As Filed with the Securities and Exchange Commission on January 17, 2002.
Registration No. 333-72572
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Pre-Effective Amendment No. 1
To FORM S-6
For Registration Under the Securities Act of 1933 of the Securities of Unit
Investment Trusts Registered on Form N-8B-2
GE Life & Annuity Separate Account II
(Exact Name of Trust)
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GE Life and Annuity Assurance Company
(Name of Depositor)
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6610 West Broad Street, Richmond, Virginia 23230
(Address of Principal Executive Office)
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Donita M. King
Senior Vice President, General Counsel and Secretary
GE Life and Annuity Assurance Company
6610 W. Broad Street
Richmond, VA 23230
(Name and Complete Address of Agent for Service)
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement
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Title of Securities Being Registered: Flexible Premium Single Life and
Joint and Last Survivor Variable Life Insurance
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective in such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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GE Life & Annuity Separate Account II
Prospectus For The
Flexible Premium Single Life and Joint and
Last Survivor Variable Life Insurance Policy
Single Life Policy
Form P1258 7/01
Joint and Last Survivor Life Policy
Form P1259 7/01
issued by:
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, Virginia 23230
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This prospectus describes an individual flexible premium life insurance policy
(the "Policy") offered by GE Life and Annuity Assurance Company ("we," "us,"
"our," or the "Company"). We offer the Policy on either a single life or joint
and last survivor basis. If you purchase the Policy on a single life basis, we
will pay a Death Benefit upon the death of the Insured. If you purchase the
Policy on a joint and last survivor basis, we will pay a Death Benefit only on
the death of the Last Insured. The Policy provides life insurance protection,
premium flexibility, and the ability to change Death Benefits.
Your Account Value may accumulate on a variable or fixed basis, or both. If you
choose our variable option, we will invest your Account Value in the
Subaccounts of Separate Account II that you select. Each Subaccount invests
exclusively in the shares of a portfolio of a Fund. We list the Funds, and
their currently available portfolios, below.
AIM Variable Insurance Funds Fidelity Variable Insurance
AIM V.I. Capital Products Fund (VIP)
Appreciation Fund VIP Equity-Income Portfolio
AIM V.I. Growth Fund VIP Growth Portfolio
AIM V.I. Value Fund
Fidelity Variable Insurance
Alliance Variable Products Products Fund II (VIP II)
Series Fund, Inc. VIP II ContraFund(R)
Portfolio
Growth and Income Portfolio Fidelity Variable Insurance
Premier Growth Portfolio Products Fund III (VIP III)
Quasar Portfolio VIP III Growth & Income
Portfolio
Dreyfus
VIP III Mid Cap Portfolio
Dreyfus Investment
Portfolios-Emerging Markets GE Investments Funds, Inc.
Portfolio Mid-Cap Value Equity Fund
The Dreyfus Socially Money Market Fund
Responsible Growth Fund, Premier Growth Equity Fund
Inc. S&P 500(R) Index Fund
Small-Cap Value Equity Fund
Federated Insurance Series U.S. Equity Fund
Federated High Income Bond Value Equity Fund
Fund II
Federated International
Small Company Fund II
Janus Aspen Series Oppenheimer Variable Account
Aggressive Growth Portfolio Funds
Balanced Portfolio Oppenheimer Global
Capital Appreciation Securities Fund/VA
Portfolio Oppenheimer Main Street
Global Life Sciences Growth & Income Fund/VA
Portfolio
Global Technology Portfolio PIMCO Variable Insurance
Growth Portfolio Trust
International Growth Foreign Bond Portfolio
Portfolio High Yield Bond Portfolio
Worldwide Growth Portfolio Long-Term U.S. Government
Bond Portfolio
MFS(R) Variable Insurance
Trust Total Return Bond Portfolio
MFS(R) Investors Growth Rydex Variable Trust
Stock Series (formerly Rydex OTC Fund
known as MFS(R) Growth
Series)
MFS(R) Investors Trust
Series (formerly known as
MFS(R) Growth With Income
Series)
MFS(R) New Discovery Series
MFS(R) Utilities Series
Not all of these portfolios may be available in all states or in all markets.
If you choose our fixed option, your Account Value will grow at a rate of at
least 4%. We take the investment risk for Account Value allocated to the
Guarantee Account.
Your Policy provides for a Surrender Value. The amount of your Surrender Value
will depend upon the investment performance of the portfolio(s) you select and
interest credited on Account Value in the Guarantee Account. You bear the
investment risk of investing in Separate Account II.
You may cancel your Policy during the free-look period. Please note that
replacing your existing insurance coverage with the Policy might not be to your
advantage.
The Securities and Exchange Commission has not approved these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Neither the U.S. Government nor any governmental agency insures or guarantees
your investment in the Policy.
This prospectus contains information about Separate Account II that you should
know before investing. Please read this prospectus carefully before investing
and keep it for future reference.
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not be lawfully made.
The date of this prospectus is February 1, 2002.
Table of Contents
Definitions.................................................................
Annual Expense Table........................................................
Portfolio Annual Expenses..................................................
Other Policies.............................................................
Policy Summary..............................................................
Risk Summary................................................................
GE Life and Annuity Assurance Company.......................................
State Regulation...........................................................
Separate Account II.........................................................
Changes to Separate Account II.............................................
The Portfolios..............................................................
Subaccounts................................................................
Your Right to Vote Portfolio Shares........................................
Guarantee Account...........................................................
Charges and Deductions......................................................
Premium Charge.............................................................
Monthly Deduction..........................................................
Cost of Insurance..........................................................
Surrender Charge...........................................................
Partial Surrender Processing Fee...........................................
Other Charges..............................................................
Reduction of Charges for Group Sales.......................................
The Policy..................................................................
Applying for a Policy......................................................
Owner......................................................................
Beneficiary................................................................
Changing the Owner or Beneficiary..........................................
Canceling a Policy.........................................................
Premiums....................................................................
General....................................................................
Tax Free Exchanges (1035 Exchanges)........................................
Certain Internal Exchanges.................................................
Periodic Premium Plan......................................................
Minimum Premium Payment....................................................
Allocating Premiums........................................................
How Your Account Value Varies...............................................
Account Value..............................................................
Surrender Value............................................................
Subaccount Values..........................................................
Unit Values................................................................
Net Investment Factor......................................................
i
Transfers...................................................................
General....................................................................
Dollar-Cost Averaging......................................................
Portfolio Rebalancing......................................................
Transfers by Third Parties.................................................
Death Benefits..............................................................
Amount of Death Benefit Payable............................................
Death Benefit Options......................................................
Changing the Death Benefit Option..........................................
Changing the Specified Amount..............................................
Surrenders and Partial Surrenders...........................................
Surrenders.................................................................
Partial Surrenders.........................................................
Effect of Partial Surrenders on Account Value and Death Benefit Proceeds...
Loans.......................................................................
General....................................................................
Repayment of Policy Debt...................................................
Effect of Policy Loans.....................................................
Termination.................................................................
Premium To Prevent Termination.............................................
Your Policy will Remain in Effect During the Grace Period..................
Reinstatement..............................................................
Payments and Telephone Transactions.........................................
Requesting Payments........................................................
Telephone Transactions.....................................................
Tax Considerations..........................................................
Introduction...............................................................
Tax Status of the Policy...................................................
Tax Treatment of Policies -- General.......................................
Special Rules for Modified Endowment Contracts (MECs)......................
Income Tax Withholding.....................................................
Tax Status of the Company..................................................
Changes in the Law and Other Considerations................................
Other Policy Information....................................................
Optional Payment Plans.....................................................
Dividends..................................................................
Incontestability...........................................................
Suicide Exclusion..........................................................
Misstatement of Age or Gender..............................................
Written Notice.............................................................
Trustee....................................................................
ii
Other Changes..............................................................
Reports....................................................................
Supplemental Benefits......................................................
Using the Policy as Collateral.............................................
Reinsurance................................................................
Legal Proceedings..........................................................
Additional Information......................................................
Sale of the Policies.......................................................
Legal Matters..............................................................
Experts....................................................................
Actuarial Matters..........................................................
Financial Statements.......................................................
Executive Officers and Directors...........................................
Other Information..........................................................
Hypothetical Illustrations.................................................
iii
Definitions
We have tried to make this prospectus as understandable as possible. However,
in explaining how the Policy works, we have had to use certain terms that have
special meanings. We define these terms below.
Account Value -- The total amount under the Policy in each Subaccount and the
General Account.
Age -- The Age on the Insured's birthday nearest the Policy Date or a Policy
Anniversary.
Attained Age -- The Insured's Age on the Policy Date plus the number of full
years since the Policy Date.
Beneficiary -- The person or entity you designate to receive the Death Benefit
payable at the death of the Insured under a single life Policy and the Last
Insured under a joint and last survivor Policy.
Continuation Amount -- A cumulative amount set forth on the Policy data pages
for each month of the Continuation Period representing the minimum Net Total
Premium required to keep the Policy in force during the Continuation Period.
Continuation Period -- The number of Policy years during which the Policy will
not lapse if the Net Total Premium is at least equal to the Continuation Amount
for the number of Policy Months that the Policy has been in force.
Death Benefit -- The amount determined under the Death Benefit option in effect
as of the date of death of the Insured under a single life Policy or the Last
Insured under a joint and last survivor Policy.
Death Benefit Proceeds -- The amount of proceeds determined under the
applicable Death Benefit option.
Fund -- Any open-end management investment company or unit investment trust in
which Separate Account II invests.
GE Life & Annuity -- GE Life and Annuity Assurance Company.
General Account -- Assets of GE Life & Annuity other than those allocated to
Separate Account II or any of our other separate accounts.
Guarantee Account -- Part of our General Account that provides a guaranteed
interest rate for a specified interest rate guarantee period. This account is
not part of and does not depend on the investment performance of Separate
Account II.
Home Office -- Our offices at 6610 West Broad Street Richmond, Virginia 23230,
1-800-352-9910. The term "we" may be used throughout this prospectus in
1
connection with calculations of Account Value (Cash Value); in these instances,
the term "we" has the same meaning as Home Office.
Insured -- The person(s) upon whose lives are Insured under the Policy.
Investment Options -- The Guarantee Account and the Subaccounts.
Monthly Anniversary Day -- The same day in each month as the Policy Date.
Net Premium -- The portion of each premium you allocate to one or more
Investment Options. It is equal to the premium paid times the Net Premium
Factor.
Net Premium Factor -- The factor we use in determining the Net Premium which
reflects a deduction from each premium paid.
Net Total Premium -- On any date, Net Total Premium equals the total of all
premiums paid to that date less (a) divided by (b), where:
(a) is any outstanding Policy Debt, plus the sum of any partial surrenders
to date; and
(b) is the Net Premium Factor.
Optional Payment Plan -- A plan under which any part of Death Benefit Proceeds
or Surrender Value proceeds can be used to provide a series of periodic
payments to you or a Beneficiary.
Owner -- The Owner of the Policy. "You" or "your" refers to the Owner. You may
also name Contingent Owners.
Planned Periodic Premium -- A level premium amount scheduled for payment at
fixed intervals over a specified period of time.
Policy -- The Policy with any attached application(s), any riders, and
endorsements.
Policy Date -- The date as of which we issue the Policy and the date as of
which the Policy becomes effective. We measure Policy years and anniversaries
from the Policy Date. The Policy Date is shown on the Policy data pages. If the
Policy Date would otherwise fall on the 29th, 30th, or 31st day of a month, the
Policy Date will be the 28th.
Policy Debt -- The amount of outstanding loans plus accrued interest. Policy
Debt is deducted from proceeds payable at the death of the Insured under a
single life Policy and the Last Insured under a joint and last survivor Policy
or at the time of surrender.
Policy Month -- A one-month period beginning on a Monthly Anniversary Day and
ending on the day immediately preceding the next Monthly Anniversary Day.
2
Separate Account II -- GE Life & Annuity Separate Account II, the segregated
asset account of GE Life & Annuity to which you allocate Net Premiums.
Subaccounts -- A subdivision of Separate Account II, the assets of which are
invested exclusively in a corresponding portfolio of a Fund. Not all
Subaccounts may be available in all states or markets.
Specified Amount -- An amount we use in determining the insurance coverage.
Surrender Value -- The amount we pay you when you surrender the Policy. It is
equal to Account Value minus any Policy Debt and minus any applicable surrender
charge.
Unit Value -- A unit of measure we use to calculate the Account Value for each
Subaccount.
Valuation Day -- For each Subaccount, each day on which the New York Stock
Exchange is open for regular trading except for days that the Subaccount's
corresponding Fund does not value its shares. The term "date" may be used
throughout this prospectus in connection with calculations of Account Value; in
those instances, the term "date" has the same meaning as Valuation Day.
Valuation Period -- The period that starts at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next succeeding Valuation Day.
3
Annual Expense Table
EXPENSE TABLE
This table describes the various costs and expenses that you will pay (either
directly or indirectly) if you purchase the Policy. The table reflects expenses
of the Subaccounts of the Separate Account and of the portfolios. For more
complete descriptions of the various costs and expenses involved, See "Charges
and Deductions" in this Prospectus, and the Fund prospectuses.
Owner Transaction Expenses:/1/
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Maximum surrender charge (per $1,000 of Specified
Amount). We reduce the surrender charge percentage over
time. In general, the later you surrender, the lower the
surrender charge will be. $37.19
Maximum Premium Charge/2/ 7.5%
Transfer Charge (for each transfer after the twelfth in a
calendar year)/3/ $20
Partial Surrender Processing Fee/4/ lesser of $25 or 2%
of amount withdrawn
Maximum Monthly Policy Charge/5/ $10
Maximum Monthly Expense Charge (per $1,000 of Specified
Amount for the first ten Policy years)/6/ $0.83
Maximum Specified Amount Increase Charge (per $1,000 of
increase in Specified Amount for the first ten Policy
years after increase)/6/ $0.83
Expenses (as a percentage of Annual Account Value in
Separate Account II):
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Maximum Mortality and Expense Risk Charge
For the first $50,000 of unloaned Account Value in the
Subaccounts ($100,000 for a joint and last survivor
Policy). .40%
For unloaned Account Value in the Subaccounts above
$50,000 ($100,000 for a joint and last survivor Policy)
for the first twenty Policy years only. .05%
Cost of Insurance Charge (maximum monthly charge per
$1,000 of coverage)/7/ 83.33
Rider Options Available with the Policy
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Riders Available to both Single and Joint and Last Survivor Policies
Accelerated Benefit Rider Charge $0
Death Benefit Enhancement Rider Cost of Insurance Charge
(maximum monthly charge per $1,000 of coverage) $83.33
Death Benefit Enhanced Rider Maximum Monthly Expense
Charge (per $1,000 of coverage and any additional
increase in coverage) $0.83
Riders Available to Single Life Policies Only
Additional Insured Rider Charge (maximum monthly charge
per $1,000 of coverage) $83.33
Children's Insurance Rider (maximum monthly charge per
$1,000 of coverage) $0.50
Waiver of Monthly Deduction (maximum monthly percentage
of the total cost of insurance charges for the base
policy, death benefit enhancement rider and any term
insurance riders) 38.24%
Accidental Death Benefit (maximum annual charge per
$1,000 of coverage) $2.24
4
Riders Available to Joint and Last Survivor Policies Only
Four Year Term Rider Charge (maximum monthly charge per $1,000 of
coverage) $83.33
Policy Split Option Rider Charge/8/ $0
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/1/ We reserve the right to impose a maximum fee of $25 for the cost of
preparing an inforce illustration, although we do not currently do so.
/2/ We currently deduct 5% from each premium payment.
/3/ We reserve the right to assess a $20 transfer charge for each transfer
after the twelfth transfer in a calendar year, although we do not
currently do so.
/4/ We reserve the right to charge a partial surrender processing fee of the
lesser of $25 or 2% of the amount withdrawn, although currently we do not
do so.
/5/ We reserve the right to assess a maximum monthly policy charge of $10,
although currently we assess a monthly policy charge of $5.
/6/ This charge varies depending upon the risk class(es) of the Insured.
Factors used in assessing the charge include the age, gender and rating
class (excluding the specified amount attributable to any supplemental
benefits) of the insured at the time the Policy is issued or at time of
the Specified Amount Increase is requested.
/7/ The cost of insurance charge is subject to a maximum guaranteed cost of
insurance as shown in your Policy. This charge depends on the risk
class(es) of the Insured(s), Specified Amount and Death Benefit option
selected. See "Charges and Deductions -- Cost of Insurance" in this
prospectus. We will not impose a cost of insurance charge once the Insured
under a single life Policy or the youngest Insured under a joint and last
survivor Policy reaches Attained Age 100.
/8/ Evidence of insurability is required when policy split is requested.
5
PORTFOLIO ANNUAL EXPENSES
Annual expenses of the portfolios of the Funds for the year ended December 31,
2000 (as a percentage of each portfolio's average net assets):
Total Annual
Expenses
Other (after fee
Management Fees Service Expenses (after waiver and
(after fee waiver, 12b-1 Share reimbursement, reimbursements
Portfolio as applicable) Fees* Fees** as applicable) as applicable)
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AIM Variable Insurance
Funds
AIM V.I. Capital
Appreciation Fund 0.61% -- % -- % 0.21% 0.82%
AIM V.I. Growth Fund 0.61 -- -- 0.22 0.83
AIM V.I. Value Fund 0.61 -- -- 0.23 0.84
Alliance Variable
Products Series Fund,
Inc./1/
Growth and Income
Portfolio -- Class B
Shares 0.63 0.25 -- 0.07 0.95
Premier Growth
Portfolio -- Class B
Shares 1.00 0.25 -- 0.05 1.30
Quasar Portfolio --
Class B Shares 0.81 0.25 -- 0.14 1.20
Dreyfus/2/
Dreyfus Investment
Portfolios -- Dreyfus
Emerging Markets
Portfolio -- Initial
Class Shares 1.25 -- -- 0.75 2.00
The Dreyfus Socially
Responsible Growth
Fund, Inc. -- Initial
Class Shares 0.75 -- -- 0.03 0.78
Federated Insurance
Series/3/
Federated High Income
Bond Fund II -- Service
Shares 0.60 -- 0.10 0.16 0.86
Federated International
Small Company Fund II 0.15 -- 0.10 1.25 1.50
Fidelity Variable
Insurance Products Fund
(VIP)/4/
VIP Equity-Income
Portfolio -- Service
Class 2 Shares 0.48 0.25 -- 0.10 0.83
VIP Growth Portfolio --
Service Class 2 Shares 0.57 0.25 -- 0.09 0.91
Fidelity Variable
Insurance Products Fund
(VIP II)/5/
VIP II ContraFund
Portfolio -- Service
Class 2 Shares 0.57 0.25 -- 0.10 0.92
Fidelity Variable
Insurance Products Fund
(VIP III)/6/
VIP III Growth & Income
Portfolio -- Service
Class 2 Shares 0.48 0.25 -- 0.12 0.85
VIP III Mid Cap
Portfolio -- Service
Class 2 Shares 0.57 0.25 -- 0.17 0.99
GE Investments Funds,
Inc./7/
Mid-Cap Value Equity
Fund 0.65 -- -- 0.05 0.70
Money Market Fund 0.28 -- -- 0.04 0.32
Premier Growth Equity
Fund 0.65 -- -- 0.02 0.67
S&P 500 Index Fund 0.35 -- -- 0.04 0.39
Small-Cap Value Equity
Fund 0.80 -- -- 0.19 0.99
U.S. Equity Fund 0.55 -- -- 0.04 0.59
Value Equity Fund 0.65 -- -- 0.19 0.84
6
Total Annual
Other Expenses
Management Expenses (after fee
Fees (after Service (after waiver and
fee waiver, 12b-1 Share reimbursement, reimbursements
Portfolio as applicable) Fees* Fees** as applicable) as applicable)
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Janus Aspen Series/8/
Aggressive Growth
Portfolio -- Service
Shares 0.65% 0.25% -- % 0.02% 0.92%
Balanced Portfolio --
Service Shares 0.65 0.25 -- 0.02 0.92
Capital Appreciation
Portfolio -- Service
Shares 0.65 0.25 -- 0.02 0.92
Global Life Sciences
Portfolio -- Service
Shares 0.65 0.25 -- 0.30 1.20
Global Technology
Portfolio -- Service
Shares 0.65 0.25 -- 0.04 0.94
Growth Portfolio --
Service Shares 0.65 0.25 -- 0.02 0.92
International Growth
Portfolio -- Service
Shares 0.65 0.25 -- 0.06 0.96
Worldwide Growth
Portfolio -- Service
Shares 0.65 0.25 -- 0.05 0.95
MFS(R) Variable
Insurance Trust/9/
MFS(R) Investors Growth
Stock Series (formerly
MFS(R) Growth
Series) -- Service
Class Shares 0.75 0.20 -- 0.15 1.10
MFS(R) Investors Trust
Series (formerly
MFS(R) Growth with
Income Series --
Service Class Shares 0.75 0.20 -- 0.11 1.06
MFS(R) New Discovery
Series -- Service
Class Shares 0.90 0.20 -- 0.15 1.25
MFS(R) Utilities
Series -- Service
Class Shares 0.75 0.20 -- 0.15 1.10
Oppenheimer Variable
Account Funds
Oppenheimer Global
Securities Fund/VA --
Service Shares 0.64 0.15 -- 0.04 0.83
Oppenheimer Main Street
Growth & Income
Fund/VA -- Service
Shares 0.70 0.15 -- 0.03 0.88
PIMCO Variable Insurance
Trust/10/
Foreign Bond
Portfolio --
Administrative Shares 0.25 -- 0.15 0.51 0.91
High Yield Bond
Portfolio --
Administrative Shares 0.25 -- 0.15 0.35 0.75
Long-Term U.S.
Government Bond
Portfolio --
Administrative Shares 0.25 -- 0.15 0.25 0.65
Total Return Bond
Portfolio --
Administrative Shares 0.25 -- 0.15 0.25 0.65
Rydex Variable Trust
Rydex OTC Fund 0.75 -- 0.25 0.46 1.46
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* The 12b-1 fees deducted from the 12b-1 classes of these portfolios cover
certain distribution and shareholder support services provided by the
companies selling Policies investing in those portfolios. The portion of
the 12b-1 fees assessed against the portfolios' assets attributable to the
Policies will be remitted to Capital Brokerage Corporation, the principal
underwriter for the Policies.
** The Service Share fees deducted from the service shares of these portfolios
cover certain administrative services provided by companies issuing
policies investing in those portfolios. The portion of the Service Share
fees assessed against the portfolios' assets attributable to the Policies
will be remitted to GE Life & Annuity.
7
/1/Alliance Variable Products Series Fund, Inc. has voluntarily agreed to
reduce or limit certain other expenses. Absent these waivers total annual
expenses during 2000 would have been 1.41% for the Quasar Portfolio,
consisting of 1.00% management fees, .25% 12b-1 fee and .16% other
expenses.
/2/The annual expenses for the Dreyfus Investment Portfolio Emerging Markets
Portfolio reflect the portfolio adviser's waiver of fees or reimbursements
for the year ending December 31, 2000. Absent these waivers and
reimbursements, the total annual expense for the portfolio would have been
3.86% consisting of 1.25% for management fees and 2.61% for other fees.
/3/The shareholder services provider of the Federated High Income Bond II and
Federated International Small Company Fund II voluntarily elected not to
accrue a portion of the shareholder services fee during the fiscal year
ending December 31, 2000. The shareholder services fee paid by the Fund
after the voluntary reduction was .10%. Absent such reduction, the total
annual expenses for the Federated High Income Bond Fund II would have been
1.01% consisting of .60% management fee, .25% service fee and .16% other
fees; total annual expenses for the International Small Company Fund II
would have been 5.99%, consisting of 1.25% management fee, .25% service
share fee and 4.49% other fees. The shareholder services provider can
terminate this voluntary reduction at any time.
Although the Federated International Small Company Fund II adopted a
distribution plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940, the Federated International Small Company Fund II did not pay or
accrue a distribution (12b-1) fee during the fiscal year ending December
31, 2000. The Federated International Small Company Fund II has no present
intention of paying or accruing a distribution (12b-1) fee during the
fiscal year ending December 31, 2001.
/4/Actual annual operating expenses were lower because a portion of the
brokerage commissions that the Funds paid were used to reduce Fund
expenses. In addition, the Funds, or FMR on behalf of the Funds, have
entered into arrangements with the custodian whereby credits realized as a
result of uninvested cash balances were used to reduce custodian expenses.
After taking these arrangements into account, the total annual expenses of
the VIP Equity-Income Portfolio during 2000 would have been .82%; the total
annual expenses of the VIP Growth would have been .90%. See the
accompanying Fund prospectus for details.
/5/Actual annual operating expenses were lower because a portion of the
brokerage commissions that the Funds paid were used to reduce Fund
expenses. In addition, the Funds, or FMR on behalf of the Funds, have
entered into arrangements with the custodian whereby credits realized as a
result of uninvested cash balances were used to reduce custodian expenses.
After taking these arrangements into account, the total annual expenses of
the VIP II ContraFund Portfolio during 2000 would have been .90%. See the
accompanying Fund prospectus for details.
/6/Actual annual operating expenses were lower because a portion of the
brokerage commissions that the Funds paid were used to reduce Fund
expenses. In addition, the Funds, or FMR on behalf of the Funds, have
entered into arrangements with the custodian whereby credits realized as a
result of uninvested cash balances were used to reduce custodian expenses.
After taking these arrangements into account, the total annual expenses of
the VIP III Growth & Income Portfolio during 2000 would have been .84%. See
the accompanying Fund prospectus for details.
/7/GE Asset Management Incorporated ("GEAM") has voluntarily agreed to waive a
portion of its management fee for the Money Market Fund. Absent this
waiver, the total annual expenses of the Fund would have been .45%
consisting of .41% in management fees and .04% in other expenses. Also,
GEAM voluntarily limited other expenses for the GE Premier Growth Equity
Fund from January 1 through April 30, 2000. Absent the waiver the total
annual expenses of the Fund would have been 0.68%, consisting of 0.65% in
management fees and 0.03% in other expenses.
/8/Expenses, for the Janus Aspen Series, are based upon expenses for the year
ended December 31, 2000, restated to reflect a reduction in the management
fee for Aggressive Growth, Balanced, Capital Appreciation, Growth,
International Growth and Worldwide Growth Portfolios.
8
/9/Absent certain fee waivers or reimbursements, the total annual expenses of
the portfolios of MFS(R) Variable Insurance Trust during 2000 would have
been: total annual expenses of 1.12% for the MFS(R) Investor Growth Stock
Series (formerly MFS(R) Growth Series), consisting of .75% management
fees, .20% 12b-1 fee and .17% other expenses; total annual expenses of
1.07% for the MFS(R) Investors Trust Series (formerly Growth With Income),
consisting of .75% management fee, .20% 12b-1 fee and .12% other expenses;
total annual expenses of 1.29% for the New Discovery Series, consisting of
.90% management fees, .20% 12b-1 fees and .19% other expenses; total
expenses of 1.11% for the MFS(R) Utilities Series, consisting of .75%
management fee, .20% 12b-1 fees and .16% other expenses. MFS(R) has
contractually agreed to waive other expenses to ensure they are no more
than .15% after non-contractual expenses are included.
/10/PIMCO has contractually agreed to reduce total annual portfolio operating
expenses for the Administrative Class shares. Absent fee waivers or
reimbursements, the total annual expenses of the Total Return Bond
Portfolio during 2000 would have been total annual expenses of .66%,
consisting of .25% management fees, .15% service fees and .26% other
expenses.
The Funds supplied all of the figures provided under the subheading Portfolio
Annual Expenses and part of the data used to produce the figures in the
examples. We have not independently verified this information.
OTHER POLICIES
We offer other variable life insurance policies in Separate Account II which
also invest in the same portfolios (or many of the same) of the Funds. These
policies may have different charges that could affect the value of the
Subaccounts and may offer different benefits more suitable to your needs. To
obtain more information about these policies, contact your agent, or call (800)
352-9910.
9
Policy Summary
PREMIUMS
You select a premium payment plan. You are not required to pay premiums
according to the plan, but may vary frequency and amount, within limits, and
can skip planned premiums. See "Periodic Premium Plan."
Premium amounts depend on an Insured's Age, gender (where applicable), risk
class, Specified Amount selected, and any supplemental benefit riders. See
"Premiums."
You may make unscheduled premium payments, provided such premium payments do
not exceed the limitations for life insurance as set forth by Section 7702 of
the Code. We may reject any additional premium payments, or portion thereof,
that would result in your Policy being disqualified as life insurance under the
Code. Each additional premium payment, if within the limitations as stated
above, must be at least $50. See "Premiums."
Under certain circumstances, you may have to pay extra premiums to prevent
termination. See "Premium to Prevent Termination."
DEDUCTION FROM PREMIUMS
Currently, we deduct a 5% premium charge (7.5% maximum) from each premium
before we place it in a Subaccount or the Guarantee Account. We currently do
not deduct the maximum 7.5% premium charge but reserve the right to do so. We
refer to the premium minus the premium charge as a Net Premium. We do not
assess a premium charge against the Policy loan portion of a premium received
from the rollover of a life insurance policy. See "Premium Charge."
ALLOCATION OF NET PREMIUMS
You may allocate your Net Premiums among up to ten of the Subaccounts of
Separate Account II plus the Guarantee Account at any given time. Until 1) the
date we approve the application, 2) the date we receive all necessary forms
(including any subsequent amendments to your application), and 3) the date we
receive the entire initial premium, we will place any premiums you pay in a
non-interest bearing account. We will then allocate your Net Premiums to the
Investment Options you designate. See "Allocating Premiums."
DEDUCTIONS FROM ASSETS
Each Fund deducts management fees and other expenses from its assets. For the
year ended December 31, 2000, the minimum total annual expenses (as a
percentage of average net assets) was .32%, and the maximum total annual
expenses (as a percentage of average net assets) was 2.00%. See "Portfolio
Annual Expenses."
We deduct monthly a mortality and expense risk charge at an effective annual
rate of 0.40% of the first $50,000 of unloaned Account Value in the Subaccounts
(0.40% of
10
the first $100,000 of unloaned Account Value for a joint and last survivor
Policy). For the first twenty Policy years, we also deduct a mortality and
expense risk charge for unloaned Account Value above $50,000 ($100,000 for a
joint and last survivor Policy) at an annual effective rate of 0.05%. Beginning
with Policy year 21, we do not deduct a mortality and expense risk charge for
unloaned Account Value over $50,000 ($100,000 for joint and last survivor
Policy).
We make a monthly deduction from your Account Value for (1) the cost of
insurance charge, (2) a current monthly policy charge of $5: ($10 per month
maximum), (3) a monthly expense charge based on the initial Specified Amount
for the first ten Policy years that varies by Age(s), gender and rating class
(excluding the Specified Amount attributable to any supplemental benefits), (4)
a monthly expense charge for an increase in Specified Amount for the first ten
policy years following the increase that varies by Age(s), gender and rating
class (excluding the Specified Amount attributable to any supplemental
benefits) and (5) supplemental benefit charges. The monthly deduction will also
include the increase charge for the first ten Policy years following an
increase in the Specified Amount. See "Changing the Specified Amount."
There are optional riders that provide additional benefits; some riders require
an additional cost. Not all riders are available in all states or to all
policies. See "Supplemental Benefits" for more information on these riders.
For information concerning compensation paid for sale of the Policies, see
"Sale of the Policies."
ACCOUNT VALUE
Account Value equals the total amount in each Subaccount and the General
Account, including the Guarantee Account.
Account Value serves as the starting point for calculating certain values under
a Policy, such as the Surrender Value and the Death Benefit Proceeds. Account
Value varies from day to day to reflect investment experience of the
Subaccounts, interest credited Account Value in the Guarantee Account, charges
deducted and other Policy transactions (such as Policy loans, transfers and
partial surrenders). See "How Your Account Value Varies."
You can transfer Account Value among the Investment Options (subject to certain
restrictions). See "Transfers" for rules and limits. Policy loans reduce the
amount available for allocations and transfers.
There is no minimum guaranteed Account Value. During the Continuation Period,
the Policy will lapse if the Surrender Value is too low to cover the monthly
deduction and the Net Total Premium is less than the Continuation Amount. After
the Continuation Period, the Policy will lapse if the Surrender Value is too
low to cover the monthly deduction. See "Premium to Prevent Termination."
11
CASH BENEFITS
You may take a Policy loan for up to 90% of the difference between Account
Value and any surrender charges, minus any Policy Debt. See "Loans."
You may partially surrender your Policy. The minimum partial surrender amount
is $200. We reserve the right to charge a processing fee equal to the lesser of
$25 or 2% of the amount of the partial surrender although we currently do not
assess such a charge. If you select Death Benefit Option B, you may only make a
partial surrender after the first Policy year. See "Partial Surrender."
You can surrender your Policy at any time for its Surrender Value (Account
Value minus Policy Debt and minus any applicable surrender charge). A surrender
charge will apply during the first ten Policy years, and for ten Policy years
after an increase in the Specified Amount (except for increases in the
Specified Amount that result from a change in Death Benefit option). See
"Surrenders" and "Surrender Charge."
You may choose from a variety of payment options. See "Requesting Payments."
DEATH BENEFITS
The minimum Specified Amount available is $100,000 for a single life Policy and
$200,000 for a joint and last survivor Policy.
You may choose from among three Death Benefit options:
. Option A -- Specified Amount plus Account Value;
. Option B -- Specified Amount; or
. Option C is:
. the greater of Specified Amount; or
. the Specified Amount; plus
. the sum of all premiums paid before Attained Age 75 of the Insured
under a single life Policy or the younger Insured under a joint and
last survivor Policy (for 1035 exchanges, the premiums paid under the
old policy minus any partial surrender of premiums and charges for
supplemental non-qualified benefits as defined in the Code); minus
. the charges for supplemental benefits, other than those specified in
Section 7702(f)(5)(A) of the Code; minus
. all partial surrenders.
The Death Benefit will be the greater of the Death Benefit under the Death
Benefit option you select or the Minimum Death Benefit. See "Death Benefits."
The Death Benefit Proceeds are payable as a lump sum or under a variety of
options. See "Requesting Payments" and "Optional Payment Plans."
12
You may change the Specified Amount and the Death Benefit option. See "Changing
the Specified Amount" and "Changing the Death Benefit Option" for rules and
limits.
During the Continuation Period, the Policy will remain in force regardless of
the sufficiency of Surrender Value so long as Net Total Premium is at least
equal to the Continuation Amount. See "Premium to Prevent Termination."
13
Risk Summary
INVESTMENT RISK
Your Account Value is subject to the risk that investment performance will be
unfavorable and that your Account Value will decrease. Because we continue to
deduct charges from Account Value, if investment results are sufficiently
unfavorable and/or you stop making premium payments at or above the minimum
requirements, the Surrender Value of your Policy may fall to zero. In that
case, the Policy will terminate without value and insurance coverage will no
longer be in effect, unless you make an additional payment sufficient to
prevent a termination during the 61-day grace period. However, your Policy will
not lapse during the Continuation Period, even if your Surrender Value is too
low to cover the monthly deductions, so long as the Net Total Premium is at
least equal to the Continuation Amount. On the other hand, if investment
experience is sufficiently favorable and you have kept the Policy in force for
a substantial time, you may be able to draw upon Account Value, through partial
surrenders and Policy loans.
RISK OF TERMINATION
If the Surrender Value of your Policy is too low to pay the Monthly Deduction
when due (and, during the Continuation Period, the Net Total Premium is less
than the Continuation Amount), the Policy will be in default and a grace period
will begin. There is a risk that if partial surrenders, loans, and monthly
deductions reduce your Surrender Value to too low an amount and/or if the
investment experience of your selected Subaccounts is unfavorable, then your
Policy could lapse. In that case, you will have a 61-day grace period to make a
sufficient payment. If you do not make a sufficient payment before the grace
period ends, your Policy will terminate without value, insurance coverage will
no longer be in effect, and you will receive no benefits. After termination,
you may reinstate your Policy within three years subject to certain conditions.
TAX RISKS
We intend for the Policy to satisfy the definition of a "life insurance
contract" under section 7702 of the Internal Revenue Code of 1986, as amended
(the "Code"). In general, earnings under the Policy will not be taxed until a
distribution is made from the Policy. In addition, Death Benefits and
Accelerated Death Benefits generally will be excludable from income. In the
case of a Policy that is considered a "modified endowment contract," special
rules apply and a 10% penalty tax may be imposed on distributions, including
loans. See "Special Rules for Modified Endowment Contracts." You should consult
a qualified tax advisor in all tax matters involving your Policy.
LIMITS ON PARTIAL SURRENDERS
The Policy permits you to take partial surrenders. However, if you selected
Death Benefit Option B or Option C, you may only make partial surrenders after
the first Policy year.
14
The minimum partial surrender amount is $200. We reserve the right to assess a
processing fee for each partial surrender although we do not currently do so.
Partial surrenders will reduce your Account Value and Death Benefit Proceeds.
Federal income taxes and a penalty tax may apply to partial surrenders.
EFFECTS OF POLICY LOANS
A Policy loan, whether or not repaid, will affect Account Value over time
because we subtract the amount of the loan from the Investment Options as
collateral. We then credit a fixed interest rate to the loan collateral. As a
result, the loan collateral does not participate in the investment results of
the Subaccounts. The longer the loan is outstanding, the greater the effect is
likely to be. Depending on the investment results of the Subaccounts, the
effect could be favorable or unfavorable.
A Policy loan also reduces the Death Benefit payable. A Policy loan could make
it more likely that a Policy would terminate. There is a risk if the loan
reduces your Surrender Value to too low an amount and investment experience is
unfavorable, that the Policy will lapse, resulting in adverse tax consequences.
You must submit a sufficient payment during the grace period to avoid the
Policy's termination without value and the end of insurance coverage.
COMPARISON WITH OTHER INSURANCE POLICIES
The Policy is similar in many ways to universal life insurance. As with
universal life insurance:
. the Owner pays premiums for insurance coverage on the Insured(s);
. the Policy provides for the accumulation of Surrender Value that is
payable if the Owner surrenders the Policy during the lifetime of the
Insured under a single life Policy and the Last Insured under a joint and
last survivor Policy; and
. the Surrender Value may be substantially lower than the premiums paid.
However, the Policy differs from universal life insurance in that it permits
you to place your premium in the Subaccounts. The amount and duration of life
insurance protection and of the Policy's Account Value will vary with the
investment performance of the Subaccounts you select. You bear the investment
risk with respect to the amounts allocated to the Subaccounts.
The Surrender Value of your Policy may decrease if the investment performance
of the Subaccounts to which you allocate Account Value is sufficiently adverse.
If the Surrender Value becomes insufficient to cover charges when due and the
Continuation Period is not in effect, the Policy will terminate without value
after a grace period.
15
GE Life and Annuity Assurance Company
We are a stock life insurance company operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. We principally offer life insurance
and annuity policies. We may do business in 49 states and the District of
Columbia. Our principal offices are at 6610 West Broad Street, Richmond,
Virginia 23230.
General Electric Capital Assurance Company ("GE Capital Assurance") owns the
majority of our capital stock, and Federal Home Life Insurance Company
("Federal") and Phoenix Home Life Mutual Insurance Company, Inc. own the
remainder. GE Capital Assurance and Federal are indirectly owned by GE
Financial Assurance Holdings, Inc which is a wholly owned subsidiary of General
Electric Capital Corporation ("GE Capital"). GE Capital, a New York
corporation, is a diversified financial services company whose subsidiaries
consist of specialty insurance, equipment management, and commercial and
consumer financing businesses.
GE Capital's indirect parent, General Electric Company, founded more than one
hundred years ago by Thomas Edison, is the world's largest manufacturer of jet
engines, engineering plastics, medical diagnostic equipment, and large electric
power generation equipment.
GNA Corporation, a direct wholly owned subsidiary of GE Financial Assurance
Holdings, Inc., directly owns the stock of Capital Brokerage Corporation (the
principal underwriter for the Policies and a broker/dealer registered with the
U.S. Securities and Exchange Commission).
We are a member of the Insurance Marketplace Standards Association ("IMSA"). We
may use the IMSA membership logo and language in our advertisements, as
outlined in IMSA's Marketing and Graphics Guidelines. Companies that belong to
IMSA subscribe to a set of ethical standards covering the various aspects of
sales and service for individually sold life insurance and annuities.
STATE REGULATION
We are subject to regulation by the State Corporation Commission of the
Commonwealth of Virginia. We file an annual statement with the Virginia
Commissioner of Insurance on or before March 1 of each year covering our
operations and reporting on our financial condition as of December 31 of the
preceding year. Periodically, the Commissioner of Insurance examines our
liabilities and reserves and those of Separate Account II and assesses their
adequacy, and a full examination of our operations is conducted by the State
Corporation Commission, Bureau of Insurance of the Commonwealth of Virginia, at
least every five years.
We are also subject to the insurance laws and regulation of other states within
which we are licensed to operate.
16
Separate Account II
We established GE Life & Annuity Separate Account II as a separate investment
account on August 21, 1986. Separate Account II currently has forty-one
Subaccounts available under the Policy. Each Subaccount invests exclusively in
shares representing an interest in a separate corresponding portfolio of one of
the thirteen Funds described below.
The assets of Separate Account II belong to us. However, we may not charge the
assets in Separate Account II attributable to the Policies with liabilities
arising out of any other business which we may conduct. If Separate Account
II's assets exceed the required reserves and other liabilities, we may transfer
the excess to our General Account. Income and both realized and unrealized
gains or losses from the assets of Separate Account II are credited to or
charged against Separate Account II without regard to the income, gains or
losses arising out of any other business we may conduct.
Separate Account II is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act") and meets the definition of
a separate account under the Federal securities laws. Registration with the SEC
does not involve supervision of the management or investment practices or
policies of Separate Account II by the SEC.
CHANGES TO SEPARATE ACCOUNT II
Separate Account II may include other Subaccounts that are not available under
the Policy. We may substitute another Subaccount or insurance company separate
account under the Policy if, in our judgment, investment in a Subaccount should
no longer be possible or becomes inappropriate to the purposes of the Policies,
or if investment in another Subaccount or insurance company separate account is
in the best interest of Owners. The new Subaccounts may be limited to certain
classes of Policies, and the new portfolios may have higher fees and charges
than the portfolios they replaced. No substitution or elimination may take
place without prior notice to Owners and prior approval of the SEC and
insurance regulatory authorities, to the extent required by the 1940 Act and
applicable law.
We may also, where permitted by law:
. create new separate accounts;
. combine separate accounts, including Separate Account II;
. transfer assets of Separate Account II, which we determine to be
associated with the class of Policies to which this Policy belongs, to
another separate account;
. add new Subaccounts to or remove Subaccounts from Separate Account II, or
combine Subaccounts;
17
. make the Subaccounts available under other policies we issue;
. add new Funds or remove existing Funds;
. substitute new Funds for any existing Fund which we determine is no
longer appropriate in light of the purposes of the Separate Account;
. deregister Separate Account II under the 1940 Act; and
. operate Separate Account II under the direction of a committee or in
another form.
18
The Portfolios
You decide the Subaccounts to which you direct Net Premiums. You may change
your premium allocation without penalty or charges. There is a separate
Subaccount which corresponds to each portfolio of a Fund offered in this
Policy.
Each Fund is registered with the Securities and Exchange Commission as an open-
end management investment company under the 1940 Act. The assets of each
portfolio are separate from other portfolios of a Fund and each portfolio has
separate investment objectives and policies. As a result, each portfolio
operates as a separate portfolio and the investment performance of one
portfolio has no effect on the investment performance of any other portfolio.
Before choosing a Subaccount to allocate your Net Premiums and Account Value,
carefully read the prospectus for each Fund, along with this Prospectus. We
summarize the investment objectives of each portfolio below. There is no
assurance that any of the portfolios will meet these objectives.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment adviser or manager. The investment results of the
portfolios, however, may be higher or lower than the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the portfolios will be comparable to the
investment results of any other portfolio, even if the other portfolio has the
same investment adviser or manager, or if the other portfolio has a similar
name.
SUBACCOUNTS
We offer you a choice from among 41 Subaccounts, each of which invests in an
underlying portfolio of one of the Funds. You may invest in up to ten
Subaccounts at any one time.
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
- -----------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Objective is growth of A I M Advisors,
Appreciation Fund capital. Inc.
- -----------------------------------------------------------------------------
AIM V.I. Growth Fund The Fund's investment A I M Advisors,
objective is to seek growth Inc.
of capital.
- -----------------------------------------------------------------------------
AIM V.I. Value Fund Seeks to achieve long-term A I M Advisors,
growth of Capital. Income Inc.
is a secondary objective.
- -----------------------------------------------------------------------------
ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
Growth and Income Seeks reasonable current Alliance Capital
Portfolio income and reasonable Management, L.P.
opportunity for
appreciation through
investments primarily in
dividend-paying common
stocks of good quality. May
also invest in fixed-income
securities and convertible
securities.
