GREAT NORTHERN INSURED ANNUITY CORP, POS AM, 1997-04-21

GREAT NORTHERN INSURED ANNUITY CORP
POS AM, 1997-04-21

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GNA CORPORATION

Registration No. 33-86410

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

POST-EFFECTIVE AMENDMENT NO. 4

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>
<S> <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 981111-0490 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

<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 Indemnification Not Applicable
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 Deferred Variable Annuity and
Modified Guaranteed Annuity Contracts
Flexible Purchase Payments
Non-Participating

The Group 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 Company has ceased
offering the Contract for sale, and it will no longer accept new Participants
under the outstanding group Contracts. Current Participants may continue to make
purchase payments subject to the limitations described in this Prospectus.

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 fifteen investment options: five 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 which has three portfolios available for
investment (the GNA Growth Portfolio, the GNA Government Portfolio and the GNA
Adjustable Rate Portfolio) and Variable Investment Trust which has two
portfolios available for investment (the GE International 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
1-800-894-3719. 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, 1997

<PAGE>

TABLE OF CONTENTS
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<CAPTION>
Page Page
<S> <C>
DEFINITIONS ............................ Mortality and Expense Risk Charge
............................................
Taxes
............................................
SUMMARY ................................
FEE TABLE AND FEDERAL TAX MATTERS
EXAMPLE................................. ............................................
ACCUMULATION UNIT Introduction
VALUES........................ ............................................
GENERAL INFORMATION..................... GNA's Tax Status
............................................
Great Northern Insured Annuity Tax Status of the Certificate
Corporation............................. ............................................
GNA Variable Investment Account ...... Federal Tax Considerations
............................................
The Funds ............................ Qualified Plans
............................................

DESCRIPTION OF THE CONTRACT ............ INVESTMENTS SUPPORTING THE FIXED
GUARANTEE PERIODS
............................................
ACCUMULATION PROVISIONS ................
Purchase Payments .................... MORE INFORMATION ABOUT GNA
........................................
Variable Accumulation ................ History and Business
............................................
Fixed Accumulation ................... Selected Financial Data
............................................
Transfers Among Investment Options ... Management's Discussion and Analysis of
Special Transfer Services............. Financial Condition and Results of
Withdrawals .......................... Operations
............................................
Special Withdrawal Services .......... Investments
............................................
Telephone Transactions ............... Competition
............................................
Market Value Adjustment............... Government Regulation
............................................
Death Benefit ........................ New Accounting Standards
............................................

ANNUITY PROVISIONS ..................... EXECUTIVE OFFICERS AND DIRECTORS
................................
General .............................. Executive Compensation
............................................
Annuity Date .........................
Annuity Options....................... GENERAL MATTERS
............................................
Amount of Fixed Annuity Payments...... Performance Data
............................................
Amount of Variable Annuity Payments .. Financial Statements
............................................
Transfers After Annuity Date ......... Restrictions Under the Texas Optional
Death Benefit on or After Annuity Date Retirement Program
............................................
Distribution of Contracts
............................................
OTHER CONTRACT PROVISIONS .............. Legal Proceedings
............................................
Proof of Age, Sex and Survival ....... Legal Matters
............................................
Misstatement of Age or Sex............ Experts
............................................
Ownership ............................ Registration Statements
............................................
Beneficiary ..........................
Notices and Elections.................

<PAGE>

Amendment of Contract and Certificates STATEMENT OF ADDITIONAL
Free Look Right....................... INFORMATION--Table of Contents
............................................
Company Approval .....................
APPENDIX A: State Premium Taxes
............................................
CHARGES AND DEDUCTIONS
Withdrawal Charges ................... APPENDIX B: Examples of Market Value
Administration Charges ............... Adjustments
............................................

</TABLE>

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.

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 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 (the "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.

<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 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.

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 deferred variable annuity and modified guaranteed annuity
contract. The Contract may be purchased by any employer, entity or other
organized group acceptable to GNA. 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.

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 fifteen
investment options currently available under the Contract: five 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
Government Portfolio and the GNA Adjustable Rate Portfolio of GNA Variable
Series Trust and the GE International 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

<PAGE>

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.

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.")

<PAGE>

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.

<PAGE>

Participant Transaction Expenses

Deferred sales load (as percentage of purchase payments)
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<CAPTION>
Number of Complete Years Withdrawal Charge
Since Purchase Payment Made Percentage
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0 5%
1 5%
2 4%
3 3%
4 2%
5+ 0%
Annual Contract Fee $401(1)
</TABLE>

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%

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

Portfolio Management Fees Other Expenses Total Annual Expenses
- --------- --------------- --------------- ---------------------
<S> <C>
GNA Growth .80% .30% 1.10%
GNA Government .55% .35% .90%
GNA Adjustable Rate .40% .30% .70%
GE International Equity# .80% .40% 1.20%
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:

surrendered his or her Certificate at annuitized or did not surrender his or her
the end of the applicable Certificate at the end of the applicable
period: period:
------------------------------------- --------------------------------------------

<S> <C>
Portfolio 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10 Year
--------- ------ ------ ------ ------- ------ ------ ------ -------
GNA Growth $71 $118 $160 $315 $26 $82 $143 $315
GNA Government $69 $111 $149 $293 $24 $76 $132 $293
GNA Adjustable Rate $67 $105 $139 $270 $22 $70 $121 $270
GE International Equity $72 $121 $165 $326 $27 $85 $148 $326
GE Money Market $65 $ 99 $128 $247 $20 $63 $110 $247
</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 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.
- ------------------------------------------------------
(1) The certificate maintenance charge is waived if at the time of assessment
the Certificate Value is $40,000 or more.

<PAGE>

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 0.058% annual asset charge based on an average Certificate
Value of $44,740 with the additional assumption that the charge is waived on 35%
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 issued under this prospectus.

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:

GNA Growth 1996 1995
o January 1 Unit Value....... $13.154 $10.001*
o December 31 Unit Value.... $15.237 $13.154
o December 31, Units........... 501,296.749795 221,675.041558
GNA Government
o January 1 Unit Value....... $11.441 $9.996*
o December 31 Unit Value.... $11.661 $11.441
o December 31, Units........... 177,813.422659 120,988.166975
GNA Adjustable Rate
o January 1 Unit Value....... $10.998 $10.001*
o December 31 Unit Value.... $11.447 $10.998
o December 31, Units........... 43,229.833640 7,535.253952
GE International Equity
o January 1 Unit Value....... $11.614 $10.001*
o December 31 Unit Value.... $13.292 $11.614
o December 31, Units........... 149,104.691691 88,199.568780
GE Money Market
o January 1 Unit Value....... $10.429 $10.001*
o December 31 Unit Value.... $10.786 $10.429
o December 31, Units........... 147,357.482064 237,634.647996

* As of commencement on January 3, 1995.

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 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"), which is indirectly 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.

<PAGE>

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 five Variable Sub-accounts within the Separate Account
available under the Contracts: the Growth Sub-account, the Government
Sub-account, the Adjustable Rate Sub-account, the International 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
Government Portfolio and the GNA Adjustable Rate Portfolio of GNA Variable
Series Trust and the GE International 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 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 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.

<PAGE>

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 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.

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 CONTRACT

The Contract is a group allocated contract pursuant to which specific accounts
are maintained for each Participant. The 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.

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.

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 such rights and benefits may be exercised without
the consent of the Contract holder. However, provisions of any plan in
connection with which a Contract has been issued may restrict a

<PAGE>

person's eligibility to 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. 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
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.

