because the recorded investment had been reduced
through charge-offs or deferral of income recognition. These loans must be
disclosed under the Statements' technical definition of "impaired" because GNA
will be unable to collect all amounts due according to original contractual
terms of the loan agreement. Under the Statements, such loans do not require
an allowance for losses. GNA's average investment in impaired loans requiring
disclosure under the Statements was $11.3 during 1995, with revenue of $1.3
recognized, principally on the cash basis.

The following table shows the activity in the allowance for losses during
the years ended December 31:

<TABLE>
<CAPTION>
1993
----------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
----- ----- ----------- ----------
<S> <C> <C> <C> <C>
Balance at beginning of period......................................................... $32.0 $30.5 $30.4 $ .8
Dividend of GE Capital Assurance....................................................... (.3) -- -- --
Additions.............................................................................. 2.8 2.4 2.6 .8
Amounts written off, net............................................................... .8 (.9) (2.5) (.6)
----- ----- ----- ----
Balance at end of period............................................................... $35.3 $32.0 $30.5 $1.0
--------------------------------------------------
===== ===== ===== ====
</TABLE>

The net amount of mortgages written off during 1995 include actual write-
offs of $2.0. The write-offs represented 0.15% of average mortgage loans
outstanding during 1995, compared with 0.07% and 0.57% during 1994 and 1993,
respectively.

The allowance for losses on mortgage loans at December 31, 1995 and 1994
represented 2.7% and 2.3% of total mortgage loans, respectively.

F-17
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

A portion of other invested assets at December 31, 1995 included $123.6 for
the Company's 48% investment in GE Capital Life, accounted for under the
equity method. Other investment income includes $1.3 for equity in earnings of
GE Capital Life subsequent to the Reorganization. Prior to the Reorganization,
GE Capital Life was consolidated. Following is the summarized financial
information for GE Capital Life for the year ended December 31, 1995:

<TABLE>
<S> <C>
Total revenue................................................... $ 102.0
Total expenses.................................................. 84.1
--------
Income before income taxes.................................. 17.9
Provision for income taxes...................................... 8.4
--------
Net income.................................................. $ 9.5
========
Total investments............................................... $1,491.6
Other assets.................................................... 100.1
--------
Total assets................................................ $1,591.7
========
Total liabilities............................................... $1,334.9
Shareholders' interest.......................................... 256.8
--------
Total liabilities and shareholders' interest.................... $1,591.7
========
</TABLE>

(3) INCOME TAXES

The total provision for income taxes for the years ended December 31
consisted of the following components:

<TABLE>
<CAPTION>
1993
----------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
----- ----- ----------- ----------
<S> <C> <C> <C> <C>
Current federal income tax provision................................................... $19.5 $12.0 $27.6 $3.6
Deferred federal income tax provision (benefit)........................................ 3.9 29.2 (17.2) 1.2
----- ----- ----- ----
Subtotal--federal provision........................................................ 23.4 41.2 10.4 4.8
----- ----- ----- ----
Current state income tax provision..................................................... 1.0 2.5 3.0 .2
Deferred state income tax provision (benefit).......................................... .1 1.0 (1.2) --
----- ----- ----- ----
Subtotal--federal provision......................................................... 1.1 3.5 1.8 .2
----- ----- ----- ----
Total provision for income taxes................................................... $24.5 $44.7 $12.2 $5.0
===== ===== ===== ====
</TABLE>

On August 10, 1993, the federal income tax rate applied to corporations was
increased from 34% to 35% effective January 1, 1993, due to the Omnibus Budget
Reconciliation Act of 1993. This change has been reflected in net income for
the nine months ended December 31, 1993.

F-18
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following reconciles the federal statutory tax rate of 35% to the
reported income tax provision (benefit):

<TABLE>
<CAPTION>
1993
----------------------
APRIL 1- JANUARY 1-
1995 1994 DECEMBER 31 MARCH 31
---- ---- ----------- ----------
<S> <C> <C> <C> <C>
Federal statutory corporate tax rate................................................... 35.0% 35.0% 35.0% 34.0%
State income tax....................................................................... 1.2 2.2 1.9 1.0
Rate change............................................................................ -- -- (9.4) --
Goodwill amortization.................................................................. 2.7 2.5 1.6 --
Other, net............................................................................. 0.6 1.8 (.5) --
---- ---- ---- ----
Effective rate..................................................................... 39.5% 41.5% 28.6% 35.0%
--------------------------------------------------
==== ==== ==== ====
</TABLE>

The components of the net deferred income tax benefit (liability) at
December 31 were as follows:

<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Assets:
Net unrealized investment loss.......................... $ -- $328.3
Mortgage loans and real estate.......................... 4.4 --
Future annuity and contract benefits.................... 58.5 241.7
Net operating loss carryforward......................... -- 66.6
Guaranty association assessments........................ 15.6 22.6
Deferred acquisition costs.............................. -- 3.9
Other assets............................................ 1.5 6.2
------ ------
Total deferred tax assets............................. 80.0 669.3
Valuation allowance for deferred tax assets............. -- (66.6)
------ ------
Net deferred tax assets............................... 80.0 602.7
------ ------
Liabilities:
Net unrealized investment gain.......................... (14.9) --
Fixed maturity valuation................................ -- (94.2)
Present value of future profits......................... (55.7) (95.9)
Deferred acquisition costs.............................. (6.1) --
Other................................................... (5.5) (7.9)
------ ------
Total deferred tax liabilities........................ (82.2) (198.0)
------ ------
Net deferred income tax benefit (liability)........... $ (2.2) $404.7
====== ======
</TABLE>

The significant change in deferred taxes is due to both lower interest rates
in 1995, which affect the unrealized gain or loss, as well as the
Reorganization.

Based on an analysis of the Company's tax position, management believes it
is more likely than not that the results of future operations and tax planning
strategies will generate sufficient taxable income to realize deferred tax
assets. No valuation allowance for deferred tax assets for 1995 was deemed
necessary following the effects of the Reorganization. During the year 1994,
the Company had recorded a valuation allowance of $66.6 representing the
entire balance of the deferred tax asset for net operating loss carryforwards
related to GE Capital Assurance.

F-19
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) RELATED-PARTY TRANSACTIONS

During the years ended December 31, 1995, 1994 and 1993, the Company
received $1.6, $2.6 and $6.3, respectively, from its affiliates, GNA
Securities, Inc. and GNA Distributors, Inc. for reimbursement of marketing,
administrative and general office expenses.

Prior to the Reorganization, the Company received $3.6 from GE Capital Life
and paid $31.2 to GE Capital Assurance for settlement of intercompany tax
payments. There were no intercompany tax payments during 1994.

(5) COMMITMENTS AND CONTINGENCIES

(a) Mortgage Loan Commitments

As of December 31, 1995 and 1994, the Company was committed to fund $20.2
and $126.7, respectively, in mortgage loans.

(b) Leases

The Company leases the office space used in its operations. Lease expense
for the years ended December 31, 1995 and 1994, nine months ended December 31,
1993 and three months ended March 31, 1993 amounted to $3.4, $3.4, $2.5 and
$0.8, respectively.