- -----------------------------------------------------------------------------
19
Adviser (and Sub-Adviser,
Subaccount Investing In Investment Objective as applicable)
- ----------------------------------------------------------------------------------
Premier Growth Portfolio Seeks growth of capital by Alliance Capital
investing predominantly in Management, L.P.
the equity securities of a
limited number of large,
carefully selected, high
quality U.S. companies
judged likely to achieve
superior earnings.
- ----------------------------------------------------------------------------------
Quasar Portfolio Seeks growth of capital by Alliance Capital
pursuing aggressive Management, L.P.
investment policies. This
Fund invests based upon the
potential for capital
appreciation and only
incidentally for current
income. The investment
policies are aggressive.
- ----------------------------------------------------------------------------------
DREYFUS
Dreyfus Investment Non-diversified/1/ The Dreyfus
Portfolios -- Emerging portfolio seeking long-term Corporation
Markets Portfolio capital growth by investing
primarily in the stocks of
companies organized, or
with a majority of its
assets or business, in
emerging market countries.
- ----------------------------------------------------------------------------------
The Dreyfus Socially Seeks to provide capital, The Dreyfus
Responsible Growth Fund growth, with current income Corporation (sub
as a secondary goal by adviser, NCM Inc.)
investing primarily in the
common stock of companies
that in the opinion of the
Fund's management, meet
traditional investment
standards and conduct their
business in a manner that
contributes to the
enhancement of the quality
of life in America.
- ----------------------------------------------------------------------------------
THE FEDERATED INSURANCE
SERIES
Federated High Income Bond Seeks high current income. Federated
Fund II Seeks to achieve its Investment
objective by investing Management Company
primarily in diversified
portfolio of professionally
managed fixed-income
securities. The fixed-
income securities in which
the Fund intends to invest
are lower-rated corporate
debt obligations, commonly
referred to as "junk
bonds." The risks of these
securities and their high
yield potential are
described in the prospectus
for the Federated Insurance
Series, which should be
read carefully before
investing.
- ----------------------------------------------------------------------------------
Federated International Seeks to provide long-term Federated Global
Small Company Fund II growth of capital. Pursues Investment
this objective by investing Management Corp.
at least 65% of its assets
in equity securities of
foreign companies that have
a market capitalization at
the time of purchase of
$1.5 billion or less.
- ----------------------------------------------------------------------------------
/1/A non-diversified portfolio is a portfolio that may hold a larger position
in a smaller number of securities than a diversified portfolio. This means
that a single security's increase or decrease in value may have a greater
impact on the return and net asset value of a non-diversified portfolio than
a diversified portfolio.
20
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
- -----------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND (VIP)
Equity-Income Portfolio Seeks reasonable income and Fidelity Management
will consider the potential & Research Company
for capital appreciation. (subadvised by FMR
The Fund also seeks a Co., Inc.)
yield, which exceeds the
composite yield on the
securities comprising the
S&P 500 by investing
primarily in income-
producing equity securities
and by investing in
domestic and foreign
issuers.
- -----------------------------------------------------------------------------
Growth Portfolio Seeks capital appreciation Fidelity Management
by investing primarily in & Research Company;
common stocks of companies (subadvised by FMR
believed to have above- Co., Inc.)
average growth potential.
- -----------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND II (VIP II)
ContraFund(R) Portfolio Seeks long-term capital Fidelity Management
appreciation by investing & Research Company
primarily in common stocks (subadvised by
and securities of companies Fidelity Management
whose value it believes to & Research (U.K.)
have not fully been Inc., Fidelity
recognized by the public. Management &
This Fund invests in Research (Far East)
domestic and foreign Inc., Fidelity
issuers and also invests in Investments Japan
"growth" stocks or "value" Limited and
stocks or both. subadvised by FMR
Co., Inc.)
- -----------------------------------------------------------------------------
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND III (VIP III)
Growth & Income Portfolio Seeks high total return Fidelity Management
through a combination of & Research Company
current income and capital (subadvised by
appreciation by investing a Fidelity Management
majority of assets in & Research (U.K.)
common stocks with a focus Inc., Fidelity
on those that pay current Management &
dividends and show Research (Far East)
potential for capital Inc., Fidelity
appreciation. Investments Japan
Limited and
subadvised by FMR
Co., Inc.)
- -----------------------------------------------------------------------------
Mid Cap Portfolio Seeks long-term growth of Fidelity Management
capital by investing & Research Company
primarily in common stocks (subadvised by
and at least 65% of total Fidelity Management
assets in securities of & Research (U.K.),
companies with medium Inc. and Fidelity
market capitalizations. Management &
Research Far East
Inc.)
- -----------------------------------------------------------------------------
21
GE Investments Funds, Inc.
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
- ----------------------------------------------------------------------------
Mid-Cap Value Equity Fund Objective of providing long GE Asset Management
term growth of capital by Incorporated
investing primarily in
common stock and other
equity securities of
companies that the
investment adviser believes
are undervalued by the
marketplace at the time of
purchase and that offer the
potential for above-average
growth of capital. Although
the current portfolio
reflects investments
primarily within the mid
cap range, the Fund is not
restricted to investments
within any particular
capitalization and may in
the future invest a
majority of its assets in
another capitalization
range.
- ----------------------------------------------------------------------------
Money Market Fund Objective of providing GE Asset Management
highest level of current Incorporated
income as is consistent
with high liquidity and
safety of principal by
investing in various types
of good quality money
market securities.
- ----------------------------------------------------------------------------
Premier Growth Equity Fund Objective of providing GE Asset Management
long-term growth of capital Incorporated
as well as future (rather
than current) income by
investing primarily in
growth-oriented equity
securities.
- ----------------------------------------------------------------------------
S&P 500 Index Fund/2/ Objective of providing GE Asset Management
capital appreciation and Incorporated
accumulation of income that (subadvised by
corresponds to the State Street Global
investment return of the Advisers)
Standard & Poor's 500
Composite Stock Price Index
through investment in
common stocks comprising
the Index.
- ----------------------------------------------------------------------------
Small-Cap Value Equity Objective of providing GE Asset Management
Fund long-term growth of capital Incorporated
by investing primarily in (subadvised by
equity securities of small Palisade Capital
cap undervalued U.S. Management, L.L.C.)
companies that have solid
growth prospects.
- ----------------------------------------------------------------------------
U.S. Equity Fund Objective of providing GE Asset Management
long-term growth of capital Incorporated
through investments
primarily in equity
securities of U.S.
companies.
- ----------------------------------------------------------------------------
Value Equity Fund Objective of providing GE Asset Management
long-term growth of capital Incorporated
and future income. Pursues
investments in equity
securities of large
undervalued U.S. companies
that have solid growth
prospects.
- ----------------------------------------------------------------------------
/2/"Standard & Poor's," "S&P," and "S&P 500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by GE Asset Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard and Poor's makes no
representation or warranty, express or implied, regarding the advisability
of investing in this Fund or the Policy.
22
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
- -----------------------------------------------------------------------------
JANUS ASPEN SERIES
Aggressive Growth Non-diversified/1/ Janus Capital
Portfolio portfolio pursuing long- Corporation
term growth of capital.
Pursues this objective by
normally investing at least
50% of its assets in equity
securities issued by
medium-sized companies.
- -----------------------------------------------------------------------------
Balanced Portfolio Seeks long-term growth of Janus Capital
capital. Pursues this Corporation
objective consistent with
the preservation of capital
and balanced by current
income. Normally invests
40-60% of its assets in
securities selected
primarily for their growth
potential and 40-60% of its
assets in securities
selected primarily for
their income potential.
- -----------------------------------------------------------------------------
Capital Appreciation Non-diversified/1/ Janus Capital
Portfolio portfolio pursing long-term Corporation
growth of capital. Pursues
this objective by investing
primarily in common stocks
of companies of any size.
- -----------------------------------------------------------------------------
Global Life Sciences Non-diversified/1/ Janus Capital
Portfolio portfolio seeking long-term Corporation
growth of capital. The
portfolio pursues this
objective by investing at
least 65% of its total
assets in securities of
U.S. and foreign companies
that the portfolio manager
believes have a life
science orientation. The
portfolio normally invests
at least 25% of its total
assets, in the aggregate,
in the following industry
groups: health care;
pharmaceuticals;
agriculture;
cosmetics/personal care;
and biotechnology.
- -----------------------------------------------------------------------------
Global Technology Non-diversified/1/ Janus Capital
Portfolio portfolio seeking long-term Corporation
growth of capital. The
portfolio pursues this
objective by investing at
least 65% of its total
assets in securities of
U.S. and foreign companies
that the portfolio manager
believes will benefit
significantly from advances
or improvements in
technology.
- -----------------------------------------------------------------------------
Growth Portfolio Seeks long-term capital Janus Capital
growth consistent with the Corporation
preservation of capital and
pursues its objective by
investing in common stocks
of companies of any size.
Emphasizes larger, more
established issuers.
- -----------------------------------------------------------------------------
23
Adviser (and Sub-
Adviser, as
Subaccount Investing In Investment Objective applicable)
- ------------------------------------------------------------------------------
International Growth Seeks long-term growth of Janus Capital
Portfolio capital. Pursues this Corporation
objective primarily through
investments in common
stocks of issuers located
outside the United States.
The portfolio normally
invests at least 65% of its
total assets in securities
of issuers from at least
five different countries,
excluding the United
States.
- ------------------------------------------------------------------------------
Worldwide Growth Portfolio Seeks long-term capital Janus Capital
growth in a manner Corporation
consistent with the
preservation of capital.
Pursues this objective by
investing in a diversified
portfolio of common stocks
of foreign and domestic
issuers of all sizes.
Normally invests in at
least five different
countries including the
United States.
- ------------------------------------------------------------------------------
MFS(R) VARIABLE INSURANCE
TRUST
MFS(R) Investors Growth Seeks to provide long-term Massachusetts
Stock Series (formerly growth of capital and Financial Services
known as MFS(R) Growth future income rather than Company ("MFS(R)")
Series) current income. Pursues
this objective by
investing, under normal
market conditions, at least
80% of its total assets in
common stocks and related
securities, of companies
MFS(R) believes offer
better than average
prospects for long-term
growth.
- ------------------------------------------------------------------------------
MFS(R) Investors Trust Seeks to provide reasonable Massachusetts
Series (formerly known as current income and long- Financial Services
MFS(R) Growth With Income) term growth of capital and Company ("MFS(R)")
income. Pursues this
objective by investing,
under normal market
conditions, at least 65% of
its total assets in common
stocks and related
securities. This series
will also seek to generate
gross income equal to
approximately 90% of the
dividend yield on the
Standard & Poor's 500
Composite Index.
- ------------------------------------------------------------------------------
MFS(R) New Discovery Seeks capital appreciation. Massachusetts
Series Pursues this objective by Financial Services
investing at least 65% of Company ("MFS(R)")
its total assets in equity
securities of emerging
growth companies.
- ------------------------------------------------------------------------------
MFS(R) Utilities Series Seeks capital growth and Massachusetts
current income. Pursues Financial Services
this objective by investing Company ("MFS(R)")
at least 65% of its total
assets in equity and debt
securities of domestic and
foreign companies in the
utilities industry.
- ------------------------------------------------------------------------------
24
Oppenheimer Variable Account
Funds
Global Securities Fund/VA Seeks long-term capital OppenheimerFunds,
appreciation by investing a Inc.
substantial portion of
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
It invests mainly in common
stocks of U.S. and foreign
issuers.
- -------------------------------------------------------------------------------
Main Street Growth & Seeks high total return, OppenheimerFunds,
Income Fund/VA which includes growth in Inc.
the value of its shares as
well as current income,
from equity and debt
securities. The Fund
invests mainly in common
stocks of U.S. companies.
- -------------------------------------------------------------------------------
PIMCO Variable Insurance Trust
Foreign Bond Portfolio Non-diversified/1/ Pacific Investment
portfolio seeking to Management Company
maximize total return, LLC
consistent with
preservation of capital and
prudent investment
management. This portfolio
primarily invests in
intermediate maturity
hedged non-U.S. fixed
income securities.
- -------------------------------------------------------------------------------
High Yield Bond Portfolio Seeks to maximize total Pacific Investment
return, consistent with Management Company
preservation of capital and LLC
prudent investment
management. Primarily
invests in higher yielding
fixed income securities
(also known as "junk
bonds").
- -------------------------------------------------------------------------------
Long-Term U.S. Government Seeks to maximize total Pacific Investment
Bond Portfolio return, consistent with the Management Company
preservation of capital and LLC
prudent investment
management. Primarily
invests in long-term
maturity fixed income
securities.
- -------------------------------------------------------------------------------
Total Return Bond Seeks to maximize total Pacific Investment
Portfolio return consistent with Management Company
preservation of capital and LLC
prudent investment
management. Primarily
invests in intermediate
maturity fixed income
securities.
- -------------------------------------------------------------------------------
Rydex Variable Trust
OTC Fund/3/ Non-diversified/1/ Fund Rydex Global
seeks to provide investment Advisors
results that correspond to
a benchmark for over-the-
counter securities that
invest primarily in
securities of companies
included in NASDAQ 100
IndexTM.
- -------------------------------------------------------------------------------
/3/ The NASDAQ 100 IndexTM is an unmanaged index that is a widely recognized
indicator of OTC Market performance.
Not all of these portfolios may be available in all states or in all markets.
25
We will purchase shares of the portfolios at net asset value and direct them to
the appropriate Subaccounts of Separate Account II. We will redeem sufficient
shares of the appropriate portfolios at net asset value to pay
surrender/partial surrender proceeds or for other purposes described in the
Policy. We automatically reinvest all dividends and capital gain distributions
of the portfolios in shares of the distributing portfolios at their net asset
value on the date of distribution. In other words, we do not pay portfolio
dividends or portfolio distributions out to Owners as additional units, but
instead reflect them in Unit Values.
Shares of the portfolios of the Funds are not sold directly to the general
public. They are sold to us, and they may also be sold to other insurance
companies that issue variable annuity and variable life insurance policies. In
addition, they may be sold to retirement plans.
When a Fund sells shares in any of its portfolios both to variable annuity and
to variable life insurance separate accounts, it engages in mixed Funding. When
a Fund sells shares in any of its portfolios to separate accounts of
unaffiliated life insurance companies, it engages in shared Funding.
Each Fund may engage in mixed and shared Funding. Therefore, due to differences
in redemption rates or tax treatment, or other considerations, the interests of
various shareholders participating in a Fund could conflict. A Fund's Board of
Directors will monitor for the existence of any material conflicts, and
determine what action, if any, should be taken. See the prospectuses for the
Funds.
We have entered into agreements with either the investment adviser or
distributor of each of the Funds under which the adviser or distributor pays us
a fee ordinarily based upon an annual average percentage of the average
aggregate net amount we have invested on behalf of Separate Account II and
other separate accounts. These percentages differ, and some investment advisers
or distributors pay us a greater percentage than other advisors or
distributors. The amounts we receive under these agreements may be significant.
The agreements reflect administrative services we provide. We will also receive
Service Share fees from certain of the portfolios. These fees are deducted from
portfolio assets attributable to the Policies, and are for the administrative
services we provide to those portfolios. In addition, our affiliate, Capital
Brokerage Corporation, the principal underwriter for the Policies, will receive
12b-1 fees deducted from portfolio assets attributable to the Policies for
providing distribution and shareholder support services to some of the
portfolios. Because the Service Share fees and 12b-1 fees are paid out of a
portfolio's assets on an ongoing basis, over time they will increase the cost
of an investment in portfolio shares.
26
YOUR RIGHT TO VOTE PORTFOLIO SHARES
As required by law, we will vote the portfolio shares held in Separate Account
II at meetings of the shareholders of the Funds. The voting will be done
according to the instructions of Owners who have interests in any Subaccounts
which invest in the portfolios of the Funds. If the 1940 Act or any regulation
under it should be amended, and if as a result we determine that we are
permitted to vote the portfolios' shares in our own right, we may elect to do
so.
We will determine the number of votes which you have the right to cast by
applying your percentage interest in a Subaccount to the total number of votes
attributable to the Subaccount. In determining the number of votes, we will
recognize fractional shares.
We will vote portfolio shares of a class held in a Subaccount for which we
received no timely instructions in proportion to the voting instructions which
we received for all Policies participating in that Subaccount. We will apply
voting instructions to abstain on any item to be voted on a pro-rata basis to
reduce the number of votes eligible to be cast.
Whenever a Fund calls a shareholders meeting, each person having a voting
interest in a Subaccount will receive proxy material, reports and other
materials relating to the portfolio. Since each portfolio may engage in shared
Funding, other persons or entities besides the Company may vote portfolio
shares.
27
Guarantee Account
Due to certain exemptive and exclusionary provisions of the Federal securities
laws, we have not registered interests in the Guarantee Account under the
Securities Act of 1933 (the "1933 Act"), and we have not registered either the
Guarantee Account or our General Account as an investment company under the
1940 Act. Accordingly, neither the interests in the Guarantee Account nor our
General Account are generally subject to regulation under the 1933 Act and the
1940 Act. Disclosures relating to the interests in the Guarantee Account and
the General Account may, however, be subject to certain generally applicable
provisions of the Federal securities laws relating to the accuracy of
statements made in a registration statement. The Guarantee Account may not be
available in all states or markets.
You may allocate some or all of your premium payments and transfer some or all
of your Account Value to the Guarantee Account. We credit the portion of the
Account Value allocated to the Guarantee Account with interest (as described
below). Account Value in the Guarantee Account is subject to some, but not all,
of the charges we assess in connection with the Policy. See "Charges and
Deductions."
Each time you allocate premium payments or transfer Account Value to the
Guarantee Account, we establish an interest rate guarantee period. For each
interest rate guarantee period, we guarantee an interest rate for a year. At
the end of an interest rate guarantee period, a new interest rate will become
effective, and a new interest rate guarantee period will commence with respect
to that portion of the Account Value in the Guarantee Account represented by
that particular allocation.
The initial interest rate guarantee period for any allocation will be one year
or longer. Subsequent interest rate guarantee periods will each be at least one
year. We may credit additional rates of interest for specified periods from
time to time. We determine the interest rates in our sole discretion. The
determination made will be influenced by, but not necessarily correspond to,
interest rates available on fixed income investments which we may acquire with
the amounts we receive as premium payments or transfers of Account Value under
the Policies. You will have no direct or indirect interest in these
investments. We also will consider other factors in determining interest rates
for a guarantee period including, but not limited to, regulatory and tax
requirements, sales commissions, and administrative expenses borne by us,
general economic trends, and competitive factors. Amounts you allocate to the
Guarantee Account will not share in the investment performance of our General
Account, or any portion thereof. We cannot predict or guarantee the level of
interest rates in future guarantee periods. However, the interest rates for any
interest guarantee period will be at least the guaranteed interest rate shown
in your Policy.
28
We will notify Owners in writing at least 10 days prior to the expiration date
of any interest rate guarantee period about the then currently available
interest rate guarantee periods and the guaranteed interest rates applicable to
such interest rate guarantee periods. A new interest rate guarantee period will
commence automatically unless we receive written notice prior to the end of the
30 day period following the expiration of the interest rate guarantee period
("30 day window") of your election of a different interest rate guarantee
period from among those being offered by us at the time, or instructions to
transfer all or a portion of the remaining amount to one or more Subaccounts
subject to certain restrictions. (See "Transfers".) During the 30-day window,
the allocation will accrue interest at the new interest rate guarantee period's
interest rate.
To the extent permitted by law we reserve the right at any time to offer
interest rate guarantee periods that differ from those available when we first
issued the Policy, and to credit additional interest on premium payments and
Account Value allocated to the Guarantee Account participating in the dollar-
cost averaging program. See "Dollar-Cost Averaging." (This may not be available
to all classes of Policies). We also reserve the right, at any time, to stop
accepting premium payments or transfers of Account Value to a particular
interest rate guarantee period. Since the specific interest rate guarantee
periods available may change periodically, please contact our Home Office to
determine the interest rate guarantee periods currently being offered.
29
Charges and Deductions
This section describes the charges and deductions we make under the Policy to
compensate us for the services and benefits we provide, costs and expenses we
incur, and risks we assume. The services and benefits we provide include:
. the partial surrender, surrender, Policy loan and Death Benefits under
the Policy;
. Investment Options, including Net Premium allocations, dollar-cost
averaging and portfolio rebalancing programs;
. administration of various elective options under the Policy; and
. the distribution of various reports to Owners.
The costs and expenses we incur include:
. those associated with underwriting applications, increases in Specified
Amount, and riders;
. various overhead and other expenses associated with providing the
services and benefits provided by the Policy;
. sales and marketing expenses, including compensation paid in connection
with sales of the Policies; and
. other costs of doing business, such as Federal, state and local premium
and other taxes and fees.
The risks we assume include:
. that Insureds may live for a shorter period of time than estimated,
resulting in the payment of greater Death Benefits than expected;
. that the costs of providing the services and benefits under the Policies
will exceed the charges deducted.
. that the General Account assets will earn less than the guaranteed
interest rate we credit.
We may profit from any charges deducted, such as the mortality and expense risk
charge. We may use any such profits for any purpose, including payment of
distribution expenses.
PREMIUM CHARGE
We currently deduct a 5% charge (7.5% maximum) from each premium before placing
the resulting Net Premium in the Subaccounts or the Guarantee Account. We
currently do not deduct the maximum 7.5% premium charge but reserve the right
to do so. We will not assess the premium charge against the Policy loan portion
of a premium received from the rollover of a life insurance policy.
30
MONTHLY DEDUCTION
We make a monthly deduction on the Policy Date and each Monthly Anniversary Day
from Account Value. The monthly deduction for each Policy consists of:
. the cost of insurance charge (discussed below);
. the mortality and expense risk charge (discussed below);
. a current monthly policy charge of $5 ($10 per month maximum);
. a maximum monthly expense charge of $0.83 per $1,000 of Specified Amount
for the first ten Policy years. The monthly expense charge is based on
the initial Specified Amount for the first ten Policy years and varies by
Age(s), gender and rating class (excluding the Specified Amount
attributable to any supplemental benefits). If an increase in Specified
Amount becomes effective, there will be an additional maximum charge of
$0.83 per $1,000 of increase included in the monthly deduction for the
first ten Policy years following the increase. See "Changing the
Specified Amount"; and
. any charges for additional benefits added by riders to the Policy (See
"Supplemental Benefits").
We currently deduct monthly a mortality and expense risk charge at an effective
annual rate of 0.40% of the first $50,000 of unloaned Account Value in the
Subaccounts (0.40% of the first $100,000 of unloaned Account Value for a joint
and last survivor Policy). For the first twenty Policy years, we also deduct a
mortality and expense risk charge for unloaned Account Value above $50,000
($100,000 for a joint and last survivor Policy) at an annual effective rate of
0.05%. Beginning with Policy year 21, we do not deduct a mortality and expense
risk charge for unloaned Account Value over $50,000 ($100,000 for joint and
last survivor Policy). We will not increase this charge for the duration of
your Policy.
The mortality risk we assume is the risk that Insureds may live for a shorter
period of time than estimated and, therefore, a greater amount of Death Benefit
Proceeds than expected will be payable. The expense risk we assume is that
expenses incurred in issuing and administering the Policies will be greater
than estimated and, therefore, will exceed the expense charge limits set by the
Policies.
We will deduct the monthly deduction from the Subaccounts of Separate Account
II and the Guarantee Account based on your written instructions. If you do not
provide us with written instructions, we will deduct the monthly deduction from
the Subaccounts of Separate Account II and the Guarantee Account in proportion
to your Account Value in each Subaccount and the Guarantee Account.
COST OF INSURANCE
The cost of insurance is a significant charge under your Policy because it is
the primary charge for the Death Benefit we provide you. The cost of insurance
charge
31
depends on a number of factors (Age, gender, Policy duration, and risk class)
that cause the charge to vary from Policy to Policy and from Monthly
Anniversary Day to Monthly Anniversary Day. We will determine the risk class
(and therefore the rates) separately for the initial Specified Amount and for
any increase in Specified Amount that requires evidence of insurability.
For a joint and last survivor Policy, we determine the cost of insurance in a
manner that reflects the anticipated mortality of both Insureds and the fact
that the Death Benefit is not payable until the death of the Last Insured.
We calculate the cost of insurance on each Monthly Anniversary Day based on
your net amount at risk. We determine your net amount at risk by the following
formula:
Death Benefit
Proceeds
-------------- -- Account Value
1.0032737
To determine your cost of insurance for a particular Policy Month, we divide
your net amount at risk by 1000 and multiply that result by the applicable cost
of insurance rate. If Death Benefit Option A or Option B is in effect, and the
Specified Amount has increased, we first consider the Account Value part up to
the initial Specified Amount. If the Account Value is more than the initial
Specified Amount, we will allocate that Account Value to the increases in
Specified Amount in the order of such increases. If Death Benefit Option C is
in effect, and the Specified Amount has increased, we first consider Account
Value part of the initial Specified Amount. If Account Value is more than the
initial Specified Amount plus premium payments, we will allocate that Account
Value to the increases in Specified Amount.
The cost of insurance rate for an Insured is based on his or her Age, gender,
Policy Duration and applicable risk class. We currently place Insureds in the
following risk classes when we issue the Policy, based on our underwriting: a
male or female or unisex risk class where appropriate under applicable law; and
a nicotine use or no nicotine use risk class. In addition, some Insureds may
qualify for a preferred rating. The original risk class applies to the initial
Specified Amount. If an increase in Specified Amount is approved, a different
risk class may apply to the increase, based on an Insured's circumstances at
the time of the increase.
We may change the cost of insurance rates from time to time at our sole
discretion, but we guarantee that the rates we charge will never exceed the
maximum rates shown in your Policy. These rates are based on the Commissioners'
1980 Standard Ordinary Mortality Tables. The maximum cost of insurance rates
are based on the Insured's Age nearest birthday at the start of the Policy
year. Modifications to cost of insurance rates are made for risk classes other
than standard. The rates we currently charge are, at most ages, lower than the
maximum permitted under the Policies and
32
depend on our expectation of future experience with respect to mortality,
interest, expenses, persistency, and taxes. A change in rates will apply to all
persons of the same Age, gender (where applicable), and risk class and whose
Policies have been in effect for the same length of time.
We will deduct the cost of insurance charge from the Subaccounts of Separate
Account II and the Guarantee Account based on your written instructions. If you
do not provide us with written instructions, we will deduct the cost of
insurance charge proportionately from your assets in the Subaccounts and the
Guarantee Account. The monthly deduction for cost of insurance charges will end
on the Policy Anniversary Date on which the Insured under a single life Policy
or the youngest Insured under a joint and last survivor Policy reaches Attained
Age 100.
SURRENDER CHARGE
If you fully surrender your Policy during the surrender charge period, we will
deduct a surrender charge. The maximum surrender charge we will assess is
$37.19 per $1,000 of Specified Amount. We calculate the surrender charge by
multiplying a factor times the lowest Specified Amount in effect before the
surrender, divided by 1000. The factor depends on the issue Age and gender
(where applicable), of the Insured. For a joint and last survivor Policy, the
factor depends on the issue Age, gender (where applicable) and risk class of
both Insureds. The surrender charge remains level for the first five Policy
years and then decreases each Policy Month to zero over the next 5 Policy
years. We will deduct the surrender charge before we pay the Surrender Value.
If you increase the Specified Amount (other than as a result of a change in
Death Benefit option), you will also incur a surrender charge. The factor used
in determining the amount of the surrender charge depends on the issue Age of
the Insured for a single life Policy or both Insureds for a joint and last
survivor Policy. The charge will apply to the increase in Specified Amount.
If you decrease the Specified Amount to less than the lowest Specified Amount
that had previously been in effect (other than as a result of partial
surrenders or changes in Death Benefit options), you will also incur a
surrender charge. The amount of the surrender charge will be based:
(a) first upon any surrender charge in effect for the most recent increase
in Specified Amount;
(b) then upon any surrender charge in effect for the next most recent
increases in Specified Amount in succession; and
(c) finally upon the surrender charge in effect for the original Specified
Amount.
We disclose the surrender charges on the data pages of your Policy. Upon
request, we will illustrate the surrender charges that apply to your Policy.
33
We do not assess a surrender charge for partial surrenders.
PARTIAL SURRENDER PROCESSING FEE
We currently do not assess a processing fee for partial surrenders. However, we
reserve the right to deduct a partial surrender processing fee in the future.
The fee will not exceed the lesser of $25 or 2% of the amount surrendered.
OTHER CHARGES
Upon written request, we will provide a projection of illustrative future life
insurance and Account Value proceeds. We reserve the right to charge a maximum
fee of $25 for the cost of preparing the illustration.
There are deductions from and expenses paid out of the assets of each portfolio
that are more fully described in each Fund's prospectus.
In addition, we reserve the right to impose a transfer charge of up to $20 for
each transfer after the twelfth transfer in a Policy year. This charge will be
at cost with no profit to us. We currently do not assess a transfer charge.
REDUCTION OF CHARGES FOR GROUP SALES
We may reduce charges and/or deductions for sales of the Policies to a trustee,
employer or similar entity representing a group or to members of the group
where such sales result in savings of sales or administrative expenses. We will
base these discounts on the following:
(1) The size of the group. Generally, the sales expenses for each
individual Owner for a larger group are less than for a smaller group
because more Policies can be implemented with fewer sales contacts and
less administrative cost.
(2) The total amount of premium payments to be received from a group. Per
Policy sales and other expenses are generally proportionately less on
larger premium payments than on smaller ones.
(3) The purpose for which the Policies are purchased. Certain types of
plans are more likely to be stable than others. Such stability reduces
the number of sales contacts and administrative and other services
required, reduces sales administration and results in fewer Policy
terminations. As a result, our sales and other expenses are reduced.
(4) The nature of the group for which the Policies are purchased. Certain
types of employee and professional groups are more likely to continue
Policy participation for longer periods than are other groups with more
mobile membership. If fewer Policies are terminated in a given group,
our sales and
34
other expenses are reduced. Likewise, we may realize reduced sales and
other expenses for sales to groups that are affiliated with us or with
whom we transact business, such as our own employees, the employees of
our affiliated companies, the employees of broker/dealers with whom we
have selling agreements and the employees of our other business
partners, including family members of such employees.
(5) Other circumstances. There may be other circumstances of which we are
not presently aware, which could result in reduced sales expenses.
If, after we consider the factors listed above, we determine that a group
purchase would result in reduced sales expenses, we may reduce the charges
and/or deductions for each group. Reductions in these charges and/or deductions
will not be unfairly discriminatory against any person, including the affected
Owners and all other owners of Policies Funded by Separate Account II.
We may also reduce charges and/or deductions for sales of the Policies to
registered representatives who sell the Policies to the extent we realize
savings of sales and administrative expenses. Any such reduction in charges
and/or deductions will be consistent with the standards we use in determining
the reduction in charges and/or deductions for other group arrangements.
35
The Policy
The Policy is a flexible premium variable life insurance policy. We may issue
the Policy either on the life of a single Insured or the lives of two Insureds
on a joint and last survivor basis. We describe your rights and benefits below
and in the Policy. There may be differences in your Policy because of
requirements of the state were we issued your Policy. We will include any such
differences in your Policy.
APPLYING FOR A POLICY
To purchase a Policy, you must complete an application and you or your agent
must submit it to us at our Home Office. You also must pay an initial premium
of a sufficient amount. See "Premiums," below. You can submit your initial
premium with your application or at a later date. If you submit your initial
premium with your application, please remember that we will place your premium
in a non-interest bearing account for a certain amount of time. See "Allocating
Premiums." Coverage generally becomes effective as of the Policy Date.
Generally, we will issue a Policy on a single Insured basis covering an Insured
up to Age 85 and on a joint and last survivor basis covering Insureds from Age
20 up to Age 85 if evidence of insurability satisfies our underwriting rules.
Required evidence of insurability may include, among other things, a medical
examination of the Insured. We may, in our sole discretion, issue a Policy
covering an Insured over Age 85. We may reject an application for any lawful
reason and in a manner that does not unfairly discriminate against similarly
situated purchasers.
If we do not receive the full first premium with your application, the
insurance will become effective on the effective date. This date is the date
that we receive your premium and that we deliver your Policy. All persons
proposed for insurance must be insurable on the Policy Date.
If you pay the full first premium with your application, we may give you a
conditional receipt. This means that, subject to our underwriting requirements
and subject to a maximum limitation, your insurance will become effective on
the effective date we specified in the conditional receipt, provided the
Insured under a single life Policy or the Insureds under a joint and last
survivor Policy are found to be, on the effective date, insurable at standard
premium rates for the plan and amount of insurance requested in the
application. This effective date will be the latest of (i) the date of
completion of the application, (ii) the date of completion of all medical exams
and tests we require, and (iii) the Policy Date you requested when that date is
later than the date you completed your application.
36
OWNER
You have rights in the Policy during the Insured's lifetime under a single life
Policy and during the lifetimes of both Insureds under a joint and last
survivor Policy. If you die before an Insured and there is no contingent Owner,
ownership will pass to your estate.
We will treat Joint Owners as having equal undivided interests in the Policy.
All Owners must together exercise any ownership rights in the Policy. If the
last surviving joint Owner dies before the Insured under a single life Policy
or the Last Insured under a joint and last survivor Policy and there is no
contingent Owner, ownership will pass to your estate.
BENEFICIARY
You designate the primary Beneficiaries and contingent Beneficiaries when you
apply for the Policy. You may name one or more primary Beneficiaries or
contingent Beneficiaries. We will pay the proceeds in equal shares to the
survivors in the appropriate Beneficiary class, unless you request otherwise.
Unless an Optional Payment Plan is chosen, we will pay the death proceeds in a
lump sum to the primary Beneficiary(ies). If the primary Beneficiary(ies) dies
before the Insured under a single life Policy or the Last Insured under a joint
and last survivor Policy, we will pay the proceeds to the contingent
Beneficiary(ies). If there is no surviving Beneficiary(ies) we will pay the
proceeds to you or your estate.
CHANGING THE OWNER OR BENEFICIARY
During an Insured's life, you may change the Owner. If you reserve the right,
you may change the Beneficiary during an Insured's life. To make this change,
please write our Home Office. The request and the change must be in a form
satisfactory to us and we must actually receive the request. The change will
take effect as of the date you signed the request.
CANCELING A POLICY
You may cancel your Policy during the "free-look period" by returning it to us
at our Home Office. The free-look period expires 10 days after you receive the
Policy. The free-look period is longer if required by state law. If you decide
to cancel the Policy during the free-look period, we will treat the Policy as
if it had never been issued. Within seven calendar days after we receive the
returned Policy, we will refund an amount equal to the sum of all premiums paid
for the Policy, or other amounts as required under state law.
37
Premiums
GENERAL
The premium amounts sufficient to Fund a Policy depend on a number of factors,
such as the Age, gender (where applicable), and risk class of a proposed
Insured, the desired Specified Amount, any supplemental benefits, investment
performance of the Subaccounts and interest credited under the Guarantee
Account. We will usually credit your initial premium payment to the Policy on
the later of the date we approve your application and the date we receive your
payment. We will credit any subsequent premium payment to the Policy on the
Valuation Day we receive it at our Home Office. After you pay the initial
premium, you may make unscheduled premium payments in any amount and at any
time subject to certain restrictions.
When you apply for the Policy, you will choose one of two alternative tests to
evaluate whether your Policy qualifies as life insurance under the Code. If you
choose the Guideline Premium Test, the total premiums you pay may not exceed
the guideline premium limitation for life insurance set forth in the Code and
shown in your Policy. We may reject any premium, or any portion of a premium,
that would result in the Policy being disqualified as life insurance under the
Code. We will refund any rejected premium along with any interest it accrued.
If you choose the Cash Value Accumulation Test, the terms of the Policy require
that the Death Benefit equal at least a factor (set forth in the Policy, and
which is dependent upon the age of the Insured(s)) multiplied by the Policy's
Account Value. Once chosen, you cannot change your choice later. You should
consult a tax adviser before making your choice.
For your convenience, we will monitor Policies and will attempt to notify you
on a timely basis if your Policy is in jeopardy of becoming a Modified
Endowment Contract ("MEC") under the Code. See "Tax Considerations." We reserve
the right to limit the number and amount of any unscheduled premium payments.
TAX FREE EXCHANGES (1035 EXCHANGES)
We will accept as part of your initial premium money from one contract that
qualified for a tax-free exchange under Section 1035 of the Code. If you
contemplate such an exchange, you should consult a competent tax advisor to
learn the potential tax effects of such a transaction. We will accept 1035
exchanges even if there is an outstanding loan on the other policy, so long as
the outstanding loan is no more than 50% of the rollover premium. We may allow
higher loan percentages. Replacing your existing coverage with this Policy may
not be to your advantage.
CERTAIN INTERNAL EXCHANGES
If you replace an existing GE Life and Annuity Assurance Company fixed
permanent life insurance policy with this Policy, we may waive some or all of
any applicable surrender charge on the fixed permanent life insurance policy,
provided that: 1) the fixed permanent life insurance policy has a positive
Surrender Value at the time of
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the exchange; and 2) the entire Account Value in the fixed permanent life
insurance policy is rolled over into the Policy.
If you qualify, the maximum amount of surrender charge we will waive on the
fixed permanent life insurance policy is equal to: Surrender Charge (new) +.03
Account Value, where Surrender Charge (new) is the initial (first Policy Month)
surrender charge of this Policy and Account Value is the Account Value of the
fixed permanent life insurance policy at the time of the exchange. Please
contact us for more details.
PERIODIC PREMIUM PLAN
When you apply for a Policy, you may select a periodic premium payment plan.
Under this plan, you may choose to receive a premium notice either annually,
semi-annually, or quarterly. You can also arrange for annual, semi-annual,
quarterly or monthly premium payments paid via automatic deduction from your
bank account or any other similar account we accept. You are not required to
pay premiums in accordance with this premium plan; you can pay more or less
than planned or skip a planned premium payment entirely. Subject to our
administrative servicing guidelines, you can change the amount of planned
premiums or switch between frequencies, whenever you want by providing
satisfactory instructions to our Home Office. Any change will be effective upon
our receipt of the instructions. Depending on the Account Value at the time of
an increase in the Specified Amount and the amount of the increase requested, a
change in your periodic premium payments may be advisable. See "Changing the
Specified Amount."
MINIMUM PREMIUM PAYMENT
Generally, the minimum amount of premium we will accept in connection with a
periodic premium payment plan is $50. Please keep in mind that you may have to
pay a higher amount to keep the Policy in force. Even if you pay the minimum
premium amount, your Policy may lapse. See "Premium to Prevent Termination."
For purposes of the minimum premium payment requirements, we deem any payment
to be a Planned Periodic Premium if we receive it within 30 days (before or
after) of the scheduled date for a Planned Periodic Premium payment and the
percentage difference between the planned amount and the actual payment amount
is not more than 10%. We will deem all other premium payments to be unscheduled
premium payments. Unless you direct us otherwise, we apply unscheduled premium
payments first to repay any Policy Debt.
ALLOCATION PREMIUMS
When you apply for a Policy, you specify the percentage of your Net Premium we
allocate to each Subaccount and the Guarantee Account. You may only direct your
Net Premiums and Account Value to not more than ten Subaccounts plus the
Guarantee
39
Account at any given time. You can change the allocation percentages at any
time by writing or calling our Home Office. The change will apply to all
premiums we receive with or after we receive your instructions. Net Premium
allocations must be in percentages totaling 100%, and each allocation
percentage must be a whole number.
Until we approve your application, receive all necessary forms including any
subsequent amendments to the application, and receive the entire initial
premium, we will place any premiums you pay into a non-interest bearing
account. We will then allocate your Net Premium to the Subaccounts and the
Guarantee Account based on the allocations percentages you specified in your
application.
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How Your Account Value Varies
ACCOUNT VALUE
The Account Value is the entire amount we hold under your Policy for you. The
Account Value serves as a starting point for calculating certain values under a
Policy. It is the sum of the total amount under the Policy in each Subaccount,
the Guarantee Account and the amount held in the General Account to secure
Policy Debt. We determine Account Value first on your Policy Date (or on the
date we receive your initial premium, if later) and after that on each
Valuation Day. Your Account Value will vary to reflect the performance of the
Subaccounts and interest credited under the Guarantee Account to which you have
allocated amounts and also will vary to reflect Policy Debt, charges for the
monthly deduction, mortality and expense risk charges, transfers, partial
surrenders, and Policy Debt repayments. Your Account Value may be more or less
than the premiums you paid and you bear the investment risk with respect to the
amounts allocated to the Subaccounts.
SURRENDER VALUE
The Surrender Value on a Valuation Day is the Account Value reduced by both any
surrender charge that we would deduct if you surrendered the Policy that day
and any Policy Debt.
SUBACCOUNT VALUES
On any Valuation Day, the value of a Subaccount equals the number of Subaccount
units we credit to the Policy multiplied by the Unit Value for that day. When
you make allocations to an Subaccount, either by Net Premium allocation,
transfer of Account Value, transfer of Policy Debt loan interest from the
General Account, or repayment of a Policy loan, we credit your Policy with
units in that Subaccount. We determine the number of units by dividing the
amount allocated, transferred or repaid to the Subaccount by the Subaccount's
Unit Value for the Valuation Day when we effect the allocation, transfer or
repayment.
The number of units we credit to a Policy will decrease whenever we take the
allocated portion of the monthly deduction, you take a Policy loan or a partial
surrender from the Subaccount, you transfer an amount from the Subaccount, you
take a partial surrender from the Subaccount, or you surrender the Policy.
UNIT VALUES
We arbitrarily set the Unit Value for each Subaccount at $10 when we
established the Subaccount. After that, a Subaccount's Unit Value varies to
reflect the investment experience of the underlying portfolio, and may increase
or decrease from one Valuation Day to the next. We determine Unit Value, after
a Subaccount's operations begin, by multiplying the net investment factor for
that Valuation Period by the Unit Value for the immediately preceding Valuation
Period.
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NET INVESTMENT FACTOR
The net investment factor for a Valuation Period is (a) divided by (b), where:
(a) is the result of:
(1) the value of the assets at the end of the preceding Valuation Period;
plus
(2) the investment income and capital gains, realized or unrealized,
credited to those assets at the end of the Valuation Period for which
the net investment factor is being determined; minus
(3) the capital losses, realized or unrealized, charged against those
assets during the Valuation Period; minus
(4) any amount charged against the Separate Account for taxes, or any
amount we set aside during the Valuation Period as a provision for
taxes attributable to the operation or maintenance of the Separate
Account; and
(b) is the value of the assets in the Subaccount at the end of the
preceding Valuation Period.
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Transfers
GENERAL
You may transfer Account Value among the Subaccounts and the Guarantee Account
at any time. Transfer requests may be made in writing or in any other form
acceptable to us.
A transfer will take effect as of the end of the Valuation Period during which
we receive your request at our Home Office. We may place limitations on
multiple transfer requests made at different times during the same Valuation
Period involving the same Subaccounts.
We may defer transfers under the same conditions that we may delay paying
proceeds. See "Requesting Payments." Currently, there is no limit on the number
of transfers among the Subaccounts and the Guarantee Account, but we reserve
the right to limit the number of transfers to twelve each calendar year. We
reserve the right to modify, restrict, suspend or eliminate the transfer
privileges, including telephone transfer privileges, at any time, for any
reason. We may not honor transfers made by third parties. See "Transfers by
Third Parties."
We also reserve the right to impose restrictions on transfers involving the
Guarantee Account. Such restrictions may include permitting transfers from an
interest rate guarantee period only during the 30 day period immediately
following the end of the guarantee period, limiting the amount of Account Value
available for transfer at any one time to 25 percent of the allocations to the
Guarantee Account plus accrued interest and prohibiting transfers to the
Guarantee Account for the six month period following a transfer from the
Guarantee Account.
Sometimes, we may not honor your transfer request. We may not honor your
transfer request:
(a) if any Subaccount that would be affected by the transfer is unable to
purchase or redeem shares of the Fund in which the Subaccount invests;
(b) if the transfer is a result of more than one trade involving the same
Subaccount within a 30 day period; or
(c) if necessary for the Policy to qualify as life insurance under the
Code.
(d) if the transfer would adversely affect accumulation unit values. This
may occur if the transfer would affect one percent or more of the
relevant Fund's total assets.
We also may not honor transfers made by third parties. (See "Transfers by Third
Parties.")
When thinking about a transfer of Account Value, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that you will make a transfer at an inopportune time.
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DOLLAR-COST AVERAGING
The dollar-cost averaging program permits you to systematically transfer on a
monthly or quarterly basis a set dollar amount from the Subaccount investing in
the Money Market portfolio of GE Investments Funds, Inc. (the "Money Market
Subaccount") or the Guarantee Account to any combination of Subaccounts other
than the Money Market Subaccount (as long as the total number of Subaccounts
used does not exceed the maximum number allowed under the Policy). The dollar-
cost averaging method of investment is designed to reduce the risk of making
purchases only when the price of units is high, but you should carefully
consider your financial ability to continue the program over a long enough
period of time to purchase units when their value is low as well as when it is
high. Dollar-cost averaging does not assure a profit or protect against a loss.
