UNITED COMPANIES SEPARATE ACCOUNT ONE, 485BPOS, 1998-05-01

UNITED COMPANIES SEPARATE ACCOUNT ONE
485BPOS, 1998-05-01

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File Nos.33-95778
811-9026
=============================================================================
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. _4_ [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _12_ [X]
(Check appropriate box or boxes.)

United Life & Annuity Separate Account One
__________________________________________
(Exact Name of Registrant)

United Life & Annuity Insurance Company
_____________________________________________
(Name of Depositor)

III United Plaza, 8545 United Plaza Boulevard, Baton Rouge, LA 70809-2264
____________________________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)

Depositor's Telephone Number, including Area Code (800) 825-7568

Name and Address of Agent for Service
___________________________________________
C. Paul Patsis, President and Chief Executive Officer
United Life & Annuity Insurance Company
III United Plaza, 8545 United Plaza Blvd.
Baton Rouge, LA 70809-2251

Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866

It is proposed that this filing will become effective:

_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on May 1, 1998 pursuant to paragraph (b)of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485

If appropriate, check the following box:

_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Registered:

Individual Variable Annuity Contracts

CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
- -------- -----------------------

PART A

Item 1. Cover Page Cover Page

Item 2. Definitions Glossary of Terms

Item 3. Synopsis Summary

Item 4. Condensed Financial Information Appendix A - Condensed
Financial Information

Item 5. General Description of Registrant, Depositor,
and Portfolio Companies ULA; Investment
Options

Item 6. Deductions and Expenses Expenses

Item 7. General Description of Variable Annuity
Contracts The SpectraSelect
Fixed and Variable Annuity Contracts

Item 8. Annuity Period Annuity Provisions

Item 9. Death Benefit Death Benefit

Item 10. Purchases and Contract Value How to Purchase A
Contract

Item 11. Redemptions Withdrawals

Item 12. Taxes Taxes

Item 13. Legal Proceedings. Not Applicable

Item 14. Table of Contents of the Statement of
Additional Information Table of Contents of
the Statement of
Additional Information
</TABLE>

CROSS REFERENCE SHEET (CONT'D)
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
- -------- --------------------

PART B

Item 15. Cover Page Cover Page

Item 16. Table of Contents. Table of Contents

Item 17. General Information and History The Company

Item 18. Services Not Applicable

Item 19. Purchase of Securities Being Offered Not Applicable

Item 20. Underwriters Distributor

Item 21. Calculation of Performance Data Performance
Information

Item 22. Annuity Payments. Annuity Provisions

Item 23. Financial Statements Financial Statements
</TABLE>

PART C

Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.

PART A

[SPECTRASELECT LOGO]

UNITED LIFE & ANNUITY

INSURANCE COMPANY

MAY 1, 1998 PROSPECTUS

THE SPECTRASELECT FIXED AND VARIABLE ANNUITY CONTRACT
ISSUED BY

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

AND

UNITED LIFE & ANNUITY INSURANCE COMPANY

MAY 1, 1998

This prospectus describes the SpectraSelect Fixed and Variable Annuity
Contract offered by United Life & Annuity Insurance Company (ULA, us or we).

The annuity has 35 investment options -- the Portfolios listed below, a one
year Fixed Account option of ULA and the Interest Adjustment Account.

<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC. MORGAN STANLEY UNIVERSAL FUNDS, INC.
AIM V.I. Capital Appreciation Fund Emerging Markets Debt Portfolio
AIM V.I. Diversified Income Fund Equity Growth Portfolio
AIM V.I. Growth Fund Global Equity Portfolio
AIM V.I. Growth and Income Fund High-Yield Portfolio
AIM V.I. International Equity Fund Value Portfolio
THE ALGER AMERICAN FUND NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Alger American Growth Portfolio AMT Guardian Portfolio
DREYFUS STOCK INDEX FUND AMT Limited Maturity Bond Portfolio
DREYFUS VARIABLE INVESTMENT FUND AMT Mid-Cap Growth Portfolio
Growth and Income Portfolio AMT Partners Portfolio
FEDERATED INSURANCE SERIES SCUDDER VARIABLE LIFE INVESTMENT FUND
Federated American Leaders Fund II Money Market Portfolio
Federated High Income Bond Fund II International Portfolio, Class A
Federated Prime Money Fund II VAN ECK WORLDWIDE INSURANCE TRUST
Federated Utility Fund II Worldwide Hard Assets Fund
Federated Fund for U.S. Government WARBURG PINCUS TRUST
Securities II Fixed Income Portfolio
MFS(R) VARIABLE INSURANCE TRUST(SM) International Equity Portfolio
MFS Emerging Growth Series Post-Venture Capital Portfolio
MFS Growth with Income Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series

</TABLE>

Please read this prospectus before investing and keep it for future
reference. It contains important information about the SpectraSelect Fixed and
Variable Annuity Contract.

To learn more about the annuity offered by this prospectus, you can obtain
a copy of the Statement of Additional Information (SAI) dated May 1, 1998. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated by reference into this prospectus. The Table of Contents of the SAI
is found on the last page of this prospectus. For a free copy of the SAI, call
us at (800) 825-7568 or write us at: P.O. Box 260100, 8545 United Plaza
Boulevard, Baton Rouge, LA 70826-0100. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated by reference,
and other information regarding registrants that file electronically with the
SEC.

Inquiries. If you have any questions about your Contract or need more
information, please contact us at: III United Plaza, 8545 United Plaza Blvd.;
Baton Rouge, Louisiana 70809-2264; (800) 825-7568. On or around May 18, 1998,
variable annuities will be processed at the Variable Annuity Service Center.
All correspondence should be directed to: United Life & Annuity Insurance
Company, Variable Annuity Service Center; 851 SW Sixth Avenue, Suite 700;
Portland, Oregon 97204-1346.

INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY.

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.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF TERMS........................................... 1
SUMMARY..................................................... 2
FEE TABLE................................................... 4
THE SPECTRASELECT FIXED AND VARIABLE ANNUITY CONTRACT....... 7
Owner..................................................... 7
Joint Owner............................................... 7
Annuitant................................................. 7
Beneficiary............................................... 8
Assignment................................................ 8
ANNUITY PAYMENTS (THE INCOME PHASE)......................... 8
Annuity Options........................................... 8
HOW TO PURCHASE A CONTRACT.................................. 9
Purchase Payments......................................... 9
Allocation of Purchase Payments........................... 9
Right to Examine Contract................................. 9
Accumulation Units........................................ 9
INVESTMENT OPTIONS.......................................... 10
Voting Rights............................................. 11
Substitution.............................................. 11
Transfers................................................. 11
Dollar Cost Averaging Program............................. 12
Rebalancing Program....................................... 12
Asset Allocation Programs................................. 13
PERFORMANCE................................................. 13
EXPENSES.................................................... 14
Insurance Charges......................................... 14
Mortality and Expense Risk Charge....................... 14
Administrative Charge................................... 14
Contingent Deferred Sales Charge.......................... 14
Reduction or Elimination of the Contingent Deferred Sales
Charge.................................................. 15
Transfer Fee.............................................. 15
Premium Taxes............................................. 15
Income Taxes.............................................. 15
Portfolio Expenses........................................ 15
TAXES....................................................... 15
Annuity Contracts in General.............................. 15
Qualified and Non-Qualified Contracts..................... 16
Withdrawals -- Non-Qualified Contracts.................... 16
Withdrawals -- Qualified Contracts........................ 16
Withdrawals -- Tax-Sheltered Annuities.................... 16
Diversification........................................... 17
WITHDRAWALS................................................. 17
Systematic Withdrawal Program............................. 17
Suspension of Payments or Transfers....................... 18
DEATH BENEFIT............................................... 18
Upon Your Death........................................... 18
Death Benefit............................................. 18
Death of Annuitant........................................ 19
OTHER INFORMATION........................................... 19
ULA....................................................... 19
The Separate Account...................................... 19
Distribution.............................................. 20
Financial Statements...................................... 20
APPENDIX A.................................................. A-1
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL
INFORMATION............................................... C-1
</TABLE>

GLOSSARY OF TERMS

We have tried to make this prospectus as understandable for you as
possible. We have capitalized some of the technical terms used in this
prospectus. To help you understand these terms, we have defined them below.

ACCOUNTS: The Portfolios, the Fixed Account and each Guarantee Period of
the Interest Adjustment Account.

ACCUMULATION PHASE: Until you decide to begin receiving Annuity Payments,
your annuity is in the Accumulation Phase.

ACCUMULATION UNIT: The unit of measurement we use to keep track of the
value of your Contract during the Accumulation Phase.

ANNUITANT: The natural person on whose life we base Annuity Payments.

ANNUITY OPTIONS: You can choose among income plans for your Annuity
Payments. These are referred to as Annuity Options.

ANNUITY PAYMENTS: You can receive regular income payments from your
Contract. These are referred to as Annuity Payments.

BENEFICIARY: The person or entity you name to receive any death benefits.

CONTRACT: An individual contract and the certificate issued to participants
under a group contract.

FIXED ACCOUNT: An investment option within our general account.

GUARANTEE PERIODS: The periods for which interest rates are credited in the
Interest Adjustment Account or the Fixed Account.

INCOME DATE: You can choose the month and year in which Annuity Payments
will begin. This is referred to as the Income Date.

INCOME PHASE: The period during which we make Annuity Payments to you or
someone you name to receive them.

INTEREST ADJUSTMENT ACCOUNT: An investment option within our general
account where we guarantee the rate of interest for a specified period (a
Guarantee Period).

JOINT OWNER: The Contract can be owned by you and your spouse (the Joint
Owner).

OWNER: The person or entity entitled to ownership rights under a Contract.

NON-QUALIFIED: If you do not purchase the Contract under a qualified plan,
your Contract is referred to as a Non-Qualified Contract.

PORTFOLIO: The variable investment options available under the Contract.
Each Portfolio has its own investment objective.

PURCHASE PAYMENT: The money you give us to buy the Contract.

QUALIFIED: If you purchase the Contract under a qualified plan, it is
referred to as a Qualified Contract (examples: individual retirement annuities,
tax-sheltered annuities, H.R. 10 plans, and pension and profit-sharing plans).

TAX DEFERRAL: Tax deferral means that you are not taxed on any earnings or
appreciation on the assets in your Contract until you take money out of your
Contract.

SUMMARY

The following information is a summary of some of the more important
features of your annuity Contract. More detailed information is contained in the
corresponding sections of this prospectus.

The SpectraSelect Fixed and Variable Annuity Contract. This prospectus
describes individual and group fixed and variable deferred annuity contracts and
certificates (together referred to as the "Contracts"). The Contract offered by
ULA is a contract between you, the owner, and United Life & Annuity Insurance
Company, an insurance company. The Contract provides a means for investing on a
Tax-Deferred basis in the Portfolios, the Fixed Account and the Interest
Adjustment Account. The SpectraSelect Fixed and Variable Annuity Contract is
designed for people seeking long-term Tax-Deferred accumulation of assets,
generally for retirement or other long-term purposes. The Tax-Deferred feature
is most attractive to people in high federal and state tax brackets. You should
not buy this Contract if you are looking for a short-term investment or if you
cannot accept the risk of getting back less money than you put in.

You may invest in the Fixed Account, the Interest Adjustment Account or the
following Portfolios:

AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund

THE ALGER AMERICAN FUND
Alger American Growth Portfolio

DREYFUS STOCK INDEX FUND

DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio

FEDERATED INSURANCE SERIES
Federated American Leaders Fund II
Federated High Income Bond Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Federated Fund for U.S. Government Securities II

MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Emerging Growth Series
MFS Growth with Income Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series

MORGAN STANLEY UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio
Equity Growth Portfolio
Global Equity Portfolio
High-Yield Portfolio
Value Portfolio

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
AMT Guardian Portfolio
AMT Limited Maturity Bond Portfolio
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio

SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio
International Portfolio, Class A

VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund

WARBURG PINCUS TRUST
Fixed Income Portfolio
International Equity Portfolio
Post-Venture Capital Portfolio

The Portfolios are fully described in the attached Portfolio prospectuses.
You can make or lose money in the Portfolios, depending upon market conditions.

The Fixed Account offers an interest rate that is guaranteed by us. You can
also invest in the Interest Adjustment Account, which is an option within our
general account where we guarantee a specific rate of interest for certain
Guarantee Periods. There are currently three Guarantee Periods available -- 3, 5
and 7 years. If you withdraw or transfer money from the Interest Adjustment
Account prior to the end of the selected Guarantee Period, it may be subject to
an interest adjustment.

CURRENTLY, THERE ARE THIRTY-FIVE INVESTMENT OPTIONS (WHICH INCLUDE EACH
PORTFOLIO, THE FIXED ACCOUNT AND EACH GUARANTEE PERIOD OF THE INTEREST
ADJUSTMENT ACCOUNT). YOU MAY SELECT TO PUT YOUR MONEY IN UP TO TEN (10) OF
THESE OPTIONS AT ANY TIME.

Like all deferred annuity contracts, your Contract has two phases: the
Accumulation Phase and the Income Phase. During the Accumulation Phase, your
earnings accumulate on a Tax-Deferred basis and are based on the investment
performance of the Portfolio(s) you selected and/or the interest rate earned on
the money you have in the Fixed Account and the Interest Adjustment Account.
During the Accumulation Phase, the earnings are taxed as income only when you
make a withdrawal. The Income Phase occurs when you begin receiving regular
payments from your Contract. The amount of the payments you may receive during
the Income Phase depends in part upon the amount of money you are able to
accumulate in your Contract during the Accumulation Phase.

Annuity Payments (The Income Phase). You can receive monthly Annuity
Payments from your Contract by selecting an Annuity Option. During the Income
Phase, payments will come from the Fixed Account.

How To Purchase A Contract. You can buy a Non-Qualified Contract with
a minimum payment of $5,000 and a Qualified Contract with $2,000, except for
certain Qualified plans. You can add $500 (or $100 if you use the automatic
premium check option) or more any time you like during the Accumulation Phase.
Your registered representative can help you fill out the proper forms.

Expenses. The Contract has insurance features and investment features, and
there are costs related to each.

If you select Death Benefit Option 1 (Enhanced Death Benefit Rider), the
annual insurance charges total 1.60% of the average daily value of your
Contract allocated to the Portfolios. If you select Death Benefit Option 2
(Standard Death Benefit), the annual insurance charges total 1.40% of the
average daily vale of your Contract allocated to the Portfolios. There
are also annual Portfolio charges which range from .28% to 1.40% of the average
daily value of the Portfolio, depending upon the Portfolio(s) you invest in.

You can transfer between Accounts up to 12 times a year without charge.
After 12 transfers, the charge is $25 or 2% of the amount transferred, whichever
is less.

If you make a withdrawal from the Contract, ULA may assess a contingent
deferred sales charge (withdrawal charge). The amount of the charge depends upon
how long ULA has had your Purchase Payment. The charge is:

<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS SINCE
RECEIPT OF PURCHASE PAYMENT CHARGE
------------------------------ ------
<S> <C>
0...................................................... 7.0%
1...................................................... 6.0%
2...................................................... 5.0%
3...................................................... 4.0%
4...................................................... 3.0%
5...................................................... 2.0%
6...................................................... 1.0%
7 years or more........................................ 0.0%
</TABLE>

Free Withdrawal Amount -- You can make a partial withdrawal without
incurring a contingent deferred sales charge of the "free withdrawal amount."
The free withdrawal amount is equal to the greater of: (a) earnings, or (b) 10%
of remaining Purchase Payments at the beginning of the current year. If your
withdrawal is not on a Contract anniversary, the free withdrawal amount is equal
to the free withdrawal amount at the beginning of the Contract year less amounts
withdrawn without the contingent deferred sales charge during the current
Contract year. If you make a complete withdrawal, the free withdrawal amount is
not available.

In addition, in certain states, you can make a total or partial withdrawal
and ULA will not deduct the contingent deferred sales charge if you are confined
to a skilled nursing home facility for 90 consecutive days after the first
Contract year.

ULA may assess a state premium tax charge which ranges from 0% - 4.0%
(depending upon the state).

Taxes. Your earnings are not taxed until you take them out. In most cases,
if you take money out, earnings come out first and are taxed as income. If you
are younger than 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the taxable amounts withdrawn. Payments during the Income
Phase are considered partly a return of your original investment. That part of
each payment is not taxable as income. If the Contract is tax-qualified, the
entire payment may be taxable. There are limits to the amount you can withdraw
from a Qualified plan known as a 403(b) plan (or tax-sheltered annuity).

Withdrawals. You may make a withdrawal at any time during the Accumulation
Phase. Any partial withdrawal must be for at least $500 (unless it is made under
the Systematic Withdrawal Program). You may request a withdrawal or elect the
Systematic Withdrawal Program. Of course, you may also have to pay income tax
and a tax penalty on any money you take out.

Death Benefit. If you die during the Accumulation Phase, the person you
have selected as your Beneficiary will receive a death benefit. The death
benefit that the Beneficiary will receive will be the death benefit option
elected at the time of purchase, or with respect to Contracts issued prior to
May 1, 1998, the death benefit option you select on your next Contract
anniversary after May 1, 1998.

Other Information

Free Look/Right to Examine. If you cancel the Contract within 10 days after
receiving it (or whatever period is required in your state), we will send your
money back without assessing a contingent deferred sales charge. You will
receive whatever your Contract is worth on the day we receive your request. This
may be more or less than your original payment. (Some states require that we
return your Purchase Payment.)

No Probate. In most cases, when you die, your Beneficiary will receive the
death benefit without going through probate.

Additional Features. The Contract offers additional features which you
might be interested in. These include:

Dollar Cost Averaging Program -- You can arrange to have a regular amount
of money automatically transferred from the Scudder Money Market Portfolio or
the one year Fixed Account to one or more selected Portfolios monthly, quarterly
or semi-annually, theoretically giving you a lower average cost per unit over
time than a single one time purchase. However, there are no guarantees that this
will take place.

Rebalancing Program -- ULA will automatically readjust your money among the
Portfolios to maintain your specified allocation mix. This can be done
quarterly, semi-annually or annually if the value of your Contract is at least
$5,000.

Systematic Withdrawal Program -- You can elect to receive periodic payments
from your Contract. Of course, you may have to pay taxes and a tax penalty on
the money you receive.

FEE TABLE (See Note 1 below)

OWNER TRANSACTION EXPENSES
Contingent Deferred Sales Charge (see Note 2 below)

<TABLE>
<CAPTION>
NUMBER OF COMPLETE
YEARS SINCE RECEIPT
OF PURCHASE PAYMENT CHARGE
- - ------------------- ------
<S> <C>
0...................................................... 7.0%
1...................................................... 6.0%
2...................................................... 5.0%
3...................................................... 4.0%
4...................................................... 3.0%
5...................................................... 2.0%
6...................................................... 1.0%
7 years or more........................................ 0.0%

Transfer Fee (see Note 3 below) No charge for first 12 transfers in a
Contract year; thereafter the fee is
the lesser of $25 or 2% of the amount
transferred.
</TABLE>

SEPARATE ACCOUNT ANNUAL EXPENSES FOR CONTRACTS WITH DEATH BENEFIT OPTION 1
(ENHANCED DEATH BENEFIT RIDER) (as a percentage of average daily net asset
value)

Mortality and Expense Risk Charge........................... 1.45%
Administrative Charge....................................... .15%
----
Total Separate Account Annual Expenses...................... 1.60%

SEPARATE ACCOUNT ANNUAL EXPENSES FOR CONTRACTS WITH DEATH BENEFIT OPTION 2
(STANDARD DEATH BENEFIT)(as a percentage of average daily net asset value)

Mortality and Expense Risk Charge........................... 1.25%
Administrative Charge....................................... .15%
----
Total Separate Account Annual Expenses...................... 1.40%

NOTES TO FEE TABLE

Note 1. The purpose of the Fee Table is to show you the various expenses
you will incur directly or indirectly with the Contract. The Fee Table reflects
expenses of the Separate Account as well as the Portfolios.

Note 2. Under certain circumstances, you can make a withdrawal without
incurring the contingent deferred sales charge.

Note 3. ULA will not charge you the transfer fee even if there are more
than 12 transfers in a year if the transfer is part of the Dollar Cost Averaging
or Rebalancing Programs.

ANNUAL EXPENSES OF THE PORTFOLIOS
(as a percentage of the average daily net assets of a Portfolio)

<TABLE>
<CAPTION>
TOTAL ANNUAL
OTHER EXPENSES EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
FEES REIMBURSEMENT) REIMBURSEMENT)
---------- -------------- --------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund............... .63% .05% .68%
AIM V.I. Diversified Income Fund................. .60% .20% .80%
AIM V.I. Growth Fund............................. .65% .08% .73%
AIM V.I. Growth and Income Fund.................. .63% .06% .69%
AIM V.I. International Equity Fund............... .75% .18% .93%
THE ALGER AMERICAN FUND
Alger American Growth Portfolio.................. .75% .04% .79%
DREYFUS STOCK INDEX FUND........................... .25% .03% .28%
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio...................... .75% .05% .80%
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II(a)............ .66% .19% .85%
Federated High Income Bond Fund II(b)............ .51% .29% .80%
Federated Prime Money Fund II(c)................. .30% .50% .80%
Federated Utility Fund II(d) .................... .48% .37% .85%
Federated Fund for U.S. Government
Securities II(e).............................. .15% .65% .80%
MFS(R) Variable Insurance Trust(SM)
MFS Emerging Growth Series....................... .75% .12% .87%
MFS Growth With Income Series(f)................. .75% .25% 1.00%
MFS Research Series.............................. .75% .13% .88%
MFS Total Return Series(f)....................... .75% .25% 1.00%
MFS Utilities Series (f)......................... .75% .25% 1.00%
MORGAN STANLEY UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio (g).............. .09% 1.21% 1.30%
Equity Growth Portfolio (g)...................... .00% .85% .85%
Global Equity Portfolio (g)...................... .00% 1.15% 1.15%
High-Yield Portfolio (g)......................... .00% .80% .80%
Value Portfolio (g).............................. .00% .85% .85%
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
AMT Guardian Portfolio........................... .60% .40% 1.00%
AMT Limited Maturity Bond Portfolio.............. .65% .12% .77%
AMT Mid-Cap Growth Portfolio..................... .60% .40% 1.00%
AMT Partners Portfolio........................... .80% .06% .86%
SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio........................... .37% .09% .46%
International Portfolio, Class A(h).............. .83% .17% 1.00%
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund(i).................... 1.00% .17% 1.17%
WARBURG PINCUS TRUST
Fixed Income Portfolio (j)....................... .32% .67% .99%
International Equity Portfolio (j)............... 1.00% .36% 1.36%
Post-Venture Capital Portfolio (j)............... 1.07% .33% 1.40%
</TABLE>

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

(a) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at anytime at its sole discretion. The maximum management fee is
.75%. The total operating expenses were .94% absent the voluntary waiver
of the management fee and the voluntary reimbursement of certain other
operating expenses.

(b) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.60%. The total operating expenses were .89% absent the voluntary waiver
of the management fee and the voluntary reimbursement of certain other
operating expenses.

(c) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.50%. The total operating expenses were 1.00% absent the voluntary waiver
of the management fee and the voluntary reimbursement of certain other
operating expenses.

(d) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.75%. The total operating expenses were 1.12% absent the voluntary waiver
of the management fee and the voluntary reimbursement of certain other
operating expenses.

(e) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is .60%. The total
operating expenses were 1.25% absent the voluntary waiver of the management
fee and the voluntary reimbursement of certain other operating expenses.

(f) The adviser has agreed to bear expenses for the Series, subject to
reimbursement by the Series, so that the Series' "Other Expenses" do not
exceed .25% of the average daily net assets of the Series during the
current fiscal year. Otherwise, "Other Expenses" and "Total Annual
Expenses" would be: .35% and 1.10% respectively for the MFS Growth with
Income Series; .27% and 1.02% respectively for the MFS Total Return Series;
and .45% and 1.20% respectively for the MFS Utilities Series. Each Series
has an expense offset arrangement which reduces the Series' custodian fee
based upon the amount of cash maintained by the Series with its custodian
and dividend disbursing agent, and may enter into other such arrangements
and directed brokerage arrangements (which would also have the effect of
reducing the Series' expenses). Any such fee reductions are not reflected
under "Other Expenses."

(g) The management fee has been reduced to reflect the voluntary waiver of a
portion or all of the management fee and the reimbursement by the
portfolio's adviser to the extent "Total Annual Expenses" exceed the
percentages set forth above. The adviser may terminate this voluntary
waiver at any time at its sole discretion. Absent such reductions,
"Management Fees", "Other Expenses" and "Total Annual Expenses",
respectively, would be as follows: Emerging Markets Debt Portfolio - 0.80%,
1.26%, 2.06%; Equity Growth Portfolio - 0.55%, 1.50%, 2.05%; Global Equity
Portfolio - 0.80%, 1.63%, 2.43%; High Yield - 0.50%, 1.18%, 1.68%; and
Value - 0.55%, 1.32%, 1.87%.

(h) For any calendar month during which the average daily net assets of the
International Portfolio exceed $500,000,000, the fee payable for that
month, with respect to the excess over $500,000,000, is calculated at an
annual rate of .725%. As a result, the adviser received compensation at an
annual rate of .83% for the fiscal year ended December 31, 1997.

(i) Other expenses are net of soft dollar credits. Without such credits, Other
Expenses would have been 0.18% and Total Annual Expenses would have been
1.18%.

(j) Management Fees, Other Expenses and Total Annual Expenses for the Fixed
Income, International Equity, and Post-Venture Capital Portfolios are based
on actual expenses for the fiscal year ended December 31, 1997, net of
any fee waivers and/or expense reimbursements. Without such waivers and/or
reimbursements, Management Fees would be .50%, 1.00% and 1.25%, Other
Expenses would be 12.54%, .40% and .71%, and Total Annual Expenses would be
13.04%, 1.40% and 1.69%, respectively. The Portfolios' adviser has
undertaken to limit each Portfolio's Total Annual Expenses to the limits
shown in the table above through December 31, 1999.

EXAMPLES - There are two sets of examples below. One set is for Contracts with
Death Benefit Option 1 (Enhanced Death Benefit Rider), the other set is for
Contracts with Death Benefit Option 2 (Standard Death Benefit).

DEATH BENEFIT OPTION 1 (Enhanced Death Benefit Rider)

You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if: (a) you surrender your Contract at the end of
each time period and (b) if your Contract is not surrendered or annuitized:

<TABLE>
<CAPTION>
TIME PERIODS
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund............... a) $ 93 a) $124
b) $ 23 b) $ 74
AIM V.I. Diversified Income Fund................. a) $ 95 a) $128
b) $ 25 b) $ 78
AIM V.I. Growth Fund............................. a) $ 94 a) $125
b) $ 24 b) $ 75
AIM V.I. Growth and Income Fund.................. a) $ 93 a) $124
b) $ 23 b) $ 74
AIM V.I. International Equity Fund............... a) $ 96 a) $132
b) $ 26 b) $ 82

THE ALGER AMERICAN FUND
Alger American Growth Portfolio.................. a) $ 94 a) $127 a) $165 a) $308
b) $ 24 b) $ 77 b) $135 b) $308

DREYFUS STOCK INDEX FUND........................... a) $ 89 a) $111 a) $136 a) $242
b) $ 19 b) $ 61 b) $106 b) $242
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio...................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II............... a) $ 95 a) $129
b) $ 25 b) $ 79
Federated High Income Bond Fund II............... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
Federated Prime Money Fund II.................... a) $ 95 a) $128
b) $ 25 b) $ 78
Federated Utility Fund II........................ a) $ 95 a) $129 a) $169 a) $316
b) $ 25 b) $ 79 b) $139 b) $316
Federated Fund for U.S. Government Securities
II............................................ a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Emerging Growth Series....................... a) $ 95 a) $130 a) $170 a) $318
b) $ 25 b) $ 80 b) $140 b) $318

MFS Growth with Income Series..................... a) $ 97 a) $134
b) $ 27 b) $ 84
MFS Research Series............................... a) $ 95 a) $130
b) $ 25 b) $ 80
MFS Total Return Series........................... a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
MFS Utilities Series.............................. a) $ 97 a) $134
b) $ 27 b) $ 84
MORGAN STANLEY UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio................... a) $100 a) $144
b) $ 30 b) $ 94
Equity Growth Portfolio........................... a) $ 95 a) $129
b) $ 25 b) $ 79
Global Equity Portfolio........................... a) $ 98 a) $139
b) $ 28 b) $ 89
High-Yield Portfolio.............................. a) $ 95 a) $128
b) $ 25 b) $ 78
Value Portfolio................................... a) $ 95 a) $129
b) $ 25 b) $ 79

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
ATM Guardian Portfolio............................ a) $ 97 a) $134
b) $ 27 b) $ 84
AMT Limited Maturity Bond Portfolio............... a) $ 94 a) $127
b) $ 24 b) $ 77
AMT Mid-Cap Growth Portfolio...................... a) $ 97 a) $134
b) $ 27 b) $ 84
AMT Partners Portfolio............................ a) $ 95 a) $129
b) $ 25 b) $ 79
SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio............................ a) $ 91 a) $117 a) $147 a) $266
b) $ 21 b) $ 67 b) $117 b) $266
International Portfolio, Class A.................. a) $ 97 a) $134 a) $177 a) $335
b) $ 27 b) $ 84 b) $147 b) $335
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund........................ a) $ 98 a) $140 a) $187 a) $357
b) $ 28 b) $ 90 b) $157 b) $357
WARBURG PINCUS TRUST
Fixed Income Portfolio............................ a) $ 97 a) $134
b) $ 27 b) $ 84
International Equity Portfolio.................... a) $100 a) $146
b) $ 30 b) $ 96
Post-Venture Capital Portfolio.................... a) $101 a) $147
b) $ 31 b) $ 97

</TABLE>

DEATH BENEFIT OPTION 2 (Standard Death Benefit)

<TABLE>
<CAPTION>
TIME PERIODS
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund............... a) $ 91 a) $117
b) $ 21 b) $ 67
AIM V.I. Diversified Income Fund................. a) $ 93 a) $121
b) $ 23 b) $ 71
AIM V.I. Growth Fund............................. a) $ 92 a) $119
b) $ 22 b) $ 69
AIM V.I. Growth and Income Fund.................. a) $ 91 a) $118
b) $ 21 b) $ 68
AIM V.I. International Equity Fund............... a) $ 94 a) $125
b) $ 24 b) $ 75
THE ALGER AMERICAN FUND
Alger American Growth Portfolio.................. a) $ 92 a) $121 a) $154 a) $282
b) $ 22 b) $ 71 b) $124 b) $282

DREYFUS STOCK INDEX FUND........................... a) $ 87 a) $104 a) $125 a) $217
b) $ 17 b) $ 54 b) $ 95 b) $217
DREYFUS VARIABLE INVESTMENT FUND
Growth and Income Portfolio....................... a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
FEDERATED INSURANCE SERIES
Federated American Leaders Fund II................ a) $ 93 a) $123
b) $ 23 b) $ 73
Federated High Income Bond Fund II................ a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
Federated Prime Money Fund II..................... a) $ 93 a) $121
b) $ 23 b) $ 71
Federated Utility Fund II......................... a) $ 93 a) $123 a) $157 a) $290
b) $ 23 b) $ 73 b) $127 b) $290
Federated Fund for U.S. Government Securities
II............................................. a) $ 93 a) $121 a) $155 a) $284
b) $ 23 b) $ 71 b) $125 b) $284
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Emerging Growth Series........................ a) $ 93 a) $123 a) $159 a) $293
b) $ 23 b) $ 73 b) $129 b) $293
MFS Growth with Income Series..................... a) $ 95 a) $128
b) $ 25 b) $ 78
MFS Research Series............................... a) $ 93 a) $124
b) $ 23 b) $ 74
MFS Total Return Series........................... a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
MFS Utilities Series.............................. a) $ 95 a) $128
b) $ 25 b) $ 78

MORGAN STANLEY UNIVERSAL FUNDS, INC.
Emerging Markets Debt Portfolio................... a) $ 98 a) $137
b) $ 28 b) $ 87
Equity Growth Portfolio........................... a) $ 93 a) $123
b) $ 23 b) $ 73
Global Equity Portfolio........................... a) $ 96 a) $132
b) $ 26 b) $ 82
High-Yield Portfolio.............................. a) $ 93 a) $121
b) $ 23 b) $ 71
Value Portfolio................................... a) $ 93 a) $123
b) $ 23 b) $ 73

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
AMT Guardian Portfolio............................ a) $ 95 a) $128
b) $ 25 b) $ 78
AMT Limited Maturity Bond Portfolio............... a) $ 92 a) $120
b) $ 22 b) $ 70
AMT Mid-Cap Growth Portfolio...................... a) $ 95 a) $128
b) $ 25 b) $ 78
AMT Partners Portfolio............................ a) $ 93 a) $123
b) $ 23 b) $ 73

SCUDDER VARIABLE LIFE INVESTMENT FUND
Money Market Portfolio............................ a) $ 89 a) $110 a) $135 a) $240
b) $ 19 b) $ 60 b) $105 b) $240
International Portfolio, Class A.................. a) $ 95 a) $128 a) $166 a) $309
b) $ 25 b) $ 78 b) $136 b) $309
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund........................ a) $ 96 a) $133 a) $176 a) $331
b) $ 26 b) $ 83 b) $146 b) $331
WARBURG PINCUS TRUST
Fixed Income Portfolio............................ a) $ 94 a) $127
b) $ 24 b) $ 77
International Equity Portfolio.................... a) $ 98 a) $139
b) $ 28 b) $ 89
Post-Venture Capital Portfolio.................... a) $ 99 a) $140
b) $ 29 b) $ 90
</TABLE>

THE ANNUAL EXPENSES OF THE PORTFOLIOS AND THE EXAMPLES ARE BASED ON DATA
PROVIDED BY THE RESPECTIVE FUND GROUPS. WE HAVE NOT INDEPENDENTLY VERIFIED SUCH
DATA.

Premium taxes are not reflected. They may apply.

The assumed average contract size is $25,000.

THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

THE SPECTRASELECT FIXED AND VARIABLE ANNUITY CONTRACT

This prospectus describes individual and group fixed and variable deferred
annuity contracts and certificates (together referred to as the "Contracts")
offered by ULA.

An annuity is a contract between you, the owner, and an insurance company
(in this case ULA), where the insurance company promises to pay you (or someone
else you choose) an income, in the form of Annuity Payments, beginning on a
designated date that is at least three years in the future. Until you decide to
begin receiving Annuity Payments, your annuity is in the Accumulation Phase.
Once you begin receiving Annuity Payments, your Contract switches to the Income
Phase.

The Contract benefits from Tax Deferral. Tax Deferral means that you are
not taxed on earnings or appreciation on the assets in your Contract until you
take money out of your Contract.

The Contract is called a variable annuity because you can choose among the
available Portfolios and, depending upon market conditions, you can make or lose
money in any of these Portfolios. If you select the variable annuity portion of
the Contract, the amount of money you are able to accumulate in your Contract
during the Accumulation Phase depends in part upon the investment performance of
the Portfolio(s) you select. The Annuity Payments you will receive during the
Income Phase will come from the Fixed Account.

The Contract contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by ULA. There is a one year Guarantee Period available
for the Fixed Account. ULA guarantees that the interest credited to the Fixed
Account will not be less than 3% per year. If you select the Fixed Account, your
money will be placed with our other general assets. If you select the Fixed
Account, the amount of money you are able to accumulate in your Contract during
the Accumulation Phase depends in part upon the total interest credited to your
Contract.

The Contract also has an Interest Adjustment Account with three Guarantee
Periods currently available: 3 years, 5 years and 7 years. Each allocation to a
Guarantee Period locks in a fixed annual interest rate declared by ULA.
Withdrawals, transfers or annuitization of amounts from a Guarantee Period prior
to the end of that Guarantee Period may be subject to an interest adjustment.

We may make changes to your Contract in order to comply with applicable
law.

Owner. The SpectraSelect Fixed and Variable Annuity is a group deferred
annuity contract. A group contract is issued to a contractholder, for the
benefit of the participants in the group. You are a participant in the group and
will receive a certificate evidencing your ownership. You, as the Owner of a
certificate, are entitled to all the rights and privileges of ownership. In some
states an individual fixed and variable deferred annuity contract is issued
instead, which is identical to the group contract described in this prospectus
except that it is issued directly to the Owner. As used in this prospectus, the
term Contract refers to your certificate or individual contract. The Owner is as
designated at the time the Contract is issued, unless changed. You may change
Owners at any time prior to the Income Date. This may be a taxable event. You
should consult with your tax adviser before doing this.

Joint Owner. The Contract can be owned by Joint Owners. Any Joint Owner
must be the spouse of the other Owner. Upon the death of either Joint Owner, the
surviving spouse will be the primary Beneficiary. Any other Beneficiary
designation will be treated as a contingent Beneficiary unless otherwise
indicated. Unless otherwise specified, if there are Joint Owners, both
signatures will be required for all transactions except telephone transfers.

Annuitant. The Annuitant is the person whose life we look to when we make
Annuity Payments. You choose the Annuitant at the time the Contract is issued.
You may change the Annuitant at any time before the Income Date unless the
Contract is owned by a non-individual (for example, a corporation). Any change
of Annuitant is subject to our underwriting rules then in effect. On or after
the Income Date, the Annuitant will include any Joint Annuitant.

Beneficiary. The Beneficiary is the person(s) or entity you name to receive
any death benefit. The Beneficiary is named at the time the Contract is issued
unless changed at a later date. Unless an irrevocable Beneficiary has been
named, you can change the Beneficiary or contingent Beneficiary.

Assignment. You can assign the Contract at any time during your lifetime.
ULA will not be bound by the assignment until it receives the written notice of
the assignment. ULA will not be liable for any payment or other action we take
in accordance with the Contract before we receive notice of the assignment. Any
assignment made after the death benefit has become payable can only be done with
our consent. AN ASSIGNMENT MAY BE A TAXABLE EVENT.

If the Contract is issued pursuant to a Qualified plan, there may be
limitations on your ability to assign the Contract.

ANNUITY PAYMENTS (THE INCOME PHASE)

You can receive regular monthly income payments under your Contract. You
can choose the month and year in which those payments begin. We call that date
the Income Date. Your Income Date must be at least three years after you buy the
Contract. The Income Date may not be later than when the Annuitant reaches age
85 or 10 years after the Contract is issued for Annuitants older than 75. You
can also choose among income plans. We call those Annuity Options.

We ask you to choose your Income Date when you purchase the Contract. You
can change it at any time before the Income Date with thirty (30) days notice to
us. You (or someone you designate) will receive the Annuity Payments.

If you do not choose an Annuity Option prior to the Income Date, we will
assume that you selected Option B which provides a life annuity with 120 monthly
payments guaranteed. Prior to the Income Date, you can change the Annuity
Option. Any change must be requested at least thirty (30) days prior to the
Income Date.

Annuity Payments are paid in monthly installments. Annuity Payments will be
made on a fixed basis only (which means they will come from the Fixed Account
and will not be based on the investment performance of the Portfolios). If the
value of your Contract to be applied to an Annuity Option is less than $2,000,
we reserve the right to pay you a lump sum amount instead of Annuity Payments.
Also, if the Annuity Payments would be or become less than $200, we reserve the
right to reduce the frequency of payments so that they will be at least $200.

ANNUITY OPTIONS

You can choose one of the following Annuity Options or any other Annuity
Option you want and that ULA agrees to provide. After Annuity Payments begin,
you cannot change the Annuity Option.

Option A. Life Annuity. Under this option, we will make monthly Annuity
Payments so long as the Annuitant is alive. After the Annuitant dies, we stop
making Annuity Payments.

Option B. Life Annuity With 60, 120, 180 or 240 Monthly Payments
Guaranteed. Under this option, we will make monthly Annuity Payments so long as
the Annuitant is alive. However, if, when the Annuitant dies, we have made
Annuity Payments for less than the selected guaranteed period, we will continue
to make Annuity Payments to you for the rest of the guaranteed period. If you do
not want to receive Annuity Payments, you can ask us for a single lump sum.