<PAGE>

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.

<PAGE>

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 by 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 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 Market
Sub-account. A Participant may leave Notice on file giving instructions for the
reinvestment of all Fixed Guarantee

<PAGE>

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
<PAGE>

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 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 59 1/2 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.

<PAGE>

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 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+C ) -1 ]

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
[( ----- ) ]
[( 1.053 ) -1 ]

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

<PAGE>

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 selected must be no later than April 1 of the first
calendar year following the later of (i) the calendar year in which the
Annuitant attains age 70 1/2 or (ii) the calendar year in which the Annuitant
retires.)

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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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

<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 will it be responsible for the validity or

<PAGE>

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.

<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.

Number of Complete Years Since Withdrawal Charge
Purchase Payment Made Percentage
0 5%
1 5%
2 4%
3 3%
4 2%
5+ 0%

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 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 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.

<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

<PAGE>

Sub-account to reimburse GNA for administrative expenses. This asset-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.

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. 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 (the "Code") and also with plans that qualify for special income tax
treatment under the 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.

<PAGE>

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 applicable 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, income accruing on 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), must be
reported currently by the owner. 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 other than a pension plan contract
to be treated as an annuity for federal income tax purposes, the investments of
the Separate Account that are allocable to the contract 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 (other than a pension plan 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, in 1986 the Treasury Department 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 generally similar
to, but different in certain respects from, those described by the Service in
Revenue 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 than were available in
such rulings. 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 does not expect that variable annuity contract owners would be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts, but 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 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 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 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 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.

<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 Non-qualified Certificates
Section 72(b) generally provides that 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. Where annuity payments are made under a Qualified
Certificate , the portion of each payment that is excluded from gross income
will generally be equal to the total amount of any investment in the Certificate
as of the Annuity Date, divided by the number of anticipated payments, which are
determined by reference to the age of the Annuitant. 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 or, under Qualified Certificates, the total number of
anticipated 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
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. Although Congress is not now actively considering any
proposal that would adversely impact the taxation of deferred annuities, there
is no way of knowing if such legislation 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).

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 59 1/2 (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 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 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 59 1/2, 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.)

<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 in existence prior to
August 20, 1996, 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 until December 31, 1998, or such earlier date as may be
established by plan amendment. Amounts deferred under a plan created on or after
August 20, 1996, however, must be held in trust, custodial account or annuity
contract for the exclusive benefit of plan participants and their beneficiaries.
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.

<PAGE>

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 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 of New York). GE Capital Life of
New York issues deferred and immediate annuities, life insurance and long-term
care 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 (herein
referred to as the Reorganization). As part of the Reorganization, GNA became a

<PAGE>

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 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 New Hampshire
and New York. GNA markets fixed-rate deferred annuities, immediate annuities and
structured settlement immediate annuities primarily through banks, thrifts and
other financial institutions.

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. In 1996, the Company issued $354.4
million in deferred annuities. At December 31, 1996, deferred annuities
comprised $5,317.6 million of total liabilities for future annuity and contract
benefits.

Immediate Annuities. The Company'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 their
dependents. Structured settlement annuities are generally long-term and cannot
be surrendered. In 1996, the Company issued $227.3 million in immediate
annuities. At December 31, 1996, immediate annuities comprised $697.4 million of
total liabilities for future annuity and contract benefits.

GNA leases office space in Seattle, Washington. GNA is reimbursed by its
subsidiaries and affiliates for rent based on direct and indirect allocation
methods.

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)

Year ended December 31
------------------------------------------------------------------------------------------
1996 1995 1995 1994 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Pro forma Pro forma
(unaudited) (unaudited)
(1) (1)

Net investment income $ 462.5 $ 444.5 $ 784.7 $ 391.6 $ 837.8 $ 579.8 $ 406.4
Income before income taxes
and minority interest 76.0 39.1 62.0 70.6 107.7 57.0 53.6
Net income 51.1 26.7 26.3 44.0 47.5 34.1 33.6
Total assets 7,120.0 6,926.5 6,926.5 6,578.0 13,100.2 13,160.1 5,973.9
Shareholder's interest,
excluding net unrealized
investment gain/(loss) 682.9 631.7 631.7 607.3 794.2 754.0 326.3
Net unrealized investment
gain/(loss) 7.0 29.9 29.9 (166.7) (528.8) (16.3) (.5)
Total shareholder's interest 689.9 661.6 661.6 440.6 265.4 737.7 325.8

</TABLE>

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

<PAGE>

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.

GNA's results of operations for the year ended December 31, 1996 include the
accounts of GNA, as well as the Company's investment in GE Capital Life of New
York, accounted for under the equity method. For the year ended December 31,
1995, GNA's results of operations include GE Capital Assurance and subsidiaries'
results for the nine months ended September 30, 1995.

1996 Compared to 1995

Net investment income decreased $322.2 million to $462.5 million, of which
$343.8 million relates to GE Capital Assurance and subsidiaries that were
divested and are no longer included in the earnings of the Company as of October
1, 1995. The offsetting $21.6 million increase is primarily attributable to
higher invested assets, the equity income of the Company's subsidiary, and the
impact of higher interest rates resulting in higher reinvestment rates.

Net realized investment gains (losses) - Net realized investment gains were $3.1
million during 1996, compared to a $14.4 million loss in 1995. This change is
related to the Company's asset/liability risk management and varies with market
and economic conditions.

Premiums increased $22.9 million to $200.0 million. This increase primarily
relates to greater recognition of premiums on GNA's life contingent structured
settlement product, offset by the effects of the Reorganization of $9.4 million.

Interest credited on policyholder deposits decreased $166.5 million to $295.7
million. The decrease was primarily related to the Reorganization. Interest
crediting rates remained relatively consistent with 1995.

Change in policy reserves increased $26.5 million to $201.0 million. Policy
reserves related to life contingent products increased primarily from greater
life contingent structured settlement premiums, offset by the effects of the
Reorganization of $8.0 million.

Annuity and surrender benefits decreased $106.8 million to $29.9 million.
Offsetting the effects of the Reorganization, which decreased benefits by $116.3
million, annuity and surrender benefits increased by $9.5 million, primarily due
to payments on life contingent structured settlements benefits.

Commissions decreased $15.5 million to $27.4 million. The Reorganization
accounted for $10.7 million of the decrease with the remaining decrease
attributable to a lower sales of single premium deferred annuities.

General expenses decreased $34.7 million to $36.5 million. This decrease is
primarily related to an accrual for guaranty association assessments of $20.4
million recorded in the fourth quarter of 1995. There was no significant
additional accrual necessary during 1996. In addition, the effects of the
Reorganization resulted in a $14.5 million decrease in general expenses.

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. Amortization of
goodwill is based on a 25 year life and amortization of PVFP is based on
periodic estimates of realized and remaining gross profits. For the years ended
December 31, 1996 and 1995, goodwill amortization was $1.5 million and $4.8
million, respectively, and net PVFP amortization was $32.4 million and $52.4
million, respectively. The decrease is primarily related to the fact that as
result of the Reorganization, the amortization of the goodwill and PVFP balances
of GE Capital Assurance are no longer included in the Company's earnings
effective October 1, 1995.

<PAGE>

Increase in deferred acquisition costs decreased $16.2 million to $26.7 million
primarily as a result of lower commissions of $4.8 million and the effect of the
Reorganization of $10.8 million.

Provision for income taxes. The effective tax rate for 1996 decreased from 39.5%
to 32.8% primarily due to equity income of the Company's subsidiary and lower
state taxes caused by the Reorganization.