You may participate in the dollar-cost averaging program by completing a
dollar-cost averaging agreement, or calling our Home Office. To use the dollar-
cost averaging program, you must transfer at least $100 from the Money Market
Subaccount or the Guarantee Account to any Subaccount other than the Money
Market Subaccount. If any transfer would leave less than $100 in the Investment
Option from which transfers are being made, we will transfer the entire amount.
Once elected, dollar-cost averaging remains in effect from the date we receive
your request until the value of the Investment Option from which transfers are
being made is depleted, or until you cancel the program by written request or
by telephone if we have your telephone authorization on file. The dollar-cost
averaging program will start 30 days after we receive your premium payment and
instructions, unless you specify an earlier date. (See "Allocating Premiums"
for a description of when this occurs).
There is no additional charge for dollar-cost averaging, and we do not consider
a transfer under this program a transfer for purposes of assessing a transfer
charge, nor for calculating any limit on the maximum number of transfers we may
impose for a calendar year. We reserve the right to discontinue or modify the
dollar-cost averaging program at any time and for any reason.
PORTFOLIO REBALANCING
Once you allocate your money among the Subaccounts, the performance of each
Subaccount may cause your allocation to shift. You may instruct us to
automatically rebalance (on a quarterly, semi-annual or annual basis) your
Account Value to return to the percentages specified in your allocation
instructions. You may elect to participate in the portfolio rebalancing program
at any time by completing the portfolio rebalancing agreement. Your percentage
allocations must be in whole percentages. Subsequent changes to your percentage
allocations may be made at any time by writing or calling our Home Office. Once
elected, portfolio rebalancing remains in effect from the date we receive your
request until you instruct us to
44
discontinue portfolio rebalancing. There is no additional charge for using
portfolio rebalancing, and we do not consider a portfolio rebalancing transfer
a transfer for purposes of calculating any limit on the maximum number of
transfers we may impose for a calendar year. We reserve the right to
discontinue or modify the portfolio rebalancing program at any time and for any
reason. Portfolio rebalancing does not guarantee a profit or protect against a
loss. We also reserve the right to exclude Subaccounts from portfolio
rebalancing. The Guarantee Account does not participate in portfolio
rebalancing.
TRANSFERS BY THIRD PARTIES
As a general rule and as a convenience to you, we allow you to give a third
party the right to effect transfers on your behalf. However, when the same
third party makes transfers for many Owners, the result can be simultaneous
transfers involving large amounts of Account Value. Such transfers can disrupt
the orderly management of the portfolios underlying the Policy, can result in
higher costs to Owners, and are generally not compatible with the long-range
goals of Owners. We believe that such simultaneous transfers effected by such
third parties are not in the best interests of all shareholders of the
portfolios underlying the Policies, and the managements of those portfolios
share this position.
Therefore, to the extent necessary to reduce the adverse effects of
simultaneous transfers made by third parties who make transfers on behalf of
multiple owners, we may not honor such transfers. Also, we will institute
procedures to assure that the transfer requests that we receive have, in fact,
been made by the Owners in whose names they are submitted. These procedures
will not, however, prevent Owners from making their own transfer requests.
45
Death Benefits
As long as the Policy remains in force, we will pay the Death Benefit upon
receipt at our Home Office of satisfactory proof of the Insured's death. See
"Requesting Payments." We will pay the Death Benefit to the Beneficiary.
AMOUNT OF DEATH BENEFIT PAYABLE
The amount of Death Benefit payable equals:
. the Death Benefit Proceeds determined under the Death Benefit option in
effect on the date of death of the Insured under a single life Policy and
the Last Insured under a joint and last survivor Policy;
. plus any supplemental Death Benefits provided by rider;
. minus any Policy Debt on that date; and
. minus the premium that would have been required to keep the Policy in
force if the date of death occurred during a grace period.
Under certain circumstances, we may further adjust the amount of the Death
Benefit payable. See "Incontestability," "Misstatement of Age or Gender" and
"Suicide."
The minimum Specified Amount is $100,000 under a single life Policy and
$200,000 under a joint and last survivor Policy.
DEATH BENEFIT OPTIONS
A Policy must satisfy either one of two tests to qualify as a life insurance
contract for purposes of Section 7702 of the Code. At the time of application,
you must choose either the Cash Value Accumulation Test or the Guideline
Premium Test. Once chosen, the tax qualification test cannot be changed. For
each tax qualification test, there are three Death Benefit options available
under the Policy. The Death Benefit will be the greater of the Death Benefit
under Death Benefit option you select or the Minimum Death Benefit resulting
from the chosen tax qualification test.
For any Death Benefit option, the calculation of the Minimum Death Benefit is
shown in the Policy. The Minimum Death Benefit generally is the lowest Death
Benefit which will qualify the Policy as life insurance under Section 7702 of
the Code.
For an Insured under a single life Policy or either Insured under a joint and
last survivor Policy where the Attained Age of the Insured is less than 100,
the Death Benefit is set forth below.
. Under Option A, the Death Benefit is the Specified Amount plus the
Account Value.
. Under Option B, the Death Benefit is the Specified Amount.
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. Under Option C, the Death Benefit is:
. the greater of Specified Amount; or
. the Specified Amount; plus
. the sum of all premiums paid before Attained Age 75 of the Insured
under a single life Policy or the younger Insured under a joint and
last survivor Policy (for 1035 exchanges, the premiums paid under the
old policy minus any partial surrender of premiums and charges for
supplemental non-qualified benefits as defined in the Code); minus
. the charges for supplemental benefits, other than those specified in
Section 7702(f)(5)(A) of the Code; minus
. all partial surrenders.
Under Options A, B and C for Attained Ages 100 and older, the Death Benefit is
the Account Value multiplied by 101%.
Under all options, we determine the Specified Amount and Account Value on the
Valuation Day of the death of the Insured under a single life Policy and of the
Last Insured under a joint and last survivor Policy.
Under Death Benefit Option A, the Death Benefit Proceeds will vary directly
with the investment performance of the Account Value. Under Death Benefit
Option B, the Death Benefit Proceeds ordinarily will not change until the
applicable percentage amount of the Account Value exceeds the Specified Amount
or you change the Specified Amount. Under Death Benefit Option C, the Death
Benefit will vary directly with premium payments.
CHANGING THE DEATH BENEFIT OPTION
You select the Death Benefit option when you apply for the Policy. However, you
may request a change to Option A or Option B on your Policy at any time by
writing to our Home Office. Changes to Option C are not permitted. The
effective date of the change will be the Monthly Anniversary Day after we
receive the request for the change. We will send you revised Policy data pages
reflecting the new option and the effective date of the change. We will adjust
the Specified Amount on the effective date of the change in Death Benefit
option to ensure the Death Benefit after the change equals the Death Benefit
before the charge. A change in the Death Benefit option will affect the cost of
insurance charges.
CHANGING THE SPECIFIED AMOUNT
After a Policy has been in effect for one year, you may increase or decrease
the Specified Amount. The maximum monthly charge that can be assessed for an
increase in Specified Amount is $0.83 per $1,000 of increase in Specified
Amount
47
for the first 10 Policy Years after the increase. To make a change, you must
send a written request and the Policy to our Home Office. Any change in the
Specified Amount may affect the cost of insurance rate and the net amount at
risk, both of which may change your cost of insurance. See "Monthly Deduction"
and "Cost of Insurance." Depending on the Account Value at the time of an
increase in the Specified Amount and the amount of the increase requested, it
may be advisable to change your periodic payments upon an increase in the
Specified Amount.
Any change in the Specified Amount will affect the maximum premium limitation.
If a decrease in the Specified Amount causes the premiums to exceed new lower
limitations required by Federal tax law, we will withdraw the excess from
Account Value and refund it to you so that the Policy will continue to meet
these requirements. We will withdraw the Account Value that we refund from each
Investment Option in the same proportion that the Account Value in that
Investment Option bears to the total Account Value in all Investment Options
under the Policy at the time of the withdrawal (i.e., on a pro-rata basis).
Any decrease in the Specified Amount will become effective on the Monthly
Anniversary Day after the date we receive the request. The decrease will first
apply to coverage provided by the most recent increase, then to the next most
recent increases successively, then to the coverage under the original
application. During the Continuation Period, we will not allow a decrease
unless the Account Value less any Policy Debt is greater than the surrender
charge. The Specified Amount following a decrease can never be less than the
minimum Specified Amount for the Policy when we issued it. A decrease may cause
us to assess a surrender charge and may require us to pay excess Account Value.
To apply for an increase, you must complete a supplemental application and
submit evidence of insurability satisfactory to us. Any approved increase will
become effective on the date shown in the supplemental Policy data page. Please
note that an increase will not become effective if the Policy's Surrender Value
is too low to cover the monthly deduction for the Policy Month following the
increase.
An increase in the Specified Amount will increase the Continuation Amounts and
may result in a surrender charge.
A change in your Specified Amount may have Federal tax consequences. See "Tax
Considerations."
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Surrenders and Partial Surrenders
SURRENDERS
You may cancel and surrender your Policy at any time before the Insured dies
under a single life Policy or the Last Insured dies under a joint and last
survivor Policy. The Policy will terminate on the Valuation Day we receive your
request at our Home Office, and you will not be able to reinstate it.
We will pay you the Surrender Value in a lump sum unless you make other
arrangements. You will incur a surrender charge if you surrender your Policy
during the first ten Policy years. See "Surrender Charge." A surrender may have
adverse tax consequences. See "Tax Considerations."
PARTIAL SURRENDERS
You may make partial surrenders at any time under your Policy. If you elected
Death Benefit Option B, you only may make partial surrenders after the first
Policy year. The minimum partial surrender amount is $200.
We reserve the right to assess a processing fee for each partial surrender
equal to the lesser of $25 or 2% of the amount partially surrendered, although
we currently do not do so. See "Partial Surrender Processing Fee." The amount
of the partial surrender will equal the amount you requested to surrender plus
the processing fee.
When you request a partial surrender, you can direct how we deduct the partial
surrender from your Account Value. If you provide no directions, we will deduct
the partial surrender proportionately from the Investment Options in which you
are invested.
EFFECT OF PARTIAL SURRENDERS ON ACCOUNT VALUE AND DEATH BENEFIT PROCEEDS
A partial surrender will reduce both the Account Value and the Death Benefit
Proceeds by the amount of the partial surrender.
49
Loans
GENERAL
You may borrow up to the following amount:
. 90% of the difference between your Account Value at the end of the
Valuation Period during which we received your loan request and any
surrender charges on the date of the loan;
. less any outstanding Policy Debt.
The minimum Policy loan is $500. You may request Policy loans by writing our
Home Office.
When we make a loan, we transfer an amount equal to the loan proceeds from your
Account Value in Separate Account II and the Guarantee Account to our General
Account and hold it as "collateral" for the loan. If you do not direct an
allocation for this transfer, we will make it on a pro-rata basis from each
Investment Option in which you have invested. We will pay interest at an annual
rate of at least 4% on that collateral.
During the first ten Policy years, we pay interest at an annual rate of 4.25
percent on collateral corresponding to Policy Debt and charge interest daily at
an effective annual rate of 4.40 percent on outstanding Policy Debt. After the
tenth Policy year, we pay interest at an annual rate of 4.00 percent on
collateral and charge interest daily at an effective annual rate of 4.00
percent on outstanding Policy Debt, essentially providing a Policy loan without
an interest charge. Currently, for Policy years six through ten, we pay the
same rate of interest on collateral and charge the same rate of interest on
Policy Debt as we do after the tenth Policy year, however, we may, in our sole
discretion, change this practice in the future.
Interest is due and payable at the end of each Policy Year while a Policy loan
is outstanding. If, on any Policy Anniversary, you have not paid interest
accrued since the last Policy Anniversary, we add the amount of the interest to
the loan and this becomes part of your outstanding Policy Debt. We transfer the
interest due from each Investment Option on a pro-rata basis.
You may repay a loan at any time during an Insured's life while your Policy is
in effect. When you repay a loan, we transfer an amount equal to the repayment
from our General Account to Separate Account II and the Guarantee Account and
allocate it as you directed when you repay the loan. If you provide no
directions, we will allocate the amount according to your standing instructions
for Net Premium allocations.
REPAYMENT OF POLICY DEBT
You may repay all or part of your Policy Debt at any time while an Insured is
living and the Policy is in force. We will treat any payments by you (other
than the initial premium) first as the repayment of any outstanding Policy
Debt. We will treat the
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portion of the payment in excess of any outstanding Policy Debt as an
additional premium payment. See "Premiums."
When you repay a loan, we transfer an amount equal to the repayment from our
General Account to Separate Account II and/or the Guarantee Account and
allocate it as you directed when you repaid the loan. If you provide no
directions, we will allocate the amount according to your standing instructions
for premium allocations.
You must send loan repayments to our Home Office. We will credit the repayments
as of the Valuation Day we receive them.
EFFECT OF POLICY LOANS
A Policy loan affects the Policy, because we reduce the Death Benefit Proceeds
and Surrender Value under the Policy by the amount of any outstanding loan plus
interest you owe on the loan. Repaying the loan causes the Death Benefit
Proceeds and Surrender Value to increase by the amount of the repayment. As
long as a loan is outstanding, we hold an amount equal to the loan as
collateral. We will credit interest at an annual rate of at least 4% on that
collateral. The amount held as collateral is not affected by Separate Account
II's investment performance. Amounts transferred from Separate Account II as
collateral will affect the Account Value because we credit such amounts with an
interest rate we declare rather than a rate of return reflecting the investment
performance of Separate Account II.
There are risks involved in taking a Policy loan, a few of which include the
potential for a Policy to lapse if projected earnings, taking into account
outstanding loans, are not achieved. A Policy loan may also have possible
adverse tax consequences that could occur if a Policy lapses with loans
outstanding. See "Tax Considerations."
We will notify you if the sum of your loans plus any interest you owe on the
loans is more than the Account Value less applicable surrender charges, or if
during the Continuation Period, the sum of your loans plus any interest you owe
on the loans is more than the Account Value less any applicable surrender
charges, and the Net Total Premium is less than the Continuation Amount. If you
do not submit a sufficient payment within 61 days from the date of the notice,
your Policy may terminate.
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Termination
PREMIUM TO PREVENT TERMINATION
Generally, if on a Monthly Anniversary Day, the Surrender Value of your Policy
is too low to cover the monthly deduction, your Policy will be in default and a
grace period will begin. In that case, we will mail you notice of the
additional premium necessary to prevent your Policy from terminating. You will
have a 61-day grace period from the date we mail the notice to make the
required premium payment.
However, your Policy will not lapse during the Continuation Period, even if
your Surrender Value is too low to cover the monthly deduction, so long as the
Net Total Premium is at least equal to the Continuation Amount. At the end of
the Continuation Period, you may, however, have to make an additional premium
payment to keep the Policy in force.
YOUR POLICY WILL REMAIN IN EFFECT DURING THE GRACE PERIOD
If the Insured under a single life Policy or both Insureds under a joint and
survivor Policy should die during the grace period before you pay the required
premium, the Death Benefit will still be payable to the Beneficiary, although
we will reduce the amount of the Death Benefit payable by the amount of premium
that would have been required to keep the Policy in force. If you have not paid
the required premium before the grace period ends, your Policy will terminate.
The Policy will have no value and no benefits will be payable. However, you may
reinstate your Policy under certain circumstances.
REINSTATEMENT
If you have not surrendered your Policy, you may reinstate your Policy within
three years after termination, subject to compliance with certain conditions,
including the payment of a necessary premium and submission of satisfactory
evidence of insurability. See your Policy for further information.
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Payments and Telephone Transactions
REQUESTING PAYMENTS
You may send your written requests for payment to our Home Office or give them
to one of our authorized agents. We will ordinarily pay any Death Benefit
Proceeds, loan proceeds or surrender or partial surrender proceeds in a lump
sum within seven days after receipt at our Home Office of all the documents
required for such a payment. Other than the Death Benefit Proceeds, which we
determine as of the Valuation Day of the Insured's death under a single life
Policy or the Last Insured's death under a joint and last survivor Policy, the
amount we pay is as of the end of the Valuation Period during which our Home
Office receives all required documents. We may pay your Death Benefit Proceeds
in a lump sum or under an Optional Payment Plan. See "Optional Payment Plans."
In most cases, when we pay Death Benefit payments in a lump sum, we will pay
these proceeds either:
(1) to your Designated Beneficiary(ies) directly in the form of a check; or
(2) by establishing an interest bearing account called the "GE Secure
Access Account" for the Designated Beneficiary(ies) in the amount of
Death Proceeds payable.
When establishing the GE Secure Access Account we will send the Beneficiary a
checkbook within 7 days after we receive all the required documents, and the
Beneficiary will have immediate access to the account simply by writing a check
for all or any part of the amount of the Death Benefit payments payable. The GE
Secure Access Account is part of our General Account. It is not a bank account
and it is not Insured by the FDIC or any other government agency. As part of
our General Account, it is subject to the claims of our creditors. We receive a
benefit from all amounts left in the GE Secure Access Account. If we do not
receive instructions from the Beneficiary(ies) with regard to the form of Death
Benefit payment, we will automatically establish the Secure Access Account.
Any Death Benefit Proceeds that we pay in one lump sum will include interest
from the date of death to the date of payment. We will pay interest at a rate
we set, or a rate set by law if greater. The minimum interest rate which we may
pay is 2.5%. We will not pay interest beyond one year or any longer time set by
law. We will reduce Death Benefit Proceeds by any outstanding Policy Debt and
any due and unpaid charges and will increase Death Benefit Proceeds by any
benefits added by rider.
We may delay making a payment or processing a transfer request if:
. the disposal or valuation of Separate Account II's assets is not reasonably
practicable because the New York Stock Exchange is closed for other than a
regular holiday or weekend, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
53
. the SEC by order permits postponement of payment to protect our Policy
Owners.
We also may defer making payments attributable to a check that has not cleared
the bank on which it is drawn.
TELEPHONE TRANSACTIONS
You may make certain requests under your Policy by calling us provided we
received your prior written authorization at our Customer Service Center. Such
requests include requests for transfers and changes in premium allocations,
dollar-cost averaging, and portfolio rebalancing.
By completing the telephone authorization form, you agree that we will not be
liable for any loss, liability, cost or expense when we follow the telephone
instructions we receive. If we later determine that you did not make a
telephone request, or the request was made without your authorization, you will
bear any loss that resulted from such unauthorized transaction.
We will employ reasonable procedures to confirm that instructions we receive
are genuine. Such procedures may include, among others,
. requiring you or a third party you authorized to provide some form of
personal identification before we act on the telephone instructions,
. confirming the telephone transaction in writing to you or a third party
you authorized, and/or
. tape recording telephone instructions.
If we do not follow reasonable procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. We reserve the right to limit
telephone transactions.
To request a telephone transaction, please call our Customer Service Line at
1-800-352-9910.
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Tax Considerations
INTRODUCTION
This part of the Prospectus discusses the Federal income tax treatment of the
Policy. The Federal income tax treatment of the Policy is complex and sometimes
uncertain. The Federal income tax rules may vary with your particular
circumstances.
This discussion is general and is not intended as tax advice. It does not
address all of the Federal income tax rules that may affect you and your
Policy. This discussion also does not address Federal estate or gift tax
consequences, or state or local tax consequences, associated with a Policy. As
a result, you should always consult a tax advisor about the application of tax
rules to your individual situation.
TAX STATUS OF THE POLICY
Federal income tax law generally grants favorable treatment to life insurance:
the proceeds paid on the death of the Insured (or Last Insured for the joint
and last survivor version of the Policy) are excluded from the gross income of
the Beneficiary, and the Owner is not taxed on increases in the Account Value
unless amounts are distributed while the Insured (or last Insured) is alive.
The Policy is designed to comply with one of two alternative tests under the
tax law. For Policies designed to comply with the tax law's Guideline Premium
Test, this favorable tax treatment will apply to your Policy only if the
premiums paid for your Policy do not exceed a limit established by the tax law.
An increase or decrease in the Policy's Specified Amount may change this
premium limit. Also, a Minimum Death Benefit requirement must be satisfied. Due
to the coverage of more than one Insured under the joint and survivor version
of the Policy, there is some uncertainty about how the tax law's limit on
premiums should be calculated. As a result, we may need to return a portion of
your premiums, with earnings thereon, and impose higher cost of insurance
charges (not exceeding those guaranteed) in the future. We will monitor the
premiums paid for your Policy to keep them within the tax law's limit.
For Policies designed to comply with the tax law's Cash Value Accumulation
Test, the Policy's terms define a Minimum Death Benefit that is different than
that imposed by the Guideline Premium Test. There is also uncertainty regarding
the application of this test to the joint and survivor version of the Policy.
As necessary to ensure compliance, we may need to amend this Policy, e.g., to
generally provide higher Death Benefit Factors.
Regardless of the tax compliance test selected, two other requirements must be
met for your Policy to receive favorable tax treatment as life insurance:
We will monitor the premiums paid for your Policy to keep them within the tax
law's limit. However, for your Policy to receive favorable tax treatment as
life insurance, two other requirements must be met:
. The investments of Separate Account II must be "adequately diversified"
in accordance with Internal Revenue Service ("IRS") regulations; and
. your right to choose particular investments for a Policy must be limited.
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Investments in Separate Account II must be diversified: The IRS has issued
regulations that prescribe standards for determining whether the investments of
Separate Account II, including the assets of the Funds in which Separate
Account II invests, are "adequately diversified." If Separate Account II fails
to comply with these diversification standards, you could be required to pay
tax currently on the excess of the Account Value over the premiums paid for the
Policy.
Although we do not control the investments of all of the Funds (the Company
only indirectly controls those of GE Investments Funds, Inc., through an
affiliated company), we expect that the Funds will comply with the IRS
regulations so that Separate Account II will be considered "adequately
diversified."
Restrictions on the extent to which you can direct the investment of Account
Values: Federal income tax law limits your right to choose particular
investments for the Policy. The U.S. Treasury Department stated in 1986 that it
expected to issue guidance clarifying those limits, but it has not yet done so.
Thus, the nature of the limits is currently uncertain. As a result, your right
to allocate Account Values among the Funds may exceed those limits. If so, you
would be treated as the owner of a portion of the assets of Separate Account II
and thus subject to current taxation on the income and gains from those assets.
The Company does not know what limits may be set forth in any guidance that the
Treasury Department may issue, or whether any such limits will apply to
existing Policies. The Company therefore reserves the right to modify the
Policy without your consent to attempt to prevent the tax law from considering
you to own a portion of the assets of Separate Account II.
No guarantees regarding tax treatment: The Company makes no guarantees
regarding the tax treatment of any Policy or of any transaction involving a
Policy. However, the remainder of this discussion assumes that your Policy will
be treated as a life insurance contract for Federal income tax purposes and
that the tax law will not impose tax on any increase in your Account Value
until there is a distribution from your Policy.
TAX TREATMENT OF POLICIES -- GENERAL
Death benefit Proceeds and Account Value Increases: A Policy's treatment as
life insurance for Federal income tax purposes generally has the following
results:
. Death Benefit Proceeds are excludable from the gross income of the
Beneficiary.
. You are not taxed on increases in the Account Value unless amounts are
distributed from the Policy while the Insured (or Last Insured) is alive.
. The taxation of amounts distributed while the Insured is alive depends
upon whether your Policy is a "modified endowment contract." The term
"modified endowment contract," or "MEC," is defined below.
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Partial and full surrenders and maturity proceeds: A partial surrender occurs
when you receive less than the total amount of the Policy's Surrender Value;
receipt of the entire Surrender Value is a full surrender. If your Policy is
not a MEC, you will generally pay tax on the amount of a partial or full
surrender only to the extent it exceeds your "investment in the contract." In a
few states, a maturity value will be paid. Maturity proceeds will be taxable to
the extent the amount received plus Policy Debt exceeds the "investment in the
contract." You will be taxed on this amount at ordinary income tax rates, not
at lower capital gains tax rates. Your "investment in the contract" generally
equals the total of the premiums paid for your Policy plus the amount of any
loan that was includible in your income, reduced by any amounts you previously
received from the Policy that you did not include in your income.
Special rule for certain cash distributions in the first 15 Policy
years: During the first 15 years after your Policy is issued, if we distribute
cash to you and reduce the Death Benefit Proceeds (e.g., by decreasing the
Policy's Specified Amount), you may be required to pay tax on all or part of
the cash payment, even if it is less than your "investment in the contract."
This also may occur if we distribute cash to you up to two years before the
proceeds are reduced, or if the cash payment is made in anticipation of the
reduction. However, you will not be required to pay tax on more than the amount
by which your Account Value exceeds your "investment in the contract."
Considerations where Insured lives past Age 100: If the Insured survives beyond
the end of the mortality table used to measure charges under the Policy, which
ends at Age 100, the IRS may seek to deny the tax-free treatment of the Death
Benefit Proceeds and instead to tax you on the amount by which your Account
Value exceeds your "investment in the contract." Because we believe the Policy
continues to meet the Federal tax definition of life insurance beyond Age 100,
we have no current plans to withhold or report taxes in this situation.
Accelerated Benefit Rider: Your Policy may contain an Accelerated Benefit
Rider, which provides you with access to a portion of the Death Benefit if the
Insured becomes terminally ill. The accelerated benefit payment is treated in
the same manner as Death Benefit Proceeds for tax purposes, meaning that it
generally will be excludable from gross income. But if the Insured under the
Policy is an officer, director, or employee of the Owner of the Policy, or is
financially interested in the trade or business of the Owner, the payment would
be taxable in part.
Loans: If your Policy is not a MEC, a loan received under a Policy (i.e.,
Policy Debt) normally will be treated as your indebtedness. Hence, so long as
the Policy remains in force, you will generally not be taxed on any part of a
Policy loan. However, it is possible that you could have additional income for
tax purposes if any of your Policy
57
loan consists of Preferred Policy Debt. If your Policy terminates (by a full
surrender or by a lapse) while the Insured (or Last Insured) is alive, you will
be taxed on the amount (if any) by which the Policy Debt plus any amount
received in cash exceeds your investment in the contract.
Generally, interest paid on Policy Debt or other indebtedness related to the
Policy will not be tax deductible, except in the case of certain indebtedness
under a Policy covering a "key person." A tax advisor should be consulted
before taking any Policy loan.
Loss of interest deduction where policies are held by or for the benefit of
corporations, trusts, etc.: If an entity (such as a corporation or a trust, not
an individual) purchases a Policy or is the Beneficiary of a Policy issued
after June 8, 1997, a portion of the interest on indebtedness unrelated to the
Policy may not be deductible by the entity. However, this rule does not apply
to a Policy owned by an entity engaged in a trade or business which covers the
life of an individual who is:
. a 20% owner of the entity, or
. an officer, director, or employee of the trade or business, at the time
first covered by the Policy.
This rule also does not apply to a policy owned by an entity engaged in a trade
or business which covers the joint lives of the 20% owners of the entity and
the Owner's spouse at the time first covered by the policy. Entities that are
considering purchasing the Policy, or that will be Beneficiaries under a
Policy, should consult a tax advisor.
Optional Payment Plans: If Death Benefit Proceeds under the Policy are paid
under one of the Optional Payment Plans, the Beneficiary will be taxed on a
portion of each payment (at ordinary income tax rates). The Company will notify
the Beneficiary annually of the taxable amount of each payment. However, if the
Death Benefit Proceeds are held by the Company under Optional Payment Plan 4
(interest income), the Beneficiary will be taxed on the interest income as it
is credited.
Changes and Exchanges: The right to change Owners and changes reducing future
amounts of Death Benefit Proceeds may have tax consequences depending upon the
circumstances of each change. The exchange of one life insurance contract for
another life insurance contract generally is not taxed (unless cash is
distributed or a loan is reduced or forgiven). However, in the case of the
Policy when issued as a joint and survivor Policy, the other life insurance
contract involved in the exchange generally must also cover the same two
Insureds. The exercise of the option to split the joint and survivor version of
the Policy into two separate life insurance contracts may result in the
taxation of the Policy as if there were a full surrender.
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SPECIAL RULES FOR MODIFIED ENDOWMENT CONTRACTS (MECs)
Definition of a "Modified Endowment Contract:" Special rules apply to a Policy
classified as a MEC. A Policy will be classified as a MEC if either of the
following is true:
. If premiums are paid more rapidly than allowed by a "7-pay test" under
the tax law. At your request, we will let you know the amount of premium
that may be paid for your Policy in any year that will avoid MEC
treatment under the 7-pay test.
. If the Policy is received in exchange for another policy that is a MEC.
Due to the coverage of more than one Insured under the joint and survivor
version of the Policy, there are special considerations in applying the 7-pay
test. For example, a reduction in the Death Benefit at any time, such as may
occur upon a partial surrender, may cause the Policy to be a MEC, resulting in
the application of the tax treatment described below. Also and more generally,
the manner of applying the 7-pay test is somewhat uncertain in the case of
contracts covering more than one Insured.
Tax Treatment of MECs: If a Policy is classified as a MEC, the following
special rules apply:
. A partial surrender will be taxable to you to the extent that the Account
Value exceeds your investment in the contract.
. A loan from the Policy (together with any unpaid interest included in
Policy Debt), and the amount of any assignment or pledge of the Policy,
will be taxed in the same manner as a partial surrender.
A penalty tax of 10% will be imposed on the amount of any full or partial
surrender, loan and unpaid loan interest included in Policy Debt, assignment,
or pledge on which you must pay tax. However, the penalty tax does not apply to
a distribution made:
(1) after you attain Age 59 1/2,
(2) because you have become disabled, within the meaning of the tax law, or
(3) in substantially equal periodic payments (not less frequently than
annually) made over your life or life expectancy (or over the joint
lives or life expectancies of you and your Beneficiary, within the
meaning of the tax law).
Special Rules If You Own More Than One MEC: All MECs that we (or any of our
affiliates) issue to you within the same calendar year will be combined to
determine the amount of any distribution from the Policy that will be taxable
to you.
Interpretative issues: The tax law's rules relating to MECs are complex and
open to considerable variation in interpretation. You should consult your tax
advisor before making any decisions regarding changes in coverage under or
distributions from your Policy.
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INCOME TAX WITHHOLDING
We may be required to withhold and pay to the IRS a part of the taxable portion
of each distribution made under a Policy. However, in many cases, you may elect
not to have any amounts withheld. You are responsible for payment of all taxes
and early distribution penalties, regardless of whether you request that no
taxes be withheld or if we do not withhold a sufficient amount of taxes. At the
time you request a distribution from the Policy, we will send you forms that
explain the withholding requirements.
TAX STATUS OF THE COMPANY
Under existing Federal income tax law, we do not expect to incur any Federal
income tax liability on the income or gains in Separate Account II. Based upon
this expectation, we do not impose a charge for Federal income taxes. If
Federal income tax law changes and we are required to pay taxes on some or all
of the income and gains earned by Separate Account II, we may impose a charge
for those taxes.
We may also incur state and local taxes, in addition to premium taxes for which
a deduction from premiums is currently made. At present, these taxes are not
significant. If there is a material change in state or local tax laws, we may
impose a charge for any taxes attributable to Separate Account II.
CHANGES IN THE LAW AND OTHER CONSIDERATIONS
This discussion is based on our understanding of the Federal income tax law
existing on the date of this Prospectus. Congress, the IRS, and the courts may
modify these laws at any time, and may do so retroactively. Any person
concerned about the tax implications of ownership of a Policy should consult a
tax advisor.
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Other Policy Information
OPTIONAL PAYMENT PLANS
The Policy currently offers the following five Optional Payment Plans, free of
charge, as alternatives to the payment of a Death Benefit or Surrender Value in
a lump sum (see "Requesting Payments"):
Plan 1 -- Income For A Fixed Period. We will make equal periodic payments
for a fixed period not longer than 30 years. Payments can be annual, semi-
annual, quarterly, or monthly. If the payee dies before the end of the fixed
period, we will discount the amount of the remaining guaranteed payments to
the date of the payee's death at a yearly rate of 3%. We will pay the
discounted amount in one sum to the payee's estate unless otherwise
provided. Discounted means we will deduct the amount of interest each
remaining payment would have included had it not been paid out early.
Plan 2 -- Life Income. We will make equal monthly payments for a guaranteed
minimum period. If the payee lives longer than the minimum period, payments
will continue for his or her life. The minimum period can be 10, 15, or 20
years. If the payee dies before the end of the guaranteed period, we will
discount the amount of remaining payments for the minimum period at the same
interest rate used to calculate the monthly income. We will pay the
discounted amount in one sum to the payee's estate unless otherwise
provided.
Plan 3 -- Income of a Definite Amount. We will make equal periodic payments
of a definite amount. Payments can be annual, semi-annual, quarterly, or
monthly. The amount paid each year must be at least $120 for each $1,000 of
proceeds. Payments will continue until the proceeds are exhausted. The last
payment will equal the amount of any unpaid proceeds. If the payee dies, we
will pay the amount of the remaining proceeds with earned interest in one
sum to the payee's estate unless otherwise provided.
Plan 4 -- Interest Income. We will make periodic payments of interest earned
from the proceeds left with us. Payments can be annual, semi-annual,
quarterly or monthly and will begin at the end of the first period chosen.
If the payee dies, we will pay the amount of remaining proceeds and any
earned but unpaid interest in one sum to the payee's estate unless otherwise
provided.
Plan 5 -- Joint Life And Survivor Income. We will make equal monthly
payments to two payees for a guaranteed minimum of 10 years. Each payee must
be at least 35 years old when payments begin. Payments will continue as long
as either payee is living. If both payees die before the end of the minimum
period, we will discount the amount of the remaining payments for the 10-
year period at the same interest rate used to calculate the monthly income.
We will pay the discounted amount in one sum to the survivor's estate unless
otherwise provided.
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You may select an Optional Payment Plan in your application or by writing our
Home Office. We will transfer any amount left with us for payment under an
Optional Payment Plan to our General Account. Payments under an Optional
Payment Plan will not vary with the investment performance of Separate Account
II because they are forms of fixed-benefit annuities. See "Tax Treatment of
Policies." Amounts allocated to an Optional Payment Plan will earn interest at
3% compounded annually. Certain conditions and restrictions apply to payments
received under an Optional Payment Plan. For further information, please review
your Policy or contact one of our authorized agents.
DIVIDENDS
The Policy is non-participating. We will not pay dividends on the Policy.
INCONTESTABILITY
The Policy limits our right to contest the Policy as issued, reinstated or as
increased, except for material misstatements contained in the application or a
supplemental application, after it has been in force for a minimum period
during the Insured's lifetime under the single life version or the lifetimes of
both Insureds under the joint and last survivor version, generally for two
years from the Policy Date, date of reinstatement or effective date of the
increase. This provision does not apply to riders that provide disability
benefits (subject to state exception).
SUICIDE EXCLUSION
If the Insured under a single life Policy commits suicide while sane or insane
within two years of the Policy Date, all coverage under the Policy will end,
and we will pay the Beneficiary an amount equal to all premiums paid, less
outstanding Policy Debt and less amounts paid upon partial surrender of the
Policy.
If the Insured under a single life Policy commits suicide while sane or insane
more than two years after the Policy Date but within two years after the
effective date of an increase in the Specified Amount, we will limit the amount
payable with respect to that increase. The amount payable attributable to the
increase will equal the monthly deductions for the increase. Such Death Benefit
Proceeds will be paid to the Beneficiary under the same conditions as the
initial Specified Amount.
If either Insured under a joint and last survivor Policy commits suicide while
sane or insane within two years of the Policy Date, all coverage under the
Policy will end, and we will pay the Beneficiary an amount equal to all
premiums paid, less outstanding Policy Debt and less amounts paid upon partial
surrender of the Policy.
If the first Insured to die commits suicide while sane or insane more than two
years after the Policy Date but within two years after the effective date of an
increase in the Specified Amount, we will limit the amount payable with respect
to that increase.
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The amount payable to the Beneficiary attributable to the increase will equal
the monthly deductions for the increase.
If the Last Insured to die commits suicide while sane or insane more than two
years after the Policy Date but within two years after the effective date of an
increase in the Specified Amount, we will limit the proceeds payable with
respect to that increase. The proceeds payable attributable to the increase
will equal the additional premium payment required for the increase. Such Death
Benefit Proceeds will be paid to the Beneficiary under the same conditions as
the initial Specified Amount.
Please see your Policy for more details.
MISSTATEMENT OF AGE OR GENDER
We will adjust the Death Benefit Proceeds if you misstated an Insured's Age or
gender in your application.
WRITTEN NOTICE
You should send any written notice to us at our Home Office. The notice should
include the Policy number and the full name of the Insured for a single life
Policy or each Insured for a joint and last survivor Policy. We will send any
notice to the address shown in the application unless an appropriate address
change form has been filed with us.
TRUSTEE
If you name a trustee as the Owner or Beneficiary of the Policy and the trustee
subsequently exercises ownership rights or claims benefits thereunder, we will
have no obligation to verify that a trust is in effect or that the trustee is
acting within the scope of his/her authority. Payment of Policy benefits to the
trustee will release us from all obligations under the Policy to the extent of
the payment. When we make a payment to the trustee, we will have no obligation
to ensure that such payment is applied according to the terms of the trust
agreement.
OTHER CHANGES
At any time, we may make such changes in the Policy as are necessary to assure
compliance at all times with the definition of life insurance prescribed by the
Code:
. to make the Policy, our operations, or the operation of Separate Account
II to conform with any law or regulation issued by any government agency
to which they are subject; or
. to reflect a change in the operation of Separate Account II, if allowed
by the Policy.
Only the President or a Vice President of GE Life & Annuity has the right to
change the Policy. No agent has the authority to change the Policy or waive any
of its terms.
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The President or a Vice President of GE Life & Annuity must sign all
endorsements, amendments, or riders to be valid.
REPORTS
We maintain records and accounts of all transactions involving the Policy,
Separate Account II, the Guarantee Account and Policy Debt. Within 30 days
after each Policy Anniversary, we will send you a report showing information
about your Policy. The report will show:
. the Specified Amount;
. the Account Value in each Investment Option;
. the Surrender Value;
. the Policy Debt; and
. the premiums paid and charges made during the Policy year.
We also will send you an annual and a semi-annual report for each Fund
underlying a Subaccount to which you have allocated Account Value, as required
by the 1940 Act. In addition, when you pay premiums (other than by pre-
authorized checking account deduction), or if you take out a Policy loan, make
transfers or make partial surrenders, you will receive a written confirmation
of these transactions.
SUPPLEMENTAL BENEFITS
There are several supplemental benefits that may be added to a single life
Policy, as well as a joint and last survivor Policy. These benefits may not be
available in all states or markets.
All riders except the Death Benefit Enhancement Rider may be added at the time
the Policy is issued and after issue. The Death Benefit Enhancement Rider may
only be added at the time the Policy is issued. Riders (excluding the Death
Benefit Enhancement Rider) may be canceled at any time by notifying us in
writing at the Home Office.
Riders Available on Single Life Policies Only:
Additional Insured Rider. An additional Insured can be added with this term
insurance rider. The rider is available to the same issue ages and risk classes
as the base Insured. The minimum amount of insurance is $10,000 and the maximum
is the Specified Amount on the base Policy (excluding the Death Benefit
Enhancement rider amount). This rider also contains a conversion option that
expires on the Policy anniversary nearest the additional Insured's 70th
birthday. The cost of this rider is the same as the Cost of Insurance on a
current and guaranteed basis, based on the additional Insured's age,
underwriting class and gender.
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Children's Insurance Rider. This rider provides available insurance coverage
for each child of the Insured. The minimum amount of insurance coverage is
$2000; the maximum amount is $10,000. There is a conversion privilege at policy
anniversary nearest 25th birthday or when Policy ends, if earlier. If the
Insured dies while the Policy is in effect, each child that is covered under
this rider, will receive a paid-up Policy for the rider amount of insurance.
The current and maximum monthly rate for this rider is $0.50 per $1000 of rider
insurance coverage.
Waiver of Monthly Deduction Rider. In the event of total disability, this rider
will provide the payments of Premiums to the Policy. The rider is available for
issue ages 15-60 (rating restrictions may apply). The amount of Premium benefit
equal the maximum monthly deduction continuation amount. Coverage under this
rider ends on the Policy anniversary nearest Insured's age 65 unless the
Insured has been continuously disabled for the previous five years. The maximum
cost of the rider is 38.24% of the total monthly Cost of Insurance charges,
including rider cost of insurance.
Accidental Death Benefit. This rider provides an additional Death Benefit
should the Insured's death occur as a result of an accident (as defined by the
rider). The amount is paid in addition to the Specified Amount of the base
Policy. The Specified Amount of the rider can be from $5,000 to $200,000, but
may not exceed the Specified Amount of the base Policy. The maximum annual
charge is $2.24 per $1,000 of Specified Amount but ends at attained age 70.
Riders Available on Joint Life Policies Only:
Four Year Term Rider. This rider provides term insurance coverage on the
Insured that dies last. The four year term rider will use the same current and
guaranteed Cost of Insurance rates that are used on the base Policy.
Policy Split Option Rider. This rider allows the Owner to split a Policy into
two individual Policies in the event of a divorce or a substantial change in
estate tax law. The maximum Death Benefit available on either insured is equal
to one-half of the base Policy Specified Amount. There is no charge for this
rider, but evidence of insurability is required when the split is requested.
Riders Available on Both Single and Joint Life Policies:
Death Benefit Enhancement Rider. This rider provides additional insurance on
the Insured(s). The additional benefit is payable on the death of the second
Insured for a Joint Life policy. The cost of Insurance charge for this rider is
the same as the Cost of Insurance rates on the base coverage. There is also a
monthly Expense Charge per $1,000 of coverage and any additional increase in
coverage.
Accelerated Benefit Rider. Provided the Accelerated Benefit Rider is approved
in your state, you may elect an Accelerated Benefit if the Insured is
terminally ill. There is no charge for the election of this rider. The
Accelerated Benefit Rider provides you with
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access to a portion of the Death Benefit during the Insured's lifetime, if the
Insured is diagnosed with a terminal illness. Joint and last survivor Policies
will be eligible for acceleration only after the death of the first Insured and
the diagnosis of the terminal illness of the surviving Insured.
For purposes of determining if an Accelerated Benefit is available, we define
terminal illness as a medical condition resulting from bodily injury or disease
or both:
. which has been diagnosed by a licensed physician;
. the diagnosis of which is supported by clinical, radiological, laboratory
or other evidence that is satisfactory to us; and
. which a licensed physician certifies is expected to result in death
within 12 months from the date of the certification.
Any request for payment of an accelerated benefit must be in a form
satisfactory to us, and any payment of an accelerated benefit requires
satisfactory proof of a terminal illness and is subject to our administrative
procedures as well as the conditions set forth in the Accelerated Benefit
Rider. Please see our Policy rider for more information.
The Accelerated Benefit will equal (a) minus (b) minus (c) minus (d), where:
(a) is the Eligible Proceeds;
(b) is the discount for early payment of a Death Benefit. The discount will
be based on the annual interest rate charged for Non-Preferred Policy
Loans;
(c) is the product of (1) the ratio of Eligible Proceeds to Total Proceeds,
and (2) any Policy Debt; and
(d) is an administrative charge not to exceed $250.
Eligible Proceeds is the lesser of (a) and (b), where:
(a) is 75% of the Total Proceeds; and
(b) is $250,000 for all the Insured's policies in force with us.
Total Proceeds include the Policy's Death Benefit had the Insured's death
occurred on the date of the approval of the Accelerated Benefit claim and any
term insurance on the Insured (or in the case of joint and last survivor term
insurance on the Insured (or in the case of joint and last survivor policies
the surviving Insured) added by rider. Any such rider must have at least two
years of the term remaining as measured from the date we received proof of
terminal illness.
The Accelerated Benefit will be paid in one lump sum.
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If the amount of Eligible Proceeds is equal to the amount of the Death Benefit
that would have been paid at the Insured's death, then our payment of
Accelerated Benefit will result in termination of all insurance under the
Policy on the life of the Insured (including riders). Any insurance under the
Policy on the life of someone other than the Insured will be treated as though
the Insured had died.
If the amount of Eligible Proceeds is less than the amount of the Death Benefit
that would have been paid at the Insured's death, then upon payment of the
Accelerated Benefit the Policy will continue with the Specified Amount, Account
Value, Policy Debt and any additional term insurance eligible to be accelerated
under this rider reduced by the ratio of Eligible Proceeds to Total Proceeds.
We will waive any surrender charge for the resulting decrease in Specified
Amount as well as any minimum Specified Amount requirement under the Policy.
Other rider benefits will continue without reduction.
We will deduct monthly charges from your Account Value as part of the monthly
deduction for the benefits described above except for the accelerated death
benefit and split option benefit. There is no charge for the accelerated Death
Benefit or policy split option riders. See "Charges and Deductions, Monthly
Deduction."
Additional rules and limits apply to these supplemental benefits. Please ask
your authorized GE Life & Annuity representative for further information or
contact our Home Office.