Option C. Joint And Survivor Annuity. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments, so long as the joint Annuitant
continues to live. The monthly Annuity Payments will end when the last surviving
Annuitant dies.

HOW TO PURCHASE A CONTRACT

PURCHASE PAYMENTS

A Purchase Payment is the money you give us to buy the Contract. The
minimum payment ULA will accept is $5,000 when the Contract is bought as a
Non-Qualified Contract. If the Contract is bought as a Qualified Contract, the
minimum payment we will accept is $2,000. This requirement may be waived if you
buy this Contract as part of an IRA (Individual Retirement Annuity) or 403(b)
plan. We may also waive the minimum Purchase Payment requirements if you select
the automatic premium check option. The maximum amount we will accept without
our prior approval is $500,000. You can make additional Purchase Payments of
$500 (or as low as $100 if you have selected the automatic premium check option)
or more to either type of Contract. We reserve the right to reject any Purchase
Payment or application. At the time you buy the Contract, you and the Annuitant
cannot be older than 85 years old for a Non-Qualified Contract and 75 years old
for a Qualified Contract.

ALLOCATION OF PURCHASE PAYMENTS

When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account, one or more Guarantee Periods of the Interest Adjustment Account
and/or one or more of the Portfolios you have selected. We ask that you allocate
your money in whole percentages with a minimum allocation of 5% of each Purchase
Payment or transfer or $500 (whichever is greater). You can instruct us how to
allocate additional Purchase Payments you make. If you do not instruct us, we
will allocate them in the same way as your previous instructions to us. Under
certain circumstances, we will allocate your initial Purchase Payment to a money
market portfolio until the end of the right to examine contract period (see
below). CURRENTLY, YOU CAN SELECT UP TO TEN OF THE THIRTY-FIVE INVESTMENT
OPTIONS (WHICH INCLUDE EACH PORTFOLIO, THE FIXED ACCOUNT AND EACH GUARANTEE
PERIOD OF THE INTEREST ADJUSTMENT ACCOUNT).

Once we receive your Purchase Payment, the necessary information and
federal funds (federal funds means monies credited to a bank's account with its
regional federal reserve bank), we will issue your Contract and allocate your
first Purchase Payment within 2 business days. If you do not give us all of the
information we need, we will contact you to get it. If for some reason we are
unable to complete this process within 5 business days, we will either send back
your money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.

RIGHT TO EXAMINE CONTRACT

If you change your mind about owning the Contract, you can cancel it within
10 days after receiving it (or the period required in your state). When you
cancel the Contract within this time period, ULA will not assess a contingent
deferred sales charge. You will receive back whatever your Contract is worth on
the day we receive your request. In certain states or if you have purchased the
Contract as an IRA, we may be required to give you back your Purchase Payment if
you decide to cancel your Contract within 10 days after receiving it (or
whatever period is required in your state). If that is the case, we will
allocate your Purchase Payment(s) received during the right to examine period to
a money market portfolio (except for any portion of your Purchase Payment(s)
which you selected to be allocated to the Fixed Account and/or the Interest
Adjustment Account) for 15 days. (In some states, the period may be longer.) At
the end of the period, we will re-allocate your Purchase Payment as you
selected.

ACCUMULATION UNITS

The value of the portion of your Contract allocated to the Portfolios will
go up or down depending upon the investment performance of the Portfolio(s) you
choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund).

Every business day we determine the value of an Accumulation Unit by
multiplying the Accumulation Unit value for the previous period by a factor for
the current period. The factor is determined by:

1. dividing the value of a Portfolio share at the end of the current period
by the value of a Portfolio share for the previous period; and

2. subtracting from that amount any insurance charges.

The value of an Accumulation Unit may go up or down from day to day.

When you make a Purchase Payment, we credit your Contract with Accumulation
Units. The number of Accumulation Units credited is determined by dividing the
amount of the Purchase Payment allocated to a Portfolio by the value of the
Accumulation Unit for that Portfolio.

We calculate the value of an Accumulation Unit for each Portfolio after the
New York Stock Exchange closes each day and then credit your Contract
accordingly.

EXAMPLE:

On Tuesday we receive an additional Purchase Payment of $4,000 from you.
You have told us you want this to go to the Alger American Growth Portfolio.
When the New York Stock Exchange closes on that Tuesday, we determine that the
value of an Accumulation Unit for investment in the Alger American Growth
Portfolio is $11.25. We then divide $4,000 by $11.25 and credit your Contract on
Tuesday night with 355.56 Accumulation Units for the Alger American Growth
Portfolio.

INVESTMENT OPTIONS

When you buy the Contract you have the opportunity to allocate your money
to: (1) the Fixed Account; (2) the Interest Adjustment Account; and (3) the
Portfolios set forth below. Additional Portfolios may be available in the
future.

YOU SHOULD READ THE PROSPECTUSES FOR THE PORTFOLIOS CAREFULLY BEFORE
INVESTING. THE PROSPECTUSES FOR THE PORTFOLIOS ACCOMPANY THIS PROSPECTUS.

AIM VARIABLE INSURANCE FUNDS, INC.

A I M Advisors, Inc. serves as the Fund's investment adviser. The Fund is
comprised of thirteen funds, the following five of which are available under the
Contract:

AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund

THE ALGER AMERICAN FUND

Fred Alger Management, Inc. is the investment manager. The Trust is
comprised of six Portfolios, the following one of which is available under the
Contract:

Alger American Growth Portfolio

DREYFUS STOCK INDEX FUND

The Dreyfus Corporation serves as the Fund's manager and Mellon Equity
Associates serves as the Fund's index fund manager.

DREYFUS VARIABLE INVESTMENT FUND

The Dreyfus Corporation serves as the investment adviser. The Fund is
comprised of thirteen Portfolios, the following one of which is available under
the Contract:

Growth and Income Portfolio

FEDERATED INSURANCE SERIES

Federated Advisers is the investment adviser to each Fund. The Trust has
eight separate Funds, the following five of which are available under the
Contract:

Federated American Leaders Fund II (a capital growth portfolio)
Federated High Income Bond Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Federated Fund for U.S. Government Securities II

MFS(R) VARIABLE INSURANCE TRUST(SM)

Massachusetts Financial Services Company is the investment adviser to each
Series. The Trust is comprised of twelve Series, the following five of which
are available under the Contract:

MFS Emerging Growth Series
MFS Growth with Income Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series

MORGAN STANLEY UNIVERSAL FUNDS, INC.

Morgan Stanley Asset Management Inc. serves as the investment adviser for
the Emerging Markets Debt, Equity Growth, and Global Equity Portfolios. Miller,
Anderson & Sherrerd, LLP serves as the investment adviser for the High-Yield and
Value Portfolios. The Fund is comprised of eighteen portfolios, the following
five of which are available under the Contract:

Emerging Markets Debt Portfolio
Equity Growth Portfolio
Global Equity Portfolio
High-Yield Portfolio
Value Portfolio (an equity value portfolio)

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST

Neuberger & Berman Management Incorporated, with the assistance of
Neuberger & Berman, LLC as a sub-adviser, selects investments for AMT Guardian
Investments, AMT Limited Maturity Bond Investments, AMT Mid-Cap Growth
Investments, and AMT Partners Investment, all four of which are available under
the Contract.

AMT Guardian Portfolio (a capital appreciation and secondarily, current
income portfolio)
AMT Limited Maturity Bond Portfolio
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio (a capital growth portfolio)

SCUDDER VARIABLE LIFE INVESTMENT FUND

Scudder, Stevens & Clark, Inc. is the investment adviser to the Fund. The
Trust is comprised of seven portfolios, the following two of which are available
under the Contract:

Money Market Portfolio
International Portfolio, Class A

VAN ECK WORLDWIDE INSURANCE TRUST

Van Eck Associates Corporation is the investment adviser to the Fund.
The Trust is comprised of five funds, the following one of which is
available under the Contract:

Worldwide Hard Assets Fund

WARBURG PINCUS TRUST

Warburg Pincus Asset Management, Inc. serves as the investment adviser
to the Trust. The Trust is comprised of seven portfolios, the following
three of which are available under the Contract:

Fixed Income Portfolio
International Equity Portfolio
Post-Venture Capital Portfolio (a long-term capital growth portfolio)

Shares of the Portfolios are issued and redeemed in connection with
investments in and payments under certain variable annuity contracts and (with
respect to certain of the Portfolios) variable life insurance policies of
various life insurance companies which may or may not be affiliated. The
Portfolios do not believe that offering their shares in this manner will be
disadvantageous to you. Nevertheless, the Board of Trustees or the Boards of
Directors, as applicable, intend to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken. If such a conflict were to occur, one or more
insurance company separate accounts might withdraw its investments in a
Portfolio. An irreconcilable conflict might result in the withdrawal of a
substantial amount of a Portfolio's assets which could adversely affect such
Portfolio's net asset value per share.

VOTING RIGHTS

ULA is the legal owner of the Portfolio shares. However, ULA believes that
when a Portfolio solicits proxies in conjunction with a shareholder vote, it is
required to obtain from you and other Contract owners instructions as to how to
vote those shares. When we receive those instructions, we will vote all of the
shares we own in proportion to those instructions. This will also include any
shares that ULA owns on its own behalf. Should ULA determine that it is no
longer required to comply with the above, we will vote the shares in our own
right.

SUBSTITUTION

ULA may be required to substitute one of the Portfolios you have selected
with another Portfolio. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this.

TRANSFERS

During the Accumulation Phase, you can transfer money among the Portfolios,
the Fixed Account and the Interest Adjustment Account, after the right to
examine contract period is over. During the Accumulation Phase, ULA currently
allows you to make as many transfers as you want to each year. However, this
product is not designed for professional market timing organizations or other
individuals using programmed and frequent transfers. Such activity may be
disruptive to a Portfolio. We reserve the right to stop or prohibit these types
of transfers if we determine that they could harm a Portfolio.

If you make more than 12 transfers in a year, there is a transfer fee
deducted. The fee is the lesser of $25 per transfer or 2% of the amount
transferred. The following applies to any transfer:

1. The minimum amount which you can transfer is $250 from an Account or
your entire value in the Account. This requirement is waived if the transfer is
in connection with the Dollar Cost Averaging Program (which is described below).

2. You cannot make transfers during the right to examine contract period.

3. The minimum amount which must remain in an Account after a transfer is
$500, or $0 if the entire amount in the Account is transferred.

4. The maximum amount which can be transferred from the Fixed Account to
the Portfolios is 25% of the value of your Contract in the Fixed Account in any
one Contract year. This requirement is waived if the transfer is made pursuant
to the Dollar Cost Averaging or Rebalancing Programs.

5. The maximum amount which can be transferred from each Guarantee Period
in the Interest Adjustment Account to the Portfolios, the Fixed Account or
another Guarantee Period of the Interest Adjustment Account is 25% of the value
of your Contract in the Interest Adjustment Account as of the beginning of the
current Contract year. If there was no Contract value in the Interest Adjustment
Account at the beginning of the year, then the transfer is limited to 25% of the
Purchase Payment allocated to the Interest Adjustment Account.

6. We reserve the right, at any time, to terminate, suspend or modify the
transfer privileges described above.

7. You cannot make transfers during the Income Phase.

You can make transfers by telephone during the Accumulation Phase. We may
allow you to authorize someone else to make transfers by telephone on your
behalf. If you own the Contract with a Joint Owner, unless ULA is instructed
otherwise, ULA will accept telephone instructions from either one of you. ULA
will use reasonable procedures to confirm that instructions given us by
telephone are genuine. If we do not use such procedures, we may be liable for
any losses due to unauthorized or fraudulent instructions. We may tape record
all telephone instructions. The telephone privilege may be discontinued at any
time.

DOLLAR COST AVERAGING PROGRAM

The Dollar Cost Averaging Program allows you to systematically transfer a
set amount of money on a monthly, quarterly or semi-annual basis from a money
market portfolio or the Fixed Account to one or more Portfolios. Transfers to
the Fixed Account or Interest Adjustment Account are not permitted under Dollar
Cost Averaging. By allocating amounts on a regularly scheduled basis, as opposed
to allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. You may only participate in
this program during the Accumulation Phase. The minimum amount which may be
transferred is $50 (per Portfolio). We will notify you for instructions if at
any time the value of the money market portfolio or the Fixed Account is not
sufficient to make the requested transfer.

All Dollar Cost Averaging transfers will be made at any time prior to the
25th of a calendar month. If you choose this Program, you must participate in it
for at least one year.

If you participate in the Dollar Cost Averaging Program, the transfers made
under the Program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and the Rebalancing
Program at the same time.

We reserve the right to terminate, suspend or modify the Dollar Cost
Averaging Program.

REBALANCING PROGRAM

Once your money has been invested, the performance of the Portfolios and
the earnings from the Fixed Account and Guarantee Periods of the Interest
Adjustment Account may cause your allocation to shift. The Rebalancing Program
is designed to help you maintain your specified allocation mix among the
different Portfolios. You can direct us to readjust your money quarterly,
semi-annually or annually to return to your particular percentage allocations.
The value of your Contract must be at least $5,000 to have transfers made

under this Program. You may not rebalance your money in the Fixed Account
or the Interest Adjustment Account. If you participate in the Rebalancing
Program, the transfers made under the Program are not taken into account in
determining any transfer fee. You may not participate in the Rebalancing Program
and the Dollar Cost Averaging Program at the same time.

ASSET ALLOCATION PROGRAMS

ULA understands the importance of having available on a continuous basis
advice from a financial adviser regarding your investments in the Contract
(asset allocation program). Certain investment advisers have made arrangements
with us to make their services available to you. ULA has not made any
independent investigation of these advisers and is not endorsing such programs.
You may be required to enter into an advisory agreement with your investment
adviser. You are responsible for the compensation of the adviser you choose.

Under certain asset allocation programs, if you are under age 59 1/2, you
will be billed for the services of the investment adviser. If you are 59 1/2 or
older, ULA will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and will be includible in gross income for federal tax
purposes and, under certain circumstances, may be subject to a tax penalty.

PERFORMANCE

ULA may periodically advertise performance of the various Portfolios. ULA
will calculate performance by determining the percentage change in the value of
an Accumulation Unit by dividing the increase (decrease) for that unit by the
value of the Accumulation Unit at the beginning of the period. This performance
number reflects the deduction of the insurance charges and the expenses of the
Portfolio. It does not reflect the deduction of any applicable contingent
deferred sales charge. The deduction of any applicable contingent deferred sales
charge would reduce the percentage increase or make greater any percentage
decrease. Any advertisement will also include average annual total return
figures which reflect the deduction of the insurance charges, contingent
deferred sales charges and the expenses of the Portfolios.

The Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are relatively new. In order to
demonstrate how the actual investment experience of the Portfolios may affect
your Accumulation Unit values, ULA prepares performance information. The
performance is based on the performance of the Portfolios, modified to reflect
the charges and expenses of your Contract as if it had been in existence for the
time periods shown. ULA will also provide standardized total return performance
figures for the Accumulation Unit values for the applicable time periods, where
available. The information is based upon the historical experience of the
Portfolios and does not necessarily represent what your investment would earn in
those Portfolios.

From time to time, we may advertise the money market portfolio's yield and
effective yield. ULA may also in the future advertise yield information for one
or more of the other Portfolios. If it does, it will provide you with
information regarding how yield is calculated. More detailed information
regarding how performance is calculated is found in the SAI.

Any performance advertised will be based on historical data and does not
guarantee future results of the Portfolios.

EXPENSES

There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:

INSURANCE CHARGES

We deduct insurance charges each day. We do this as part of the calculation
of the value of the Accumulation Units. The insurance charges are: 1) the
mortality and expense risk charge and 2) the administrative charge.

Mortality and Expense Risk Charge.

Death Benefit Option 1 (Enhanced Death Benefit Rider). The Mortality and
Expense Risk Charge for Contracts with the Enhanced Death Benefit Rider is
equal, on an annual basis, to 1.45% of the average daily value of the Contract
invested in a Portfolio, after the deduction of expenses.

Death Benefit Option 2 (Standard Death Benefit). The Mortality and Expense
Risk charge for Contracts with the Standard Death Benefit is equal, on an annual
basis, to 1.25% of the average daily value of the Contract invested in a
Portfolio, after the deduction of expenses.

This charge compensates us for all the insurance benefits provided by your
Contract (for example, the guarantee of annuity rates, the death benefits,
certain expenses related to the Contract, and for assuming the risk (expense
risk) that the current charges will be insufficient in the future to cover the
cost of administering the Contract).

Administrative Charge. This charge is equal, on an annual basis, to .15% of
the average daily value of the Contract invested in a Portfolio, after the
deduction of expenses. This charge is for all the expenses associated with the
administration of the Contract. Some of these expenses include: preparation of
the Contract, confirmations, annual reports and statements, maintenance of
Contract records, personnel costs, legal and accounting fees, filing fees, and
computer and systems costs. Because this charge is taken out of every
Accumulation Unit value, you may pay more in administrative costs than those
that are associated solely with your Contract. ULA does not intend to profit
from this charge. However, if this charge is not enough to cover the costs of
the Contracts in the future, ULA will bear the loss.

CONTINGENT DEFERRED SALES CHARGE

Withdrawals may be subject to a contingent deferred sales charge. During
the Accumulation Phase, you can make withdrawals from your Contract (see the
"Withdrawals" section). ULA keeps track of each Purchase Payment you make. The
amount of the contingent deferred sales charge depends upon how long ULA has had
your payment. The charge is calculated at the time of each withdrawal and will
be deducted from the value remaining in your Contract. The charge is:

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of complete years from
receipt of Purchase Payment: 0 1 2 3 4 5 6 7 years or more
Contingent Deferred Sales Charge: 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>

However, after ULA has had a Purchase Payment for 7 years, there is no
charge when you withdraw that Purchase Payment. For purposes of the contingent
deferred sales charge, ULA treats withdrawals as coming from the oldest Purchase
Payments first. ULA does not assess the contingent deferred sales charge on any
payments paid out as Annuity Payments or as death benefits.

NOTE: For tax purposes, withdrawals are considered to have come from the
last money you put into the Contract. Thus, for tax purposes, earnings are
considered to come out first.

REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE

ULA will reduce or eliminate the amount of the contingent deferred sales
charge when the Contract is sold under circumstances which reduce its sales
expenses. Some examples are: if there is a large group of individuals that will
be purchasing the Contract or a prospective purchaser already had a relationship
with ULA. ULA will not deduct a contingent deferred sales charge under a
Contract issued to an officer, director or employee of ULA or any of its
affiliates. Any circumstances resulting in the reduction or elimination of the
contingent deferred sales charge requires our prior approval.

TRANSFER FEE

You can make 12 free transfers every year. We measure a year from the day
we issue your Contract. If you make more than 12 transfers a year, we will
deduct a transfer fee of $25 or 2% of the amount that is transferred, whichever
is less, for each additional transfer.

If the transfer is part of the Dollar Cost Averaging or Rebalancing
Programs, it will not count in determining the transfer fee.

PREMIUM TAXES

Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. ULA is responsible for the payment of these
taxes and will make a deduction from the value of your Contract for them. Some
of these taxes are due when the Contract is issued, others are due when Annuity
Payments begin. It is ULA's current practice to pay any premium taxes when they
become payable to the states. Premium taxes generally range from 0% to 4.0%,
depending on the state.

INCOME TAXES

ULA will deduct from the Contract any income taxes which it may incur
because of the Contract. Currently, ULA is not making any such deductions.

PORTFOLIO EXPENSES

There are deductions from and expenses paid out of the assets of the
various Portfolios which are described in the prospectuses for the Portfolios.

TAXES

NOTE: ULA HAS PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL
DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE. YOU SHOULD CONSULT
YOUR OWN TAX ADVISER ABOUT YOUR OWN CIRCUMSTANCES. ULA HAS INCLUDED ADDITIONAL
INFORMATION REGARDING TAXES IN THE STATEMENT OF ADDITIONAL INFORMATION.

ANNUITY CONTRACTS IN GENERAL

Annuity contracts are a means of setting aside money for future needs --
usually retirement. Congress recognized how important saving for retirement was
and provided special rules in the Internal Revenue Code (Code) for annuities.

Basically, these rules provide that you will not be taxed on the earnings
on the money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract --
Qualified or Non-Qualified (see following sections).

You, as the Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs -- either as a withdrawal or as Annuity
Payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment you receive will be treated as a partial return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity Payment will be treated as ordinary income. How the Annuity Payment is
divided between taxable and non-taxable portions depends upon the period over
which the Annuity Payments are expected to be made. Annuity Payments received
after you have received all of your Purchase Payments are fully includible in
income.

When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than tax-qualified trusts), the
Contract will generally not be treated as an annuity for tax purposes. This
means that the Contract may not receive the benefits of Tax-Deferral. Income may
be taxed as ordinary income every year.

QUALIFIED AND NON-QUALIFIED CONTRACTS

If you purchase the Contract under a Qualified plan, your Contract is
referred to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) Contracts), H.R. 10 Plans (sometimes referred to as Keogh Plans), pension
and profit-sharing plans, which include 401(k) plans and Section 457 Deferred
Compensation Plans.

If you do not purchase the Contract under a Qualified plan, your Contract
is referred to as a Non-Qualified Contract.

WITHDRAWALS -- NON-QUALIFIED CONTRACTS

If you make a withdrawal from your Contract, the Code treats such a
withdrawal as first coming from earnings and then from your Purchase Payments.
In most cases, such withdrawn earnings are includible in income.

The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a tax penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts: (1) paid
on or after the taxpayer reaches age 59 1/2; (2) paid after you die; (3) paid if
the taxpayer becomes totally disabled (as that term is defined in the Code); (4)
paid in a series of substantially equal payments made annually (or more
frequently) for the life or life expectancy of the taxpayer; (5) paid under an
immediate annuity; or (6) which come from purchase payments made prior to August
14, 1982.

WITHDRAWALS -- QUALIFIED CONTRACTS

The above information describing the taxation of Non-Qualified Contracts
does not apply to Qualified Contracts. There are special rules that govern
Qualified Contracts. A more complete discussion of withdrawals from Qualified
Contracts is contained in the Statement of Additional Information.

WITHDRAWALS -- TAX-SHELTERED ANNUITIES

The Code limits the withdrawal of purchase payments made by owners from
certain Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1)
reaches age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled (as
that term is defined in the Code); or (5) in the case of hardship. However, in
the case of hardship, the owner can only withdraw the purchase payments and not
any earnings.

DIVERSIFICATION

The Code provides that the underlying investments for a variable annuity
must satisfy certain diversification requirements in order to be treated as an
annuity contract. ULA believes that the Portfolios are being managed so as to
comply with the requirements.

Neither the Code nor the Internal Revenue Service Regulations issued to
date provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not ULA
would be considered the owner of the shares of the Portfolios. If this occurs,
it will result in the loss of the favorable tax treatment for the Contract. It
is unknown to what extent under federal tax law Contract Owners are permitted to
select Portfolios, to make transfers among the Portfolios or the number and type
of Portfolios Owners may select from. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new position,
it may be applied retroactively. This would mean that you, as the Owner of the
Contract, could be treated as the owner of the Portfolios.

Due to the uncertainty in this area, ULA reserves the right to modify the
Contract in an attempt to maintain favorable tax treatment.

WITHDRAWALS

You can have access to the money in your Contract: (1) by making a
withdrawal (either a partial or a total withdrawal); (2) by receiving Annuity
Payments; or (3) when a death benefit is paid to your Beneficiary. Withdrawals
can only be made during the Accumulation Phase.

When you make a complete withdrawal you will receive the value of the
Contract on the day you made the withdrawal less any applicable contingent
deferred sales charge and less any premium tax. (See "Expenses" for a discussion
of the charges.) A partial withdrawal is taken first from the value of the
Contract for which the free withdrawal provision applies and then from the value
for which there is no waiver.

Any partial withdrawal must be for at least $500 (unless it is made under
the Systematic Withdrawal Program, see below). Unless you tell us otherwise,
partial withdrawals will be made pro-rata from the Portfolios. ULA requires that
after you make a partial withdrawal the value of your Contract must be at least
$2,000 and the value of any Account must be at least $500. A partial withdrawal
from the Fixed Account or the Interest Adjustment Account is made first from the
one year Fixed Account Guarantee Period and then next from the Guarantee Period
of the shortest remaining duration and then from the Guarantee Period with the
earliest effective date where the Guarantee Periods are of the same duration. A
withdrawal from the Interest Adjustment Account may be subject to an adjustment.

INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE.

There are limits to the amount you can withdraw from a Qualified plan
referred to as a 403(b) plan. For a more complete explanation see -- Taxes and
the discussion in the SAI.

SYSTEMATIC WITHDRAWAL PROGRAM

If the value of your Contract is at least $12,000, ULA offers a Program
which provides automatic periodic payments to you each year. Systematic
withdrawals can be made at any time, including during the first year. You can
instruct us how much you want to withdraw under the Program as long as each
payment is at least $100. You may terminate systematic withdrawals by giving us
thirty (30) days prior written notice. We do not currently charge for systematic
withdrawals but reserve the right to charge for them in the future. The
contingent deferred sales charge may apply to systematic withdrawals (see
"Expenses"). Systematic withdrawals are available for Qualified and
Non-Qualified Contracts.

INCOME TAXES AND TAX PENALTIES MAY APPLY TO SYSTEMATIC WITHDRAWALS.

SUSPENSION OF PAYMENTS OR TRANSFERS

ULA may be required to suspend or postpone payments for withdrawals or
transfers 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 the Portfolio
shares is not reasonably practicable or ULA cannot reasonably value the
Portfolio shares;

4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.

ULA has reserved the right to defer payment for a withdrawal or transfer
from the Fixed Account or the Interest Adjustment Account for the period
permitted by law but not for more than six months.

DEATH BENEFIT

Upon Your Death

If you die during the Accumulation Phase, ULA will pay a death benefit to
your Beneficiary (see below). No death benefit is paid during the Income Phase.
If you have a Joint Owner, and the Joint Owner dies, the surviving Owner will be
considered the primary Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses.

Death Benefit

You can select Death Benefit Option 1 (Enhanced Death Benefit Rider) or
Death Benefit Option 2 (Standard Death Benefit). If you bought your Contract
before May 1, 1998, your Contract has Death Benefit Option 1 (Enhanced Death
Benefit Rider). On your next Contract anniversary after May 1, 1998, you can
make a one time only election to choose Death Benefit Option 2 (Standard Death
Benefit).

Death Benefit Option 1 - Enhanced Death Benefit Rider

If you select Death Benefit Option 1, the death benefit will be the value
of your Contract in the Fixed Account and the Interest Adjustment Account plus
the greatest of:

(a) the value of your Contract invested in the Portfolios as of the date
ULA receives proof of death and an election for the method of payment; or

(b) the Purchase Payments you have made which are invested in the
Portfolios, less any money taken out and transfers from the Portfolios (and
related contingent deferred sales charges and transfer fees), increased by 4%
per year up to the first Contract anniversary after your 75th birthday; or

(c) the highest reset value up to the date of death. The reset value is the
value of your Contract invested in the Portfolios on each Contract anniversary
prior to your 80th birthday, plus Purchase Payments you have made after such
Contract anniversary and invested in the Portfolios, less any money taken out
and transfers from the Portfolios after such anniversary and any related
contingent deferred sales charges and transfer fees.

Death Benefit Option 2 - Standard Death Benefit

If you select Death Benefit Option 2, the Death Benefit will be the greater
of:

(a) the Purchase Payments you have made, less any money you have taken out
and related contingent deferred sales charges; or

(b) the value of your Contract on the date we receive both proof of death
and an election for the payment method.

A Beneficiary may request that the death benefit be paid in one of the
following ways: (1) lump sum payment of the death benefit; (2) payment of the
entire death benefit within 5 years of the date of death; or (3) payment of the
death benefit under an Annuity Option. The death benefit payable under an
Annuity Option must be paid over the Beneficiary's lifetime or for a period not
extending beyond the Beneficiary's life expectancy. Payment must begin within
one year of the date of death. Any portion of the death benefit not applied
under (3) above within one year of the date of the Owner's death must be
distributed within five years of the date of death.

If the Beneficiary is the spouse of the Owner, he/she can choose to
continue the Contract in his/her own name at the then current value, elect a
lump sum payment of the death benefit or apply the death benefit to an Annuity
Option. Payment to the Beneficiary, other than in a lump sum, may only be
elected during the sixty-day period beginning with the date we receive proof of
death. If a lump sum payment is elected and all the necessary requirements are
met, the payment will be made within seven days.

If you (or any Joint Owner) die during the Income Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Income Phase, the Beneficiary becomes the Owner.

Death of Annuitant

If the Annuitant, who is not an Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant. If a new Annuitant is not
named within 30 days of the death of the Annuitant, you will become the
Annuitant. However, if the Owner is a non-natural person (e.g., a corporation),
then the death of the Annuitant will be treated as the death of the Owner, and a
new Annuitant may not be named.

If the Annuitant dies after Annuity Payments have begun, the remaining
amounts payable, if any, will be as provided for in the Annuity Option selected.
The remaining amounts payable will be paid to the Owner at least as rapidly as
they were being paid at the Annuitant's death.

OTHER INFORMATION

ULA

United Life & Annuity Insurance Company (ULA), 8545 United Plaza Boulevard,
Baton Rouge, Louisiana 70809-2264, is a stock life insurance company domiciled
in Louisiana and organized in 1955. ULA is authorized to conduct business in 47
states, the District of Columbia and Puerto Rico. On July 24, 1996, Pacific Life
and Accident Insurance Company (PLAIC) acquired one hundred percent ownership of
ULA. PLAIC is a wholly-owned subsidiary of PennCorp Financial Group, Inc.
(PennCorp). PennCorp is a publicly-traded insurance holding company, the
principal subsidiaries of which are insurance companies.

Year 2000

In October 1997, the Company developed a plan to convert its computer
systems to be Year 2000 compliant. The plan provides for the conversion efforts
to be completed by the end of 1998. The Year 2000 issue is the result of
computer programs being written using two digits rather than four to define
the applicable year. The total cost of the plan is estimated to be $.9 million
and is being funded through operating cash flows. The Company is expensing all
costs associated with these systems changes as the costs are incurred. As of
December 31, 1997, no external expenses have been incurred.

THE SEPARATE ACCOUNT

ULA established a separate account, United Life & Annuity Separate Account
One (Separate Account), to hold the assets that underlie the Contracts. Prior to
May 1, 1997, the Separate Account was known as United Companies Separate Account
One. Our Board of Directors adopted a resolution to establish the Separate
Account under Louisiana insurance law on November 2, 1994. ULA has registered
the Separate Account with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. The Separate Account
is divided into sub-accounts. Each sub-account invests in a portfolio.

The assets of the Separate Account are held in ULA's name on behalf of the
Separate Account and legally belong to ULA. However, those assets that underlie
the Contracts, are not chargeable with liabilities arising out of any other
business we may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
Contracts and not against any other Contracts we may issue.

DISTRIBUTION

United Variable Services, Inc. (UVS), 8545 United Plaza Boulevard, Baton
Rouge, Louisiana 70809-2264, acts as the distributor of the Contracts. UVS is a
wholly-owned subsidiary of ULA. Commissions will be paid to broker-dealers who
sell the Contracts.

FINANCIAL STATEMENTS

The financial statements of ULA and the Separate Account have been included
in the Statement of Additional Information.

APPENDIX - CONDENSED FINANCIAL INFORMATION

ACCUMULATION UNIT VALUES

The following schedule includes Accumulation Unit values for the periods
indicated. This data has been taken from the Separate Account's financial
statements. This information should be read in conjunction with the Separate
Account's financial statements and related notes thereto which appear in the
Statement of Additional Information. The unit values below reflect asset-based
charges for Contracts with Death Benefit Option 1. Death Benefit Option 2 was
not available until May 1, 1998.

<TABLE>
<CAPTION>
PERIOD FROM
COMMENCEMENT OF
DATE OF OPERATIONS OR
COMMENCEMENT YEAR ENDED FOR YEAR ENDED
OF OPERATIONS 12-31-97 12-31-96
------------- --------------- ---------------
<S> <C> <C> <C>
ALGER AMERICAN GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $11.21 $ 10.05
Unit value at end of period............................... $13.88 $ 11.21
Number of units outstanding at end of period.............. 58,256 42,143
DREYFUS STOCK INDEX SUB-ACCOUNT
Unit value at beginning of period......................... 3/4/96 $12.25 $ 10.15
Unit value at end of period............................... $16.02 $ 12.25
Number of units outstanding at end of period.............. 45,285 20,958
DREYFUS GROWTH AND INCOME SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $12.45 $ 10.48
Unit value at end of period............................... $14.23 $ 12.45
Number of units outstanding at end of period.............. 30,751 11,261
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II SUB-ACCOUNT
Unit value at beginning of period......................... 3/15/96 $10.39 $ 10.14
Unit value at end of period............................... $11.11 $ 10.39
Number of units outstanding at end of period.............. 27,911 3,447
FEDERATED HIGH INCOME BOND FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $11.43 $ 10.16
Unit value at end of period............................... $12.81 $ 11.43
Number of units outstanding at end of period.............. 37,974 30,495
FEDERATED UTILITY FUND II SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $11.31 $ 10.30
Unit value at end of period............................... $14.10 $ 11.31
Number of units outstanding at end of period.............. 20,103 8,368
MFS EMERGING GROWTH SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $11.74 $ 10.19
Unit value at end of period............................... $14.08 $ 11.74
Number of units outstanding at end of period.............. 69,658 43,337
MFS TOTAL RETURN SUB-ACCOUNT
Unit value at beginning of period......................... 9/12/96 $11.53 $ 10.25
Unit value at end of period............................... $13.77 $ 11.53
Number of units outstanding at end of period.............. 52,392 24,528
SCUDDER INTERNATIONAL, CLASS A SUB-ACCOUNT
Unit value at beginning of period......................... 1/19/96 $11.42 $ 10.11
Unit value at end of period............................... $12.26 $ 11.42
Number of units outstanding at end of period.............. 27,011 18,553
SCUDDER MONEY MARKET SUB-ACCOUNT
Unit value at beginning of period......................... 1/12/96 $10.38 $ 10.04
Unit value at end of period............................... $10.75 $ 10.38
Number of units outstanding at end of period.............. 44,108 17,583
VAN ECK WORLDWIDE HARD ASSETS SUB-ACCOUNT
Unit value at beginning of period......................... 1/29/97 $11.78 N/A
Unit value at end of period............................... $11.40
Number of units outstanding at end of period.............. 1,652
</TABLE>

The AIM V.I. Capital Appreciation, AIM V.I. Diversified Income, AIM V.I.
Growth, AIM V.I. Growth and Income, AIM V.I. International Equity, Federated
American Leaders Fund II, Federated Prime Money Fund II, MFS Growth With
Income, MFS Research, MFS Utilities, Morgan Stanley Emerging Markets Debt,
Morgan Stanley Equity Growth, Morgan Stanley Global Equity, Morgan Stanley
High Yield, Morgan Stanley Value, AMT Guardian, AMT Limited Maturity Bond,
AMT Mid-Cap Growth, AMT Partners, Warburg Pincus Fixed Income, Warburg
Pincus International Equity, Warburg Pincus Post-Venture Capital Sub-Accounts
had not commenced operations as of December 31, 1997. Therefore, no
accumulation unit values are presented above for them.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Company..................................................... 3
Independent Auditors........................................ 3
Legal Opinions.............................................. 4
Distributor................................................. 4
Reduction or Elimination of the Contingent Deferred Sales
Charge.................................................... 4
Yield Calculation For Money Market Portfolio................ 4
Calculation of Performance Information...................... 5
Federal Tax Status.......................................... 7
Annuity Provisions.......................................... 14
Financial Statements........................................ 14
</TABLE>

Please send me, at no charge, the Statement of Additional Information dated May
1, 1998 for the SpectraSelect Fixed and Variable Annuity Contract issued by
United Life & Annuity Insurance Company.

(Please print or type and fill in all information)

----------------------------------------------------------------------
Name

----------------------------------------------------------------------
Address

----------------------------------------------------------------------
City State Zip Code

ULV-AD-4009SD (2/98)

<TABLE>
<S> <C>
- -------------------------------------- -------------------
- -------------------------------------- Put stamp here
- -------------------------------------- The Post Office will
not deliver mail
without postage.
-------------------
</TABLE>
United Life & Annuity Insurance Company
Variable Annuity Service Center
851 SW Sixth Avenue, Suite 700
Portland, OR 97204-1346

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.

ISSUED BY:

UNITED LIFE & ANNUITY
INSURANCE COMPANY
A MEMBER OF THE PENNCORP FINANCIAL GROUP OF COMPANIES

PO BOX 260100, BATON ROUGE, LA 70826-0100
8545 UNITED PLAZA BLVD, BATON ROUGE, LA 70809-2264

DISTRIBUTED BY UNITED VARIABLE SERVICES, INC., MEMBER NASD

PART B

STATEMENT OF ADDITIONAL INFORMATION

INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED
ANNUITY CONTRACTS

ISSUED BY

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

AND

UNITED LIFE & ANNUITY INSURANCE COMPANY

THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD
BE READ IN CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 1998, FOR THE INDIVIDUAL
AND GROUP FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS WHICH ARE REFERRED TO
HEREIN.

THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT: UNITED LIFE & ANNUITY INSURANCE COMPANY, P.O. BOX 260100, BATON
ROUGE, LOUISIANA 70826-0100, (800) 825-7568.

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED MAY 1, 1998.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Company.....................................................
Independent Auditors........................................
Legal Opinions..............................................
Distributor.................................................
Reduction or Elimination of the Contingent Deferred Sales
Charge....................................................
Yield Calculation For Money Market Portfolio................
Calculation of Performance Information......................
Federal Tax Status..........................................
Annuity Provisions..........................................
Financial Statements........................................
</TABLE>

COMPANY

United Life & Annuity Insurance Company ("ULA" or the "Company") is a stock
life insurance company domiciled in Louisiana and organized in 1955. ULA is
licensed to do business in 47 states, the District of Columbia and Puerto Rico.
On or about May 1, 1997, ULA changed its name from United Companies Life
Insurance Company to its present name.

On July 24, 1996, Pacific Life and Accident Insurance Company ("PLAIC")
acquired one hundred percent ownership of the Company from United Companies
Financial Corporation ("UCFC"), including its wholly-owned subsidiary United
Variable Services, Inc., a registered broker-dealer which acts as the principal
underwriter of the Contracts issued by the Company (the "Acquisition").

Under the terms of the Acquisition, the sales price was comprised of cash,
estimated, as of January 30, 1996, to be $109 million, and real estate and other
assets owned by the Company to be distributed to UCFC prior to the acquisition.
The real estate to be distributed included portions of the United Plaza office
park, including UCFC's home office. In addition, UCFC purchased a convertible
promissory note from an affiliate of the purchaser for $15 million in cash. The
purchaser also agreed that the Company would continue to be an investor in first
lien home equity loans originated by UCFC's lending operations and that the
purchaser would use commercially reasonable efforts to maintain the Company's
home office operations in its present location in Baton Rouge, Louisiana
following the closing for at least two years.

PLAIC is a Texas domestic life insurance company, formed on May 31, 1985.
PLAIC is a wholly-owned life insurance subsidiary of PennCorp Financial Group,
Inc. ("PennCorp") and acts as the holding company for the stock of Pennsylvania
Life Insurance Company and Professional Insurance Corporation.

PennCorp is a publicly-traded insurance holding company the principal
subsidiaries of which are insurance companies with operations throughout the
United States and Canada, the executive offices of which are located in Baton
Rouge, Louisiana, Raleigh, North Carolina, Waco, Texas and Toronto, Canada.

INDEPENDENT AUDITORS

The consolidated financial statements and financial statement schedules of
United Life & Annuity Insurance Company and subsidiary as of December 31, 1997
and 1996 and for the year ended December 31, 1997 and for the periods from July
24, 1996 to December 31, 1996 and January 1, 1996 to July 23, 1996 and the
financial statements of United Life & Annuity Separate Account One as of
December 31, 1997 and for the year then ended have been audited by KPMG Peat
Marwick LLP, independent auditors, as stated in their reports appearing herein.