Minority interest decreased $11.2 million to zero due to the fact that
subsequent to the third 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.

1995 Compared to 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.

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 acquisition. 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.

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.

<PAGE>

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.

(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, 1996, investments subject to certain call provisions totaled
$128.6 million; and mortgage-backed securities subject to prepayment risk
totaled $1,863.9 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
previous 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, 1996,
approximately $66.0 million was available for dividend payments in 1997.

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, 1996, approximately 38.0% of the fixed maturities were in corporate
issues, U.S. Treasuries, and other foreign securities with expected maturities
within five years. Another 35.4% is invested in securities backed by residential
mortgages. At December 31, 1996, 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%, 16.9% and 6.3% of the portfolio were
concentrated in the manufacturing, financial and utility industries,
respectively. As of December 31, 1996, .8% 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, 1996 and 1995. 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 and deferred taxes, have been
included in shareholder's interest as of December 31, 1996 and 1995. At December
31, 1996 and 1995, shareholder's interest included net unrealized gains of $7.0
and $29.9 million, respectively, a difference primarily due to an decrease in
the fair value of fixed maturities, principally resulting from higher interest
rates.

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, 1996, the mortgage loan portfolio consisted of
1,044 mortgage loans on commercial real estate properties, 46% 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

<PAGE>

loan-to-value ratios at the date of origination of less than 75%. GNA does not
engage in construction lending or land loans. Nonearning and reduced earning
receivables decreased to $14.3 million at December 31, 1996, compared with $16.2
million at year-end 1995.

Other Invested Assets. The Company's other invested assets consist of GNA's
equity investment in GE Capital Life of New York of $121.0 million and
investments in mutual fund portfolios offered in conjunction with the deferred
variable annuity of $40.7 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 numerous 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, 1996, the
Company has 480 employees. In addition, the Company has 68 retail sales agents
selling the Company's products through an affiliated company, GNA Insurance
Services, Inc. The number of retail sales agents decreased significantly during
1996 as a result of several banks internalizing sales forces.

A.M. Best has assigned to GNA an A + (Superior) rating. Duff & Phelps has
reaffirmed the Company's AA (Very High) rating, and Standard & Poor's has
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, and has recorded a liability of $34.4 million at December 31, 1996
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 and investment products sold by the Company and the
taxation impact on the relative desirability of various investment vehicles.

New Accounting Standards

New accounting standards include Statement of Financial Accounting Standards
(SFAS) No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. Among other things, the new statement
distinguishes transfers of financial assets that are sales from transfers that
are secured borrowings, based on control of the transferred assets. SFAS No. 125
is effective for transfers of financial assets occurring after December 31, 1996
and its adoption will not have a material effect on the financial position or
results of operations of GNA.

EXECUTIVE OFFICERS AND DIRECTORS

Position with GNA(1) and
Name (Age) Principal Occupation for Last Five Years
- ----------------- -----------------------------------------
<S> <C>

Geoffrey S. Stiff Director of GNA since 1994. President and Chief Executive Officer of GNA since
(45) 1997. Senior Vice President and Chief Financial Officer of since 1993 - 1996.
Vice President, Chief Financial Officer and Director of Employers Reinsurance
Corporation 1987-93.

Stephen P. Joyce Director and Senior Vice President of GNA since 1995. Vice President, Business
(41) Development, GE Capital Corporation 1991- Current. President, Monogram Retailer
Credit, 1990-1993.

Charles A. Kaminski Director since 1994 and Senior Vice President of GNA since 1993. Vice President of
(48) Investments of GNA 1992-93.

Victor C. Moses Director since 1994 and Senior Vice President since 1992. Chief Actuary of GNA
(49) since 1993. Chief Financial Officer of GNA 1991-93.

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

Marilee Byers Senior Vice President of GNA since 1996. Formerly, Senior Vice President, Pacific
(44) Mutual Life Insurance Company, 1988 - 1996.

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

Marycatherine Yeagley Senior Vice President of GNA since 1995. Vice President of GNA 1990-95.
(49)

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

Steven M. Callahan Vice President of GNA since 1996. Vice President/Manager of AMEX Life Assurance
(39) Company (now General Electric Capital Assurance Company, GNA's parent company)
since 1982.

Thomas W. Casey Chief Financial Officer of GNA since 1996. Vice President of GNA since 1993.
(34) Technical Adviser, GE Capital Corporation 1992-93.

Scott Curtis Vice President of GNA since 1996. Sales and Marketing Manager/Director of GNA
(34) 1990-96.

Stephen N. DeVos Vice President and Controller of GNA since 1996.
(36) Technical Advisor, GE Capital Corporation 1994-96.
Manager, Coopers & Lybrand 1986-94.

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

</TABLE>

<PAGE>

Position with GNA(1) and
Name (Age) Principal Occupation for Last Five Years
- ---------------- ------------------------------------------
<S> <C>
Pamela A. Hughes Vice President of GNA since 1992. Regional Marketing Director of GNA 1986-92.
(37)

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

Bill Koski Vice President of GNA since 1995. Assistant Vice President of GNA from 1989-1995.
(43)

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

Laurence M. Richmond Vice President of GNA since 1986.
(49)

J. Michael Singleton Vice President of GNA since 1985.
(56)

Chris Shumate Vice President of GNA since 1996. President of GE Capital Assignment Corporation
(48) since 1995 and Executive Vice President from 1993-1995. Broker, Kidder, Peabody &
Co., Inc., 1991-1992.

Patricia C. Vaselakos Vice President of GNA since 1994. Program and Regional Marketing Director of GNA
(42) 1990-94

Edward J. Wiles, Jr. Vice President, Counsel and Assistant Secretary of GNA since 1989.
(49)

</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.

<PAGE>

Summary Compensation Table

Annual Compensation
Name and Other Annual Long Term
Principal Position Year Salary Bonus Compensation(1) Compensation(2)
------------------ ---- ------ ----- --------------- ---------------
<S> <C>
Geoffrey S. Stiff 1996 $53,718 $31,700 $9,384 -0-
President and Chief Executive 1995 50,558 26,945 255 -0-
Officer 1994 48,666 23,775 5,807 -0-
Patrick E. Welch 1996 33,189 14,539 18,954 20,254
President and Chief Executive 1995 141,960 52,500 4,246 77,550
Officer 1994 119,700 39,900 3,136 72,200
Marycatherine Yeagley 1996 53,666 26,520 26,730 -0-
Senior Vice President, Human Resources 1995 55,563 24,000 5,282 -0-
1994 42,000 16,000 3,245 -0-
Steven M. Callahan 1996 124,776 46230 24842 -0-
Vice President
Laurence M. Richmond 1996 71,092 26,975 58,308 10,375
Vice President 1995 99,000 36,000 5,499 15,000
1994 64,000 26,000 3,976 10,000
J. Michael Singleton 1996 104,813 37,100 44,149 17,500
Vice President 1995 85,200 27,600 5,685 -0-
1994 74,250 22,000 3,911 -0-
</TABLE>

* Patrick E. Welch resigned his positions with GNA effective December 13, 1996,
and Geoffrey S. Stiff assumed those responsibilities and became President and
Chief Executive Officer effective December 16, 1996.