Future minimum commitments under operating leases as of December 31, 1995
are summarized as follows:

<TABLE>
<S> <C>
1996............................... $ 4.1
1997............................... 3.8
1998............................... 3.7
1999............................... 2.8
-----
Total.......................... $14.4
=====
</TABLE>

Rates for certain office space leases are subject to inflationary increases.
The effect of such inflationary increases has not been reflected in the future
minimum commitments.

The Company has nonqualified deferred compensation arrangements with certain
senior officers. Compensation earned will be paid through a ten-year annuity,
commencing ten years from the date of employment or promotion. Deferred
compensation vests at 10% for each year of service. The present value of
accrued amounts vested at December 31, 1995 and 1994 were $3.2 and $3.6,
respectively. During the years ended December 31, 1995 and 1994, nine months
ended December 31, 1993 and three months ended March 31, 1993, the Company
expensed $0.5, $0.6, $0.5 and $0.2, respectively, related to deferred
compensation.

(d) Guaranty Association Assessments

The Company is required by law to participate in the guaranty associations
of the various states in which it does business. The state guaranty
associations ensure payment of guaranteed benefits, with certain restrictions
to policyholders of impaired or insolvent insurance companies, by assessing
all other companies involved in similar lines of business.

There are currently several insurance companies which had substantial
amounts of annuity business, in the process of liquidation or rehabilitation.
The Company paid $6.6, $10.3, $3.5 and $0.9 to various state guaranty

F-20
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
associations during the years ended December 31, 1995 and 1994, nine months
ended December 31, 1993 and three months ended March 31, 1993, respectively.
The Company accrues its best estimate for known insolvencies. At December 31,
1995 and 1994, accounts payable and accrued expenses include $38.2 and $46.8,
respectively, related to estimated assessments. The Company expensed $20.4 of
related assessments during the fourth quarter of 1995.

(e) Litigation

There is no material pending litigation to which the Company is a party or
of which any of the Company's property is the subject, and there are no legal
proceedings contemplated by any governmental authorities against the Company
of which management has any knowledge.

(6) STATUTORY BASIS DATA AND RESTRICTION OF RETAINED EARNINGS

The Company files financial statements with state insurance regulatory
authorities which are prepared on an accounting basis prescribed or permitted
by such authorities (statutory basis). Statutory accounting practices differ
from GAAP in several respects, causing differences in reported net income and
shareholder's interest. The Company, however, has no significant permitted
accounting practices which vary from prescribed accounting practices or GAAP.

The principal differences between GAAP and statutory accounting practices
are shown in the following reconciliation of net income:

<TABLE>
<CAPTION>
1993
----------------------
APRIL 1- JANAURY 1-
1995 1994 DECEMBER 31 MARCH 31
----- ------ ----------- ----------
<S> <C> <C> <C> <C>
Net income-GAAP...................... $26.3 $ 47.5 $ 24.8 $ 9.3
Investment income.................... 20.5 96.8 120.0 6.4
Equity income of subsidiaries........ 3.0 -- -- --
Net realized investment losses....... 3.1 (16.7) (24.2) --
Amortization of interest maintenance
reserve, net of transferred gains
and losses.......................... (5.4) 15.5 12.2 .4
Adjustment to liability for future
annuity and contract benefits....... (.4) (106.8) (157.4) 2.2
Deferred acquisition costs, less
amortization........................ (32.1) (63.1) (27.2) (8.9)
Amortization of intangibles.......... 45.5 58.0 19.8 --
Guaranty association assessments..... 16.0 (7.3) (.4) 3.5
Deferred income taxes................ (2.2) 50.4 22.9 1.0
Minority interest.................... -- 15.5 5.7 --
Statutory loss (pre-acquisition)..... -- -- (12.7) --
Other................................ 2.4 (7.2) (5.9) --
----- ------ ------ -----
Statutory net income (loss)...... $76.7 $ 82.6 $(22.4) $13.9
----- ------ ------ -----
Statutory net income (loss) by
company:
GNA................................ $76.7 $ 36.9 $ 44.4 $12.6
GE Capital Assurance............... -- 30.0 (95.0) --
GE Capital Life.................... -- 15.7 28.2 1.3
----- ------ ------ -----
Totals........................... $76.7 $ 82.6 $(22.4) $13.9
===== ====== ====== =====
</TABLE>

F-21

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The principal differences between GAAP shareholder's interest and statutory
basis capital and surplus at December 31 are as follows:

<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Shareholder's interest--GAAP............................ $ 661.6 $ 265.4
Investment valuation.................................... (112.4) 791.7
Investment in subsidiaries/affiliates................... (47.5) 185.7
Deferred acquisition costs.............................. (88.8) (92.1)
Intangible assets....................................... (156.3) (562.7)
Deferred income taxes................................... 2.2 (404.7)
Nonadmitted assets...................................... (8.7) (43.3)
Future annuity and contract benefits valuation.......... 135.9 544.7
Interest maintenance reserve............................ (9.5) (126.6)
Asset valuation reserve................................. (59.5) (108.3)
Guaranty association assessments........................ 44.8 63.0
Minority interest....................................... -- 279.6
Other, net.............................................. (4.9) (1.5)
------- -------
Statutory capital and surplus....................... $ 356.9 $ 790.9
======= =======
Statutory capital and surplus by company:
GNA................................................... $ 356.9 $ 298.7
GE Capital Assurance.................................. -- 343.2
GE Capital Life....................................... -- 149.0
------- -------
Totals.............................................. $ 356.9 $ 790.9
======= =======
</TABLE>

Statutory basis capital and surplus increased due to the Reorganization by
$32.7 primarily related to the decrease in nonadmitted assets for the
Company's investment in GE Capital Assurance.

Prior to its acquisition, GE Capital Assurance had entered into reinsurance
agreements with various companies (including Employers Reassurance
Corporation, an affiliate of GE Capital), to cede single premium deferred
annuities on a modified-coinsurance basis. The net effect of these
transactions are to increase statutory surplus by $31.5 at December 31, 1994.
There were no reinsurance effects at December 31, 1995 due to the
Reorganization.

These reinsurance agreements do not relieve the Company from its primary
obligation to the policyholders, and have been recorded as deposits in the
accompanying consolidated financial statements.

Insurance companies are restricted by certain states as to the amount of
dividends they may pay within a given calendar year to their parent without
regulatory consent. That restriction is the greater of statutory net gain from
operations for the previous year or 10% of the policyholder surplus (net of
common stock) at the close of the previous year, subject to a maximum limit
equal to statutory earned surplus. At December 31, 1995, approximately $78.3
was available for dividend payments in 1996.

(7) FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has no derivative financial instruments other than mortgage loan
commitments of $20.2 and $126.7 at December 31, 1995 and 1994, respectively.
The fair value of fixed rate mortgage loan commitments approximates the
nominal amounts due to the short term nature of these commitments.