The financial statements of United Life & Annuity Insurance Company and
subsidiary for the year ended December 31, 1995 included in this Statement of
Additional Information have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein.

LEGAL OPINIONS

Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided
advice on certain matters relating to the federal securities and income tax laws
in connection with the Contracts.

DISTRIBUTOR

United Variable Services, Inc., a wholly-owned subsidiary of the Company,
acts as the distributor. The offering is on a continuous basis.

REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE

The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to a reduction of the Contingent Deferred Sales Charge will be
determined by the Company after examination of the following factors: 1) the
size of the group; 2) the total amount of purchase payments expected to be
received from the group; 3) the nature of the group for which the Contracts are
purchased, and the persistency expected in that group; 4) the purpose for which
the Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and 5) any other circumstances which the Company
believes to be relevant to determining whether reduced sales or administrative
expenses may be expected. None of the reductions in charges for sales is
contractually guaranteed.

The Contingent Deferred Sales Charge will be eliminated when the Contracts
are issued to an officer, director or employee of the Company or any of its
affiliates. In no event will any reduction or elimination of the Contingent
Deferred Sales Charge be permitted where the reduction or elimination will be
unfairly discriminatory to any person.

YIELD CALCULATION FOR MONEY MARKET PORTFOLIO

The Money Market Portfolio will calculate its current yield based upon the
seven days ended on the date of calculation. For the seven calendar days ended
December 31, 1997, the annualized yield of the Money Market Portfolio was 3.69%.

The current yield of the Money Market Portfolio is computed by determining
the net change (exclusive of capital changes) in the value of a hypothetical
pre-existing Owner account having a balance of one Accumulation Unit of the
Portfolio at the beginning of the period, subtracting the Mortality and Expense
Risk Charge and the Administrative Charge, dividing the difference by the value
of the account at the beginning of the same period to obtain the base period
return and multiplying the result by (365/7).

The Money Market Portfolio computes its effective compound yield according
to the method prescribed by the Securities and Exchange Commission. The
effective yield reflects the reinvestment of net income earned daily on Money
Market Portfolio assets. For the seven calendar days ended December 31, 1997,
the effective yield of the Money Market Portfolio was 3.76%.

As of December 31, 1997, the yield calculations reflect only the charges of
Contracts with Death Benefit Option 1 (Enhanced Death Benefit Rider). The
Company will also present yield calculations which reflect Contracts with Death
Benefit Option 2 (Standard Death Benefit).

Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not.

The yields quoted should not be considered a representation of the yield of
the Money Market Portfolio in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Portfolio and changes in the interest rates
on such investments, but also on changes in the Money Market Portfolio's
expenses during the period.

Yield information may be useful in reviewing the performance of the Money
Market Portfolio and for providing a basis for comparison with other investment
alternatives. However, the Money Market Portfolio's yield fluctuates, unlike
bank deposits or other investments which typically pay a fixed yield for a
stated period of time.

PERFORMANCE INFORMATION

From time to time, the Company may advertise performance data as described
in the Prospectus. Any such advertisement will include total return figures for
the time periods indicated in the advertisement. There will be different
presentations of total return figures. One set will reflect the deduction of a
1.45% Mortality and Expense Risk Charge, a .15% Administrative Charge and the
expenses for the underlying Portfolio being advertised. Another set will reflect
the deduction of a 1.25% Mortality and Expense Risk Charge, a .15%
Administrative Charge and the expenses of the underlying Portfolio. Any such
advertisement will also include average annual total return for the time periods
indicated in the advertisement and will reflect the deduction of the Mortality
and Expense Risk Charge, the Administrative Charge, the Contingent Deferred
Sales Charge and the expenses for the underlying Portfolio being advertised.

The hypothetical value of a Contract purchased for the time periods
described in the advertisement will be determined by using the actual
Accumulation Unit values for an initial $1,000 purchase payment to arrive at the
ending hypothetical value. The average annual total return is then determined by
computing the fixed interest rate that a $1,000 purchase payment would have to
earn annually, compounded annually, to grow to the hypothetical value at the end
of the time periods described. The formula used in these calculations is:

n
P (1 + T) = ERV

<TABLE>
<S> <C> <C> <C>
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used
(or fractional portion thereof) of a hypothetical $1,000
payment made at the beginning of the time periods used.
</TABLE>

In addition to total return data, the Company may include yield information
in its advertisements. For each Portfolio (other than the Money Market
Portfolio) for which the Company will advertise yield, it will show a yield
quotation based on a 30 day (or one month) period ended on the date of the most
recent balance sheet of the Separate Account included in the registration
statement, computed by dividing the net investment income per Accumulation Unit
earned during the period by the maximum offering price per Unit on the last day
of the period, according to the following formula:

Yield = 2 [(a - b + 1) (6) -1]
-----
cd
Where:
a = Net investment income earned during the period by the
Portfolio attributable to shares owned by the Sub-Account.
b = Expenses accrued for the period (net of reimbursements).
c = The average daily number of Accumulation Units outstanding
during the period.
d = The maximum offering price per Accumulation Unit on the last
day of the period.

The Company may also advertise performance data which will be computed on a
different basis.

PERFORMANCE INFORMATION

The Sub-Accounts of the Separate Account are relatively new and therefore
have little or no meaningful investment performance history. However, the
corresponding Portfolios have been in existence for some time and consequently
have investment performance history. In order to demonstrate how the actual
investment experience of the Portfolios affects Accumulation Unit values, the
following performance information was developed. The information is based upon
the historical experience of the Portfolios and is for the periods shown. There
is also standardized performance shown based on the historical performance of
the Portfolios for the periods commencing from the date on which a Sub-Account
first invested in the Portfolio (Chart 3 below).

Actual performance will vary and the results shown are not necessarily
representative of future results. Performance for periods ending after those
shown may vary substantially from the examples shown below. Chart 1 below shows
the performance of the Accumulation Units calculated for a specified period
of time assuming an initial Purchase Payment of $1,000 allocated to each
Portfolio and a deduction of all charges and deductions (see "Expenses" in the
Prospectus for more information). Chart 2 below is identical to Chart 1 except
that it does not reflect the deduction of the Contingent Deferred Sales Charge
("CDSC"). Charts 1 and 2 reflect a mortality and expense risk charge for
Contracts with Death Benefit Option 1. Performance is not shown for Contracts
with Death Benefit Option 2. The performance figures in the charts also reflect
the actual fees and expenses paid by the Portfolio. The percentage increases
are determined by subtracting the initial Purchase Payment from the ending value
and dividing the remainder by the beginning value.

For the Periods Ended 12/31/97:

CHART 1
(reflects the deduction of all fees and expenses for Contracts
with Death Benefit Option 1)

<TABLE>
<CAPTION>
SINCE PORTFOLIO
PORTFOLIO INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alger American Growth..................... 17.75% 20.37% 14.42% -- 15.92% 1/9/89
Dreyfus Growth and Income................. 8.37% 28.02% -- -- 20.71% 5/2/94
Dreyfus Stock Index....................... 24.85% 26.67% 10.87% -- 6.57% 9/29/89
Federated High Income Bond II............. 6.03% 10.21% -- -- 4.21% 3/1/94
Federated Fund for U.S. Government
Securities II........................... 0.88% 2.52% -- -- 1.64% 3/28/94
Federated Utility II...................... 18.63% 15.88% -- -- 9.55% 2/10/94
MFS Emerging Growth....................... 13.97% -- -- -- 19.37% 7/24/95
MFS Total Return.......................... 13.38% -- -- -- 17.71% 1/3/95
Scudder International..................... 1.34% 8.67% 10.66% 8.91% 7.08% 5/1/87
Van Eck Worldwide Hard Assets............. (8.24)% 6.01% 12.41% -- 4.57% 9/1/89
</TABLE>

CHART 2
(reflects the deduction of all fees and expenses, except the
CDSC, for Contracts with Death Benefit Option 1)

<TABLE>
<CAPTION>
SINCE PORTFOLIO
PORTFOLIO INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alger American Growth...................... 23.75% 21.29% 14.66% -- 15.92% 1/9/89
Dreyfus Growth and Income.................. 14.37% 28.83% -- -- 21.73% 5/2/94
Dreyfus Stock Index........................ 30.85% 27.50% 11.13% -- 8.57% 9/29/89
Federated High Income Bond II.............. 12.03% 11.30% -- -- 5.13% 3/1/94
Federated Fund for U.S. Government
Securities II............................ 6.86% 3.78% -- -- 2.84% 3/28/94
Federated Utility II....................... 24.63% 16.96% -- -- 10.33% 2/10/94
MFS Emerging Growth........................ 19.97% -- -- -- 20.94% 7/24/95
MFS Total Return........................... 19.38% -- -- -- 18.90% 1/3/95
Scudder International...................... 7.34% 9.79% 10.93% 8.91% 7.08% 5/1/87
Van Eck Worldwide Hard Assets.............. (3.24)% 7.19% 12.66% -- 4.57% 9/1/89
</TABLE>

CHART 3

AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/97 FOR CONTRACTS WITH DEATH
BENEFIT OPTION 1:

SEPARATE
SINCE ACCOUNT
SEPARATE INCEPTION
ACCOUNT DATE IN
1 YEAR 5 YEARS INCEPTION PORTFOLIO
------ ------- --------- ---------
<S> <C> <C> <C> <C>
Alger American Growth...................... 17.75% -- 16.56% 1/19/96
Dreyfus Growth and Income.................. 8.37% -- 14.97% 1/19/96
Dreyfus Stock Index........................ 24.85% -- 21.72% 3/4/96
Federated High Income Bond II.............. 6.03% -- 9.09% 1/19/96
Federated Fund for U.S. Government
Securities II............................ 0.86% -- 2.80% 3/15/96
Federated Utility II....................... 18.63% -- 14.23% 1/19/96
MFS Emerging Growth........................ 13.97% -- 17.39% 1/19/96
MFS Total Return........................... 13.38% -- 18.10% 9/12/96
Scudder International...................... 1.34% -- 6.92% 1/19/96
Van Eck Worldwide Hard Assets.............. (8.24)% -- (10.58)% 1/29/97
</TABLE>

You should note that the investment results of each Portfolio will
fluctuate over time, and any presentation of the Portfolio's total return or
yield for any period should not be considered as a representation of what an
investment may earn or what your total return or yield may be in any future
period.

FEDERAL TAX STATUS

NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE
FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT
SPECIAL RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS.
MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX
LAWS.

GENERAL

Section 72 of the Code governs taxation of annuities in general. An Owner
is not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option elected. For a lump sum payment received as a total surrender
(total redemption) or death benefit, the recipient is taxed on the portion of
the payment that exceeds the cost basis of the Contract. For Non-Qualified
Contracts, this cost basis is generally the purchase payments, while for
Qualified Contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.

For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments based
on a fixed annuity option is determined by multiplying the payment by the ratio
that the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. Payments received
after the investment in the Contract has been recovered (i.e. when the total of
the excludible amounts equals the investment in the Contract) are fully taxable.
The taxable portion is taxed at ordinary income rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions.

The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company, and its operations form a part of the Company.

DIVERSIFICATION

Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.

On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.

The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."

The Company intends that all Portfolios underlying the Contracts will be
managed by the investment advisers for the Portfolios in such a manner as to
comply with these diversification requirements.

The Treasury Department has indicated that the diversification Regulations
do not provide guidance regarding the circumstances in which Owner control of
the investments of the Separate Account will cause the Owner to be treated as
the owner of the assets of the Separate Account, thereby resulting in the loss
of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.

The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.

In the event any forthcoming guidance or ruling is considered to set forth
a new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owner
being retroactively determined to be the owner of the assets of the Separate
Account.

Due to the uncertainty in this area, the Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.

MULTIPLE CONTRACTS

The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year period to the same contract owner by one company
or its affiliates are treated as one annuity contract for purposes of
determining the tax consequences of any distribution. Such treatment may result
in adverse tax consequences, including more rapid taxation of the distributed
amounts from such combination of contracts. Owners should consult a tax adviser
prior to purchasing more than one non-qualified annuity contract in any calendar
year period.

CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS

Under Section 72(u) of the Code, the investment earnings on purchase
payments for the Contracts will be taxed currently to the Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.

TAX TREATMENT OF ASSIGNMENTS

An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.

INCOME TAX WITHHOLDING

All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Owner, in most cases, may
elect not to have taxes withheld or to have withholding done at a different
rate.

Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a mandatory
20% withholding for federal income tax. The 20% withholding requirement
generally does not apply to: a) a series of substantially equal payments made at
least annually for the life or life expectancy of the participant or joint and
last survivor expectancy of the participant and a designated beneficiary, or for
a specified period of 10 years or more; b) distributions which are required
minimum distributions; or (c) the portion of the distributions not includible in
gross income (i.e. returns of after-tax contributions). Participants should
consult their own tax counsel or other tax adviser regarding withholding
requirements.

TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS

Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Owner; (c) if
the taxpayer is totally disabled (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life expectancies)
of the taxpayer and his Beneficiary; (e) under an immediate annuity; or (f)
which are allocable to purchase payments made prior to August 14, 1982.

The above information does not apply to Qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals -- Qualified Contracts.")

QUALIFIED PLANS

The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative 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 general descriptions of the types of Qualified
Plans with which the Contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications, depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a Contract issued under a Qualified Plan.

On July 6, 1983, the Supreme Court decided in Arizona Governing Committee
v. Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.

Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to Qualified Plans are not transferable except upon surrender or annuitization.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to surrenders from Qualified Contracts.
(See "Tax Treatment of Withdrawals -- Qualified Contracts.")

a. H.R. 10 Plans

Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" plans. Contributions made to the Plan for the benefit of
the employees will not be included in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary,
depending upon the particular Plan design. However, the Code places limitations
and restrictions on all Plans, including on such items as: amounts of allowable
contributions; form, manner and timing of distributions; transferability of
benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See "Tax Treatment of Withdrawals -- Qualified
Contracts.")

Purchasers of Contracts for use with an H.R. 10 Plan should obtain competent tax
advice as to the tax treatment and suitability of such an investment.

b. Tax-Sheltered Annuities

Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and scientific
organizations described in Section 501(c)(3) of the Code. These qualifying
employers may make contributions to the Contracts for the benefit of their
employees. Such contributions are not includible in the gross income of the
employee until the employee receives distributions from the Contract. The amount
of contributions to the tax-sheltered annuity is limited to certain maximums
imposed by the Code. Furthermore, the Code sets forth additional restrictions
governing such items as transferability, distributions, nondiscrimination and
withdrawals. (See "Tax Treatment of Withdrawals -- Qualified Contracts" and
"Tax-Sheltered Annuities -- Withdrawal Limitations.") Employee loans are not
allowed under these Contracts. Any employee should obtain competent tax advice
as to the tax treatment and suitability of such an investment.

c. Individual Retirement Annuities

Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals -- Qualified Contracts.")
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of Contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.

d. Corporate Pension and Profit-Sharing Plans

Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under the
Plan. Contributions to the Plan for the benefit of employees will not be
includible in the gross income of the employee until distributed from the Plan.
The tax consequences to participants may vary, depending upon the particular
Plan design. However, the Code places limitations and restrictions on all Plans,
including on such items as: amount of allowable contributions; form, manner and
timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Participant loans are not allowed under the Contracts purchased in
connection with these Plans. (See "Tax Treatment of Withdrawals -- Qualified
Contracts.") Purchasers of Contracts for use with Corporate Pension or
Profit-Sharing Plans should obtain competent tax advice as to the tax treatment
and suitability of such an investment.

TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS

In the case of a withdrawal under a Qualified Contract, a ratable portion
of the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts issued and qualified under Code Sections 401 (H.R. 10 and
Corporate Pension and Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities)
and 408(b) (Individual Retirement Annuities). To the extent amounts are not
includible in gross income because they have been properly rolled over to an IRA
or to another eligible Qualified Plan, no tax penalty will be imposed. The tax
penalty will not apply to the following distributions: (a) if distribution is
made on or after the date on which the Owner or Annuitant (as applicable)
reaches age 59 1/2; (b) distributions following the death or disability of the
Owner or Annuitant (as applicable) (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (c) after separation from service, distributions
that are part of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the Owner or Annuitant (as
applicable) or the joint lives (or joint life expectancies) of such Owner or
Annuitant (as applicable) and his designated beneficiary; (d) distributions to
an Owner or Annuitant (as applicable) who has separated from service after he
has attained age 55; (e) distributions made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the amount allowable
as a deduction under Code Section 213 to the Owner or Annuitant (as applicable)
for amounts paid during the taxable year for medical care; (f) distributions
made to an alternate payee pursuant to a qualified domestic relations order; (g)
distributions from an Individual Retirement Annuity for the purchase of medical
insurance (as described in Section 213(d)(1)(D) of the Code) for the Owner or
Annuitant (as applicable) and his or her spouse and dependents if the Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception will no longer apply after the Owner or Annuitant (as
applicable) has been re-employed for at least 60 days); (h) distributions from
an Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
to the extent such distributions do not exceed the qualified higher education
expenses (as defined in Section 72(t)(7) of the Code) of the Owner or Annuitant
(as applicable) for the taxable year; and (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8) of
the Code). The exceptions stated in items (d) and (f) above do not apply in the
case of an Individual Retirement Annuity. The exception stated in item (c)
applies to an Individual Retirement Annuity without the requirement that there
be a separation from service.

Generally, distributions from a Qualified Plan must commence no later than
April 1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.

TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS

The Code limits the withdrawal of amounts attributable to contributions
made pursuant to a salary reduction agreement (as defined in Section 403(b)(11)
of the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
value which represents contributions by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, and to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Owners should consult their own tax counsel or other tax adviser
regarding any distributions.

SECTION 457 -- DEFERRED COMPENSATION PLANS

Under Section 457 of the Code, governmental and certain other tax-exempt
employers may establish deferred compensation plans for the benefit of their
employees which may invest in annuity contracts. The Code, as in the case of
qualified plans, establishes limitations and restrictions on eligibility,
contributions and distributions. Under these Plans, contributions made for the
benefit of the employees will not be includible in the employees' gross income
until distributed from the Plan. Under a Section 457 Plan, the plan assets
remain solely the property of the employer, subject only to the claims of the
employer's general creditors, until such time as made available to the
participant or beneficiary. However, for Plans established after August 20,
1996, it is required that plan assets must be held in trust for the benefit of
plan participants and are not subject to the claims of the general creditors of
the employer. Furthermore, this requirement must be met for all Plans no later
than January 1, 1999. IN CERTAIN STATES, THE CONTRACTS MAY NOT BE AVAILABLE FOR
USE IN CONNECTION WITH SECTION 457 PLANS.

ANNUITY PROVISIONS

Currently, the Company makes available payment plans on a fixed basis only.
(See the Prospectus for a description of the Annuity Options.)

FINANCIAL STATEMENTS

The financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.

UNITED LIFE & ANNUITY
SEPARATE ACCOUNT ONE

Financial Statements
December 31, 1997 and 1996
Independent Auditors' Report

<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors of United
Life & Annuity Insurance Company and
Contractowners of United Life & Annuity Separate Account One:

We have audited the accompanying statements of assets and liabilities of the
sub-accounts of United Life & Annuity Separate Account One as of December 31,
1997 and the related statements of operations for the year then ended, and the
statement of changes in net assets for each of the two years in the period then
ended. These financial statements are the responsibility of the Separate
Account's management. Our responsibility is to express an opinion of these
financial statements based on our audit.

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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of United
Life & Annuity Separate Account One as of December 31, 1997, and the results of
their operations for the year then ended and the changes in their net assets for
each of the two years in the period then ended in conformity with generally
accepted accounting principles.

/s/ KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP

February 20, 1998

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

Alger Dreyfus Federated
------------ -------------------------- ----------------------------------------
Growth and High Income U.S. Govt
Growth Stock Index Income Bond Bond Utility
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
- ----------------------------------------------
Investments in mutual funds at market value:
The Alger American Fund (Alger):
Alger American Growth Portfolio -
170,845.250 shares (cost $6,350,698). . $ 7,305,343
The Dreyfus Variable Investment Fund
(Dreyfus):
Stock Index Portfolio - 309,125.817
shares (cost $7,068,236) $ 7,959,989
Growth and Income Fund -
227,931.673 shares (cost $4,761,408) $ 4,736,420
Federated Investors (Federated):
High Income Bond Fund II -
338,261.159 shares (cost $3,490,803) $ 3,703,960
Fund for U.S. Government Securities II -
163,004.460 shares (cost $1,662,233) $ 1,718,067
Utility Fund II - 120,012.698 shares
(cost $1,437,054) $ 1,714,981
------------ ------------ ------------ ------------ ------------ ------------
Total assets . . . . . . . . . . . . $ 7,305,343 $ 7,959,989 $ 4,736,420 $ 3,703,960 $ 1,718,067 $ 1,714,981
============ ============ ============ ============ ============ ============
Liabilities. . . . . . . . . . . . . . . . . . - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
Net Assets . . . . . . . . . . . . . . . . . . $ 7,305,343 $ 7,959,989 $ 4,736,420 $ 3,703,960 $ 1,718,067 $ 1,714,981
============ ============ ============ ============ ============ ============
Units Outstanding. . . . . . . . . . . . . . . 527,092.145 497,428.734 333,083.620 289,680.547 154,876.520 121,807.250
============ ============ ============ ============ ============ ============
Average Unit Value . . . . . . . . . . . . . . 13.86 16.00 14.22 12.79 11.09 14.08
============ ============ ============ ============ ============ ============
SpectraDirect Unit Value . . . . . . . . . . . 13.86 16.00 14.22 12.79 11.09 14.07
============ ============ ============ ============ ============ ============
SpectraSelect Unit Value . . . . . . . . . . . 13.88 16.02 14.23 12.81 11.11 14.10
============ ============ ============ ============ ============ ============
<FN>

See accompanying notes to financial statements.
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

(CONTINED)

MFS Scudder Van Eck Total
-------------------------- -------------------------- ------------
Emerging Total Money Intl. Worldwide All
Growth Return Market Equity Hard Assets Funds
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Assets
- -----------------------------------------------
Investments in mutual funds at market value:
MFS Variable Insurance Trust (MFS):
Emerging Growth Series -
558,276.153 shares (cost $7,984,416) . . $ 9,010,577
Total Return Series -420,893.986 shares
(cost $6,301,811) $ 6,999,467
Scudder Variable Life Investment Fund
(Scudder):
Money Market Portfolio - 4,954,866 shares $ 4,954,865
(cost $4,954,866)
International Portfolio - 248,565.297 $ 3,507,256
shares (cost $3,437,617)
Van Eck Worldwide Insurance Trust (Van Eck):
Van Eck Worldwide Hard Assets -
18,457.295 shares (cost $302,566) $ 290,156
------------ ------------ ------------ ------------ ------------
Total assets. . . . . . . . . . . . . $ 9,010,577 $ 6,999,467 $ 4,954,865 $ 3,507,256 $ 290,156 $51,901,081
============ ============ ============ ============ ============ ===========
Liabilities . . . . . . . . . . . . . . . . . . - - - - - -
------------ ------------ ------------ ------------ ------------ -----------
Net Assets. . . . . . . . . . . . . . . . . . . $ 9,010,577 $ 6,999,467 $ 4,954,865 $ 3,507,256 $ 290,156 $51,901,081
============ ============ ============ ============ ============ ===========
Units Outstanding . . . . . . . . . . . . . . . 640,543.755 509,068.630 461,537.438 286,406.329 25,487.017
============ ============ ============ ============ ============
Average Unit Value. . . . . . . . . . . . . . . 14.07 13.75 10.74 12.25 11.38
============ ============ ============ ============ ============
SpectraDirect Unit Value. . . . . . . . . . . . 14.06 13.75 10.73 12.24 11.38
============ ============ ============ ============ ============
SpectraSelect Unit Value. . . . . . . . . . . . 14.08 13.77 10.75 12.26 11.40
============ ============ ============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997

Alger Dreyfus Federated
--------- -------------------------- ----------------------------------
Growth and High Income U.S. Govt
Growth Stock Index Income Bond Bond Utility
--------- ------------ ------------ ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends. . . . . . . . . . . . . . $ 15,061 $ 106,373 $ 342,482 $ 163,894 $ 24,581 $ 28,307
Expenses:
Mortality and expense risks charges
and administrative fees. . . . . . 85,535 78,761 50,259 47,698 14,880 18,776
--------- ------------ ------------ ------------ ---------- --------
NET INVESTMENT INCOME (LOSS). . . . . . . (70,474) 27,612 292,223 116,196 9,701 9,531
--------- ------------ ------------ ------------ ---------- --------
REALIZED GAIN (LOSS) ON
INVESTMENTS:
Proceeds from sales . . . . . . . . . . 805,133 653,404 478,760 874,161 191,369 261,642
Cost of securities. . . . . . . . . . . 660,333 504,482 473,178 832,974 184,107 226,364
--------- ------------ ------------ ------------ ---------- --------
Net Gain (Loss). . . . . . . . . . . 144,800 148,922 5,582 41,187 7,262 35,278
Capital Gain Distributions Received . . 27,276 177,665 8,347 1,722 - 6,635
--------- ------------ ------------ ------------ ---------- --------
NET REALIZED GAIN (LOSS). . . . . . . . . 172,076 326,587 13,929 42,909 7,262 41,913
--------- ------------ ------------ ------------ ---------- --------
UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Beginning period . . . . . . . . . . 116,495 137,860 (105,264) 56,010 1,446 32,711
--------- ------------ ------------ ------------ ---------- --------
End of period. . . . . . . . . . . . 954,645 891,753 (24,988) 213,157 55,834 277,927
--------- ------------ ------------ ------------ ---------- --------
NET UNREALIZED GAIN (LOSS). . . . . . . . 838,150 753,893 80,276 157,147 54,388 245,216
--------- ------------ ------------ ------------ ---------- --------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . $939,752 $ 1,108,092 $ 386,428 $ 316,252 $ 71,351 $296,660
========= ============ ============ ============ ========== ========

MFS Scudder Van Eck Total
---------------------- ---------------------- ------------- -----------
Emerging Total Money Intl. Worldwide All
Growth Return Market Equity Hard Assets Funds
----------- --------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends. . . . . . . . . . . . . . $ - $ - $ 203,041 $ 38,676 $ 4,037 $ 926,452
Expenses:
Mortality and expense risks charges
and administrative fees. . . . . . 101,145 67,407 65,198 42,269 3,316 575,244
----------- --------- ----------- --------- ------------- -----------
NET INVESTMENT INCOME (LOSS). . . . . . . (101,145) (67,407) 137,843 (3,593) 721 351,208
----------- --------- ----------- --------- ------------- -----------
REALIZED GAIN (LOSS) ON
INVESTMENTS:
Proceeds from sales . . . . . . . . . . 978,925 563,587 16,576,570 684,667 54,805 22,123,023
Cost of securities. . . . . . . . . . . 854,530 472,036 16,576,570 605,295 51,213 21,441,082
----------- --------- ----------- --------- ------------- -----------
Net Gain (Loss). . . . . . . . . . . 124,395 91,551 - 79,372 3,592 681,941
Capital Gain Distributions Received . . - - - - - 221,645
----------- --------- ----------- --------- ------------- -----------
NET REALIZED GAIN (LOSS). . . . . . . . . 124,395 91,551 - 79,372 3,592 903,586
----------- --------- ----------- --------- ------------- -----------
UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Beginning period . . . . . . . . . . 2,679 62,772 - 62,827 3,208 370,744
----------- --------- ----------- --------- ------------- -----------
End of period. . . . . . . . . . . . 1,026,161 697,656 - 69,639 (12,410) 4,149,374
----------- --------- ----------- --------- ------------- -----------
NET UNREALIZED GAIN (LOSS). . . . . . . . 1,023,482 634,884 - 6,812 (15,618) 3,778,630
----------- --------- ----------- --------- ------------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . $1,046,732 $659,028 $ 137,843 $ 82,591 $ (11,305) $ 5,033,424
=========== ========= =========== ========= ============= ===========
<FN>
See accompanying notes to financial statements.
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

Alger Dreyfus
------------------------ --------------------------------------------------
Growth and
Growth Stock Index Income
------------------------ ------------------------ ------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations
Net investment income (loss). . . . . $ (70,474) $ (21,046) $ 27,612 $ 19,796 $ 292,223 $ 145,799
Net realized gain (loss). . . . . . . 172,076 26,128 326,587 37,364 13,929 22,966
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 838,150 116,028 753,893 138,221 80,276 (105,264)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations . . . . . . . . . . . 939,752 121,110 1,108,092 195,381 386,428 63,501
----------- ----------- ----------- ----------- ----------- -----------
CONTRACT TRANSACTIONS:
Transfer of annuity fund deposits . . 633,101 319,655 766,485 211,527 518,285 194,843
Net transfers between sub-accounts. . 3,020,107 2,554,609 4,098,748 1,832,191 2,521,967 1,347,401
Death benefits. . . . . . . . . . . . (9,359) (8,772) (15,141) - (42,170) (9,276)
Surrenders. . . . . . . . . . . . . . (250,808) (79,607) (225,015) (53,317) (148,497) (96,062)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from contract transactions. . . . . . 3,393,041 2,785,885 4,625,077 1,990,401 2,849,585 1,436,906
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS. . . . . . . 4,332,793 2,906,995 5,733,169 2,185,782 3,236,013 1,500,407

NET ASSETS:
Beginning period. . . . . . . . . . . 2,972,550 65,555 2,226,820 41,038 1,500,407 -
----------- ----------- ----------- ----------- ----------- -----------
End of period . . . . . . . . . . . . $7,305,343 $2,972,550 $7,959,989 $2,226,820 $4,736,420 $1,500,407
=========== =========== =========== =========== =========== ===========

Federated
------------------------------------------------------------------------
High Income U.S. Govt
Bond Bond Utility
------------------------ ---------------------- ----------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations
Net investment income (loss). . . . . $ 116,196 $ 66,525 $ 9,701 $ 4,368 $ 9,531 $ 5,479
Net realized gain (loss). . . . . . . 42,909 12,854 7,262 (295) 41,913 650
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 157,147 56,007 54,388 1,446 245,216 32,711
----------- ----------- ----------- --------- ----------- ---------
Net increase in net assets resulting
from operations . . . . . . . . . . . 316,252 135,386 71,351 5,519 296,660 38,840
----------- ----------- ----------- --------- ----------- ---------
CONTRACT TRANSACTIONS:
Transfer of annuity fund deposits . . 190,348 167,478 304,693 47,816 216,933 91,429
Net transfers between sub-accounts. . 1,094,026 1,987,073 1,107,179 234,280 711,466 398,265
Death benefits. . . . . . . . . . . . - (24,893) - - (4,755) (8,112)
Surrenders. . . . . . . . . . . . . . (111,293) (55,048) (33,436) (19,335) (18,500) (7,245)
----------- ----------- ----------- --------- ----------- ---------
Net increase in net assets resulting
from contract transactions. . . . . . 1,173,081 2,074,610 1,378,436 262,761 905,144 474,337
----------- ----------- ----------- --------- ----------- ---------
TOTAL INCREASE IN NET ASSETS. . . . . . . 1,489,333 2,209,996 1,449,787 268,280 1,201,804 513,177

NET ASSETS:
Beginning period. . . . . . . . . . . 2,214,627 4,631 268,280 - 513,177 -
----------- ----------- ----------- --------- ----------- ---------
End of period . . . . . . . . . . . . $3,703,960 $2,214,627 $1,718,067 $268,280 $1,714,981 $513,177
=========== =========== =========== ========= =========== =========
<FN>
See accompanying notes to financial statements.
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

(CONTINUED)

MFS Scudder
-------------------------------------------------- ----------------------------
Emerging Growth Total Return Money Market
------------------------ ------------------------ ----------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations
Net investment income (loss). . . . $ (101,145) $ 2,632 $ (67,407) $ 18,579 $ 137,843 $ 66,483
Net realized gain (loss). . . . . . 124,395 25,761 91,551 24,794 - -
Net unrealized gain (loss) on
investments. . . . . . . . . . . . 1,023,482 2,687 634,884 63,485 - -
----------- ----------- ----------- ----------- ------------- -------------
Net increase (decrease) in net
assets resulting from operations . . . 1,046,732 31,080 659,028 106,858 137,843 66,483
----------- ----------- ----------- ----------- ------------- -------------
CONTRACT TRANSACTIONS:
Transfer of annuity fund deposits . . 841,749 272,751 820,813 138,317 27,008,328 17,365,947
Net transfers between sub-accounts. . 4,544,948 2,608,016 4,038,530 1,484,454 (24,402,932) (15,021,067)
Death benefits. . . . . . . . . . . . (31,649) (9,390) (11,022) - - (15,651)
Surrenders. . . . . . . . . . . . . . (240,566) (54,115) (195,836) (65,716) (157,922) (100,495)
----------- ----------- ----------- ----------- ------------- -------------
Net increase in net assets resulting
from contract transactions. . . . . . 5,114,482 2,817,262 4,652,485 1,557,055 2,447,474 2,228,734
----------- ----------- ----------- ----------- ------------- -------------
TOTAL INCREASE IN NET ASSETS . . . . . . . 6,161,214 2,848,342 5,311,513 1,663,913 2,585,317 2,295,217

NET ASSETS:
Beginning period. . . . . . . . . . . 2,849,363 1,021 1,687,954 24,041 2,369,549 74,332
----------- ----------- ----------- ----------- ------------- -------------
End of period . . . . . . . . . . . . $9,010,577 $2,849,363 $6,999,467 $1,687,954 $ 4,954,866 $ 2,369,549
=========== =========== =========== =========== ============= =============

Scudder Van Eck Total
------------------------ -------------------
International Worldwide All
Equity Hard Assets Funds
------------------------ ------------------- --------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations
Net investment income (loss). . . . $ (3,593) $ (6,147) $ 721 $ (370) $ 351,208 $ 302,098
Net realized gain (loss). . . . . . 79,372 6,818 3,592 200 903,586 157,240
Net unrealized gain (loss) on
investments. . . . . . . . . . . . 6,812 62,827 (15,618) 3,208 3,778,630 371,356
----------- ----------- --------- -------- ------------ ------------
Net increase (decrease) in net
assets resulting from operations . . . 82,591 63,498 (11,305) 3,038 5,033,424 830,694
----------- ----------- --------- -------- ------------ ------------
CONTRACT TRANSACTIONS:
Transfer of annuity fund deposits . . 309,848 156,616 31,683 22,158 31,642,266 18,988,537
Net transfers between sub-accounts. . 1,847,991 1,172,920 191,362 59,084 (1,226,608) (1,342,774)
Death benefits. . . . . . . . . . . . (21,789) (8,422) - - (135,885) (84,516)
Surrenders. . . . . . . . . . . . . . (77,246) (18,814) (5,428) (435) (1,464,547) (550,189)
----------- ----------- --------- -------- ------------ ------------
Net increase in net assets resulting
from contract transactions. . . . . . 2,058,804 1,302,300 217,617 80,807 28,815,226 17,011,058
----------- ----------- --------- -------- ------------ ------------
TOTAL INCREASE IN NET ASSETS . . . . . . . 2,141,395 1,365,798 206,312 83,845 33,848,650 17,841,752

NET ASSETS:
Beginning period. . . . . . . . . . . 1,365,861 63 83,845 - 18,052,433 210,681
----------- ----------- --------- -------- ------------ ------------
End of period . . . . . . . . . . . . $3,507,256 $1,365,861 $290,157 $83,845 $51,901,083 $18,052,433
=========== =========== ========= ======== ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS. United Life & Annuity Separate Account One
(the "Separate Account") is a separate investment account of United Life &
Annuity Insurance Company ("ULA"). The Separate account is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940 as a
unit investment trust. ULA administers its SpectraSelect and SpectraDirect
products through the Separate Account. SpectraSelect is a seven-year product;
whereas, SpectraDirect is a ten-year product. ULA is a stock life insurance
company domiciled in Louisiana and organized in 1955. ULA is currently
authorized to conduct business in 47 states, the District of Columbia and Puerto
Rico. ULA is a wholly-owned subsidiary of Pacific Life and Accident Insurance
Company, a wholly-owned subsidiary of PennCorp Financial Group, Inc., an
insurance holding company.

As of December 31, 1997 and 1996, the Separate Account consisted of eleven
sub-accounts. Each of the eleven sub-accounts invests only in a single
corresponding portfolio of either The Alger American Fund (Fred Alger
Management, Advisor), the Dreyfus Variable Investment Fund and the Dreyfus Stock
Index Fund (The Dreyfus Corporation, Advisor), Federated Insurance Series
(Federated Advisors, Advisor), MFS Variable Insurance Trust (MFS, Advisor),
Scudder Variable Life Investment Fund (Scudder, Stevens & Clark, Inc., Advisor)
or the Van Eck Worldwide Insurance Trust (Van Eck Associates Corporation,
Advisor).

2. INVESTMENTS. Investments of the Separate Account are valued daily at
market value using net asset values provided by the respective sub-account
advisors. Transactions are accounted for on the trade date and dividend income
is recognized on the ex-dividend date. Realized gains and losses are determined
on a first-in first-out basis. Generally, investment income and realized
capital gains are reinvested.

3. CONTRACT CHARGES. A mortality and expense risk charge is deducted from
the Separate Account, on a daily basis equal, on an annual basis, to 1.52% for
SpectraDirect and to 1.45% for SpectraSelect, of the average daily net asset
value of each sub-account of the Separate Account. This charge compensates ULA
for assuming the mortality and expense risks under the contracts and
certificates. In addition, an administrative charge is deducted from the
Separate Account for both SpectraDirect and SpectraSelect contracts which is
equal, on an annual basis, to .15% of the average daily net asset value of each
sub-account of the Separate Account. This charge compensates ULA for costs
associated with the administration of the contracts, certificates and the
Separate Account. Under certain circumstances, a transfer fee may be assessed
when an owner or certificate holder transfers contract values or certificate
holder's account values between sub-accounts or to or from ULA's fixed accounts.
A contingent deferred sales charge is assessed against full or partial
surrenders in accordance with contract terms. There is no contingent deferred
sales charge if all premiums were received at least ten years for SpectraDirect
and seven years for SpectraSelect prior to the date of the full or partial
surrenders. An annual contract or certificate maintenance fee of $30 is charged
on SpectraDirect contracts based upon a minimum contract value. Some states and
other jurisdictions assess premium taxes at the time purchase payments are made;
others assess premium taxes at the time annuity payments begin. Premium taxes
are deducted when they are due.

4. INCOME TAXES. The operations of the Separate Account are included in the
federal income tax return of ULA, which is taxed as a Life Insurance Company
under the provisions of the Internal Revenue Code. ULA does not expect to incur
any federal income tax liability on earnings, or realized capital gains
attributable to the Separate Account, therefore, no charges for federal income
taxes are currently deducted from the Separate Account. If ULA incurs income
taxes attributable to the Separate Account, or determines that such taxes will
be incurred, it may make a charge for such taxes against the Separate Account.

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. CHANGES IN THE UNITS OUTSTANDING.