(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. The following officers listed in the
Summary Compensation Table above have received awards payable as follows:
Patrick E. Welch - $50,000 commencing August 1, 1993; Laurence M. Richmond
- $25,000 commencing December 1, 1993; James M. Singleton - $25,000
commencing January 1, 1996; and Marycatherine Yeagley - $25,000 commencing
January 1, 2000, and $25,000 commencing May 1, 2005. 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 Geoffrey S. Stiff and Steve Callahan, 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

<PAGE>

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 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 GNA of which
the Company 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, 1996,
1995 and 1994 included in this Prospectus have been audited by GNA's independent
public accountants, KPMG Peat Marwick LLP, as indicated in its report with
respect thereto and are included herein in reliance upon the authority of said
firm as

<PAGE>

experts in accounting and auditing in giving said reports.

The Separate Account's financial statements for the year ended December 31,
1996, 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 of Contents

Page
Performance Data.............. 2

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

Financial Statements.......... 4

<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
- ----- ----------- ---------
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%

<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

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>
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)]

<PAGE>

FINANCIAL STATEMENTS

<PAGE>

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

Contents

Page
Consolidated Financial Statements:
Great Northern Insured Annuity Corporation and Subsidiaries
Independent Auditors'Report......................................
Consolidated Balance Sheets as of December 31, 1996 and 1995.....
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994................................
Consolidated Statements of Shareholder's Interest for the
Years Ended December 31, 1996, 1995 and 1994....................
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994..........................
Notes to Consolidated Financial Statements.......................

<PAGE>

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, 1996
and 1995, and the related consolidated statements of income, shareholder's
interest, and cash flows for each of the years in the three-year period ended
December 31, 1996. 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, 1996
and 1995, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Seattle, Washington
January 17, 1997

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1996 AND 1995
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS 1996 1995
- ------------------------------------------------------------------------------------------------------- -------- --------
<S> <C>
Investments:
Fixed maturities, at fair value (amortized cost of $5,254.4 in 1996 and $4,942.2 in 1995............. $5,270.1 $5,064.6
Mortgage loans, net of valuation allowance of $35.6 in 1996 and $35.3 in 1995........................ 1,159.7 1,282.4
Policy loans......................................................................................... 3.3 3.9
Short-term investments............................................................................... 3.9 28.1
Other invested assets................................................................................ 161.7 165.1
-------- --------
Total investments................................................................................. 6,598.7 6,544.1
Cash................................................................................................... 2.3 1.9
Accrued investment income.............................................................................. 112.2 85.6
Deferred acquisition costs............................................................................. 129.6 88.8
Intangible assets...................................................................................... 181.0 156.3
Deferred income tax benefit............................................................................ 19.1 --
Other assets........................................................................................... 44.4 32.2
Separate account assets................................................................................ 32.7 17.6
-------- --------
Total assets...................................................................................... $7,120.0 $6,926.5
-------- --------
-------- --------

<CAPTION>
LIABILITIES AND SHAREHOLDER'S INTEREST
- -------------------------------------------------------------------------------------------------------
<S> <C>
Liabilities:
Future annuity and contract benefits................................................................. $6,075.1 $5,977.9
Policy and contract claims........................................................................... 96.8 89.5
Other policyholder liabilities....................................................................... 48.1 73.6
Deferred income tax liability........................................................................ -- 2.2
Accounts payable and accrued expenses................................................................ 177.4 104.1
Separate account liabilities......................................................................... 32.7 17.6
-------- --------
Total liabilities................................................................................. 6,430.1 6,264.9
Shareholder's interest:
Common stock, $100 par value. Authorized, issued and outstanding 25,000 shares....................... 2.5 2.5
Additional paid-in capital........................................................................... 542.0 541.9
Net unrealized investment gain....................................................................... 7.0 29.9
Retained earnings.................................................................................... 138.4 87.3
-------- --------
Total shareholder's interest...................................................................... 689.9 661.6
-------- --------
Total liabilities and shareholder's interest...................................................... $7,120.0 $6,926.5
-------- --------
-------- --------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLAR AMOUNTS IN MILLIONS)

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C>
Revenues:
Net investment income.......................................................................... $462.5 $784.7 $837.8
Net realized investment gains (losses)......................................................... 3.1 (14.4) 6.3
Premiums....................................................................................... 200.0 177.1 117.6
Surrender fee and other income................................................................. 8.1 16.7 11.2
------ ------ ------
Total revenues.............................................................................. 673.7 964.1 972.9
------ ------ ------
Benefits and expenses:
Interest credited.............................................................................. 295.7 462.2 489.4
Change in policy reserves...................................................................... 201.0 174.5 120.4
Annuity and surrender benefits................................................................. 29.9 136.7 160.9
Commissions.................................................................................... 27.4 42.9 52.8
General expenses............................................................................... 36.5 71.2 46.8
Amortization of intangibles, net............................................................... 33.9 57.5 58.0
Increase in deferred acquisition costs, net.................................................... (26.7) (42.9) (63.1)
------ ------ ------
Total benefits and expenses................................................................. 597.7 902.1 865.2
------ ------ ------
Income before income taxes and minority interest............................................ 76.0 62.0 107.7
Provision for income taxes....................................................................... 24.9 24.5 44.7
------ ------ ------
Income before minority interest............................................................. 51.1 37.5 63.0
Minority interest................................................................................ -- 11.2 15.5
------ ------ ------
Net income.................................................................................. $ 51.1 $ 26.3 $ 47.5
------ ------ ------
------ ------ ------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S INTEREST

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK ADDITIONAL INVESTMENT
------------------ PAID-IN GAINS RETAINED
SHARES AMOUNT CAPITAL (LOSSES) EARNINGS
------ -------- ---------- ---------- --------
<S> <C>
Balances at December 31, 1993............................ 25,000 $ 2.5 $ 726.7 $ (16.3) $ 24.8
Net income.......................................... -- -- -- -- 47.5
Purchase price adjustments.......................... -- -- (7.3) -- --
Net unrealized investment losses.................... -- -- -- (512.5) --
------ -------- ---------- ---------- --------
Balances at December 31, 1994............................ 25,000 2.5 719.4 (528.8) 72.3
Net income.......................................... -- -- -- -- 26.3
Dividend of GE Capital Assurance.................... -- -- (175.2) -- (11.3)
Purchase price adjustments.......................... -- -- (2.3) -- --
Net unrealized investment gains..................... -- -- -- 558.7 --
------ -------- ---------- ---------- --------
Balances at December 31, 1995............................ 25,000 2.5 541.9 29.9 87.3
Net income.......................................... -- -- -- -- 51.1
Purchase price adjustments.......................... -- -- .1 -- --
Net unrealized investment losses.................... -- -- -- (22.9) --
------ -------- ---------- ---------- --------
Balances at December 31, 1996............................ 25,000 $ 2.5 $ 542.0 $ 7.0 $138.4
------ -------- ---------- ---------- --------
------ -------- ---------- ---------- --------

TOTAL
SHAREHOLDER'S
INTEREST
-----------------
<S> <C>
Balances at December 31, 1993............................ $ 737.7
Net income.......................................... 47.5
Purchase price adjustments.......................... (7.3)
Net unrealized investment losses.................... (512.5)
--------
Balances at December 31, 1994............................ 265.4
Net income.......................................... 26.3
Dividend of GE Capital Assurance.................... (186.5)
Purchase price adjustments.......................... (2.3)
Net unrealized investment gains..................... 558.7
--------
Balances at December 31, 1995............................ 661.6
Net income.......................................... 51.1
Purchase price adjustments.......................... .1
Net unrealized investment losses.................... (22.9)
--------
Balances at December 31, 1996............................ $ 689.9
--------
--------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLAR AMOUNTS IN MILLIONS)