F-22
<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The fair values of financial instruments presented in the applicable notes
to the Company's consolidated financial statements are estimates of the fair
values at a specific point in time using available market information and
appropriate valuation methodologies. These estimates are subjective in nature
and involve uncertainties and significant judgment in the interpretation of
current market data. Therefore, the fair values presented are not necessarily
indicative of amounts the Company could realize or settle currently. The
Company does not necessarily intend to dispose of or liquidate such
instruments prior to maturity.

The fair value of fixed maturities and other invested assets equals quoted
market price, if available. If a quoted market price is not available, fair
values are estimated based on management's judgment using market prices for
similar instruments.

The fair value of mortgage loans is estimated by discounting the estimated
future cash flows using current loan origination rates adjusted for credit
risks.

The fair value of policy loans approximates the carrying values because the
interest rates used in discounted cash flow analysis (current rates offered on
policy loans) are substantially equal to the policy loan interest rates
offered in the past.

For short-term investments, the carrying amount is a reasonable estimate of
fair value.

The estimated fair value of investment contracts is the amount payable on
demand (cash surrender value) for deferred annuities and the net present
value, based on interest rates currently offered on similar contracts, for
non-life contingent immediate annuities. Fair value disclosures are not
required for insurance contracts.

At December 31, the carrying amounts and fair values of the Company's
financial instruments were as follows:

<TABLE>
<CAPTION>
1995 1994
----------------- -------------------
CARRYING FAIR CARRYING FAIR
FINANCIAL INSTRUMENTS AMOUNT VALUE AMOUNT VALUE
--------------------- -------- -------- --------- ---------
<S> <C> <C> <C> <C>
Fixed maturities....................... $5,064.6 $5,064.6 $10,281.3 $10,281.3
Mortgage loans......................... 1,282.4 1,344.9 1,352.1 1,312.7
Policy loans........................... 3.9 3.9 88.6 88.6
Short-term investments................. 28.1 28.1 58.7 58.7
Other invested assets.................. 40.4 40.4 -- --
-------- -------- --------- ---------
Total assets....................... $6,419.4 $6,481.9 $11,780.7 $11,741.3
======== ======== ========= =========
Investment contracts................... $5,668.2 $5,514.9 $ 9,769.1 $ 9,466.1
======== ======== ========= =========
</TABLE>

F-23
<PAGE>

PART B

INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

GNA Variable Investment Account

GREAT NORTHERN INSURED ANNUITY CORPORATION

GROUP DEFERRED VARIABLE ANNUITY AND
MODIFIED GUARANTEED ANNUITY CONTRACT

This Statement of Additional Information is not a Prospectus. It contains
information in addition to that described in the Prospectus and should be read
in conjunction with the Prospectus dated the same date as this Statement of
Additional Information. The Prospectus may be obtained by writing Great Northern
Insured Annuity Corporation ("GNA") at its Variable Annuity Service Center,
300 Berwyn Park, Berwyn, PA 19312-0031 or by telephoning 1-800-894-3719.

The date of this Statement of Additional Information is May 1, 1996.

Great Northern Insured Annuity Corporation
Two Union Square, Suite 5600
Seattle, WA 98101-2336
(206) 625-1755

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----
<S> <C>
Performance Data......... 2

Services................. 4
Servicing Agent........ 4
Principal Underwriter.. 4
Financial Statements..... 4
</TABLE>
PERFORMANCE DATA

Each of the Variable Sub-accounts may in its advertising and sales materials
quote total return figures. The Variable Sub-accounts may advertise both
"standardized" and "non-standardized" total return figures, although
standardized figures will always accompany non-standardized figures. Such
figures will always include the average annual total return for recent one year
and, when applicable, five and ten year periods and, where less than ten years,
the period since the Variable Sub-account first became available for investment.
Where the period since inception is less than one year, the total return quoted
will be the aggregate return for the period. The average annual total return is
the average annual compounded rate of return that equates a purchase payment to
the market value of such purchase payment on the last day of the period for
which such return is calculated. The aggregate total return is the percentage
change (not annualized) that equates a purchase payment to the market value of
such purchase payment on the last day of the period for which such return is
calculated. For purposes of the calculations it is assumed that an initial
payment of $1,000 is made on the first day of the period for which the return is
calculated. In calculating standardized return figures, all recurring charges
are reflected, the asset charges are reflected in changes in unit values and the
$40 certificate maintenance charge is translated to a 0.12% annual asset charge
based on an average Certificate Value of $25,000, with the additional assumption
that the charge is waived on 25% of all Certificates due to the waiver in place
for Certificates with a Certificate Value of $40,000 or greater. These
assumptions are based on sales information from annuities sold by GNA.
Standardized total return figures will be quoted assuming redemption at the end
of the period. Such figures may be accompanied by non-standardized total return
figures that are calculated on the same basis as the standardized returns except
that the calculations assume no redemption at the end of the period. GNA
believes such non-standardized figures are useful to Participants who wish to
assess the performance of an ongoing Certificate of the size that is meaningful
to the individual owner. Of course, any performance data quoted for the any of
the Variable Sub-accounts of the Separate Account represents only historical
performance and is not intended to predict future results.

2
<PAGE>

The following are the average annual total returns for the period
indicated:
<TABLE>
<CAPTION>

"Standardized" "Non-Standardized"
1/3/95 (commencement) 1/3/95 (commencement) to
Variable Sub-account to 12/31/95 12/31/95
-------------------- ----------- --------
<S> <C> <C>
GNA Growth 27.07% 31.42%
GNA Government 9.86% 14.29%
GNA Adjustable Rate 5.41% 9.86%
GE International Equity 11.60% 16.02%
GE Money Market -0.30% 4.17%
</TABLE>

Additionally, the Separate Account also advertises its Money Market Sub-
account's "Yield" and "Effective Yield". Both figures are based on historical
earnings and are not intended to indicate future performance. The "Yield" of
the Sub-account refers to income generated by an hypothetical investment in the
Money Market Sub-account over a seven-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as an annual percentage of return
on the investment. The "Effective Yield" is calculated similarly but, when
annualized, the income earned by an investment in the Sub-account is assumed to
be reinvested. The "Effective Yield" will be slightly higher than the "Yield"
because of the compounding effect of the assumed reinvestment. Neither yield
quotation assumes redemption at the end of the period. If the charges related
to redemptions were included in the yield figures, the "Yield" and "Effective
Yield" would be reduced. Each figure assumes imposition of the pro rata portion
of the $40 certificate maintenance charge.

The current seven day "Yield" and "Effective Yield" as of December 31, 1995,
were as follows:

<TABLE>
<S> <C> <C>
12/31/95 12/31/95
Variable Sub-account "Yield" "Effective Yield"
-------------------- ------ -----------------
GE Money Market 1.21568% 1.22295%
</TABLE>

Effective December 11, 1995, the Paragon Power Intermediate Term Bond Portfolio,
the Paragon Power Value Growth Portfolio. the Paragon Power Value Equity Income
Portfolio, and the Paragon Power Gulf South Growth Portfolio of the Paragon
Portfolio were no longer available as investment options under the Contract.
Accordingly, no performance figures for the Paragon Portfolios is provided.