USING THE POLICY AS COLLATERAL
You can assign the Policy as collateral security. You must notify us in writing
on the appropriate form if you assign the Policy. Any payments we made before
the assignment will not be affected. We are not responsible for the validity of
an assignment. An assignment may affect your rights and the rights of the
Beneficiary.
REINSURANCE
We may reinsure a portion of the risks assumed under the Policies.
LEGAL PROCEEDINGS
GE Life & Annuity, like all other companies, is involved in lawsuits, including
class action lawsuits. In some class action and other lawsuits involving
insurance companies, substantial damages have been sought and/or material
settlement payments have been made. Although the outcome of any litigation
cannot be predicted with certainty, GE Life & Annuity believes that at the
present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on it or Separate Account II.
67
Additional Information
SALE OF THE POLICIES
We have entered into an underwriting agreement with Capital Brokerage
Corporation (doing business in Indiana, Minnesota, New Mexico, and Texas as GE
Capital Brokerage Corporation) (the "Underwriter") for the distribution and
sale of the Policies. Pursuant to this agreement, the Underwriter serves as
principal underwriter for the Policies. The Underwriter is located at 6630 W.
Broad St., Richmond, Virginia 23230. The Underwriter was organized as a
corporation under the laws of the state of Washington in 1981 and is an
affiliate of ours. The Underwriter is registered as a broker-dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as well as with the securities commissions in the states in which it operates,
and is a member of the National Association of Securities Dealers, Inc.
The Underwriter offers the Policies through its registered representatives who
are registered with the NASD and with the states in which they do business.
Registered representatives with the Underwriter are also licensed as insurance
agents in the states in which they do business and are appointed with us.
The Underwriter also enters into selling agreements with an affiliated broker-
dealer (Terra Securities Corporation) and independent broker-dealers to sell
the Policies. The registered representatives of these selling firms are
registered with the NASD and with the states in which they do business, are
licensed as insurance agents in the states in which they do business and are
appointed with us.
We pay sales commissions and other marketing related expenses to the
Underwriter for promotion and sales of the Policies by its registered
representatives as well as by selling firms. In the first Policy year, the
selling firm will receive a commission of up to approximately 90% of the first
year target premium (based on Age, gender, Specified Amount, risk class and
other factors). In renewal years, the selling firm receives up to approximately
4.0% of premiums paid. We may pay trails commissions up to an annual rate of
0.25% of Account Value (less any Policy Debt) for all Policy years. This
commission may be returned to us if the Policy is not continued through the
first Policy year. We may on occasion pay a higher commission for a short
period of time as a special promotion. In the case of sales by the
Underwriter's registered representatives, a portion of the sales commission is
passed through the Underwriter to its registered representative who sold the
Policy. Because the Underwriter is our affiliate, their registered
representatives are eligible for various cash benefits, such as bonuses,
insurance benefits and financing arrangements, and non-cash compensation
programs that we offer, such as conferences, trips, prizes and awards.
The Underwriter also receives 12b-1 fees from Alliance Variable Products Series
Fund, Inc., Fidelity Variable Products Fund, Fidelity Variable Insurance
Products Fund II, Fidelity Variable Insurance Products Fund III, Janus Aspen
Series, MFS(R) Variable Insurance Trust and Oppenheimer Variable Account Funds.
68
In the case of sales by selling firms, the Underwriter passes through the
entire amount of the sales commission to the selling firm whose registered
representative sold the Policy. The selling firm may retain a portion of the
commission before it pays the registered representative who sold the Policy.
We may also make payments for services that do not directly involve the sales
of the Policies. These services may include the recruitment and training of
personnel, production of promotional literature, and similar services.
We intend to recover commissions, marketing, administrative and other expenses
and costs of Policy benefits through fees and charges imposed under the
Policies. Commissions paid on the Policies, including other incentives and
payments, are not charged directly to you or to the Account Value.
LEGAL MATTERS
The legal matters in connection with the Policy described in this prospectus
have been passed on by Heather C. Harker, Assistant Vice President and
Associate General Counsel of GE Life & Annuity.
EXPERTS
The consolidated financial statements of GE Life and Annuity Assurance Company
and subsidiary as of December 31, 2000 and 1999, and for each of the years in
the three-year period ended December 31, 2000, and the financial statements of
GE Life & Annuity Separate Account II, as of December 31, 2000 and for each of
the years or lesser periods in the three-year period ended December 31, 2000,
have been included herein in reliance upon the reports of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
The report of KPMG LLP dated January 22, 2001 with respect to the consolidated
financial statements of GE Life and Annuity Assurance Company and subsidiary,
contains an explanatory paragraph that states that the Company changed its
method of accounting for insurance-related assessments in 1999.
ACTUARIAL MATTERS
Actuarial matters included in this Prospectus have been examined by Paul Haley,
an actuary of GE Life & Annuity, whose opinion we filed as an exhibit to the
registration statement.
FINANCIAL STATEMENTS
You should distinguish the consolidated financial statements of GE Life &
Annuity and subsidiary included in this prospectus from the financial
statements of Separate Account II. Please consider the financial statements of
GE Life & Annuity only as bearing on our ability to meet our obligations under
the Policies. You should not
69
consider the financial statements of GE Life & Annuity and subsidiary as
affecting the investment performance of the assets held in Separate Account II.
The Separate Account II financial statements included in this Prospectus
profile have several Subaccounts that are not available to this Policy. The new
Subaccounts in Separate Account II that are available to this Policy did not
begin operation before the date of this prospectus.
EXECUTIVE OFFICERS AND DIRECTORS
We are managed by a board of directors. The following table sets forth the
name, address and principal occupations during the past five years of each of
our executive officers and directors.
Name Positions and Offices with Depositor for Last Five Years
- ----------------------------------------------------------------------------------------------------------------
Pamela S. Schutz Director and President, GE Life and Annuity Life Assurance Company since May 1998; Chief
Executive Officer, GE Life and Annuity Assurance Company since June 2000; President, The
Harvest Life Insurance Company May 1997- November 1998; President, GE Capital Commercial
Real Estate (an affiliate) May 1994-November 1998.
Thomas M. Stinson(1) Director and Senior Vice President, GE Life and Annuity Assurance Company since April
2000; President, Personal Financial Services of GE Life and Annuity Assurance Company
since 1998; General Manager of Home Depot Credit Services Account, GE Card Services (an
affiliate) 1993-1998.
Elliot A. Rosenthal Director, GE Life and Annuity Assurance Company since June 2000; Senior Vice President of
GE Life and Annuity Assurance Company since 1996.
Leon E. Roday(2) Director, GE Life and Annuity Assurance Company since June 1999; Senior Vice President, GE
Life and Annuity Assurance Company since May 1998; Director, Senior Vice President,
General Counsel and Secretary, GE Financial Assurance Holdings, Inc. (an affiliate) since
1996.
Geoffrey S. Stiff Director, GE Life and Annuity Assurance Company since May 1996; Senior Vice President, GE
Life and Annuity Assurance Company since March 1999; Vice President, GE Life and Annuity
Assurance Company May 1996-March 1999; Director and Chief
Executive Officer of General Electric Capital Assurance Company (an affiliate) since 1996.
Kelly L Groh Senior Vice President and Chief Financial Officer of GE Life and Annuity Assurance Company
since January, 2002; Vice President and Controller of Wealth Management Income, GE Life
and Annuity Assurance Company since July 2000; Vice President, Controller and Sr.
Financial Analyst, Financial Service of GE Life and Annuity Assurance Company since March
1996.
Donita M. King Senior Vice President, General Counsel and Secretary, GE Life and Annuity Assurance
Company since March 1999; Associate General Counsel, Prudential Insurance Company of
America, March 1989-March 1999.
Susan M. Mann Vice President and Controller, GE Life and Annuity Assurance Company since April 2001;
Vice President and Controller, AMF Bowling, Inc. July 1998-December 2000; Chief Financial
Officer, World Access, Inc. (provider of travel insurance, assistance and financial market
enhancement related products and services) April 1991-July 1998.
Gary T. Prizzia(3) Treasurer, GE Life and Annuity Assurance Company since January 2000; Assistant Treasurer
GE Financial Assurance Holdings, Inc. (an affiliate) since January 2000; Treasurer/Risk
Manager, Budapest Bank, October 1996-January 2000.
Paul A. Haley Senior Vice President and Chief Actuary, GE Life and Annuity Assurance Company since
January 2, 2002; Vice President Product Development, GE Life and Annuity Assurance Company
from October 1999-December 2001; Vice President and Chief Actuary, Colonial Life &
Accident Insurance Company, August 1997- July 1999.
70
The principal business address of each person listed, unless otherwise
indicated, is GE Life and Annuity Assurance Company, 6610 W. Broad Street,
Richmond, Virginia 23230.
(1) The principal business address for Mr. Stinson is GE Financial
Assurance, 1650 Los Gamos Drive, San Rafael, CA 94903.
(2) The principal business address for Mr. Roday is GE Financial Assurance
Holdings, Inc., 6620 W. Broad Street, Richmond, Virginia 23230.
(3) The principal business address for Mr. Prizzia is GE Financial
Assurance Holdings, Inc., 6620 W. Broad Street, Richmond, Virginia
23230.
Executive officers serve at the pleasure of the Board of Directors and
directors are elected annually by GE Life and Annuity Assurance Company's
shareholders.
OTHER INFORMATION
We have filed a Registration Statement with the SEC, under the Securities Act
of 1933 as amended, for the Policies being offered here. This Prospectus does
not contain all the information in the Registration Statement, its amendments
and exhibits. Please refer to the Registration Statement for further
information about Separate Account II, the Company, and the Policies offered.
Statements in this Prospectus about the content of Policies and other legal
instruments are summaries. For the complete text of those Policies and
instruments, please refer to those documents as filed with the SEC and
available on the SEC's website at http://www.sec.gov.
HYPOTHETICAL ILLUSTRATIONS
We have included illustrations in this prospectus, and use them in connection
with your purchase of the Policy. These illustrations are based on hypothetical
rates of return that are not guaranteed. The rates are illustrative only, and
do not represent past or future performance. Your actual Policy values and
benefits will be different from these illustrations.
The illustrations assume you paid planned premiums annually and the returns on
the assets in the Subaccounts were a uniform gross annual rate of 0%, 6% or
12%, before deduction of any fees and charges. The values reflect the deduction
of all Policy and Fund fees and charges. The tables also show planned premiums
accumulated at 5% interest. The values under a Policy would be different from
those shown if the returns averaged 0%, 6% or 12% but fluctuated over and under
those averages throughout the years shown. The hypothetical investment rates of
return are illustrative only and should not be deemed a representation of past
or future investment rates of return. Actual rates of return for a particular
Policy may be more or less than the hypothetical investment rates of return
used in the illustrations.
71
The illustrations assume an average annual expense ratio of .94% of the average
daily net assets of the Funds available under the Policies, based on the Funds'
fees and expenses for the year ended December 31, 2000 as shown in the
Portfolio Annual Expense Table, above. (These fees and expenses, and therefore
the illustrations, reflect certain fee waivers and reimbursements provided by
some of the Funds. We cannot guarantee that these fee waivers and
reimbursements will continue.) For information on Fund fees and expenses, see
the prospectuses for the Funds accompanying this prospectus. The illustrations
also take into account the monthly charge we assess for assuming mortality and
expense risks, equal to an annual rate of 0.40% of the first $50,000 of
unloaned Account Value in the Subaccounts (0.40% of the first $100,000 of
unloaned Account Value for a joint and last survivor Policy) plus an annual
rate of 0.05% of unloaned Account Value above $50,000 ($100,000 for a joint and
last survivor Policy) for the first twenty Policy years. After deduction of
these amounts, the illustrated gross annual investment rates of return of 0%,
6% and 12%, correspond to approximate net annual rates of [-.94]%, [5.06]%, and
[11.06]% respectively.
The illustrations reflect the premium charge and the monthly deduction for the
hypothetical Insured. We reflect our current charges and the higher maximum
guaranteed charges that we have the contractual right to charge in separate
illustrations on each of the following pages. All the illustrations reflect the
fact that no charges for Federal or state income taxes are currently made
against Separate Account II and assume no Policy Debt or charges for
supplemental benefits.
The illustrations reflect our gender distinct rates for no nicotine use. Upon
request, we will furnish a comparable illustration based upon the proposed
Insured's individual circumstances. Such illustrations may assume different
hypothetical rates of return than those illustrated.
72
Flexible Premium Variable Life Insurance
Male Issue Age 45 Initial Specified Amount $250,000
Preferred No Nicotine Use
Underwriting Risk Initial Premium and Planned
Death Benefit Option -- Level Premium (Payable Annually) (1) $13,000
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Maximum Return with Maximum Return with Maximum
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 13,650 6,442 9,707 250,000 7,091 10,356 250,000 7,742 11,007 250,000
2 27,983 15,989 19,254 250,000 17,901 21,166 250,000 19,894 23,159 250,000
3 43,032 25,380 28,645 250,000 29,189 32,454 250,000 33,319 36,584 250,000
4 58,833 34,616 37,881 250,000 40,981 44,246 250,000 48,162 51,427 250,000
5 73,567 42,075 45,340 250,000 51,600 54,865 250,000 62,812 66,077 250,000
6 77,246 39,748 42,360 250,000 52,421 55,033 250,000 68,147 70,759 250,000
7 81,108 37,355 39,314 250,000 53,162 55,121 250,000 73,939 75,898 250,000
8 85,163 34,879 36,185 250,000 53,807 55,113 250,000 80,234 81,540 250,000
9 89,421 32,303 32,956 250,000 54,336 54,989 250,000 87,087 87,740 250,000
10 93,892 29,606 29,606 250,000 54,724 54,724 250,000 94,555 94,555 250,000
15 140,592 33,646 33,646 250,000 77,460 77,460 250,000 171,712 171,712 250,000
20 211,082 39,128 39,128 250,000 113,116 113,116 250,000 316,032 316,032 385,559
25 301,047 33,422 33,422 250,000 155,576 155,576 250,000 554,150 554,150 642,814
30 415,867 6,489 6,489 250,000 210,651 210,651 250,000 947,701 947,701 1,014,040
35 562,411 * * * 290,351 290,351 304,868 1,605,984 1,605,984 1,686,283
- ----------------------------------------------------------------------------------------------------
* Premium in addition to the planned premium is required to keep the policy
in effect.
(1) The values illustrated assume that the planned premium of $13,000 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the maximum expense charges and
cost of insurance rates allowable under the Policy. Accordingly, if the
assumed hypothetical gross annual investment return were earned, the
values and benefits of an actual Policy with the listed specifications
could never be less than those shown, and in some cases may be greater
than those shown.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
73
Flexible Premium Variable Life Insurance
Male Issue Age 45 Initial Specified Amount $250,000
Preferred No Nicotine Use
Underwriting Risk Initial Premium and Planned
Death Benefit Option -- Level Premium (Payable Annually) (1) $13,000
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Current Return with Current Return with Current
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 13,650 7,402 10,667 250,000 8,091 11,356 250,000 8,781 12,046 250,000
2 27,983 17,889 21,154 250,000 19,937 23,202 250,000 22,069 25,334 250,000
3 43,032 28,204 31,469 250,000 32,301 35,566 250,000 36,738 40,003 250,000
4 58,833 38,359 41,624 250,000 45,221 48,486 250,000 52,965 56,230 250,000
5 73,567 46,724 49,989 250,000 57,020 60,285 250,000 69,123 72,388 250,000
6 77,246 45,070 47,682 250,000 58,838 61,450 250,000 75,855 78,467 250,000
7 81,108 43,408 45,367 250,000 60,681 62,640 250,000 83,236 85,195 250,000
8 85,163 41,722 43,028 250,000 62,539 63,845 250,000 91,329 92,635 250,000
9 89,421 40,019 40,672 250,000 64,420 65,073 250,000 100,223 100,876 250,000
10 93,892 38,264 38,264 250,000 66,295 66,295 250,000 109,987 109,987 250,000
15 140,592 48,351 48,351 250,000 99,023 99,023 250,000 203,532 203,532 272,733
20 211,082 63,896 63,896 250,000 150,594 150,594 250,000 374,272 374,272 456,612
25 301,047 76,559 76,559 250,000 217,953 217,953 252,826 661,041 661,041 766,807
30 415,867 83,405 83,405 250,000 305,080 305,080 326,436 1,141,352 1,141,352 1,221,247
35 562,411 82,420 82,420 250,000 416,609 416,609 437,440 1,950,626 1,950,626 2,048,158
- ----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $13,000 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the expense charges and cost of
insurance rates currently in effect. Although GE Life & Annuity
anticipates deducting these charges for the forseeable future, these
charges are not guaranteed and could be raised at the discretion of GE
Life & Annuity. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
74
Flexible Premium Variable Life Insurance
Male Issue Age 45 Initial Specified Amount $250,000
Preferred No Nicotine Use
Underwriting Risk Initial Premium and Planned
Death Benefit Option --
Increasing Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Maximum Return with Maximum Return with Maximum
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------ -------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -----------------------------------------------------------------------------------------------
1 4,988 0 2,142 252,142 0 2,333 252,333 0 2,526 252,526
2 10,224 923 4,188 254,188 1,440 4,705 254,705 1,983 5,248 255,248
3 15,723 2,869 6,134 256,134 3,848 7,113 257,113 4,918 8,183 258,183
4 21,497 4,713 7,978 257,978 6,288 9,553 259,553 8,083 11,348 261,348
5 27,559 6,445 9,710 259,710 8,752 12,017 262,017 11,491 14,756 264,756
6 33,925 8,715 11,327 261,327 11,888 14,500 264,500 15,816 18,428 268,428
7 40,608 10,854 12,813 262,813 15,026 16,985 266,985 20,414 22,373 272,373
8 47,626 12,846 14,152 264,152 18,148 19,454 269,454 25,296 26,602 276,602
9 54,995 14,679 15,332 265,332 21,239 21,892 271,892 30,477 31,130 281,130
10 62,732 16,331 16,331 266,331 24,273 24,273 274,273 35,963 35,963 285,963
15 107,623 24,182 24,182 274,182 41,646 41,646 291,646 73,628 73,628 323,628
20 164,916 24,100 24,100 274,100 54,968 54,968 304,968 127,211 127,211 377,211
25 238,039 11,134 11,134 261,134 57,038 57,038 307,038 200,753 200,753 450,753
30 331,364 * * * 34,655 34,655 284,655 296,371 296,371 546,371
35 450,473 * * * * * * 408,817 408,817 658,817
- -----------------------------------------------------------------------------------------------
* Premium in addition to the planned premium is required to keep the policy
in effect.
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the maximum expense charges and
cost of insurance rates allowable under the Policy. Accordingly, if the
assumed hypothetical gross annual investment return were earned, the
values and benefits of an actual Policy with the listed specifications
could never be less than those shown, and in some cases may be greater
than those shown.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
75
Flexible Premium Variable Life Insurance
Male Issue Age 45 Initial Specified Amount $250,000
Preferred No Nicotine Use
Underwriting Risk Initial Premium and Planned
Death Benefit Option --
Increasing Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Current Return with Current Return with Current
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 4,988 0 2,924 252,924 0 3,145 253,145 101 3,366 253,366
2 10,224 2,493 5,758 255,758 3,117 6,382 256,382 3,768 7,033 257,033
3 15,723 5,239 8,504 258,504 6,453 9,718 259,718 7,772 11,037 261,037
4 21,497 7,906 11,171 261,171 9,900 13,165 263,165 12,157 15,422 265,422
5 27,559 10,521 13,786 263,786 13,489 16,754 266,754 16,988 20,253 270,253
6 33,925 13,723 16,335 266,335 17,867 20,479 270,479 22,954 25,566 275,566
7 40,608 16,847 18,806 268,806 22,372 24,331 274,331 29,437 31,396 281,396
8 47,626 19,877 21,183 271,183 26,993 28,299 278,299 36,473 37,779 287,779
9 54,995 22,823 23,476 273,476 31,744 32,397 282,397 44,132 44,785 294,785
10 62,732 25,646 25,646 275,646 36,589 36,589 286,589 52,438 52,438 302,438
15 107,623 40,188 40,188 290,188 65,640 65,640 315,640 111,187 111,187 361,187
20 164,916 51,011 51,011 301,011 99,394 99,394 349,394 206,364 206,364 456,364
25 238,039 57,531 57,531 307,531 138,403 138,403 388,403 362,644 362,644 612,644
30 331,364 55,194 55,194 305,194 178,497 178,497 428,497 615,463 615,463 865,463
35 450,473 41,112 41,112 291,112 216,173 216,173 466,173 1,027,155 1,027,155 1,277,155
- ----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the expense charges and cost of
insurance rates currently in effect. Although GE Life & Annuity
anticipates deducting these charges for the forseeable future, these
charges are not guaranteed and could be raised at the discretion of GE
Life & Annuity. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the investment options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
76
Flexible Premium Variable Life Insurance
Male Issue Age 45 Initial Specified Amount $250,000
Preferred No Nicotine Use
Underwriting Risk Initial Premium and Planned
Death Benefit Option -- Return
of Premium Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Maximum Return with Maximum Return with Maximum
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------ -------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -----------------------------------------------------------------------------------------------
1 4,988 0 2,137 254,750 0 2,328 254,750 0 2,521 254,750
2 10,224 903 4,168 259,500 1,421 4,686 259,500 1,965 5,230 259,500
3 15,723 2,823 6,088 264,250 3,804 7,069 264,250 4,876 8,141 264,250
4 21,497 4,627 7,892 269,000 6,205 9,470 269,000 8,004 11,269 269,000
5 27,559 6,302 9,567 273,750 8,614 11,879 273,750 11,363 14,628 273,750
6 33,925 8,496 11,108 278,500 11,677 14,289 278,500 15,622 18,234 278,500
7 40,608 10,536 12,495 283,250 14,720 16,679 283,250 20,138 22,097 283,250
8 47,626 12,400 13,706 288,000 17,720 19,026 288,000 24,918 26,224 288,000
9 54,995 14,070 14,723 292,750 20,656 21,309 292,750 29,975 30,628 292,750
10 62,732 15,518 15,518 297,500 23,497 23,497 297,500 35,315 35,315 297,500
15 107,623 21,514 21,514 321,250 39,170 39,170 321,250 72,099 72,099 321,250
20 164,916 16,719 16,719 345,000 48,416 48,416 345,000 126,018 126,018 345,000
25 238,039 * * * 39,603 39,603 368,750 208,312 208,312 368,750
30 331,364 * * * * * * 349,007 349,007 392,500
35 450,473 * * * * * * 606,444 606,444 636,767
- -----------------------------------------------------------------------------------------------
* Premium in addition to the planned premium is required to keep the policy
in effect.
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the maximum expense charges and
cost of insurance rates allowable under the Policy. Accordingly, if the
assumed hypothetical gross annual investment return were earned, the
values and benefits of an actual Policy with the listed specifications
could never be less than those shown, and in some cases may be greater
than those shown.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
77
Flexible Premium Variable Life Insurance
Male Issue Age 45 Initial Specified Amount $250,000
Preferred No Nicotine Use
Underwriting Risk Initial Premium and Planned
Death Benefit Option -- Return
of Premium Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Current Return with Current Return with Current
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 4,988 0 2,924 254,750 0 3,144 254,750 100 3,365 254,750
2 10,224 2,489 5,754 259,500 3,113 6,378 259,500 3,765 7,030 259,500
3 15,723 5,229 8,494 264,250 6,443 9,708 264,250 7,765 11,030 264,250
4 21,497 7,886 11,151 269,000 9,882 13,147 269,000 12,143 15,408 269,000
5 27,559 10,487 13,752 273,750 13,460 16,725 273,750 16,967 20,232 273,750
6 33,925 13,671 16,283 278,500 17,823 20,435 278,500 22,923 25,535 278,500
7 40,608 16,772 18,731 283,250 22,311 24,270 283,250 29,398 31,357 283,250
8 47,626 19,770 21,076 288,000 26,908 28,214 288,000 36,427 37,733 288,000
9 54,995 22,676 23,329 292,750 31,631 32,284 292,750 44,082 44,735 292,750
10 62,732 25,446 25,446 297,500 36,442 36,442 297,500 52,392 52,392 297,500
15 107,623 39,438 39,438 321,250 65,241 65,241 321,250 111,660 111,660 321,250
20 164,916 49,059 49,059 345,000 98,819 98,819 345,000 210,221 210,221 345,000
25 238,039 53,025 53,025 368,750 138,278 138,278 368,750 379,579 379,579 440,311
30 331,364 44,223 44,223 392,500 181,032 181,032 392,500 665,242 665,242 711,809
35 450,473 14,870 14,870 416,250 226,746 226,746 416,250 1,146,509 1,146,509 1,203,834
- ----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the expense charges and cost of
insurance rates currently in effect. Although GE Life & Annuity
anticipates deducting these charges for the forseeable future, these
charges are not guaranteed and could be raised at the discretion of GE
Life & Annuity. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
78
Flexible Premium Joint and Last Survivor Variable Life Insurance
Male Issue Age 45 Preferred No
Nicotine Use Initial Specified Amount $500,000
Female Issue Age 45 Preferred No
Nicotine Use Initial Premium and Planned
Death Benefit Option -- Level Premium (Payable Annually) (1) $13,000
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Maximum Return with Maximum Return with Maximum
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 13,650 7,405 10,370 500,000 8,075 11,040 500,000 8,746 11,711 500,000
2 27,983 17,626 20,591 500,000 19,617 22,582 500,000 21,690 24,655 500,000
3 43,032 27,698 30,663 500,000 31,681 34,646 500,000 35,994 38,959 500,000
4 58,833 37,621 40,586 500,000 44,291 47,256 500,000 51,803 54,768 500,000
5 75,425 47,395 50,360 500,000 57,470 60,435 500,000 69,273 72,238 500,000
6 86,066 51,718 54,090 500,000 65,582 67,954 500,000 82,565 84,937 500,000
7 90,369 49,993 51,772 500,000 67,686 69,465 500,000 90,487 92,266 500,000
8 94,888 48,267 49,453 500,000 69,828 71,014 500,000 99,158 100,344 500,000
9 99,632 46,532 47,125 500,000 72,004 72,597 500,000 108,669 109,262 500,000
10 104,614 44,779 44,779 500,000 74,209 74,209 500,000 119,122 119,122 500,000
15 163,334 62,709 62,709 500,000 117,655 117,655 500,000 227,542 227,542 500,000
20 246,315 81,839 81,839 500,000 177,676 177,676 500,000 419,300 419,300 511,546
25 352,222 92,225 92,225 500,000 249,488 249,488 500,000 742,747 742,747 861,586
30 487,389 84,622 84,622 500,000 334,336 334,336 500,000 1,283,651 1,283,651 1,373,506
35 659,901 31,630 31,630 500,000 438,425 438,425 500,000 2,188,927 2,188,927 2,298,374
- ----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $13,000 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the maximum expense charges and
cost of insurance rates allowable under the Policy. Accordingly, if the
assumed hypothetical gross annual investment return were earned, the
values and benefits of an actual Policy with the listed specifications
could never be less than those shown, and in some cases may be greater
than those shown.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
79
Flexible Premium Joint and Last Survivor Variable Life Insurance
Male Issue Age 45 Preferred No
Nicotine Use Initial Specified Amount $500,000
Female Issue Age 45 Preferred No
Nicotine Use Initial Premium and Planned
Death Benefit Option -- Level Premium (Payable Annually) (1) $13,000
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Current Return with Current Return with Current
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------- ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -----------------------------------------------------------------------------------------------------
1 13,650 7,790 10,755 500,000 8,482 11,447 500,000 9,174 12,139 500,000
2 27,983 18,400 21,365 500,000 20,459 23,424 500,000 22,601 25,566 500,000
3 43,032 28,868 31,833 500,000 32,990 35,955 500,000 37,452 40,417 500,000
4 58,833 39,194 42,159 500,000 46,102 49,067 500,000 53,879 56,844 500,000
5 75,425 49,381 52,346 500,000 59,820 62,785 500,000 72,047 75,012 500,000
6 86,066 53,970 56,342 500,000 68,346 70,718 500,000 85,950 88,322 500,000
7 90,369 52,369 54,148 500,000 70,734 72,513 500,000 94,387 96,166 500,000
8 94,888 50,794 51,980 500,000 73,201 74,387 500,000 103,658 104,844 500,000
9 99,632 49,243 49,836 500,000 75,750 76,343 500,000 113,875 114,468 500,000
10 104,614 47,712 47,712 500,000 78,382 78,382 500,000 125,145 125,145 500,000
15 163,334 68,164 68,164 500,000 125,867 125,867 500,000 240,680 240,680 500,000
20 246,315 92,345 92,345 500,000 193,537 193,537 500,000 445,353 445,353 543,331
25 352,222 114,014 114,014 500,000 279,655 279,655 500,000 791,674 791,674 918,341
30 487,389 131,869 131,869 500,000 389,031 389,031 500,000 1,375,735 1,375,735 1,472,036
35 659,901 142,913 142,913 500,000 529,766 529,766 556,254 2,360,978 2,360,978 2,479,027
- -----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $13,000 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the expense charges and cost of
insurance rates currently in effect. Although GE Life & Annuity
anticipates deducting these charges for the forseeable future, these
charges are not guaranteed and could be raised at the discretion of GE
Life & Annuity. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
80
Flexible Premium Joint and Last Survivor Variable Life Insurance
Male Issue Age 45 Preferred No
Nicotine Use Initial Specified Amount $500,000
Female Issue Age 45 Preferred No
Nicotine Use Initial Premium and Planned
Death Benefit Option --
Increasing Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Maximum Return with Maximum Return with Maximum
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- ---------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- --------------------------------------------------------------------------------------------------
1 4,988 0 2,841 502,841 90 3,055 503,055 305 3,270 503,270
2 10,224 2,667 5,632 505,632 3,274 6,239 506,239 3,909 6,874 506,874
3 15,723 5,407 8,372 508,372 6,593 9,558 509,558 7,882 10,847 510,847
4 21,497 8,095 11,060 511,060 10,049 13,014 513,014 12,259 15,224 515,224
5 27,559 10,727 13,692 513,692 13,644 16,609 516,609 17,080 20,045 520,045
6 33,925 13,893 16,265 516,265 17,975 20,347 520,347 22,981 25,353 525,353
7 40,608 16,995 18,774 518,774 22,449 24,228 524,228 29,414 31,193 531,193
8 47,626 20,029 21,215 521,215 27,067 28,253 528,253 36,430 37,616 537,616
9 54,995 22,987 23,580 523,580 31,828 32,421 532,421 44,081 44,674 544,674
10 62,732 25,861 25,861 525,861 36,727 36,727 536,727 52,426 52,426 552,426
15 107,623 42,314 42,314 542,314 67,909 67,909 567,909 113,023 113,023 613,023
20 164,916 53,930 53,930 553,930 102,747 102,747 602,747 209,744 209,744 709,744
25 238,039 55,380 55,380 555,380 136,196 136,196 636,196 361,007 361,007 861,007
30 331,364 35,384 35,384 535,384 154,479 154,479 654,479 588,718 588,718 1,088,718
35 450,473 * * * 120,144 120,144 620,144 907,824 907,824 1,407,824
- --------------------------------------------------------------------------------------------------
* Premium in addition to the planned premium is required to keep the policy
in effect.
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the maximum expense charges and
cost of insurance rates allowable under the Policy. Accordingly, if the
assumed hypothetical gross annual investment return were earned, the
values and benefits of an actual Policy with the listed specifications
could never be less than those shown, and in some cases may be greater
than those shown.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
81
Flexible Premium Joint and Last Survivor Variable Life Insurance
Male Issue Age 45 Preferred No
Nicotine Use Initial Specified Amount $500,000
Female Issue Age 45 Preferred No
Nicotine Use Initial Premium and Planned
Death Benefit Option --
Increasing Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Current Return with Current Return with Current
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 4,988 57 3,022 503,022 280 3,245 503,245 504 3,469 503,469
2 10,224 3,038 6,003 506,003 3,675 6,640 506,640 4,341 7,306 507,306
3 15,723 5,978 8,943 508,943 7,227 10,192 510,192 8,584 11,549 511,549
4 21,497 8,876 11,841 511,841 10,941 13,906 513,906 13,275 16,240 516,240
5 27,559 11,734 14,699 514,699 14,825 17,790 517,790 18,462 21,427 521,427
6 33,925 15,144 17,516 517,516 19,479 21,851 521,851 24,790 27,162 527,162
7 40,608 18,513 20,292 520,292 24,319 26,098 526,098 31,723 33,502 533,502
8 47,626 21,840 23,026 523,026 29,351 30,537 530,537 39,324 40,510 540,510
9 54,995 25,124 25,717 525,717 34,583 35,176 535,176 47,663 48,256 548,256
10 62,732 28,365 28,365 528,365 40,022 40,022 540,022 56,816 56,816 556,816
15 107,623 47,523 47,523 547,523 75,347 75,347 575,347 124,144 124,144 624,144
20 164,916 64,769 64,769 564,769 118,988 118,988 618,988 236,358 236,358 736,358
25 238,039 79,455 79,455 579,455 173,052 173,052 673,052 424,313 424,313 924,313
30 331,364 89,316 89,316 589,316 237,804 237,804 737,804 736,837 736,837 1,236,837
35 450,473 89,977 89,977 589,977 310,842 310,842 810,842 1,253,725 1,253,725 1,753,725
- ----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the expense charges and cost of
insurance rates currently in effect. Although GE Life & Annuity
anticipates deducting these charges for the forseeable future, these
charges are not guaranteed and could be raised at the discretion of GE
Life & Annuity. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
82
Flexible Premium Joint and Last Survivor Variable Life Insurance
Male Issue Age 45 Preferred No
Nicotine Use Initial Specified Amount $500,000
Female Issue Age 45 Preferred No
Nicotine Use Initial Premium and Planned
Death Benefit Option -- Return
of Premium Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Maximum Return with Maximum Return with Maximum
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 4,988 0 2,841 504,750 90 3,055 504,750 305 3,270 504,750
2 10,224 2,667 5,632 509,500 3,274 6,239 509,500 3,909 6,874 509,500
3 15,723 5,407 8,372 514,250 6,593 9,558 514,250 7,882 10,847 514,250
4 21,497 8,094 11,059 519,000 10,048 13,013 519,000 12,259 15,224 519,000
5 27,559 10,724 13,689 523,750 13,642 16,607 523,750 17,079 20,044 523,750
6 33,925 13,888 16,260 528,500 17,971 20,343 528,500 22,979 25,351 528,500
7 40,608 16,988 18,767 533,250 22,443 24,222 533,250 29,411 31,190 533,250
8 47,626 20,017 21,203 538,000 27,058 28,244 538,000 36,425 37,611 538,000
9 54,995 22,967 23,560 542,750 31,814 32,407 542,750 44,077 44,670 542,750
10 62,732 25,831 25,831 547,500 36,707 36,707 547,500 52,423 52,423 547,500
15 107,623 42,163 42,163 571,250 67,844 67,844 571,250 113,153 113,153 571,250
20 164,916 53,346 53,346 595,000 102,697 102,697 595,000 211,196 211,196 595,000
25 238,039 53,147 53,147 618,750 136,610 136,610 618,750 370,799 370,799 618,750
30 331,364 26,571 26,571 642,500 156,516 156,516 642,500 640,526 640,526 685,363
35 450,473 * * * 120,620 120,620 666,250 1,100,055 1,100,055 1,155,058
- ----------------------------------------------------------------------------------------------------
* Premium in addition to the planned premium is required to keep the policy
in effect.
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the maximum expense charges and
cost of insurance rates allowable under the Policy. Accordingly, if the
assumed hypothetical gross annual investment return were earned, the
values and benefits of an actual Policy with the listed specifications
could never be less than those shown, and in some cases may be greater
than those shown.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
83
Flexible Premium Joint and Last Survivor Variable Life Insurance
Male Issue Age 45 Preferred No
Nicotine Use Initial Specified Amount $500,000
Female Issue Age 45 Preferred No
Nicotine Use Initial Premium and Planned
Death Benefit Option -- Return
of Premium Premium (Payable Annually) (1) $4,750
0% Assumed Hypothetical 6% Assumed Hypothetical 12% Assumed Hypothetical
Gross Annual Investment Gross Annual Investment Gross Annual Investment
Premiums Return with Current Return with Current Return with Current
End Accumulated Charges (2)(3) Charges (2)(3) Charges (2)(3)
of At 5% ------------------------ ------------------------- -----------------------------
Policy Interest Surrender Cash Death Surrender Cash Death Surrender Cash Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- ----------------------------------------------------------------------------------------------------
1 4,988 57 3,022 504,750 280 3,245 504,750 504 3,469 504,750
2 10,224 3,038 6,003 509,500 3,675 6,640 509,500 4,341 7,306 509,500
3 15,723 5,978 8,943 514,250 7,227 10,192 514,250 8,584 11,549 514,250
4 21,497 8,876 11,841 519,000 10,941 13,906 519,000 13,275 16,240 519,000
5 27,559 11,733 14,698 523,750 14,825 17,790 523,750 18,462 21,427 523,750
6 33,925 15,143 17,515 528,500 19,479 21,851 528,500 24,790 27,162 528,500
7 40,608 18,512 20,291 533,250 24,319 26,098 533,250 31,723 33,502 533,250
8 47,626 21,839 23,025 538,000 29,350 30,536 538,000 39,324 40,510 538,000
9 54,995 25,122 25,715 542,750 34,582 35,175 542,750 47,663 48,256 542,750
10 62,732 28,362 28,362 547,500 40,020 40,020 547,500 56,816 56,816 547,500
15 107,623 47,504 47,504 571,250 75,344 75,344 571,250 124,175 124,175 571,250
20 164,916 64,693 64,693 595,000 119,017 119,017 595,000 236,668 236,668 595,000
25 238,039 79,207 79,207 618,750 173,315 173,315 618,750 426,269 426,269 618,750
30 331,364 88,482 88,482 642,500 239,257 239,257 642,500 746,971 746,971 799,259
35 450,473 87,194 87,194 666,250 316,989 316,989 666,250 1,288,470 1,288,470 1,352,894
- ----------------------------------------------------------------------------------------------------
(1) The values illustrated assume that the planned premium of $4,750 is paid
at the beginning of each Policy year. Values will be different if premiums
are paid with a different frequency or in different amounts.
(2) The values and benefits are as of the end of the year shown. They assume
that no Policy loans or withdrawals have been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
surrender value.
(3) The values and benefits are shown using the expense charges and cost of
insurance rates currently in effect. Although GE Life & Annuity
anticipates deducting these charges for the forseeable future, these
charges are not guaranteed and could be raised at the discretion of GE
Life & Annuity. Accordingly, even if the assumed hypothetical gross annual
investment return were earned, the values and benefits under an actual
Policy with the listed specifications may be less than those shown if the
cost of insurance charges were increased.
The hypothetical gross annual investment rates of return shown above and
elsewhere in this prospectus are illustrative only and should not be deemed a
representation of past or future investment rates of return.
Actual investment rates of return may be more or less than those shown and will
depend on a number of factors, including prevailing interest rates, rates of
inflation, and the allocations made by an Owner among the Investment Options.
The gross hypothetical investment rates of return of 0%, 6%, and 12% shown
above correspond to net annual rates of -.94%, 5.06%, and 11.06%. The Death
Benefit and Account Value for a Policy will be different from those shown if
the actual investment rate of return averages 0%, 6%, and 12% over a period of
years, but fluctuated above or below those averages for individual policy
years. No representations can be made by GE Life & Annuity or the Funds that
these hypothetical investment rates of return can be achieved for any one year
or sustained over any period of time.
84
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Financial Statements
(Unaudited)
September 30, 2001
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Table of Contents
For the nine months ended September 30, 2001
Page
----
Financial Statements (Unaudited):
Statements of Assets and Liabilities..................................... F-1
Statements of Operations................................................. F-15
Statements of Changes in Net Assets...................................... F-26
Notes to Financial Statements (Unaudited).................................. F-37
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities
September 30, 2001
(Unaudited)
GE Investments Funds, Inc.