Alger Dreyfus Federated
------------------ -------------------------------------- ------------------
U.S. Government
Growth Stock Index Growth and Income High Income Bond
------------------ ------------------ ------------------ ------------------
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding beginning of the period 265,242 6,521 181,969 4,041 120,598 - 193,943 456
Units purchased . . . . . . . . . . . . . 49,810 29,243 52,851 18,333 38,724 15,903 15,721 15,536
Units transferred between sub-accounts. . 232,123 237,682 279,089 164,152 187,968 113,297 89,252 185,228
Units surrendered . . . . . . . . . . . . (20,083) (8,204) (16,480) (4,557) (14,206) (8,602) (9,235) (7,277)
-------- -------- -------- -------- -------- -------- -------- --------
Units outstanding end of the period . . . 527,092 265,242 497,429 181,969 333,084 120,598 289,681 193,943
======== ======== ======== ======== ======== ======== ======== ========

Federated
------------------------------------
U.S. Government
Bond Utility
----------------- -----------------
1997 1996 1997 1996
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Units outstanding beginning of the period 25,831 - 45,403 -
Units purchased . . . . . . . . . . . . . 28,420 4,670 18,348 8,713
Units transferred between sub-accounts. . 103,695 23,085 59,915 38,142
Units surrendered . . . . . . . . . . . . (3,069) (1,924) (1,859) (1,452)
-------- ------- -------- -------
Units outstanding end of the period . . . 154,877 25,831 121,807 45,403
======== ======= ======== =======
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. CHANGES IN THE UNITS OUTSTANDING. (CONTINUED)

<PAGE>

MFS Scudder
-------------------------------------- --------------------------------------------
International
Emerging Growth Total Return Money Market Equity
------------------ ------------------ ------------------------ ------------------
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding beginning of the period 242,852 100 146,453 2,346 228,486 7,407 119,631 6
Units purchased . . . . . . . . . . . . . 66,048 23,409 63,721 12,487 2,555,841 1,703,017 25,371 14,346
nits transferred between sub-accounts . . 352,324 224,700 315,014 137,503 (2,307,894) (1,471,540) 149,475 107,758
Units surrendered . . . . . . . . . . . . (20,680) (5,357) (16,119) (5,883) (14,896) (10,398) (8,071) (2,479)
-------- -------- -------- -------- ----------- ----------- -------- --------
Units outstanding end of the period . . . 640,544 242,852 509,069 146,453 461,537 228,486 286,406 119,631
======== ======== ======== ======== =========== =========== ======== ========

Van Eck
---------------
Worldwide
Hard Assets
1997 1996
---------------
<S> <C> <C>
Units outstanding beginning of the period 7,122 -
Units purchased . . . . . . . . . . . . . 2,678 1,937
nits transferred between sub-accounts . . 16,142 5,223
Units surrendered . . . . . . . . . . . . (455) (38)
------- ------
Units outstanding end of the period . . . 25,487 7,122
======= ======
</TABLE>

<PAGE>

UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. UNIT VALUES:

A summary of unit values and units outstanding for variable annuity
contracts and the expense ratios, including expenses of the underlying funds
for each of the two years in the period ended December 31, 1997 follows.

Annualized
Ratio of
Expenses
Average Net Assets to Average
Units Unit Value (000's) Net Assets
------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 527,092 $ 13.86 $ 7,305,343 1.66%
1996 . . . . . . . . . . . . . . . . . . . 265,242 11.21 2,972,550 1.43%

Dreyfus Stock Index Portfolio
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 497,429 16.00 7,959,989 1.55%
1996 . . . . . . . . . . . . . . . . . . . 181,969 12.24 2,226,820 1.43%

Dreyfus Growth and Income Fund
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 333,084 14.22 4,736,420 1.61%
1996 . . . . . . . . . . . . . . . . . . . 120,598 12.44 1,500,407 1.44%

Federated High Income Bond Fund II
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 289,681 12.79 3,703,960 1.61%
1996 . . . . . . . . . . . . . . . . . . . 193,943 11.42 2,214,627 1.37%

Federated Fund for U.S. Government Securities II
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 154,877 11.09 1,718,067 1.50%
1996 . . . . . . . . . . . . . . . . . . . 25,831 10.39 268,280 1.24%

Federated Utility Fund II
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 121,807 14.08 1,714,981 1.69%
1996 . . . . . . . . . . . . . . . . . . . 45,403 11.30 513,177 1.29%

MFS Emerging Growth Series
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 640,544 14.07 9,010,577 1.71%
1996 . . . . . . . . . . . . . . . . . . . 242,852 11.73 2,849,363 1.32%

MFS Total Return Series
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 509,069 13.75 6,999,467 1.55%
1996 . . . . . . . . . . . . . . . . . . . 146,453 11.53 1,687,954 1.52%

Scudder Money Market Portfolio
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 461,537 10.74 4,954,866 1.78%
1996 . . . . . . . . . . . . . . . . . . . 228,486 10.37 2,369,549 2.75%

Scudder International Portfolio
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 286,406 12.25 3,507,256 1.73%
1996 . . . . . . . . . . . . . . . . . . . 119,631 11.42 1,365,861 1.05%

<PAGE>

Van Eck Worldwide Hard Assets Fund
- ------------------------------------------------
December 31
1997 . . . . . . . . . . . . . . . . . . . 25,487 11.38 290,157 1.77%
1996 . . . . . . . . . . . . . . . . . . . 7,122 11.77 83,845 .92%
</TABLE>

<PAGE>

Independent Auditors' Report
----------------------------

The Board of Directors and Stockholder
United Life & Annuity Insurance Company:

We have audited the accompanying consolidated balance sheets of United Life &
Annuity Insurance Company and subsidiary (the Company) as of December 31, 1997
and 1996, and the related consolidated statements of income, cash flows, and
stockholder's equity for the year ended December 31, 1997 and for the periods
from July 24, 1996 to December 31, 1996 (Successor period) and January 1, 1996
to July 23, 1996 (Predecessor period). Our audit also included the related
financial statement shcedules III, IV and V. These consolidated financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of United Life &
Annuity Insurance Company and subsidiary as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for the year ended December
31, 1997 and the periods from July 24, 1996 to December 31, 1996 (Successor
period) and January 1, 1996 to July 23, 1996 (Predecessor period), in conformity
with generally accepted accounting principles. Also in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

February 20, 1998

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
United Life & Annuity Insurance Company:

We have audited the accompanying consolidated financial statements of income,
stockholder's equity, and cash flows of United Life & Annuity Insurance Company
(formerly United Companies Life Insurance Company) for the year ended December
31, 1995. Our audit also included the related financial statement schedules III,
IV, and V. These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedules based on
our audit.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of United Life & Annuity Insurance Company and
subsidiary's operations and their cash flows for the year ended December 31,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.

/s/ Deloitte & Touche LLP
Deloitte & Touche LLP

Baton Rouge, Louisiana
February 29, 1996

<PAGE>

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

Purchase basis of accounting
----------------------------
December 31,
(Restated)
1997 1996
---- ----
(dollars in thousands)

<S> <C> <C>
Assets
Investments:
Fixed maturity securities:
Held for investment at amortized cost (fair value $- in 1997
and $50,902 in 1996) . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 48,473
Available for sale at fair value (amortized cost $1,069,459 in 1997
and $1,127,850 in 1996) . . . . . . . . . . . . . . . . . . . . . . 1,106,961 1,144,165
Mortgage loans on real estate, less allowances of $3,923
in 1997 and $4,211 in 1996 . . . . . . . . . . . . . . . . . . . . . 227,755 243,715
Investment real estate. . . . . . . . . . . . . . . . . . . . . . . . 932 -
Policy loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,585 21,536
Investments in limited partnerships . . . . . . . . . . . . . . . . . 16,026 5,704
Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . 22,804 467
Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . 150 1,491
---------- ----------
Total investments . . . . . . . . . . . . . . . . . . . . . . . . 1,397,213 1,465,551
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14,487
Accrued investment income. . . . . . . . . . . . . . . . . . . . . . . 17,482 17,251
Accounts and notes receivable. . . . . . . . . . . . . . . . . . . . . 1,057 6,973
Due from reinsurers. . . . . . . . . . . . . . . . . . . . . . . . . . 33,379 34,923
Present value of insurance in force. . . . . . . . . . . . . . . . . . 27,769 54,931
Deferred policy acquisition costs. . . . . . . . . . . . . . . . . . . 13,671 4,187
Costs in excess of net assets acquired . . . . . . . . . . . . . . . . 25,459 27,973
Deferred income tax benefit. . . . . . . . . . . . . . . . . . . . . . 3,529 8,882
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 213
Assets held in separate accounts . . . . . . . . . . . . . . . . . . . 51,901 18,052
---------- ----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . $1,572,072 $1,653,423
========== ==========

Liabilities and Stockholder's equity
Liabilities:
Policy reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,312,876 $1,443,964
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 18,770 14,373
Liabilities related to separate accounts. . . . . . . . . . . . . . . 51,901 18,052
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 1,383,547 1,476,389
---------- ----------
Stockholder's equity:
Common stock, $2 par value;
Authorized - 4,200,528 shares;
Issued - 4,200,528 shares. . . . . . . . . . . . . . . . . . . . . . 8,401 8,401
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . 158,913 158,913
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 11,533 5,703
Net unrealized gains on securities. . . . . . . . . . . . . . . . . . 9,678 4,017
---------- ----------
Total stockholder's equity. . . . . . . . . . . . . . . . . . . . 188,525 177,034
---------- ----------
Committments and contingencies (note 11)
Total liabilities and stockholder's equity. . . . . . . . . . . . $1,572,072 $1,653,423
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

Purchase basis Historical basis
of accounting of accounting
-------------- ----------------
Period
from Period
Year Jul 24 from Year
Ended to Dec 31, Jan 1 to Ended
Dec 31, (Restated) Jul 23, Dec 31,
1997 1996 1996 1995
---- ---- ---- ----
(dollars in thousands)

<S> <C> <C> <C> <C>
REVENUES:
Premiums. . . . . . . . . . . . . . . . . $ 5,731 $ 3,483 $ 3,732 $ 8,508
Interest sensitive policy product
charges . . . . . . . . . . . . . . . . 2,821 1,048 1,421 1,949
Net investment income . . . . . . . . . . 110,735 49,733 66,421 125,591
Realized investment gains (losses). . . . 5,932 (157) (1,592) (3,670)
Other . . . . . . . . . . . . . . . . . . 1,204 1,215 52 172
-------- -------- -------- ---------
Total revenues . . . . . . . 126,423 55,322 70,034 $132,550
-------- -------- -------- ---------

EXPENSES:
Claims incurred . . . . . . . . . . . . . 6,980 3,332 5,215 9,083
Interest on annuity policies. . . . . . . 67,354 32,022 42,434 81,035
Change in liability for future policy
benefits and other policy benefits. . . 169 504 752 847
Amortization of present value of
insurance in force and deferred
policy acquisition costs. . . . . . . . 15,588 5,068 9,699 13,159
Amortization of costs in excess of
net assets acquired . . . . . . . . . . 1,434 583 -
Underwriting and other administrative
expenses. . . . . . . . . . . . . . . . 9,740 4,733 9,753 16,326
-------- -------- -------- ---------
Total benefits and expenses. 101,265 46,242 67,853 120,450
-------- -------- -------- ---------

Income before income taxes. . . . . . . . . 25,158 9,080 2,181 12,100
-------- -------- -------- ---------

PROVISION (BENEFIT) FOR INCOME TAXES:
Current . . . . . . . . . . . . . . . . . 7,477 2,427 1,139 5,259
Deferred. . . . . . . . . . . . . . . . . 1,724 950 (370) (1,194)
-------- -------- -------- ---------
Total income tax expense . . 9,201 3,377 769 4,065
-------- -------- -------- ---------
Net income. . . . . . . . . . . . . . . . $ 15,957 $ 5,703 $ 1,412 $ 8,035
======== ======== ======== =========
</TABLE>

See accompanying notes to consolidated financial statements.

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Purchase basis Historical basis
of accounting of accounting
-------------- ----------------

Period
from Period
Year Jul 24 from Year
Ended to Dec 31, Jan 1 Ended
Dec 31, (Restated) to Jul 23, December 31,
1997 1996 1996 1995
--------- --------- --------- ------------
(dollars in thousands)

<S> <C> <C> <C> <C>
Cash flows from operations activities:
Net income $ 15,957 $ 5,703 $ 1,412 $ 8,035
Adjustments to reconcile net income to net cash
provided by operation activities:
Capitalization of deferred policy acquisition costs (10,465) (5,172) (4,797) (11,947)
Amortization of intangibles, depreciation and accretion, net 15,311 4,601 10,502 13,159
Increase in policy reserves, liabilities and accruals
and other policyholder funds 63,215 27,592 45,059 71,048
Other, net (73) 2,323 (6,986) 8,116
---------- ---------- ---------- ------------
Net cash provided by operating activities 83,945 35,047 45,190 88,411
---------- ---------- ---------- ------------

Cash flows from investing activities:
Purchases of securities available for sale (493,929) (94,025) (158) (136,503)
Maturities of securities held for investment - 7,679 2,918 1,940
Acquisitions and originations of mortgage loans (44,375) (112,473) (749,953) (1,208,195)
Maturities of securities available for sale 107,177 2,000 2,650 51,000
Sales of securities available for sale 500,058 18,233 34,065 25,185
Sales of mortgage loans 7,602 151,921 733,271 1,111,636
Principal payments on mortgage loans 52,591 21,657 44,264 71,294
(Increase) decrease in short-term investments, net
(including changes in amounts due to broker) (22,337) 50,063 (27,726) 31,860
(Increase) decrease in limited partnerships (10,322) 337 1,769 -
Other, net 928 40 (2,201) (180)
---------- ---------- ---------- ------------
Net cash provided by (used in) investing activities 97,393 45,432 38,899 (51,963)
---------- ---------- ---------- ------------

Cash flows from financing activities:
Receipts from interest sensitive products credited
to policyholders' account balances 86,194 48,770 51,464 146,487
Return of policyholders' account balances
on interest sensitive products (277,033) (104,528) (155,464) (233,953)
Increase (decrease) in repurchase agreements - (52,839) 11,982 40,857
Dividends (10,127) - (10,000) -
Contributed capital - 57,259 - -
Other, net - 247 - 20
---------- ---------- ---------- ------------
Net cash used by financing activities (200,966) (51,091) (102,018) (46,589)
---------- ---------- ---------- ------------
Increase (decrease) in cash (19,628) 29,388 (17,929) (10,141)
Cash at beginning of period 14,487 (14,901) 3,028 13,169
---------- ---------- ---------- ------------
Cash (overdraft) at end of period $ (5,141) $ 14,487 $ (14,901) $ 3,028
========== ========== ========== ============

Supplemental disclosures:
Income taxes paid $ 7,079 $ - $ 2,797 $ 4,655
Interest paid $ 171 $ 439 $ 2,392 $ 3,362
</TABLE>

See accompanying notes to consolidated financial statements.

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

Unrealized
Additional Gains Total
Common Paid-In Retained (Losses) on Stockholder's
Stock Capital Earnings Securities Equity
------- -------- ---------- ------------ ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
HISTORICAL BASIS OF ACCOUNTING:
Balance, December 31, 1994. . . . . . $ 8,401 $ 28,980 $ 111,632 $ (46,834) $102,179
Net income. . . . . . . . . . . . . . - - 8,035 - 8,035
Changes in net unrealized losses on -
securities, net . . . . . . . . . . - - - 76,311 76,311
------- -------- ---------- ------------ ---------
Balance, December 31, 1995. . . . . . 8,401 28,980 119,667 29,477 186,525
Net income. . . . . . . . . . . . . . - - 1,412 - 1,412
Changes in net unrealized losses on -
securities, net . . . . . . . . . . - - - (31,665) (31,665)
Dividend. . . . . . . . . . . . . . . - - (58,334) - (58,334)
------- -------- ---------- ------------ ---------
Balance, July 23, 1996. . . . . . . . $ 8,401 $ 28,980 $ 62,745 $ (2,188) $ 97,938
======= ======== ========== ============ =========

PURCHASE BASIS OF ACCOUNTING:
Balance, July 24, 1996. . . . . . . . $ 8,401 $101,655 $ - $ - $110,056
Net income (restated) . . . . . . . . - - 5,703 - 5,703
Capital contribution. . . . . . . . . - 57,258 - - 57,258
Changes in net unrealized gains on
securities, net . . . . . . . . . . - - - 4,017 4,017
------- -------- ---------- ------------ ---------
Balance, December 31, 1996 (restated) 8,401 158,913 5,703 4,017 177,034
Net income. . . . . . . . . . . . . . - - 15,957 - 15,957
Changes in net unrealized gains
on securities, net. . . . . . . . . - - - 5,661 5,661
Dividend. . . . . . . . . . . . . . . - - (10,127) - (10,127)
------- -------- ---------- ------------ ---------
Balance, December 31, 1997 . . . . . . $ 8,401 $158,913 $ 11,533 $ 9,678 $188,525
======= ======== ========== ============ =========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

(1) BASIS OF PRESENTATION

United Life & Annuity Insurance Company (the "Company" or "ULA") is a
wholly-owned subsidiary of Pacific Life and Accident Insurance Company
("PLAIC"), a wholly-owned subsidiary of PennCorp Financial Group, Inc.
("PennCorp"). (See note 2 to Notes to Consolidated Financial Statements.)
PennCorp is an insurance holding company which offers, through its wholly-owned
subsidiaries, a broad range of life insurance, annuity and accident and sickness
products.

The Company, a life insurance company domiciled in Louisiana and organized
in 1955, is currently authorized to conduct business in 47 states, the District
of Columbia and Puerto Rico. The primary products of the Company are tax
deferred annuity contracts marketed to individuals principally through financial
institutions and independent agents.

The consolidated financial statements include the Company and its
wholly-owned subsidiary, United Variable Services, Inc. All significant
intercompany balances and transactions have been eliminated in the consolidated
financial statements.

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principals ("GAAP") on a historical cost basis of
accounting through the date of acquisition and on a purchase GAAP push-down
basis of accounting ("purchase GAAP") from the date of acquisition to the end of
the period. The comparability of the financial condition and the operating
results for the post-acquisition period and the pre-acquisition periods are
affected by the fair value accounting basis determination of assets and
liabilities under purchase accounting.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities as well
as revenues and expenses. Accounts that the Company deems to be acutely
sensitive to changes in estimates include deferred policy acquisition costs,
policy liabilities and accruals, present value of insurance in force and
deferred taxes. In addition, the Company must determine the requirements for
disclosure of contingent assets and liabilities as of the date of the financial
statements based upon estimates. As additional information becomes available,
or actual amounts are determinable, the recorded estimates may be revised and
reflected in operating results. Although some variability is inherent in these
estimates, management believes the amounts provided are adequate. In all
instances, actual results could differ from estimates.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments

Fixed maturities classified as held for investment are recorded at cost,
adjusted for amortization of premium or discount, as the Company has the intent
and ability to hold them to maturity. Fixed maturities and equity securities
classified as available for sale are recorded at fair value, as they may be sold
in response to changes in interest rates, prepayment risk, liquidity needs, the
need or desire to increase income, capital or other economic factors. Changes
in unrealized gains and losses related to securities available for sale are
recorded as a separate component of shareholders' equity, net of income taxes.
Securities classified as trading securities are reported at fair value with
realized gains and losses and changes in unrealized gains and losses included in
the determination of net income as a component of other income. The
classification of securities as held for investment, available for sale or
trading is generally determined at the date of purchase. Mortgage-backed fixed
maturity securities held for investment of available for sale are amortized
using the interest method including anticipated prepayments at the date of
purchase. Significant changes in estimated cash flows from original assumptions
are reflected at cost, adjusted for amortization of premium or discount and
provision for loan loss, if necessary. Mortgage loans are carried at amortized
cost, net of allowance for losses. Investment in real estate, which is
comprised of properties acquired through foreclosures, are carried at the lower
of fair value less estimated cost to sell ("fair value") or the outstanding loan
amount plus accrued interest ("cost"). Investments in limited partnerships are
carried on an equity basis. Policy loans, short-term investments, and other
investments are recorded at cost, which approximates fair value.

As a result of the Company's decision to exit the private placement bond
sector, the Company transferred all of its remaining assets in the fixed
maturities held for investment portfolio aggregating $20.8 million to its fixed
maturities available for sale portfolio as of April 1, 1997. In accordance with
Statement of Financial Accounting Standards No. 115, the Company marked all
assets subject to the transfer to fair value resulting in a net increase in
shareholders' equity, net of applicable income taxes, of $1.9 million.

Realized investment gains and losses and declines in value which are other
than temporary, determined on the basis of specific identification, are included
in net income.

Accounts and Notes Receivable

Accounts and notes receivable consist primarily of agents' balances and
premiums receivable from agents and policyholders. Agents' balances are
partially secured by commissions due to agents in the future and premiums
receivable are secured by policy liabilities. An allowance for doubtful accounts
is established, based upon specific identification and general provision, for
amounts which the Company estimates will not ultimately be collected.

Present Value of Insurance in Force

The present value of insurance in force represents the anticipated gross
profits to be realized from future revenues on insurance in force at the date
such insurance was purchased, discounted to provide an appropriate rate of
return and amortized, with interest based upon the policy liability or contract
rate, over the years that such profits are anticipated to be received in
proportion to the estimated gross profits. Accumulated amortization was $20.2
million and $5.0 million as of December 31, 1997 and 1996, respectively.

Deferred Policy Acquisition Costs

Commissions and other costs related to the production of new and renewal
business have been deferred. The deferred costs related to traditional life
insurance are amortized over the premium payment period using assumptions
consistent with those used in computing policy benefit reserves. Deferred costs
related to annuities and interest sensitive products are amortized over the
estimated life of the policy in relation to the present value of estimated gross
profits on the contract. The Company periodically reviews the appropriateness
of assumptions used in calculating the estimated gross profits on annuity
contracts. Any change required in these assumptions may result in an adjustment
to deferred policy acquisition costs which would affect income.

Costs in Excess of Net Assets Acquired

Costs in excess of the fair value of net assets acquired are amortized on a
straight-line basis over 20 years. Accumulated amortization was $2.0 million at
December 31, 1997 and $.6 million at December 31, 1996.

The Company continuously monitors the value of costs in excess of net
assets acquired based upon estimates of future earnings. Any amounts deemed to
be impaired are charged, in the period in which such impairment was determined,
as an expense against earnings. For the periods presented there was no charge
to earnings for the impairment of costs in excess of net assets acquired.

Other Assets

Property is stated at cost less accumulated depreciation and is included in
"Other assets." Depreciation is computed on the straight-line and accelerated
methods over the estimated useful lives of the assets.

Policy Liabilities

Policy benefit reserves for traditional life insurance policies utilize
statutory commissioners reserve valuation method and net level premium method as
reasonable approximations of GAAP reserves for all non-interest sensitive
products. Average investment yields assumed in the traditional life policy
benefit reserves ranged from 3% to 6%.

Reserves for annuity policies and interest sensitive life policies
represent the policy account balance, or accumulated fund value, before
applicable surrender charges. Benefit claims incurred in excess of related
policy account balances and interest credited during the period to policy
account balances are charged to expense.

Reserves for separate account policies are carried at account value.

Income Taxes

<PAGE>
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." Under the asset and liability method of SFAS
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to (i) temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and (ii) operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which the temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Prior to
the date of the sale, The Company filed a consolidated federal income tax return
with its former parent and other former affiliated companies. The former parent
allocated to the Company its proportionate share of the consolidated tax
liability under a tax allocation agreement whereby each affiliate's federal
income tax provision is computed on a separate return basis. Subsequent to the
purchase, the Company files a consolidated return with PLAIC whereby the
Company's proportionate share of the consolidated tax liability is allocated
based upon separate return calculations.

Insurance Revenue Recognition

Income on short duration single premium contracts, primarily credit
insurance products, is recognized over the contract period. Premiums on other
insurance contracts principally traditional life insurance and limited payment
life insurance policies, are recognized as revenue when due.

Revenues for interest sensitive annuity contracts represent charges
assessed against the policyholders' account balance, primarily for the
surrenders.

Reinsurance

The Company generally reinsures with other insurance companies the portion
of any one risk which exceeds $100,000. On certain types of policies this limit
is $25,000. The Company is contingently liable for insurance ceded to
reinsurers. Premiums ceded under reinsurance agreements were $1.2 million, $1.3
million and $1.7 million in 1997, 1996 and 1995, respectively. Amounts due from
reinsurers related to policy reserves ceded under reinsurance agreements totaled
$32.3 million and $34.5 million at December 31, 1997 and 1996, respectively.

The Company has a receivable at December 31, 1997 of approximately $31.5
million from one reinsurer; however, the funds supporting the receivable are
escrowed in a separate trust account for the benefit of the Company by the
reinsurer. The following table reflects the effect of reinsurance agreements on
premiums and the amounts earned for the periods indicated.

<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
------------------------- ---------------------------
Period from
Year Ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Direct premiums. . . . . . . $ 5,023 $ 2,704 $ 3,148 $ 7,659
Reinsurance assumed. . . . . 1,927 1,214 1,461 2,589
Reinsurance ceded. . . . . . (1,219) (435) (877) (1,740)
------------ ----------- ------------- ------------
Net insurance premiums. $ 5,731 $ 3,483 $ 3,732 $ 8,508
============ =========== ============= ============
</TABLE>

Participating Policies

Direct participating business, primarily related to the Company's pre-need
funeral policies, represented 10.4%, 9% and 8.2% of the life insurance in force
as of December 31, 1997, 1996 and 1995, respectively. The amount of dividends
paid on participating policies is based on published dividend scales and totaled
$1.1 million, $1.4 million and $1.2 million for the years ended December 31,
1997, 1996 and 1995, respectively.

Restatement

The December 31, 1996 financial statements have been restated to reflect
the reclassification of $7.7 million loan loss reserves which were offset
against costs in excess of net assets acquired, net of applicable deferred
income taxes. At acquisition, the Company established a reserve reflecting an
estimate of possible losses associated with its home equity mortgage loans
originated by United Companies Financial Corporation ("UC Financial"). Since
that date, UC Financial provided a guaranty of those loans against default in a
revision to the stock purchase agreement between PennCorp and UC Financial.
Investment income was reduced $.8 million and amortization of costs in excess of
net assets acquired was reduced by $.4 million in 1996, as a result of the
restatement. All amounts presented reflect the impact of such restatement.

Accounting Pronouncements Not Yet Adopted

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 is effective for annual and interim periods beginning
after December 15, 1997. This statement establishes standards for reporting and
displaying comprehensive income and its components and requires all items to be
recognized under accounting standards as comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Examples of items to be included in the Company's
presentation of comprehensive income, in addition to net income applicable to
common stock, are unrealized foreign currency translation gains or losses as
well as unrealized gains and losses on securities available for sale. The
Company will adopt the provisions of SFAS No. 130 in 1998.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was also issued in June 1997 by the FASB. This Statement requires
that companies disclose segment data on the basis that is used internally by
management for evaluating segment performance and allocating resources to
segments. This Statement requires that a company report a measure of segment
profit or loss, certain specific revenue and expense items, and segment assets.
It also requires various reconciliations of total segment information to amounts
in the consolidated financial statements. The Company's current definition of
its business segments will not materially change from the current presentation.
SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.

In December 1997, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 97-3. SOP 97-3 provides (1) guidance for
determining when an entity should recognize a liability for guaranty-fund and
other insurance-related assessments, (2) guidance on how to measure the
liability, (3) guidance on when an asset may be recognized for a portion or all
of the assessment liability or paid assessment that can be recovered through
premium tax offsets or policy surcharges, and (4) requirements for disclosure of
certain information. This SOP is effective for financial statements for fiscal
years beginning after December 15, 1998. Early adoption is encouraged.
Previously issued annual financial statements are not restated. The Company
will report the effect of initially adopting this SOP in a manner similar to the
reporting of a cumulative effect of a change in accounting principle. The
Company is currently evaluating the financial impact, which is expected to be
immaterial, as well as the changes to its related disclosures.

In February 1998, the FASB adopted SFAS No. 132 "Employers Disclosures
about Pensions and Other Postretirement Benefits." SFAS No. 132 is effective
for fiscal years beginning after December 31, 1997. Earlier application is
encouraged. Restatement of disclosures for earlier periods provided for
comparative purposes is required. SFAS No. 132 standardizes employers'
disclosures about pension and other postretirement benefits, requires additional
information on changes in the benefit obligations and fair values of plan assets
to facilitate financial analysis, and eliminates certain irrelevant disclosures.
The Company is currently evaluating the necessary changes to its related
disclosures.

Reclassifications

Certain amounts from prior periods have been reclassified to conform with
the current year presentation. Such reclassifications had no effect on net
income.

(3) SALE OF THE COMPANY

On July 24, 1996, PLAIC consummated the acquisition of the Company from UC
Financial. Pursuant to an Amended and Restated Stock Purchase Agreement (the
"Agreement") dated as of July 24, 1996, PLAIC acquired 100% of the outstanding
capital stock of the Company for $110.1 million in cash including expenses
incurred $9.7 million as part of the acquisition. Immediately following the
acquisition of the Company, PLAIC contributed $57.3 million in cash to the
Company, which represented the market value of certain real estate and other
assets distributed to UC Financial immediately prior to the consummation of the
acquisition.

The Company's acquisition has been accounted for using the purchase method
of accounting. The total purchase price of the acquisition was allocated to the
tangible and intangible assets and liabilities acquired based upon their
respective fair values as of the date of acquisition. Based upon such
respective fair values, the value of the net assets acquired was $82.6 million,
as restated, resulting in costs in excess of net assets acquired at the date of
acquisition of $27.5 million, as restated.

<PAGE>
(4) INVESTMENTS

Fixed Maturity Securities

The Company's portfolio of fixed maturity securities consisted of the
following:

<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(dollars in thousands)
Available for Sale:
U.S. Government . $ 8,883 $ 118 $ - $ 9,001
Municipal . . . . 3,371 155 - 3,526
Foreign . . . . . 5,541 165 - 5,706
Corporate . . . . 432,512 16,051 378 448,185
Mortgage-backed . 619,152 21,421 30 640,543
---------- ----------- ----------- -----------
Total. . . . $1,069,459 $ 37,910 $ 408 $ 1,106,961
========== =========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
December 31, 1996
-------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(dollars in thousands)
Available for Sale:
U.S. Government . $ 9,029 $ 93 $ - $ 9,122
Municipal . . . . 5,434 1 48 5,387
Foreign . . . . . 10,920 185 - 11,105
Corporate . . . . 414,551 5,944 1,064 419,431
Mortgage-backed . 687,916 11,210 6 699,120
---------- ----------- ----------- -----------
Total. . . . $1,127,850 $ 17,433 $ 1,118 $ 1,144,165
========== =========== =========== ===========
Held for Investment:
Corporate . . . . $ 13,927 $ 124 $ 2 $ 14,049
Mortgage-backed . 34,546 2,307 - 36,853
---------- ----------- ----------- -----------
Total. . . . $ 48,473 $ 2,431 $ 2 $ 50,902
========== =========== =========== ===========
</TABLE>

The cost and estimated fair value of fixed maturity securities by
contractual maturity at December 31, 1997 are shown below.

<TABLE>
<CAPTION>
Available for Sale
-----------------------
Amortized Estimated
Cost Fair Value
---------- -----------
<S> <C> <C>
(dollars in thousands)
1 year or less . . . . . . . . $ 8,479 $ 8,496
Over 1 year through 5 years. . 168,541 172,889
Over 5 years through 10 years. 226,432 235,303
After 10 years . . . . . . . . 46,855 49,730
Mortgage-backed securities . . 619,152 640,543
---------- -----------
Total . . . . . . . . . . $1,069,459 $ 1,106,961
========== ===========
</TABLE>

Expected maturities may differ from contractual maturities because certain
issuers may have the right to call or prepay obligations with or without call or
prepayment penalties.

In 1990, the Company securitized pools of commercial real estate loans
owned in two transactions and in connection therewith sold pass-through
certificates ("Series 90-1" and "Series 90-2") for which an election under the
real estate mortgage investment conduit provisions ("REMIC") of the Internal
Revenue Code of 1986, as amended were made. The Company retained as an
investment subordinated junior certificates in both issues, as well as a senior
certificate interest in Series 90-2. During the third quarter of 1996, the
Company became the only remaining investor in its Series 90-2 REMIC. In the
first quarter of 1997, the Company closed the REMIC and reacquired the
underlying mortgages.

Fixed maturity securities available for sale at December 31, 1997 and held
for investment at December 31, 1996 included REMIC investments of approximately
$9.6 million and $34 million, respectively. The two primary purposes of closing
the REMIC were the elimination of the administration and servicing fees and the
resulting improvement to the Company's Statutory Risk Based Capital.

A summary of the Company's investment at December 31, 1997 and 1996, in the
REMIC's are as follows:

<TABLE>
<CAPTION>
Remaining
Date of Principal Carrying Interest Maturity
Issue Balance Value Rate Date
------------ ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
December 31, 1997:
United Companies Life REMIC
Series 90-1, Class B-1. . Mar 29, 1990 $ 10,351 $ 9,606 10.05% Sep 25, 2009
========== =========
December 31, 1996:
United Companies Life REMIC
Series 90-1, Class B-1. . Mar 29, 1990 $ 10,574 $ 7,263 10.05% Sep 25, 2009
Series 90-2, Class A-3. . Dec 18, 1990 14,688 14,965 9.88% May 25, 2000
Series 90-2, Class B-1. . Dec 18, 1990 14,339 11,750 9.88% Jan 25, 2009
---------- ---------
$ 39,601 $ 33,978
========== =========
<FN>
At December 31, 1997, securities with a cost of $14.2 million were on deposit with
insurance regulatory authorities.
</TABLE>

Equity Securities

The unrealized capital gains and losses on common stocks included as "Other
invested assets" at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(dollars in thousands)
Trading. . . . . . . . $ 765 $ 169 $ 34 $ 900
Available for sale . . 78 - 72 6
----- ----------- ----------- -----------
Total . . . . . . $ 843 $ 169 $ 106 $ 906
===== =========== =========== ===========
</TABLE>

The Company did not own equity securities at December 31, 1997.

Mortgage Loans on Real Estate

The following schedule summarizes the composition of mortgage loans on real
estate:

<TABLE>
<CAPTION>
December 31,
-------------------
1997 1996
-------- ---------
<S> <C> <C>
(dollars in thousands)
Residential $ 34,372 $ 61,911
Unearned loan charges (232) (266)
-------- ---------
Residential, net . . . . . 34,140 61,645
-------- ---------
Commercial 197,538 186,281
Allowance for loan losses (3,923) (4,211)
-------- ---------
Commercial, net. . . . . . 193,615 182,070
-------- ---------
Total $227,755 $243,715
======== =========
</TABLE>

Included in the loans owned at December 31, 1997 and 1996 were loans with
delinquencies in excess of 180 days of $.1 million and $1.4 million,
respectively.

The Company provides an estimate for future credit losses in an allowance
for loan losses. A summary analysis of the changes in the Company's allowance
for loan losses on its commercial loans is as follows:

<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
------------------------------------ --------------------------------
Year Ended Period from Period from Year Ended
Dec 31, Jul 24 to Dec 31, Jan 1 to Jul 23, Dec 31,
1997 1996 1996 1995
--------------- ------------------- ------------------ ------------
(Restated)
<S> <C> <C> <C> <C>
(dollars in thousands)
Balance at beginning of year $ 4,211 $ 4,211 $ 2,117 $ 1,778
Losses charged to allowance. (276) - (771) (194)
Loan loss provision. . . . . (12) - 478 533
--------------- ------------------- ------------------ ------------
Balance at end of year . . . $ 3,923 $ 4,211 $ 1,824 $ 2,117
=============== =================== ================== ============

Specific reserves. . . . . . $ 418 $ 706 $ 824 $ 1,117
Unallocated reserves . . . . 3,505 3,505 1,000 1,000
--------------- ------------------- ------------------ ------------
Total reserves. . . . . $ 3,923 $ 4,211 $ 1,824 $ 2,117
=============== =================== ================== ============
</TABLE>

Investment Real Estate

Immediately prior to the closing of the sale of the Company, the Company
distributed all of its real estate to its former parent. The investment real
estate of $.9 million at December 31, 1997 was acquired through foreclosure
during 1997.

Investment In Limited Partnerships

Immediately prior to the closing of the sale of the Company, the Company
distributed a limited partnership investment to its former parent aggregating
$17.8 million. Following is an analysis of the Company's investment in limited
partnerships:

<PAGE>
<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
--------------------------- ---------------------------
Period from Period from
Year ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Balance, beginning of period . . . . $ 5,704 $ 6,041 $ 25,594 $ 26,672
Contributions and capitalized costs. 13,473 43 620 9,869
Net partnership income . . . . . . . 1,765 948 1,061 6,279
Distributions. . . . . . . . . . . . (3,190) (1,328) (3,451) (17,226)
Distribution of partnerships . . . . (3,061) - (17,783) -
Realized gains . . . . . . . . . . . 1,335 - - -
------------ ------------- ------------- ------------
Balance, end of period. . . . . $ 16,026 $ 5,704 $ 6,041 $ 25,594
============ ============= ============= ============
</TABLE>

The limited partnerships were formed for the purpose of participating in
privately placed equity or mezzanine investments. These investments, acquired in
leveraged investment transactions, generally include private equity securities
and/or higher risk subordinated debt.

Investment Income

Investment income by type that exceeds five percent of total investment
income was as follows:

<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
------------- ------------ -------------------------
Period from Period from
Year ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
------------- ------------ ------------ -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Fixed maturity securities . . $ 85,626 $ 37,140 $ 47,606 $ 85,852
Mortgage loans on real estate 24,614 11,192 20,331 35,056
Other investments . . . . . . 4,487 3,281 4,067 14,386
------------- ------------ ------------ -----------
Gross investment income. 114,727 51,613 72,004 135,294
Less: Investment expenses . . 3,992 1,880 5,583 9,703
------------- ------------ ------------ -----------
Net investment income. . $ 110,735 $ 49,733 $ 66,421 $ 125,591
============= ============ ============ ===========
</TABLE>

Realized, and Changes in Unrealized, Investment Gains (Losses)

Net realized, and changes in unrealized, investment gains (losses) were as
follows:

<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
--------------------------- ---------------------------
Period from Period from
Year ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Fixed maturity securities:
Gross gains . . . . . . . . . . . . . . . . . . $ 5,923 $ - $ 42 $ 524
Gross losses. . . . . . . . . . . . . . . . . . (1,181) (157) (1,388) (1,807)
Loss provision. . . . . . . . . . . . . . . . . (83) - 477 (350)
------------ ------------- ------------- ------------
Net gains (losses) on fixed maturity
securities. . . . . . . . . . . . . . 4,659 (157) (869) (1,633)
------------ ------------- ------------- ------------
Mortgage loans on real estate:
Losses on sales . . . . . . . . . . . . . . . . - - (771) (194)
Loss provision. . . . . . . . . . . . . . . . . 12 - 293 (339)
------------ ------------- ------------- ------------
Net gains (losses) on mortgage loans on
real estate. . . . . . . . . . . . . . 12 - (478) (533)
------------ ------------- ------------- ------------
Investment real estate:
Losses on sales . . . . . . . . . . . . . . . . (1) - (1,098) (2,638)
Loss provision. . . . . . . . . . . . . . . . . - - 853 1,134
------------ ------------- ------------- ------------
Net losses on investment real estate . . . (1) - (245) (1,504)
------------ ------------- ------------- ------------
Limited partnerships:
Gains on sales $ 1,336 $ - $ - $ -
------------ ------------- ------------- ------------
Net Losses on limited partnerships $ 1,336 $ - $ - $ -
------------ ------------- ------------- ------------

Other invested assets:
Gains on sales $ 2 $ $ $
Losses on sales $ (76) $ - $ - $ -
------------ ------------- ------------- ------------
Net Losses on limited partnerships $ (74) $ - $ - $ -
------------ ------------- ------------- ------------
Realized investment gains (losses). . $ 5,932 $ (157) $ (1,592) $ (3,670)
============ ============= ============= ============
Changes in unrealized gains (losses):
Securities available for sale . . . . . . . . . 21,263 16,243 (48,716) 117,404
------------ ------------- ------------- ------------
Net change in unrealized gains (losses) .. $ 21,263 $ 16,243 $ (48,716) $ 117,404
============ ============= ============= ============
Trading portfolio:
Net gains (losses) from sales. . . . . . . . . $ 59 $ (20) $ 37 $ (12)
Net change in unrealized gains (losses). . . . (135) 135 (26) 184
------------ ------------- ------------- ------------
Total trading gains (losses) . . . . . . . $ (76) $ 115 $ 11 $ 172
============ ============= ============= ============
</TABLE>

Individually Significant Investments

The following investments, other than obligations of the U.S. Government
or agencies thereof, individually exceeded 10% of total stockholder's equity:

<TABLE>
<CAPTION>
December 31, 1997
-------------------
Amortized Fair
Investment Cost Value
- ------------------------------------------ ---------- -------
<S> <C> <C>
(Dollars in thousands)
Collateralized Mortgage Obligation Trust,
Series 64, Class Z . . . . . . . . . . . $ 20,640 $20,672
========== =======
</TABLE>

<TABLE>
<CAPTION>
December 31, 1996
-------------------
Amortized Fair
Cost Value
---------- -------
<S> <C> <C>
(Dollars in thousands)
United Companies Life REMIC 1990-2. $ 26,715 $27,595
========== =======
</TABLE>

<PAGE>

(5) INCOME TAXES

The provision (benefit) for income taxes attributable to operations is as
follows:

<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
------------------------- ---------------------------
Period from Period from
Year ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
----------- ------------ ------------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Current. . . . . . . . $ 7,477 $ 2,427 $ 1,139 $ 5,259
Deferred . . . . . . . 1,724 950 (370) (1,194)
----------- ------------ ------------- ------------
Total. . . . $ 9,201 $ 3,377 $ 769 $ 4,065
=========== ============ ============= ============
</TABLE>

Reported income tax expense attributable to operations differs from the
amount computed by applying the statutory federal income tax rate of 35% to
income from operations before income taxes for the following reasons:

<TABLE>
<CAPTION>
Purchase
basis of
Purchase basis of accounting accounting
--------------------------- --------------------------
Period from Period from
Year ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Federal income tax (benefit) at statutory rate . $ 8,805 $ 3,178 $ 763 $ 4,235
Differences resulting from:
Amortization of costs in excess
of net assets acquired. . . . . . . . . . 502 236 - -
Other . . . . . . . . . . . . . . . . . . (106) (37) 6 (170)
------------ ------------- ------------ ------------
Reported income tax provision benefit. . . . . . $ 9,201 $ 3,377 $ 769 $ 4,065
============ ============= ============ ============
</TABLE>

The significant components of the Company's net deferred income tax benefit
and liability are as follows:

<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Mortgage loans on real estate and other
investments. . . . . . . . . . . . . . . $ - $ 2,238 $ - $ 4,184
Deferred policy acquisition costs . . . . - 3,860 - 5,062
Present value of insurance in force . . . 6,328 - - 2,163
Unrealized gain on investment securities. - 13,127 - -
Policy reserves . . . . . . . . . . . . . 15,956 - 19,319 -
Other . . . . . . . . . . . . . . . . . . 470 - 972 -
--------- ------------ --------- ------------
$ 22,754 $ 19,225 $ 20,291 $ 11,409
========= ============ ========= ============
</TABLE>

In assessing the realization of deferred taxes, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. The ultimate realization of deferred tax assets is
dependent on the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment. Based upon those
considerations, management believes it is more likely than not that the Company
will realize the benefits of these deductible differences as of December 31,
1997.