3
<PAGE>

SERVICES

Servicing Agent

Delaware Valley Financial Services ("DVFS") provides to GNA a computerized
data processing recordkeeping system for variable annuity administration. DVFS
provides various daily, semimonthly, monthly, semiannual and annual reports
including: daily updates on accumulation unit values, Participant transactions
and agent production and commissions; semimonthly commission statements; monthly
summaries of agent production and daily transaction reports; semiannual
statements for Participants and annual Participant tax reports. DVFS receives
compensation for its services based primarily on percentages of purchase
payments received and monthly account balances.

Principal Underwriter

GNA Distributors, Inc., a wholly-owned subsidiary of GNA Corporation, serves
as principal underwriter of the Contracts and Certificates. Contracts and
Certificates are offered on a continuous basis.

FINANCIAL STATEMENTS

The financial statements of GNA which are included in the Prospectus should be
considered only as bearing on the ability of GNA to meet its obligations under
the Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account. The financial
Statements for the GNA Variable Investment Account are included in this
Statement of Additional Information.

INDEX TO FINANCIAL STATEMENTS
GNA Variable Investment Account
Contents
<TABLE>
<CAPTION>

Financial Statements: Page
----
<S> <C>
GNA Variable Investment Account
Independent Auditors' Report....................................
Statement of Assets and Liabilities as of December 31, 1995.....
Statement of Operations for the Year Ended
December 31, 1995.............................................
Statement of Changes in Net Assets for the Year Ended
December 31, 1995.............................................
Notes to Financial Statements...................................

</TABLE>

4
<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

Financial Statements

December 31, 1995

(With Independent Auditors' Report Thereon)
<PAGE>

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Directors
GNA Variable Investment Account:

We have audited the accompanying statement of assets and liabilities of GNA
Adjustable Rate Portfolio, GNA Government Portfolio, GNA Growth Portfolio, GNA
Value Portfolio, GE U.S. Equity Portfolio, GE International Equity Portfolio, GE
Fixed Income Portfolio, GE Money Market Portfolio, Paragon Power Intermediate
Term Bond Portfolio, Paragon Power Value Growth Portfolio, Paragon Power Value
Equity Income Portfolio, and Paragon Power Gulf South Growth Portfolio sub-
accounts of the GNA Variable Investment Account as of December 31, 1995, and the
related statements of operations and changes in net assets for the year then
ended. 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 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, 1995 by correspondence
with the custodian and other appropriate procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the aforementioned sub-accounts
of GNA Variable Investment Account as of December 31, 1995, and the results of
their operations and changes in their net assets for the year then ended in
conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP

Seattle, Washington
March 1, 1996
<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1995

<TABLE>
<CAPTION>
=================================================================================================
GNA Variable Series Trust Portfolios
----------------------------------------------------
GNA GNA
Adjustable Govern- GNA GNA
Rate ment Growth Value
Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at fair value:
GNA Variable Series Trust:
GNA Adjustable Rate Portfolio -
212,559 shares, cost $5,328,433 $ 5,620,122 $ - $ - $ -
GNA Government Portfolio - 262,864
shares, cost $6,672,690 - 7,147,629 - -
GNA Growth Portfolio - 207,384
shares, cost, $5,855,006 - - 6,893,103 -
GNA Value Portfolio - 144,197
shares, cost, $3,954,437 - - - 4,516,798
----------------------------------------------------
Total investments 5,620,122 7,147,629 6,893,103 4,516,798

Dividends receivable 146 2,394 - -
----------------------------------------------------
Total assets $ 5,620,268 $ 7,150,023 $ 6,893,103 $ 4,516,798
====================================================

Net assets:
Attributable to Great Northern Insured
Annuity Corporation 5,537,367 5,765,560 3,977,180 2,525,712
For deferred variable annuity policies 82,901 1,384,463 2,915,923 1,991,086
----------------------------------------------------
$ 5,620,268 $ 7,150,023 $ 6,893,103 $ 4,516,798
====================================================
Outstanding units - deferred variable
annuity policies 7,535 120,988 221,675 158,124

Accumulated unit value $ 11.00 $ 11.44 $ 13.15 $ 12.59
=================================================================================================
</TABLE>

See accompanying notes to financial statements.
<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1995

<TABLE>
<CAPTION>
====================================================================================================
Variable Investment Trust Portfolios
-----------------------------------------------------
GE GE GE GE
U.S. International Fixed Money
Equity Equity Income Market
Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at fair value:
Variable Investment Trust:
GE U.S. Equity Portfolio - 469,414
shares, cost $9,016,302 $ 9,043,836 $ - $ - $ -
GE International Equity Portfolio -
364,981 shares, cost $6,281,571 - 6,340,538 - -
GE Fixed Income Portfolio - 259,115
shares, cost $3,258,816 - - 3,247,782 -
GE Money Market Portfolio -
5,094,982 shares, cost $5,095,025 - - - 5,094,982
----------------------------------------------------
Total investments 9,043,836 6,340,538 3,247,782 5,094,982

Dividends receivable - - - -
----------------------------------------------------
Total assets $ 9,043,836 $ 6,340,538 $ 3,247,782 $ 5,094,982
====================================================
Net assets:
Attributable to Great Northern Insured
Annuity Corporation 7,326,599 5,316,249 2,309,982 2,616,624
For deferred variable annuity policies 1,717,237 1,024,289 937,800 2,478,358
----------------------------------------------------
$ 9,043,836 $ 6,340,538 $ 3,247,782 $ 5,094,982
====================================================
Outstanding units - deferred variable
annuity policies 128,448 88,200 81,370 237,634

Accumulated unit value $ 13.37 $ 11.61 $ 11.53 $ 10.43
====================================================================================================
</TABLE>

See accompanying notes to financial statements.
<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1995

<TABLE>
<CAPTION>
====================================================================================================
Paragon Portfolios
-----------------------------------------------------
Paragon Paragon Paragon
Power Paragon Power Power
Interme- Power Value Gulf
diate Value Equity South
Term Bond Growth Income Growth
Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at fair value:
Paragon Portfolio:
Paragon Power Intermediate Term Bond
Portfolio - 232,439 shares, cost
$2,298,136 $ 2,442,905 $ - $ - $ -
Paragon Power Value Growth Portfolio
158,429 shares, cost $2,259,985 - 2,591,781 - -
Paragon Power Value Equity Income -
171,729 shares, cost $2,127,338 - - 2,480,918 -
Paragon Power Gulf South Growth -
138,015 shares, cost $2,174,825 - - - 2,560,919
----------------------------------------------------
Total investments 2,442,905 2,591,781 2,480,918 2,560,919

Dividends receivable - - -
----------------------------------------------------
Total assets $ 2,442,905 $ 2,591,781 $ 2,480,918 $ 2,560,919
====================================================
Net assets:
Attributable to Great Northern Insured
Annuity Corporation 1,176,689 1,247,288 1,339,138 1,251,259
For deferred variable annuity policies 1,266,216 1,344,493 1,141,780 1,309,660
----------------------------------------------------
$ 2,442,905 $ 2,591,781 2,480,918 2,560,919
====================================================
Outstanding units - deferred variable
annuity policies 109,775 110,204 86,867 107,010