<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C>
Cash flows from operating activities:
Net income............................................................................... $ 51.1 $ 26.3 $ 47.5
--------- -------- --------
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest..................................................................... -- 11.2 15.5
Equity in earnings of GE Capital Life of New York..................................... (7.6) (1.3) --
Increase in future policy benefits.................................................... 496.7 636.7 609.8
Net realized investment (gains) losses................................................ (3.1) 14.4 (6.3)
Amortization of investment premiums and discounts..................................... 27.7 61.4 83.6
Amortization of intangibles........................................................... 33.9 57.5 58.0
Deferred income tax provision (benefit)............................................... (10.4) 4.0 30.2
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income........................................................ (26.6) (6.5) 6.5
Deferred acquisition costs....................................................... (26.7) (42.9) (63.1)
Other assets..................................................................... (12.4) 12.6 (10.7)
Increase (decrease) in:
Other policyholder liabilities................................................... (25.5) (25.7) 122.7
Accounts payable and accrued expenses............................................ 73.3 24.1 (13.0)
--------- -------- --------
Total adjustments................................................................ 519.3 745.5 833.2
--------- -------- --------
Net cash provided by operating activities........................................ 570.4 771.8 880.7
--------- -------- --------
Cash flows from investing activities:
Proceeds from investments in fixed maturities and real estate............................ 868.2 1,735.6 1,970.8
Principal collected on mortgage loans.................................................... 163.9 124.4 93.1
Purchases of fixed maturities............................................................ (1,199.5) (1,846.5) (2,413.7)
Mortgage loan originations............................................................... (42.3) (159.9) (389.2)
Dividends received....................................................................... 7.5 7.1 --
--------- -------- --------
Net cash used in investing activities............................................ (202.2) (139.3) (739.0)
--------- -------- --------
Cash flows from financing activities:
Proceeds from issue of investment contracts.............................................. 415.6 810.3 994.9
Redemption and benefit payments on investment contracts.................................. (807.6) (1,469.2) (1,220.6)
Cash distributed in conjunction with dividend of GE Capital Assurance.................... -- (31.5) --
Short-term borrowings.................................................................... -- -- (5.0)
--------- -------- --------
Net cash used in financing activities............................................ (392.0) (690.4) (230.7)
--------- -------- --------
Net decrease in cash and cash equivalents........................................ (23.8) (57.9) (89.0)
Cash and cash equivalents at beginning of year............................................. 30.0 87.9 176.9
--------- -------- --------
Cash and cash equivalents at end of year................................................... $ 6.2 $ 30.0 $ 87.9
--------- -------- --------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

(DOLLAR AMOUNTS IN MILLIONS)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

These consolidated financial statements have been 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 Commissioner of the State of Washington, where
Great Northern Insured Annuity Corporation (GNA or the Company) is 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.

Certain reclassifications have been made to the 1995 and 1994 consolidated
financial statements to conform to the 1996 presentation. These
reclassifications have no effect on reported net income or shareholder's
interest.

(B) 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 GNA's parent company, GNA Corporation. 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 (collectively, the Acquisitions). During 1994, United
Pacific Life Insurance Company was renamed General Electric Capital Assurance
Company (GE Capital Assurance).

Effective October 1, 1995, 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 sheets of GNA as of
December 31, 1996 and 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. On
October 1, 1995, 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 and a decrease in shareholder's interest of
$186.5.

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 Assurance Company of New York (GE Capital Life of New York).

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

<TABLE>
<S> <C>
Total revenues.......................................................................... $ 631.4
Net income.............................................................................. 26.7
Total assets............................................................................ 6,926.5
Total shareholders' interest............................................................ 661.6
</TABLE>

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
(D) PRODUCTS

The primary products of the Company are investment type deferred annuities
and structured settlement immediate annuities. 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.

(E) 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 consolidated balance sheets
and considered cash equivalents in the consolidated statements of cash flows.

During the years ended December 31, 1996, 1995, and 1994, the Company paid
federal and state income taxes of $50.4, $1.7 and $6.8, respectively.

(F) INVESTMENTS

The Company has designated its fixed maturities as available for sale. The
fair value for fixed maturities and equity securities is based on quoted market
prices, where available. For securities not actively traded, fair values are
estimated using values obtained from independent pricing services or, in the
case of private placements, are estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit quality, call
features and maturity of the investments, as applicable. Changes in the market
values of fixed maturities, net of the effect on deferred policy acquisition
costs, present value of future profits and deferred federal income taxes, and
market values of equity securities, net of deferred federal income taxes, are
reflected as unrealized appreciation and depreciation in a separate component of
shareholder's interest and, accordingly, have no effect on net income.
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. The Company had no significant open or outstanding
derivative transactions during the years 1996, 1995 or 1994.

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

(G) 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.

(H) INTANGIBLE ASSETS

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.

GOODWILL

Goodwill is amortized over its estimated period of benefit on a
straight-line basis. No amortization period exceeds 25 years. Goodwill in excess
of associated expected operating undiscounted cash flows is considered to be
impaired and is written down to fair value.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
(I) FUTURE ANNUITY AND CONTRACT BENEFITS

Future annuity and contract benefits are comprised of the liabilities for
life insurance policies and immediate and deferred annuity contracts. Depending
on the type of contract, these liabilities are calculated based upon actuarial
assumptions as to mortality, interest, expense and withdrawals, with experience
for adverse deviation where appropriate.

(J) REVENUES

Investment income is recorded when earned. Investment gains and losses are
calculated on the basis of specific identification. Premiums on long-duration
insurance products are recognized as earned when due or, in the case of life
contingent annuities, when the contracts are issued. Premiums received under
annuity contracts without significant mortality risk are not reported as
revenues but as future annuity benefit liabilities. Surrender charges are
recognized as income when the policy is surrendered.

(K) FEDERAL INCOME TAX

The Company is included with GE Capital Assurance in a life insurance
consolidated federal income tax return. 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 variable annuity contract owners. The Company receives
mortality risk fees and administration fees from the variable annuity mutual
fund portfolios and separate account assets.

(2) INVESTMENTS

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

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C>
Fixed maturities...................................................... $353.0 $662.9 $724.9
Mortgage loans........................................................ 102.8 122.3 105.7
GE Capital Life of New York equity method income...................... 7.6 1.3 --
Other................................................................. 2.4 4.9 13.7
------ ------ ------
Gross investment income............................................... 465.8 791.4 844.3
Investment expenses................................................... (3.3) (6.7) (6.5)
------ ------ ------
Net investment income................................................. $462.5 $784.7 $837.8
------ ------ ------
------ ------ ------
</TABLE>

(A) FIXED MATURITIES

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

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C>
Sales proceeds........................................................ $192.8 $998.9 $860.1
------ ------ ------
Gross realized investment:
Gains................................................................. $ 8.1 $ 16.6 $ 17.5
Losses................................................................ (5.0) (31.0) (11.2)
------ ------ ------
Net realized investment gains (losses)................................ $ 3.1 $(14.4) $ 6.3
------ ------ ------
------ ------ ------
</TABLE>

The additional proceeds from investments in fixed maturities in the
consolidated statements of cash flows result from principal collected on
mortgage-backed securities, maturities, calls and sinking fund payments.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(2) INVESTMENTS -- CONTINUED
Fixed maturities are considered available for sale. Accordingly, fixed
maturities are accounted for at fair value, with the resulting unrealized gain
or loss recorded through shareholder's interest, net of the following
adjustments:

<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C>
Fixed maturities................................................................ $ 15.7 $122.4
Other invested assets........................................................... 5.4 5.2
Deferred acquisition costs...................................................... (3.6) (17.7)
Present value of future profits................................................. (6.4) (65.1)
Deferred income taxes........................................................... (4.1) (14.9)
------ ------
Net unrealized investment gains.......................................... $ 7.0 $ 29.9
------ ------
------ ------
</TABLE>

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
1996 COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------------- --------- ------ ------ --------
<S> <C>
United States and agency........................................................... $ 144.5 $ 9.9 $ (1.4) $ 153.0
Foreign............................................................................ 200.9 6.7 (1.5) 206.1
Corporate securities............................................................... 3,065.0 10.1 (28.0) 3,047.1
Mortgage-backed securities......................................................... 1,844.0 36.5 (16.6) 1,863.9
--------- ------ ------ --------
Totals...................................................................... $5,254.4 $ 63.2 $(47.5) $5,270.1
--------- ------ ------ --------
--------- ------ ------ --------

<CAPTION>
1995
- -----------------------------------------------------------------------------------
<S> <C>
United States and agency........................................................... $ 140.6 $ 13.1 $ (.7) $ 153.0
Corporate 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>

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

<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- -------- --------- --------
<S> <C>
Due in one year or less........................................................ $ 471.9 $ 472.6 $ 345.8 $ 345.7
Due between one year through five years........................................ 1,585.1 1,529.2 1,873.6 1,916.2
Due between five years through ten years....................................... 650.1 663.3 636.7 655.6
Due after ten years............................................................ 703.3 741.1 446.7 485.5
--------- -------- --------- --------
Subtotals............................................................... 3,410.4 3,406.2 3,302.8 3,403.0
Mortgage-backed securities.............................................. 1,844.0 1,863.9 1,639.4 1,661.6
--------- -------- --------- --------
Totals.................................................................. $5,254.4 $5,270.1 $4,942.2 $5,064.6
--------- -------- --------- --------
--------- -------- --------- --------
</TABLE>

At December 31, 1996, approximately 23.5%, 16.9% and 6.3% 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.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(2) INVESTMENTS -- CONTINUED
The fixed maturities portfolio at December 31 consisted of the following
classes of securities:

<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
FAIR FAIR
VALUE PERCENT VALUE PERCENT
-------- ------- -------- -------
<S> <C>
Agencies and treasuries............................................................. $1,400.5 26.6% $1,377.2 27.2%
AAA................................................................................. 476.7 9.0 283.7 5.6
AA.................................................................................. 284.6 5.4 214.7 4.3
A................................................................................... 1,412.7 26.8 1,546.3 30.5
BBB................................................................................. 1,275.1 24.2 1,225.6 24.2
BB.................................................................................. 40.7 .8 71.0 1.4
B................................................................................... -- -- 5.2 .1
Not rated........................................................................... 379.8 7.2 340.9 6.7
-------- ------- -------- -------
Totals....................................................................... $5,270.1 100.0% $5,064.6 100.0%
-------- ------- -------- -------
-------- ------- -------- -------
</TABLE>

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.

At December 31, 1996, there were no bonds in default as to interest and
principal.

(B) MORTGAGE LOANS

At December 31, 1996 and 1995, the Company's mortgage loan portfolio
consisted of 1,044 and 1,161, 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 $12.5, $18.5 and $62.3 of mortgages secured by real
estate in California, which represent 29%, 13% and 16% of total originations for
the years ended December 31, 1996, 1995 and 1994, respectively. At December 31,
1996 and 1995, respectively, the Company held $449.0 and $519.2 in mortgages
secured by real estate in California; this is 38% of the total mortgage
portfolio for 1996 and 40% of the total portfolio for 1995.

"Impaired" loans are defined by generally accepted accounting principles as
loans for which it is probable that the lender will be unable to collect all
amounts due according to terms of the original contractual terms of the loan
agreement. That definition excludes, among other things, leases, or large groups
of smaller-balance homogeneous loans, and therefore applies principally to GNA's
commercial loans.

Under these principles, GNA has two types of "impaired" loans as of
December 31, 1996 and 1995: loans requiring allowances for losses ($1.7 and
$3.2, respectively) and loans expected to be fully recoverable because the
carrying amount has been reduced previously through charge-offs or deferral of
income recognition ($12.6 and $13.0, respectively); allowance for losses on
these loans were $0.8 and $0.1, respectively. Average investment during 1996 and
1995 was $15.6 and $11.3, respectively and interest income earned on these loans
while they were considered impaired was $.7 and $1.3, respectively.

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

<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C>
Balance at January 1...................................................... $35.3 $32.0 $30.5
Dividend of GE Capital Assurance.......................................... -- (.3) --
Additions................................................................. 2.5 2.8 2.4
Amounts written off, net.................................................. (2.2) .8 (.9)
----- ----- -----
Balance at December 31.................................................... $35.6 $35.3 $32.0
----- ----- -----
----- ----- -----
</TABLE>

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(2) INVESTMENTS -- CONTINUED
The net write-offs represented 0.18% of average mortgage loans outstanding
during 1996, compared with 0.15% and 0.07% during 1995 and 1994, respectively.

The allowance for losses on mortgage loans at December 31, 1996 and 1995
represented 3.1% and 2.7% of total mortgage loans, respectively.

A portion of other invested assets at December 31, 1996 and 1995 included
$121.0 and $123.6, respectively, for the Company's 48% investment in GE Capital
Life of New York, accounted for under the equity method. Investment income for
1996 includes $7.6 for equity in earnings of GE Capital Life of New York. For
1995, investment income includes $1.3 for equity in earnings of GE Capital Life
of New York subsequent to the Reorganization on October 1, 1995. Prior to the
Reorganization, GE Capital Life of New York was consolidated. Following is the
summarized financial information for GE Capital Life of New York as of and for
the years ended December 31:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C>
Total revenue............................................................... $ 163.3 $ 102.0
Total expenses.............................................................. 137.6 84.1
Income before income taxes........................................... 25.7 17.9
Provision for income taxes.................................................. 9.8 8.4
-------- --------
Net income........................................................... $ 15.9 $ 9.5
-------- --------
-------- --------
Total investments........................................................... $1,554.1 $1,491.6
Other assets................................................................ 154.9 100.1
-------- --------
Total assets......................................................... $1,709.0 $1,591.7
-------- --------
-------- --------
Total liabilities........................................................... $1,459.8 $1,334.9
Shareholder's interest...................................................... 249.2 256.8
-------- --------
Total liabilities and shareholder's interest......................... $1,709.0 $1,591.7
-------- --------
-------- --------
</TABLE>

(3) DEFERRED ACQUISITION COSTS

For investment contracts, deferred acquisition costs are amortized 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 or the present value of expected future premiums.

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 is charged
to expense.

Activity in deferred acquisition costs was as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ -----
<S> <C>
Unamortized balance at January 1................................................. $106.5 $ 90.2 $27.1
Dividend of GE Capital Assurance................................................. -- (26.6) --
Costs deferred................................................................... 36.0 53.0 62.8
Amortization, net................................................................ (9.3) (10.1) .3
------ ------ -----
Unamortized balance at December 31............................................... 133.2 106.5 90.2
Cumulative effect of net unrealized investment (gains) losses.................... (3.6) (17.7) 1.9
------ ------ -----
Recorded balance................................................................. $129.6 $ 88.8 $92.1
------ ------ -----
------ ------ -----
</TABLE>

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(4) INTANGIBLE ASSETS

(A) PRESENT VALUE OF FUTURE PROFITS

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 for investment contracts 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 is charged to expense.