The Company's "Policyholders' Surplus" became taxable income to its former
parent in conjunction with the sale of the Company in 1996 and was therefore,
extinguished.

The Company had a current income tax payable, which is included in "Other
liabilities," in the amount of $3.4 million at December 31, 1997, and $3
million at December 31, 1996.

(6) TRANSACTIONS WITH AFFILIATES

In conjunction with the sale of the Company, Knightsbridge Management LLC
("Knightsbridge"), an affiliate, accrued transaction fees of $2.5 million during
1996.

Immediately after the closing of the sale, the Company received $57.3
million in cash from PLAIC as replacement for assets distributed to its former
parent in conjunction with the sale of the Company. (See note 2 to Notes to
Consolidated Financial Statements.)

Knightsbridge provides management consulting services to the Company for an
annualized fee of $1 million. For the period from July 24, 1996 through
December 31, 1996, the accompanying financial statements include $.4 million for
such fees. The Company was allocated certain costs from UC Financial and its
affiliates under a cost sharing agreement totaling $2.1 million and $4.1 million
for the periods from January 1, 1996 to July 23, 1996 and the year ended
December 31, 1995, respectively.

Knightsbridge also provides investment management consulting services to
the Company for a fee based upon the average dollar amount of the related
investments. For the year ended December 31, 1997 and the period from July 24,
1996 to December 31, 1996, the Company incurred $2.3 million and $.6 million,
respectively, related to such services.

UC Mortgage Corporation ("UC Mortgage"), an affiliate, services commercial
loans for the Company for a fee of three-eights of one percent of the principal
balances. For the year ended December 31, 1997 and the period from July 24,
1996 to December 31, 1996, the Company paid UC Mortgage $.8 million and $.4
million, respectively, for mortgage servicing fees. In addition, the Company
provides employees to UC Mortgage and is reimbursed for salary and salary
related expenses for those employees. The total amount of reimbursed employee
expenses for the year ended December 31, 1997 and the period from July 24, 1996
to December 31, 1996 were $.6 million and $.3 million, respectively. As of
December 31, 1997, 1996 and 1995, UC Lending, Inc. ("UC Lending"), a former
affiliate, serviced loans owned by the Company having aggregate unpaid principal
balances of approximately $34.6 million, $62.6 million, and $338.4 million,
respectively. The Company paid servicing fees relative to these loans of
approximately $ - million, $ - million, $.5 million and $.9 million for the year
ended December 31, 1997 and the periods from July 24, 1996 to December 31, 1996,
January 1, 1996 to July 23, 1996 and the year ended December 31, 1995,
respectively.

The Company has an agreement with UC Lending to purchase qualifying
residential home equity mortgage loans originated or purchased and underwritten
by UC Lending. (See note 10 to Notes to Consolidated Financial Statements.)
These loans are usually held three to six months until resold to UC Lending for
sale by UC Lending in loan securitizations. Also, under an agreement UC Lending
is obligated to repurchase these home equity loans previously sold to the
Company at the time of foreclosure. At December 31, 1997 and 1996, $33.6
million and $61 million, respectively, of home equity loans originated by UC
Lending were owned by the Company. During the year ended December 31, 1997 and
the periods from July 24, 1996 to December 31, 1996, January 1, 1996 to July 23,
1996 and the year ended December 31, 1995, the Company purchased home equity
loans for approximately $ - million, $ 75.2 million, $656 million and $1,169
million, respectively, from UC Lending. Sales of these home equity loans to UC
Lending by the Company were $6.6 million, $51.4 million, $679.2 million and
$1,112 million for the year ended December 31, 1997, the periods from July 24,
1996 to December 31, 1996 and January 1, 1996 to July 23, 1996 and the year
ended December 31, 1995, respectively. No gain or loss was recorded by the
Company in these transactions.

Several executive officers of Marketing One, Inc. ("Marketing One"), an
affiliate based in Portland, Oregon, also serve as executive officers of the
Company. Marketing One personnel provide certain services to the Company, for
which Marketing One is reimbursed. The Company paid $.9 million and $ - million
to Marketing One for such services for the year ended December 31, 1997 and
1996, respectively.

The Company formerly leased home office space to UC Financial and other
former affiliates. Rent income attributable to these affiliates was
approximately $ - million for the year ended December 31, 1997 and for the
period from July 24, 1996 to December 31, 1996, $1 million for each of the
periods from January 1, 1996 to July 23, 1996 and the year ended December 31,
1995.

United Companies Realty & Development Co., Inc. ("UCRD"), a former
affiliate, managed the home office buildings leased by the Company to UC
Financial and other third party tenants under a real estate management contract
for the period from January 1, 1996 to July 23, 1996. The Company paid
approximately $.2 million to UCRD in management fees for the period January 1,
1996 to July 23, 1996 and $.4 million for the year ended December 31, 1995.

(7) Deferred Policy Acquisition Costs and Present Value of Insurance in Force

Deferred policy acquisition costs represent commissions, premium taxes and
certain other acquisition expenses, including underwriting and issue costs.
Information relating to these costs is as follows:

<TABLE>
<CAPTION>
Historical
basis of
Purchase basis of accounting accounting
--------------------------- ---------------------------
Period from Period from
Year Ended Jul 24 to Jan 1 to Year Ended
Dec 31, Dec 31, Jul 23, Dec 31,
1997 1996 1996 1995
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Unamortized deferred policy acquisition
Costs at beginning of period. . . . . . $ 4,187 $ - $ 90,703 $ 91,915
Policy acquisition costs deferred:
Commissions . . . . . . . . . . . . . 8,326 4,298 4,531 11,283
Underwriting and issue costs. . . . . 2,139 874 266 664
Policy acquisition costs amortized . . . (316) (8) (9,699) (13,159)
Unrealized investment gain adjustment. . (665) (977) - -
------------ ------------- ------------- ------------
Unamortized deferred policy
Acquisition costs at end of period. $ 13,671 $ 4,187 $ 85,801 $ 90,703
============ ============= ============= ============
</TABLE>

The methods used by the Company to value the fixed benefit, life, and
accumulation products purchased are consistent with the valuation methods used
most commonly to value blocks of insurance business. It is also consistent with
the basic methodology generally used to value insurance assets. The method used
by the Company includes identifying the future cash flows from the acquired
business, the risks inherent in realizing those cash flows, the rate of return
the Company believes it must earn in order to accept the risks inherent in
realizing the cash flows, and determining the value of the insurance asset by
discounting the expected future cash flows by the discount rate the Company
requires.

The discount rate used to determine such values is the rate of return
required in order to invest in the business being acquired. In selecting the
rate of return, the Company considered the magnitude of the risks associated
with actuarial factors described in the following paragraph, cost of capital
available to the Company to fund the acquisition, compatibility with other
Company activities that may favorably affect future profits, and the complexity
of the acquired Company.

<PAGE>
Expected future cash flows used in determining such values are based on
actuarial determination of future premium collection, mortality, surrenders,
operating expenses and yields on assets held to back policy liabilities as well
as other factors. Variances from original projections, whether positive or
negative, are included in income as they occur. To the extent that these
variances indicate that future cash flows will differ from those included in the
original scheduled amortization of the value of the insurance in force, current
and future amortization may be adjusted. Recoverability of the value of
insurance in force is evaluated annually and appropriate adjustments are then
determined and reflected in the financial statements for the applicable period.

Expected gross amortization, based upon current assumptions and accretion of
interest at a policy or contract rates ranging from 5.36% to 5.43% for the next
five years of the present value of insurance in force is as follows:

Beginning Gross Accretion Net
Balance Amortization of Interest Amortization
------- ------------ ----------- ------------
(dollars in thousands)
----------------------

1998 $ 27,769 $ 5,879 $ 1,508 $ 4,371
-------- ------------ ----------- ------------

1999 23,398 5,293 1,261 4,032
-------- ------------ ----------- ------------

2000 19,367 4,351 1,038 3,313
-------- ------------ ----------- ------------

2001 16,054 3,588 861 2,727
-------- ------------ ----------- ------------

2002 13,327 3,033 714 2,319
-------- ------------ ----------- ------------

(8) RETIREMENT AND PROFIT SHARING PLANS

Eligible employees may elect to participate in PennCorp's defined
contribution 401(K) retirement plan. Contributions to the Plan are made pursuant
to salary deferral elections by participants in an amount equal to 1% to 15% of
their annual compensation. In addition, the Company makes matching contributions
in an amount equal to 50% of each participant's salary deferral to a maximum of
3% of annual compensation. The defined contribution plan also provides for a
discretionary employer profit sharing contribution, which is determined annually
by the Board of Directors for the succeeding plan year. Profit sharing
contributions are credited to participant's accounts on the basis of their
respective compensation in accordance with a formula that provides a higher
percentage contribution for compensation in excess of the federal Social
Security wage base. Salary deferral contribution accounts are at all times fully
vested, while matching contribution accounts vest ratably from one to two years
of service, and profit sharing contribution accounts vest ratably from one to
five years of service. All participant accounts are fully vested at death,
disability or attainment of age 65. Payment of vested benefits under the defined
contribution plan may be elected by a participant in a variety of forms of
payment. The Company's funding policy is to contribute annually an amount that
can be deducted for federal income tax purposes. Expenses related to this plan
for the year ended December 31, 1997 and the period from July 24, 1996 to
December 31, 1996, were $207,248 and $78,000, respectively, compared to costs
associated with employee benefit plans of the Company's former parent of
$184,600 for the period from January 1, 1996 to July 23, 1996 and $414,000 for
the year ended December 31, 1995.

(9) STATUTORY ACCOUNTING

Accounting records of the Company are also maintained in accordance with
practices prescribed or permitted by insurance regulatory authorities.
Prescribed statutory accounting principles include a variety of publications of
the National Association of Insurance Commissioners, as well as state laws,
regulations, and general administrative rules. Permitted statutory accounting
practices encompass all accounting practices not so prescribed. The Company's
capital and surplus pursuant to the statutory accounting basis as of December
31, 1997 and 1996, was $105.4 million and $103.1 million, respectively. On a
statutory accounting basis, net gain from operations for the years ended
December 31, 1997, 1996 and 1995 was $14.5 million, $10.1 million and $12.8
million, respectively. Net income on a statutory accounting basis, which
includes realized capital gains and losses, was $13.3 million, $6.8 million and
$10.0 million for the years ended December 31, 1997, 1996 and 1995,
respectively.

<PAGE>
Under the current statutory requirements in Louisiana, the Company has the
capacity to pay dividends of $14.5 million in 1998. The Company paid a cash
dividend of $10.1 million to PLAIC during 1997. During 1996, extraordinary
dividends, with a statutory value of $62.6 million, consisting of real estate,
an investment in a limited partnership and $10 million cash, were distributed to
the Company's former parent immediately prior to the closing of the sale of the
Company. Immediately after the closing, PLAIC contributed $57.3 million cash to
the Company as a replacement for the distributed assets. (See note 2 to Notes
to Consolidated Financial Statements.) As part of its July 1996 approval of
PLAIC's acquisition of the Company, the Louisiana Insurance Commissioner
approved a dividend plan for the Company pursuant to which the Company may pay a
specified amount of dividends for each of the five years following the
acquisition, beginning in 1997, amounting to the lesser of the pro forma
dividend amounts in such plan or the actual earnings of the Company, and
conditioned on the Company's maintaining a risk-based capital of at least 300%
of the Authorized Control Level. No dividends were paid in 1995.

The Company received written approval from the Louisiana Department of
Insurance to invest in first lien residential mortgage loans originated by UC
Lending on a short-term basis without recording the assignment of the mortgage
loans to the Company, which differs from prescribed statutory accounting
practices. Statutory accounting practices prescribed by the Louisiana Department
of Insurance require that investments in mortgage loans be secured by
unrestricted first liens on the underlying property. As of December 31, 1997,
statutory surplus was not affected as a result of this permitted practice.

(10) DISCLOSURES ABOUT FINANCIAL INSTRUMENTS

The carrying value and estimated fair value of the Company's financial
assets and liabilities were as follows:

<TABLE>
<CAPTION>
Purchase basis of accounting
--------------------------------------------------
December 31, 1997 December 31, 1996
------------------------ ------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----------- ----------- ----------- -----------
(Restated)
<S> <C> <C> <C> <C>
(dollars in thousands)
Financial assets:
Investments:
Fixed maturity securities:
Available for sale. . . . . . . $ 1,106,961 $ 1,106,961 $ 1,144,165 $ 1,144,165
Held to maturity. . . . . . . . - - 48,473 50,902
Mortgage loans on real estate . . 227,755 234,927 243,715 243,715
Investment real estate. . . . . . 932 932 - -
Policy loans. . . . . . . . . . . 22,585 22,585 21,536 21,536
Investment in limited partnership 16,026 16,026 5,704 5,704
Short-term investments. . . . . . 22,804 22,804 467 467
Other invested assets . . . . . . 150 150 1,491 1,491
Cash. . . . . . . . . . . . . . . - - 14,487 14,487
Financial liabilities:
Annuity reserves. . . . . . . . . 1,203,549 1,153,765 1,330,100 1,271,346
</TABLE>

The above values do not reflect any premium or discount from offering for
sale at one time the Company's entire holdings of a particular financial
instrument. Fair value estimates are made at a specific point in time based on
relevant market information, if available. Because no market exists for certain
of the Company's financial instruments, fair value estimates for these assets
and liabilities were based on subjective estimates of market conditions and
perceived risks of the financial instruments. Fair value estimates were also
based on judgments regarding future loss and prepayment experience and were
influenced by the Company's historical information.

The following methods and assumptions were used to estimate the fair value
of the Company's financial instruments.

Fixed Maturity and Equity Securities

The estimated fair value for the Company's investment portfolio was
generally determined from quoted market prices for publicly traded securities.
Certain of the securities owned by the Company may trade infrequently or not at
all; therefore, fair value for these securities was determined by management by
evaluating the relationship between quoted market values and carrying value and
assigning a liquidity factor to this segment of the investment portfolio.

Mortgage Loans on Real Estate
The fair value of the Company's loan portfolio was determined by
segregating the portfolio by type of loan and further by its performing and
non-performing components. Performing loans were further segregated based on
the due date of their payments, an analysis of credit risk by category was
performed and a matrix of pricing by category was developed. The fair value of
delinquent loans was estimated by the Company's using estimated recoveries on
defaulted loans.

Investment Real Estate

The fair value of the Company's investment real estate was based upon
independent appraisals of the properties.

Policy Loans

Policy loans are generally settled at the loan amount plus accrued
interest; therefore, the carrying value of these assets is a reasonable estimate
of their fair values.

Other Invested Assets

The fair value of the Company's investment in other invested assets
approximates their carrying value.

Short-term Investments

The carrying amount of short-term investments approximates their fair
values because these assets generally mature in 90 days or less and do not
present any significant credit concerns.

Investment in Limited Partnerships

The fair value of the Company's investment in limited partnerships
approximated their carrying value.

Annuity Reserves

The Company's annuity contracts generally do not have a defined maturity
and are considered as deposits under SFAS No. 97. SFAS No. 107 states that the
fair value to be disclosed for deposit liabilities with no defined maturities is
the amount payable on demand at the reporting date. Accordingly, the Company
has estimated the fair value of its annuity reserves as the cash surrender value
of these contracts.

(11) COMMITMENTS AND CONTINGENCIES

The Company is obligated under operating leases, including office space,
computer equipment and automobiles. Rent expense was $.5 million, $.6 million
and $.7 million in 1997, 1996 and 1995, respectively.

Minimum annual commitments under noncancellable operating leases are as
follows (in thousands of dollars):

<TABLE>
<CAPTION>
<S> <C>
1998 . . . . . . . . . . . . . . . $ 81
1999 . . . . . . . . . . . . . . . 59
2000 . . . . . . . . . . . . . . . 60
2001 . . . . . . . . . . . . . . . 62
2002 and thereafter. . . . . . . . 55
----
Total minimum payments required $317
====
</TABLE>

In connection with the sale of the Company, the Company entered into an
agreement with UC Financial which will provide for the Company's purchase of up
to $300 million (revised to $150 million during 1997), at any one time
outstanding, of first mortgage residential loans originated by UC Financial.
The agreement provides that UC Financial will have the right for a limited time
to repurchase certain loans which are eligible for securitization by UC
Financial. The agreement also has a sublimit of $150 million (revised to $75
million during 1997) for loans that are not eligible for securitization by UC
Financial. No purchases were made in 1997 or 1996.

The Company is subject to various litigation arising during the ordinary
course of business. While the outcome of such litigation cannot be predicted
with certainty, management does not expect the resolution of these matters to
have a material adverse effect on the financial condition or results of
operations of the Company.

(12) QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data is as follows:

<TABLE>
<CAPTION>
Purchase basis of accounting
----------------------------------
Three Months Ended
----------------------------------
Dec 31 Sep 30 Jun 30 Mar 31
------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C>
1997:
Total revenues. . . . . $31,743 $32,033 $30,431 $32,216
Income from operations
before income taxes. . 8,810 5,313 5,418 5,617
Net income. . . . . . . 5,619 3,441 3,392 3,505
</TABLE>

<TABLE>
<CAPTION>
Historical basis Purchase basis
of accounting of accounting
-------------------------------- ----------------
Three Period Period Three Three
Months from from Months Months
Ended Jul 24 to Jul 1 to Ended Ended
Dec 31 Sep 30 July 23 Jun 30 Mar 31
------- ----------- ---------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
1996:
Total revenues . . . . . . . . $31,502 $ 23,820 $ 6,579 $31,239 $32,216
Income (loss) from operations
before income taxes. . . . . 4,947 4,132 (2,996) 2,516 2,661
Net income (loss). . . . . . . 3,096 2,606 (1,940) 1,622 1,730
</TABLE>

(13) SUBSEQUENT EVENT

In February 1998, the Company announced that it is relocating its
operations from Baton Rouge, Louisiana. The operating functions will be assumed
by an affiliate company in Dallas, Texas.

<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARY

SUPPLEMENTARY INSURANCE INFORMATION

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN F COLUMN G COLUMN H
- -------------------------------- ------------ --------------- --------- ------------ ----------- -------------
Deferred
Policy Net Benefits,
Acquisition Future Policy Unearned Premium Investment Claims
Costs Benefits(1) Premiums Revenues(3) Income Losses, Etc.
------------ --------------- --------- ------------ ----------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
PURCHASE BASIS OF ACCOUNTING:
Year ended December 31, 1997 . . $ 13,671 $ 1,312,876 $ 132 $ 5,731 $ 110,735 $ 7,149
Period from July 24 through
December 31, 1996 . . . . . . $ 4,187 $ 1,443,964 $ 275 $ 3,483 $ 49,733 $ 3,836
HISTORICAL BASIS OF ACCOUNTING:
Period from January 1 through
July 23, 1996 . . . . . . . . $ 85,801 $ 1,465,012 $ 1,074 $ 3,732 $ 66,421 $ 5,967
Year ended December 31, 1995 . . $ 90,703 $ 1,531,572 $ 1,793 $ 8,508 $ 125,591 $ 9,930

COLUMN A COLUMN I & J
- -------------------------------- -----------------
Deferred Policy
Acquisition Cost
Amortization
and
Other Operating
Expenses
-----------------
(dollars in thousands)
<S> <C>
PURCHASE BASIS OF ACCOUNTING:
Year ended December 31, 1997 . . $ 10,056
Period from July 24 through
December 31, 1996 . . . . . . $ 4,741
HISTORICAL BASIS OF ACCOUNTING:
Period from January 1 through
July 23, 1996 . . . . . . . . $ 19,452
Year ended December 31, 1995 . . $ 29,485
<FN>
NOTES:
(1) Column C includes accumulated fund values on annuity and interest
sensitive products.
(2) Column E is omitted as amounts are not material and are included with
Column C.
(3) Column F excludes premiums on annuity and interest sensitive products
which are accounted for as deposits.
</TABLE>

<PAGE>
SCHEDULE IV

UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARY

REINSURANCE

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------- ----------- ----------- ----------- ---------- -----------
Percentage
Ceded to Assumed of Amount
Direct Other From Other Net Assumed to
Amount Companies Companies Amount Net Amount
----------- ----------- ----------- ---------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997
Life insurance in force
at end of period. . . . . . . . . . . . . . . . $ 410,606 $ 116,672 $ 732,253 $1,026,187 71.4%
=========== =========== =========== ==========
Premiums
Life insurance. . . . . . . . . . . . . . . . . $ 4,624 $ 1,195 $ 1,927 $ 5,356 36.0
Accident and health insurance . . . . . . . . . 398 23 - 375 -
----------- ----------- ----------- ----------
Total premiums . . . . . . . . . . . . . . $ 5,022 $ 1,218 $ 1,927 $ 5,731 33.6
=========== =========== =========== ==========
Period from July 24, 1996 to December 31, 1996
Life insurance in force
Premiums
Life insurance. . . . . . . . . . . . . . . . . $ 2,496 $ 481 $ 1,214 $ 3,229 37.6
Accident and health insurance . . . . . . . . . 208 (46) - 254 -
----------- ----------- ----------- ----------
Total premiums . . . . . . . . . . . . . . $ 2,704 $ 435 $ 1,214 $ 3,483 34.9
=========== =========== =========== ==========
Period from January 1, 1996 to July 23, 1996
Life insurance in force
at end of period . . . . . . . . . . . . . . . $ 499,292 $ 141,816 $ 992,672 $1,350,148 73.5
=========== =========== =========== ==========
Premiums
Life insurance. . . . . . . . . . . . . . . . . $ 2,719 $ 341 $ 877 $ 3,255 26.9
Accident and health insurance . . . . . . . . . 429 (48) - 477 -
----------- ----------- ----------- ----------
Total premiums . . . . . . . . . . . . . . $ 3,148 $ 293 $ 877 $ 3,732 23.5
=========== =========== =========== ==========
Year ended December 31, 1995
Life insurance in force
at end of period . . . . . . . . . . . . . . . $ 554,131 $ 149,080 $ 992,979 $1,398,030 71.0
=========== =========== =========== ==========
Premiums
Life insurance. . . . . . . . . . . . . . . . . $ 6,016 $ 1,625 $ 2,588 $ 6,979 37.1
Accident and health insurance . . . . . . . . . 1,643 115 1 1,529 -
----------- ----------- ----------- ----------
Total premiums . . . . . . . . . . . . . . $ 7,659 $ 1,740 $ 2,589 $ 8,508 30.4
=========== =========== =========== ==========
</TABLE>

<PAGE>
SCHEDULE V

UNITED LIFE & ANNUITY INSURANCE COMPANY AND SUBSIDIARY

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
COLUMN C COLUMN D
ADDITIONS
COLUMN A COLUMN B DEDUCTIONS(2) COLUMN E(3)
----------- -------------- ------------
Charged
Balance at to Costs Charged Balance at
Beginning and to Other End
of Period Expenses Accounts(1) of Period
----------- ---------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Purchase basis of accounting:
- -----------------------------------
Year ended December 31, 1997
Allowance for loan losses . . . . $ 4,211 $ (12) $ - $ 276 $ 3,923
Allowance for real estate losses. -
Allowance for bond losses . . . . 189 - - 189 -
Unearned loan charges . . . . . . 2,072 - - 503 1,569
----------- ---------- ------------ -------------- ------------
Total . . . . . . . . . $ 6,472 $ (12) $ - $ 968 $ 5,492
=========== ========== ============ ============== ============
Period from July 24, 1996 to
December 31, 1996 (Restated)
Allowance for loan losses . . . . $ 4,211 $ - $ - $ - $ 4,211
Allowance for real estate losses. - - - - -
Allowance for bond losses . . . . 189 - - - 189
Unearned loan charges . . . . . . 2,021 - - (51) 2,072
----------- ---------- ------------ -------------- ------------
Total. . . . . . . . . . $ 6,421 $ - $ - $ (51) $ 6,472
=========== ========== ============ ============== ============
Historical basis of accounting:
- -----------------------------------
Period from January 1, 1996 to
July 23, 1996
Allowance for loan losses . . . . $ 2,117 $ 478 $ - $ 771 $ 1,824
Allowance for real estate losses. 3,987 (1,098) - 2,889 -
Allowance for bond losses . . . . 666 884 - 1,361 189
Unearned loan charges . . . . . . 301 - - 17 284
----------- ---------- ------------ -------------- ------------
Total. . . . . . . . . . $ 7,071 $ 264 $ - $ 5,038 $ 2,297
=========== ========== ============ ============== ============
Year ended December 31, 1995
Allowance for loan losses . . . . $ 1,778 $ 533 $ - $ 194 $ 2,117
Allowance for real estate losses. 5,120 1,505 - 2,638 3,987
Allowance for bond losses . . . . 317 2,013 - 1,664 666
Unearned loan charges . . . . . . 419 - - 118 301
----------- ---------- ------------ -------------- ------------
Total . . . . . . . . . . $ 7,634 $ 4,051 $ - $ 4,614 $ 7,071
=========== ========== ============ ============== ============
<FN>
NOTES:
(1) Represents the approximate amount of unearned loan charges on installment
loans originated during the period.
(2) Represents loans and bonds charged off and loan charges earned during the
period.
(3) All of the above are deducted in the balance sheet from the asset to which
they apply.
</TABLE>

<PAGE>

PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

A. FINANCIAL STATEMENTS

The financial statements of the Separate Account and the Company are
included in Part B hereof.

B. EXHIBITS

1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.*

2. Not Applicable.

3. Form of Principal Underwriters Agreement.*

4. (i) Individual Fixed and Variable Deferred Annuity Contract.*
(ii) Allocated Fixed and Variable Group Annuity Contract.*
(iii) Allocated Fixed and Variable Group Annuity Certificate.*
(iv) Death Benefit Endorsement.*

5. Application Form.*

6. (i) Copy of Articles of Incorporation of the Company.*
(ii) Copy of the Bylaws of the Company.*

7. Not Applicable.

8. Form of Fund Participation Agreements.

9. Opinion and Consent of Counsel.

10. Consents of Independent Auditors.

11. Not Applicable.

12. Not Applicable.

13. Calculation of Performance Information.

14. Not Applicable.

15. Company Organizational Chart.*

27. Not Applicable.

* Incorporated by reference to Post-Effective Amendment No. 2 as
electronically filed on April 30, 1997.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

The following are the Executive Officers and Directors of the Company:

<TABLE>
<CAPTION>
<S> <C>
Name and Principal Position and Offices
Business Address* with Depositor
- -------------------------- ----------------------------------------------

C. Paul Patsis Chief Executive Officer, President and
Director

James Woodruff Lillie, Jr. Secretary

Scott D. Silverman Director

Kitty S. Kennedy Executive Vice President, Chief Actuary,
Chief Administrative Officer and Director

John H. Lancaster Director, Executive Vice President and Chief
Marketing Officer

Michael J. Prager Director

James P. McDermott Director

R. Andrew Davidson, III Treasurer, Senior Vice President (Investments)

Jo Anna Cotaya Senior Vice President, Commercial Real
Estate Group

Francis G. Miller Senior Vice President, Information Services

Donald M. Woodard Senior Vice President and Controller

Joel S. Kaplan Executive Vice President - Financial & Legal
Development
<FN>
* The Principal business address for all officers and directors listed above
is III United Plaza, 8545 United Plaza Blvd., Baton Rouge, Louisiana
70809-2264.
</FN>
</TABLE>

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT

The Company organizational chart was included as Exhibit 15 in Post- Effective
Amendment No. 2 and is incorporated herein by reference.

ITEM 27. NUMBER OF CONTRACT OWNERS

As of March 31, 1998, there were 129 Non-Qualified Contract Owners and 147
Qualified Contract Owners.

ITEM 28. INDEMNIFICATION

The Bylaws (Article VII) of the Company provide, in part, that:

This company may indemnify any person who was or is a party or is threatened to
be made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (including any action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the company, or is or was serving at the request of the
company as a director, officer, employee or agent of another business, foreign
or non-profit corporation, partnership, joint venture or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense or
settlement of such action and no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent, that the court shall determine upon
application that, despite the adjudication of liability that in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity
plus such expenses which the court shall deem proper. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner in which
he reasonably believed to be in or not opposed to the best interest of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Not Applicable.

(b) United Variable Services, Inc. is the principal underwriter for the
Contracts. The following persons are the officers and directors of United
Variable Services, Inc. The principal business address for each officer and
director of United Variable Services, Inc. is III United Plaza, 8545 United
Plaza Blvd., Baton Rouge, LA 70809-2264.

<TABLE>
<CAPTION>
<S> <C> <C>
(b) Name and Principal Positions and Offices
Business Address with Underwriter
-------------------- --------------------------------------

C. Paul Patsis President, Chief Executive Officer and
Director

Theresa T. Cockerham Director

Mary Lynn Leach Director

Joel S. Kaplan Executive Vice President, Financial
and Legal Services; Secretary
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

Donald M. Woodard, Senior Vice President and Controller, whose address is III
United Plaza, 8545 United Plaza Blvd., Baton Rouge, Louisiana 70809-2264,
maintains physical possession of the accounts, books or documents of the
Separate Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.

ITEM 31. MANAGEMENT SERVICES

Not Applicable.

ITEM 32. UNDERTAKINGS

a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.

b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.

c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.

d. United Life & Annuity Insurance Company ("Company") hereby represents
that the fees and charges deducted under the Contracts described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.

REPRESENTATIONS

The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:

1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;

2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;

3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;

4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Baton Rouge,
and State of Louisiana on this 29th day of April, 1998.

<TABLE>
<CAPTION>
<S> <C>
UNITED LIFE & ANNUITY SEPARATE ACCOUNT ONE
-------------------------------------------
Registrant

By: UNITED LIFE & ANNUITY INSURANCE COMPANY
---------------------------------------

By: /S/ C. PAUL PATSIS
---------------------------------------
Mr. C. Paul Patsis
President and Chief Executive Officer

By: UNITED LIFE & ANNUITY INSURANCE COMPANY
---------------------------------------
Depositor

By: /S/ C. PAUL PATSIS
---------------------------------------
Mr. C. Paul Patsis
President and Chief Executive Officer
</TABLE>

As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIGNATURE DATE SIGNATURE DATE

/S/ C. PAUL PATSIS 4/24/98 /S/ KITTY S. KENNEDY 4/16/98
- ------------------------- ------- -------------------- -------
C. Paul Patsis Kitty S. Kennedy
Director, President and Chief Director, Executive Vice
Executive Officer President, Chief Administrative
Officer & Chief Actuary

/S/ JOHN H. LANCASTER 4/24/98 /S/ R. ANDREW DAVIDSON, III 4/16/98
- ------------------------- ------- ---------------------------- -------
John H. Lancaster R. Andrew Davidson, III
Director, Executive Vice President, Treasurer, Chief Investment
& Chief Marketing Officer Officer, Senior Vice President

/S/ SCOTT D. SILVERMAN 4/27/98 /S/ JAMES P. MCDERMOTT 4/27/98
- ------------------------- ------- -------------------------- -------
Scott D. Silverman James P. McDermott
Director Director

/S/ MICHAEL J. PRAGER 4/27/98
- -------------------------- -------
Michael J. Prager
Director
</TABLE>

INDEX TO EXHIBITS

EX-99.B8. Form of Fund Participation Agreements.

EX-99.B9. Opinion and Consent of Counsel.

EX-99.B10. Consents of Independent Auditors.

EX-99.B13. Calculation of Performance Information.

PARTICIPATION AGREEMENT

AMONG

MORGAN STANLEY UNIVERSAL FUNDS, INC.,

MORGAN STANLEY ASSET MANAGEMENT INC.

MILLER ANDERSON & SHERRERD, LLP

AND

UNITED LIFE & ANNUITY INSURANCE COMPANY

DATED AS OF

JANUARY 30, 1998

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I. Purchase of Fund Shares

ARTICLE II Representations and Warranties

ARTICLE III. Prospectuses, Reports to Shareholders
and Proxy Statements, Voting

ARTICLE IV. Sales Material and Information

ARTICLE V Fees and Expenses

ARTICLE VI. Diversification

ARTICLE VII. Potential Conflicts

ARTICLE VIII. Indemnification

ARTICLE IX. Applicable Law

ARTICLE X. Termination

ARTICLE XI. Notices

ARTICLE XII. Miscellaneous

SCHEDULE A Separate Accounts and Contracts

SCHEDULE B Portfolios of Morgan Stanley Universal Funds, Inc.

SCHEDULE C Proxy Voting Procedures

THIS AGREEMENT, made and entered into as of the 30th day of
January, 1998 by and among UNITED LIFE & ANNUITY COMPANY (hereinafter
the "Company"), a Louisiana corporation , on its own behalf and on
behalf of each separate account of the Company set forth on Schedule A
hereto as may be amended from time to time (each such account
hereinafter referred to as the "Account"), and MORGAN STANLEY UNIVERSAL
FUNDS, INC. (hereinafter the "Fund"), a Maryland corporation, and
MORGAN STANLEY ASSET MANAGEMENT INC. and MILLER ANDERSON & SHERRERD,
LLP (hereinafter collectively the "Advisers" and individually the
"Adviser"), a Delaware corporation and a Pennsylvania limited liability
partnership, respectively.

WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans (hereinafter "Qualified Plans"); and

WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Contracts enter into
participation agreements with the Fund and the Advisers (the "Participating
Insurance Companies");

WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, any one or more of which may be made available under this
Agreement, as may be amended from time to time by mutual agreement of the
parties hereto (each such series hereinafter referred to as a "Portfolio"); and

WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 19, 1996 (File No. 812-10118), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (hereinafter the "1940
Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by Variable
Annuity Product separate accounts of both affiliated and unaffiliated life
insurance companies and Qualified Plans (hereinafter the "Shared Funding
Exemptive Order"); and

WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and

WHEREAS, each Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and

WHEREAS, each Adviser manages certain Portfolios of the Fund; and

WHEREAS, Morgan Stanley & Co. Incorporated (the "Underwriter") is
registered as a broker/dealer under the Securities Exchange Act of 1934, as
amended (hereinafter the "1934 Act"), is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD") and serves
as principal underwriter of the shares of the Fund; and

WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and

WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Product; and

WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase, on behalf of each Account, shares
in the Portfolios set forth in Schedule B attached to this Agreement, to fund
certain of the aforesaid Variable Insurance Products and the Underwriter is
authorized to sell such shares to each such Account at net asset value;

NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:

ARTICLE I. PURCHASE OF FUND SHARES

1.1. The Fund agrees to make available for purchase by the Company
shares of the Fund and shall execute orders placed for each Account on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of such order. For purposes of this Section 1.1, the Company shall be
the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 10:00 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.

1.2. The Fund, so long as this Agreement is in effect, agrees to make
its shares available indefinitely for purchase at the applicable net asset value
per share by the Company and its Accounts on those days on which the Fund
calculates its net asset value pursuant to rules of the Securities and Exchange
Commission and the Fund shall use reasonable efforts to calculate such net asset
value on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter
the "Board") may refuse to permit the Fund to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.

1.3. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans. No shares of any Portfolio will be sold to the general public.

1.4. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of such
request for redemption on the next following Business Day.

1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Variable Insurance
Products issued by the Company, under which amounts may be invested in the Fund
(hereinafter the "Contracts"), are listed on Schedule A attached hereto and
incorporated herein by reference, as such Schedule A may be amended from time to
time by mutual written agreement of all of the parties hereto. The Company will
give the Fund and the Adviser 45 days written notice of its intention to make
available in the future, as a funding vehicle under the Contracts, any other
investment company.

1.6. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purposes of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.

1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.

1.8. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.

1.9. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Eastern time) and shall use its best efforts to make such net asset value
per share available by 7:00 p.m.

Eastern time.

ARTICLE II. REPRESENTATIONS AND WARRANTIES

2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Louisiana Statute RS22:1500 and has registered or, prior to any issuance
or sale of the Contracts, will register each Account as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.

2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Maryland and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund.

2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.

2.4. The Company represents that the Contracts are currently treated as
life insurance policies or annuity contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be so
treated in the future.

2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have a board of directors, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.

2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Maryland and the Fund represents that their respective operations are
and shall at all times remain in material compliance with the laws of the State
of Maryland to the extent required to perform this Agreement.

2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.

2.8. Each Adviser represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws.

2.9. The Fund represents and warrants that its directors, officers,
employees, and other individuals/entities dealing with the money and/or
securities of the Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimal coverage as required currently by Rule 17g-(1)
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.

2.10. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount not less $5 million. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.

ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING

3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus and statement of additional
information as the Company may reasonably request. If requested by the Company,
in lieu of providing printed copies the Fund shall provide camera-ready film or
computer diskettes containing the Fund's prospectus and statement of additional
information, and such other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the prospectus and/or
statement of additional information for the Fund is amended during the year) to
have the prospectus for the Contracts and the Fund's prospectus printed together
in one document, and to have the statement of additional information for the
Fund and the statement of additional information for the Contracts printed
together in one document. Alternatively, the Company may print the Fund's
prospectus and/or its statement of additional information in combination with
other fund companies' prospectuses and statements of additional information.

3.2. Except as provided in this Section 3.2., all expenses of printing
and distributing Fund prospectuses and statements of additional information
shall be the expense of the Company. For prospectuses and statements of
additional information provided by the Company to its existing owners of
Contracts who currently own shares of one or more of the Fund's Portfolios, in
order to update disclosure as required by the 1933 Act and/or the 1940 Act, the
cost of printing shall be borne by the Fund. If the Company chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Fund's prospectus, the Fund will reimburse the Company in an amount equal to
the product of x and y where x is the number of such prospectuses distributed to
owners of the Contracts who currently own shares of one or more of the Fund's
Portfolios, and y is the Fund's per unit cost of typesetting and printing the
Fund's prospectus. The same procedures shall be followed with respect to the
Fund's statement of additional information. The Company agrees to provide the
Fund or its designee with such information as may be reasonably requested by the
Fund to assure that the Fund's expenses do not include the cost of printing any
prospectuses or statements of additional information other than those actually
distributed to existing owners of the Contracts.