Accumulated unit value $ 11.54 $ 12.20 $ 13.14 $ 12.24
====================================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

Year ended December 31, 1995

<TABLE>
<CAPTION>
================================================================================================================
GNA Variable Series Trust Portfolios
--------------------------------------------------
GNA GNA
Adjustable Govern- GNA GNA
Rate ment Growth Value
Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Operations
Investment income:
Income - dividends $ 272,765 $ 362,009 $ 20,308 $ 49,624
Expenses:
Mortality and expense risk charge 380 4,829 8,460 3,515
Administrative charges 45 580 1,016 422
---------------------------------------------------------
Total expenses 425 5,409 9,476 3,937
---------------------------------------------------------
Net investment income 272,340 356,600 10,832 45,687
---------------------------------------------------------
Net realized and unrealized gain on investments:
Net realized gain 305 9,193 36,380 2,754
Unrealized appreciation on investments 291,689 474,939 1,038,097 562,361
---------------------------------------------------------
Net realized and unrealized gain
on investments 291,994 484,132 1,074,477 565,115
---------------------------------------------------------
Increase in net assets from operations $ 564,334 $ 840,732 $ 1,085,309 $ 610,802
---------------------------------------------------------
Statement of Changes in Net Assets
Increase (decrease) in assets:
Operations:
Net investment income $ 272,340 $ 356,600 $ 10,832 $ 45,687
Net realized gains on investments 305 9,193 36,380 2,754
Net change in unrealized
appreciation on investments 291,689 474,939 1,038,097 562,361
---------------------------------------------------------
Increase in assets from operations 564,334 840,732 1,085,309 610,802
=========================================================
Participants' transactions:
Purchases by Great Northern Insured
Annuity Corporation 4,975,000 4,975,000 2,975,000 1,975,000
Net contract purchase payments 101,739 457,518 1,358,417 470,427
Transfers to the general account of
Great Northern Insured Annuity Corporation:
Surrender benefits (77) (38,039) (31,090) (24,112)
Transfers from (to) the Fixed
Guarantee Period Account (85,757) (300) 24,546 -
Interfund transfers 65,029 915,112 1,480,921 1,484,681
---------------------------------------------------------
Increase in assets from participants'
transactions 5,055,934 6,309,291 5,807,794 3,905,996
---------------------------------------------------------
Increase in assets 5,620,268 7,150,023 6,893,103 4,516,798

Assets at beginning of year - - - -
- ----------------------------------------------------------------------------------------------------------------
Assets at end of year $ 5,620,268 $ 7,150,023 $ 6,893,103 $ 4,516,798
================================================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

Year ended December 31, 1995

<TABLE>
<CAPTION>
=================================================================================================================
GE Variable Series Trust Portfolios
--------------------------------------------------
GE
GE Inter- GE GE
U.S. national Fixed Money
Equity Equity Income Market
Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Operations (continued)
Investment income:
Income - dividends $ 85,342 $ 16,990 $ 62,009 $ 67,713
Expenses:
Mortality and expense risk charge 4,397 5,557 3,740 14,467
Administrative charges 528 667 449 1,736
----------------------------------------------------------
Total expenses 4,925 6,224 4,189 16,203
----------------------------------------------------------
Net investment income 80,417 10,766 57,820 51,510
----------------------------------------------------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain 1,376 37,517 152 -
Unrealized appreciation (depreciation) on 27,534 58,967 (11,034) -
investments
----------------------------------------------------------

Net realized and unrealized gain (loss)
on investments 28,910 96,484 (10,882) -
-----------------------------------------------------------
Increase in net assets from operations $ 109,327 $ 107,250 $ 46,938 $ 51,510
===========================================================

Statement of Changes in Net Assets (continued)
Increase (decrease) in assets:
Operations:
Net investment income $ 80,417 $ 10,766 $ 57,820 $ 51,510
Net realized gains on investments 1,376 37,517 152 -
Net change in unrealized appreciation
(depreciation) on investments 27,534 58,967 (11,034) -
-----------------------------------------------------------
Increase in assets from operations 109,327 107,250 46,938 51,510
-----------------------------------------------------------
Participants' transactions:
Purchases by Great Northern Insured
Annuity Corporation 7,300,000 5,300,000 2,300,000 2,600,000
Net contract purchase payments 545,680 618,381 47,652 10,367,509
Transfers to the general account of Great
Northern Insured Annuity Corporation:
Surrender benefits (5,192) (42,025) (60) (79,132)
Transfers from (to) the Fixed
Guarantee Period Account - (300) 24,846 (106,763)
Interfund transfers 1,094,021 357,232 828,406 (7,738,142)
-----------------------------------------------------------
Increase in assets from participants'
transactions 8,934,509 6,233,288 3,200,844 5,043,472
-----------------------------------------------------------
Increase in assets 9,043,836 6,340,538 3,247,782 5,094,982
Assets at beginning of year - - - -
- -----------------------------------------------------------------------------------------------------------------
Assets at end of year $ 9,043,836 $ 6,340,538 $ 3,247,782 $ 5,094,982
=================================================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

Year ended December 31, 1995

<TABLE>
<CAPTION>
==================================================================================================================
Paragon Portfolios
-------------------------------------------------------
Paragon
Power Paragon Paragon
Inter- Paragon Power Power
mediate Power Value Gulf
Term Value Equity South
Bond Growth Income Growth
Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Operations (continued)
Investment income:
Income - dividends $ 100,731 $ 48,783 $ 86,631 $ 3,897
Expenses:
Mortality and expense risk charge 6,539 9,499 5,927 9,481
Administrative charges 785 1,140 711 1,138
---------------------------------------------------------
Total expenses 7,324 10,639 6,638 10,619
---------------------------------------------------------
Net investment income (loss) 93,407 38,144 79,993 (6,722)
---------------------------------------------------------

Net realized and unrealized gain on investments:
Net Realized gain 18,069 73,987 58,419 40,543
Unrealized appreciation on investments 144,769 331,796 353,580 386,094
---------------------------------------------------------
Net realized and unrealized gain on
investments 162,838 405,783 411,999 426,637
---------------------------------------------------------
Increase in net assets from operations $ 256,245 $ 443,927 $ 491,992 $ 419,915
=========================================================

Statement of Changes in Net Assets (continued)
Increase (decrease) in assets:
Operations:
Net investment income (Loss) $ 93,407 $ 38,144 $ 79,993 $ (6,722)
Net realized gains on investments 18,069 73,987 58,419 40,543
Net change in unrealized appreciation on
investments 144,769 331,796 353,580 386,094
---------------------------------------------------------
Increase in assets from operations 256,245 443,927 491,992 419,915
---------------------------------------------------------
Participants' transactions:
Purchases by Great Northern Insured
Annuity Corporation 1,000,000 1,000,000 1,000,000 1,000,000
Net contract purchase payments 506,155 656,066 930,586 952,839
Transfers to the general account of Great
Northern Insured Annuity Corporation:
Surrender benefits (13,324) (41,075) (5,063) (34,080)
Transfers from (to) the Fixed
Guarantee Period Account - (400) - -
Interfund transfers 693,829 533,263 63,403 222,245
---------------------------------------------------------
Increase in assets from participants'
transactions 2,186,660 2,147,854 1,988,926 2,141,004
---------------------------------------------------------
Increase in assets 2,442,905 2,591,781 2,480,918 2,560,919
Assets at beginning of year - - - -
- -------------------------------------------------------------------------------------------------------------------
Assets at end of year $ 2,442,905 $ 2,591,781 $ 2,480,918 $ 2,560,919
===================================================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