-----------------------------------------------------------------
S&P 500 Money Total International Real Estate Global
Index Market Return Equity Securities Income
Fund Fund Fund Fund Fund Fund
Assets ----------- --------- --------- ------------- ----------- -------
Investments in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(513,948 shares;
cost -- $12,384,069).. $10,073,379 -- -- -- -- --
Money Market Fund
(8,698,220 shares;
cost -- $8,698,220).... -- 8,698,220 -- -- -- --
Total Return Fund
(279,916 shares;
cost -- $4,267,050).... -- -- 3,907,623 -- -- --
International Equity
Fund (47,803 shares;
cost -- $541,764)...... -- -- -- 367,127 -- --
Real Estate Securities
Fund (60,158 shares;
cost -- $802,897)...... -- -- -- -- 893,950 --
Global Income Fund
(14,596 shares;
cost -- $141,632)...... -- -- -- -- -- 141,293
Receivable from
affiliate.............. 480 2,891 -- 13 -- 9
Receivable for units
sold................... 1,642 15,213 388 -- 10,019 --
----------- --------- --------- ------- ------- -------
Total assets............ 10,075,501 8,716,325 3,908,011 367,140 903,969 141,302
----------- --------- --------- ------- ------- -------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 2,761 23,408 16,858 931 1,454 965
Payable for units
withdrawn.............. 10,180 -- -- 4,463 57 3
----------- --------- --------- ------- ------- -------
Total liabilities....... 12,941 23,408 16,858 5,394 1,511 968
----------- --------- --------- ------- ------- -------
Net assets attributable
to variable life
policyholders.......... $10,062,560 8,692,917 3,891,153 361,746 902,458 140,334
=========== ========= ========= ======= ======= =======
Outstanding units: Type
I (note 2)............. 87,018 147,860 88,393 8,198 19,465 4,700
=========== ========= ========= ======= ======= =======
Net asset value per
unit: Type I........... $ 44.73 19.24 37.29 11.95 21.31 10.63
=========== ========= ========= ======= ======= =======
Outstanding units: Type
II (note 2)............ 137,944 303,955 15,956 22,074 22,884 8,502
=========== ========= ========= ======= ======= =======
Net asset value per
unit: Type II.......... $ 44.73 19.24 37.29 11.95 21.31 10.63
=========== ========= ========= ======= ======= =======
F-1
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
GE Investments Funds, Inc. (continued)
----------------------------------------------------------------------
Mid-Cap U.S. Premier Small-Cap
Value Equity Income Equity Growth Equity Value Equity Value Equity
Fund Fund Fund Fund Fund Fund
Assets ------------ ------- --------- ------------- ------------ ------------
Investments in GE
Investments Funds,
Inc., at fair value
(note 2):
Mid-Cap Value Equity
Fund (79,153 shares;
cost -- $1,234,747)... $1,160,390 -- -- -- -- --
Income Fund (57,346
shares;
cost -- $700,737)..... -- 742,057 -- -- -- --
U.S. Equity Fund
(37,216 shares;
cost -- $1,334,922)... -- -- 1,099,725 -- -- --
Premier Growth Equity
Fund (12,043 shares;
cost -- $958,657)..... -- -- -- 750,743 -- --
Value Equity Fund
(3,465 shares;
cost -- $32,466)...... -- -- -- -- 28,971 --
Small-Cap Value Equity
Fund (6,419 shares;
cost -- $72,538)...... -- -- -- -- -- 69,835
Receivable from
affiliate.............. -- 27 70 31 -- --
Receivable for units
sold................... 10,446 4,656 262 1,014 1,169 2,157
---------- ------- --------- ------- ------ ------
Total assets.......... 1,170,836 746,740 1,100,057 751,788 30,140 71,992
---------- ------- --------- ------- ------ ------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 1,336 4,563 148 100 4 9
Payable for units
withdrawn.............. -- -- -- -- -- --
---------- ------- --------- ------- ------ ------
Total liabilities..... 1,336 4,563 148 100 4 9
---------- ------- --------- ------- ------ ------
Net assets attributable
to variable life
policyholders.......... $1,169,500 742,177 1,099,909 751,688 30,136 71,983
========== ======= ========= ======= ====== ======
Outstanding units: Type
I (note 2)............. 14,851 33,463 5,789 15,609 -- --
========== ======= ========= ======= ====== ======
Net asset value per
unit: Type I........... $ 15.65 12.40 10.38 8.75 -- --
========== ======= ========= ======= ====== ======
Outstanding units: Type
II (note 2)............ 59,878 26,390 100,175 70,298 3,613 6,829
========== ======= ========= ======= ====== ======
Net asset value per
unit: Type II.......... $ 15.65 12.40 10.38 8.75 8.34 10.54
========== ======= ========= ======= ====== ======
F-2
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Oppenheimer Variable
Account Funds --
Oppenheimer Variable Account Funds Class 2 Shares
------------------------------------------------------- ----------------------
Main Street
Capital Aggressive High Multiple Global Growth &
Bond Appreciation Growth Income Strategies Securities Income
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
Assets ---------- ------------ ---------- --------- ---------- ---------- -----------
Investments in
Oppenheimer Variable
Account Funds, at fair
value (note 2):
Bond Fund/VA (96,678
shares; cost --
$1,085,058).......... $1,101,165 -- -- -- -- -- --
Capital Appreciation
Fund/VA (147,423
shares;
cost -- $5,608,993)... -- 4,667,418 -- -- -- -- --
Aggressive Growth
Fund/VA (107,227
shares;
cost -- $6,163,534)... -- -- 4,015,650 -- -- -- --
High Income Fund/VA
(350,079 shares;
cost -- $3,490,948)... -- -- -- 2,818,134 -- -- --
Multiple Strategies
Fund/VA (88,674
shares;
cost -- $1,407,460)... -- -- -- -- 1,252,966 -- --
Investments in Oppenheimer
Variable Account Funds -- Class 2
Shares, at fair value (note 2):
Global Securities
Fund/VA (5,947 shares;
cost -- $140,358)..... -- -- -- -- -- 115,966 --
Main Street Growth &
Income Fund/VA (6,832
shares;
cost -- $134,036)..... -- -- -- -- -- -- 120,034
Receivable from
affiliate.............. -- -- -- 36 -- -- --
Receivable for units
sold................... 4,900 3,631 1,843 -- 151 120 7
---------- --------- --------- --------- --------- ------- -------
Total assets.......... 1,106,065 4,671,049 4,017,493 2,818,170 1,253,117 116,086 120,041
---------- --------- --------- --------- --------- ------- -------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 1,511 1,112 1,638 1,010 1,165 16 17
Payable for units with-
drawn.................. -- 1,729 100 786 -- -- --
---------- --------- --------- --------- --------- ------- -------
Total liabilities..... 1,511 2,841 1,738 1,796 1,165 16 17
---------- --------- --------- --------- --------- ------- -------
Net assets attributable
to variable life poli-
cyholders.............. $1,104,554 4,668,208 4,015,755 2,816,374 1,251,952 116,070 120,024
========== ========= ========= ========= ========= ======= =======
Outstanding units: Type
I (note 2)............. 20,669 58,367 68,739 51,956 24,572 -- --
========== ========= ========= ========= ========= ======= =======
Net asset value per
unit: Type I........... $ 26.70 54.45 45.90 32.39 34.24 -- --
========== ========= ========= ========= ========= ======= =======
Outstanding units: Type
II (note 2)............ 20,700 27,367 18,750 34,996 11,992 16,121 16,132
========== ========= ========= ========= ========= ======= =======
Net asset value per
unit: Type II.......... $ 26.70 54.45 45.90 32.39 34.24 7.20 7.44
========== ========= ========= ========= ========= ======= =======
F-3
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Variable Insurance
Products Fund -- Variable Insurance
Variable Insurance Products Fund Service Class 2 Products Fund II
--------------------------------- ------------------- --------------------
Equity- Equity- Asset
Income Growth Overseas Income Growth Manager Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Assets ----------- ---------- ---------- --------- --------- --------- ----------
Investments in Variable
Insurance Products
Fund, at fair value
(note 2):
Equity-Income Portfolio
(343,357 shares;
cost -- $7,398,145)... $ 7,141,818 -- -- -- -- -- --
Growth Portfolio
(249,369 shares;
cost -- $9,317,522)... -- 7,174,352 -- -- -- -- --
Overseas Portfolio
(128,366 shares;
cost -- $2,160,825)... -- -- 1,621,258 -- -- -- --
Investments in Variable
Insurance Products
Fund -- Service Class
2, at fair value (note
2):
Equity-Income Portfolio
(7,230 shares;
cost -- $168,451)..... -- -- -- 149,434 -- -- --
Growth Portfolio
(10,281 shares;
cost -- $364,763)..... -- -- -- -- 293,522 -- --
Investments in Variable
Insurance Products Fund
II, at fair value (note
2):
Asset Manager Portfolio
(290,244 shares;
cost -- $4,347,887)... -- -- -- -- -- 3,886,373 --
Contrafund Portfolio
(293,630 shares;
cost -- $6,596,778)... -- -- -- -- -- -- 5,529,046
Receivable from
affiliate.............. 4 -- -- -- -- -- 142
Receivable for units
sold................... 9,512 1,572 4,547 2,843 362 704 4,223
----------- ---------- ---------- ------- ------- --------- ---------
Total assets.......... 7,151,334 7,175,924 1,625,805 152,277 293,884 3,887,077 5,533,411
----------- ---------- ---------- ------- ------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate
(note 3)............... 3,038 1,523 805 20 40 1,028 2,398
Payable for units
withdrawn.............. -- -- -- -- -- 193 10,109
----------- ---------- ---------- ------- ------- --------- ---------
Total liabilities..... 3,038 1,523 805 20 40 1,221 12,507
----------- ---------- ---------- ------- ------- --------- ---------
Net assets attributable
to variable life
policyholders.......... $ 7,148,296 7,174,401 1,625,000 152,257 293,844 3,885,856 5,520,904
=========== ========== ========== ======= ======= ========= =========
Outstanding units: Type
I (note 2)............. 135,640 109,013 66,357 -- -- 135,783 111,964
=========== ========== ========== ======= ======= ========= =========
Net asset value per
unit: Type I........... $ 43.82 50.32 21.86 -- -- 26.96 25.03
=========== ========== ========== ======= ======= ========= =========
Outstanding units: Type
II (note 2)............ 27,489 33,562 7,980 17,012 48,014 8,351 108,607
=========== ========== ========== ======= ======= ========= =========
Net asset value per
unit: Type II.......... $ 43.82 50.32 21.86 8.95 6.12 26.96 25.03
=========== ========== ========== ======= ======= ========= =========
F-4
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Variable Insurance
Variable Insurance Products Fund
Products Fund II -- Variable Insurance III -- Service
Service Class 2 Products Fund III Class 2
------------------- ----------------------- -------------------
Growth & Growth Growth &
Contrafund Income Opportunities Mid Cap Income
Portfolio Portfolio Portfolio Portfolio Portfolio
Assets ------------------- --------- ------------- --------- ---------
Investments in Variable
Insurance Products Fund
II -- Service Class 2,
at fair value (note 2):
Contrafund Portfolio
(5,815 shares;
cost -- $116,741)..... $108,862 -- -- -- --
Investments in Variable
Insurance Products Fund
III, at fair value
(note 2):
Growth & Income
Portfolio (101,195
shares;
cost -- $1,432,455)... -- 1,216,365 -- -- --
Growth Opportunities
Portfolio (26,208
shares;
cost -- $489,926)..... -- -- 354,334 -- --
Investments in Variable
Insurance Products Fund
III -- Service Class 2,
at fair value (note 2):
Mid Cap Portfolio
(3,067 shares; cost --
$57,240)............. -- -- -- 54,537 --
Growth & Income
Portfolio (7,107
shares;
cost -- $94,669)...... -- -- -- -- 84,649
Receivable from
affiliate.............. -- -- -- -- --
Receivable for units
sold................... 149 1,110 94 -- 14
-------- --------- ------- ------ ------
Total assets.......... 109,011 1,217,475 354,428 54,537 84,663
-------- --------- ------- ------ ------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 14 1,099 752 7 12
Payable for units
withdrawn.............. -- 561 -- 851 --
-------- --------- ------- ------ ------
Total liabilities..... 14 1,660 752 858 12
-------- --------- ------- ------ ------
Net assets attributable
to variable life
policyholders.......... $108,997 1,215,815 353,676 53,679 84,651
======== ========= ======= ====== ======
Outstanding units: Type
I (note 2)............. -- 23,240 11,069 -- --
======== ========= ======= ====== ======
Net asset value per
unit: Type I........... $ -- 13.72 9.90 -- --
======== ========= ======= ====== ======
Outstanding units: Type
II (note 2)............ 14,342 65,376 24,656 6,142 10,797
======== ========= ======= ====== ======
Net asset value per
unit: Type II.......... $ 7.60 13.72 9.90 8.74 7.84
======== ========= ======= ====== ======
F-5
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Federated
Insurance
Series --
Federated Insurance Series Service Class
------------------------------------------ --------------
American High International High
Leaders Income Bond Utility Small Company Income Bond
Fund II Fund II Fund II Fund II Fund II
Assets -------- ----------- ------- ------------- --------------
Investments in Federated
Insurance Series, at
fair value (note 2):
American Leaders Fund
II (41,579 shares;
cost -- $839,365)..... $736,362 -- -- -- --
High Income Bond Fund
II (60,407 shares;
cost -- $553,026)..... -- 442,780 -- -- --
Utility Fund II (44,503
shares;
cost -- $570,311)..... -- -- 472,618 -- --
International Small
Company Fund II
(44 shares; cost --
$287)................ -- -- -- 229 --
Investments in Federated
Insurance Series --
Service Class, at fair
value (note 2):
High Income Bond Fund
II (3,653 shares;
cost -- $28,733)...... -- -- -- -- 26,773
Receivable from
affiliate.............. -- -- 28 -- --
Receivable for units
sold................... 932 -- 2 38 282
-------- ------- ------- ---- ------
Total assets.......... 737,294 442,780 472,648 267 27,055
-------- ------- ------- ---- ------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 1,068 973 469 -- 4
Payable for units
withdrawn.............. 103 370 2,022 -- --
-------- ------- ------- ---- ------
Total liabilities..... 1,171 1,343 2,491 -- 4
-------- ------- ------- ---- ------
Net assets attributable
to variable life
policyholders.......... $736,123 441,437 470,157 267 27,051
======== ======= ======= ==== ======
Outstanding units: Type
I (note 2)............. 19,427 15,646 13,332 -- --
======== ======= ======= ==== ======
Net asset value per
unit: Type I........... $ 16.08 13.73 15.53 -- --
======== ======= ======= ==== ======
Outstanding units: Type
II (note 2)............ 26,352 16,505 16,942 47 3,043
======== ======= ======= ==== ======
Net asset value per
unit: Type II.......... $ 16.08 13.73 15.53 5.62 8.89
======== ======= ======= ==== ======
F-6
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------ -------------------
PBHG
Small LargeCap Large Cap PBHG
Capitalization Growth Growth Growth II
Portfolio Portfolio Portfolio Portfolio
Assets -------------- --------- --------- ---------
Investments in Alger American
Fund, at fair value (note 2):
Small Capitalization Portfolio
(88,030 shares; cost --
$2,467,064)................... $1,260,590 -- -- --
LargeCap Growth Portfolio
(120,274 shares; cost --
$5,893,480)................... -- 3,890,860 -- --
Investments in PBHG Insurance
Series Fund, Inc., at fair value
(note 2):
PBHG Large Cap Growth Portfolio
(45,257 shares;
cost -- $1,069,882)............ -- -- 721,400 --
PBHG Growth II Portfolio (65,725
shares; cost -- $1,261,410).... -- -- -- 632,277
Receivable from affiliate........ -- 59 -- 20
Receivable for units sold........ -- -- 1,964 1,684
---------- --------- ------- -------
Total assets................... 1,260,590 3,890,919 723,364 633,981
---------- --------- ------- -------
Liabilities
Accrued expenses payable to
affiliate (note 3).............. 1,160 1,218 1,403 1,038
Payable for units withdrawn...... 4,226 17,367 27 --
---------- --------- ------- -------
Total liabilities.............. 5,386 18,585 1,430 1,038
---------- --------- ------- -------
Net assets attributable to
variable life policyholders..... $1,255,204 3,872,334 721,934 632,943
========== ========= ======= =======
Outstanding units: Type I (note
2).............................. 96,435 95,885 19,368 22,481
========== ========= ======= =======
Net asset value per unit: Type
I............................... $ 7.70 17.29 15.83 9.49
========== ========= ======= =======
Outstanding units: Type II (note
2).............................. 66,579 128,079 26,238 44,215
========== ========= ======= =======
Net asset value per unit: Type
II.............................. $ 7.70 17.29 15.83 9.49
========== ========= ======= =======
F-7
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Janus Aspen Series
-----------------------------------------------------------------------------
Aggressive Worldwide Flexible International Capital
Growth Growth Growth Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Assets ---------- --------- --------- --------- --------- ------------- ------------
Investments in Janus
Aspen Series, at fair
value (note 2):
Aggressive Growth
Portfolio (212,708
shares;
cost -- $8,366,016)... $4,113,771 -- -- -- -- -- --
Growth Portfolio
(303,237 shares;
cost -- $8,364,893)... -- 5,327,880 -- -- -- -- --
Worldwide Growth
Portfolio (300,259
shares;
cost -- $10,389,162).. -- -- 7,620,585 -- -- -- --
Balanced Portfolio
(234,969 shares;
cost -- $5,588,143)... -- -- -- 5,127,021 -- -- --
Flexible Income
Portfolio
(40,686 shares;
cost -- $473,504)..... -- -- -- -- 486,603 -- --
International Growth
Portfolio (110,690
shares;
cost -- $3,192,556)... -- -- -- -- -- 2,287,955 --
Capital Appreciation
Portfolio (142,573
shares;
cost -- $3,985,489)... -- -- -- -- -- -- 2,664,694
Receivable from affili-
ate.................... 83 156 254 199 -- 96 149
Receivable for units
sold................... 5,120 4,061 10,093 4,393 11,898 -- 11,290
---------- --------- --------- --------- ------- --------- ---------
Total assets.......... 4,118,974 5,332,097 7,630,932 5,131,613 498,501 2,288,051 2,676,133
---------- --------- --------- --------- ------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 3,576 1,071 1,522 1,645 1,322 1,291 5,334
Payable for units
withdrawn.............. 438 -- 3,163 -- -- 785 10,783
---------- --------- --------- --------- ------- --------- ---------
Total liabilities..... 4,014 1,071 4,685 1,645 1,322 2,076 16,117
---------- --------- --------- --------- ------- --------- ---------
Net assets attributable
to variable life
policyholders.......... $4,114,960 5,331,026 7,626,247 5,129,968 497,179 2,285,975 2,660,016
========== ========= ========= ========= ======= ========= =========
Outstanding units: Type
I (note 2)............. 115,565 135,136 188,658 85,556 7,610 46,228 23,718
========== ========= ========= ========= ======= ========= =========
Net asset value per
unit: Type I........... $ 18.57 19.60 22.89 21.92 15.58 16.25 18.61
========== ========= ========= ========= ======= ========= =========
Outstanding units: Type
II (note 2)............ 106,026 136,855 144,511 148,475 24,301 94,447 119,216
========== ========= ========= ========= ======= ========= =========
Net asset value per
unit: Type II.......... $ 18.57 19.60 22.89 21.92 15.58 16.25 18.61
========== ========= ========= ========= ======= ========= =========
F-8
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Janus Aspen Series -- Service Shares
-------------------------------------------
Global Life Global Aggressive
Sciences Technology Growth Growth
Portfolio Portfolio Portfolio Portfolio
Assets ----------- ---------- ---------- ---------
Investments in Janus Aspen
Series -- Service Shares, at fair
value (note 2):
Global Life Sciences Portfolio
(23,405 shares; cost --
$190,994)....................... $169,918 -- -- --
Global Technology Portfolio
(32,614 shares; cost --
$225,592)....................... -- 101,430 -- --
Aggressive Growth Portfolio
(4,485 shares; cost --
$116,021)....................... -- -- 85,801 --
Growth Portfolio (5,101 shares;
cost -- $117,385)............... -- -- -- 89,110
Receivable from affiliate......... 12 1 -- --
Receivable for units sold......... 5,599 18 -- 43
-------- ------- ------ ------
Total assets.................... 175,529 101,449 85,801 89,153
-------- ------- ------ ------
Liabilities
Accrued expenses payable to
affiliate (note 3)............... 22 14 13 13
Payable for units withdrawn....... -- 34 840 --
-------- ------- ------ ------
Total liabilities............... 22 48 853 13
-------- ------- ------ ------
Net assets attributable to
variable life policyholders...... $175,507 101,401 84,948 89,140
======== ======= ====== ======
Outstanding units: Type I (note
2)............................... 6,068 9,076 -- --
======== ======= ====== ======
Net asset value per unit: Type I.. $ 8.91 3.25 -- --
======== ======= ====== ======
Outstanding units: Type II (note
2)............................... 13,630 22,124 23,466 16,296
======== ======= ====== ======
Net asset value per unit: Type
II............................... $ 8.91 3.25 3.62 5.47
======== ======= ====== ======
F-9
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Janus Aspen Series -- Service Shares
(continued)
----------------------------------------------
Capital Worldwide International
Appreciation Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
Assets ------------ --------- ------------- ---------
Investments in Janus Aspen
Series -- Service Shares, at
fair value (note 2):
Capital Appreciation Portfolio
(3,816 shares; cost --
$85,690)..................... $70,636 -- -- --
Worldwide Growth Portfolio
(4,436 shares; cost --
$138,308).................... -- 111,777 -- --
International Growth Portfolio
(4,337 shares; cost --
$110,510).................... -- -- 88,827 --
Balanced Portfolio (18,263
shares; cost -- $434,847).... -- -- -- 409,641
Receivable from affiliate...... -- -- -- --
Receivable for units sold...... -- 2,872 -- --
------- ------- ------ -------
Total assets................. 70,636 114,649 88,827 409,641
------- ------- ------ -------
Liabilities
Accrued expenses payable to
affiliate (note 3)............ 10 16 12 56
Payable for units withdrawn.... 10 -- 5 2,265
------- ------- ------ -------
Total liabilities............ 20 16 17 2,321
------- ------- ------ -------
Net assets attributable to
variable life policyholders... $70,616 114,633 88,810 407,320
======= ======= ====== =======
Outstanding units: Type I (note
2)............................ -- -- -- --
======= ======= ====== =======
Net asset value per unit: Type
I............................. $ -- -- -- --
======= ======= ====== =======
Outstanding units: Type II
(note 2)...................... 12,281 19,298 15,286 46,339
======= ======= ====== =======
Net asset value per unit: Type
II............................ $ 5.75 5.94 5.81 8.79
======= ======= ====== =======
F-10
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Goldman Sachs Salomon Brothers
Variable Insurance Trust Variable Series Fund Inc.
------------------------- --------------------------
Total
Growth and Mid Cap Strategic Investors Return
Income Fund Value Fund Bond Fund Fund Fund
Assets ------------------------- --------- --------- ------
Investments in Goldman
Sachs Variable Insurance
Trust, at fair value
(note 2):
Growth and Income Fund
(12,023 shares; cost --
$126,079).............. $ 103,274 -- -- -- --
Mid Cap Value Fund
(101,290 shares; cost
-- $1,066,698)......... -- 1,070,635 -- -- --
Investments in Salomon
Brothers Variable Series
Fund Inc., at fair value
(note 2):
Strategic Bond Fund
(25,588 shares; cost --
$258,378).............. -- -- 262,276 -- --
Investors Fund (61,393
shares; cost --
$836,920).............. -- -- -- 715,846 --
Total Return Fund (4,334
shares; cost --
$45,885)............... -- -- -- -- 43,942
Receivable from
affiliate............... 9 89 17 25 1
Receivable for units
sold.................... 23 12,569 107 621 310
----------- ------------ ------- ------- ------
Total assets........... 103,306 1,083,293 262,400 716,492 44,253
----------- ------------ ------- ------- ------
Liabilities
Accrued expenses payable
to affiliate (note 3)... 14 143 35 96 6
Payable for units
withdrawn............... 6 -- -- -- --
----------- ------------ ------- ------- ------
Total liabilities...... 20 143 35 96 6
----------- ------------ ------- ------- ------
Net assets attributable
to variable life
policyholders........... $ 103,286 1,083,150 262,365 716,396 44,247
=========== ============ ======= ======= ======
Outstanding units: Type I
(note 2)................ 841 24,748 3,126 21,505 858
=========== ============ ======= ======= ======
Net asset value per unit:
Type I.................. $ 7.28 10.84 11.39 13.31 10.80
=========== ============ ======= ======= ======
Outstanding units: Type
II (note 2)............. 13,347 75,174 19,909 32,319 3,239
=========== ============ ======= ======= ======
Net asset value per unit:
Type II................. $ 7.28 10.84 11.39 13.31 10.80
=========== ============ ======= ======= ======
F-11
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Rydex
Variable
Dreyfus MFS Variable Insurance Trust Trust
-------------------------------- ---------------------------------------- --------
Dreyfus
Investment MFS
The Dreyfus Portfolios- MFS Investors MFS
Socially Emerging New Growth Investors MFS
Responsible Growth Markets Discovery Stock Trust Utility
Fund, Inc. Portfolio Series Series Series Series OTC Fund
Assets -------------------- ----------- --------- ---------- ---------- -------- --------
Investments in Dreyfus,
at fair value (note 2):
The Dreyfus Socially
Responsible Growth
Fund, Inc. (791
shares;
cost -- $22,987)...... $19,228 -- -- -- -- -- --
Dreyfus Investment
Portfolios-Emerging
Markets Portfolio
(364 shares; cost --
$3,300)............... -- 2,867 -- -- -- -- --
Investments in MFS
Variable Insurance
Trust, at fair value
(note 2):
MFS New Discovery
Series (2,635 shares;
cost -- $37,404)...... -- -- 31,836 -- -- -- --
MFS Investors Growth
Stock Series (3,115
shares; cost --
$29,274)............. -- -- -- 26,231 -- -- --
MFS Investors Trust
Series (3,489 shares;
cost -- $61,546)...... -- -- -- -- 55,121 -- --
MFS Utility Series
(8,681 shares;
cost -- $170,273)..... -- -- -- -- -- 137,075 --
Investments in Rydex
Variable Trust, at fair
value (note 2):
Rydex OTC Fund (1,200
shares;
cost -- $18,737)...... -- -- -- -- -- -- 13,228
Receivable from
affiliate.............. -- -- -- -- -- -- --
Receivable for units
sold................... -- -- 1,632 12 1 685 33
------- ----- ------ ------ ------ ------- ------
Total assets.......... 19,228 2,867 33,468 26,243 55,122 137,760 13,261
------- ----- ------ ------ ------ ------- ------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 3 1 5 4 7 19 2
Payable for units
withdrawn.............. 7 -- -- -- -- -- --
------- ----- ------ ------ ------ ------- ------
Total liabilities..... 10 1 5 4 7 19 2
------- ----- ------ ------ ------ ------- ------
Net assets attributable
to variable life
policyholders.......... $19,218 2,866 33,463 26,239 55,115 137,741 13,259
======= ===== ====== ====== ====== ======= ======
Outstanding units: Type
I (note 2)............. -- -- -- -- -- -- --
======= ===== ====== ====== ====== ======= ======
Net asset value per
unit: Type I........... $ -- -- -- -- -- -- --
======= ===== ====== ====== ====== ======= ======
Outstanding units: Type
II (note 2)............ 3,140 391 4,965 4,628 7,349 18,973 4,263
======= ===== ====== ====== ====== ======= ======
Net asset value per
unit: Type II.......... $ 6.12 7.33 6.74 5.67 7.50 7.26 3.11
======= ===== ====== ====== ====== ======= ======
F-12
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
Alliance Variable Products
Series Fund, Inc. AIM Variable Insurance Funds
------------------------------ -----------------------------
AIM V.I. AIM
Growth and Premier Capital AIM V.I. V.I.
Income Growth Quasar Appreciation Growth Value
Portfolio Portfolio Portfolio Fund Fund Fund
Assets ---------- --------- --------- ------------ -------- -------
Investments in Alliance
Variable Products
Series Fund, Inc., at
fair value (note 2):
Growth and Income
Portfolio (12,624
shares;
cost -- $290,221)..... $251,593 -- -- -- -- --
Premier Growth
Portfolio (3,890
shares;
cost -- $108,320)..... -- 84,758 -- -- -- --
Quasar Portfolio (1,858
shares; cost --
$19,643)............. -- -- 14,787 -- -- --
Investments in AIM
Variable Insurance
Funds, at fair value
(note 2):
AIM V.I. Capital
Appreciation Fund
(2,569 shares;
cost -- $65,715)...... -- -- -- 51,355 -- --
AIM V.I. Growth Fund
(4,416 shares;
cost -- $79,470)...... -- -- -- -- 66,675 --
AIM V.I. Value Fund
(5,141 shares;
cost -- $126,898)..... -- -- -- -- -- 111,465
Receivable from
affiliate.............. -- -- -- -- -- --
Receivable for units
sold................... 4,695 1,155 45 71 -- 146
-------- ------ ------ ------ ------ -------
Total assets.......... 256,288 85,913 14,832 51,426 66,675 111,611
-------- ------ ------ ------ ------ -------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 36 12 2 8 9 15
Payable for units
withdrawn.............. -- -- -- -- 34 --
-------- ------ ------ ------ ------ -------
Total liabilities..... 36 12 2 8 43 15
-------- ------ ------ ------ ------ -------
Net assets attributable
to variable life
policyholders.......... $256,252 85,901 14,830 51,418 66,632 111,596
======== ====== ====== ====== ====== =======
Outstanding units: Type
I (note 2)............. -- -- -- -- -- --
======== ====== ====== ====== ====== =======
Net asset value per
unit: Type I........... $ -- -- -- -- -- --
======== ====== ====== ====== ====== =======
Outstanding units: Type
II (note 2)............ 27,853 13,968 2,561 10,263 14,177 15,499
======== ====== ====== ====== ====== =======
Net asset value per
unit: Type II.......... $ 9.20 6.15 5.79 5.01 4.70 7.20
======== ====== ====== ====== ====== =======
F-13
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
September 30, 2001
(Unaudited)
PIMCO Variable Insurance Trust
------------------------------------------------
Foreign Long-Term U.S. High Total
Bond Government Yield Bond Return Bond
Portfolio Portfolio Portfolio Portfolio
Assets --------- -------------- ----------- -----------
Investments in PIMCO Variable
Insurance Trust, at fair
value (note 2):
Foreign Bond Portfolio (670
shares; cost -- $6,410).... $6,463 -- -- --
Long-Term U.S. Government
Portfolio (4,937 shares;
cost -- $51,986)........... -- 54,111 -- --
High Yield Bond Portfolio
(4,299 shares; cost --
$34,753).................. -- -- 32,973 --
Total Return Bond Portfolio
(6,611 shares; cost --
$65,645).................. -- -- -- 67,167
Dividends Receivable......... 18 138 176 190
Receivable from affiliate.... -- -- -- --
Receivable for units sold.... 57 1,685 45 3,667
------ ------ ------ ------
Total assets............... 6,538 55,934 33,194 71,024
------ ------ ------ ------
Liabilities
Accrued expenses payable to
affiliate (note 3).......... 19 144 180 198
Payable for units withdrawn.. -- -- -- --
------ ------ ------ ------
Total liabilities.......... 19 144 180 198
------ ------ ------ ------
Net assets attributable to
variable life
policyholders............... $6,519 55,790 33,014 70,826
====== ====== ====== ======
Outstanding units: Type I
(note 2).................... -- -- -- --
====== ====== ====== ======
Net asset value per unit:
Type I...................... $ -- -- -- --
====== ====== ====== ======
Outstanding units: Type II
(note 2).................... 596 4,814 3,468 6,352
====== ====== ====== ======
Net asset value per unit:
Type II..................... $10.93 11.59 9.52 11.15
====== ====== ====== ======
F-14
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations
(Unaudited)
GE Investments Funds, Inc.
----------------------------------------------------------------
Money Total Real Estate Global
S&P 500 Index Market Return International Securities Income
Fund Fund Fund Equity Fund Fund Fund
------------- ------- -------- ------------- ----------- ------
Nine months ended September 30, 2001
----------------------------------------------------------------
Investment income:
Income -- Ordinary
dividends............. $ -- 264,418 -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 23,395 14,606 19,581 616 2,030 261
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 34,111 27,551 3,491 1,421 2,026 436
----------- ------- -------- -------- ------ -----
Net investment income
(expense).............. (57,506) 222,261 (23,072) (2,037) (4,056) (697)
----------- ------- -------- -------- ------ -----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (154,126) 0 (13,440) (14,408) 16,419 (407)
Unrealized appreciation
(depreciation) on
investments........... (2,298,685) -- (430,570) (107,960) 36,375 2,843
Capital gain
distributions......... -- -- -- -- -- --
----------- ------- -------- -------- ------ -----
Net realized and
unrealized gain (loss)
on investments......... $(2,452,811) 0 (444,010) (122,368) 52,794 2,436
----------- ------- -------- -------- ------ -----
Increase (decrease) in
net assets from
operations............. $(2,510,317) 222,261 (467,082) (124,405) 48,738 1,739
=========== ======= ======== ======== ====== =====
GE Investments Funds, Inc. (continued)
---------------------------------------------------------------------------------
Mid-Cap Small-Cap
Value Equity Income U.S. Equity Premier Growth Value Equity Value Equity
Fund Fund Fund Equity Fund Fund Fund
------------ ------ ----------- -------------- ---------------- ----------------
Period from Period from
February 8, 2001 February 6, 2001
to September 30, to September 30,
Nine months ended September 30, 2001 2001 2001
----------------------------------------------- ---------------- ----------------
Investment income:
Income -- Ordinary
dividends.............. $ -- -- -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I (note
3)..................... 1,021 2,133 249 796 -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3)............... 4,364 1,782 5,866 3,162 63 124
--------- ------ -------- -------- ------ ------
Net investment income
(expense).............. (5,385) (3,915) (6,115) (3,958) (63) (124)
--------- ------ -------- -------- ------ ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................. 11,750 7,142 (33,453) (23,898) (112) (54)
Unrealized appreciation
(depreciation) on
investments............ (134,298) 45,876 (171,170) (156,504) (3,495) (2,703)
Capital gain
distributions.......... -- -- -- -- -- --
--------- ------ -------- -------- ------ ------
Net realized and
unrealized gain (loss)
on investments......... (122,548) 53,018 (204,623) (180,402) (3,607) (2,757)
--------- ------ -------- -------- ------ ------
Increase (decrease) in
net assets from
operations............. $(127,933) 49,103 (210,738) (184,360) (3,670) (2,881)
========= ====== ======== ======== ====== ======
F-15
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Oppenheimer Variable Account Funds
--------------------------------------------------------
Capital Aggressive Multiple
Bond Appreciation Growth High Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
------- ------------ ---------- ----------- ----------
Nine months ended September 30, 2001
--------------------------------------------------------
Investment income:
Income -- Ordinary
dividends............. $60,057 34,724 48,679 300,154 51,791
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 2,713 21,059 21,997 9,668 4,744
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 1,966 9,148 5,545 6,482 2,820
------- ---------- ---------- -------- --------
Net investment income
(expense).............. 55,378 4,517 21,137 284,004 44,227
------- ---------- ---------- -------- --------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (772) (33,166) (536,619) (47,659) (12,183)
Unrealized appreciation
(depreciation) on
investments........... 20,078 (2,035,245) (2,725,218) (373,187) (192,452)
Capital gain
distributions......... -- 521,076 759,549 -- 69,177
------- ---------- ---------- -------- --------
Net realized and
unrealized gain (loss)
on investments......... 19,306 (1,547,335) (2,502,288) (420,846) (135,458)
------- ---------- ---------- -------- --------
Increase (decrease) in
net assets from
operations............. $74,684 (1,542,818) (2,481,151) (136,842) (91,231)
======= ========== ========== ======== ========
Oppenheimer Variable Account Funds --
Class 2 Shares
-------------------------------------
Global Securities Main Street Growth
Fund/VA & Income Fund/VA
------------------ ------------------
Period from Period from
January 8, 2001 to January 8, 2001 to
September 30, 2001 September 30, 2001
------------------ ------------------
Investment income:
Income -- Ordinary dividends............ $ 122 33
Expenses -- Mortality and expense risk
charges -- Type I (note 3)............. -- --
Expenses -- Mortality and expense risk
charges -- Type II (note 3)............ 308 314
-------- -------
Net investment income (expense).......... (186) (281)
-------- -------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss)................ (1,121) (368)
Unrealized appreciation (depreciation)
on investments......................... (24,392) (14,002)
Capital gain distributions.............. 2,295 --
-------- -------
Net realized and unrealized gain (loss)
on investments.......................... (23,218) (14,370)
-------- -------
Increase (decrease) in net assets from
operations.............................. $(23,404) (14,651)
======== =======
F-16
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Variable Insurance Products Fund --
Variable Insurance Products Fund Service Class 2
---------------------------------- -----------------------------------------
Equity-
Income Growth Overseas Equity-Income
Portfolio Portfolio Portfolio Portfolio Growth Portfolio
----------- ---------- --------- ----------------- -----------------
Period from Period from
January 24, 2001 January 24, 2001
Nine months ended September 30, to September 30, to September 30,
2001 2001 2001
---------------------------------- ----------------- -----------------
Investment income:
Income -- Ordinary
dividends.............. $ 129,306 7,051 105,667 30 0
Expenses -- Mortality
and expense risk
charges -- Type I (note
3)..................... 34,996 37,531 9,835 -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3)............... 6,409 10,834 1,082 314 801
----------- ---------- -------- ----------------- -----------------
Net investment income
(expense)............... 87,901 (41,314) 94,750 (284) (801)
----------- ---------- -------- ----------------- -----------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................. (17,339) (610,122) (157,370) (507) (1,151)
Unrealized appreciation
(depreciation) on
investments............ (1,088,927) (2,419,967) (488,372) (19,017) (71,241)
Capital gain
distributions.......... 363,289 662,803 167,022 86 30
----------- ---------- -------- ----------------- -----------------
Net realized and
unrealized gain (loss)
on investments.......... (708,299) (2,367,286) (478,720) (19,438) (72,362)
----------- ---------- -------- ----------------- -----------------
Increase (decrease) in
net assets from
operations.............. $ (620,398) (2,408,600) (383,971) (19,722) (73,163)
=========== ========== ======== ================= =================
Variable Insurance
Variable Insurance Products Fund II--
Products Fund II Service Class 2
--------------------- ------------------
Asset
Manager Contrafund Contrafund
Portfolio Portfolio Portfolio
--------- ---------- ------------------
Nine months ended Nine months ended
September 30, 2001 September 30, 2001
--------------------- ------------------
Investment income:
Income -- Ordinary dividends........ $ 180,444 47,417 1
Expenses -- Mortality and expense
risk charges -- Type I (note 3)... 21,642 16,421 --
Expenses -- Mortality and expense
risk charges -- Type II (note 3)... 1,324 15,410 247
--------- ---------- ------
Net investment income (expense)...... 157,478 15,586 (246)
--------- ---------- ------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss)............ (79,927) (232,945) (372)
Unrealized appreciation
(depreciation) on investments...... (434,649) (943,358) (7,865)
Capital gain distributions.......... 67,666 167,353 3
--------- ---------- ------
Net realized and unrealized gain
(loss) on investments............... (446,960) (1,008,950) (8,234)
--------- ---------- ------
Increase (decrease) in net assets
from operations..................... $(289,482) (993,364) (8,480)
========= ========== ======
F-17
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Variable Insurance Variable Insurance Products Fund
Products Fund III III -- Service Class 2
------------------------ -----------------------------------
Growth & Growth
Income Opportunities Growth & Income
Portfolio Portfolio Mid Cap Portfolio Portfolio
--------- ------------- ------------------ ----------------
Period from
January 18, 2001
Nine months ended Nine months ended to September 30,
September 30, 2001 September 30, 2001 2001
------------------------ ------------------ ----------------
Investment income:
Income -- Ordinary
dividends............. $ 3,886 1,448 -- 12,195
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 1,755 649 -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 5,188 1,538 131 201
--------- -------- ------ -------
Net investment income
(expense).............. (3,057) (739) (131) 11,994
--------- -------- ------ -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................. (42,272) (37,239) (92) (228)
Unrealized appreciation
(depreciation) on
investments........... (192,308) (71,638) (2,690) (10,020)
Capital gain
distributions......... 12,475 -- -- 39,153
--------- -------- ------ -------
Net realized and
unrealized gain (loss)
on investments......... (222,105) (108,877) (2,782) 28,905
--------- -------- ------ -------
Increase (decrease) in
net assets from
operations............. $(225,163) (109,616) (2,913) 40,900
========= ======== ====== =======
F-18
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Federated
Insurance Series --
Federated Insurance Series Service Class
----------------------------------------------------- ---------------------
American High Income
Leaders Bond Utility International Small High Income Bond Fund
Fund II Fund II Fund II Company Fund II II
--------- ----------- ------- --------------------- ---------------------
Period from Period from March 27,
Nine months ended February 6, 2001 2001
September 30, 2001 to September 30, 2001 to September 30, 2001
------------------------------ --------------------- ---------------------
Investment income:
Income -- Ordinary
dividends............. $ 10,434 43,741 15,059 -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 1,722 1,221 1,109 -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 2,527 1,162 1,406 2 63
--------- ------- ------- --- ------
Net investment income
(expense).............. 6,185 41,358 12,544 (2) (63)
--------- ------- ------- --- ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (4,329) (14,879) (6,150) (15) (26)
Unrealized appreciation
(depreciation) on
investments........... (112,856) (52,024) (65,327) (58) (1,960)
Capital gain
distributions......... 4,548 -- -- -- --
--------- ------- ------- --- ------
Net realized and
unrealized gain (loss)
on investments......... (112,637) (66,903) (71,477) (73) (1,986)
--------- ------- ------- --- ------
Increase (decrease) in
net assets from
operations............. $(106,452) (25,545) (58,933) (75) (2,049)
========= ======= ======= === ======
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------- --------------------
PBHG
Small LargeCap Large Cap PBHG
Capitalization Growth Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- ---------- --------- ---------
Nine months ended Nine months ended
September 30, 2001 September 30, 2001
------------------------- --------------------
Investment income:
Income -- Ordinary dividends... $ 743 10,186 -- --
Expenses -- Mortality and
expense risk charges -- Type I
(note 3)...................... 4,972 10,628 1,895 1,433
Expenses -- Mortality and
expense risk charges -- Type
II (note 3)................... 3,175 14,067 2,608 2,827
--------- ---------- -------- --------
Net investment income
(expense)...................... (7,404) (14,509) (4,503) (4,260)
--------- ---------- -------- --------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss)....... (460,129) (555,396) (103,002) (262,456)
Unrealized appreciation
(depreciation) on
investments................... (315,892) (1,191,186) (293,296) (339,166)
Capital gain distributions..... -- 552,329 -- --
--------- ---------- -------- --------
Net realized and unrealized gain
(loss) on investments.......... (776,621) (1,194,253) (396,298) (601,622)
--------- ---------- -------- --------
Increase (decrease) in net
assets from operations......... $(783,425) (1,208,762) (400,801) (605,882)
========= ========== ======== ========
F-19
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Janus Aspen Series
----------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
----------- ---------- ---------- ---------
Nine months ended September 30, 2001
----------------------------------------------
Investment income:
Income -- Ordinary dividends... $ -- -- -- --
Expenses -- Mortality and
expense risk charges -- Type I
(note 3)...................... 17,007 18,636 29,352 9,673
Expenses -- Mortality and
expense risk charges -- Type
II
(note 3)...................... 14,396 19,176 22,066 17,342
----------- ---------- ---------- --------
Net investment income
(expense)...................... (31,403) (37,812) (51,418) (27,015)
----------- ---------- ---------- --------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss)....... (1,889,072) (357,194) (212,774) (22,964)
Unrealized appreciation
(depreciation) on
investments................... (1,782,903) (2,345,900) (3,265,946) (530,909)
Capital gain distributions..... -- 16,402 21,134 67,312
----------- ---------- ---------- --------
Net realized and unrealized gain
(loss) on investments.......... (3,671,975) (2,686,692) (3,457,586) (486,561)
----------- ---------- ---------- --------
Increase (decrease) in net
assets from operations......... $(3,703,378) (2,724,504) (3,509,004) (513,576)
=========== ========== ========== ========
Janus Aspen Series (continued)
------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
--------- ------------- ------------
Nine months ended September 30, 2001
------------------------------------
Investment income:
Income -- Ordinary dividends............. $ -- -- --
Expenses -- Mortality and expense risk
charges -- Type I (note 3).............. 528 4,917 3,087
Expenses -- Mortality and expense risk
charges -- Type II (note 3)............. 1,907 9,729 14,682
------- ---------- ----------
Net investment income (expense)........... (2,435) (14,646) (17,769)
------- ---------- ----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................. 2,508 (212,600) (306,354)
Unrealized appreciation (depreciation) on
investments............................. 14,877 (871,050) (857,853)
Capital gain distributions............... 14,150 18,619 25,976
------- ---------- ----------
Net realized and unrealized gain (loss) on
investments.............................. 31,535 (1,065,031) (1,138,231)
------- ---------- ----------
Increase (decrease) in net assets from
operations............................... $29,100 (1,079,677) (1,156,000)
======= ========== ==========
F-20
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Janus Aspen Series -- Service Shares
----------------------------------------------------------------------------
Global Life Global Technology Aggressive
Sciences Portfolio Portfolio Growth Portfolio Growth Portfolio
------------------ ----------------- ------------------- -------------------
Period from Period from
Nine months ended January 24, 2001 to February 9, 2001 to
September 30, 2001 September 30, 2001 September 30, 2001
------------------------------------ ------------------- -------------------
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 235 242 -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 801 388 234 265
-------- ------- ------- -------
Net investment income
(expense).............. (1,036) (630) (234) (265)
-------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (11,059) (28,401) (1,529) (1,019)
Unrealized appreciation
(depreciation) on
investments........... (34,799) (65,266) (30,220) (28,275)
Capital gain
distributions......... -- 887 -- 169
-------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (45,858) (92,780) (31,749) (29,125)
-------- ------- ------- -------
Increase (decrease) in
net assets from
operations............. $(46,894) (93,410) (31,983) (29,390)
======== ======= ======= =======
Janus Aspen Series -- Service Shares (continued)
------------------------------------------------------------------------------
Capital
Appreciation Worldwide International Balanced
Portfolio Growth Portfolio Growth Portfolio Portfolio
------------------- ------------------- ------------------- ------------------
Period from Period from Period from Period from
January 24, 2001 to January 24, 2001 to February 8, 2001 to January 8, 2001 to
September 30, 2001 September 30, 2001 September 30, 2001 September 30, 2001
------------------- ------------------- ------------------- ------------------
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 147 331 295 914
-------- ------- ------- -------
Net investment income
(expense).............. (147) (331) (295) (914)
-------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (740) (1,045) (505) (877)
Unrealized appreciation
(depreciation) on
investments........... (15,054) (26,531) (21,683) (25,206)
Capital gain
distributions......... 268 202 464 2,481
-------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (15,526) (27,374) (21,724) (23,602)
-------- ------- ------- -------
Increase (decrease) in
net assets from
operations............. $(15,673) (27,705) (22,019) (24,516)
======== ======= ======= =======
F-21
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Goldman Sachs Variable
Insurance Trust Salomon Brothers Variable Series Fund Inc.
------------------------- ---------------------------------------------------
Growth and Mid Cap Value Strategic Bond Investors Total Return
Income Fund Fund Fund Fund Fund
----------- ------------- ---------------- --------------- --------------
Nine months ended Nine months ended
September 30, 2001 September 30, 2001
------------------------- ---------------------------------------------------
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 19 1,200 45 1,304 37
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 592 3,082 853 2,164 127
-------- ------- ------------ --------------- -------------
Net investment income
(expense).............. (611) (4,282) (898) (3,468) (164)
-------- ------- ------------ --------------- -------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (2,656) 32,513 880 (5,284) (76)
Unrealized appreciation
(depreciation) on
investments........... (17,243) (69,405) 6,477 (117,541) (1,557)
Capital gain
distributions......... -- -- -- 7,551 --
-------- ------- ------------ --------------- -------------
Net realized and
unrealized gain (loss)
on investments......... (19,899) (36,892) 7,357 (115,274) (1,633)
-------- ------- ------------ --------------- -------------
Increase (decrease) in
net assets from
operations............. $(20,510) (41,174) 6,459 (118,742) (1,797)
======== ======= ============ =============== =============
F-22
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Dreyfus
---------------------------------------
Dreyfus Investment
The Dreyfus Socially Portfolios --
Responsible Growth Emerging Markets
Fund, Inc. Portfolio
-------------------- ------------------
Period from
April 6, 2001
Nine months ended to September 30,
September 30, 2001 2001
-------------------- ------------------
Investment income:
Income -- Ordinary dividends.......... $ 0 --
Expenses -- Mortality and expense risk
charges -- Type I (note 3)........... -- --
Expenses -- Mortality and expense risk
charges -- Type II (note 3).......... 56 9
------- ----
Net investment income (expense)........ (56) (9)
------- ----
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss).............. (190) (10)
Unrealized appreciation (depreciation)
on investments....................... (3,745) (433)
Capital gain distributions............ -- --
------- ----
Net realized and unrealized gain (loss)
on investments........................ (3,935) (443)
------- ----
Increase (decrease) in net assets from
operations............................ $(3,991) (452)
======= ====
Rydex Variable
MFS Variable Insurance Trust Trust
--------------------------------------------------------------- --------------
MFS MFS Investors MFS
New Discovery Growth Stock Investors Trust MFS Utility
Series Series Series Series OTC Fund
------------- ---------------- ----------------- -------------- --------------
Nine months Period from Period from Period from Nine months
ended January 23, 2001 February 14, 2001 March 14, 2001 ended
September 30, to September 30, to September 30, to September September 30,
2001 2001 2001 30, 2001 2001
------------- ---------------- ----------------- -------------- --------------
Investment income:
Income -- Ordinary
dividends............. $ -- 3 35 2,118 --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. -- -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 54 36 104 348 45
------- ------ ------ ------- ------
Net investment income
(expense).............. (54) (33) (69) 1,770 (45)
------- ------ ------ ------- ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (201) (316) (217) (2,168) (392)
Unrealized appreciation
(depreciation) on
investments........... (5,555) (3,043) (6,425) (33,198) (5,499)
Capital gain
distributions......... 23 34 190 5,580 --
------- ------ ------ ------- ------
Net realized and
unrealized gain (loss)
on investments......... (5,733) (3,325) (6,452) (29,786) (5,891)
------- ------ ------ ------- ------
Increase (decrease) in
net assets from
operations............. $(5,787) (3,359) (6,521) (28,016) (5,936)
======= ====== ====== ======= ======
F-23
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
Alliance Variable Products Series Fund, Inc.