3.3. The Fund's statement of additional information shall be obtainable
from the Fund, the Company or such other person as the Fund may designate, as
agreed upon by the parties.

3.4. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and statements of additional information, which are covered in
section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.

3.5. If and to the extent required by law the Company shall:

(i) solicit voting instructions from Contract owners;

(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and

(iii) vote Fund shares for which no instructions
have been received in the same proportion as
Fund shares of such Portfolio for which
instructions have been received,

so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. The Fund and the Company shall follow the procedures, and shall have the
corresponding responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule C attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C, which standards will also be provided to the other Participating
Insurance Companies.

3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.

3.7. The Fund shall use reasonable efforts to provide Fund
prospectuses, reports to shareholders, proxy materials and other Fund
communications (or camera-ready equivalents) to the Company sufficiently in
advance of the Company's mailing dates to enable the Company to complete, at
reasonable cost, the printing, assembling and/or distribution of the
communications in accordance with applicable laws and regulations.

ARTICLE IV. SALES MATERIAL AND INFORMATION

4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser(s) is named, at least ten Business
Days prior to its use. No such material shall be used if the Fund or its
designee reasonably objects to such use within ten Business Days after receipt
of such material.

4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.

4.3. The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its separate account(s)
is named at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
Business Days after receipt of such material.

4.4. The Fund and the Advisers shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.

4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, which are relevant
to the Company or the Contracts.

4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the investment
in the Fund under the Contracts.

4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials.

ARTICLE V. FEES AND EXPENSES

5.1. The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing.

5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.

5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.

ARTICLE VI. DIVERSIFICATION

6.1. The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance within the grace period afforded by Regulation
817-5.

ARTICLE VII. POTENTIAL CONFLICTS

7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by Variable Insurance Product owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.

7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.

7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.

7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.

7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.

7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.

7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.

ARTICLE VIII. INDEMNIFICATION

8.1. Indemnification By The Company

8.1(a) The Company agrees to indemnify and hold harmless the Fund and
each member of the Board and officers, and each Adviser and each director and
officer of each Adviser, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:

(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the registration statement or
prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or

(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Fund or an Adviser) or unlawful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund shares; or

(iii)arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Fund by
or on behalf of the Company; or

(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or

(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.

8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.

8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.

8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.

8.2. Indemnification by the Advisers

8.2(a). Each Adviser agrees, with respect to each Portfolio that it
manages, to indemnify and hold harmless the Company and each of its directors
and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
and individually, "Indemnified Party," for purposes of this Section 8.2) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of shares of the Portfolio
that it manages or the Contracts and:

(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or on
behalf of the Company for use in the registration statement
or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Portfolio shares; or

(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by the Fund or persons under its
control and other than statements or representations
authorized by the Company) or unlawful conduct of the Fund,
Adviser(s) or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or
Portfolio shares; or

(iii)arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund; or

(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or

(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser; as limited by and
in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.

8.2(b). An Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.

8.2(c). An Adviser shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Adviser in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Adviser of any such claim shall not
relieve the Adviser from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Adviser will be entitled to participate, at its own
expense, in the defense thereof. The Adviser also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Adviser to such party of the Adviser's election to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Adviser will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.

8.2(d). The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.

8.3. Indemnification by the Fund

8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Fund) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:

(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or

(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;

8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.

8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.

8.3(d). The Company agrees promptly to notify the Fund of the commencement
of any litigation or proceedings against it or any of its respective officers or
directors in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of either Account, or the sale or
acquisition of shares of the Fund.

ARTICLE IX. APPLICABLE LAW

9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.

9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.

ARTICLE X. TERMINATION

10.1. This Agreement shall continue in full force and effect until the
first to occur of:

(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or

(b) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio based upon the Company's determination
that shares of such Portfolio is not reasonably available to meet the
requirements of the Contracts; or

(c) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event any of the Portfolio's shares
are not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by the Company; or

(d) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that such Portfolio ceases to
qualify as a Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if the Company reasonably believes
that the Fund may fail to so qualify; or

(e) termination by the Company by written notice to the Fund and the
Adviser with respect to any Portfolio in the event that such Portfolio falls to
meet the diversification requirements specified in Article VI hereof; or

(f) termination by either the Fund by written notice to the Company if the
Fund shall determine, in its sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a material adverse change
in its business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity, or

(g) termination by the Company by written notice to the Fund and the
Adviser, if the Company shall determine, in its sole judgment exercised in good
faith, that either the Fund or the Adviser has suffered a material adverse
change in its business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse publicity; or

(h) termination by the Fund or the Adviser by written notice to the
Company, if the Company gives the Fund and the Adviser the written notice
specified in Section 1.5 hereof and at the time such notice was given there was
no notice of termination outstanding under any other provision of this
Agreement; provided, however any termination under this Section 10.1(h) shall be
effective forty five (45) days after the notice specified in Section 1.5 was
given.

10.2. Notwithstanding any termination of this Agreement, the Fund shall at
the option of the Company, continue to make available additional shares of the
Fund pursuant to the terms and conditions of this Agreement, for all Contracts
in effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing, Contracts"). Specifically, without limitation, the
owners of the Existing Contracts shall be permitted to direct reallocation of
investments in the Fund, redemption of investments in the Fund and/or investment
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.

10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the Securities and Exchange Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish
to the Fund the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund) to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the Fund 90 days
prior written notice of its intention to do so.

ARTICLE XI. NOTICES

Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.

If to the Fund:

Morgan Stanley Universal Funds, Inc.

c/o Morgan Stanley Asset Management Inc.

1221 Avenue of the Americas
New York, New York 10020
Attention: Harold J. Schaaff, Jr., Esq.

If to Adviser:

Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: Harold J. Schaaff, Jr., Esq.

If to Adviser:

Miller Anderson & Sherrerd, LLP

One Tower Bridge

West Conshohocken, Pennsylvania 19428

Attention: Lorraine Truten

If to the Company:

United Life & Annuity Insurance Company
8545 United Plaza Blvd.
Baton Rouge, Louisiana 70809-2264
Attention: Kitty Kennedy, Executive Vice President

ARTICLE XII. MISCELLANEOUS

12.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.

12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.

12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.

12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.

12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.

12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.

12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations
at law or in equity, which the parties hereto are entitled to under state and
federal laws.

12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that an Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement.

12. 9 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:

(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical and in any event within 90
days after the end of each fiscal year;

(b) the Company's quarterly statements (statutory) (and GAAP, if any), as
soon as practical and in any event within 45 days after the end of each
quarterly period:

(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical after
the delivery thereof to stockholders;

(d) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any state
insurance regulator, as soon as practical after the filing thereof;

(e) any other report submitted to the Company by independent accountants in
connection with any annual, interim or special audit made by them of the books
of the Company, as soon as practical after the receipt thereof.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.

UNITED LIFE & ANNUITY INSURANCE COMPANY

By: ______________________________

NAME:
TITLE:

MORGAN STANLEY UNIVERSAL FUNDS, INC.

By: ______________________________

NAME:
TITLE:

MORGAN STANLEY ASSET MANAGEMENT INC.

By: ______________________________

NAME:
TITLE:

MILLER ANDERSON & SHERRERD, LLP

By: ______________________________

NAME:
TITLE:

SCHEDULE A

SEPARATE ACCOUNTS AND CONTRACTS
<S> <C>
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF CONTRACT
FUNDED BY SEPARATE
DATE ESTABLISHED BY BOARD OF DIRECTORS ACCOUNT

United Life and Aunniuty UCV-AN-6000 Master Contract
Separate Account I UCV-AN-6001 Master Contract
Established November 2, 1994 UCV-AN-6002 SpectraDirect Group

UCV-AN-6003 SpectraSelect Group
UCV-AN-6004 SpectraDirect Individual
UCV-AN-6005 SpectraSelect Individual
ULV-AN-6008 IntegraPreferred Individual
ULV-AN-6009 IntegraGold Individual
</TABLE>

A-1

SCHEDULE B

PORTFOLIOS OF MORGAN STANLEY

UNIVERSAL FUNDS, INC.

EQUITY GROWTH

VALUE

GLOBAL EQUITY
HIGH YIELD

EMERGING MARKETS DEBT

B-1

SCHEDULE C

PROXY VOTING PROCEDURES

The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.

. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates.

This will be done verbally approximately two months before meeting.

. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.

Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund , as soon as possible, but
no later than two weeks after the Record Date.

. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Fund will provide the last
Annual Report to the Company pursuant to the terms of Section 3.3 of
the Agreement to which this Schedule relates.

. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:

C-1

. name (legal name as found on account registration)

. address
. fund or account number
. coding to state number of units

. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).

(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)

. During this time, the Fund will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers by the Company
will include:

. Voting Instruction Card(s)
. One proxy notice and statement (one document)

. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent

. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that

requests Customers to vote as quickly as possible and that
their vote is important. One copy will be supplied by the
Fund.)

. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund.

. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.

. Package mailed by the Company.

* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including,) the meeting, counting backwards.

. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.

C-2

Note: Postmarks are not generally needed. A need for postmark information would
be due to an insurance company's internal procedure and has not been required by
the Fund in the past.

Signatures on Card checked against legal name on account registration which was
printed on the Card. Note: For Example, if the account registration is under
"John A. Smith, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.

If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a new
Card and return envelope. The mutilated or illegible Card is disregarded and
considered to be not received for purposes of vote tabulation. Any Cards that
have been "kicked out" (e.g. mutilated, illegible) of the procedure are "hand
verified," i.e., examined as to why they did not complete the system. Any
questions on those Cards are usually remedied individually.

There are various control procedures used to ensure proper tabulation of votes
and accuracy of that tabulation. The most prevalent is to sort the Cards as they
first arrive into categories depending upon their vote; an estimate of how the
vote is progressing may then be calculated. If the initial estimates and the
actual vote do not coincide, then an internal audit of that vote should occur.
This may entail a recount.

The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated in
terms of a percentage and the number of shares.) The

Fund must review and approve tabulation format.

Final tabulation in shares is verbally given by the Company to the Fund on the
morning of the meeting not later than 10:00 a.m. Eastern time. The Fund may
request an earlier deadline if reasonable and if required to calculate the vote
in time for the meeting.

A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. The Fund will
provide a standard form for each Certification.

C-3

The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise necessary
for legal, regulatory, or accounting purposes, the Fund will be permitted
reasonable access to such Cards.

All approvals and "signing-off' may be done orally, but must always be followed
up in writing.

PARTICIPATION AGREEMENT

BY AND AMONG

AIM VARIABLE INSURANCE FUNDS, INC.,

UNITED LIFE & ANNUITY INSURANCE COMPANY,

ON BEHALF OF ITSELF AND

ITS SEPARATE ACCOUNTS,

AND

UNITED VARIABLE SERVICES, INC.

<TABLE>
<CAPTION>
TABLE OF CONTENTS

DESCRIPTION PAGE
<S> <C>
Section 1. Available Funds.......................................................................................2
1.1 Availability....................................................................................2
1.2 Addition, Deletion or Modification of Funds.....................................................2
1.3 No Sales to the General Public..................................................................2

Section 2. Processing Transactions...............................................................................2
2.1 Timely Pricing and Orders.......................................................................2
2.2 Timely Payments.................................................................................3
2.3 Applicable Price................................................................................3
2.4 Dividends and Distributions.....................................................................4
2.5 Book Entry......................................................................................4

Section 3. Costs and Expenses....................................................................................4
3.1 General.........................................................................................4
3.2 Registration....................................................................................4
3.3 Other (Non-Sales-Related).......................................................................5
3.4 Other (Sales-Related)...........................................................................5
3.5 Parties To Cooperate............................................................................5

Section 4. Legal Compliance......................................................................................5
4.1 Tax Laws........................................................................................5
4.2 Insurance and Certain Other Laws................................................................8
4.3 Securities Laws.................................................................................8
4.4 Notice of Certain Proceedings and Other Circumstances...........................................9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF......................................10
4.6 AVIF To Provide Documents; Information About LIFE COMPANY......................................11

Section 5. Mixed and Shared Funding.............................................................................12
5.1 General........................................................................................12
5.2 Disinterested Directors........................................................................13
5.3 Monitoring for Material Irreconcilable Conflicts...............................................13
5.4 Conflict Remedies..............................................................................14
5.5 Notice to LIFE COMPANY.........................................................................15
5.6 Information Requested by Board of Directors....................................................15
5.7 Compliance with SEC Rules......................................................................15
5.8 Other Requirements.............................................................................16

Section 6. Termination..........................................................................................16
6.1 Events of Termination..........................................................................16
6.2 Notice Requirement for Termination.............................................................17
6.3 Funds To Remain Available......................................................................17
6.4 Survival of Warranties and Indemnifications....................................................18
6.5 Continuance of Agreement for Certain Purposes..................................................18

Section 7. Parties To Cooperate Respecting Termination..........................................................18

Section 8. Assignment...........................................................................................18

Section 9. Notices..............................................................................................18

Section 10. Voting Procedures...................................................................................19

Section 11. Foreign Tax Credits.................................................................................20

Section 12. Indemnification.....................................................................................20
12.1 Of AVIF by LIFE COMPANY and UNDERWRITER........................................................20
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF........................................................22
12.3 Effect of Notice...............................................................................24
12.4 Successors.....................................................................................25

Section 13. Applicable Law......................................................................................25

Section 14. Execution in Counterparts...........................................................................25

Section 15. Severability........................................................................................25

Section 16. Rights Cumulative...................................................................................25

Section 17. Headings............................................................................................25

Section 18. Confidentiality.....................................................................................26

Section 19. Trademarks and Fund Names...........................................................................26

Section 20. Parties to Cooperate................................................................................28
</TABLE>

PARTICIPATION AGREEMENT

THIS AGREEMENT, made and entered into as of the ____ day of _________,
1998 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); United Life & Annuity Insurance Company, a Louisiana life
insurance company (ALIFE COMPANY@), on behalf of itself and each of its
segregated asset accounts listed in Schedule A hereto, as the parties hereto may
amend from time to time (each, an "Account," and collectively, the "Accounts");
and United Variable Services, Inc., an affiliate of LIFE COMPANY and the
principal underwriter of the Contracts ("UNDERWRITER") (collectively, the
AParties@).

WITNESSETH THAT:

WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, AVIF currently consists of nine separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and

WHEREAS, AVIF will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and

WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts (hereinafter collectively, the "Contracts"), if required by applicable
law, will be registered under the 1933 Act; and

WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts,
each of which may be divided into two or more subaccounts ("Subaccounts";
reference herein to an "Account" includes reference to each Subaccount thereof
to the extent the context requires); and

WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each
of which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Contracts will be registered as securities under the
1933 Act (or exempt therefrom); and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Contracts; and

WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");

NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:

SECTION 1. AVAILABLE FUNDS

1.1 .....AVAILABILITY.

AVIF will make Shares of each Fund available to LIFE COMPANY for
purchase and redemption at net asset value and with no sales charges, subject to
the terms and conditions of this Agreement. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.

1.2 .....ADDITION, DELETION OR MODIFICATION OF FUNDS.

The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.

1.3......NO SALES TO THE GENERAL PUBLIC.

AVIF represents and warrants that no Shares of any Fund have been or
will be sold to the general public.

SECTION 2. PROCESSING TRANSACTIONS

2.1......TIMELY PRICING AND ORDERS.

(a) .....AVIF or its designated agent will use its best efforts to
provide LIFE COMPANY with the net asset value per Share for each Fund by 5:30
p.m. Central Time on each Business Day. As used herein, "Business Day" shall
mean any day on which (i) the New York Stock Exchange is open for regular
trading, (ii) AVIF calculates the Fund's net asset value, and (iii) LIFE COMPANY
is open for business.

(b) .....LIFE COMPANY will use the data provided by AVIF each Business
Day pursuant to paragraph (a) immediately above to calculate Account unit values
and to process transactions that receive that same Business Day's Account unit
values. LIFE COMPANY will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with AVIF by
9:00 a.m. Central Time the following Business Day; provided, however, that AVIF
shall provide additional time to LIFE COMPANY in the event that AVIF is unable
to meet the 5:30 p.m. time stated in paragraph (a) immediately above. Such
additional time shall be equal to the additional time that AVIF takes to make
the net asset values available to LIFE COMPANY.

(c)......With respect to payment of the purchase price by LIFE COMPANY
and of redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below.

(d) .....If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE COMPANY shall be entitled
to an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation or
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to LIFE COMPANY.

2.2......TIMELY PAYMENTS.

LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.

2.3......APPLICABLE PRICE.

(a)......Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, AContract transactions@) and that LIFE COMPANY receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), LIFE COMPANY shall be the designated agent of
AVIF for receipt of orders relating to Contract transactions on each Business
Day and receipt by such designated agent shall constitute receipt by AVIF;
provided that AVIF receives notice of such orders by 9:00 a.m. Central Time on
the next following Business Day or such later time as computed in accordance
with Section 2.1(b) hereof.

(b) All other Share purchases and redemptions by LIFE COMPANY will
be effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.

2.4......DIVIDENDS AND DISTRIBUTIONS.

AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Fund. LIFE
COMPANY hereby elects to reinvest all dividends and capital gains distributions
in additional Shares of the corresponding Fund at the ex-dividend date net asset
values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by
the Parties that the ex-dividend date and the payment date with respect to any
dividend or distribution will be the same Business Day. LIFE COMPANY reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.

2.5......BOOK ENTRY.

Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.

SECTION 3. COSTS AND EXPENSES

3.1......GENERAL.

Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.

3.2......REGISTRATION.

(a)......AVIF will bear the cost of its registering as a management
investment company under the 1940 Act and registering its Shares under the 1933
Act, and keeping such registrations current and effective; including, without
limitation, the preparation of and filing with the SEC of Forms N-SAR and Rule
24f-2 Notices with respect to AVIF and its Shares and payment of all applicable
registration or filing fees with respect to any of the foregoing.

(b)......LIFE COMPANY will bear the cost of registering, to the extent
required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Contracts under the 1933 Act and keeping
such registrations current and effective; including, without limitation, the
preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment of all applicable
registration or filing fees with respect to any of the foregoing.

3.3......OTHER (NON-SALES-RELATED).

(a)......AVIF will bear, or arrange for others to bear, the costs of
preparing, filing with the SEC and setting for printing AVIF's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF
proxy material and other shareholder communications.

(b) .....LIFE COMPANY will bear the costs of preparing, filing with the
SEC and setting for printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), any periodic reports to Contract owners, annuitants,
insureds or participants (as appropriate) under the Contracts (collectively,
"Participants"), voting instruction solicitation material, and other Participant
communications.

(c)......LIFE COMPANY will print in quantity and deliver to existing
Participants the documents described in Section 3.3(b) above and the prospectus
provided by AVIF in camera ready or computer diskette form. AVIF will print the
AVIF statement of additional information, proxy materials relating to AVIF and
periodic reports of AVIF.

3.4......OTHER (SALES-RELATED).

LIFE COMPANY will bear the expenses of distribution. These expenses
would include by way of illustration, but are not limited to, the costs of
distributing to Participants the following documents, whether they relate to the
Account or AVIF: prospectuses, statements of additional information, proxy
materials and periodic reports. These costs would also include the costs of
preparing, printing, and distributing sales literature and advertising relating
to the Funds, as well as filing such materials with, and obtaining approval
from, the SEC, the NASD, any state insurance regulatory authority, and any other
appropriate regulatory authority, to the extent required.

3.5......PARTIES TO COOPERATE.

Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.

SECTION 4. LEGAL COMPLIANCE

4.1......TAX LAWS.

(a)......AVIF represents and warrants that each Fund is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will use its best efforts to qualify and to maintain qualification of each Fund
as a RIC. AVIF will notify LIFE COMPANY immediately upon having a reasonable
basis for believing that a Fund has ceased to so qualify or that it might not so
qualify in the future.

(b)......AVIF represents that it will use its best efforts to comply
and to maintain each Fund's compliance with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817-5(b) of the regulations
under the Code. AVIF will notify LIFE COMPANY immediately upon having a
reasonable basis for believing that a Fund has ceased to so comply or that a
Fund might not so comply in the future. In the event of a breach of this Section
4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the
Fund so as to achieve compliance within the grace period afforded by Section
1.817-5 of the regulations under the Code.

(c) ....LIFE COMPANY agrees that if the Internal Revenue Service
("IRS") asserts in writing in connection with any governmental audit or review
of LIFE COMPANY or, to LIFE COMPANY=s knowledge, of any Participant, that any
Fund has failed to comply with the diversification requirements of Section
817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that
could give rise to any claim against AVIF or its affiliates as a result of such
a failure or alleged failure:

(i) LIFE COMPANY shall promptly notify AVIF of such
assertion or potential claim (subject to the
Confidentiality provisions of Section 18 as to any
Participant);

(ii) LIFE COMPANY shall consult with AVIF as to how to
minimize any liability that may arise as a result of
such failure or alleged failure;

(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;

(iv) LIFE COMPANY shall permit AVIF, its affiliates and
their legal and accounting advisors to participate in
any conferences, settlement discussions or other
administrative or judicial proceeding or contests
(including judicial appeals thereof) with the IRS,
any Participant or any other claimant regarding any
claims that could give rise to liability to AVIF or
its affiliates as a result of such a failure or
alleged failure; provided, however, that LIFE COMPANY
will retain control of the conduct of such
conferences discussions, proceedings, contests or
appeals;

(v) any written materials to be submitted by LIFE COMPANY
to the IRS, any Participant or any other claimant in
connection with any of the foregoing proceedings or
contests (including, without limitation, any such
materials to be submitted to the IRS pursuant to
Treasury Regulations Section 1.817-5(a)(2)), (a) shall
be provided by LIFE COMPANY to AVIF (together with any
supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten
(10) business days or such shorter period to which the
Parties hereto agree prior to the day on which such
proposed materials are to be submitted, and (b) shall
not be submitted by LIFE COMPANY to any such person
without the express written consent of AVIF which shall
not be unreasonably withheld;

(vi) LIFE COMPANY shall provide AVIF or its affiliates and
their accounting and legal advisors with such
cooperation as AVIF shall reasonably request
(including, without limitation, by permitting AVIF
and its accounting and legal advisors to review the
relevant books and records of LIFE COMPANY) in order
to facilitate review by AVIF or its advisors of any
written submissions provided to it pursuant to the
preceding clause or its assessment of the validity or
amount of any claim against its arising from such a
failure or alleged failure;

(vii)LIFE COMPANY shall not with respect to any claim of
the IRS or any Participant that would give rise to a
claim against AVIF or its affiliates (a) compromise or
settle any claim, (b) accept any adjustment on audit,
or (c) forego any allowable administrative or judicial
appeals, without the express written consent of AVIF or
its affiliates, which shall not be unreasonably
withheld, provided that LIFE COMPANY shall not be
required, after exhausting all administrative
penalties, to appeal any adverse judicial decision
unless AVIF or its affiliates shall have provided an
opinion of independent counsel to the effect that a
reasonable basis exists for taking such appeal; and
provided further that the costs of any such appeal
shall be borne equally by the Parties hereto; and

(viii) AVIF and its affiliates shall have no liability as a
result of such failure or alleged failure if LIFE
COMPANY fails to comply with any of the foregoing
clauses (i) through (vii), and such failure could be
shown to have materially contributed to the
liability.

Should AVIF or any of its affiliates refuse to give its written consent
to any compromise or settlement of any claim or liability hereunder, LIFE
COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the
name of LIFE COMPANY in, and to control the conduct of, such conferences,
discussions, proceedings, contests or appeals and all administrative or judicial
appeals thereof, and in that event AVIF or its affiliates shall bear the fees
and expenses associated with the conduct of the proceedings that it is so
authorized to control; provided, that in no event shall LIFE COMPANY have any
liability resulting from AVIF's refusal to accept the proposed settlement or
compromise with respect to any failure caused by AVIF. As used in this
Agreement, the term "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.

(d)......LIFE COMPANY represents and warrants that the Contracts
currently are and will be treated as annuity contracts or life insurance
contracts under applicable provisions of the Code and that it will use its best
efforts to maintain such treatment; LIFE COMPANY will notify AVIF immediately
upon having a reasonable basis for believing that any of the Contracts have
ceased to be so treated or that they might not be so treated in the future.

(e)......LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. LIFE COMPANY will use its best efforts to continue to
meet such definitional requirements, and it will notify AVIF immediately upon
having a reasonable basis for believing that such requirements have ceased to be
met or that they might not be met in the future.

4.2......INSURANCE AND CERTAIN OTHER LAWS.

(a)......AVIF will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by LIFE COMPANY, including, the furnishing of information not otherwise
available to LIFE COMPANY which is required by state insurance law to enable
LIFE COMPANY to obtain the authority needed to issue the Contracts in any
applicable state.

(b)......LIFE COMPANY represents and warrants that (i) it is an
insurance company duly organized, validly existing and in good standing under
the laws of the State of Louisiana and has full corporate power, authority and
legal right to execute, deliver and perform its duties and comply with its
obligations under this Agreement, (ii) it has legally and validly established
and maintains each Account as a segregated asset account under Lousiana law and
the regulations thereunder, and (iii) the Contracts comply in all material
respects with all other applicable federal and state laws and regulations.

(c)......AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.

4.3......SECURITIES LAWS.

(a)......LIFE COMPANY represents and warrants that (i) interests in
each Account pursuant to the Contracts will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Contracts will be duly authorized
for issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Louisiana law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Contracts, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.

(b)......AVIF represents and warrants that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF=s Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.

(c)......AVIF will at its expense register and qualify its Shares for
sale in accordance with the laws of any state or other jurisdiction if and to
the extent reasonably deemed advisable by AVIF.

(d)......AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
AVIF undertakes to have its Board of Directors, a majority of whom are not
Ainterested@ persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.

(e)......AVIF represents and warrants that all of its trustees,
officers, employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund in an amount not less than the minimal coverage as required currently
by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.

4.4......NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.

(a)......AVIF will immediately notify LIFE COMPANY of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to AVIF's registration statement under the 1933
Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of Shares
of AVIF, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of AVIF's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by LIFE COMPANY. AVIF
will make every reasonable effort to prevent the issuance, with respect to any
Fund, of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.

(b)......LIFE COMPANY will immediately notify AVIF of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to each Account's registration statement under
the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any
request by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. LIFE COMPANY will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.

4.5......LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.

(a)......LIFE COMPANY will provide to AVIF or its designated agent at
least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.

(b) .....LIFE COMPANY will provide to AVIF or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named, at least
five (5) Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates AIM as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to LIFE COMPANY in the manner required by
Section 9 hereof.

(c)......Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
AVIF or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.

(d) ....LIFE COMPANY shall adopt and implement procedures reasonably
designed to ensure that information concerning AVIF and its affiliates that is
intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither AVIF nor any of its affiliates shall be
liable for any losses, damages or expenses relating to the improper use of such
broker only materials.

(e)......For the purposes of this Section 4.5, the phrase Asales
literature or other promotional material@ includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media,
(e.g., on-line networks such as the Internet or other electronic messages),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.

4.6......AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.

(a) .....AVIF will provide to LIFE COMPANY at least one (1) complete
copy of all SEC registration statements, AVIF Prospectuses, reports, any
preliminary and final proxy material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to AVIF
or the Shares of a Fund, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.

(b)......AVIF will provide to LIFE COMPANY camera ready or computer
diskette copies of all AVIF prospectuses and printed copies, in an amount
specified by LIFE COMPANY, of AVIF statements of additional information, proxy
materials, periodic reports to shareholders and other materials required by law
to be sent to Participants who have allocated any Contract value to a Fund. AVIF
will provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE
COMPANY, as the case may be, to print and distribute such materials within the
time required by law to be furnished to Participants.

(c)......AVIF will provide to LIFE COMPANY or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which LIFE COMPANY, or any of its respective affiliates
is named, or that refers to the Contracts, at least five (5) Business Days prior
to its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if LIFE COMPANY or its designated
agent objects to such use within five (5) Business Days after receipt of such
material or such shorter period as the Parties hereto may, from time to time,
agree upon. LIFE COMPANY shall receive all such sales literature until such time
as it appoints a designated agent by giving notice to AVIF in the manner
required by Section 9 hereof.

(d)......Neither AVIF nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
LIFE COMPANY, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Contracts, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by LIFE COMPANY for distribution; or (iii) in sales literature or
other promotional material approved by LIFE COMPANY or its affiliates, except
with the express written permission of LIFE COMPANY.

(e) ....AVIF shall cause its principal underwriter to adopt and
implement procedures reasonably designed to ensure that information concerning
LIFE COMPANY, and its respective affiliates that is intended for use only by
brokers or agents selling the Contracts (i.e., information that is not intended
for distribution to Participants) ("broker only materials") is so used, and
neither LIFE COMPANY, nor any of its respective affiliates shall be liable for
any losses, damages or expenses relating to the improper use of such broker only
materials.

(f) ....For purposes of this Section 4.6, the phrase Asales literature
or other promotional material@ includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.

SECTION 5. MIXED AND SHARED FUNDING

5.1......GENERAL.

The SEC has granted an order to AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with LIFE
COMPANY, and trustees of qualified pension and retirement plans (collectively,
"Mixed and Shared Funding"). The Parties recognize that the SEC has imposed
terms and conditions for such orders that are substantially identical to many of
the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies LIFE
COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may
be appropriate to include in the prospectus pursuant to which a Contract is
offered disclosure regarding the potential risks of Mixed and Shared Funding.

5.2......DISINTERESTED DIRECTORS.

AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board;(b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.

5.3......MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.

AVIF agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). LIFE COMPANY agrees to inform the Board of Directors of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:

(a) ....an action by any state insurance or other regulatory
authority;

(b) ....a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;

(d) ....the manner in which the investments of any Fund are being managed;

(e) ....a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;

(f) ....a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or

(g) .....a decision by a Participating Plan to disregard the voting
instructions of Plan participants.

Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist
the Board of Directors in carrying out its responsibilities by providing the
Board of Directors with all information reasonably necessary for the Board of
Directors to consider any issue raised, including information as to a decision
by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY=s
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Participants.

5.4......CONFLICT REMEDIES.

(a)......It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of the Disinterested Directors
that a material irreconcilable conflict exists, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:

(i) withdrawing the assets allocable to some or all of
the Accounts from AVIF or any Fund and reinvesting
such assets in a different investment medium,
including another Fund of AVIF, or submitting the
question whether such segregation should be
implemented to a vote of all affected Participants
and, as appropriate, segregating the assets of any
particular group (e.g., annuity Participants, life
insurance Participants or all Participants) that
votes in favor of such segregation, or offering to
the affected Participants the option of making such a
change; and

(ii) establishing a new registered investment company of
the type defined as a "management company" in Section
4(3) of the 1940 Act or a new separate account that
is operated as a management company.

(b)......If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within six (6) months
after AVIF gives notice to LIFE COMPANY that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by LIFE COMPANY for the purchase and redemption of Shares of
AVIF.

(c)......If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to LIFE COMPANY
conflicts with the majority of other state regulators, then LIFE COMPANY will
withdraw each Account's investment in AVIF within six (6) months after AVIF's
Board of Directors informs LIFE COMPANY that it has determined that such
decision has created a material irreconcilable conflict, and until such
withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY
for the purchase and redemption of Shares of AVIF. No charge or penalty will be
imposed as a result of such withdrawal.

(d)......LIFE COMPANY agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.

(e)......For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.

5.5......NOTICE TO LIFE COMPANY.

AVIF will promptly make known in writing to LIFE COMPANY the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.

5.6......INFORMATION REQUESTED BY BOARD OF DIRECTORS.

LIFE COMPANY and AVIF (or its investment adviser) will at least
annually submit to the Board of Directors of AVIF such reports, materials or
data as the Board of Directors may reasonably request so that the Board of
Directors may fully carry out the obligations imposed upon it by the provisions
hereof or any exemptive order granted by the SEC to permit Mixed and Shared
Funding, and said reports, materials and data will be submitted at any
reasonable time deemed appropriate by the Board of Directors. All reports
received by the Board of Directors of potential or existing conflicts, and all
Board of Directors actions with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating Plans of
a conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.

5.7......COMPLIANCE WITH SEC RULES.

If, at any time during which AVIF is serving as an investment medium
for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.

5.8......OTHER REQUIREMENTS.

AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.

SECTION 6. TERMINATION

6.1......EVENTS OF TERMINATION.

Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:

(a)......at the option of any party, with or without cause with respect
to the Fund, upon six (6) months advance written notice to the other parties,
or, if later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or

(b)......at the option of AVIF upon institution of formal proceedings
against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding LIFE COMPANY's obligations
under this Agreement or related to the sale of the Contracts, the operation of
each Account, or the purchase of Shares, if, in each case, AVIF reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or

(c)......at the option of LIFE COMPANY upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body regarding AVIF's obligations under this Agreement or related to the
operation or management of AVIF or the purchase of AVIF Shares, if, in each
case, LIFE COMPANY reasonably determines that such proceedings, or the facts on
which such proceedings would be based, have a material likelihood of imposing
material adverse consequences on LIFE COMPANY, or the Subaccount corresponding
to the Fund with respect to which the Agreement is to be terminated; or

(d)......at the option of any Party in the event that (i) the Fund's
Shares are not registered and, in all material respects, issued and sold in
accordance with any applicable federal or state law, or (ii) such law precludes
the use of such Shares as an underlying investment medium of the Contracts
issued or to be issued by LIFE COMPANY; or

(e)......upon termination of the corresponding Subaccount's investment in
the Fund pursuant to Section 5 hereof; or

(f)......at the option of LIFE COMPANY if the Fund ceases to qualify as
a RIC under Subchapter M of the Code or under successor or similar provisions,
or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or

(g)......at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or

(h)......at the option of AVIF if the Contracts issued by LIFE COMPANY
cease to qualify as annuity contracts or life insurance contracts under the Code
(other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under the Contracts are
not registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or

(i)......upon another Party's material breach of any provision of this
Agreement.

6.2......NOTICE REQUIREMENT FOR TERMINATION.

No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:

(a)......in the event that any termination is based upon the provisions
of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;

(b)......in the event that any termination is based upon the provisions
of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and

(c)......in the event that any termination is based upon the provisions
of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.

6.3......FUNDS TO REMAIN AVAILABLE.

Notwithstanding any termination of this Agreement, AVIF will, at the
option of LIFE COMPANY, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as AExisting Contracts@). Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments in
the Fund (as in effect on such date), redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 6.3 will not apply to
any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.

6.4......SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.

All warranties and indemnifications will survive the termination of
this Agreement.

6.5......CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.

If any Party terminates this Agreement with respect to any Fund
pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i)
hereof, this Agreement shall nevertheless continue in effect as to any Shares of
that Fund that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that LIFE COMPANY may, by written notice shorten said six (6) month period in
the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i).

SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION

The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.

SECTION 8. ASSIGNMENT

This Agreement may not be assigned by any Party, except with the
written consent of each other Party.

SECTION 9. NOTICES

Notices and communications required or permitted by Section 9 hereof
will be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:

AIM VARIABLE INSURANCE FUNDS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185

Attn: Nancy L. Martin, Esq.

UNITED LIFE & ANNUITY INSURANCE COMPANY

UNITED VARIABLE SERVICES, INC.

851 S.W. Sixth Avenue, Ninth Floor
Portland, Oregon 97204
Facsimile: (503) 220-3322

Attn: Mr. Joel Kaplan, Esq.

SECTION 10. VOTING PROCEDURES

Subject to the cost allocation procedures set forth in Section 3
hereof, LIFE COMPANY will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
LIFE COMPANY nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. LIFE COMPANY reserves the right to vote
shares held in any Account in its own right, to the extent permitted by law.
LIFE COMPANY shall be responsible for assuring that each of its Accounts holding
Shares calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY
of any changes of interpretations or amendments to Mixed and Shared Funding
exemptive order it has obtained. AVIF will comply with all provisions of the
1940 Act requiring voting by shareholders, and in particular, AVIF either will
provide for annual meetings (except insofar as the SEC may interpret Section 16
of the 1940 Act not to require such meetings) or will comply with Section 16(c)
of the 1940 Act (although AVIF is not one of the trusts described in Section
16(c) of that Act) as well as with Sections 16(a) and, if and when applicable,
16(b). Further, AVIF will act in accordance with the SEC=s interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the SEC may promulgate with respect thereto.

SECTION 11. FOREIGN TAX CREDITS

AVIF agrees to consult in advance with LIFE COMPANY concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.

SECTION 12. INDEMNIFICATION

12.1.....OF AVIF BY LIFE COMPANY AND UNDERWRITER.

(a)......Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF,
its affiliates, and each person, if any, who controls AVIF or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers, (collectively, the "Indemnified Parties" for purposes of
this Section 12.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of LIFE COMPANY
and UNDERWRITER) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise;
provided, the Account owns shares of the Fund and insofar as such losses,
claims, damages, liabilities or actions:

(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to LIFE COMPANY or
UNDERWRITER by or on behalf of AVIF for use in any Account's 1933
Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising or otherwise for
use in connection with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing); or

(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of LIFE COMPANY, UNDERWRITER or their
respective affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of LIFE
COMPANY, UNDERWRITER or their respective affiliates or persons
under their control (including, without limitation, their
employees and "Associated Persons," as that term is defined in
paragraph (m) of Article I of the NASD's By-Laws), in connection
with the sale or distribution of the Contracts or Shares; or

(iii)arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to AVIF or its affiliates by or on behalf
of LIFE COMPANY, UNDERWRITER or their respective affiliates for
use in AVIF's 1933 Act registration statement, AVIF Prospectus,
sales literature or advertising of AVIF, or any amendment or
supplement to any of the foregoing; or

(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER
to perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement, or
any material breach of any representation and/or warranty made by
LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or
result from any other material breach of this Agreement by LIFE
COMPANY or UNDERWRITER; or

(v) arise as a result of failure by the Contracts issued by LIFE
COMPANY to qualify as annuity contracts or life insurance
contracts under the Code, otherwise than by reason of any Fund's
failure to comply with Subchapter M or Section 817(h) of the
Code.

(b)......Neither LIFE COMPANY nor UNDERWRITER shall be liable under
this Section 12.1 with respect to any losses, claims, damages, liabilities or
actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
AVIF.

(c)......Neither LIFE COMPANY nor UNDERWRITER shall be liable under
this Section 12.1 with respect to any action against an Indemnified Party unless
AVIF shall have notified LIFE COMPANY and UNDERWRITER in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
from any liability which they may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to
participate, at their own expense, in the defense of such action and also shall
be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from LIFE COMPANY or UNDERWRITER to such Indemnified
Party of LIFE COMPANY=s or UNDERWRITER=s election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER will be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.

12.2.....OF LIFE COMPANY AND UNDERWRITER BY AVIF.

(a)......Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF agrees to indemnify and hold harmless LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of AVIF) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law, or otherwise; provided, the Account owns shares of the Fund and insofar as
such losses, claims, damages, liabilities or actions:

(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales literature
or advertising of AVIF (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to AVIF or its
affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or their
respective affiliates for use in AVIF's 1933 Act registration
statement, AVIF Prospectus, or in sales literature or advertising
or otherwise for use in connection with the sale of Contracts or
Shares (or any amendment or supplement to any of the foregoing);
or

(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of AVIF
or its affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of AVIF
or its affiliates or persons under its control (including,
without limitation, their employees and "Associated Persons" as
that term is defined in Section (n) of Article I of the NASD
By-Laws), in connection with the sale or distribution of AVIF
Shares; or

(iii)arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance
upon and in conformity with information furnished to LIFE
COMPANY, UNDERWRITER or their respective affiliates by or on
behalf of AVIF for use in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or
advertising covering the Contracts, or any amendment or
supplement to any of the foregoing; or

(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any material
breach of any representation and/or warranty made by AVIF in this
Agreement or arise out of or result from any other material
breach of this Agreement by AVIF.