NOTES TO FINANCIAL STATEMENTS

December 31, 1995

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

(1) DESCRIPTION OF ENTITY

GNA Variable Investment Account (the Separate Account) is a separate
investment account established in 1981 by Great Insured Annuity
Corporation (GNA) under laws of the State of Washington. The Separate
Account is registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, as a unit investment
trust. Beginning in 1995, the Separate Account funds certain benefits for
group deferred variable annuity policies issued by GNA through twelve
portfolios. GNA is an indirect wholly-owned subsidiary of GNA
Corporation, General Electric Capital Corporation and General Electric
Company (GE Company). The portfolios included in these financial
statements commenced operations January 3, 1995.

Participants may transfer amounts among the Separate Account's portfolios
and the Fixed Guarantee Period Account that is part of the general
account of GNA. The net assets related to deferred variable annuity
policies are the property of GNA and cannot be used to settle liabilities
arising out of any other business of GNA.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) INVESTMENTS

Investments in shares of the portfolios are recorded at their net
asset value. The net asset value is based upon the underlying assets
of the mutual funds as determined by quoted market prices. Purchases
and sales of investments are recorded on the trade date. Realized
gains and losses on investments are determined on a first-in, first-
out (FIFO) basis. Dividend income is recorded on the ex-dividend
date.

The aggregate cost of investments acquired and the aggregate
proceeds of investments sold, for the year ended December 31, 1995,
were:

<TABLE>
<CAPTION>
Proceeds
Cost of from
shares shares
acquired sold
------------------------
<S> <C> <C>
GNA Variable Series Trust Portfolios:
GNA Adjustable Rate $ 5,415,820 $ 87,692
GNA Government 6,965,704 302,207
GNA Growth 6,451,300 632,674
GNA Value 3,980,271 28,588

Variable Investment Trust Portfolios:
GE U.S. Equity 9,025,695 10,769
GE International Equity 6,537,176 293,124
GE Fixed Income 3,263,075 4,411
GE Money Market 15,387,726 10,292,701

Paragon Portfolio:
Paragon Power Intermediate Term Bond 2,606,526 326,459
Paragon Power Value Growth 2,714,338 528,340
Paragon Power Value Equity Income 2,575,896 506,977
Paragon Power Gulf South Growth 2,389,531 255,248
</TABLE>

(Continued)
<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

NOTES TO FINANCIAL STATEMENTS

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

(B) DISTRIBUTIONS

The net investment income (loss) and realized capital gains of the
Separate Account are retained and reinvested within the Separate
Account.

The operations of the Separate Account are a part of, and are taxed
with, the operations of GNA. Therefore, the Separate Account is not
separately taxed as a regulated investment company under Subchapter
M of the Internal Revenue Code. Under existing federal income tax
laws, investment income and capital gains of the Separate Account
are not taxed. Accordingly, the Separate Account paid no federal
income taxes and no federal income tax provision was required. GNA
is taxed as a life insurance company under the Internal Revenue
Code.

(3) RELATED PARTY TRANSACTIONS AND CONTRACT CHARGES

Net contract purchase payments transferred from GNA to the Separate
Account represent gross purchase payments recorded by GNA on its group
deferred variable annuity products, less deductions for premium taxes in
certain states. A withdrawal charge (contingent deferred sales charge)
may be assessed against certain amounts withdrawn within five years of
any purchase payment. Subject to certain limitations, this charge equals
5% (or less) of the purchase payment surrendered, depending on the time
between purchase payment and surrender.

Each year GNA will deduct a certificate maintenance charge of $40 plus an
administration charge at an annual rate of .15% of average daily net
assets as partial compensation for certain administrative services. GNA
will waive the certificate maintenance charge if at the time of the
assessment the account value is $40,000 or greater. In addition, GNA
charges the Separate Account at an annual rate of 1.25% of average daily
net assets for the mortality and expense risk that GNA assumes.
Administrative expenses as well as mortality and risk charges are
deducted daily and reflect the effective annual rates.

Units are not assigned to purchases made by GNA and no contract charges
are assessed against GNA's net assets.

GNA Variable Series Trust (GNA VST) and the Variable Investment Trust
(VIT) are open-ended diversified management investment companies whose
shares are offered only to the Separate Account.

GNA Capital Management, Inc., a wholly-owned subsidiary of GNA
Corporation, serves as investment advisor to the GNA VST portfolios. The
individual portfolios agree to pay GNA Capital Management, Inc. a fee
based upon each portfolio's daily net assets, calculated at an effective
annual rate of .40% to .80% depending on the type of portfolio and the
portfolio's combined average daily net assets.

(Continued)

2
<PAGE>

GNA VARIABLE INVESTMENT ACCOUNT

NOTES TO FINANCIAL STATEMENTS

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

GE Investment Management, Inc. a wholly-owned subsidiary of General
Electric Company, serves as investment advisor of the VIT portfolios. The
individual portfolios agree to pay GE Investment Management, Inc. a fee
based upon each portfolio's daily net assets, calculated at an effective
annual rate of .30% to .85% depending on the nature of the portfolio.

On January 3, 1995, GE Company purchased $24,000,000 of shares in the VIT
Portfolios, These portfolio shares were not held in the Separate Account
and the related activity was not recorded in the accompanying financial
statements. In December 1995, GE Company redeemed all of these shares. On
December 28, 1995, GNA purchased $17,500,000 of VIT portfolio shares and
placed the shares in the Separate Account.

(4) PARAGON PORTFOLIOS

Effective December 11, 1995, GNA suspended sales of Paragon Portfolio
shares. Pending approval by the Securities and Exchange Commission, all
assets invested in the Paragon Portfolios will be transferred to the GE
Money Market Portfolio.