The following table presents the activity in PVFP for the years ended
December 31:

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C>
Unamortized balance at January 1............................................... $187.5 $313.9 $363.9
Dividend of GE Capital Assurance............................................... -- (74.0) --
Interest accrued at 5.4% in 1996, 4.8% in 1995 and 4.9% in 1994................ 10.0 15.4 17.8
Amortization................................................................... (42.4) (67.8) (67.8)
------ ------ ------
Unamortized balance at December 31............................................. 155.1 187.5 313.9
Cumulative effect of net unrealized investment gains (losses).................. (6.4) (65.1) 101.2
------ ------ ------
Recorded balance............................................................... $148.7 $122.4 $415.1
------ ------ ------
------ ------ ------
</TABLE>

The estimated percentage of the December 31, 1996 balance before the effect
of unrealized investment gains or losses to be amortized over the next five
years is as follows:

1997 19.3%

1998 16.3

1999 13.3

2000 10.7

2001 8.9

(B) GOODWILL

In conjunction with the acquisitions, $150.6 of goodwill was recorded. In
conjunction with the Reorganization, goodwill was reduced by $103.4. During the
years ended December 31, 1996, 1995 and 1994, $1.5, $4.8 and $7.8, respectively,
was amortized. As of December 31, 1996, the unamortized balance of goodwill was
$31.2.

(5) FUTURE ANNUITY AND CONTRACT BENEFITS

(A) INVESTMENT AND UNIVERSAL LIFE TYPE CONTRACTS

Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment and universal life type contracts are recognized by providing a
liability equal to the current account value of the policyholders' contracts.
Interest rates credited to these contracts are guaranteed for the policy term
with renewal rates determined by management. At December 31, 1996 and 1995,
investment contracts comprised $5,564.1 and $5,668.2, respectively.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(5) FUTURE ANNUITY AND CONTRACT BENEFITS -- CONTINUED
(B) 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,
1996 and 1995, insurance contracts comprised $511.0 and $309.7, respectively.

Interest rate assumptions used in calculating the present value of future
annuity and contract benefits for insurance contracts range from 6.1% to 9.9%.

(6) RELATED-PARTY TRANSACTIONS

During the years ended December 31, 1996, 1995 and 1994, the Company
recognized $3.4, $1.6 and $2.6, respectively, from its affiliates, GNA
Securities, Inc. and GNA Distributors, Inc. for reimbursement of marketing,
administrative and general office expenses.

During the years ended December 31, 1996 and 1995, the Company received a
dividend from GE Capital Life of New York of $7.5 and $7.1, respectively.

Prior to the Reorganization, the Company received $3.6 from GE Capital Life
of New York and paid $31.2 to GE Capital Assurance for settlement of
intercompany tax payments.

(7) COMMITMENTS AND CONTINGENCIES

(A) MORTGAGE LOAN COMMITMENTS

As of December 31, 1996 and 1995, the Company was committed to fund $27.7
and $20.2, respectively, in mortgage loans.

(B) 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 $3.9, $6.6 and $10.3 to various state guaranty associations
during the years ended December 31, 1996, 1995 and 1994, respectively. At
December 31, 1996 and 1995, accounts payable and accrued expenses include $34.4
and $38.2, respectively, related to estimated assessments. The Company expensed
$20.4 of related assessments during the fourth quarter of 1995.

The Company leases the office space used in its operations. Future minimum
commitments under operating leases as of December 31, 1996 aggregate to $11.5,
terminating in the year 2001.

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.

(D) 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.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(8) INCOME TAXES

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

<TABLE>
<CAPTION>
1996 1995 1994
------ ----- -----
<S> <C>
Current federal income tax provision.............................................. $ 34.3 $19.5 $12.0
Deferred federal income tax provision............................................. (10.1) 3.9 29.2
------ ----- -----
Subtotal -- federal provision................................................ 24.2 23.4 41.2
------ ----- -----
Current state income tax provision................................................ 1.0 1.0 2.5
Deferred state income tax provision............................................... (.3) .1 1.0
------ ----- -----
Subtotal -- state provision.................................................. .7 1.1 3.5
------ ----- -----
Total provision for income taxes............................................. $ 24.9 $24.5 $44.7
------ ----- -----
------ ----- -----
</TABLE>

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

<TABLE>
<CAPTION>
1996 1995 1994
------ ------ -----
<S> <C>
Statutory U.S. federal income tax rate........................................... 35.0% 35.0% 35.0%
Equity in earnings of GE Capital Life of New York................................ (3.5) (.7) --
State income tax................................................................. .6 1.2 2.2
Goodwill amortization............................................................ .7 2.7 2.5
Other, net....................................................................... -- 1.3 1.8
------ ------ -----
Effective rate.............................................................. 32.8% 39.5% 41.5%
------ ------ -----
------ ------ -----
</TABLE>

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

<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C>
Assets:
Mortgage loans and real estate.......................................................... $ 6.2 $ 4.4
Future annuity and contract benefits.................................................... 68.2 58.5
Guaranty association assessments........................................................ 14.1 15.6
Other................................................................................... .7 1.5
------ ------
Total deferred tax assets............................................................ 89.2 80.0
------ ------
Liabilities:
Net unrealized gains on investment securities........................................... (4.1) (14.9)
Investments............................................................................. (2.0) --
Present value of future profits......................................................... (45.2) (55.7)
Deferred acquisition costs.............................................................. (16.4) (6.1)
Other................................................................................... (2.4) (5.5)
------ ------
Total deferred tax liabilities....................................................... (70.1) (82.2)
------ ------
Net deferred income tax benefit (liability).......................................... $ 19.1 $ (2.2)
------ ------
------ ------
</TABLE>

Based on an analysis of the Company's tax position, management believes it
is more likely than not that the results of future operations and tax planning
strategies will generate sufficient taxable income to realize deferred tax
assets. No valuation allowance for deferred tax assets was deemed necessary for
1996 or 1995.

<PAGE>

GREAT NORTHERN INSURED ANNUITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(9) FAIR VALUE OF FINANCIAL INSTRUMENTS

On December 31, 1995, the Company adopted SFAS No. 119, DISCLOSURE ABOUT
DERIVATIVE FINANCIAL INSTRUMENTS. This statement required disclosures about
amounts, nature and trems of derivative financial instruments and modifies
existing disclosure requirements for other financial instruments.

The Company has no derivative financial instruments other than mortgage
loan commitments of $27.7 and $20.2 at December 31, 1996 and 1995, respectively.

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. Financial instruments that, as a matter of accounting policy, are
reflected in the accompanying consolidated financial statements at fair value
are not included in the following disclosures. Such items include cash and cash
equivalents, investment securities, policy loans and other invested assets.

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 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>
1996 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
FINANCIAL INSTRUMENTS AMOUNT VALUE AMOUNT VALUE
- ------------------------------------------------------- -------- -------- -------- --------
<S> <C>
Mortgage loans......................................... $1,159.7 $1,171.2 $1,282.4 $1,344.9
-------- -------- -------- --------
Investment contracts................................... $5,504.0 $5,364.5 $5,668.2 $5,514.9
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>

(10) STATUTORY BASIS DATA AND RESTRICTION OF RETAINED EARNINGS

The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners (NAIC) that
are prepared on an accounting basis prescribed 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.
Permitted statutory accounting practices encompass all accounting practices not
so prescribed but that have been specifically granted by state insurance
authorities. The Company, however, has no significant permitted accounting
practices which vary from prescribed accounting practices or GAAP.