-----------------------------------------------
Premier
Growth and Growth
Income Portfolio Portfolio Quasar Portfolio
---------------- ------------- ----------------
Period from Nine Months Period from
February 6, 2001 ended February 8, 2001
to September 30, September 30, to September 30,
2001 2001 2001
---------------- ------------- ----------------
Income -- Ordinary dividends... $ 865 -- --
Expenses -- Mortality and
expense risk charges -- Type
I (note 3)................... -- -- --
Expenses -- Mortality and
expense risk charges -- Type
II (note 3).................. 645 285 53
-------- ------- ------
Net investment income
(expense)..................... 220 (509) (53)
-------- ------- ------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)...... (549) (509) (405)
Unrealized appreciation
(depreciation) on
investments.................. (38,628) (23,547) (4,856)
Capital gain distributions.... 6,702 4,460 391
-------- ------- ------
Net realized and unrealized
gain (loss) on investments.... (32,475) (19,596) (4,870)
-------- ------- ------
Increase (decrease) in net
assets from operations........ $(32,255) (19,881) (4,923)
======== ======= ======
AIM Variable Insurance Funds, Inc.
------------------------------------------------------
AIM V.I. Capital AIM V.I. Growth AIM V.I. Value
Appreciation Fund Fund Fund
------------------- ---------------- -----------------
Period from Period from
Nine Months February 9, 2001 February 19, 2001
ended September 30, to September 30, to September 30,
2001 2001 2001
------------------- ---------------- -----------------
Income -- Ordinary
dividends.............. $ -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. -- -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 161 186 254
-------- ------- -------
Net investment income
(expense).............. (161) (186) (254)
-------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (819) (606) (448)
Unrealized appreciation
(depreciation) on
investments........... (14,346) (12,795) (15,433)
Capital gain
distributions......... -- -- --
-------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (15,165) (13,401) (15,881)
-------- ------- -------
Increase (decrease) in
net assets from
operations............. $(15,326) (13,587) (16,135)
======== ======= =======
F-24
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
(Unaudited)
PIMCO Variable Insurance Trust
-----------------------------------------------------------------------
Long-Term U.S.
Foreign Bond Government High Yield Bond Total Return Bond
Portfolio Portfolio Portfolio Portfolio
------------------- ---------------- ---------------- -----------------
Period from Period from Period from
Nine months February 9, 2001 February 8, 2001 February 6, 2001,
ended September 30, to September 30, to September 30, to September 30,
2001 2001 2001 2001
------------------- ---------------- ---------------- -----------------
Investment income:
Income -- Ordinary
dividends............. $ 51 753 879 751
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 12 113 79 109
---- ----- ------ -----
Net investment income
(expense).............. 39 640 800 642
---- ----- ------ -----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 5 (10) (114) 38
Unrealized appreciation
(depreciation) on
investments........... 54 2,125 (1,780) 1,522
Capital gain
distributions......... -- -- -- --
---- ----- ------ -----
Net realized and
unrealized gain (loss)
on investments......... 59 2,115 (1,894) 1,560
---- ----- ------ -----
Increase (decrease) in
net assets from
operations............. $ 98 2,755 (1,094) 2,202
==== ===== ====== =====
F-25
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets
(Unaudited)
GE Investments Funds, Inc.
-------------------------------------------------------------------------
Real Estate Global
S&P 500 Index Money Market Total Return International Securities Income
Fund Fund Fund Equity Fund Fund Fund
------------- ------------ ------------ ------------- ----------- -------
Nine months ended September 30, 2001
-------------------------------------------------------------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (57,506) 222,261 (23,072) (2,037) (4,056) (697)
Net realized gain
(loss)................ (154,126) 0 (13,440) (14,408) 16,419 (407)
Unrealized appreciation
(depreciation) on
investments........... (2,298,685) -- (430,570) (107,960) 36,375 2,843
Capital gain
distributions......... -- -- -- -- -- --
----------- ---------- --------- -------- ------- -------
Increase (decrease) in
net assets from
operations............ (2,510,317) 222,261 (467,082) (124,405) 48,738 1,739
----------- ---------- --------- -------- ------- -------
From capital
transactions:
Net premiums........... 2,841,473 7,846,004 389,106 122,536 139,971 43,016
Loan interest.......... (1,061) 391 (1,453) 65 (31) --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (3,222) -- (14,229) -- (3,557) --
Surrenders............. (306,384) (176,280) (65,669) 1,540 (24,426) --
Loans.................. (102,135) (169,315) (59,627) (2,509) (1,101) (168)
Cost of insurance and
administrative expense
(note 3).............. (934,042) (692,785) (330,742) (25,227) (65,673) (10,006)
Transfer gain (loss)
and transfer fees..... 4,062 (2,323) 1,625 4 (461) (16)
Interfund transfers.... 828,939 (5,774,133) 22,190 24,855 102,967 2,293
----------- ---------- --------- -------- ------- -------
Increase (decrease) in
net assets from
capital transactions.. 2,327,630 1,031,559 (58,799) 121,264 147,689 35,119
----------- ---------- --------- -------- ------- -------
Increase (decrease) in
net assets............. (182,687) 1,253,820 (525,881) (3,141) 196,427 36,858
Net assets at beginning
of year................ 10,245,247 7,439,097 4,417,034 364,887 706,031 103,476
----------- ---------- --------- -------- ------- -------
Net assets at end of
period................. $10,062,560 8,692,917 3,891,153 361,746 902,458 140,334
=========== ========== ========= ======== ======= =======
GE Investments Funds, Inc. (continued)
----------------------------------------------------------------------------------
Mid-Cap Small-Cap
Value Equity Income U.S. Equity Premier Growth Value Equity Value Equity
Fund Fund Fund Equity Fund Fund Fund
------------ ------- ----------- -------------- ---------------- ----------------
Period from Period from
February 8, 2001 February 6, 2001
to September 30, to September 30,
Nine months ended September 30, 2001 2001 2001
------------------------------------------------ ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (5,385) (3,915) (6,115) (3,958) (63) (124)
Net realized gain
(loss)................ 11,750 7,142 (33,453) (23,898) (112) (54)
Unrealized appreciation
(depreciation) on
investments........... (134,298) 45,876 (171,170) (156,504) (3,495) (2,703)
Capital gain
distributions......... -- -- -- -- -- --
---------- ------- --------- -------- ------ ------
Increase (decrease) in
net assets from
operations............ (127,933) 49,103 (210,738) (184,360) (3,670) (2,881)
---------- ------- --------- -------- ------ ------
From capital
transactions:
Net premiums........... 321,153 195,383 238,464 339,177 25,731 70,481
Loan interest.......... 709 (241) (3,286) (248) -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (9,928) -- (413) -- -- --
Surrenders............. (3,483) (19,467) (5,540) (4,630) -- --
Loans.................. (7,344) (65,640) (9,141) (22,827) -- 150
Cost of insurance and
administrative expense
(note 3).............. (80,530) (44,115) (76,788) (102,884) (2,896) (4,029)
Transfer gain (loss)
and transfer fees..... (3,271) 158 (4,274) (2,948) (52) (1,498)
Interfund transfers.... 294,570 82,127 138,413 112,458 11,023 9,760
---------- ------- --------- -------- ------ ------
Increase (decrease) in
net assets from
capital transactions.. 511,876 148,205 277,435 318,098 33,806 74,864
---------- ------- --------- -------- ------ ------
Increase (decrease) in
net assets............. 383,943 197,308 66,697 133,738 30,136 71,983
Net assets at beginning
of year................ 785,557 544,869 1,033,212 617,950 -- --
---------- ------- --------- -------- ------ ------
Net assets at end of
period................. $1,169,500 742,177 1,099,909 751,688 30,136 71,983
========== ======= ========= ======== ====== ======
F-26
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Oppenheimer Variable Account Funds
----------------------------------------------------------------------------------
Bond Capital Appreciation Aggressive Growth High Income Multiple Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
---------- -------------------- ----------------- ----------- -------------------
Nine months ended September 30, 2001
----------------------------------------------------------------------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 55,378 4,517 21,137 284,004 44,227
Net realized gain
(loss)................ (772) (33,166) (536,619) (47,659) (12,183)
Unrealized appreciation
(depreciation) on
investments........... 20,078 (2,035,245) (2,725,218) (373,187) (192,452)
Capital gain
distributions......... -- 521,076 759,549 -- 69,177
---------- ---------- ---------- --------- ---------
Increase (decrease) in
net assets from
operations............ 74,684 (1,542,818) (2,481,151) (136,842) (91,231)
---------- ---------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 150,947 835,521 899,799 315,781 161,335
Loan interest.......... (352) (2,807) 565 (562) (52)
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- (12,006) (500) -- --
Surrenders............. (20,065) (73,070) (173,365) (40,090) (160,064)
Loans.................. (1,201) (66,005) (112,428) (24,411) (6,005)
Cost of insurance and
administrative expense
(note 3).............. (71,758) (346,307) (342,541) (152,365) (85,575)
Transfer gain (loss)
and transfer fees..... (526) (4,691) (150) 1,181 637
Interfund transfers.... 241,844 277,212 (490,015) 73,007 121,752
---------- ---------- ---------- --------- ---------
Increase (decrease) in
net assets from
capital transactions.. 298,889 607,847 (218,635) 172,541 32,028
---------- ---------- ---------- --------- ---------
Increase (decrease) in
net assets............. 373,573 (934,971) (2,699,786) 35,699 (59,203)
Net assets at beginning
of year................ 730,981 5,603,179 6,715,541 2,780,675 1,311,155
---------- ---------- ---------- --------- ---------
Net assets at end of
period................. $1,104,554 4,668,208 4,015,755 2,816,374 1,251,952
========== ========== ========== ========= =========
Oppenheimer Variable Account
Funds -- Class 2 Shares
---------------------------------------
Global Securities Main Street Growth &
Fund/VA Income Fund/VA
------------------ --------------------
Period from Period from
January 8, 2001 to January 8, 2001 to
September 30, 2001 September 30, 2001
------------------ --------------------
Increase (decrease) in net assets
From operations:
Net investment income (expense)....... $ (186) (281)
Net realized gain (loss).............. (1,121) (368)
Unrealized appreciation (depreciation)
on investments....................... (24,392) (14,002)
Capital gain distributions............ 2,295 --
-------- -------
Increase (decrease) in net assets from
operations........................... (23,404) (14,651)
-------- -------
From capital transactions:
Net premiums.......................... 95,608 100,123
Loan interest......................... -- --
Transfers (to) from the general
account of GE Life and Annuity:
Death benefits........................ -- --
Surrenders............................ (77) --
Loans................................. -- --
Cost of insurance and administrative
expense (note 3)..................... (7,912) (10,352)
Transfer gain (loss) and transfer
fees................................. (265) (120)
Interfund transfers................... 51,590 45,024
-------- -------
Increase (decrease) in net assets from
capital transactions................. 139,474 134,675
-------- -------
Increase (decrease) in net assets...... 116,070 120,024
Net assets at beginning of year........ -- --
-------- -------
Net assets at end of period............ $116,070 120,024
======== =======
F-27
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Variable Insurance Products Fund
Variable Insurance Products Fund -- Service Class 2
----------------------------------- ---------------------------------
Equity-Income Growth Overseas Equity-Income
Portfolio Portfolio Portfolio Portfolio Growth Portfolio
------------- ---------- --------- ---------------- ----------------
January 24, 2001 January 24, 2001
Nine months ended September 30, to September 30, to September 30,
2001 2001 2001
----------------------------------- ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 87,901 (41,314) 94,750 (284) (801)
Net realized gain
(loss)................ 17,339 (610,122) (157,370) (507) (1,151)
Unrealized appreciation
(depreciation) on
investments........... (1,088,927) (2,419,967) (488,372) (19,017) (71,241)
Capital gain
distributions......... 363,289 662,803 167,022 86 30
---------- ---------- --------- ------- -------
Increase (decrease) in
net assets from
operations............ (620,398) (2,408,600) (383,971) (19,722) (73,163)
---------- ---------- --------- ------- -------
From capital
transactions:
Net premiums........... 870,483 1,224,284 274,820 109,762 202,325
Loan interest.......... (5,327) (5,866) (1,228) -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (1,602) (479) -- -- --
Surrenders............. (174,342) (302,473) (40,000) -- --
Loans.................. (91,755) (77,902) (25,819) -- (2,211)
Cost of insurance and
administrative expense
(note 3).............. (443,410) (567,035) (108,192) (8,566) (18,567)
Transfer gain (loss)
and transfer fees..... (493,321) (656,166) (273,936) (1,575) 1,425
Interfund transfers.... 361,003 7,860 (30,097) 72,358 184,035
---------- ---------- --------- ------- -------
Increase (decrease) in
net assets from
capital transactions.. 21,729 (377,777) (204,452) 171,979 367,007
---------- ---------- --------- ------- -------
Increase (decrease) in
net assets............. (598,669) (2,786,377) (588,423) 152,257 293,844
Net assets at beginning
of year................ 7,746,965 9,960,778 2,213,423 -- --
---------- ---------- --------- ------- -------
Net assets at end of
period................. $7,148,296 7,174,401 1,625,000 152,257 293,844
========== ========== ========= ======= =======
Variable Insurance
Variable Insurance Products Fund II--
Products Fund II Service Class 2
---------------------- ------------------
Asset
Manager Contrafund Contrafund
Portfolio Portfolio Portfolio
---------- ---------- ------------------
Nine months ended Nine months ended
September 30, 2001 September 30, 2001
---------------------- ------------------
Increase (decrease) in net assets
From operations:
Net investment income (expense)..... $ 157,478 15,586 (246)
Net realized gain (loss)............ (79,927) (232,745) (372)
Unrealized appreciation
(depreciation) on investments...... (434,699) (943,358) (7,865)
Capital gain distributions.......... 67,666 167,353 3
---------- --------- -------
Increase (decrease) in net assets
from operations.................... (289,482) (993,364) (8,480)
---------- --------- -------
From capital transactions:
Net premiums........................ 339,206 941,435 99,191
Loan interest....................... (1,719) (3,199) --
Transfers (to) from the general
account of GE Life and Annuity:
Death benefits...................... (474) (12,806) --
Surrenders.......................... (177,712) (154,517) --
Loans............................... (2,963) (45,660) --
Cost of insurance and administrative
expense (note 3)................... (203,822) (410,372) (11,210)
Transfer gain (loss) and transfer
fees............................... (245,345) (215,680) 68
Interfund transfers................. (37,136) 197,912 29,394
---------- --------- -------
Increase (decrease) in net assets
from capital transactions.......... (329,965) 297,113 117,443
---------- --------- -------
Increase (decrease) in net assets.... (619,447) (696,251) 108,963
Net assets at beginning of year...... 4,505,303 6,217,155 34
---------- --------- -------
Net assets at end of period.......... $3,885,856 5,520,904 108,997
========== ========= =======
F-28
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Variable Insurance Products Fund
Variable Products Fund III III -- Service Class 2
----------------------------- ---------------------------------
Growth
Growth & Income Opportunities Growth & Income
Portfolio Portfolio Mid Cap Portfolio Portfolio
--------------- ------------- ----------------- ---------------
Period from
January 18,
Nine months ended 2001 to
Nine months ended September 30, September 30,
September 30, 2001 2001 2001
----------------------------- ----------------- ---------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense).............. $ (3,057) (739) (131) 11,994
Net realized gain
(loss)................ (42,272) (37,239) (92) (228)
Unrealized appreciation
(depreciation) on
investments........... (192,308) (71,638) (2,690) (10,020)
Capital gain
distributions......... 12,475 -- -- 39,153
---------- -------- ------ -------
Increase (decrease) in
net assets from
operations............ (225,163) (109,616) (2,913) 40,900
---------- -------- ------ -------
From capital
transactions:
Net premiums........... 370,369 156,643 39,572 75,568
Loan interest.......... (96) (202) -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (14,248) (3,491) -- --
Surrenders............. (42,081) (15,793) -- --
Loans.................. (24,158) (2,737) -- --
Cost of insurance and
administrative expense
(note 3).............. (149,738) (48,028) (4,791) (6,284)
Transfer gain (loss)
and transfer fees..... (14,956) (980) (1,037) (51,973)
Interfund transfers.... 35,606 (13,474) 22,814 26,440
---------- -------- ------ -------
Increase (decrease) in
net assets from
capital transactions.. 160,698 71,938 56,558 43,751
---------- -------- ------ -------
Increase (decrease) in
net assets............. (64,465) (37,678) 53,645 84,651
Net assets at beginning
of year................ 1,280,280 391,354 34 --
---------- -------- ------ -------
Net assets at end of
period................. $1,215,815 353,676 53,679 84,651
========== ======== ====== =======
F-29
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Federated
Insurance Series
Federated Insurance Series -- Service Class
----------------------------------------------------------- ----------------
International
American Leaders High Income Bond Utility Small Company High Income Bond
Fund II Fund II Fund II Fund II Fund II
---------------- ---------------- ------- ---------------- ----------------
Period from Period from
February 6, 2001 March 27, 2001
to September 30, to September 30,
Nine months ended September 30, 2001 2001 2001
----------------------------------------- ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 6,185 41,358 12,544 (2) (63)
Net realized gain
(loss)................ (4,329) (14,879) (6,150) (15) (26)
Unrealized appreciation
(depreciation) on
investments........... (112,856) (52,024) (65,327) (58) (1,960)
Capital gain
distributions......... 4,548 -- -- -- --
--------- ------- ------- ---- ------
Increase (decrease) in
net assets from
operations............ (106,452) (25,545) (58,933) (75) (2,049)
--------- ------- ------- ---- ------
From capital
transactions:
Net premiums........... 160,462 99,533 111,103 463 12,369
Loan interest.......... (60) (118) 541 -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- -- --
Surrenders............. (64,111) (11,131) 1,055 -- --
Loans.................. (29,813) (8,424) (19,628) -- --
Cost of insurance and
administrative expense
(note 3).............. (56,601) (35,617) (27,714) (154) (1,476)
Transfer gain (loss)
and transfer fees..... 1,880 (8) (1,779) 0 (25)
Interfund transfers.... 125,069 77,724 38,606 33 18,232
--------- ------- ------- ---- ------
Increase (decrease) in
net assets from
capital transactions.. 136,826 121,959 102,184 342 29,100
--------- ------- ------- ---- ------
Increase (decrease) in
net assets............. 30,374 96,414 43,251 267 27,051
Net assets at beginning
of year................ 705,749 345,023 426,906 -- --
--------- ------- ------- ---- ------
Net assets at end of
period................. $ 736,123 441,437 470,157 267 27,051
========= ======= ======= ==== ======
Alger American Fund PBHG Insurance Series Fund, Inc.
------------------------------------- -----------------------------------------
Small Capitalization LargeCap PBHG Large Cap PBHG Growth II
Portfolio Growth Portfolio Growth Portfolio Portfolio
-------------------- ---------------- ------------------ ------------------
Nine months ended September 30, 2001 Nine months ended September 30, 2001
------------------------------------- -----------------------------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense).............. $ (7,404) (14,509) (4,503) (4,260)
Net realized gain
(loss)................. (460,129) (555,396) (103,002) (262,456)
Unrealized appreciation
(depreciation) on
investments............ (315,892) (1,191,186) (293,296) (339,166)
Capital gain
distributions.......... -- 552,329 -- --
---------- ---------- ------------------ ------------------
Increase (decrease) in
net assets from
operations............. (783,425) (1,208,762) (400,801) (605,882)
---------- ---------- ------------------ ------------------
From capital
transactions:
Net premiums............ 390,102 740,015 268,534 191,484
Loan interest........... (699) (822) (574) 188
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits.......... -- -- -- (12,534)
Surrenders.............. (39,105) (107,735) (6,054) (2,901)
Loans................... (14,713) (31,532) (14,934) (3,263)
Cost of insurance and
administrative expense
(note 3)............... (124,404) (338,812) (98,663) (65,314)
Transfer gain (loss) and
transfer fees.......... 5,091 (6,373) (8,287) 720
Transfers (to) from the
Guarantee Account...... -- -- -- --
Interfund transfers..... 97,180 499,516 183,203 169,430
---------- ---------- ------------------ ------------------
Increase (decrease) in
net assets from capital
transactions........... 313,452 754,257 323,225 277,810
---------- ---------- ------------------ ------------------
Increase (decrease) in
net assets.............. (469,973) (454,505) (77,576) (328,072)
Net assets at beginning
of year................. 1,725,177 4,326,839 799,510 961,015
---------- ---------- ------------------ ------------------
Net assets at end of
period.................. $1,255,204 3,872,334 721,934 632,943
========== ========== ================== ==================
F-30
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Janus Aspen Series
----------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
----------- ---------- ---------- ---------
Nine months ended September 30, 2001
----------------------------------------------
Increase (decrease) in net
assets
From operations:
Net investment income
(expense).................... $ (31,403) (37,812) (51,418) (27,015)
Net realized gain (loss)...... (1,889,012) (357,194) (212,774) (22,964)
Unrealized appreciation
(depreciation) on
investments.................. (1,782,903) (2,345,900) (3,265,946) (530,909)
Capital gain distributions.... -- 16,402 21,134 67,312
----------- ---------- ---------- ---------
Increase (decrease) in net
assets from operations....... (3,701,378) (2,724,504) (3,509,004) (513,576)
----------- ---------- ---------- ---------
From capital transactions:
Net premiums.................. 1,295,882 1,237,969 1,555,049 1,206,957
Loan interest................. 1,231 (2,995) (1,779) (2,107)
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits................ (630) (14,408) (3,825) (743)
Surrenders.................... (177,728) (160,031) (266,169) (40,862)
Loans......................... (73,097) (66,144) (81,797) (77,841)
Cost of insurance and
administrative expense (note
3)........................... (478,939) (487,706) (657,780) (333,930)
Transfer gain (loss) and
transfer fees................ 37,370 3,993 8,200 (1,800)
Interfund transfers........... (381,277) (144,042) (171,490) 477,142
----------- ---------- ---------- ---------
Increase (decrease) in net
assets from capital
transactions................. 222,812 366,576 380,409 1,226,816
----------- ---------- ---------- ---------
Increase (decrease) in net
assets........................ (3,480,566) (2,357,928) (3,128,595) 713,240
Net assets at beginning of
year.......................... 7,595,526 7,688,954 10,754,842 4,416,728
----------- ---------- ---------- ---------
Net assets at end of period.... $ 4,114,960 5,331,026 7,626,247 5,129,968
=========== ========== ========== =========
Janus Aspen Series (continued)
-------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
--------- ------------- ------------
Nine months ended September 30, 2001
-------------------------------------
Increase (decrease) in net assets
From operations:
Net investment income (expense).......... $ (2,435) (14,646) (17,769)
Net realized gain (loss)................. 2,508 (212,600) (306,354)
Unrealized appreciation (depreciation) on
investments............................. 14,877 (871,050) (857,853)
Capital gain distributions............... 14,150 18,619 25,976
-------- ---------- ----------
Increase (decrease) in net assets from
operations.............................. 29,100 (1,079,677) (1,156,000)
-------- ---------- ----------
From capital transactions:
Net premiums............................. 155,512 627,342 811,420
Loan interest............................ 145 (2,675) (1,328)
Transfers (to) from the general account
of GE Life and Annuity:
Death benefits........................... -- (2,191) (10,443)
Surrenders............................... (20,111) (22,518) (62,121)
Loans.................................... (17,845) (66,680) (25,558)
Cost of insurance and administrative
expense (note 3)........................ (31,126) (216,268) (291,921)
Transfer gain (loss) and transfer fees... 20 4,245 7,494
Transfers (to) from the Guarantee
Account................................. -- -- --
Interfund transfers...................... 67,098 223,662 (219,675)
-------- ---------- ----------
Increase (decrease) in net assets from
capital transactions.................... 153,693 544,917 207,868
-------- ---------- ----------
Increase (decrease) in net assets......... 182,793 (534,760) (948,132)
Net assets at beginning of year........... 314,386 2,820,735 3,608,148
-------- ---------- ----------
Net assets at end of period............... $497,179 2,285,975 2,660,016
======== ========== ==========
F-31
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Janus Aspen Series-Service Shares
--------------------------------------------------------
Global Life Global
Sciences Technology Aggressive
Portfolio Portfolio Growth Portfolio Growth Portfolio
----------- ---------- ---------------- ----------------
Period from Period from
January 24, 2001 February 9, 2001
Nine months ended to September 30, to September 30,
September 30, 2001 2001 2001
---------------------- ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (1,036) (630) (234) (265)
Net realized gain
(loss)................ (11,059) (28,401) (1,529) (1,019)
Unrealized appreciation
(depreciation) on
investments........... (34,799) (65,266) (30,220) (28,275)
Capital gain
distributions......... -- 887 -- 169
-------- ------- ------- -------
Increase (decrease) in
net assets from
operations............ (46,894) (93,410) (31,983) (29,390)
-------- ------- ------- -------
From capital
transactions:
Net premiums........... 92,413 73,503 98,817 63,283
Loan interest.......... (12) (2) -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- --
Surrenders............. (78,530) (2,544) (52) --
Loans.................. (7,487) 6,381 -- --
Cost of insurance and
administrative expense
(note 3).............. (11,917) (10,104) (10,414) (8,600)
Transfer gain (loss)
and transfer fees..... 692 (79) (174) (235)
Interfund transfers.... 29,754 (8,426) 28,754 64,082
-------- ------- ------- -------
Increase (decrease) in
net assets from capital
transactions........... 24,913 58,729 116,931 118,530
-------- ------- ------- -------
Increase (decrease) in
net assets............. (21,981) (34,681) 84,948 89,140
Net assets at beginning
of year................ 197,488 136,082 -- --
-------- ------- ------- -------
Net assets at end of
period................. $175,507 101,401 84,948 89,140
======== ======= ======= =======
Janus Aspen Series-Service Shares (continued)
-------------------------------------------------------------------
Capital
Appreciation Worldwide Growth International Balanced
Portfolio Portfolio Growth Portfolio Portfolio
---------------- ---------------- ---------------- ----------------
Period from Period from Period from Period from
January 24, 2001 January 24, 2001 February 8, 2001 January 8, 2001
to September 30, to September 30, to September 30, to September 30,
2001 2001 2001 2001
---------------- ---------------- ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (147) (331) (295) (914)
Net realized gain
(loss)................ (740) (1,045) (505) (877)
Unrealized appreciation
(depreciation) on
investments........... (15,054) (26,531) (21,683) (25,206)
Capital gain
distributions......... 268 202 464 2,481
-------- ------- ------- -------
Increase (decrease) in
net assets from
operations............ (15,673) (27,705) (22,019) (24,516)
-------- ------- ------- -------
From capital
transactions:
Net premiums........... 70,074 89,934 34,691 331,835
Loan interest.......... -- -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- --
Surrenders............. -- (45) -- --
Loans.................. -- -- -- --
Cost of insurance and
administrative expense
(note 3).............. (5,958) (10,555) (4,875) (21,539)
Transfer gain (loss)
and transfer fees..... (804) (963) 558 (1,606)
Interfund transfers.... 22,977 63,967 80,455 123,146
-------- ------- ------- -------
Increase (decrease) in
net assets from capital
transactions........... 86,289 142,338 110,829 431,836
-------- ------- ------- -------
Increase (decrease) in
net assets............. 70,616 114,633 88,810 407,320
Net assets at beginning
of year................ -- -- -- --
-------- ------- ------- -------
Net assets at end of
period................. $ 70,616 114,633 88,810 407,320
======== ======= ======= =======
F-32
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
-------------------- ---------------------------
Growth and Mid Cap Total
Income Value Strategic Investors Return
Fund Fund Bond Fund Fund Fund
---------- --------- --------- --------- ------
Nine months ended Nine months ended
September 30, 2001 September 30, 2001
-------------------- ---------------------------
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................... $ (611) (4,282) (898) (3,468) (164)
Net realized gain (loss).... (2,656) 32,513 880 (5,284) (76)
Unrealized appreciation
(depreciation) on
investments................ (17,243) (69,405) 6,477 (117,541) (1,557)
Capital gain distributions.. -- -- -- 7,551 --
-------- --------- ------- -------- ------
Increase (decrease) in net
assets from operations..... (20,510) (41,174) 6,459 (118,742) (1,797)
-------- --------- ------- -------- ------
From capital transactions:
Net premiums................ 20,497 160,798 97,106 75,373 38,364
Loan interest............... 33 (81) (67) (83) --
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits.............. -- -- -- -- --
Surrenders.................. (752) (453) -- (523) --
Loans....................... -- (10,028) -- (394) --
Cost of insurance and
administrative expense
(note 3)................... (11,131) (47,387) (14,023) (29,121) (3,548)
Transfer gain (loss) and
transfer fees.............. 156 103 331 (740) 135
Interfund transfers......... (842) 506,410 73,621 416,217 3,910
-------- --------- ------- -------- ------
Increase (decrease) in net
assets from capital
transactions................ 7,961 609,362 156,968 460,729 38,861
-------- --------- ------- -------- ------
Increase (decrease) in net
assets...................... (12,549) 568,188 163,427 341,987 37,064
Net assets at beginning of
year........................ 115,835 514,962 98,938 374,409 7,183
-------- --------- ------- -------- ------
Net assets at end of period.. $103,286 1,083,150 262,365 716,396 44,247
======== ========= ======= ======== ======
F-33
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Dreyfus
----------------------------------------
The Dreyfus Dreyfus Investment
Socially Responsible Portfolios-Emerging
Growth Fund, Inc. Markets Portfolio
-------------------- -------------------
Period from
Nine months ended April 6, 2001 to
September 30, 2001 September 30, 2001
-------------------- -------------------
Increase (decrease) in net assets
From operations:
Net investment income (expense)...... $ (56) (9)
Net realized gain (loss)............. (190) (10)
Unrealized appreciation
(depreciation) on investments....... (3,745) (433)
Capital gain distributions........... -- --
------- -----
Increase (decrease) in net assets
from operations..................... (3,991) (452)
------- -----
From capital transactions:
Net premiums......................... 23,871 3,320
Loan interest........................ -- --
Transfers (to) from the general
account of GE Life and Annuity:
Death benefits....................... -- --
Surrenders........................... -- --
Loans................................ -- --
Cost of insurance and administrative
expense (note 3).................... (2,554) (358)
Transfer gain (loss) and transfer
fees................................ 147 6
Interfund transfers.................. 1,711 350
------- -----
Increase (decrease) in net assets from
capital transactions................. 23,175 3,318
------- -----
Increase (decrease) in net assets..... 19,184 2,866
Net assets at beginning of year....... 34 --
------- -----
Net assets at end of period........... $19,218 2,866
======= =====
Rydex Variable
MFS Variable Insurance Trust Trust
----------------------------------------------------------------- --------------
MFS MFS Investors MFS
New Discovery Growth Stock Investors Trust MFS Utility
Series Series Series Series OTC Fund
------------- ---------------- ----------------- ---------------- --------------
Nine months Period from Period from Period from Nine months
ended January 23, 2001 February 14, 2001 March 14, 2001 ended
September 30, to September 30, to September 30, to September 30, September 30,
2001 2001 2001 2001 2001
------------- ---------------- ----------------- ---------------- --------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (54) (33) (69) 1,770 (45)
Net realized gain
(loss)................ (201) (316) (217) (2,168) (392)
Unrealized appreciation
(depreciation) on
investments........... (5,555) (3,043) (6,425) (33,198) (5,499)
Capital gain
distributions......... 23 34 190 5,580 --
------- ------ ------ ------- ------
Increase (decrease) in
net assets from
operations............ (5,787) (3,359) (6,521) (28,016) (5,936)
------- ------ ------ ------- ------
From capital
transactions:
Net premiums........... 20,371 22,990 42,944 107,336 14,019
Loan interest.......... -- -- -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- -- --
Surrenders............. -- -- -- -- --
Loans.................. -- -- -- 150 --
Cost of insurance and
administrative expense
(note 3).............. (2,365) (2,292) (2,551) (12,947) (2,032)
Transfer gain (loss)
and transfer fees..... (31) (123) 540 (190) 257
Interfund transfers.... 21,239 9,023 20,703 71,408 6,928
------- ------ ------ ------- ------
Increase (decrease) in
net assets from capital
transactions........... 39,214 29,598 61,636 165,757 19,172
------- ------ ------ ------- ------
Increase (decrease) in
net assets............. 33,427 26,239 55,115 137,741 13,236
Net assets at beginning
of year................ 36 -- -- -- 23
------- ------ ------ ------- ------
Net assets at end of
period................. $33,463 26,239 55,115 137,741 13,259
======= ====== ====== ======= ======
F-34
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
Alliance Variable Products Series Fund, Inc.
-----------------------------------------------------
Growth and Premier Growth Quasar
Income Portfolio Portfolio Portfolio
---------------- ------------------- ----------------
Period from Period from
February 6, 2001 Nine months February 8, 2001
to September 30, ended September 30, to September 30,
2001 2001 2001
---------------- ------------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense).............. $ 220 (285) (53)
Net realized gain
(loss)................. (549) (509) (405)
Unrealized appreciation
(depreciation) on
investments............ (38,628) (23,547) (4,856)
Capital gain
distributions.......... 6,702 4,460 391
-------- ------- ------
Increase (decrease) in
net assets from
operations............. (32,255) (19,881) (4,923)
-------- ------- ------
From capital
transactions:
Net premiums............ 172,115 54,653 12,337
Loan interest........... -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits.......... -- -- --
Surrenders.............. -- -- --
Loans................... -- (2,184) --
Cost of insurance and
administrative expense
(note 3)............... (13,680) (5,170) (2,265)
Transfer gain (loss) and
transfer fees.......... 684 233 7
Interfund transfers..... 129,388 58,217 9,674
-------- ------- ------
Increase (decrease) in
net assets from capital
transaction............ 288,507 105,749 19,753
-------- ------- ------
Increase (decrease) in
net assets.............. 256,252 85,868 14,830
Net assets at beginning
of year................. -- 33 --
-------- ------- ------
Net assets at end of
period.................. $256,252 85,901 14,830
======== ======= ======
AIM Variable Insurance Funds
------------------------------------------------------
AIM V.I. Capital AIM V.I. Growth AIM V.I. Value
Appreciation Fund Fund Fund
------------------- ---------------- -----------------
Period from Period from
Nine months February 9, 2001 February 19, 2001
ended September 30, to September 30, to September 30,
2001 2001 2001
------------------- ---------------- -----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (161) (186) (254)
Net realized gain
(loss)................ (819) (606) (448)
Unrealized appreciation
(depreciation) on
investments........... (14,346) (12,795) (15,433)
Capital gain
distributions......... -- -- --
-------- ------- -------
Increase (decrease) in
net assets from
operations............ (15,326) (13,587) (16,135)
-------- ------- -------
From capital
transactions:
Net premiums........... 49,631 50,243 100,129
Loan interest.......... -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- --
Surrenders............. -- -- --
Loans.................. -- 150 --
Cost of insurance and
administrative expense
(note 3).............. (7,769) (9,291) (10,652)
Transfer gain (loss)
and transfer fees..... 157 (117) (500)
Interfund transfers.... 24,691 39,234 38,754
-------- ------- -------
Increase (decrease) in
net assets from
capital transactions.. 66,710 80,219 127,731
-------- ------- -------
Increase (decrease) in
net assets............. 51,384 66,632 111,596
Net assets at beginning
of year................ 34 -- --
-------- ------- -------
Net assets at end of
period................. $ 51,418 66,632 111,596
======== ======= =======
F-35
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
(Unaudited)
PIMCO Variable Insurance Trust
----------------------------------------------------------------------
Foreign Long-Term U.S. Total
Bond Government High Yield Bond Return Bond
Portfolio Portfolio Portfolio Portfolio
------------------- ---------------- ---------------- ----------------
Period from Period from Period from
Nine months February 9, 2001 February 8, 2001 February 6, 2001
ended September 30, to September 30, to September 30, to September 30,
2001 2001 2001 2001
------------------- ---------------- ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 39 640 800 642
Net realized gain
(loss)................ 5 (10) (114) 38
Unrealized appreciation
(depreciation) on
investments........... 54 2,125 (1,780) 1,522
Capital gain
distributions......... -- -- -- --
------ ------ ------ ------
Increase (decrease) in
net assets from
operations............. 98 2,755 (1,094) 2,202
------ ------ ------ ------
From capital
transactions:
Net premiums........... 6,093 27,073 27,248 41,681
Loan interest.......... -- -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- --
Surrenders............. -- -- -- --
Loans.................. -- -- -- --
Cost of insurance and
administrative expense
(note 3).............. (777) (4,369) (3,370) (2,688)
Transfer gain (loss)
and transfer fees..... (7) (39) (194) (117)
Interfund transfers.... 1,112 30,370 10,424 29,748
------ ------ ------ ------
Increase (decrease) in
net assets from capital
transactions........... 6,421 53,035 34,108 68,624
------ ------ ------ ------
Increase (decrease) in
net assets............. 6,519 55,790 33,014 70,826
Net assets at beginning
of year................ -- -- -- --
------ ------ ------ ------
Net assets at end of
period................. $6,519 55,790 33,014 70,826
====== ====== ====== ======
F-36
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements
September 30, 2001
(Unaudited)
(1) Description of Entity
GE Life & Annuity Separate Account II (the Account) is a separate investment
account established in 1986 by GE Life and Annuity Assurance Company (GE Life
& Annuity) under the laws of the Commonwealth of Virginia. The Account
operates as a unit investment trust under the Investment Company Act of 1940.
The Account is used to fund certain benefits for flexible premium variable
life insurance policies issued by GE Life & Annuity. GE Life and Annuity
Assurance Company is a stock life insurance company operating under a charter
granted by the Commonwealth of Virginia on March 21, 1871. A majority of the
capital stock of GE Life & Annuity is owned by General Electric Capital
Assurance Company. General Electric Capital Assurance Company and its parent,
GE Financial Assurance Holdings, Inc., are indirect, wholly-owned subsidiaries
of General Electric Capital Company (GE Capital). GE Capital, a diversified
financial services company, is a wholly-owned subsidiary of General Electric
Company (GE), a New York corporation.
(2) Summary of Significant Accounting Policies
(a) Unit Class
There are two unit classes included in the Account. Type I units are sold
under policy forms P1096 and P1251. Type II units are sold under policy forms
P1250 and P1250CR. Type II unit sales began in the first half of 1998. Type
III units are expected to be sold in the 1st half of 2002 under policy form
P1258 and P1259.
During 2001, MFS(R) Variable Insurance Trust changed the name of the MFS(R)
Growth Series to MFS(R) Growth Stock Series and MFS(R) Growth with Income
Series to MFS(R) Investment Trust Series.
(b) Investments
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income distributions
are recorded on the ex-dividend date. Realized gains and losses on investments
are determined on the average cost basis. The units and unit values are
disclosed as of the last business day in the applicable year or period.
The aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the nine months or lesser period ended September 30,
2001 were:
Cost of
Shares Proceeds from
Fund/Portfolio Acquired Shares Sold
- -------------- ----------- -------------
GE Investments Funds, Inc. Fund
S&P 500 Index Fund................................ $ 4,167,674 $ 1,897,132
Money Market Fund................................. 14,489,193 13,070,698
Total Return Fund................................. 478,845 562,276
International Equity Fund......................... 167,321 42,573
Real Estate Securities Fund....................... 321,849 187,370
Global Income Fund................................ 47,738 13,076
Mid Cap Value Equity Fund......................... 847,319 351,198
Income Fund....................................... 515,167 375,138
U.S. Equity Fund.................................. 487,460 215,369
Premier Growth Equity Fund........................ 520,522 206,187
Value Equity Fund................................. 35,662 3,084
Small Cap Value Equity Fund....................... 78,660 6,068
Oppenheimer Variable Account Funds:
Bond Fund/VA...................................... 569,050 206,423
Capital Appreciation Fund/VA...................... 1,904,859 772,583
Aggressive Growth Fund/VA......................... 3,613,572 3,056,528
High Income Fund/VA............................... 762,701 304,935
Multiple Strategies Fund/VA....................... 505,463 360,580
F-37
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Cost of
Shares Proceeds from
Fund/Portfolio Acquired Shares Sold
- -------------- --------- -------------
Oppenheimer Variable Account Funds -- Class 2
Shares:
Global Securities Fund/VA......................... $ 154,270 $ 12,791
Main Street Growth & Income Fund/VA............... 148,284 13,880
Variable Insurance Products Fund:
Equity-Income Portfolio........................... 2,200,418 1,740,360
Growth Portfolio.................................. 4,640,572 4,413,777
Overseas Portfolio................................ 645,977 593,792
Variable Insurance Products Fund -- Service Class
2:
Equity-Income Portfolio........................... 183,332 14,374
Growth Portfolio.................................. 390,220 24,306
Variable Insurance Products Fund II:
Asset Manager Portfolio........................... 691,578 797,999
Contrafund Portfolio.............................. 2,014,416 1,522,288
Variable Insurance Products Fund II -- Service
Class 2:
Contrafund Portfolio.............................. 128,774 11,708
Variable Insurance Products Fund III:
Growth & Income Portfolio......................... 504,255 334,883
Growth Opportunities Portfolio.................... 205,021 134,286
Variable Insurance Products Fund III -- Service
Class 2:
Mid Cap Portfolio................................. 64,278 6,993
Growth & Income Portfolio......................... 102,798 7,901
Federated Insurance Series:
American Leaders Fund II.......................... 327,754 180,476
High Income Bond Fund II.......................... 251,634 88,046
Utility Fund II................................... 174,063 57,556
International Small Company Fund II............... 452 150
Federated Insurance Series -- Service Shares:
High Income Bond Fund II.......................... 30,498 1,739
Alger American Fund:
Small Capitalization Portfolio.................... 960,371 647,414
LargeCap Growth Portfolio......................... 3,278,279 1,963,123
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio................... 830,097 513,531
PBHG Growth II Portfolio.......................... 705,647 434,362
Janus Aspen:
Aggressive Growth Portfolio....................... 3,728,355 3,536,069
Growth Portfolio.................................. 1,983,756 1,635,408
Worldwide Growth Portfolio........................ 1,939,187 1,590,426
Balanced Portfolio................................ 1,855,742 593,723
Flexible Income Portfolio......................... 339,879 181,333
International Growth Portfolio.................... 2,261,448 1,708,647
Capital Appreciation Portfolio.................... 1,457,866 1,239,382
Janus Aspen Series -- Service Shares:
Global Life Sciences Portfolio.................... 142,114 123,859
Global Technology Portfolio....................... 132,756 73,766
F-38
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Cost of
Shares Proceeds from
Fund/Portfolio Acquired Shares Sold
- -------------- -------- -------------
Aggressive Growth Portfolio......................... $129,152 $11,602
Growth Portfolio.................................... 129,061 10,657
Capital Appreciation Portfolio...................... 95,379 8,949
Worldwide Growth Portfolio.......................... 151,595 12,242
International Growth Portfolio...................... 116,417 5,402
Balanced Portfolio.................................. 473,964 38,240
Goldman Sachs Variable Insurance Trust:
Growth & Income Fund................................ 29,595 22,301
Mid Cap Value Fund.................................. 937,441 343,441
Salomon Brothers Variable Series Fund Inc.:
Strategic Bond Fund................................. 221,410 66,134
Investors Fund...................................... 612,798 148,618
Total Return Fund................................... 42,078 3,729
Dreyfus:
The Dreyfus Socially Responsible Growth Fund, Inc... 26,868 3,739
Dreyfus Investment Portfolios -- Emerging Markets
Portfolio.......................................... 3,673 363
MFS Variable Insurance Trust:
MFS New Discovery Series............................ 39,991 2,435
MFS Investors Growth Stock Series................... 32,213 2,623
MFS Investors Trust Series.......................... 64,430 2,667
MFS Utility Series.................................. 189,004 16,563
Rydex Variable Trust:
OTC Fund............................................ 22,150 3,054
Alliance Variable Products Series Fund, Inc.:
Premier Growth Portfolio............................ 307,628 16,858
Growth & Income Portfolio........................... 116,484 7,703
Quasar Portfolio.................................... 22,992 2,944
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund.................. 74,821 8,335
AIM V.I. Growth Fund................................ 89,878 9,802
AIM V.I. Value Fund................................. 138,839 11,493
PIMCO Variable Insurance Trust:
Foreign Bond Portfolio.............................. 7,526 1,122
Long-Term U.S. Government Bond Portfolio............ 57,884 5,888
High Yield Bond Portfolio........................... 39,237 4,370
Total Return Bond Portfolio......................... 69,318 3,711
(c) Capital Transactions
The increase (decrease) in outstanding units from capital transactions for
the nine months or lesser period ended September 30, 2001 is as follows:
F-39
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
GE Investments Funds, Inc.