(5) CHANGES IN OUTSTANDING UNITS - DEFERRED VARIABLE ANNUITY POLICIES

<TABLE>
<CAPTION>
Variable Investment Trust
GNA Variable Series Trust Portfolios Portfolios
---------------------------------------------------- ---------------------------
GNA GNA GE GE Inter-
Adjustable Govern- GNA GNA U.S. national
Rate ment Growth Value Equity Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning
of year - - - - - -
Units purchased 15,579 146,873 269,323 160,204 128,914 113,204
Units redeemed (8,044) (25,885) (47,648) (2,080) (466) (25,004)
- -----------------------------------------------------------------------------------------------------------------------------------
Units outstanding, end of year 7,535 120,988 221,675 158,124 128,448 88,200
===================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
Variable Investment Trust
Portfolios Paragon Portfolios
--------------------------- ----------------------------------------------------------
Paragon Paragon Paragon
Power Paragon Power Power
GE GE Intermediate Power Value Gulf
Fixed Money Term Value Equity South
Income Market Bond Growth Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning
of year - - - - - -
Units purchased 81,389 1,237,368 137,613 153,392 125,446 127,480
Units redeemed (19) (999,734) (27,838) (43,188) (38,579) (20,470)
- -----------------------------------------------------------------------------------------------------------------------------------
Units outstanding, end of year 81,370 237,634 109,775 110,204 86,867 107,010
===================================================================================================================================
</TABLE>

3
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS
<PAGE>

Item 13. Other Expenses of issuance and Distribution.
-------------------------------------------

The expenses of the issuance and distribution of the Contracts, other than any
underwriting discounts and commissions, are as follows:
<TABLE>
<CAPTION>

Amount
----------------
<S> <C>
Securities and Exchange Commission
Registration Fee $ 17,241
Printing and Engraving 82,800
Accounting fees and expenses 30,300
Legal fees and expenses 15,600
----------
Total Expenses $ 145,941
</TABLE>

Item 14. Indemnification of Officers and Directors.
-----------------------------------------

The registrant's By-Laws provide, inter alia, that any director, officer or
----- ----
employee of the registrant may be indemnified by the registrant against
liability (including fines, penalties and amounts paid or incurred in settlement
of any action or in the satisfaction of a judgment except a judgment in favor of
the registrant) and reasonable expenses incurred by him or her in connection
with any action of whatever nature, whether civil, criminal, administrative or
investigative, in which her or she may be involved by reason of his or her
having been a director, officer or employee of the registrant. In the case of
an action brought by or in the right of the registrant, a person who has been
successful on the merits shall be indemnified as of right, no person who has
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the registrant shall be indemnified, and any other party
shall be indemnified if the Board of Directors, acting by a quorum consisting of
directors not having an interest in the action, determines that such person has
not been guilty of negligence or misconduct in the performance of his or her
duty to the registrant. In the case of any other action, a person who has been
successful on the merits shall be indemnified as of right and any other person
shall be indemnified if the Board of Directors, acting by a quorum consisting of
directors not having an interest in the action, determines that such person
acted in good faith for a purpose which he or she reasonably believed to be in
the best interests of the registrant and, in any criminal action or proceeding,
that such person had no reasonable cause to believe that his or her conduct was
unlawful.

Item 15. Recent Sales of Unregistered Securities.
---------------------------------------

During the past three years the registrant has sold no securities which were
not registered pursuant to the Securities Act of 1933.

Item 16. Financial Statements and Exhibits.
---------------------------------

1.1 Underwriting Agreement between Great Northern Insured Annuity
Corporation and GNA Distributors, Inc. Incorporated by reference to
Exhibit (3)(i) to registration statement under the Variable Investment
Securities Act of 1933 of GNA Account, File No. 33-78810, filed May
11, 1994.
<PAGE>

3.1 Articles of Incorporation of Great Northern Insured Annuity
Corporation. Incorporated herein by reference to Exhibit 3.1 to the
registration statement under the Securities Act of 1933 of Great
Northern Insured Annuity Corporation, File No. 33-62674, filed May 14,
1993.

3.2 By-laws of Great Northern Insured Annuity Corporation.
Incorporated herein by reference to Exhibit 3.2 to the registration
statement under the Securities Act of 1933 of Great Northern Insured
Annuity Corporation, File No. 33-62674, filed May 14, 1993.

4.1 Specimen Group Deferred Variable Annuity and Modified Guaranteed
Annuity Contract. Incorporated herein by reference to Exhibit (4)(i)
to the registration statement on Form N-4 of GNA Variable Investment
Account, File No. 33-78810, filed September 15, 1994.

4.2 Specimen Certificate under Group Deferred Variable Annuity and
Modified Guaranteed Annuity Contract. Incorporated herein by reference
to Exhibit (4)(ii) to the registration statement on Form N-4 of GNA
Variable Investment Account, File No. 33-78810, filed September 15,
1994.

4.3 Endorsements to Contracts or Certificates. Incorporated herein by
reference to Exhibit (4)(iii) to registration statement on Form N-4 of
GNA Variable Investment Account, File No. 33-78810, filed May 11,
1994.

4.4 Application for Group Deferred Variable Annuity and Modified
Guaranteed Annuity Contract. Incorporated herein by reference to
Exhibit (5)(i) to registration statement on Form N-4 of GNA Variable
Investment Account, File No. 33-78810, filed May 11, 1994.

4.5 Application for Certificate under Group Deferred Variable Annuity
and Modified Guaranteed Annuity Contract. Incorporated herein by
reference to Exhibit (5)(ii) to registration statement on Form N-4 of
GNA Variable Investment Account, File No. 33-78810, filed May 11,
1994.

5. Opinion and Consent of J. Neil McMurdie, Esq., Associate Counsel
and Assistant Vice President.

10. Service Agreement between Great Northern Insured Annuity
Corporation and Delaware Valley Financial Services, Inc. Incorporated
herein by reference to Exhibit (8) to registration statement on
Form N-4 of GNA Variable Investment Account, File No. 33-78810, filed
September 15, 1994.

23.1 Consent of KPMG Peat Marwick LLP.

23.2 Consent of Arthur Andersen LLP.

23.3 Consent of Jones & Blouch L.L.P.
<PAGE>

(b) Financial Statement Schedules.

See Financial Statements in Prospectus.

Item 17. Undertakings.
------------

(a) Rule 415 Offering.

Previously furnished.

(b) Indemnification.

Previously furnished.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this amended registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Seattle, State of
Washington, on this ___________ day of ______________________, 1996.

Great Northern Insured Annuity Corporation
------------------------------------------
(Registrant)

By:
--------------------------------
Patrick E. Welch, President

ATTEST:

- --------------------------------
John W. Attey, Acting Secretary

Pursuant to the requirements of the Securities Act of 1933, this amended
registration statement has been signed by the following persons in the
capacities indicated on this _______ day of _____________________, 1996.
<TABLE>
<CAPTION>

Signature Title
--------- -----
<S> <C>
Director, Senior Vice President and
- ------------------------- Chief Marketing Officer
Hans L. Carstensen, III

- ------------------------- Director and Senior Vice President
Stephen P. Joyce

- ------------------------- Director and Senior Vice President
Charles A. Kaminski

Director, Senior Vice President and
- ------------------------- Chief Actuary
Victor C. Moses

- ------------------------- Director and Senior Vice President
Kenneth F. Starr

</TABLE>
<PAGE>

SIGNATURES (Continued)
<TABLE>
<CAPTION>

Signature Title
--------- -----
<S> <C>

- -------------------------- Treasurer
Jeffrey I. Hugunin

- -------------------------- Vice President and Controller (Principal
Thomas W. Casey Accounting Officer)

Director, Senior Vice President and Chief
Financial Officer (Principal
- -------------------------- Financial Officer)
Geoffrey S. Stiff

Director, President and Chief Executive
- -------------------------- Officer (Principal Executive Officer)
Patrick E. Welch