(b)......Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF agrees to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof with, the written consent of AVIF)
or actions in respect thereof (including, to the extent reasonable, legal and
other expenses) to which the Indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of
any ruling and closing agreement or other settlement with the IRS, and the cost
of any substitution by LIFE COMPANY of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LIFE COMPANY reasonably deems necessary or appropriate as a result
of the noncompliance.

(c)......AVIF shall not be liable under this Section 12.2 with respect
to any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of such Indemnified Party's reckless disregard of its obligations and
duties (i) under this Agreement, or (ii) to LIFE COMPANY, UNDERWRITER, each
Account or Participants.

(d)......AVIF shall not be liable under this Section 12.2 with respect
to any action against an Indemnified Party unless the Indemnified Party shall
have notified AVIF in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the action shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but failure
to notify AVIF of any such action shall not relieve AVIF from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.2. Except as otherwise provided
herein, in case any such action is brought against an Indemnified Party, AVIF
will be entitled to participate, at its own expense, in the defense of such
action and also shall be entitled to assume the defense thereof (which shall
include, without limitation, the conduct of any ruling request and closing
agreement or other settlement proceeding with the IRS), with counsel approved by
the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from AVIF to such Indemnified Party of
AVIF's election to assume the defense thereof, the Indemnified Party will
cooperate fully with AVIF and shall bear the fees and expenses of any additional
counsel retained by it, and AVIF will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.

(e) ....In no event shall AVIF be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, LIFE COMPANY, UNDERWRITER or any other Participating
Insurance Company or any Participant, with respect to any losses, claims,
damages, liabilities or expenses that arise out of or result from (i) a breach
of any representation, warranty, and/or covenant made by LIFE COMPANY or
UNDERWRITER hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants; (ii) the failure by LIFE COMPANY or any Participating Insurance
Company to maintain its segregated asset account (which invests in any Fund) as
a legally and validly established segregated asset account under applicable
state law and as a duly registered unit investment trust under the provisions of
the 1940 Act (unless exempt therefrom); or (iii) the failure by LIFE COMPANY or
any Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.

12.3.....EFFECT OF NOTICE.

Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.

12.4.....SUCCESSORS.

A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.

SECTION 13. APPLICABLE LAW

This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.

SECTION 14. EXECUTION IN COUNTERPARTS

This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.

SECTION 15. SEVERABILITY

If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.

SECTION 16. RIGHTS CUMULATIVE

The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.

SECTION 17. HEADINGS

The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.

SECTION 18. CONFIDENTIALITY

AVIF acknowledges that the identities of the customers of LIFE COMPANY
or any of its affiliates (collectively, the ALIFE COMPANY Protected Parties@ for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY=s performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties= customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY Protected Parties= customers who
also maintain accounts directly with AVIF, AVIF will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY=s prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively, the AAVIF Protected Parties@ for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF=s
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or compilation of the identities of or other information about the AVIF
Protected Parties= customers or any other information or property of the AVIF
Protected Parties, other than such information as may be independently developed
or compiled by LIFE COMPANY from information supplied to it by the AVIF
Protected Parties= customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with AVIF=s prior written consent; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.

SECTION 19. TRADEMARKS AND FUND NAMES

(a)......A I M Management Group Inc. (AAIM@ or Alicensor@), an
affiliate of AVIF, owns all right, title and interest in and to the name,
trademark and service mark AAIM@ and such other tradenames, trademarks and
service marks as may be set forth on Schedule B, as amended from time to time by
written notice from AIM to LIFE COMPANY (the AAIM licensed marks@ or the
Alicensor=s licensed marks@) and is authorized to use and to license other
persons to use such marks. LIFE COMPANY and its affiliates are hereby granted a
non-exclusive license to use the AIM licensed marks in connection with LIFE
COMPANY=s performance of the services contemplated under this Agreement, subject
to the terms and conditions set forth in this Section 19.

(b)......The grant of license to LIFE COMPANY and its affiliates ( the
Alicensee@) shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor=s
licensed marks, except that LIFE COMPANY shall have the right to continue to
service any outstanding Contracts bearing any of the AIM licensed marks. Upon
AIM=s elective termination of this license, LIFE COMPANY and its affiliates
shall immediately cease to issue any new annuity or life insurance contracts
bearing any of the AIM licensed marks and shall likewise cease any activity
which suggests that it has any right under any of the AIM licensed marks or that
it has any association with AIM, except that LIFE COMPANY shall have the right
to continue to service outstanding Contracts bearing any of the AIM licensed
marks.

(c)......The licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor=s licensed marks. The licensor=s approvals shall not be unreasonably
withheld.

(d)......During the term of this grant of license, a licensor may
request that a licensee submit samples of any materials bearing any of the
licensor=s licensed marks which were previously approved by the licensor but,
due to changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The licensor=s
approval shall not be unreasonably withheld, and the licensor, when requesting
reconsideration of a prior approval, shall assume the reasonable expenses of
withdrawing and replacing such disapproved materials. The licensee shall obtain
the prior written approval of the licensor for the use of any new materials
developed to replace the disapproved materials, in the manner set forth above.

(e)......The licensee hereunder: (i) acknowledges and stipulates that,
to the best of the knowledge of the licensee, the licensor=s licensed marks are
valid and enforceable trademarks and/or service marks and that such licensee
does not own the licensor=s licensed marks and claims no rights therein other
than as a licensee under this Agreement; (ii) agrees never to contend otherwise
in legal proceedings or in other circumstances; and (iii) acknowledges and
agrees that the use of the licensor=s licensed marks pursuant to this grant of
license shall inure to the benefit of the licensor.

SECTION 20. PARTIES TO COOPERATE

Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.

<TABLE>
<CAPTION>
<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC.

Attest: ________________________ By: ______________________________________
Nancy L. Martin Name: Robert H. Graham
Assistant Secretary Title: President

UNITED LIFE & ANNUITY INSURANCE
COMPANY, on behalf of itself and its separate

accounts

Attest: ________________________ By: ______________________________________

Name: ________________________ Name: ______________________________________

Title: ________________________ Title: ______________________________________

UNITED VARIABLE SERVICES, INC.

Attest: ________________________ By: ______________________________________

Name: ________________________ Name: ______________________________________

Title: ________________________ Title: ______________________________________

</TABLE>

SCHEDULE A

FUNDS AVAILABLE UNDER THE CONTRACTS

AIM VARIABLE INSURANCE FUNDS, INC.

AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Diversified Income Fund

SEPARATE ACCOUNTS UTILIZING THE FUNDS

United Life & Annuity Separate Account One

FORM NUMBERS AND CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS

UCV-AN-6000 - Master Contract UCV-AN-6001 - Master Contract UCV-AN-6002
- SpectraDirect (Group) UCV-AN-6003 - SpectraSelect (Group) UCV-AN-6004
- SpectraDirect (Individual) UCV-AN-6005 - SpectraSelect (Individual)

ULV-AN-6008 - IntegraPreferred (Individual)
ULV-AN-6009 - IntegraGold (Individual)

SCHEDULE B

$ AIM VARIABLE INSURANCE FUNDS, INC.

AIM Fund

$ AIM and Design

PARTICIPATION AGREEMENT

BY AND AMONG

AND

WARBURG, PINCUS TRUST

AND

WARBURG PINCUS ASSET MANAGEMENT, INC.

AND

COUNSELLORS SECURITIES INC.

THIS AGREEMENT, made and entered into this day of _____________, 1998,
by and among ______________________ organized under the laws of ________________
(the "Company"), on its own behalf and on behalf of each separate account of the
Company named in Schedule 1 to this Agreement as may be amended from time to
time (each account referred to as the "Account"), Warburg, Pincus Trust, an
open-end management investment company and business trust organized under the
laws of the Commonwealth of Massachusetts (the "Fund"); Warburg Pincus Asset
Management, Inc. a corporation organized under the laws of the State of Delaware
(the "Adviser"); and Counsellors Securities Inc., a corporation organized under
the laws of the State of New York ("CSI").

WHEREAS, the Fund engages in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
contracts and variable annuity contracts to be offered by insurance companies
that have entered into participation agreements similar to this Agreement (the
"Participating Insurance Companies"), and

WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and

WHEREAS, the Fund has received an order from the Securities and
Exchange Commission (the "SEC") granting Participating Insurance Companies and
variable annuity separate accounts and variable life insurance separate accounts
relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended (the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity separate accounts
and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and qualified pension and
retirement plans outside of the separate account context (the "Mixed and Shared
Funding Exemptive Order"). The parties to this Agreement agree that the
conditions or undertakings specified in the Mixed and Shared Funding Exemptive
Order and that may be imposed on the Company, the Fund, the Adviser and/or CSI
by virtue of the receipt of such order by the SEC will be incorporated herein by
reference, and such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party; and

WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and

WHEREAS, the Company has registered or will register certain variable
annuity contracts (the "Contracts") under the 1933 Act; and

WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of ______________, to set aside and invest
assets attributable to the Contracts; and

WHEREAS, the Company has registered the Account as a unit investment trust
under the 1940 Act; and

WHEREAS, CSI, the Fund's distributor, is registered as a broker-dealer
with the SEC under the Securities Exchange Act of 1934 (the "1934 Act") and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios named in
Schedule 2, as such schedule may be amended from time to time (the "Designated
Portfolios"), on behalf of the Account to fund the Contracts, and the Fund is
authorized to sell such shares to unit investment trusts such as the Account at
net asset value;

NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Adviser and CSI agree as follows:

ARTICLE I. SALE OF FUND SHARES

1.1. The Fund agrees to sell to the Company those shares of the Designated
Portfolios that each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt and acceptance by the Fund or
its designee of the order for the shares of the Fund. For purposes of this
Section 1.1, the Company will be the designee of the Fund for receipt of such
orders from each Account and receipt by such designee will constitute receipt by
the Fund; provided that the Fund receives notice of such order by 9:00 a.m.
Eastern Time on the next following Business Day ("T+1"). "Business Day" will
mean any day on which the New York Stock Exchange, Inc. (the "NYSE") is open for
trading and on which the Fund calculates its net asset value pursuant to the
rules of the SEC.

1.2. The Company will pay for Fund shares on T+1 in each case that an order to
purchase Fund shares is made in accordance with Section 1.1 above. Payment will
be in federal funds transmitted by wire. This wire transfer will be initiated by
12:00 p.m. Eastern Time.

1.3. The Fund agrees to make shares of the Designated Portfolios available
indefinitely for purchase at the applicable net asset value per share by
Participating Insurance Companies and their separate accounts on those days on
which the Fund calculates its Designated Portfolio net asset value pursuant to
rules of the SEC and the Fund shall use reasonable efforts to calculate such net
asset value on each day the NYSE is open for trading; provided, however, that
the Fund, the Adviser or CSI may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in its or their sole discretion acting in good faith, necessary in the best
interests of the shareholders of such Portfolio.

1.4. On each Business Day on which the Fund calculates its net asset value, the
Company will aggregate and calculate the net purchase or redemption orders for
each Account maintained by the Fund in which contract owner assets are invested.
Net orders will only reflect orders that the Company has received prior to the
close of regular trading on the NYSE currently 4:00 p.m., Eastern Time) on that
Business Day. Orders that the Company has received after the close of regular
trading on the NYSE will be treated as though received on the next Business Day.
Each communication of orders by the Company will constitute a representation
that such orders were received by it prior to the close of regular trading on
the NYSE on the Business Day on which the purchase or redemption order is priced
in accordance with Rule 22c-1 under the 1940 Act. Other procedures relating to
the handling of orders will be in accordance with the prospectus and statement
of information of the relevant Designated Portfolio or with oral or written
instructions that CSI or the Fund will forward to the Company from time to time.

1.5. The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their separate accounts, qualified pension and
retirement plans or such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), and regulations promulgated thereunder, the sale to which will
not impair the tax treatment currently afforded the Contracts. No shares of any
Portfolio will be sold to the general public except as set forth in this Section
1.5.

1.6. The Fund agrees to redeem for cash, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt and acceptance by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.6, the Company will be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee will
constitute receipt by the Fund, provided the Fund receives notice of request for
redemption by 10:00 a.m. Eastern Time on the next following Business Day.
Payment will be in federal funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time, on the same Business Day
the Fund receives notice of the redemption order from the Company. The Fund
reserves the right to delay payment of redemption proceeds, but in no event may
such payment be delayed longer than the period permitted by the 1940 Act. The
Fund will not bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds; the Company alone will be responsible for such
action. If notification of redemption is received after 10:00 a.m. Eastern Time,
payment for redeemed shares will be made on the next following Business Day.

1.7. The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in accordance with
the provisions of such prospectus.

1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Purchase
and redemption orders for Fund shares will be recorded in an appropriate title
for each Account or the appropriate subaccount of each Account.

1.9. The Fund will furnish same day notice (by telecopier, followed by written
confirmation) to the Company of the declaration of any income, dividends or
capital gain distributions payable on each Designated Portfolio's shares. The
Company hereby elects to receive all such dividends and distributions as are
payable on the Designated Portfolio shares in the form of additional shares of
that Designated Portfolio. The Fund will notify the Company of the number of
shares so issued as payment of such dividends and distributions. The Company
reserves the right to revoke this election upon reasonable prior notice to the
Fund and to receive all such dividends and distributions in cash.

1.10. The Fund will make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and will use its
best efforts to make such net asset value per share available by 6:00 p.m.,
Eastern Time, but in no event later than 7:00 p.m., Eastern Time, each Business
Day.

1.11. In the event adjustments are required to correct any error in the
computation of the net asset value of the Fund's shares, the Fund or CSI will
notify the Company as soon as practicable after discovering the need for those
adjustments that result in an aggregate reimbursement of $150 or more to any one
Account maintained by a Designated Portfolio unless notified otherwise by the
Company (or, if lesser, results in an adjustment of $10 or more to each
contractowner's account). Any such notice will state for each day for which an
error occurred the incorrect price, the correct price and, to the extent
communicated to the Fund's shareholders, the reason for the price change. The
Company may send this notice or a derivation thereof (so long as such derivation
is approved in advance by CSI or the Adviser) to contractowners whose accounts
are affected by the price change. The parties will negotiate in good faith to
develop a reasonable method for effecting such adjustments.

ARTICLE II. REPRESENTATIONS AND WARRANTIES

2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act and that the Contracts will be issued and sold in
compliance with all applicable federal and state laws, including state insurance
suitability requirements. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Account as a separate
account under applicable state law and has registered the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, and that it will maintain such
registration for so long as any Contracts are outstanding. The Company will
amend the registration statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Account from time to time as
required in order to effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company will register and qualify
the Contracts for sale in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.

2.2. The Company represents that the Contracts are currently and at the time of
issuance will be treated as annuity contracts under applicable provisions of the
Internal Revenue Code, and that it will make every effort to maintain such
treatment and that it will notify the Fund and the Adviser immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.

2.3. The Company represents and warrants that it will not purchase shares of the
Designated Portfolios with assets derived from tax-qualified retirement plans
except, indirectly, through Contracts purchased in connection with such plans.

2.4. The Fund represents and warrants that Fund shares of the Designated
Portfolios sold pursuant to this Agreement will be registered under the 1933 Act
and duly authorized for issuance in accordance with applicable law and that the
Fund is and will remain registered under the 1940 Act for as long as such shares
of the Designated Portfolios are outstanding. The Fund will amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares or as may otherwise be required by applicable law. The Fund will register
and qualify the shares of the Designated Portfolios for sale in accordance with
the laws of the various states only if and to the extent deemed advisable by the
Fund.

2.5. The Fund represents that each Designated Portfolio is currently qualified
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code and that it will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provision) and that it will notify the
Company immediately upon having a reasonable basis for believing that a
Designated Portfolio has ceased to so qualify or that it might not so qualify in
the future.

2.6. The Fund represents and warrants that in performing the services described
in this Agreement, the Fund will comply with all applicable laws, rules and
regulations. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies, objectives and restrictions) complies with the insurance laws and
regulations of any state. The Fund and CSI agree that upon request they will use
their best efforts to furnish the information required by state insurance laws
so that the Company can obtain the authority needed to issue the Contracts in
the various states.

2.7. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it
reserves the right to make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1 the Fund
undertakes to have its Fund Board formulate and approve any plan under Rule
12b-1 to finance distribution expenses in accordance with the 1940 Act.

2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of The Commonwealth of Massachusetts and that it does and will
comply in all material respects with applicable provisions of the 1940 Act.

2.9. CSI represents and warrants that it will distribute the Fund shares of the
Designated Portfolios in accordance with all applicable federal and state
securities laws including, without limitation, the 1933 Act, the 1934 Act and
the 1940 Act.

2.10. CSI represents and warrants that it is and will remain duly registered
under all applicable federal and state securities laws and that it will perform
its obligations for the Fund in accordance in all material respects with any
applicable state and federal securities laws.

2.11. The Fund represents and warrants that all of its trustees, officers,
employees, and other individuals/entities having access to the funds and/or
securities of the Fund are and continue to be at all times covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund in an amount not
less than the minimal coverage as required currently by Rule 17g-(1) of the 1940
Act or related provisions as may be promulgated from time to time. The aforesaid
bond includes coverage for larceny and embezzlement and is issued by a reputable
bonding company. CSI and the Fund's investment advisers represent and warrant
that they are and continue to be at all times covered by policies similar to the
aforesaid bond.

ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING

3.1. The Fund or CSI will provide the Company, at the Fund's or its affiliate's
expense, with as many copies of the current Fund prospectus for the Designated
Portfolios as the Company may reasonably request for distribution, at the
Company's expense, to prospective contractowners and applicants. The Fund or CSI
will provide, at the Fund's or its affiliate's expense, as many copies of said
prospectus as necessary for distribution, at the Company's expense, to existing
contractowners. The Fund or CSI will provide the copies of said prospectus to
the Company or to its mailing agent. If requested by the Company, the Fund or
CSI will provide such documentation, including a computer diskette of the
Company's specification or a final copy of a current prospectus set in type at
the Fund's or its affiliate's expense, and such other assistance as is
reasonably necessary in order for the Company at least annually (or more
frequently if the Fund prospectus is amended more frequently) to have the Fund's
prospectus, the prospectus for the Contracts and the prospectuses of other
mutual funds in which assets attributable to the Contracts may be invested
printed together in one document (the "Multifund Prospectus"), in which case the
Fund or its affiliate will bear its reasonable share of expenses as described
above, allocated based on the proportionate number of pages of the Fund's and
other fund's respective portions of the document.

3.2. The Fund or CSI will provide the Company, at the Fund's or its affiliate's
expense, with as many copies of the statement of additional information as the
Company may reasonably request for distribution, at the Company's expense, to
prospective contractowners and applicants. The Fund or CSI will provide, at the
Fund's or its affiliate's expense, as many copies of said statement of
additional information as necessary for distribution, at the Company's expense,
to any existing contractowner who requests such statement or whenever state or
federal law otherwise requires that such statement be provided. The Fund or CSI
will provide the copies of said statement of additional information to the
Company or to its mailing agent.

3.3. To the extent that the Fund or CSI desires to change (whether by revision
or supplement) any of the information contained in any form of Fund prospectus
or statement of additional information provided to the Company for inclusion in
a Multifund Prospectus, the Company agrees to make such changes within a
reasonable period of time after receipt of a request to make such change from
the Fund or CSI, subject to the following limitation. To the extent that the
Fund is legally required to make a change to a Fund prospectus or statement of
additional information provided to the Company for inclusion in a Multifund
Prospectus, the Company agrees to make any such change as soon as possible
following receipt of the form of revised prospectus and/or statement of
additional information or supplement, as applicable, but in no event later than
five days following receipt. To the extent that the Fund is required by law to
cease selling shares of a Designated Portfolio, the Company agrees to cease
offering shares of the Designated Portfolio until the Fund or CSI notifies the
Company otherwise.

3.4. The Fund or CSI, at the Fund's or its affiliate's expense, will provide the
Company or its mailing agent with copies of its proxy material, if any, reports
to shareholders and other communications to shareholders in such quantity as the
Company will reasonably require. The Company will distribute this proxy
material, reports and other communications to existing contract owners and
tabulate the votes.

3.5. If and to the extent required by law the Company will:

(a) solicit voting instructions from contractowners;

(b) vote the shares of the Designated Portfolios held in the
Account in accordance with instructions received from contractowners; and

(c) vote shares of the Designated Portfolios held in the
Account for which no timely instructions have been received, as well as shares
it owns, in the same proportion as shares of such Designated Portfolio for which
instructions have been received from the Company's contractowners;

so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable contractowners.
Except as set forth above, the Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. The Company will be responsible for assuring that each of its separate
accounts participating in the Fund calculates voting privileges in a manner
consistent with all legal requirements, including the Mixed and Shared Funding
Exemptive Order.

3.6. The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund either will provide for annual
meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not
to require such meetings) or, as the Fund currently intends, will comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the SEC may promulgate
with respect thereto.

ARTICLE IV. SALES MATERIAL AND INFORMATION

4.1. CSI will provide the Company on a timely basis with investment performance
information for each Designated Portfolio in which the Company maintains an
Account, including total return for the preceding calendar month and calendar
quarter, the calendar year to date, and the prior one-year, five-year, and ten
year (or life of the Designated Portfolio) periods. The Company may, based on
the SEC mandated information supplied by CSI, prepare communications for
contractowners ("Contractowner Materials"). The Company will provide copies of
all Contractowner Materials concurrently with their first use for CSI's internal
recordkeeping purposes. It is understood that neither CSI nor any Designated
Portfolio will be responsible for errors or omissions in, or the content of,
Contractowner Materials except to the extent that the error or omission resulted
from information provided by or on behalf of CSI or the Designated Portfolio.
Any printed information that is furnished to the Company pursuant to this
Agreement other than each Designated Portfolio's prospectus or statement of
additional information (or information supplemental thereto), periodic reports
and proxy solicitation materials is CSI's sole responsibility and not the
responsibility of any Designated Portfolio or the Fund. The Company agrees that
the Portfolios, the shareholders of the Portfolios and the officers and
governing Board of the Fund will have no liability or responsibility to the
Company in these respects.

4.2. The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement, prospectus or statement of additional information
for Fund shares, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in published reports for the Fund
which are in the public domain or approved by the Fund or CSI for distribution,
or in sales literature or other material provided by the Fund, the Adviser or by
CSI, except with permission of CSI. The Company will furnish, or will cause to
be furnished, to the Fund, the Adviser or CSI, each piece of sales literature or
other promotional material in which the Company or its Account is named, at
least ten (10) business days prior to its use. No such sales literature or other
promotional material which requires the permission of CSI prior to use will be
used if CSI reasonably objects to such use within five (5) business days after
receipt.

Nothing in this Section 4.2 will be construed as preventing the Company
or its employees or agents from giving advice on investment in the Fund.

4.3. The Fund, the Adviser and CSI will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or statement
of additional information for the Contracts, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in published reports for each Account or the
Contracts which are in the public domain or approved by the Company for
distribution to contractowners, or in sales literature or other material
provided by the Company, except with permission of the Company. The Company
agrees to respond to any request for approval on a prompt and timely basis. The
Fund, the Adviser or CSI will furnish, or will cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or its Account is named at least ten (10) business
days prior to its use. No such material will be used if the Company reasonably
objects to such use within five (5) business days after receipt of such
material.

4.4. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additions information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the SEC, the NASD or other regulatory
authority.

4.5. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC,
the NASD or other regulatory authority.

4.6. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media (e.g., on-line
networks such as the Internet or other electronic messages)), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisements sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, proxy materials and
any other material constituting sales literature or advertising under the NASD
rules, the 1933 Act or the 1940 Act.

4.7. The Fund and CSI hereby consent to the Company's use of the names Warburg,
Pincus Trust Post-Venture Capital Portfolio, or other Designated Portfolio, and
Warburg, Pincus Counsellors, Inc. in connection with the marketing of the
Contracts, subject to the terms of Sections 4.1 and 4.2 of this Agreement. Such
consent will continue only as long as any Contracts are invested in the relevant
Designated Portfolio.

ARTICLE V. FEES AND EXPENSES

5.1. The Fund, the Adviser and CSI will pay no fee or other compensation to the
Company (other than as set forth in the administrative services letter agreement
between CSI and the Company) except if the Fund or any Designated Portfolio
adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then, subject to obtaining any required exemptive
orders or other regulatory approvals, the Fund may make payments to the Company
or to the underwriter for the Contracts if and in such amounts agreed to by the
Fund in writing.

5.2. All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund to the extent permitted by law. The Fund will bear the expenses
for the cost of registration and qualification of the Fund's shares; preparation
and filing of the Fund's prospectus, statement of additional information and
registration statement, proxy materials and reports; setting in type and
printing the Fund's prospectus; setting in type and printing proxy materials and
reports by it to contractowners (including the costs of printing a Fund
prospectus that contains an annual report); the preparation of all statements
and notices required by any federal or state law; all taxes on the issuance or
transfer of the Fund's shares; any expenses permitted to be paid or assumed by
the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and
all other expenses set forth in Article III of this Agreement.

ARTICLE VI. DIVERSIFICATION

6.1. The Adviser will ensure that the Fund will at all times invest money from
the Contracts in such a manner as to ensure that the Contracts will be treated
as variable annuity contracts under the Internal Revenue Code and the
regulations issued thereunder. Without limiting the scope of the foregoing, the
Fund will comply with Section 817(h) of the Internal Revenue Code and Treasury
Regulation 1.817-5, as amended from time to time, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulation. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps: (a) to notify the Company of such breach; and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Treasury Regulation 1.817-5.

ARTICLE VII. POTENTIAL CONFLICTS

7.1. The Board of Trustees of the Fund (the "Fund Board") will monitor the Fund
for the existence of any irreconcilable material conflict among the interests of
the contractowners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax or securities laws or regulations, or
a public ruling, private letter ruling, no-action or interpretative letter, or
any similar action by insurance, tax or securities regulatory authorities; (c)
an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by Participating Insurance Companies or
by variable annuity and variable life insurance contractowners; or (f) a
decision by an insurer to disregard the voting instructions of contractowners.
The Fund Board will promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.

7.2. The Company will report any potential or existing conflicts of which it is
aware to the Fund Board. The Company agrees to assist the Fund Board in carrying
out its responsibilities, as delineated in the Mixed and Shared Funding
Exemptive Order, by providing the Fund Board with all information reasonably
necessary for the Fund Board to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Fund Board
whenever contractowner voting instructions are to be disregarded. The Company's
responsibilities hereunder will be carried out with a view only to the interest
of contractowners.

7.3. If it is determined by a majority of the Fund Board, or a majority of its
disinterested trustees, that an irreconcilable material conflict exists, the
Company will, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the Accounts
from the Fund or any Designated Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected contractowners and, as appropriate,
segregating the assets of any appropriate group (i.e., variable annuity
contractowners or variable life insurance contractowners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected contractowners the option of making such a change; and
(b) establishing a new registered management investment company or managed
separate account.

7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard contractowner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
subaccount of the Account's investment in the Fund and terminate this Agreement
with respect to such subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested trustees of the Fund Board. No charge or penalty will be imposed
as a result of such withdrawal.

7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state insurance regulators, then the Company will withdraw the
affected subaccount of the Account's investment in the Fund and terminate this
Agreement with respect to such subaccount; provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge or penalty will be imposed
as a result of such withdrawal.

7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Fund Board will determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund or the Adviser (or any other investment adviser to the Fund) be
required to establish a new funding medium for the Contracts. The Company will
not be required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
contractowners materially affected by the irreconcilable material conflict.

7.7. The Company will at least annually submit to the Fund Board such reports,
materials or data as the Fund Board may reasonably request so that the Fund
Board may fully carry out the duties imposed upon it as delineated in the Mixed
and Shared Funding Exemptive Order, and said reports, materials and data will be
submitted more frequently if deemed appropriate by the Fund Board.

7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive Order, then: (a) the Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.

ARTICLE VIII. INDEMNIFICATION

8.1. Indemnification By The Company

(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, CSI, and each person, if any, who controls or is associated with the
Fund, the Adviser or CSI within the meaning of such terms under the federal
securities laws and any director, trustee, officer, partner, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:

(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus or statement of additional information for the Contracts
or contained in the Contracts or sales literature or other promotional material
for the Contracts (or any amendment or supplement to any of the foregoing),
including any prospectuses or statements of additional information of the Fund
to which the Company has made any changes to the information provided to the
Company or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated or necessary to make such
statements not misleading in light of the circumstances in which they were made;
provided that this agreement to indemnify will not apply as to any Indemnified
Party if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by the Fund, the Adviser or CSI for use in the registration
statement, prospectus or statement of additional information for the Contracts
or in the Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund shares;
or

(2) arise out of or as a result of statements or
representations by or on behalf of the Company or wrongful conduct of the
Company or persons under its control, with respect to the sale or distribution
of the Contracts or Fund shares (other than statements or representations
contained in the Fund registration statement, Fund prospectus, Fund statement of
additional information, sales literature or other promotional material of the
Fund not supplied by the Company or persons under its control); or

(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of the Fund (or amendment or supplement) or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make such statements not misleading in light of the
circumstances in which they were made, if such a statement or omission was made
in reliance upon and in conformity with information furnished to the Fund by or
on behalf of the Company or persons under its control; or

(4) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or

(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or result
from any other material breach by the Company of this Agreement, including, but
not limited to, a failure to comply with the provisions of Section 3.3;

except to the extent provided in Sections 8.1(b) and 8.3
hereof. This indemnification will be in addition to any liability that the
Company otherwise may have.

(b) No party will be entitled to indemnification under Section 8.1(a)
to the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this Agreement by the party seeking
indemnification.

(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by regulatory
authorities against them in connection with the issuance or sale of the Fund
shares or the Contracts or the operation of the Fund.

8.2. Indemnification By The Adviser, the Fund and CSI

(a) The Adviser, the Fund and CSI, in each case solely to the extent
relating to such party's responsibilities hereunder, agree to indemnify and hold
harmless the Company and each person, if any, who controls or is associated with
the Company within the meaning of such terms under the federal securities laws
and any director, trustee, officer, partner, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:

(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement, prospectus or statement of additional information for the Fund or
sales literature or other promotional material of the Fund (or any amendment or
supplement to any of the foregoing) or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated or necessary to make such statements not misleading in light of the
circumstances in which they were made (in each case substantially as transmitted
to you by the Fund or CSI), provided that this agreement to indemnify will not
apply as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Adviser, CSI or the Fund by or on behalf of the
Company for use in the registration statement, prospectus or statement of
additional information for the Fund or in sales literature of the Fund (or any
amendment or supplement thereto) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or

(2) arise out of or as a result of statements or
representations or wrongful conduct of the Adviser, the Fund or CSI or persons
under the control of the Adviser, the Fund or CSI respectively, with respect to
the sale of the Fund shares (other than statements or representations contained
in a registration statement, prospectus, statement of additional information,
sales literature or other promotional material covering the Contracts not
supplied by CSI or persons under its control); or

(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement, prospectus,
statement of additional information or sales literature or other promotional
material covering the Contracts (or any amendment or supplement thereto), or the
omission or alleged omission to state therein a material fact required to be
stated or necessary to make such statement or statements not misleading in light
of the circumstances in which they were made, if such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by the Adviser, the Fund or CSI or persons under the control of the
Adviser, the Fund or CSI; or

(4) arise as a result of any failure by the Fund, the Adviser
or CSI to provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements and procedures
related thereto specified in Article VI of this Agreement); or

(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the Fund or CSI in this
Agreement, or arise out of or result from any other material breach of this
Agreement by the Adviser the Fund or CSI;

except to the extent provided in Sections 8.2(b) and 8.3
hereof. These indemnifications will be in addition to any liability that the
Fund, Adviser or CSI otherwise may have.

(b) No party will be entitled to indemnification under Section 8.2(a)
to the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this Agreement by the party seeking
indemnification.

(c) The Indemnified Parties will promptly notify the Adviser, the Fund
and CSI of the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection with the issuance
or sale of the Contracts or the operation of the account.

8.3. Indemnification Procedure

Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.3) will not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("Indemnified Party" for the purpose of this Section 8.3) unless such
Indemnified Party will have notified the Indemnifying Party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim will have been served upon such
Indemnified Party (or after such party will have received notice of such service
on any designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of the indemnification provision of this Article VIII, except to
the extent that the failure to notify results in the failure of actual notice to
the Indemnifying Party and such Indemnifying Party is damaged solely as a result
of failure to give such notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to participate, at
its own expense, in the defense thereof. The Indemnifying Party also will be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Indemnifying Party to the Indemnified
Party of the Indemnifying Party's election to assume the defense thereof, the
Indemnified Party will bear the fees and expenses of any additional counsel
retained by it, and the Indemnifying Party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless: (a) the Indemnifying Party and the
Indemnified Party will have mutually agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party will not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there is a final judgment for the
plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from
and against any loss or liability by reason of such settlement or judgment. A
successor by law of the parties to this Agreement will be entitled to the
benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive any
termination of this Agreement.

ARTICLE IX. APPLICABLE LAW

9.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.

9.2. This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof will be interpreted and construed in accordance
therewith.

ARTICLE X. TERMINATION

10.1. This Agreement will terminate:

(a) at the option of any party, with or without cause, with respect to
some or all of the Designated Portfolios, upon ninety (90) days' advance written
notice to the other parties; or

(b) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to any Designated Portfolio if shares
of the Designated Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by the Company; or

(c) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to any Designated Portfolio in the
event any of the Designated Portfolio's shares are not registered, issued or
sold in accordance with applicable state and/or Federal law or such law
precludes the use of such shares as the underlying investment media of the
Contracts issued or to be issued by Company; or

(d) at the option of the Fund, upon receipt of the Fund's written
notice by the other parties, upon institution of formal proceedings against the
Company by the NASD, the SEC, the insurance commission of any state or any other
regulatory body regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the administration of the Contracts, the operation
of the Account, or the purchase of the Fund shares, provided that the Fund
determines in its sole judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or

(e) at the option of the Company, upon receipt of the Company's written
notice by the other parties, upon institution of formal proceedings against the
Fund, Adviser or CSI by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, provided that the Company determines in
its sole judgment, exercised in good faith, that any such proceeding would have
a material adverse effect on the Fund's, Adviser's or CSI's ability to perform
its obligations under this Agreement; or

(f) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to any Designated Portfolio if the
Designated Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code, or under any successor or similar
provision, or if the Company reasonably and in good faith believes that the
Designated Portfolio may fail to so qualify; or

(g) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to any Designated Portfolio if the
Designated Portfolio fails to meet the diversification requirements specified in
Article VI hereof or if the Company reasonably and in good faith believes the
Designated Portfolio may fail to meet such requirements; or

(h) at the option of any party to this Agreement, upon written notice
to the other parties, upon another party's material breach of any provision of
this Agreement which material breach is not cured within thirty (30) days of
said notice; or

(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund, the Adviser or CSI has
suffered a material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon the business
and operations of the Company, such termination to be effective sixty (60) days'
after receipt by the other parties of written notice of the election to
terminate; or

(j) at the option of the Fund or CSI, if the Fund or CSI respectively,
determines in its sole judgment exercised in good faith, that the Company has
suffered a material adverse change in its business, operations or financial
condition since the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon the business
and operations of the Fund or the Adviser, such termination to be effective
sixty (60) days' after receipt by the other parties of written notice of the
election to terminate; or

(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the contractowners having an
interest in the Account (or any subaccount) to substitute the shares of another
investment company for the corresponding Designated Portfolio shares of the Fund
in accordance with the terms of the Contracts for which those Designated
Portfolio shares had been selected to serve as the underlying investment media.
The Company will give sixty (60) days' prior written notice to the Fund of the
date of any proposed vote or other action taken to replace the Fund's shares; or

(l) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested Fund Board
members, that an irreconcilable material conflict exists among the interests of:
(1) all contractowners of variable insurance products of all separate accounts;
or (2) the interests of the Participating Insurance Companies investing in the
Fund as set forth in Article VII of this Agreement; or

(m) at the option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable federal and/or state law.
Termination will be effective immediately upon such occurrence without notice.

10.2. Notice Requirement

Except as specified in Section 10.1(m), no termination of this
Agreement will be effective unless and until the party terminating this
Agreement gives prior written notice to all other parties of its intent to
terminate, which notice will set forth the basis for the termination.

10.3. Effect of Termination

In the event of any termination of this Agreement other than pursuant
to subsection (d), (j), (l) or (m) of Section 10.1, the Fund and CSI will, at
the option of the Company, continue to make available additional shares of the
Fund pursuant to the terms and conditions of this Agreement, for all Contracts
in effect on the effective date of termination of this Agreement ( hereinafter
referred to as "Existing Contracts.") . Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments in
the Designated Portfolios (as in effect on such date), redeem investments in the
Designated Portfolios and/or invest in the Designated Portfolios upon the making
of additional purchase payments under the Existing Contracts.

10.4. Surviving Provisions

Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive and not
be affected by any termination of this Agreement. In addition, each party's
obligations under Section 12.6 will survive and not be affected by any
termination of this Agreement. Finally, with respect to Existing Contracts, all
provisions of this Agreement also will survive and not be affected by any
termination of this Agreement.

ARTICLE XI. NOTICES

11.1. Any notice will be deemed duly given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other parties.

If to the Company: If to the Fund, the Adviser and/or CSI:

_______________ 466 Lexington Avenue
_______________ 10th Floor
_______________ New York, NY 10017
Attn: __________ Attn: Eugene P. Grace
_______________ Senior Vice President

ARTICLE XII. MISCELLANEOUS

12.1. The Fund, the Adviser and CSI acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the "Company
Protected Parties" for purposes of this Section 12.1), information maintained
regarding those customers, and all computer programs and procedures or other
information developed or used by the Company Protected Parties or any of their
employees or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Company Protected Parties.
The Fund, the Adviser and CSI agree that if they come into possession of any
list or compilation of the identities of or other information about the Company
Protected Parties' customers, or any other information or property of the
Company Protected Parties, other than such information as is publicly available
or as may be independently developed or compiled by the Fund, the Adviser or CSI
from information supplied to them by the Company Protected Parties' customers
who also maintain accounts directly with the Fund, the Adviser or CSI, the Fund,
the Adviser and CSI will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with the Company's prior written consent; or (b) as
required by law or judicial process. The Company acknowledges that the
identities of the customers of the Fund, the Adviser, CSI or any of their
affiliates (collectively the "Adviser Protected Parties" for purposes of this
Section 12.1), information maintained regarding those customers, and all
computer programs and procedures or other information developed or used by the
Adviser Protected Parties or any of their employees or agents in connection with
the Fund's, the Adviser's or CSI's performance of their respective duties under
this Agreement are the valuable property of the Adviser Protected Parties. The
Company agrees that if it comes into possession of any list or compilation of
the identities of or other information about the Adviser Protected Parties'
customers, or any other information or property of the Adviser Protected
Parties, other than such information as is publicly available or as may be
independently developed or compiled by the Company from information supplied to
them by the Adviser Protected Parties' customers who also maintain accounts
directly with the Company, the Company will hold such information or property in
confidence and refrain from using, disclosing or distributing any of such
information or other property except: (a) with the Fund's, the Adviser's or
CSI's prior written consent; or (b) as required by law or judicial process. Each
party acknowledges that any breach of the agreements in this Section 12.1 would
result in immediate and irreparable harm to the other parties for which there
would be no adequate remedy at law and agree that in the event of such a breach,
the other parties will be entitled to equitable relief by way of temporary and
permanent injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.

12.2. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.

12.3. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.

12.4. If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will not be
affected thereby.

12.5. This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.

12.6. Each party to this Agreement will maintain all records required by law,
including records detailing the services it provides. Such records will be
preserved, maintained and made available to the extent required by law and in
accordance with the 1940 Act and the rules thereunder. Each party to this
Agreement will cooperate with each other party and all appropriate governmental
authorities (including without limitation the SEC, the NASD and state insurance
regulators) and will permit each other and such authorities reasonable access to
its books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby. Upon request by the
Fund or CSI, the Company agrees to promptly make copies or, if required,
originals of all records pertaining to the performance of services under this
Agreement available to the Fund or CSI, as the case may be. The Fund agrees that
the Company will have the right to inspect, audit and copy all records
pertaining to the performance of services under this Agreement pursuant to the
requirements of any state insurance department. Each party also agrees to
promptly notify the other parties if it experiences any difficulty in
maintaining the records in an accurate and complete manner. This provision will
survive termination of this Agreement.