---------------------------------------------------------
S&P 500 Total International Real Estate
Index Money Market Return Equity Securities
Fund Fund Fund Fund Fund
------- ------------ ------ ------------- -------------
Type I Units:
Units outstanding at
December 31, 2000...... 82,706 153,318 94,648 7,317 18,782
------ ------- ------ ----- ------
From capital
transactions:
Net premiums.......... 11,504 71,052 2,682 1,417 2,218
Loan Interest......... 17 (73) (31) 6 (1)
Tranfers (to) from the
general account of GE
Life & Annuity:
Death benefits.... -- -- (348) -- --
Surrenders........ (2,784) (1,004) (1,543) 127 (1,074)
Loans............. (907) 117 (861) (162) (48)
Cost of insurance
and
administrative
expenses......... (5,473) (7,486) (6,737) (361) (1,448)
Interfund transfers... 1,955 (68,064) 583 (146) 1,036
------ ------- ------ ----- ------
Net increase (decrease)
in units from capital
transactions........... 4,312 (5,458) (6,255) 881 683
------ ------- ------ ----- ------
Units outstanding at
September 30, 2001..... 87,018 147,860 88,393 8,198 19,465
====== ======= ====== ===== ======
GE Investments Funds, Inc. (continued)
---------------------------------------------------------
Global Mid-Cap U.S. Premier
Income Value Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
------- ------------ ------ ------------- -------------
Type I Units:
Units outstanding at
December 31, 2000...... 4,744 9,256 35,829 2,844 13,608
------ ------- ------ ----- ------
From capital
transactions:
Net premiums.......... 149 3,431 1,899 2,390 2,980
Loan Interest......... -- (3) (21) -- 5
Tranfers (to) from the
general account of GE
Life & Annuity:
Death benefits.... -- -- -- -- --
Surrenders........ -- (72) (1,273) -- (77)
Loans............. -- (67) (3,066) -- (436)
Cost of insurance
and
administrative
expenses......... (193) (620) (2,262) (279) (1,407)
Interfund transfers... -- 2,926 2,357 834 936
------ ------- ------ ----- ------
Net increase (decrease)
in units from capital
transactions........... (44) 5,595 (2,366) 2,945 2,001
------ ------- ------ ----- ------
Units outstanding at
September 30, 2001..... 4,700 14,851 33,463 5,789 15,609
====== ======= ====== ===== ======
F-40
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Oppenheimer Variable Account Funds
----------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
------- ------------ ---------- ------- ----------
Type I Units:
Units outstanding at
December 31, 2000....... 18,720 57,754 76,644 50,481 23,162
------ ------ ------ ------ ------
From capital
transactions:
Net premiums........... 2,478 4,004 5,844 4,362 1,889
Loan Interest.......... -- (30) 28 (11) (1)
Tranfers (to) from the
general account of GE
Life &
Annuity:
Death benefits..... -- -- (8) -- --
Surrenders......... (695) (705) (2,652) (1,116) (805)
Loans.............. (47) (397) (1,063) (518) (169)
Cost of insurance
and administrative
expenses.......... (1,214) (2,335) (3,660) (2,968) (1,194)
Interfund transfers.... 1,427 76 (6,394) 1,726 1,690
------ ------ ------ ------ ------
Net increase (decrease)
in units from capital
transactions............ 1,949 613 (7,905) 1,475 1,410
------ ------ ------ ------ ------
Units outstanding at
September 30, 2001...... 20,669 58,367 68,739 51,956 24,572
====== ====== ====== ====== ======
Variable Insurance Products Variable Insurance
Fund Products Fund II
----------------------------- --------------------
Equity- Asset
Income Growth Overseas Manager Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ----------
Type I Units:
Units outstanding at
December 31, 2000......... 131,225 111,512 66,332 140,135 107,300
------- ------- ------ ------- -------
From capital transactions:
Net premiums............. 12,068 9,244 488 9,014 12,721
Loan Interest............ (49) (79) (2) (59) (95)
Tranfers (to) from the
general account of GE
Life &
Annuity:
Death benefits....... (32) (8) -- (16) --
Surrenders........... (3,523) (4,815) (103) (5,993) (3,991)
Loans................ (611) (766) (24) (102) (702)
Cost of insurance and
administrative
expenses............ (6,934) (5,498) (235) (6,111) (6,344)
Interfund transfers...... 3,496 (577) (99) (1,085) 3,075
------- ------- ------ ------- -------
Net increase (decrease) in
units from capital
transactions.............. 4,415 (2,499) 25 (4,352) 4,664
------- ------- ------ ------- -------
Units outstanding at
September 30, 2001........ 135,640 109,013 66,357 135,783 111,964
======= ======= ====== ======= =======
F-41
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Variable Insurance
Products Fund III Federated Insurance Series
----------------------- ----------------------------
Growth & Growth American High
Income Opportunities Leaders Income Bond Utility
Portfolio Portfolio Fund II Fund II Fund II
--------- ------------- -------- ----------- -------
Type I Units:
Units outstanding at
December 31, 2000........ 18,023 9,366 17,219 12,794 11,890
------ ------ ------ ------ ------
From capital transactions:
Net premiums............ 5,736 3,793 2,100 1,602 2,355
Loan Interest........... (2) (8) 3 (8) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... -- -- -- -- --
Surrenders.......... (10) (1,244) (235) (356) 71
Loans............... 30 (8) (184) (552) (129)
Cost of insurance
and administrative
expenses........... (2,233) (684) (1,043) (961) (725)
Interfund transfers..... 1,696 (146) 1,567 3,127 (130)
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............. 5,217 1,703 2,208 2,852 1,442
------ ------ ------ ------ ------
Units outstanding at
September 30, 2001....... 23,240 11,069 19,427 15,646 13,332
====== ====== ====== ====== ======
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------ --------------------
Small PBHG Large PBHG
Capitalization Growth Cap Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- --------- ---------- ---------
Type I Units:
Units outstanding at December
31, 2000....................... 88,077 81,378 16,655 15,864
------ ------ ------ ------
From capital transactions:
Net premiums.................. 9,779 6,661 679 1,068
Loan Interest................. (48) (18) (12) 8
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits............ -- -- -- --
Surrenders................ (1,563) (1,130) -- (122)
Loans..................... (712) (68) (22) (85)
Cost of insurance and
administrative expenses.. (4,046) (3,745) (498) (564)
Interfund transfers........... 4,948 12,807 2,566 6,312
------ ------ ------ ------
Net increase (decrease) in units
from capital transactions...... 8,358 14,507 2,713 6,617
------ ------ ------ ------
Units outstanding at September
30, 2001....................... 96,435 95,885 19,368 22,481
====== ====== ====== ======
F-42
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series
--------------------------------------------------
Aggressive Worldwide Flexible
Growth Growth Growth Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- ---------
Type I Units:
Units outstanding at
December 31, 2000.......... 124,550 130,947 188,993 70,273 6,189
------- ------- ------- ------ -----
From capital transactions:
Net premiums.............. 13,362 15,029 30,802 10,634 1,637
Loan Interest............. 64 (82) (72) (10) 9
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (24) (51) (83) -- --
Surrenders............ (6,336) (5,256) (8,959) (1,285) (4)
Loans................. (421) (826) (2,657) (437) 2
Cost of insurance and
administrative
expenses............. (7,268) (6,116) (16,291) (3,649) (538)
Interfund transfers....... (8,362) 1,491 (3,075) 10,030 315
------- ------- ------- ------ -----
Net increase (decrease) in
units from capital
transactions............... (8,985) 4,189 (335) 15,283 1,421
------- ------- ------- ------ -----
Units outstanding at
September 30, 2001......... 115,565 135,136 188,658 85,556 7,610
======= ======= ======= ====== =====
Janus Aspen Series --
Janus Aspen Series Service Shares
-------------------------- ----------------------
International Capital Global Life Global
Growth Appreciation Sciences Technology
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ----------- ----------
Type I Units:
Units outstanding at December
31, 2000.................... 42,207 24,520 4,262 7,801
------ ------ ----- -----
From capital transactions:
Net premiums............... 6,477 3,044 938 90
Loan Interest.............. (38) (8) -- --
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits......... -- -- -- --
Surrenders............. (1,062) (63) -- --
Loans.................. (774) -- -- --
Cost of insurance and
administrative
expenses.............. (2,834) (2,200) (94) (206)
Interfund transfers........ 2,252 (1,575) 962 1,391
------ ------ ----- -----
Net increase (decrease) in
units from capital
transactions................ 4,021 (802) 1,806 1,275
------ ------ ----- -----
Units outstanding at
September 30, 2001.......... 46,228 23,718 6,068 9,076
====== ====== ===== =====
F-43
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------ --------------------------
Growth and Mid Cap Total
Income Value Strategic Investors Return
Fund Fund Bond Fund Fund Fund
---------- ------- --------- --------- ------
Type I Units:
Units outstanding at December 31,
2000............................ 36 13,153 100 10,216 399
--- ------ ----- ------ ---
From capital transactions:
Net premiums................... 824 4,328 765 258 384
Loan Interest.................. 4 (1) -- (4) --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- -- --
Surrenders................. -- -- -- -- --
Loans...................... -- (21) -- (25) --
Cost of insurance and
administrative expenses... (17) (491) (79) (340) (89)
Interfund transfers............ (6) 7,780 2,340 11,400 164
--- ------ ----- ------ ---
Net increase (decrease) in units
from capital transactions....... 805 11,595 3,026 11,289 459
--- ------ ----- ------ ---
Units outstanding at September
30, 2001........................ 841 24,748 3,126 21,505 858
=== ====== ===== ====== ===
GE Investments Funds, Inc.
----------------------------------------
S&P 500 Money Total International
Index Market Return Equity
Fund Fund Fund Fund
------- -------- ------ -------------
Type II Units
Units outstanding at December 31,
2000................................. 98,018 244,069 11,404 14,664
------- -------- ------ ------
From capital transactions:
Net premiums........................ 42,889 343,796 6,511 6,926
Loan Interest....................... (36) 93 (5) (2)
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits.................. (61) -- -- --
Surrenders...................... (3,154) (8,307) (60) (29)
Loans........................... (1,071) (9,043) (569) --
Cost of insurance and
administrative expenses........ (12,487) (29,164) (1,287) (1,352)
Interfund transfers................. 13,846 (237,489) (38) 1,867
------- -------- ------ ------
Net increase (decrease) in units from
capital transactions................. 39,926 59,886 4,552 7,410
------- -------- ------ ------
Units outstanding at September 30,
2001................................. 137,944 303,955 15,956 22,074
======= ======== ====== ======
F-44
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
GE Investments Funds, Inc. (continued)
---------------------------------------------------
Real Estate Mid-Cap
Securities Global Income Value Equity
Fund Fund Fund Income Fund
----------- ------------- ------------ ------------
Type II Units
Units outstanding at
December 31, 2000......... 16,662 5,120 35,633 11,345
------- ------ ------ ------
From capital transactions:
Net premiums............. 4,201 3,959 15,171 14,879
Loan Interest............ (1) -- 45 --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (167) -- (575) --
Surrenders........... -- -- (130) (408)
Loans................ -- (16) (358) (2,592)
Cost of insurance and
administrative
expenses............ (1,536) (779) (4,045) (1,543)
Interfund transfers...... 3,725 218 14,137 4,709
------- ------ ------ ------
Net increase (decrease) in
units from capital trans-
actions................... 6,222 3,382 24,245 15,045
------- ------ ------ ------
Units outstanding at Sep-
tember 30, 2001........... 22,884 8,502 59,878 26,390
======= ====== ====== ======
GE Investments Funds, Inc. (continued)
---------------------------------------------------
Premier Small-Cap
U.S. Equity Growth Equity Value Equity Value Equity
Fund Fund Fund Fund
----------- ------------- ------------ ------------
Type II Units
Units outstanding at
December 31, 2000......... 79,418 42,013 -- --
------- ------ ------ ------
From capital transactions:
Net premiums............. 17,674 29,097 2,746 6,303
Loan Interest............ (277) (28) -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (35) -- -- --
Surrenders........... (466) (364) -- --
Loans................ (769) (1,745) -- 13
Cost of insurance and
administrative
expenses............ (6,183) (8,370) (309) (360)
Interfund transfers...... 10,813 9,695 1,176 873
------- ------ ------ ------
Net increase (decrease) in
units from capital
transactions.............. 20,757 28,285 3,613 6,829
------- ------ ------ ------
Units outstanding at
September 30, 2001........ 100,175 70,298 3,613 6,829
======= ====== ====== ======
F-45
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Oppenheimer Variable Account Funds
----------------------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
-------------- ---------------- ---------- --------- ----------
Type II Units
Units outstanding at
December 31, 2000...... 11,104 19,702 15,362 31,594 12,564
-------------- -------------- ------ ------ --------
From capital
transactions:
Net premiums.......... 3,369 7,199 7,609 4,621 2,897
Loan Interest......... (14) (7) (15) (5) --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- (163) -- -- --
Surrenders........ (89) (265) (234) (23) (4,039)
Loans............. -- (486) (682) (176) --
Cost of insurance
and
administrative
expenses......... (1,566) (2,289) (1,738) (1,365) (1,328)
Interfund transfers... 7,896 3,676 (1,552) 350 1,898
-------------- -------------- ------ ------ --------
Net increase (decrease)
in units from capital
transactions........... 9,596 7,665 3,388 3,402 (572)
-------------- -------------- ------ ------ --------
Units outstanding at
September 30, 2001..... 20,700 27,367 18,750 34,996 11,992
============== ============== ====== ====== ========
Oppenheimer Variable Account Variable Insurance
Funds -- Class 2 Shares Products Fund
---------------------------------- -------------------------------
Global Main Street Equity-
Securities Growth & Income Income Growth Overseas
Fund/VA Fund/VA Portfolio Portfolio Portfolio
-------------- ---------------- ---------- --------- ----------
Type II Units
Units outstanding at
December 31, 2000...... -- -- 21,575 27,295 5,931
-------------- -------------- ------ ------ --------
From capital
transactions:
Net premiums.......... 11,072 11,983 5,448 9,798 3,019
Loan Interest......... -- -- (58) (16) (15)
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- -- --
Surrenders........ (9) -- -- (199) (22)
Loans............. -- -- (1,226) (467) (566)
Cost of insurance
and
administrative
expenses......... (916) (1,239) (1,999) (3,471) (632)
Interfund transfers... 5,974 5,388 3,749 622 265
-------------- -------------- ------ ------ --------
Net increase (decrease)
in units from capital
transactions........... 16,121 16,132 5,914 6,267 2,049
-------------- -------------- ------ ------ --------
Units outstanding at
September 30, 2001..... 16,121 16,132 27,489 33,562 7,980
============== ============== ====== ====== ========
F-46
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Variable Insurance Variable Insurance
Product Fund -- Variable Insurance Product Fund II --
Service Class 2 Products Fund II Service Class 2
------------------- -------------------- ------------------
Equity- Asset
Income Growth Manager Contrafund Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------- ------------------
Type II Units
Units outstanding at
December 31, 2000...... 7,001 95,544 7,001 95,544 4
------ ------- ----- ------- --------
From capital
transactions:
Net premiums.......... 3,758 (68,971) 2,532 19,292 12,116
Loan Interest......... -- -- -- (8) --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- (458) --
Surrenders........ -- -- (130) (1,020) --
Loans............. -- (290) -- (840) --
Cost of insurance
and
administrative
expenses......... (840) (2,439) (867) (7,507) (1,369)
------ ------- ----- ------- --------
Interfund
transfers........ 7,093 24,170 (185) 3,604 3,591
------ ------- ----- ------- --------
Net increase (decrease)
in units from capital
transactions........... 10,011 (47,530) 1,350 13,063 14,338
------ ------- ----- ------- --------
Units outstanding at
September 30, 2001..... 17,012 48,014 8,351 108,607 14,342
====== ======= ===== ======= ========
Variable Insurance
Variable Insurance Product Fund III --
Products Fund III Service Class 2
----------------------- -------------------
Growth & Growth Growth &
Income Opportunities Mid Cap Income
Portfolio Portfolio Portfolio Portfolio
--------- ------------- --------- ---------
Type II Units
Units outstanding at December 31,
2000.............................. 59,196 20,715 3 --
------ ------ ----- ------
From capital transactions:
Net premiums..................... 18,582 8,335 4,218 8,524
Loan Interest.................... (4) (8) -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............... (948) (268) -- --
Surrenders................... (2,788) -- -- --
Loans........................ (1,638) (202) -- --
Cost of insurance and
administrative expenses..... (7,604) (3,023) (511) (709)
Interfund transfers.............. 580 (893) 2,432 2,982
------ ------ ----- ------
Net increase (decrease) in units
from capital transactions......... 6,180 3,941 6,139 10,797
------ ------ ----- ------
Units outstanding at September 30,
2001.............................. 65,376 24,656 6,142 10,797
====== ====== ===== ======
F-47
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Federated Insurance Series
-------------------------------------------
American High Income International
Leaders Bond Utility Small Company
Fund II Fund II Fund II Fund II
-------- ----------- ------- -------------
Type II Units
Units outstanding at December 31,
2000............................... 21,241 11,267 12,269 --
------ ------ ------ ---
From capital transactions:
Net premiums...................... 6,584 5,016 4,206 63
Loan Interest..................... (6) -- 32 --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits................ -- -- -- --
Surrenders.................... (3,213) (381) (7) --
Loans......................... (1,422) -- (1,021) --
Cost of insurance and
administrative expenses...... (2,031) (1,399) (917) (21)
Interfund transfers............... 5,199 2,002 2,380 5
------ ------ ------ ---
Net increase (decrease) in units
from capital transactions.......... 5,111 5,238 4,673 47
------ ------ ------ ---
Units outstanding at September 30,
2001............................... 26,352 16,505 16,942 47
====== ====== ====== ===
Federated
Insurance Series-- PBHG Insurance Series
Service Class Alger American Fund Fund, Inc.
------------------ ------------------------ ------------------------
High Small PBHG Large PBHG
Income Bond Capitalization Growth Cap Growth Growth II
Fund II Portfolio Portfolio Portfolio Portfolio
------------------ -------------- --------- ----------- ----------
Type II Units
Units outstanding at
December 31, 2000...... -- 47,871 111,785 15,978 35,472
----- ------ ------- ---------- ----------
From capital
transactions:
Net premiums.......... 1,292 24,720 25,273 10,335 12,127
Loan Interest......... -- (4) (15) (8) --
Tranfers (to) from the
general account of GE
Life & Annuity:
Death benefits.... -- -- -- -- (915)
Surrenders........ -- (1,705) (3,477) (253) --
Loans............. -- (478) (1,349) (596) (90)
Cost of insurance
and
administrative
expenses......... (154) (6,654) (10,692) (3,466) (3,790)
Interfund transfers... 1,905 2,829 6,554 4,248 1,411
----- ------ ------- ---------- ----------
Net increase (decrease)
in units from capital
transactions........... 3,043 18,708 16,294 10,260 8,743
----- ------ ------- ---------- ----------
Units outstanding at
September 30, 2001..... 3,043 66,579 128,079 26,238 44,215
===== ====== ======= ========== ==========
F-48
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series
----------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- ---------
Type II Units
Units outstanding at December 31,
2000................................ 92,280 128,552 132,527 111,935
------- ------- ------- -------
From capital transactions:
Net premiums....................... 30,321 27,623 31,026 40,222
Loan Interest...................... (16) (22) (14) (79)
Transfers (to) from the general
account of GE Life &
Annuity:
Death benefits................. -- (445) (72) (31)
Surrenders..................... (270) (289) (3,130) (448)
Loans.......................... (1,998) (1,453) (1,019) (2,840)
Cost of insurance and
administrative expenses....... (9,195) (10,688) (11,195) (10,430)
Interfund transfers................ (5,096) (6,423) (3,612) 10,146
------- ------- ------- -------
Net increase (decrease) in units from
capital transactions................ 13,746 8,303 11,984 36,540
------- ------- ------- -------
Units outstanding at September 30,
2001................................ 106,026 136,855 144,511 148,475
======= ======= ======= =======
Janus Aspen Series (continued)
------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
--------- ------------- ------------
Type II Units
Units outstanding at December 31, 2000.... 15,374 74,064 111,124
------ ------ -------
From capital transactions:
Net premiums............................ 8,828 22,013 27,029
Loan Interest........................... -- (85) (42)
Transfers (to) from the general account
of GE Life & Annuity:
Death benefits...................... -- (97) (384)
Surrenders.......................... (1,359) (40) (2,225)
Loans............................... (1,211) (2,263) (939)
Cost of insurance and administrative
expenses........................... (1,547) (7,045) (8,715)
Interfund transfers..................... 4,216 7,900 (6,632)
------ ------ -------
Net increase (decrease) in units from
capital transactions..................... 8,927 20,383 8,092
------ ------ -------
Units outstanding at September 30, 2001... 24,301 94,447 119,216
====== ====== =======
F-49
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series -- Service Shares
-------------------------------------------
Global Life Global Aggressive
Sciences Technology Growth Growth
Portfolio Portfolio Portfolio Portfolio
----------- ---------- ---------- ---------
Type II Units
Units outstanding at December 31,
2000.............................. 12,941 12,094 -- --
------ ------ ------ ------
From capital transactions:
Net premiums..................... 7,340 14,392 19,801 8,683
Loan Interest.................... (1) -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............... -- -- -- --
Surrenders................... (6,867) (502) (10) --
Loans........................ (655) 1,259 -- --
Cost of insurance and
administrative expenses..... (968) (1,739) (2,087) (1,180)
Interfund transfers.............. 1,840 (3,380) 5,762 8,793
------ ------ ------ ------
Net increase (decrease) in units
from capital transactions......... 689 10,030 23,466 16,296
------ ------ ------ ------
Units outstanding at September 30,
2001.............................. 13,630 22,124 23,466 16,296
====== ====== ====== ======
Janus Aspen Series -- Service Shares
(continued)
----------------------------------------------
Capital Worldwide International
Appreciation Growth Growth Balanced
Portfolio Portfolio Portfolio Portfolio
------------ --------- ------------- ---------
Type II Units
Units outstanding at December
31, 2000...................... -- -- -- --
------ ------ ------ ------
From capital transactions:
Net premiums................. 9,881 12,111 4,809 35,477
Loan Interest................ -- -- -- --
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits........... -- -- -- --
Surrenders............... -- (6) -- --
Loans.................... -- -- -- --
Cost of insurance and
administrative
expenses................ (840) (1,421) (676) (2,303)
Interfund transfers.......... 3,240 8,614 11,153 13,165
------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions.................. 12,281 19,298 15,286 46,339
------ ------ ------ ------
Units outstanding at September
30, 2001...................... 12,281 19,298 15,286 46,339
====== ====== ====== ======
F-50
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
Goldman Sachs Variable Salomon Brothers Variable
Insurance Trust Series Fund, Inc.
-------------------------- --------------------------
Mid Cap Total
Growth and Value Strategic Investors Return
Income Fund Fund Bond Fund Fund Fund
------------ ----------- --------- --------- ------
Type II Units
Units outstanding at
December 31, 2000...... 13,112 33,662 8,986 14,064 228
----------- ----------- ------ ------ -----
From capital
transactions:
Net premiums.......... 2,570 9,701 7,899 4,597 3,054
Loan Interest......... -- (6) (6) (2) --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- -- --
Surrenders........ (140) (39) -- (34) --
Loans............. -- (851) -- -- --
Cost of insurance
and
administrative
expenses......... (2,048) (3,636) (1,173) (1,531) (228)
Interfund transfers... (147) 36,343 4,203 15,225 185
----------- ----------- ------ ------ -----
Net increase (decrease)
in units from capital
transactions........... 235 41,512 10,923 18,255 3,011
----------- ----------- ------ ------ -----
Units outstanding at
September 30, 2001..... 13,347 75,174 19,909 32,319 3,239
=========== =========== ====== ====== =====
Dreyfus
----------------------------------------
The Dreyfus Socially Dreyfus Investment
Responsible Portfolios-Emerging
Growth Fund, Inc. Markets Portfolio
-------------------- -------------------
Type II Units
Units outstanding at December 31,
2000................................. 4 --
----- ---
From capital transactions:
Net premiums........................ 3,251 392
Loan Interest....................... -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits.................. -- --
Surrenders...................... -- --
Loans........................... -- --
Cost of insurance and
administrative expenses........ (348) (42)
Interfund transfers................. 233 41
----- ---
Net increase (decrease) in units from
capital transactions................. 3,136 391
----- ---
Units outstanding at September 30,
2001................................. 3,140 391
===== ===
F-51
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
MFS Variable Insurance Trust
-------------------------------------------------
MFS New MFS Investors
Discovery Growth Stock MFS Investors MFS Utility
Series Series Trust Series Series
--------- ------------- ------------- -----------
Type II Units
Units outstanding at December
31, 2000.................... 4 -- -- --
----- ------ ------ ------
From capital transactions:
Net premiums............... 2,575 3,580 5,166 12,272
Loan Interest.............. -- -- -- --
Tranfers (to) from the
general account of GE Life
& Annuity:
Death benefits......... -- -- -- --
Surrenders............. -- -- -- --
Loans.................. -- -- -- 17
Cost of insurance and
administrative
expenses.............. (299) (357) (307) (1,480)
Interfund transfers........ 2,685 1,405 2,490 8,164
----- ------ ------ ------
Net increase (decrease) in
units from capital
transactions................ 4,961 4,628 7,349 18,973
----- ------ ------ ------
Units outstanding at
September 30, 2001.......... 4,965 4,628 7,349 18,973
===== ====== ====== ======
Rydex
Variable Alliance Variable Products Series Fund,
Trust Inc.
--------- ---------------------------------------
Growth and Premier
Income Growth Quasar
OTC Fund Portfolio Portfolio Portfolio
--------- ------------- ------------- -----------
Type II Units
Units outstanding at December
31, 2000.................... 3 4 -- --
----- ------ ------ ------
From capital transactions:
Net premiums............... 3,158 16,652 7,237 1,600
Loan Interest.............. -- -- -- --
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits......... -- -- -- --
Surrenders............. -- -- -- --
Loans.................. -- -- (289) --
Cost of insurance and
administrative
expenses.............. (458) (1,324) (684) (294)
Interfund transfers........ 1,560 12,521 7,704 1,255
----- ------ ------ ------
Net increase (decrease) in
units from capital
transactions................ 4,260 27,849 13,968 2,561
----- ------ ------ ------
Units outstanding at
September 30, 2001.......... 4,263 27,853 13,968 2,561
===== ====== ====== ======
F-52
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
AIM Variable Insurance Funds
-------------------------------------
AIM V. I. AIM V. I.
AIM V. I. Capital Growth Value
Appreciation Fund Fund Fund
----------------- --------- ---------
Type II Units
Units outstanding at December 31, 2000... 4 -- --
------ ------ ------
From capital transactions:
Net premiums........................... 7,651 8,867 12,102
Loan Interest.......................... -- -- --
Transfers (to) from the general account
of GE Life & Annuity:
Death benefits..................... -- -- --
Surrenders......................... -- -- --
Loans.............................. -- 26 --
Cost of insurance and
administrative expenses........... (1,198) (1,640) (1,287)
Interfund transfers.................... 3,806 6,924 4,684
------ ------ ------
Net increase (decrease) in units from
capital transactions.................... 10,259 14,177 15,499
------ ------ ------
Units outstanding at September 30, 2001.. 10,263 14,177 15,499
====== ====== ======
PIMCO Variable Insurance Trust
--------------------------------------------------
Long-Term U.S. High Total
Foreign Bond Government Yield Bond Return Bond
Portfolio Portfolio Fund Fund
------------ -------------- ---------- -----------
Type II Units
Units outstanding at
December 31, 2000.......... 4 -- -- --
--- ----- ----- -----
From capital transactions:
Net premiums.............. 561 2,455 2,755 3,851
Loan Interest............. -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- --
Surrenders............ -- -- -- --
Loans................. -- -- -- --
Cost of insurance and
administrative
expenses............. (72) (396) (341) (248)
Interfund transfers....... 103 2,755 1,054 2,749
--- ----- ----- -----
Net increase (decrease) in
units from capital
transactions............... 592 4,814 3,468 6,352
--- ----- ----- -----
Units outstanding at
September 30, 2001......... 596 4,814 3,468 6,352
=== ===== ===== =====
F-53
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
September 30, 2001
(Unaudited)
(2) Summary of Significant Accounting Policies -- continued
(d) Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of GE Life & Annuity. GE Life & Annuity is
taxed as a life insurance company under the Internal Revenue Code (the Code).
GE Life & Annuity is included in the General Electric Capital Assurance
Company consolidated federal income tax return. Under existing federal income
tax law, no taxes are payable on the investment income or on the capital gains
of the Account.
(e) Use of Estimates
Financial statements prepared in conformity with accounting principles
generally accepted in the United States Of America require management to make
estimates and assumptions that affect amounts and disclosures reported
therein. Actual results could differ from those estimates.
(3) Related Party Transactions
Net premiums transferred from GE Life & Annuity to the Account represent
gross premiums recorded by GE Life & Annuity on its flexible premium variable
life insurance policies, less deductions of 7.5% retained as compensation for
certain distribution expenses and premium taxes. In addition, there is a
deferred sales charge of up to 45% of the first year's premiums. This charge
will be deducted from the policy's cash value in equal installments at the
beginning of each of the policy years two through ten with any remaining
installments deducted at policy lapse or surrender.
If a policy is surrendered or lapses during the first nine years for Type I
policies or fifteen years for Type II policies, a charge is made by GE Life &
Annuity to cover the expenses of issuing the policy. The charge is a stated
percentage of the insurance amount and varies by the age of the policyholder
when issued and period of time that the policy has been in force. A charge
equal to the lesser of $25 or 2% of the amount paid on a partial surrender
will be made to compensate GE Life & Annuity for the costs incurred in
connection with the partial surrender.
A charge based on the policy specified amount of insurance, death benefit
option, cash values, duration, the insured's sex, issue age and risk class is
deducted from the policy cash values each month to compensate GE Life &
Annuity for the cost of insurance and any benefits added by rider. In
addition, GE Life & Annuity charges the Account for the mortality and expense
risk that GE Life & Annuity assumes. This charge is assessed through the daily
unit calculation equal to an effective annual rate of 0.70% of the net assets
of the account. For certain policies issued on or after May 1, 1993, GE Life &
Annuity will deduct a monthly administrative charge of $6 from the policy cash
value and for policies issued prior to May 1, 1993, GE Life & Annuity will
deduct a monthly administrative charge of $5 from the policy cash value.
Capital Brokerage Corporation, an affiliate of GE Life & Annuity, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation serves
as principal underwriter for variable life insurance policies and variable
annuities issued by GE Life and Annuity.
GE Investments Funds, Inc. (the Fund) is an openend diversified management
investment company. GE Investment Management Incorporated (Investment
Advisor), a wholly-owned subsidiary of GE, currently serves as investment
advisor to GE Investments Funds, Inc. As compensation for its services, the
Investment Advisor is paid an investment advisory fee by the Fund based on the
average daily net assets at an effective annual rate of .35% for the S&P 500
Index Fund, .50% for the Money Market, Income, and Total Return Funds, 1.00%
for the International Equity Fund, .85% for the Real Estate Securities Fund,
.60% for the Global Income Fund, .55% for the U.S. Equity Fund, and .65% for
the Mid-Cap Value Equity, Premier Growth Equity Funds, and Value Equity Funds
and 0.80% for the Small-Cap Value Equity Fund.
Certain officers and directors of GE Life & Annuity are also officers and
directors of Capital Brokerage Corporation.
F-54
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Financial Statements
Year ended December 31, 2000
(With Independent Auditors' Report Thereon)
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Table of Contents
December 31, 2000
Page
----
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities..................................... F-2
Statements of Operations................................................. F-13
Statements of Changes in Net Assets...................................... F-26
Notes to Financial Statements.............................................. F-37
Independent Auditors' Report
Policyholders
GE Life & Annuity Separate Account II
and
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying statements of assets and liabilities of GE
Life & Annuity Separate Account II (the Account) (comprising the GE
Investments Funds, Inc.--S&P 500 Index, Money Market, Total Return,
International Equity, Real Estate Securities, Global Income, Mid-Cap Value
Equity, Income, U.S. Equity, and Premier Growth Equity Funds; the Oppenheimer
Variable Account Funds--Bond, Capital Appreciation, Aggressive Growth, High
Income, and Multiple Strategies Funds/VA; the Variable Insurance Products
Fund--Equity-Income, Growth, and Overseas Portfolios; the Variable Insurance
Products Fund II--Asset Manager and Contrafund Portfolios; the Variable
Insurance Products Fund II--Service Class 2--Contrafund Portfolio; the
Variable Insurance Products Fund III--Growth & Income and Growth Opportunities
Portfolios; the Variable Insurance Products Fund III--Service Class 2--Mid Cap
Portfolio; the Federated Insurance Series--American Leaders, High Income Bond
and Utility Funds II; the Alger American Fund--Small Capitalization and
LargeCap Growth Portfolios; the PBHG Insurance Series Fund, Inc.--PBHG Large
Cap Growth and PBHG Growth II Portfolios; the Janus Aspen Series--Aggressive
Growth, Growth, Worldwide Growth, Balanced, Flexible Income, International
Growth and Capital Appreciation Portfolios; the Janus Aspen Series--Service
Shares--Global Life Sciences and Global Technology Portfolios; the Goldman
Sachs Variable Insurance Trust--Growth and Income, and Mid Cap Value Funds;
the Salomon Brothers Variable Series Fund Inc.--Strategic Bond, Investors, and
Total Return Funds; the Dreyfus--The Dreyfus Socially Responsible Growth Fund,
Inc.; the MFS Variable Insurance Trust--MFS New Discovery Series; the Rydex
Variable Trust--OTC Fund; the Alliance Variable Products Series Fund, Inc.--
Premier Growth Portfolio; and the AIM Variable Insurance Funds, Inc.--AIM V.I.
Capital Appreciation Fund) as of December 31, 2000 and the related statements
of operations and changes in net assets for the aforementioned funds of GE
Life & Annuity Separate Account II for each of the years or lesser periods in
the three-year period ended December 31, 2000. These financial statements are
the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 2000, by correspondence with the underlying mutual
funds or their transfer agent. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
portfolios constituting GE Life & Annuity Separate Account II as of December
31, 2000 and the results of their operations and changes in their net assets
for each of the years or lesser periods in the three-year period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.
/s/ KPMG LLP
Richmond, Virginia
February 16, 2001
F-1
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities
December 31, 2000
GE Investments Funds, Inc.
---------------------------------------------------------
Money Total International Real Estate
S&P 500 Market Return Equity Securities
Index Fund Fund Fund Fund Fund
Assets ----------- --------- --------- ------------- -----------
Investments in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(415,040 shares;
cost -- $10,267,653).. $10,255,648 -- -- -- --
Money Market Fund
(7,279,725 shares;
cost -- $7,279,725)... -- 7,279,725 -- -- --
Total Return Fund
(285,949 shares;
cost -- $4,363,921)... -- -- 4,435,064 -- --
International Equity
Fund (34,378 shares;
cost -- $431,424)..... -- -- -- 364,747 --
Real Estate Securities
Fund (51,134 shares;
cost -- $651,999)..... -- -- -- -- 706,677
Receivable from
affiliate.............. 235 5,534 -- 4 --
Receivable for units
sold................... -- 174,275 1,422 1,444 939
----------- --------- --------- ------- -------
Total assets........... 10,255,883 7,459,534 4,436,486 366,195 707,616
----------- --------- --------- ------- -------
Liabilities
Accrued expenses payable
to affiliate (note 3).. 3,830 20,437 19,228 1,287 1,418
Payable for units
withdrawn.............. 6,806 -- 224 21 167
----------- --------- --------- ------- -------
Total liabilities...... 10,636 20,437 19,452 1,308 1,585
----------- --------- --------- ------- -------
Net assets attributable
to variable life
policyholders.......... $10,245,247 7,439,097 4,417,034 364,887 706,031
=========== ========= ========= ======= =======
Outstanding units: Type
I (note 2)............. 82,706 153,318 94,648 7,317 18,782
=========== ========= ========= ======= =======
Net asset value per
unit: Type I........... $ 56.69 18.72 41.65 16.60 19.92
=========== ========= ========= ======= =======
Outstanding units: Type
II (note 2)............ 98,018 244,069 11,404 14,664 16,662
=========== ========= ========= ======= =======
Net asset value per
unit: Type II.......... $ 56.69 18.72 41.65 16.60 19.92
=========== ========= ========= ======= =======
F-2
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
GE Investments Funds, Inc. (continued)
------------------------------------------
Mid-Cap Premier
Global Value U.S. Growth
Income Equity Income Equity Equity
Fund Fund Fund Fund Fund
Assets -------- ------- ------- --------- -------
Investments in GE Investments
Funds, Inc., at fair value (note
2):
Global Income Fund (10,956 shares;
cost -- $107,377)................ $104,195 -- -- -- --
Mid-Cap Value Equity Fund (48,241
shares;
cost -- $726,876)................ -- 786,817 -- -- --
Income Fund (45,789 shares;
cost -- $553,566)................ -- -- 549,010 -- --
U.S. Equity Fund (29,029 shares;
cost -- $1,096,284).............. -- -- -- 1,032,257 --
Premier Growth Equity Fund (7,839
shares; cost -- $668,220)........ -- -- -- -- 616,810
Receivable from affiliate.......... 3 -- -- 11 3
Receivable for units sold.......... 228 349 122 1,122 1,273
-------- ------- ------- --------- -------
Total assets...................... 104,426 787,166 549,132 1,033,390 618,086
-------- ------- ------- --------- -------
Liabilities
Accrued expenses payable to
affiliate (note 3)................ 950 1,501 4,263 178 109
Payable for units withdrawn........ -- 108 -- -- 27
-------- ------- ------- --------- -------
Total liabilities................. 950 1,609 4,263 178 136
-------- ------- ------- --------- -------
Net assets attributable to variable
life policyholders................ $103,476 785,557 544,869 1,033,212 617,950
======== ======= ======= ========= =======
Outstanding units: Type I (note
2)................................ 4,744 9,256 35,829 2,844 13,608
======== ======= ======= ========= =======
Net asset value per unit: Type I... $ 10.49 17.50 11.55 12.56 11.11
======== ======= ======= ========= =======
Outstanding units: Type II (note
2)................................ 5,120 35,633 11,345 79,418 42,013
======== ======= ======= ========= =======
Net asset value per unit: Type II.. $ 10.49 17.50 11.55 12.56 11.11
======== ======= ======= ========= =======
F-3
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Oppenheimer Variable Account Funds
-----------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
-------- ------------ ---------- --------- ----------
Assets
Investments in Oppenheimer
Variable Account Funds,
at fair value (note 2):
Bond Fund/VA (63,932
shares; cost --
$723,203).............. $719,232 -- -- -- --
Capital Appreciation
Fund/VA (120,171 shares;
cost -- $4,509,883)........ -- 5,603,553 -- -- --
Aggressive Growth Fund/VA
(94,962 shares;
cost -- $6,143,109)..... -- -- 6,720,443 -- --
High Income Fund/VA
(300,023 shares;
cost -- $3,080,841)..... -- -- -- 2,781,214 --
Multiple Strategies
Fund/VA (79,318 shares;
cost -- $1,274,760)..... -- -- -- -- 1,312,718
Receivable for units
sold..................... 13,208 2,053 -- 1,084 --
-------- --------- --------- --------- ---------
Total assets............. 732,440 5,605,606 6,720,443 2,782,298 1,312,718
-------- --------- --------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 3).... 1,418 1,855 3,050 1,269 1,360
Payable for units
withdrawn................ 41 572 1,852 354 203
-------- --------- --------- --------- ---------
Total liabilities........ 1,459 2,427 4,902 1,623 1,563
-------- --------- --------- --------- ---------
Net assets attributable to
variable life
policyholders............ $730,981 5,603,179 6,715,541 2,780,675 1,311,155
======== ========= ========= ========= =========
Outstanding units: Type I
(note 2)................. 18,720 57,754 76,644 50,481 23,162
======== ========= ========= ========= =========
Net asset value per unit:
Type I................... $ 24.51 72.34 72.99 33.88 36.70
======== ========= ========= ========= =========
Outstanding units: Type II
(note 2)................. 11,104 19,702 15,362 31,594 12,564
======== ========= ========= ========= =========
Net asset value per unit:
Type II.................. $ 24.51 72.34 72.99 33.88 36.70
======== ========= ========= ========= =========
F-4
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Variable Insurance Products Variable Insurance
Fund Products Fund II
------------------------------ --------------------
Equity- Asset
Income Growth Overseas Manager Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- ----------
Assets
Investments in Variable
Insurance Products Fund,
at fair value (note 2):
Equity-Income Portfolio
(303,815 shares;
cost -- $6,920,748).... $7,753,348 -- -- -- --
Growth Portfolio (228,583
shares;
cost -- $9,700,849)..... -- 9,977,646 -- -- --
Overseas Portfolio
(110,796 shares;
cost -- $2,266,010)..... -- -- 2,214,815 -- --
Investments in Variable
Insurance Products Fund
II, at fair value (note
2):
Asset Manager Portfolio
(281,714 shares;
cost -- $4,534,235)..... -- -- -- 4,507,420 --
Contrafund Portfolio
(261,720 shares;
cost -- $6,337,595)..... -- -- -- -- 6,213,221
Receivable from
affiliate................ -- -- -- -- 68
Receivable for units
sold..................... 191 -- -- 52 7,161
---------- --------- --------- --------- ---------
Total assets............. 7,753,539 9,977,646 2,214,815 4,507,472 6,220,450
---------- --------- --------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 3).... 4,135 2,840 1,266 1,600 3,295
Payable for units
withdrawn................ 2,439 14,028 126 569 --
---------- --------- --------- --------- ---------
Total liabilities........ 6,574 16,868 1,392 2,169 3,295
---------- --------- --------- --------- ---------
Net assets attributable to
variable life
policyholders............ $7,746,965 9,960,778 2,213,423 4,505,303 6,217,155
========== ========= ========= ========= =========
Outstanding units: Type I
(note 2)................. 131,225 111,512 66,332 140,135 107,300
========== ========= ========= ========= =========
Net asset value per unit:
Type I................... $ 50.70 71.76 30.63 30.62 30.65
========== ========= ========= ========= =========
Outstanding units: Type II
(note 2)................. 21,575 27,295 5,931 7,001 95,544
========== ========= ========= ========= =========
Net asset value per unit:
Type II.................. $ 50.70 71.76 30.63 30.62 30.65
========== ========= ========= ========= =========
F-5
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Variable Insurance Variable Insurance
Products Fund II Variable Insurance Products Fund III
-- Service Class 2 Products Fund III -- Service Class 2
------------------ ----------------------- ------------------
Growth & Growth
Contrafund Income Opportunities Mid Cap
Portfolio Portfolio Portfolio Portfolio
------------------ --------- ------------- ------------------
Assets
Investments in Variable
Insurance Products Fund
II -- Service Class 2,
at fair value (note 2):
Contrafund Portfolio (1
share; cost -- $47)... $ 33 -- -- --
Investments in Variable
Insurance Products Fund
III, at fair value
(note 2):
Growth & Income
Portfolio (83,983
shares;
cost -- $1,305,355)... -- 1,281,573 -- --
Growth Opportunities
Portfolio (22,124
shares;
cost -- $456,430)..... -- -- 392,476 --
Investments in Variable
Insurance Products Fund
III -- Service Class 2,
at fair value (note 2):
Mid Cap Portfolio (2
shares; cost -- $47).. -- -- -- 34
Receivable from
affiliate.............. 1 -- -- --
Receivable for units
sold................... -- 125 -- --
----- --------- ------- ----
Total assets........... 34 1,281,698 392,476 34
----- --------- ------- ----
Liabilities
Accrued expenses payable
to affiliate (note 3).. -- 1,410 1,012 --
Payable for units
withdrawn.............. -- 8 110 --
----- --------- ------- ----
Total liabilities...... -- 1,418 1,122 --
----- --------- ------- ----
Net assets attributable
to variable life
policyholders.......... $ 34 1,280,280 391,354 34
===== ========= ======= ====
Outstanding units: Type
I (note 2)............. -- 18,023 9,366 --
===== ========= ======= ====
Net asset value per
unit: Type I........... $ -- 16.58 13.01 --
===== ========= ======= ====
Outstanding units: Type
II (note 2)............ 4 59,196 20,715 3
===== ========= ======= ====
Net asset value per
unit: Type II.......... $9.32 16.58 13.01 9.99
===== ========= ======= ====
F-6
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Federated Insurance Series
----------------------------
American High
Leaders Income Bond Utility
Fund II Fund II Fund II
-------- ----------- -------
Assets
Investments in Federated Insurance Series, at
fair value (note 2):
American Leaders Fund II (34,419 shares; cost --
$696,416)..................................... $706,269 -- --
High Income Bond Fund II (40,910 shares; cost --
$404,317)..................................... -- 346,095 --
Utility Fund II (34,372 shares; cost --
$459,954)..................................... -- -- 427,588
Receivable from affiliate........................ -- -- 12
Receivable for units sold........................ 867 14 --
-------- ------- -------
Total assets.................................... 707,136 346,109 427,600
-------- ------- -------
Liabilities
Accrued expenses payable to affiliate (note 3)... 1,273 1,037 549
Payable for units withdrawn...................... 114 49 145
-------- ------- -------
Total liabilities............................... 1,387 1,086 694
-------- ------- -------
Net assets attributable to variable life
policyholders................................... $705,749 345,023 426,906
======== ======= =======
Outstanding units: Type I (note 2)............... 17,219 12,794 11,890
======== ======= =======
Net asset value per unit: Type I................. $ 18.35 14.34 17.67
======== ======= =======
Outstanding units: Type II (note 2).............. 21,241 11,267 12,269
======== ======= =======
Net asset value per unit: Type II................ $ 18.35 14.34 17.67
======== ======= =======
F-7
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------ -------------------
PBHG
Small LargeCap LargeCap PBHG
Capitalization Growth Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- --------- --------- ---------
Assets
Investments in Alger American
Fund, at fair value (note 2):
Small Capitalization Portfolio
(73,378 shares; cost --
$2,614,236)................... $1,723,654 -- -- --
LargeCap Growth Portfolio
(91,438 shares; cost --
$5,133,720)................... -- 4,322,286 -- --
Investments in PBHG Insurance
Series Fund, Inc., at fair value
(note 2):
PBHG Large Cap Growth Portfolio
(32,646 shares; cost --
$856,318)..................... -- -- 801,132 --
PBHG Growth II Portfolio (50,986
shares; cost -- $1,252,581).... -- -- -- 962,614
Receivable from affiliate........ -- -- -- 12
Receivable for units sold........ 3,527 6,383 601 468
---------- --------- ------- -------
Total assets.................... 1,727,181 4,328,669 801,733 963,094
---------- --------- ------- -------
Liabilities
Accrued expenses payable to
affiliate (note 3).............. 2,004 1,830 2,206 2,052
Payable for units withdrawn...... -- -- 17 27
---------- --------- ------- -------
Total liabilities............... 2,004 1,830 2,223 2,079
---------- --------- ------- -------
Net assets attributable to
variable life policyholders..... $1,725,177 4,326,839 799,510 961,015
========== ========= ======= =======
Outstanding units: Type I (note
2).............................. 88,077 81,378 16,655 15,864
========== ========= ======= =======
Net asset value per unit: Type
I............................... $ 12.69 22.40 24.50 18.72
========== ========= ======= =======
Outstanding units: Type II (note
2).............................. 47,871 111,785 15,978 35,472
========== ========= ======= =======
Net asset value per unit: Type
II.............................. $ 12.69 22.40 24.50 18.72
========== ========= ======= =======
F-8
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Janus Aspen Series
---------------------------------------------------
Aggressive Worldwide Flexible
Growth Growth Growth Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- ---------- --------- ---------
Assets
Investments in Janus Aspen
Series, at fair value
(note 2):
Aggressive Growth
Portfolio (209,186
shares;
cost -- $10,062,802).... $7,593,460 -- -- -- --
Growth Portfolio (290,129
shares;
cost -- $8,373,739)..... -- 7,682,626 -- -- --
Worldwide Growth
Portfolio (290,712
shares;
cost -- $10,253,175).... -- -- 10,750,544 -- --
Balanced Portfolio
(181,772 shares;
cost -- $4,349,088)..... -- -- -- 4,418,875 --
Flexible Income Portfolio
(27,109 shares;
cost -- $312,450)....... -- -- -- -- 310,672
Receivable from
affiliate................ 17 44 101 9 --
Receivable for units
sold..................... 9,181 8,326 7,151 1,478 4,966
---------- --------- ---------- --------- -------
Total assets............. 7,602,658 7,690,996 10,757,796 4,420,362 315,638
---------- --------- ---------- --------- -------
Liabilities
Accrued expenses payable
to affiliate (note 3).... 7,132 2,042 2,954 1,923 1,252
Payable for units
withdrawn................ -- -- -- 1,711 --
---------- --------- ---------- --------- -------
Total liabilities........ 7,132 2,042 2,954 3,634 1,252
---------- --------- ---------- --------- -------
Net assets attributable to
variable life
policyholders............ $7,595,526 7,688,954 10,754,842 4,416,728 314,386
========== ========= ========== ========= =======
Outstanding units: Type I
(note 2)................. 124,550 130,947 188,993 70,273 6,189
========== ========= ========== ========= =======
Net asset value per unit:
Type I................... $ 35.03 29.63 33.45 24.24 14.58
========== ========= ========== ========= =======
Outstanding units: Type II
(note 2)................. 92,280 128,552 132,527 111,935 15,374
========== ========= ========== ========= =======
Net asset value per unit:
Type II.................. $ 35.03 29.63 33.45 24.24 14.58
========== ========= ========== ========= =======
F-9
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Janus Aspen Series Janus Aspen Series--
(continued) Service Shares
-------------------------- --------------------
Global
International Capital Life Global
Growth Appreciation Sciences Technology
Portfolio Portfolio Portfolio Portfolio
------------- ------------ --------- ----------
Assets
Investments in Janus Aspen
Series, at fair value (note
2):
International Growth
Portfolio (91,223 shares;
cost -- $2,852,355)......... $2,818,804 -- -- --
Capital Appreciation
Portfolio (134,767 shares;
cost -- $4,073,359)......... -- 3,610,417 -- --
Investments in Janus Aspen
Series -- Service Shares,
at fair value (note 2):
Global Life Sciences
Portfolio (21,216 shares;
cost -- $183,798)........... -- -- 197,521 --
Global Technology Portfolio
(20,780 shares;
cost -- $195,003)........... -- -- -- 136,107
Receivable from affiliate..... 73 30 1 --
Receivable for units sold..... 4,017 5,427 -- --
---------- --------- ------- -------
Total assets................. 2,822,894 3,615,874 197,522 136,107
---------- --------- ------- -------
Liabilities
Accrued expenses payable to
affiliate (note 3)........... 1,999 7,726 34 25
Payable for units withdrawn... 160 -- -- --
---------- --------- ------- -------
Total liabilities............ 2,159 7,726 34 25
---------- --------- ------- -------
Net assets attributable to
variable life policyholders.. $2,820,735 3,608,148 197,488 136,082
========== ========= ======= =======
Outstanding units: Type I
(note 2)..................... 42,207 24,520 4,262 7,801
========== ========= ======= =======
Net asset value per unit: Type
I............................ $ 24.26 26.60 11.48 6.84
========== ========= ======= =======
Outstanding units: Type II
(note 2)..................... 74,064 111,124 12,941 12,094
========== ========= ======= =======
Net asset value per unit: Type
II........................... $ 24.26 26.60 11.48 6.84
========== ========= ======= =======
F-10
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Goldman Sachs
Variable Salomon Brothers
Insurance Trust Variable Series Fund Inc.