</TABLE>
<PAGE>

EXHIBITS
<PAGE>

EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit No. Description Page No.
- ----------- ----------- --------
<C> <S> <C>
1.1 Underwriting Agreement Incorporated herein by reference to
between Great Northern Exhibit (3)(i) to registration
Insured Annuity statement under the Securities Act of
Corporation and GNA 1933 of GNA Variable Investment
Distributors, Inc. Account, File No. 33-78810 filed May
11, 1994.
3.1 Articles of Incorporation Incorporated herein by reference to
of Great Northern Insured Exhibit 3.1 to registration statement
Annuity Corporation. under the Securities Act of 1933 of
Great Northern Insured Annuity
Corporation, File No. 33-62674 filed
May 14, 1993.
3.2 By-laws of Great Northern Incorporated herein by reference to
Insured Annuity Exhibit 3.2 to registration statement
Corporation. under the Securities Act of 1933 of
Great Northern Insured Annuity
Corporation, File No. 33-62674 filed
May 14, 1993.
4.1 Specimen Group Deferred Incorporated herein by reference to
Variable Annuity and Exhibit (4)(i) to registration
Modified Guaranteed statement on Form N-4 of GNA Variable
Annuity Contract. Investment Account, File No. 33-78810
filed September 15, 1994.
4.2 Specimen Certificate under Incorporated herein by reference to
Group Deferred Variable Exhibit (4)(ii) to registration
Annuity and Modified statement on Form N-4 of GNA Variable
Guaranteed Annuity Investment Account, File No. 33-78810
Contract. filed September 15, 1994.
4.3 Endorsements to Contracts Incorporated herein by reference to
or Certificates. Exhibit (4)(iii) to registration
statement on Form N-4 of GNA Variable
Investment Account, File No. 33-78810
filed May 11, 1994.
4.4 Application for Group Incorporated herein by reference to
Deferred Variable Annuity Exhibit (5)(i) to registration
and Modified Guaranteed statement on Form N-4 of GNA Variable
Annuity Contract. Investment Account, File No. 33-78810
filed May 11, 1994.
</TABLE>
<PAGE>

Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
4.5 Application for Incorporated herein by
Certificate under Group reference to Exhibit
Deferred Variable (5)(ii) to registration
Annuity and Modified statement on Form N-4 of
Guaranteed Annuity GNA Variable Investment
Contract. Account, File No.
33-78810 filed May 11,
1994.
5. Opinion and consent of
J. Neil McMurdie, Esq.,
Associate Counsel and
Assistant Vice
President.
10. Service Agreement Incorporated herein by
between Great Northern reference to Exhibit (8)
Insured Annuity to registration
Corporation and statement on Form N-4 of
Delaware Valley GNA Variable Investment
Financial Services, Inc. Account, File No.
33-78812 filed September
15, 1994.
23.1 Written consent of KPMG
Peat Marwick LLP.
23.2 Written consent of
Arthur Andersen LLP.
23.3 Written consent of
Jones & Blouch L.L.P..

</TABLE>

<PAGE>

EXHIBIT 5
<PAGE>

[LOGO OF GREAT NORTHERN INSURED ANNUITY CORPORATION APPEARS HERE]

GREAT NORTHERN Two Union Square Mailing Address
INSURED ANNUITY 601 Union Street, Suite 5600 P.O. Box 490 800/426-5520
CORPORATION Seattle, WA 98101-2336 Seattle, WA 98111-0490 206/625-1755

a GS Capital Company

March 18, 1996

Board of Directors
Great Northern Insured Annuity Corporation
Two Union Square, Suite 5600
Seattle, WA 98101-2336

Re: GNA Variable Investment Account
Registration Statements on Form N-4 and S-1
File Nos. 33-78810 and 33-78812

Gentlemen:

I have acted as counsel to the Company in connection with the filing with the
Securities and Exchange Commission of Post-Effective Amendments No.3 to the
above-referenced Registration Statements on Form N-4 and Form S-1 for the Group
and Individual Deferred Variable Annuity and Modified Guaranteed Annuity
Contracts (the "Contracts") to be issued by the Company and its separate
account, GNA Variable Investment Account. I have made such examination of the
law and have examined such records and documents as in my judgment are necessary
or appropriate to enable me to render the following opinion:

1. Great Northern Insured Annuity Corporation is a duly organized, validly
existing stock life insurance company of the state of Washington.

2. GNA Variable Investment Account is a separate investment account of Great
Northern Insured Annuity Corporation duly created and validly existing
pursuant to the Washington insurance laws and regulations thereunder.

3. All of the prescribed corporate procedures for the issuance of the
Contracts have been followed, and, when such Contracts are issued in
accordance with the prospectuses contained in the Registration Statements,
and upon compliance with applicable law, such contracts will be legally
issued and binding obligations of the Company in accordance with their
terms.

4. The portion of the assets to be held in the GNA Variable Investment
Account equal to the reserves and other liabilities under contracts
participating therein is not chargeable with liabilities arising out of
any other business the Company may conduct.

I hereby consent to the use of this letter, or a copy hereof, as an exhibit to
the Registration Statements, and the reference to me under the caption "Legal
Matters" in the prospectuses contained in the registration statements.

Very truly yours,

J. Neil McMurdie
Associate Counsel
and Assistant Vice President

<PAGE>

EXHIBIT 23.1
<PAGE>

INDEPENDENT AUDITORS' CONSENT
- --------------------------------------------------------------------------------

The Board of Directors
GNA Variable Investment Account

The Board of Directors
Great Northern Insured Annuity Corporation:

We consent to the use of our reports for Great Northern Insured Annuity
Corporation and GNA Variable Investment Account included herein (post effective
amendment no. 3 to Form S-1 of registration no. 33-78812) and to the references
to our firm under the heading "Experts" in the prospectus.

Our report dated January 19, 1996 contains an explanatory paragraph that states
that effective April 1, 1993, General Electric Capital Corporation acquired all
of the outstanding stock of the Company's parent, GNA Corporation, in a business
transaction accounted for as a purchase. As a result of the acquisition, the
consolidated financial information of Great Northern Insured Annuity Corporation
for the periods after the acquisition is presented on a different cost basis
than that for the periods before the acquisition and, therefore, is not
comparable.

/s/ KPMG Peat Marwick LLP

Seattle, Washington
March 18, 1996

<PAGE>

EXHIBIT 23.2
<PAGE>

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT AUDITORS

As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.

/s/ Arthur Andersen LLP

Seattle, Washington
March 18, 1996

<PAGE>

EXHIBIT 23.3

<PAGE>

[LETTERHEAD OF JONES & BLOUCH L.L.P]

March 13, 1996

Great Northern Insured Annuity Corporation
Two Union Square, P.O. Box 490
Seattle, WA 98111-0490

Gentlemen:

We hereby consent to the reference to this firm under the caption "Legal
Matters" in the prospectus contained in Post-Effective Amendment No. 3 to the
registration statement on Form S-1, File No. 33-78812, to be filed with the
Securities and Exchange Commission.

Very truly yours,
/s/ Jones & Blouch L.L.P.
Jones & Blouch L.L.P.