12.7. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or board action, as applicable, by such
party and when so executed and delivered this Agreement will be the valid and
binding obligation of such party enforceable in accordance with its terms.

12.8. The parties to this Agreement acknowledge and agree that all liabilities
of the Fund arising, directly or indirectly, under this agreement, will be
satisfied solely out of the assets of the Fund and that no trustee, officer,
agent or holder of shares of beneficial interest of the Fund will be personally
liable for any such liabilities. No Portfolio or series of the Fund will be
liable for the obligations or liabilities of any other Portfolio or series.

12.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Accounts or the Designated Portfolios of the Fund or other applicable terms of
this Agreement.

12.10. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights.

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative as of the date specified below.

By:_____________________________________
Name:___________________________________
Title:____________________________________

WARBURG, PINCUS TRUST

By:_____________________________________
Name:___________________________________
Title:____________________________________

WARBURG PINCUS ASSET MANAGEMENT, INC.

By:_____________________________________
Name:___________________________________
Title:____________________________________

COUNSELLORS SECURITIES INC.

By:_____________________________________
Name:___________________________________
Title:____________________________________

SCHEDULE 1

PARTICIPATION AGREEMENT

BY AND AMONG

-------------------------------
AND

WARBURG, PINCUS TRUST

AND

WARBURG PINCUS ASSET MANAGEMENT, INC.

AND

COUNSELLORS SECURITIES INC.

The following separate accounts of __________________________ are permitted in
accordance with the provisions of this Agreement to invest in Designated
Portfolios of the Fund shown in Schedule 2:

SCHEDULE 2

PARTICIPATION AGREEMENT

BY AND AMONG

AND

WARBURG, PINCUS TRUST

AND

WARBURG PINCUS ASSET MANAGEMENT, INC.

AND

COUNSELLORS SECURITIES INC.

The Separate Account(s) shown on Schedule 1 may invest in the following
Designated Portfolios of the Warburg, Pincus Trust:

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

FUND PARTICIPATION AGREEMENT

THIS AGREEMENT made as of the 1st day of February, 1998 by and between
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST ("TRUST"), a Delaware business trust,
ADVISERS MANAGERS TRUST ("MANAGERS TRUST"), a New York common law trust,
NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT"), a New York
corporation, and UNITED LIFE & ANNUITY INSURANCE COMPANY ("LIFE COMPANY"), a
life insurance company organized under the laws of the State of Louisiana.

WHEREAS, TRUST and MANAGERS TRUST are registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940, as
amended ("40 Act") as open-end, diversified management investment companies; and

WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A hereto; and

WHEREAS, MANAGERS TRUST is organized as a series fund, comprised of
several portfolios ("Series"), the currently operational of which are listed on
Appendix A hereto; and

WHEREAS, each Portfolio of TRUST will invest all of its net investable
assets in a corresponding Series of MANAGERS TRUST; and

WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies ("Participating Insurance Companies") and also offers its
shares to certain qualified pension and retirement plans; and

WHEREAS, TRUST has received an order from the SEC, dated May 5,1995
(File No. 812-9164), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the '40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Portfolios of the TRUST to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Order"); and

WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and

WHEREAS, N&B MANAGEMENT is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 and as a broker-dealer under
the Securities Exchange Act of 1934, as amended; and

WHEREAS, N&B MANAGEMENT is the administrator and distributor of the
shares of each Portfolio of TRUST and investment manager of the corresponding
Series of MANAGERS TRUST; and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value;

NOW, THEREFORE, in consideration of their mutual promises, LIFE
COMPANY, TRUST, MANAGERS TRUST and N&B MANAGEMENT agree as follows:

Article I. SALE OF TRUST SHARES

1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed in Appendix B for investment
of proceeds from Variable Contracts allocated to the designated Separate
Accounts, such shares to be offered as provided in TRUST's Prospectus.

1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of TRUST for receipt of such orders from LIFE
COMPANY and receipt by such designee shall constitute receipt by TRUST; provided
that TRUST receives notice of such order by 8:30 a.m. New York time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which TRUST calculates its net asset
value pursuant to the rules of the SEC.

1.3 TRUST agrees to redeem for cash, on LIFE COMPANY's request, any
full or fractional shares of TRUST held by LIFE COMPANY, executing such requests
on a daily basis at the net asset value next computed after receipt by TRUST or
its designee of the request for redemption. For purposes of this Section 1.3,
LIFE COMPANY shall be the designee of TRUST for receipt of requests for
redemption from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such request for
redemption by 8:30 a.m. New York time on the next following Business Day.

1.4 TRUST shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of TRUST. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. TRUST shall notify
LIFE COMPANY of the number of shares so issued as payment of such dividends and
distributions.

1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
If TRUST provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE COMPANY.

1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by LIFE COMPANY by 8:30 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.

1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY by the next Business Day, unless doing so would require
TRUST to dispose of portfolio securities or otherwise incur additional costs,
but in such event, proceeds shall be wired to LIFE COMPANY within seven days and
TRUST shall notify the person designated in writing by LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York Time the same
Business Day that LIFE COMPANY transmits the redemption order to TRUST. If LIFE
COMPANY's order requests the application of redemption proceeds from the
redemption of shares to the purchase of shares of another fund administered or
distributed by N&B MANAGEMENT, TRUST shall so apply such proceeds the same
Business Day that LIFE COMPANY transmits such order to TRUST.

1.8 Notwithstanding Section 1.7, TRUST reserves the right to suspend
the right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the 40 Act and any rules thereunder.

1.9 TRUST agrees that all shares of the Portfolios of TRUST will be
sold only to Participating Insurance Companies which have agreed to participate
in TRUST to fund their Separate Accounts and/or to certain qualified pension and
other retirement plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold directly
to the general public.

1.10 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board of Trustees of TRUST, acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
deemed necessary and in the best interests of the shareholders of such
Portfolios.

Article II. REPRESENTATIONS AND WARRANTIES

2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of
Louisiana and that it has legally and validly established each Separate Account
as a segregated asset account under such laws, and that United Variable Services
Inc., the principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934.

2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.

2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "`33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all material
respects with state insurance law suitability requirements.

2.4 LIFE COMPANY represents and warrants that the Variable Contracts
are currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.

2.5 LIFE COMPANY represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of the Trust as required to be delivered under applicable
federal or state law and interpretations of federal and state securities
regulators thereunder in connection with the offer, sale or acquisition of the
Variable Contracts.

2.6 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. TRUST shall amend its registration statement under the '33 Act and
the '40 Act from time to time as required in order to effect the continuous
offering of its shares. TRUST shall register and qualify its shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by TRUST.

2.7 TRUST represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.

2.8 TRUST represents and warrants that each Portfolio invested in by
the Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will make every effort to maintain such
qualification and will notify LIFE COMPANY immediately upon having a reasonable
basis for believing it has ceased to so qualify or might not so qualify in the
future.

Article III. PROSPECTUS AND PROXY STATEMENTS

3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes to which an issuer is subject on the issuance and transfer of its
shares.

3.2 TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual Portfolio) documents,
and any supplements thereto, to existing Variable Contract owners of LIFE
COMPANY:

(i) prospectuses and statements of additional information;

(ii) annual and semi-annual reports; and

(iii) proxy materials.

LIFE COMPANY will submit any bills for printing, duplicating
and/or mailing costs, relating to the TRUST documents described above, to TRUST
for reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use
its best efforts to control these costs. LIFE COMPANY will provide TRUST on a
semi-annual basis, or more frequently as reasonably requested by TRUST, with a
current tabulation of the number of existing Variable Contract owners of LIFE
COMPANY whose Variable Contract values are invested in TRUST. This tabulation
will be sent to TRUST in the form of a letter signed by a duly authorized
officer of LIFE COMPANY attesting to the accuracy of the information contained
in the letter. If requested by LIFE COMPANY, the TRUST shall provide such
documentation (including a final copy of the TRUST's prospectus as set in type
or in camera-ready copy) and other assistance as is reasonably necessary in
order for LIFE COMPANY to print together in one document the current prospectus
for the Variable Contracts issued by LIFE COMPANY and the current prospectus for
the TRUST. Should LIFE COMPANY wish to print any of these documents in a format
different from that provided by TRUST, LIFE COMPANY shall provide Trust with
sixty (60) days' prior written notice and LIFE COMPANY shall bear the cost
associated with any format change.

3.3 TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective Variable Contract owners of LIFE COMPANY:

(i) camera-ready copy of the current prospectus for printing by the
LIFE COMPANY;

(ii) a copy of the statement of additional information suitable for
duplication;

(iii) camera-ready copy of proxy material suitable for printing; and

(iv) camera-ready copy of the annual and semi-annual reports for
printing by the LIFE COMPANY.

3.4 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.

Article IV. SALES MATERIALS

4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and N&B MANAGEMENT, each piece of sales literature or other promotional material
in which TRUST, MANAGERS TRUST or N&B MANAGEMENT is named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if TRUST,
MANAGERS TRUST or N&B MANAGEMENT objects to its use in writing within ten (10)
Business Days after receipt of such material.

4.2 TRUST and N&B MANAGEMENT will furnish, or will cause to be
furnished, to LIFE COMPANY, each piece of sales literature or other promotional
material in which LIFE COMPANY or its Separate Accounts are named, at least
fifteen (15) Business Days prior to its intended use. No such material will be
used if LIFE COMPANY objects to its use in writing within ten (10) Business Days
after receipt of such material.

4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the written permission of LIFE COMPANY.

4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.

4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers, Inc.
rules, the '40 Act or the '33 Act.

Article V. POTENTIAL CONFLICTS

5.1 The Board of Trustees of TRUST and MANAGERS TRUST (the "Boards")
will monitor TRUST and MANAGERS TRUST, respectively, (collectively the "Funds"),
for the existence of any material irreconcilable conflict between the interests
of the Variable Contract owners of Participating Insurance Company Separate
Accounts investing in the Funds. A material irreconcilable conflict may arise
for a variety of reasons, including: (a) state insurance regulatory authority
action; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling, or
any similar action by insurance, tax, or securities regulatory authorities; (c)
an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of the Funds are being managed; (e) a difference
in voting instructions given by variable annuity and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
voting instructions of Variable Contract owners.

5.2 LIFE COMPANY will report any potential or existing conflicts to the
Boards. LIFE COMPANY will be responsible for assisting each appropriate Board in
carrying out its responsibilities under the Conditions set forth in the notice
issued by the SEC for the Funds on April 12, 1995 (the "Notice") (Investment
Company Act Release No. 21003), which LIFE COMPANY has reviewed, by providing
each appropriate Board with all information reasonably necessary for it to
consider any issues raised. This responsibility includes, but is not limited to,
an obligation by LIFE COMPANY to inform each appropriate Board whenever Variable
Contract owner voting instructions are disregarded by LIFE COMPANY. These
responsibilities will be carried out with a view only to the interests of the
Variable Contract owners.

5.3 If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material irreconcilable
conflict exists, affecting the LIFE COMPANY, LIFE COMPANY, at its expense and to
the extent reasonably practicable (as determined by a majority of disinterested
trustees or directors), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including: (a) withdrawing the assets
allocable to some or all of the Separate Accounts from the Funds or any series
thereof and reinvesting those assets in a different investment medium, which may
include another series of TRUST or MANAGERS TRUST, or another investment company
or submitting the question as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., Variable Contract owners
of one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account. If a material irreconcilable
conflict arises because of LIFE COMPANY's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, LIFE COMPANY may be required, at the
election of the relevant Fund, to withdraw its Separate Account's investment in
such Fund, and no charge or penalty will be imposed as a result of such
withdrawal. The responsibility to take such remedial action shall be carried out
with a view only to the interests of the Variable Contract owners.

For the purposes of this Section 5.3, a majority of the disinterested
members of the applicable Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the relevant Fund or N&B MANAGEMENT (or any other investment adviser of the
Funds) be required to establish a new funding medium for any Variable Contract.
Further, LIFE COMPANY shall not be required by this Section 5.3 to establish a
new funding medium for any Variable Contract if any offer to do so has been
declined by a vote of a majority of Variable Contract owners materially affected
by the irreconcilable material conflict.

5.4 Any Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.

5.5 No less than annually, LIFE COMPANY shall submit to the Boards such
reports, materials or data as such Boards may reasonably request so that the
Boards may fully carry out the obligations imposed upon them by these
Conditions. Such reports, materials, and data shall be submitted more frequently
if deemed appropriate by the applicable Boards.

Article VI. VOTING

6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners. This
condition will apply to UITSeparate Accounts investing in TRUST and to managed
separate accounts investing in MANAGERS TRUST to the extent a vote is required
with respect to matters relating to MANAGERS TRUST. Accordingly, LIFE COMPANY,
where applicable, will vote shares of a Fund held in its Separate Accounts in a
manner consistent with voting instructions timely received from its Variable
Contract owners. LIFE COMPANY will be responsible for assuring that each of its
Separate Accounts that participates in any Fund calculates voting privileges in
a manner consistent with other participants as defined in the Conditions set
forth in the Notice ("Participants"). The obligation to calculate voting
privileges in a manner consistent with all other Separate Accounts investing in
a Fund will be a contractual obligation of all Participants under the agreements
governing participation in the Funds. Each Participant will vote shares for
which it has not received timely voting instructions, as well as shares it owns,
in the same proportion as its votes those shares for which it has received
voting instructions.

6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Order,
then TRUST, MANAGERS TRUST and/or the Participants, as appropriate, shall take
such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.

Article VII. INDEMNIFICATION

7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless TRUST, MANAGERS TRUST, N&B MANAGEMENT and each of their
Trustees, directors, officers, employees and agents and each person, if any, who
controls TRUST or MANAGERS TRUST or N&B MANAGEMENT within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified Parties" for purposes of this
Article VII) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of LIFE COMPANY, which
consent shall not be unreasonably withheld) or litigation (including legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the offer, sale or acquisition of TRUST's shares or the Variable
Contracts and:

(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement or prospectus for the Variable Contracts
or contained in the Variable Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to LIFE COMPANY by or on behalf of TRUST
for use in the registration statement or prospectus for the
Variable Contracts or in the Variable Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Variable Contracts or TRUST
shares; or

(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of TRUST
not supplied by LIFE COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or persons under its control,
with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or

(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature of TRUST or any amendment thereof
or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to TRUST for inclusion therein by or on behalf of LIFE
COMPANY; or

(d) arise as a result of any failure by LIFE COMPANY to substantially
provide the services and furnish the materials under the terms of
this Agreement; or

(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.

7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
TRUST, whichever is applicable.

7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
COMPANY's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.

7.4 Indemnification by N&B MANAGEMENT. N&B MANAGEMENT agrees to
indemnify and hold harmless LIFE COMPANY and each of its directors, officers,
employees, and agents and each person, if any, who controls LIFE COMPANY within
the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article VII) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of N&B MANAGEMENT which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the
offer, sale or acquisition of TRUST's shares or the Variable Contracts and:

(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of TRUST
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to N&B MANAGEMENT or
TRUST by or on behalf of LIFE COMPANY for use in the registration
statement or prospectus for TRUST or in sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or TRUST shares; or

(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by N&B MANAGEMENT or persons
under its control) or wrongful conduct of TRUST or N&B MANAGEMENT
or persons under their control, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or

(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable Contracts,
or any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY for inclusion therein
by or on behalf of TRUST; or

(d) arise as a result of (i) a failure by TRUST to substantially
provide the services and furnish the materials under the terms of
this Agreement; or (ii) a failure by a Portfolio(s) invested in
by the Separate Account to comply with the diversification
requirements of Section 817(h) of the Code; or (iii) a failure by
a Portfolio(s) invested in by the Separate Account to qualify as
a "regulated investment company" under Subchapter M of the Code;
or

(e) arise out of or result from any material breach of any
representation and/or warranty made by N&B MANAGEMENT in this
Agreement or arise out of or result from any other material
breach of this Agreement by N&B MANAGEMENT.

7.5 N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
LIFE COMPANY.

7.6 N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified N&B MANAGEMENT in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify N&B MANAGEMENT of
any such claim shall not relieve N&B MANAGEMENT from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, N&B MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof. N&B MANAGEMENT also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from N&B MANAGEMENT to such party of N&B MANAGEMENT's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and N&B MANAGEMENT
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.

Article VIII. TERM; TERMINATION

8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.

8.2 This Agreement shall terminate in accordance with the following
provisions:

(a) At the option of LIFE COMPANY or TRUST at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to
by the parties;

(b) At the option of LIFE COMPANY, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined by LIFE COMPANY. Prompt notice of election to
terminate shall be furnished by LIFE COMPANY, said termination to
be effective ten days after receipt of notice unless TRUST makes
available a sufficient number of shares to reasonably meet the
requirements of the Variable Contracts within said ten-day
period;

(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST by the SEC, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in LIFE COMPANY's reasonable judgment, materially
impair TRUST's ability to meet and perform Trust's obligations
and duties hereunder. Prompt notice of election to terminate
shall be furnished by LIFE COMPANY with said termination to be
effective upon receipt of notice;

(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the National
Association of Securities Dealers, Inc., or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in TRUST's reasonable judgment, materially impair
LIFE COMPANY's ability to meet and perform its obligations and
duties hereunder. Prompt notice of election to terminate shall be
furnished by TRUST with said termination to be effective upon
receipt of notice;

(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law
precludes the use of such shares as the underlying investment
medium of Variable Contracts issued or to be issued by LIFE
COMPANY. Termination shall be effective upon such occurrence
without notice;

(f) At the option of TRUST if the Variable Contracts cease to qualify
as annuity contracts or life insurance contracts, as applicable,
under the Code, or if TRUST reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall be effective
upon receipt of notice by LIFE COMPANY;

(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of LIFE COMPANY within ten days after
written notice of such breach is delivered to TRUST;

(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of TRUST within ten days after written
notice of such breach is delivered to LIFE COMPANY;

(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately upon
such occurrence without notice;

(j) In the event this Agreement is assigned without the prior written
consent of LIFE COMPANY, TRUST, MANAGERS TRUST and N&B
MANAGEMENT, termination shall be effective immediately upon such
occurrence without notice.

8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or LIFE COMPANY, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in TRUST,
redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, TRUST and N&B MANAGEMENT, as
promptly as is practicable under the circumstances, shall notify LIFE COMPANY
whether TRUST elects to continue to make TRUST shares available after such
termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY may terminate the Agreement, as so
continued pursuant to this Section 8.3, upon sixty (60) days prior written
notice to the other party.

8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the Separate
Accounts), and LIFE COMPANY shall not prevent Variable Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Variable Contracts, until thirty (30) days after the LIFE COMPANY shall have
notified TRUST of its intention to do so.

Article IX. NOTICES

Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party.

If to TRUST, MANAGERS TRUST or N&B MANAGEMENT:

Neuberger&Berman Management Incorporated

605 Third Avenue
New York, NY 10158-0006

Attention: Ellen Metzger, General Counsel

If to LIFE COMPANY:

Marketing One
851 SW Sixth Avenue
Portland, OR 97204-1346

Attention: Joel S. Kaplan, Executive Vice President

cc: Ron Hyde
Telecopier: (503) 220-0515

Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.

Article X. MISCELLANEOUS

10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.

10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.

10.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.

10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.

10.5 The parties agree that the assets and liabilities of each Series
are separate and distinct from the assets and liabilities of each other Series.
No Series shall be liable or shall be charged for any debt, obligation or
liability of any other Series. No Trustee, officer or agent shall be personally
liable for such debt, obligation or liability of any Series or Portfolio and no
Portfolio or other investor, other than the Portfolio or other investors
investing in the Series which incurs a debt, obligation or liability, shall be
liable therefor.

10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
National Association of Securities Dealers, Inc. and state insurance regulators)
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.

10.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.

10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
MANAGERS TRUST, N&B MANAGEMENT and the LIFE COMPANY.

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Fund Participation Agreement as of the date and year first above
written.

NEUBERGER&BERMAN
ADVISERS MANAGEMENT TRUST

By:________________________________

Name:
Title:

ADVISERS MANAGERS TRUST

By:________________________________

Name:
Title:

NEUBERGER&BERMAN

MANAGEMENT INCORPORATED

By:________________________________

Name:
Title:

UNITED LIFE & ANNUITY
INSURANCE COMPANY

By:________________________________

Name:
Title:

<TABLE>
<CAPTION>
APPENDIX A
<S> <C>
Neuberger&Berman Advisers Corresponding Series of
Management Trust and its Series (Portfolios) Advisers Managers Trust (Series)

Guardian Portfolio AMT Guardian Investments

Limited Maturity Bond Portfolio AMT Limited Maturity Bond Investments

Mid-Cap Growth Portfolio AMT Mid-Cap Growth Investments

Partners Portfolio AMT Partners Investments
</TABLE>

APPENDIX B

Separate Accounts Selected Portfolios

Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866

April 30, 1998

Board of Directors
United Life & Annuity
Insurance Company
III United Plaza
8545 United Plaza Boulevard
Baton Rouge, LA 70809

RE: Opinion of Counsel - United Life & Annuity Separate Account One

Gentlemen:

You have requested our Opinion of Counsel in connection with the filing with
the Securities and Exchange Commission of a Post-Effective Amendment to a
Registration Statement on Form N-4 for the Individual and Group Fixed and
Variable Deferred Annuity Contracts and Certificates (collectively,
the "Contracts") to be issued by United Life & Annuity Insurance Company
and its separate account, United Life & Annuity Separate Account One.

We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.

We are of the following opinions:

1. United Life & Annuity Separate Account One is a unit investment
trust as that term is defined in Section 4(2) of the Investment Company Act
of 1940 (the "Act"), and is currently registered with the Securities and
Exchange Commission, pursuant to Section 8(a) of the Act.

2. Upon the acceptance of purchase payments made by an Owner or
Certificate Holder pursuant to a Contract issued in accordance with the
Prospectus contained in the Registration Statement and upon compliance with
applicable law, such an Owner or Certificate Holder will have a
legally-issued, fully paid, non-assessable contractual interest under such
Contract.

You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.

We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of
the Registration Statement.

Sincerely,

BLAZZARD, GRODD & HASENAUER, P.C.

By: /S/ LYNN KORMAN STONE
_____________________________________
Lynn Korman Stone

The Board of Directors and Stockholder
United Life & Annuity Insurance Company:

/S/ KPMG PEAT MARWICK LLP

Dallas, Texas
April 30, 1998

The Board of Directors and Stockholder
United Life & Annuity Insurance Company:

We consent to incorporation by reference in the registration statements
(Nos. 33-91362 and 33-95778) on Form N-4, as amended and filed by United
Life & Annuity Insurance Company, of our report dated February 20, 1998,
relating to the consolidated balance sheets of United Life & Annuity
Insurance Company and subsidiary as of December 31, 1997 and 1996, and the
related consolidated statements of income, cash flows, and stockholder's
equity for the year ended December 31, 1997, the periods from July 24,
1996 to December 31, 1996 and January 1, 1996 to July 23, 1996, and the
related financial statement schedules III, IV and V.

/S/ KPMG PEAT MARWICK LLP

Dallas, Texas
April 30, 1998

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 4 to Registration
Statement No. 33-95778 of United Life & Annuity Separate Account One
(formerly United Companies Separate Account One) on Form N-4 of our report
dated February 29, 1996 relating to the financial statements of United
Life & Annuity Insurance Company (formerly United Companies Life Insurance
Company) for the year ended December 31, 1995.

/s/DELOITTE & TOUCHE LLP

Baton Rouge, Louisiana
April 30, 1998

UNITED LIFE & ANNUITY INSURANCE COMPANY
AVERAGE ANNUAL TOTAL RETURN
CALCULATION METHOD

The average annual compounded rate of return (denoted by T below) is the
rate that would equate the initial amount invested to the ending redeemable
value according to the formula:

P(1=T)^n=ERV
Where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000 payment
made at the beginning of the 1, 5, or 10 year periods at
the end of the 1, 5, or 10 year periods (or fractional portion
thereof) ^ is the symbol for exponentiation

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY
SpectraSelect Variable Annuity
SEC Average Annual Total Return
P(1+T)^N=ERV
Valuation Date 12/31/97
One Year
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C>
MFS Emerging Growth 1,000 1.00 1,140 13.97% 13.97%
Scudder International 1,000 1.00 1,013 1.34% 1.34%
Van Eck Gold & Natural 1,000 1.00 908 -9.24% -9.24%
Alger American Growth 1,000 1.00 1,178 17.75% 17.75%
Dreyfus Growth & Income 1,000 1.00 1,084 8.37% 8.37%
Dreyfus Stock Index 1,000 1.00 1,249 24.85% 24.85%
MFS Total Return 1,000 1.00 1,134 13.38% 13.38%
Federated High Income Bd 1,000 1.00 1,060 6.03% 6.03%
Federated Utility 1,000 1.00 1,186 18.63% 18.63%
Federated U S Government 1,000 1.00 1,009 0.86% 0.86%

Five Year
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
MFS Emerging Growth 1,000 2.44 1,540 19.37% 53.99%
Scudder International 1,000 5.00 1,659 10.66% 65.94%
Van Eck Gold & Natural 1,000 5.00 1,795 12.41% 79.50%
Alger American Growth 1,000 5.00 1,962 14.42% 96.15%
Dreyfus Growth & Income 1,000 3.67 1,994 20.71% 99.39%
Dreyfus Stock Index 1,000 5.00 1,675 10.87% 67.52%
MFS Total Return 1,000 2.99 1,629 17.71% 62.87%
Federated High Income Bd 1,000 3.84 1,172 4.21% 17.16%
Federated Utility 1,000 3.89 1,425 9.55% 42.55%
Federated U S Government 1,000 3.76 1,063 1.64% 6.30%

10 Year
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
MFS Emerging Growth 1,000 2.44 1,540 19.37% 53.99%
Scudder International 1,000 10.00 2,347 8.91% 134.74%
Van Eck Gold & Natural 1,000 8.33 1,451 4.57% 45.05%
Alger American Growth 1,000 8.98 3,765 15.92% 276.54%
Dreyfus Growth & Income 1,000 3.67 1,994 20.71% 99.39%
Dreyfus Stock Index 1,000 8.25 1,972 8.57% 97.21%
MFS Total Return 1,000 2.99 1,629 17.71% 62.87%
Federated High Income Bd 1,000 3.84 1,172 4.21% 17.16%
Federated Utility 1,000 3.89 1,425 9.55% 42.55%
Federated U S Government 1,000 3.76 1,063 1.64% 6.30%

Since Inception
Purchase Years Total Value of Avg. Annual Total
Fund Amount Invested Units Held Total Return Return
- ---- ------ -------- ---------- ------------ ------
MFS Emerging Growth 1,000 2.44 1,540 19.37% 53.99%
Scudder International 1,000 10.67 2,075 7.08% 107.55%
Van Eck Gold & Natural 1,000 8.33 1,451 4.57% 45.05%
Alger American Growth 1,000 8.98 3,765 15.92% 276.54%
Dreyfus Growth & Income 1,000 3.67 1,994 20.71% 99.39%
Dreyfus Stock Index 1,000 8.25 1,972 8.57% 97.21%
MFS Total Return 1,000 2.99 1,629 17.71% 62.87%
Federated High Income Bd 1,000 3.84 1,172 4.21% 17.16%
Federated Utility 1,000 3.89 1,425 9.55% 42.55%
Federated U S Government 1,000 3.76 1,063 1.64% 6.30%
</TABLE>

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY
SpectraSelect Variable Annuity
One Year

MFS Emerging Growth

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
<S> <C> <C> <C> <C> <C> <C>
12/31/96 Purchase 1,000.00 11.740470 85.175 85.175 1,000.00
12/31/97 Value before SC 14.085036 85.175 1,199.70
12/31/97 Surrender Charge 6.00% (60.00) 14.085036 (4.260) 80.916 1,139.70
12/31/97 Ending Redeemable Value 14.085036 0.000 80.916 1,139.70

Average Annual Total Return: 13.97%

Scudder International

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 11.424315 87.533 87.533 1,000.00
12/31/97 Value before SC 12.262406 87.533 1,073.36
12/31/97 Surrender Charge 6.00% (60.00) 12.262406 (4.893) 82.640 1,013.36
12/31/97 Ending Redeemable Value 12.262406 0.000 82.640 1,013.36

Average Annual Total Return: 1.34%

Van Eck Gold & Natural Resources

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 11.781647 84.878 84.878 1,000.00
12/31/97 Value before SC 11.400042 84.878 967.61
12/31/97 Surrender Charge 6.00% (60.00) 11.400042 (5.263) 79.615 907.61
12/31/97 Ending Redeemable Value 11.400042 0.000 79.615 907.61

Average Annual Total Return: -9.24%

Alger American Growth

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 11.214065 89.174 89.174 1,000.00
12/31/97 Value before SC 13.877779 89.174 1,237.53
12/31/97 Surrender Charge 6.00% (60.00) 13.877779 (4.323) 84.850 1,177.53
12/31/97 Ending Redeemable Value 13.877779 0.000 84.850 1,177.53

Average Annual Total Return: 17.75%

Dreyfus Growth & Income

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 12.449944 80.322 80.322 1,000.00
12/31/97 Value before SC 14.238739 80.322 1,143.68
12/31/97 Surrender Charge 6.00% (60.00) 14.238739 (4.214) 76.108 1,083.68
12/31/97 Ending Redeemable Value 14.238739 0.000 76.108 1,083.68

Average Annual Total Return: 8.37%

Dreyfus Stock Index

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 12.245197 81.665 81.665 1,000.00
12/31/97 Value before SC 16.022845 81.665 1,308.50
12/31/97 Surrender Charge 6.00% (60.00) 16.022845 (3.745) 77.920 1,248.50
12/31/97 Ending Redeemable Value 16.022845 0.000 77.920 1,248.50

Average Annual Total Return: 24.85%

MFS Total Return

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 11.532531 86.711 86.711 1,000.00
12/31/97 Value before SC 13.766968 86.711 1,193.75
12/31/97 Surrender Charge 6.00% (60.00) 13.766968 (4.358) 82.353 1,133.75
12/31/97 Ending Redeemable Value 13.766968 0.000 82.353 1,133.75

Average Annual Total Return: 13.38%

Federated High Income Bond

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 11.430857 87.483 87.483 1,000.00
12/31/97 Value before SC 12.805491 87.483 1,120.26
12/31/97 Surrender Charge 6.00% (60.00) 12.805491 (4.685) 82.797 1,060.26
12/31/97 Ending Redeemable Value 12.805491 0.000 82.797 1,060.26

Average Annual Total Return: 6.03%

Federated Utility

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 11.309904 88.418 88.418 1,000.00
12/31/97 Value before SC 14.095154 88.418 1,246.27
12/31/97 Surrender Charge 6.00% (60.00) 14.095154 (4.257) 84.161 1,186.27
12/31/97 Ending Redeemable Value 14.095154 0.000 84.161 1,186.27

Average Annual Total Return: 18.63%

Federated US Government Bond

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/96 Purchase 1,000.00 10.393777 96.211 96.211 1,000.00
12/31/97 Value before SC 11.106355 96.211 1,068.56
12/31/97 Surrender Charge 6.00% (60.00) 11.106355 (5.402) 90.809 1,008.56
12/31/97 Ending Redeemable Value 11.106355 0.000 90.809 1,008.56

Average Annual Total Return: 0.86%
</TABLE>

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY
SpectraSelect Variable Annuity
Five Years

MFS Emerging Growth

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
<S> <C> <C> <C> <C> <C> <C>
07/24/95 Purchase 1,000.00 8.859339 112.875 112.875 1,000.00
12/31/97 Value before SC 14.085036 112.875 1,589.85
12/31/97 Surrender Charge 5.00% (50.00) 14.085036 (3.550) 109.325 1,539.85
12/31/97 Ending Redeemable Value 14.085036 0.000 109.325 1,539.85

Average Annual Total Return: 19.37%

Scudder International

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/92 Purchase 1,000.00 7.301672 136.955 136.955 1,000.00
12/31/97 Value before SC 12.262406 136.955 1,679.40
12/31/97 Surrender Charge 2.00% (20.00) 12.262406 (1.631) 135.324 1,659.40
12/31/97 Ending Redeemable Value 12.262406 0.000 135.324 1,659.40

Average Annual Total Return: 10.66%

Van Eck Gold & Natural Resources

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/92 Purchase 1,000.00 6.281125 159.207 159.207 1,000.00
12/31/97 Value before SC 11.400042 159.207 1,814.97
12/31/97 Surrender Charge 2.00% (20.00) 11.400042 (1.754) 157.453 1,794.97
12/31/97 Ending Redeemable Value 11.400042 0.000 157.453 1,794.97

Average Annual Total Return: 12.41%

Alger American Growth

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/92 Purchase 1,000.00 7.003658 142.783 142.783 1,000.00
12/31/97 Value before SC 13.877779 142.783 1,981.50
12/31/97 Surrender Charge 2.00% (20.00) 13.877779 (1.441) 141.341 1,961.50
12/31/97 Ending Redeemable Value 13.877779 0.000 141.341 1,961.50

Average Annual Total Return: 14.42%

Dreyfus Growth & Income

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
05/02/94 Purchase 1,000.00 7.000747 142.842 142.842 1,000.00
12/31/97 Value before SC 14.238739 142.842 2,033.89
12/31/97 Surrender Charge 4.00% (40.00) 14.238739 (2.809) 140.033 1,993.89
12/31/97 Ending Redeemable Value 14.238739 0.000 140.033 1,993.89

Average Annual Total Return: 20.71%

Dreyfus Stock Index

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/92 Purchase 1,000.00 9.451994 105.798 105.798 1,000.00
12/31/97 Value before SC 16.022845 105.798 1,695.18
12/31/97 Surrender Charge 2.00% (20.00) 16.022845 (1.248) 104.550 1,675.18
12/31/97 Ending Redeemable Value 16.022845 0.000 104.550 1,675.18

Average Annual Total Return: 10.87%

MFS Total Return

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
01/03/95 Purchase 1,000.00 8.201057 121.935 121.935 1,000.00
12/31/97 Value before SC 13.766968 121.935 1,678.68
12/31/97 Surrender Charge 5.00% (50.00) 13.766968 (3.632) 118.304 1,628.68
12/31/97 Ending Redeemable Value 13.766968 0.000 118.304 1,628.68

Average Annual Total Return: 17.71%

Federated High Income Bond

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
03/01/94 Purchase 1,000.00 10.569289 94.614 94.614 1,000.00
12/31/97 Value before SC 12.805491 94.614 1,211.58
12/31/97 Surrender Charge 4.00% (40.00) 12.805491 (3.124) 91.490 1,171.58
12/31/97 Ending Redeemable Value 12.805491 0.000 91.490 1,171.58

Average Annual Total Return: 4.21%

Federated Utility

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
02/10/94 Purchase 1,000.00 9.618020 103.971 103.971 1,000.00
12/31/97 Value before SC 14.095154 103.971 1,465.49
12/31/97 Surrender Charge 4.00% (40.00) 14.095154 (2.838) 101.134 1,425.49
12/31/97 Ending Redeemable Value 14.095154 0.000 101.134 1,425.49

Average Annual Total Return: 9.55%

Federated US Government Bond

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
03/28/94 Purchase 1,000.00 10.069003 99.315 99.315 1,000.00
12/31/97 Value before SC 11.106355 99.315 1,103.02
12/31/97 Surrender Charge 4.00% (40.00) 11.106355 (3.602) 95.713 1,063.02
12/31/97 Ending Redeemable Value 11.106355 0.000 95.713 1,063.02

Average Annual Total Return: 1.64%
</TABLE>

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY
SpectraSelect Variable Annuity
Ten Years

MFS Emerging Growth

Average Annual Total Return: 19.37%

Scudder International

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
12/31/87 Purchase 1,000.00 5.223764 191.433 191.433 1,000.00
12/31/97 Value before SC 12.262406 191.433 2,347.43
12/31/97 Surrender Charge 0.00% 0.00 12.262406 0.000 191.433 2,347.43
12/31/97 Ending Redeemable Value 12.262406 0.000 191.433 2,347.43

Average Annual Total Return: 8.91%

Van Eck Gold & Natural Resources

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
09/01/89 Purchase 1,000.00 7.859385 127.236 127.236 1,000.00
12/31/97 Value before SC 11.400042 127.236 1,450.50
12/31/97 Surrender Charge 0.00% 0.00 11.400042 0.000 127.236 1,450.50
12/31/97 Ending Redeemable Value 11.400042 0.000 127.236 1,450.50

Average Annual Total Return: 4.57%

Alger American Growth

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
01/09/89 Purchase 1,000.00 3.685629 271.324 271.324 1,000.00
12/31/97 Value before SC 13.877779 271.324 3,765.38
12/31/97 Surrender Charge 0.00% 0.00 13.877779 0.000 271.324 3,765.38
12/31/97 Ending Redeemable Value 13.877779 0.000 271.324 3,765.38

Average Annual Total Return: 15.92%

Dreyfus Growth & Income

Average Annual Total Return: 20.71%

Dreyfus Stock Index

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
09/29/89 Purchase 1,000.00 8.124629 123.083 123.083 1,000.00
12/31/97 Value before SC 16.022845 123.083 1,972.13
12/31/97 Surrender Charge 0.00% 0.00 16.022845 0.000 123.083 1,972.13
12/31/97 Ending Redeemable Value 16.022845 0.000 123.083 1,972.13

Average Annual Total Return: 8.57%

MFS Total Return

Average Annual Total Return: 17.71%

Federated High Income Bond

Average Annual Total Return: 4.21%

Federated Utility

Average Annual Total Return: 9.55%

Federated US Government Bond

Average Annual Total Return: 1.64%
</TABLE>

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY
SpectraSelect Variable Annuity
Since Inception

MFS Emerging Growth

Average Annual Total Return: 19.37%

Scudder International

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
05/01/87 Purchase 1,000.00 5.908267 169.254 169.254 1,000.00
12/31/97 Value before SC 12.262406 169.254 2,075.47
12/31/97 Surrender Charge 0.00% 0.00 12.262406 0.000 169.254 2,075.47
12/31/97 Ending Redeemable Value 12.262406 0.000 169.254 2,075.47

Average Annual Total Return: 7.08%

Van Eck Gold & Natural Resources

Average Annual Total Return: 4.57%

Alger American Growth

Average Annual Total Return: 15.92%

Dreyfus Growth & Income

Average Annual Total Return: 20.71%

Dreyfus Stock Index

Average Annual Total Return: 8.57%

MFS Total Return

Average Annual Total Return: 17.71%

Federated High Income Bond

Average Annual Total Return: 4.21%

Federated Utility

Average Annual Total Return: 9.55%

Federated US Government Bond

Average Annual Total Return: 1.64%
</TABLE>

<TABLE>
<CAPTION>
UNITED LIFE & ANNUITY INSURANCE COMPANY
SpectraSelect Variable Annuity

Scudder Money Market

Date Transaction Rate Amount Unit Value Units per TransTotal Units Held Total Value
<S> <C> <C> <C> <C> <C> <C>
12/24/97 Purchase 1,000.00 10.741224 93.099 93.099 1,000.00
12/31/97 Value before SC 10.748825 93.099 1,000.70
12/31/97 Surrender Charge 0.00% 10.748825 93.099 1,000.70
12/31/97 Ending Redeemable Value 10.748825 93.099 1,000.70

Base Period Return: 0.070765%

Yield: 3.69%

Effective Yield: 3.76%
</TABLE>

Yield quotation is based on the seven days ended on 12/31/97, computed by
determining the net change, exclusive of capital charges, in the value of a
hypothetical pre-existing account having a balance of one accumulation unit of
the sub-account at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from contractowner accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
(365/7) with the resulting yield figure carried to at least the nearest
hundredth of one percent.

Effective Yield = (Base Period Return=1)^(365/7)-1