Statutory net income for the years ended December 31, 1996, 1995 and 1994
was $65.4, $76.7 and $82.6, respectively. Statutory capital and surplus as of
December 31, 1996 and 1995 was $411.2 and $356.9, respectively.

The 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.

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 previous year or 10% of the statutory surplus at the end of the year,
subject to a maximum limit equal to statutory earned surplus. As of December 31,
1996, approximately $66.0 was available for dividend payments in 1997.

<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:

Amount
------
Securities and Exchange Commission
Registration Fee $ 17,241
Printing and Engraving 97,800
Accounting fees and expenses 35,700
Legal fees and expenses 15,600
==========
Total Expenses $ 166,341

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 judgement except a judgement 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. Exhibits and Financial Statement Schedules.

(a) Exhibits

1.1 Underwriting Agreement between Great Northern Insured
Annuity Corporation and GNA Distributors, Inc. Incorporated
by reference to Exhibit
<PAGE>

(3)(i) to registration statement under the Securities Act of
1933 of GNA Variable Investment Account, File No. 33-78810,
filed May 11, 1994.

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. 33-86412, filed
November 16, 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. 33-86412, filed November 16, 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. 33-86412, filed November 16, 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. 33-86412,
filed November 16, 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. 33-86412, filed November 16,
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. 33-86412, filed November 16, 1994.

24.1 Consent of KPMG Peat Marwick LLP.

24.2 Consent of Jones & Blouch L.L.P.

<PAGE>

27. Financial Data Schedule

(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 in
its behalf by the undersigned, thereunto duly authorized, in the City of
Seattle, State of Washington, on this 14th day of April, 1997.
---- ------

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

By: /s/ GEOFFREY S. STIFF
-------------------------------------------
Geoffrey S. Stiff, President

ATTEST:

/s/ JOHN W. ATTEY
- ------------------------
John W. Attey, 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 14th day of April, 1997.
---- -------

Signature Title
--------- -----

/s/ GEOFFREY S. STIFF Director, President and Chief Executive
- -------------------------------- Officer (Principal Executive Officer)
Geoffrey S. Stiff

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

/s/ CHARLES A. KAMINSKI Director and Senior Vice President
- --------------------------------
Charles A. Kaminski

/s/ VICTOR C. MOSES Director and Senior Vice President
- ---------------------------------
Victor C. Moses

<PAGE>

SIGNATURES (Continued)

Signature Title
--------- -----

/s/ KENNETH F. STARR Director and Senior Vice President
- ---------------------------------
Kenneth F. Starr

/s/ THOMAS W. CASEY Vice President and Chief Financial
- --------------------------------- Officer (Principal Financial Officer)
Thomas W. Casey

/s/ STEPHEN N. DEVOS Vice President and Controller.
- --------------------------------- (Principal Accounting Officer)
Stephen N. DeVos

<PAGE>

EXHIBITS

<PAGE>

EXHIBIT INDEX

Exhibit No. Description Page No.
----------- ----------- --------
<S> <C>
1.1 Underwriting Agreement between Great Incorporated herein by reference to
Northern Insured Annuity Corporation and Exhibit (3)(i) to registration statement
GNA Distributors, Inc. under the Securities Act of 1933 of GNA
Variable Investment Account, File No.
33-78810 filed May 11, 1994.
3.1 Articles of Incorporation of Great Incorporated herein by reference to
Northern Insured Annuity Corporation. Exhibit 3.1 to 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 Incorporated herein by reference to
Corporation. Exhibit 3.2 to 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 Incorporated herein by reference to
and Modified Guaranteed Annuity Contract. Exhibit (4)(i) to registration statement
on Form N-4 of GNA Variable Investment
Account, File No. 33-86412 filed
November 16, 1994.
4.2 Specimen Certificate under Group Deferred Incorporated herein by reference to
Variable Annuity and Modified Guaranteed Exhibit (4)(ii) to registration
Annuity Contract. statement on Form N-4 of GNA Variable
Investment Account, File No. 33-86412
filed November 16, 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. 33-86412
filed November
16, 1994.
4.4 Application for Group Deferred Variable Incorporated herein by reference to
Annuity and Modified Guaranteed Annuity Exhibit (5)(i) to registration statement
Contract. on Form N-4 of GNA Variable Investment
Account, File No. 33-86412 filed
November 16, 1994.
4.5 Application for Certificate under Group Incorporated herein by reference to
Deferred Variable Annuity and Modified Exhibit (5)(ii) to registration
Guaranteed Annuity Contract. statement on Form N-4 of GNA Variable
Investment Account, File No. 33-86412
filed November 16, 1994.
<PAGE>

5. Opinion and consent of J. Neil McMurdie,
Esq., Associate Counsel and Assistant
Vice President.
10. Service Agreement between Great Northern Incorporated herein by reference to
Insured Annuity Corporation and Delaware Exhibit (8) to registration statement on
Valley Financial Services, Inc. Form N-4 of GNA Variable Investment
Account, File No. 33-86412 filed
November 16, 1994.
24.1 Written consent of KPMG Peat Marwick LLP.
24.2 Written consent of Jones & Blouch L.L.P..
27. Financial Data Schedule

</TABLE>

EXHIBIT 5

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

April 12, 1997

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. 33-86412 and 33-86410

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. 4 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,

/s/ J. NEIL MCMURDIE
- ------------------------------
J. Neil McMurdie
Associate Counsel and
Assistant Vice President

EXHIBIT 24.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Great Northern Insured Annuity Corporation:

We consent to the use of our report for Great Northern Insured Annuity
Corporation included herein (post-effective amendment no. 4 to Form S-1 of
registration no. 33-86410) and to the references to our firm under the heading
"Experts" in the prospectus.

Seattle, Washington
April 15, 1997

EXHIBIT 24.2

Written Consent of Jones & Blouch L.L.P.

Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
(202) 223-3500

April 10, 1997

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

Dear Sirs:

We hereby consent to the reference to this firm under the caption
"Legal Matters" in the prospectus contained in Post-Effective Amendment No. 4 to
the registration statement on Form S-1, File No. 33-86410, to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933.

Very truly yours,

/s/ Jones & Blouch L.L.P.
- -------------------------
Jones & Blouch L.L.P.

<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GREAT NORTHERN INSURED ANNUITY CORPORATION CONTAINED
IN THE PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>

<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<DEBT-HELD-FOR-SALE> 5,270 5,065
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 1,160 1,282
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 6,599 6,544
<CASH> 6 30
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 130 89
<TOTAL-ASSETS> 7,120 6,927
<POLICY-LOSSES> 6,172 6,067
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 48 74
<POLICY-HOLDER-FUNDS> 0 0
<NOTES-PAYABLE> 0 0
0 0
0 0
<COMMON> 3 3
<OTHER-SE> 687 659
<TOTAL-LIABILITY-AND-EQUITY> 7,120 6,927
200 177
<INVESTMENT-INCOME> 463 785
<INVESTMENT-GAINS> 3 (14)
<OTHER-INCOME> 8 17
<BENEFITS> 30 137
<UNDERWRITING-AMORTIZATION> (27) (43)
<UNDERWRITING-OTHER> 64 114
<INCOME-PRETAX> 76 62
<INCOME-TAX> 25 25
<INCOME-CONTINUING> 51 26
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 51 26
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0

</TABLE>