---------------- --------------------------
Growth
and Mid Cap Total
Income Value Strategic Investors Return
Fund Fund Bond Fund Fund Fund
-------- ------- --------- --------- ------
Assets
Investments in Goldman Sachs
Variable Insurance Trust, at fair
value (note 2):
Growth and Income Fund (11,207
shares; cost -- $121,441)....... $115,879 -- -- -- --
Mid Cap Value Fund (48,128
shares; cost -- $440,185)....... -- 513,527 -- -- --
Investments in Salomon Brothers
Variable Series Fund Inc., at
fair value (note 2):
Strategic Bond Fund (10,220
shares; cost -- $102,222)....... -- -- 99,643 -- --
Investors Fund (27,556 shares;
cost -- $378,024)............... -- -- -- 374,491 --
Total Return Fund (675 shares;
cost -- $7,612)................. -- -- -- -- 7,226
Receivable from affiliate......... 3 43 2 1 --
Receivable for units sold......... -- 1,479 19 -- --
-------- ------- ------ ------- -----
Total assets..................... 115,882 515,049 99,664 374,492 7,226
-------- ------- ------ ------- -----
Liabilities
Accrued expenses payable to
affiliate (note 3)............... 21 87 16 62 1
Payable for units withdrawn....... 26 -- 710 21 42
-------- ------- ------ ------- -----
Total liabilities................ 47 87 726 83 43
-------- ------- ------ ------- -----
Net assets attributable to
variable life policyholders...... $115,835 514,962 98,938 374,409 7,183
======== ======= ====== ======= =====
Outstanding units: Type I (note
2)............................... 36 13,153 100 10,216 399
======== ======= ====== ======= =====
Net asset value per unit: Type I.. $ 8.81 11.00 10.89 15.42 11.46
======== ======= ====== ======= =====
Outstanding units: Type II (note
2)............................... 13,112 33,662 8,986 14,064 228
======== ======= ====== ======= =====
Net asset value per unit: Type
II............................... $ 8.81 11.00 10.89 15.42 11.46
======== ======= ====== ======= =====
F-11
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2000
Alliance AIM
Rydex Variable Variable
MFS Variable Variable Products Series Insurance
Dreyfus Insurance Trust Trust Fund, Inc. Funds, Inc.
-------------------- --------------- -------- --------------- ------------
AIM V.I.
The Dreyfus MFS New Capital
Socially Responsible Discovery Premier Growth Appreciation
Growth Fund, Inc. Series OTC Fund Portfolio Fund
-------------------- --------------- -------- --------------- ------------
Assets
Investments in Dreyfus,
at fair value (note 2):
The Dreyfus Socially
Responsible Growth
Fund, Inc. (1 share;
cost -- $48).......... $ 34 -- -- -- --
Investments in MFS
Variable Insurance
Trust, at fair value
(note 2):
MFS New Discovery
Series (2 shares;
cost -- $49).......... -- 36 -- -- --
Investments in Rydex
Variable Trust, at fair
value (note 2):
OTC Fund (1 shares;
cost -- $33).......... -- -- 23 -- --
Investments in Alliance
Variable Products
Series Fund, Inc., at
fair value (note 2)
Premier Growth
Portfolio (1 share;
cost -- $48).......... -- -- -- 33 --
Investments in AIM
Variable Insurance
Funds, Inc., at fair
value (note 2):
AIM V.I. Capital
Appreciation Fund (1
share; cost -- $48)... -- -- -- -- 34
----- ---- ---- ---- ----
Total assets........... 34 36 23 33 34
----- ---- ---- ---- ----
Net assets attributable
to variable life
policyholders.......... $ 34 36 23 33 34
===== ==== ==== ==== ====
Outstanding units: Type
I (note 2)............. -- -- -- -- --
===== ==== ==== ==== ====
Net asset value per
unit: Type I........... $ -- -- -- -- --
===== ==== ==== ==== ====
Outstanding units: Type
II (note 2)............ 4 4 3 4 4
===== ==== ==== ==== ====
Net asset value per
unit: Type II.......... $8.72 9.01 6.49 8.59 7.77
===== ==== ==== ==== ====
See accompanying notes to financial statements.
F-12
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations
GE Investments Funds, Inc.
---------------------------------------------------------
S&P 500 Index Fund Money Market Fund
-------------------------------- ------------------------
Year ended December 31, Year ended December 31,
-------------------------------- ------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- ------- ------- -------
Investment income:
Income -- Ordinary
dividends............. $ 86,280 60,042 43,701 412,757 261,216 161,959
Expenses -- Mortality
and expense risk
charges Type I (note
3).................... 35,989 35,117 26,008 20,609 20,306 18,144
Expenses -- Mortality
and expense risk
charges Type II (note
3).................... 30,208 13,313 1,383 27,583 17,608 2,862
----------- --------- --------- ------- ------- -------
Net investment income
(expense).............. 20,083 11,612 16,310 364,565 223,302 140,953
----------- --------- --------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 369,151 367,307 200,588 -- 3 517
Unrealized appreciation
(depreciation) on
investments........... (1,654,687) 797,281 637,587 -- (3) (517)
Capital gain
distributions......... 197,387 82,915 154,941 -- -- --
----------- --------- --------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (1,088,149) 1,247,503 993,116 -- -- --
----------- --------- --------- ------- ------- -------
Increase (decrease) in
net assets from
operations............. $(1,068,066) 1,259,115 1,009,426 364,565 223,302 140,953
=========== ========= ========= ======= ======= =======
GE Investments Funds, Inc. (continued)
----------------------------------------------------
International Equity
Total Return Fund Fund
-------------------------- ------------------------
Year ended December
Year ended December 31, 31,
-------------------------- ------------------------
2000 1999 1998 2000 1999 1998
--------- ------- ------- -------- ------ ------
Investment income:
Income -- Ordinary
dividends............... $ 115,971 87,229 207,758 1,828 669 5,942
Expenses -- Mortality and
expense risk charges --
Type I (note 3)........ 28,179 28,286 26,094 799 792 638
Expenses -- Mortality and
expense risk charges --
Type II (note 3)....... 2,179 1,377 212 1,361 531 10
--------- ------- ------- -------- ------ ------
Net investment income
(expense)................ 85,613 57,566 181,452 (332) (654) 5,294
--------- ------- ------- -------- ------ ------
Net realized and
unrealized gain (loss) on
investments:
Net realized gain
(loss).................. 33,478 10,066 (62,109) 6,362 5,881 93
Unrealized appreciation
(depreciation) on
investments............. (117,815) 319,427 423,954 (103,450) 34,706 8,003
Capital gain
distributions........... 175,795 102,400 -- 53,038 16,048 --
--------- ------- ------- -------- ------ ------
Net realized and
unrealized gain (loss) on
investments.............. 91,458 431,893 361,845 (44,050) 56,635 8,096
--------- ------- ------- -------- ------ ------
Increase (decrease) in net
assets from operations... $ 177,071 489,459 543,297 (44,382) 55,981 13,390
========= ======= ======= ======== ====== ======
F-13
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
GE Investments Funds, Inc. (continued)
-------------------------------------------------
Real Estate Securities
Fund Global Income Fund
-------------------------- ---------------------
Year ended December
Year ended December 31, 31,
-------------------------- ---------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------- ------ ------ -----
Investment income:
Income -- Ordinary
dividends................. $ 25,202 23,112 13,488 138 1,257 2,016
Expenses -- Mortality and
expense risk charges --
Type I (note 3)........... 2,295 2,004 1,772 276 258 352
Expenses -- Mortality and
expense risk charges --
Type II (note 3).......... 1,614 839 117 337 141 2
-------- ------- ------- ------ ------ -----
Net investment income
(expense).................. 21,293 20,269 11,599 (475) 858 1,662
-------- ------- ------- ------ ------ -----
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)... (2,380) (14,908) (13,410) (1,161) (128) 3,656
Unrealized appreciation
(depreciation) on
investments............... 129,283 (10,218) (64,135) 548 (4,715) 1,314
Capital gain
distributions............. 2,638 1,216 12,450 -- 95 84
-------- ------- ------- ------ ------ -----
Net realized and unrealized
gain (loss) on
investments................ 129,541 (23,910) (65,095) (613) (4,748) 5,054
-------- ------- ------- ------ ------ -----
Increase (decrease) in net
assets from operations..... $150,834 (3,641) (53,496) (1,088) (3,890) 6,716
======== ======= ======= ====== ====== =====
GE Investments Funds, Inc. (continued)
----------------------------------------------
Mid-Cap Value Equity
Fund Income Fund
--------------------- -----------------------
Year ended December Year ended December
31, 31,
--------------------- -----------------------
2000 1999 1998 2000 1999 1998
------- ------ ------ ------ ------- ------
Investment income:
Income -- Ordinary dividends.. $ 7,136 4,044 1,033 32,350 21,400 20,775
Expenses -- Mortality and
expense risk charges --
Type I (note 3).............. 1,004 824 270 2,789 2,983 2,899
Expenses -- Mortality and
expense risk charges --
Type II (note 3)............. 3,471 1,482 256 523 47 3
------- ------ ------ ------ ------- ------
Net investment income
(expense)..................... 2,661 1,738 507 29,038 18,370 17,873
------- ------ ------ ------ ------- ------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)...... 12,924 14,236 (305) (1,516) (78) 3,321
Unrealized appreciation
(depreciation) on
investments.................. 26,637 22,084 11,219 18,549 (28,051) 4,423
Capital gain distributions.... 26,834 -- 5,046 -- 662 3,666
------- ------ ------ ------ ------- ------
Net realized and unrealized
gain (loss) on investments.... 66,395 36,320 15,960 17,033 (27,467) 11,410
------- ------ ------ ------ ------- ------
Increase (decrease) in net
assets from operations........ $69,056 38,058 16,467 46,071 (9,097) 29,283
======= ====== ====== ====== ======= ======
F-14
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
GE Investments Funds, Inc. (continued)
---------------------------------------------------
U.S. Equity Fund Premier Growth Equity Fund
---------------------- ----------------------------
Year ended December Period from
31, Year ended June 9, 1999 to
---------------------- December 31, December 31,
2000 1999 1998 2000 1999
-------- ------ ----- ------------ ---------------
Investment income:
Income -- Ordinary
dividends............... $ 7,043 1,122 269 731 124
Expenses -- Mortality and
expense risk charges --
Type I (note 3)......... 207 74 -- 922 103
Expenses -- Mortality and
expense risk charges --
Type II (note 3)........ 3,986 825 47 1,466 116
-------- ------ ----- ------- ------
Net investment income
(expense)................ 2,850 223 222 (1,657) (95)
-------- ------ ----- ------- ------
Net realized and
unrealized gain (loss) on
investments:
Net realized gain
(loss).................. 11,564 2,835 144 4,260 344
Unrealized appreciation
(depreciation) on
investments............. (73,997) 6,670 3,300 (64,695) 13,285
Capital gain
distributions........... 47,509 10,093 600 34,574 4,011
-------- ------ ----- ------- ------
Net realized and
unrealized gain (loss) on
investments.............. (14,924) 19,598 4,044 (25,861) 17,640
-------- ------ ----- ------- ------
Increase (decrease) in net
assets from operations... $(12,074) 19,821 4,266 (27,518) 17,545
======== ====== ===== ======= ======
Oppenheimer Variable Account Funds
------------------------------------------------------
Capital Appreciation
Bond Fund/VA Fund/VA
------------------------- ----------------------------
Year ended December 31, Year ended December 31,
------------------------- ----------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------ -------- --------- -------
Investment income:
Income -- Ordinary
dividends............. $ 50,243 21,896 5,253 6,375 11,323 18,421
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)....... 3,141 3,043 2,541 31,916 24,680 18,337
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)...... 1,368 683 56 7,014 2,409 315
-------- ------- ------ -------- --------- -------
Net investment income
(expense).............. 45,734 18,170 2,656 (32,555) (15,766) (231)
-------- ------- ------ -------- --------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (17,389) (1,863) 2,899 341,073 205,534 89,327
Unrealized appreciation
(depreciation) on
investments........... 6,329 (29,542) 11,167 (741,677) 1,083,816 270,706
Capital gain
distributions......... -- 2,165 4,848 340,197 130,214 211,836
-------- ------- ------ -------- --------- -------
Net realized and
unrealized gain (loss)
on investments......... (11,060) (29,240) 18,914 (60,407) 1,419,564 571,869
-------- ------- ------ -------- --------- -------
Increase (decrease) in
net assets from
operations............. $ 34,674 (11,070) 21,570 (92,962) 1,403,798 571,638
======== ======= ====== ======== ========= =======
F-15
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Oppenheimer Variable Account
Funds (continued)
-------------------------------
Aggressive Growth Fund/VA
-------------------------------
Year ended December 31,
-------------------------------
2000 1999 1998
----------- --------- -------
Investment income:
Income -- Ordinary dividends................. $ -- -- 8,230
Expenses -- Mortality and expense risk
charges -- Type I (note 3).................. 50,940 30,929 23,326
Expenses -- Mortality and expense risk
charges -- Type II (note 3)................. 5,264 1,422 306
----------- --------- -------
Net investment income (expense)............... (56,204) (32,351) (15,402)
----------- --------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)..................... 1,589,430 393,176 93,644
Unrealized appreciation (depreciation) on
investments................................. (2,708,169) 2,690,916 277,402
Capital gain distributions................... 272,808 -- 83,215
----------- --------- -------
Net realized and unrealized gain (loss) on
investments.................................. (845,931) 3,084,092 454,261
----------- --------- -------
Increase (decrease) in net assets from
operations................................... $ (902,135) 3,051,741 438,859
=========== ========= =======
Oppenheimer Variable Account Funds (continued)
---------------------------------------------------
Multiple Strategies
High Income Fund/VA Fund/VA
--------------------------- ----------------------
Year ended December
Year ended December 31, 31,
--------------------------- ----------------------
2000 1999 1998 2000 1999 1998
--------- ------- ------- ------- ------ ------
Investment income:
Income -- Ordinary
dividends.............. $ 218,695 129,252 37,269 46,491 30,217 6,701
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)........ 12,726 13,177 12,467 6,140 5,751 5,131
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)....... 3,016 1,187 111 1,591 766 150
--------- ------- ------- ------- ------ ------
Net investment income
(expense)............... 202,953 114,888 24,691 38,760 23,700 1,420
--------- ------- ------- ------- ------ ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................. (51,805) (9,827) 3,380 8,523 12,030 10,586
Unrealized appreciation
(depreciation) on
investments............ (245,369) (37,389) (81,675) (56,039) 16,700 (5,312)
Capital gain
distributions.......... -- -- 45,551 67,524 43,483 37,972
--------- ------- ------- ------- ------ ------
Net realized and
unrealized gain (loss)
on investments.......... (297,174) (47,216) (32,744) 20,008 72,213 43,246
--------- ------- ------- ------- ------ ------
Increase (decrease) in
net assets from
operations.............. $ (94,221) 67,672 (8,053) 58,768 95,913 44,666
========= ======= ======= ======= ====== ======
F-16
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products Fund
------------------------------------------------------------
Equity-Income Portfolio Growth Portfolio
--------------------------- --------------------------------
Year ended December 31, Year ended December 31,
--------------------------- --------------------------------
2000 1999 1998 2000 1999 1998
-------- -------- ------- ---------- --------- ---------
Investment income:
Income -- Ordinary
dividends............. $114,887 100,754 77,691 11,358 17,646 28,150
Expenses -- Mortality
and expense risk
charges
-- Type I (note 3)... 44,056 46,384 41,459 65,126 56,960 42,146
Expenses -- Mortality
and expense risk
charges
-- Type II (note 3).. 5,349 2,894 544 10,565 3,167 138
-------- -------- ------- ---------- --------- ---------
Net investment income
(expense).............. 65,482 51,476 35,688 (64,333) (42,481) (14,134)
-------- -------- ------- ---------- --------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 73,790 273,786 235,107 398,024 453,879 728,950
Unrealized appreciation
(depreciation) on
investments........... (25,951) (193,819) 97,581 (2,754,089) 1,452,235 630,736
Capital gain
distributions......... 432,830 224,259 275,448 1,130,176 864,641 675,592
-------- -------- ------- ---------- --------- ---------
Net realized and
unrealized gain (loss)
on investments......... 480,669 304,226 608,136 (1,225,889) 2,770,755 2,035,278
-------- -------- ------- ---------- --------- ---------
Increase (decrease) in
net assets from
operations............. $546,151 355,702 643,824 (1,290,222) 2,728,274 2,021,144
======== ======== ======= ========== ========= =========
Variable Insurance
Products Fund (continued)
--------------------------
Overseas Portfolio
--------------------------
Year ended December 31,
--------------------------
2000 1999 1998
--------- ------- -------
Investment income:
Income -- Ordinary dividends...................... $ 39,615 32,601 34,556
Expenses -- Mortality and expense risk charges --
Type I (note 3)................................. 17,644 16,186 13,985
Expenses -- Mortality and expense risk charges --
Type II (note 3)................................ 1,235 579 19
--------- ------- -------
Net investment income (expense).................... 20,736 15,836 20,552
--------- ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... 57,421 112,501 98,578
Unrealized appreciation (depreciation) on
investments...................................... (896,242) 685,935 (8,287)
Capital gain distributions........................ 249,470 53,190 103,670
--------- ------- -------
Net realized and unrealized gain (loss) on
investments....................................... (589,351) 851,626 193,961
--------- ------- -------
Increase (decrease) in net assets from operations.. $(568,615) 867,462 214,513
========= ======= =======
F-17
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products Fund II
-------------------------------------------------------
Asset Manager Portfolio Contrafund Portfolio
-------------------------- ----------------------------
Year ended December 31, Year ended December 31,
-------------------------- ----------------------------
2000 1999 1998 2000 1999 1998
--------- ------- ------- ---------- ------- -------
Investment income:
Income -- Ordinary
dividends............. $ 157,145 153,442 131,901 17,425 18,437 14,737
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)....... 32,686 33,559 30,607 25,515 23,952 17,652
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)...... 970 439 77 15,249 6,221 668
--------- ------- ------- ---------- ------- -------
Net investment income
(expense).............. 123,489 119,444 101,217 (23,339) (11,736) (3,583)
--------- ------- ------- ---------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 23,604 64,747 58,132 120,743 354,876 228,313
Unrealized appreciation
(depreciation) on
investments........... (739,967) 89,931 32,734 (1,216,788) 425,779 398,426
Capital gain
distributions......... 370,224 195,289 395,701 632,524 135,201 108,073
--------- ------- ------- ---------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (346,139) 349,967 486,567 (463,521) 915,856 734,812
--------- ------- ------- ---------- ------- -------
Increase (decrease) in
net assets from
operations............. $(222,650) 469,411 587,784 (486,860) 904,120 731,229
========= ======= ======= ========== ======= =======
Variable Insurance Products
Fund II -- Service Class 2
---------------------------
Contrafund Portfolio
---------------------------
Period from
December 26, 2000
to
December 31, 2000
---------------------------
Investment income:
Income -- Ordinary dividends...................... $--
Expenses -- Mortality and expense risk charges --
Type I (note 3)................................. --
Expenses -- Mortality and expense risk charges --
Type II (note 3)................................ --
----
Net investment income (expense).................... --
----
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... 15
Unrealized appreciation (depreciation) on
investments...................................... (14)
Capital gain distributions........................ --
----
Net realized and unrealized gain (loss) on
investments....................................... 1
----
Increase (decrease) in net assets from operations.. $ 1
====
F-18
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products Fund III
---------------------------------------------------
Growth & Income Growth Opportunities
Portfolio Portfolio
------------------------- ------------------------
Year ended December
Year ended December 31, 31,
------------------------- ------------------------
2000 1999 1998 2000 1999 1998
--------- ------ ------ -------- ------ ------
Investment income:
Income -- Ordinary
dividends.............. $ 9,297 2,804 -- 5,618 3,049 808
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)........ 2,010 2,165 1,159 1,654 1,866 1,170
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)....... 5,584 2,516 244 1,724 866 53
--------- ------ ------ -------- ------ ------
Net investment income
(expense)............... 1,703 (1,877) (1,403) 2,240 317 (415)
--------- ------ ------ -------- ------ ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................. 5,240 28,022 2,566 (20,425) 10,345 3,612
Unrealized appreciation
(depreciation) on
investments............ (104,078) 21,930 59,468 (101,453) (1,242) 35,308
Capital gain
distributions.......... 60,673 5,692 337 28,489 5,663 2,865
--------- ------ ------ -------- ------ ------
Net realized and
unrealized gain (loss)
on investments.......... (38,165) 55,644 62,371 (93,389) 14,766 41,785
--------- ------ ------ -------- ------ ------
Increase (decrease) in
net assets from
operations.............. $ (36,462) 53,767 60,968 (91,149) 15,083 41,370
========= ====== ====== ======== ====== ======
Variable Insurance Products
Fund III -- Service Class 2
---------------------------
Mid Cap Portfolio
---------------------------
Period from
December 26, 2000
to
December 31, 2000
---------------------------
Investment income:
Income -- Ordinary dividends...................... $--
Expenses -- Mortality and expense risk charges --
Type I (note 3)................................. --
Expenses -- Mortality and expense risk charges --
Type II (note 3)................................ --
----
Net investment income (expense).................... --
----
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... 15
Unrealized appreciation (depreciation) on
investments...................................... (13)
Capital gain distributions........................ --
----
Net realized and unrealized gain (loss) on
investments....................................... 2
----
Increase (decrease) in net assets from operations.. $ 2
====
F-19
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Federated Insurance Series
--------------------------------------------------
American Leaders Fund High Income Bond Fund
II II
------------------------ ------------------------
Year ended December Year ended December
31, 31,
------------------------ ------------------------
2000 1999 1998 2000 1999 1998
------- ------- ------ ------- ------- ------
Investment income:
Income -- Ordinary
dividends............... $ 5,560 3,192 626 30,830 15,467 3,125
Expenses -- Mortality and
expense risk charges --
Type I (note 3)......... 2,080 1,774 1,082 1,346 1,149 938
Expenses -- Mortality and
expense risk charges --
Type II (note 3)........ 2,274 1,482 198 1,092 583 41
------- ------- ------ ------- ------- ------
Net investment income
(expense)................ 1,206 (64) (654) 28,392 13,735 2,146
------- ------- ------ ------- ------- ------
Net realized and
unrealized gain (loss) on
investments:
Net realized gain
(loss).................. (5,539) 8,624 (245) (12,093) (2,384) 1,890
Unrealized appreciation
(depreciation) on
investments............. 1,613 (17,252) 22,437 (51,127) (10,198) (3,246)
Capital gain
distributions........... 16,824 32,275 8,313 -- 1,345 882
------- ------- ------ ------- ------- ------
Net realized and
unrealized gain (loss) on
investments.............. 12,898 23,647 30,505 (63,220) (11,237) (474)
------- ------- ------ ------- ------- ------
Increase (decrease) in net
assets from operations... $14,104 23,583 29,851 (34,828) 2,498 1,672
======= ======= ====== ======= ======= ======
Federated Insurance
Series (continued)
-------------------------
Utility Fund II
-------------------------
Year ended December 31,
-------------------------
2000 1999 1998
-------- ------- ------
Investment income:
Income -- Ordinary dividends........................ $ 11,457 6,452 1,649
Expenses -- Mortality and expense risk charges --
Type I (note 3)................................... 1,623 1,634 1,345
Expenses -- Mortality and expense risk charges --
Type II (note 3).................................. 1,209 602 36
-------- ------- ------
Net investment income (expense)...................... 8,625 4,216 268
-------- ------- ------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)............................ 973 3,277 5,077
Unrealized appreciation (depreciation) on
investments........................................ (57,701) (16,132) 11,499
Capital gain distributions.......................... 7,615 12,525 10,132
-------- ------- ------
Net realized and unrealized gain (loss) on
investments......................................... (49,113) (330) 26,708
-------- ------- ------
Increase (decrease) in net assets from operations.... $(40,488) 3,886 26,976
======== ======= ======
F-20
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Alger American Fund
----------------------------------------------------------
Small Capitalization
Portfolio LargeCap Growth Portfolio
---------------------------- ----------------------------
Year ended December 31, Year ended December 31,
---------------------------- ----------------------------
2000 1999 1998 2000 1999 1998
---------- ------- ------- ---------- ------- -------
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- -- 2,264 3,185
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)....... 11,091 9,129 6,602 15,002 13,062 8,011
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)...... 3,875 1,012 105 13,147 4,272 105
---------- ------- ------- ---------- ------- -------
Net investment income
(expense).............. (14,966) (10,141) (6,707) (28,149) (15,070) (4,931)
---------- ------- ------- ---------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 2,186 (6,385) (65,245) 33,463 390,753 60,482
Unrealized appreciation
(depreciation) on
investments........... (1,371,045) 405,230 102,269 (1,302,238) 99,476 293,124
Capital gain
distributions......... 735,999 183,620 119,910 513,858 224,152 156,070
---------- ------- ------- ---------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (632,860) 582,465 156,934 (754,917) 714,381 509,676
---------- ------- ------- ---------- ------- -------
Increase (decrease) in
net assets from
operations............. $ (647,826) 572,324 150,227 (783,066) 699,311 504,745
========== ======= ======= ========== ======= =======
PBHG Insurance Series Fund, Inc.
------------------------------------------------------------
PBHG Growth II
PBHG Large Cap Growth Portfolio Portfolio
----------------------------------- ------------------------
Year ended December
Year ended December 31, 31,
----------------------------------- ------------------------
2000 1999 1998 2000 1999 1998
------------ ---------- ---------- -------- ------- -----
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- -- -- --
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)....... 2,179 606 310 2,932 569 177
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)...... 1,291 209 17 3,508 410 62
------------ --------- --------- -------- ------- -----
Net investment income
(expense).............. (3,470) (815) (327) (6,440) (979) (239)
------------ --------- --------- -------- ------- -----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 26,713 5,563 3,310 (39,454) 34,202 (197)
Unrealized appreciation
(depreciation) on
investments........... (140,754) 71,826 13,650 (379,884) 81,393 8,666
Capital gain
distributions......... 16,716 -- -- 24,260 -- --
------------ --------- --------- -------- ------- -----
Net realized and
unrealized gain (loss)
on investments......... (97,325) 77,389 16,960 (395,078) 115,595 8,469
------------ --------- --------- -------- ------- -----
Increase (decrease) in
net assets from
operations............. $ (100,795) 76,574 16,633 (401,518) 114,616 8,230
============ ========= ========= ======== ======= =====
F-21
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Janus Aspen Series
--------------------------------------------------------------
Aggressive Growth Portfolio Growth Portfolio
------------------------------ ------------------------------
Year ended December 31, Year ended December 31,
------------------------------ ------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- ------- ---------- --------- -------
Investment income:
Income -- Ordinary
dividends............. $ -- 65,274 -- 5,764 10,964 81,252
Expenses -- Mortality
and expense risk
charges
-- Type I (note 3)... 41,861 24,955 13,231 32,961 25,172 16,385
Expenses -- Mortality
and expense risk
charges
-- Type II (note 3).. 24,298 6,757 391 20,783 5,821 257
----------- --------- ------- ---------- --------- -------
Net investment income
(expense).............. (66,159) 33,562 (13,622) (47,980) (20,029) 64,610
----------- --------- ------- ---------- --------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 1,590,590 861,331 171,826 926,526 379,537 115,203
Unrealized appreciation
(depreciation) on
investments........... (6,150,760) 3,141,869 488,613 (2,851,716) 1,328,882 576,941
Capital gain
distributions......... 1,036,376 111,141 -- 582,454 21,779 65,314
----------- --------- ------- ---------- --------- -------
Net realized and
unrealized gain (loss)
on investments......... (3,523,794) 4,114,341 660,439 (1,342,736) 1,730,198 757,458
----------- --------- ------- ---------- --------- -------
Increase (decrease) in
net assets from
operations............. $(3,589,953) 4,147,903 646,817 (1,390,716) 1,710,169 822,068
=========== ========= ======= ========== ========= =======
Janus Aspen Series (continued)
---------------------------------------------------------
Worldwide Growth Portfolio Balanced Portfolio
------------------------------- -------------------------
Year ended December 31, Year ended December 31,
------------------------------- -------------------------
2000 1999 1998 2000 1999 1998
----------- --------- ------- -------- ------- -------
Investment income:
Income -- Ordinary
dividends............. $ 17,398 11,433 109,248 37,643 43,936 36,704
Expenses -- Mortality
and expense risk
charges
-- Type I (note 3)... 53,602 38,848 27,847 11,335 9,328 5,806
Expenses -- Mortality
and expense risk
charges
-- Type II (note 3).. 23,434 6,863 646 10,397 3,366 484
----------- --------- ------- -------- ------- -------
Net investment income
(expense).............. (59,638) (34,278) 80,755 15,911 31,242 30,414
----------- --------- ------- -------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 863,289 404,104 233,014 99,542 79,219 24,529
Unrealized appreciation
(depreciation) on
investments........... (3,765,784) 3,266,899 623,292 (526,341) 321,542 216,533
Capital gain
distributions......... 873,121 -- 43,815 288,437 -- 5,970
----------- --------- ------- -------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (2,029,374) 3,671,003 900,121 (138,362) 400,761 247,032
----------- --------- ------- -------- ------- -------
Increase (decrease) in
net assets from
operations............. $(2,089,012) 3,636,725 980,876 (122,451) 432,003 277,446
=========== ========= ======= ======== ======= =======
F-22
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Janus Aspen Series (continued)
-------------------------------------------------
Flexible Income International Growth
Portfolio Portfolio
---------------------- -------------------------
Year ended December
31, Year ended December 31,
---------------------- -------------------------
2000 1999 1998 2000 1999 1998
------- ------ ----- -------- ------- ------
Investment income:
Income -- Ordinary
dividends.................. $ 5,264 12,568 4,328 9,018 2,819 10,815
Expenses -- Mortality and
expense risk charges --
Type I (note 3)........... 522 715 449 8,171 4,231 3,098
Expenses -- Mortality and
expense risk charges --
Type II (note 3).......... 1,197 511 10 12,438 4,585 580
------- ------ ----- -------- ------- ------
Net investment income
(expense)................... 3,545 11,342 3,869 (11,591) (5,997) 7,137
------- ------ ----- -------- ------- ------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss).... (3,171) (1,786) 1,687 242,420 54,154 40,482
Unrealized appreciation
(depreciation) on
investments................ 6,251 (8,109) (74) (990,444) 923,354 16,463
Capital gain distributions.. 7,790 566 167 133,743 -- 1,528
------- ------ ----- -------- ------- ------
Net realized and unrealized
gain (loss) on investments.. 10,870 (9,329) 1,780 (614,281) 977,508 58,473
------- ------ ----- -------- ------- ------
Increase (decrease) in net
assets from operations...... $14,415 2,013 5,649 (625,872) 971,511 65,610
======= ====== ===== ======== ======= ======
Janus Aspen Series Janus Aspen Series --
(continued) Service Shares
---------------------------- -------------------------
Global Life Global
Capital Appreciation Sciences Technology
Portfolio Portfolio Portfolio
---------------------------- ------------ ------------
Period from Period from
May 29, 2000 May 4, 2000
Year ended December 31, to to
---------------------------- December 31, December 31,
2000 1999 1998 2000 2000
----------- ------- ------ ------------ ------------
Investment income:
Income -- Ordinary
dividends............. $ 18,596 509 132 -- 827
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 5,528 3,352 1,260 134 178
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 16,675 4,381 91 195 219
----------- ------- ------ ------ -------
Net investment income
(expense).............. (3,607) (7,224) (1,219) (329) 430
----------- ------- ------ ------ -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 187,808 82,791 28,363 268 (3,121)
Unrealized appreciation
(depreciation) on
investments........... (1,022,359) 513,292 45,429 13,723 (58,896)
Capital gain
distributions......... 23,952 5,853 -- -- --
----------- ------- ------ ------ -------
Net realized and
unrealized gain (loss)
on investments......... (810,599) 601,936 73,792 13,991 (62,017)
----------- ------- ------ ------ -------
Increase (decrease) in
net assets from
operations............. $ (814,206) 594,712 72,573 13,662 (61,587)
=========== ======= ====== ====== =======
F-23
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Goldman Sachs Variable Insurance Trust
---------------------------------------------------------------
Growth and Income Fund Mid Cap Value Fund
------------------------------ --------------------------------
Period from Period from
Year ended October 1, 1998 Year ended August 28, 1998
December 31, to December 31, to
------------- December 31, --------------- December 31,
2000 1999 1998 2000 1999 1998
------- ---- --------------- ------- ------ ---------------
Investment income:
Income -- Ordinary
dividends............. $ 427 242 95 3,725 3,355 408
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 11 3 2 1,012 293 --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 535 112 17 1,161 448 117
------- ---- --- ------- ------ -----
Net investment income
(expense).............. (119) 127 76 1,552 2,614 291
------- ---- --- ------- ------ -----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 480 585 120 (24,105) 87 3,047
Unrealized appreciation
(depreciation) on
investments........... (5,835) (222) 496 73,668 (2,647) 2,320
Capital gain
distributions......... -- -- -- 12,030 -- --
------- ---- --- ------- ------ -----
Net realized and
unrealized gain (loss)
on investments......... (5,355) 363 616 61,593 (2,560) 5,367
------- ---- --- ------- ------ -----
Increase (decrease) in
net assets from
operations............. $(5,474) 490 692 63,145 54 5,658
======= ==== === ======= ====== =====
Salomon Brothers Variable Series Fund Inc.
----------------------------------------------------------
Strategic Total
Bond Fund Investors Fund Return Fund
-------------- ----------------------------- ------------
Year ended Period from Year ended
Year ended December December 8, 1998 December
December 31, 31, to 31,
-------------- ------------ December 31, ------------
2000 1999 2000 1999 1998 2000 1999
------ ------ ------ ---- ---------------- ------ ----
Investment income:
Income -- Ordinary
dividends............. $5,918 2,773 2,505 44 6 210 27
Expenses -- Mortality
and expense risk
charges -- Type I
(note 3).............. 5 -- 155 14 1 23 4
Expenses -- Mortality
and expense risk
charges -- Type II
(note 3).............. 542 163 644 6 -- 4 --
------ ------ ------ --- --- ------ ---
Net investment income
(expense).............. 5,371 2,610 1,706 24 5 183 23
------ ------ ------ --- --- ------ ---
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 490 3 (538) 22 -- (785) (1)
Unrealized appreciation
(depreciation) on
investments........... (671) (1,908) (3,818) 232 53 (349) (37)
Capital gain
distributions......... -- -- 10,551 -- -- -- --
------ ------ ------ --- --- ------ ---
Net realized and
unrealized gain (loss)
on investments......... (181) (1,905) 6,195 254 53 (1,134) (38)
------ ------ ------ --- --- ------ ---
Increase (decrease) in
net assets from
operations............. $5,190 705 7,901 278 58 (951) (15)
====== ====== ====== === === ====== ===
F-24
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Alliance
Variable
MFS Variable Rydex Products AIM Variable
Insurance Variable Series Insurance
Dreyfus Trust Trust Fund, Inc. Funds, Inc.
------------ ------------- ------------ ------------ ------------
The Dreyfus
Socially AIM V.I.
Responsible MFS Premier Capital
Growth Fund, New Discovery Growth Appreciation
Inc. Series OTC Fund Portfolio Fund
------------ ------------- ------------ ------------ ------------
Period from Period from Period from Period from Period from
December 26, December 26, December 26, December 26, December 26,
2000 to 2000 to 2000 to 2000 to 2000 to
December 31, December 31, December 31, December 31, December 31,
2000 2000 2000 2000 2000
------------ ------------- ------------ ------------ ------------
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- -- --
Expenses -- Mortality
and expense risk
charges --
Type I (note 3)....... -- -- -- -- --
Expenses -- Mortality
and expense risk
charges --
Type II (note 3)...... -- -- -- -- --
----- --- --- --- ---
Net investment income
(expense).............. -- -- -- -- --
----- --- --- --- ---
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 15 15 10 15 15
Unrealized appreciation
(depreciation) on
investments........... (14) (13) (10) (15) (14)
Capital gain
distributions......... -- -- -- -- --
----- --- --- --- ---
Net realized and
unrealized gain (loss)
on investments......... 1 2 -- -- 1
----- --- --- --- ---
Increase (decrease) in
net assets from
operations............. $ 1 2 -- -- 1
===== === === === ===
See accompanying notes to financial statements.
F-25
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets
GE Investments Funds, Inc.
----------------------------------------------------------------------
S&P 500 Index Fund Money Market Fund
--------------------------------- -----------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- -----------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- ----------- ---------- ----------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 20,083 11,612 16,310 364,565 223,302 140,953
Net realized gain
(loss)................ 369,151 367,307 200,588 -- 3 517
Unrealized appreciation
(depreciation) on
investments........... (1,654,687) 797,281 637,587 -- (3) (517)
Capital gain
distributions......... 197,387 82,915 154,941 -- -- --
----------- --------- --------- ----------- ---------- ----------
Increase (decrease) in
net assets from
operations............ (1,068,066) 1,259,115 1,009,426 364,565 223,302 140,953
----------- --------- --------- ----------- ---------- ----------
From capital
transactions:
Net premiums........... 3,412,694 2,348,331 1,553,985 13,180,675 7,117,726 5,316,844
Loan interest.......... (5,227) (199) (667) (6,351) 132 2,567
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (12,065) (10,568) -- (649) -- (1,231)
Surrenders............. (367,160) (226,385) 2,166 (291,605) (143,091) (127,487)
Loans.................. (33,079) (147,819) (28,223) (441,223) (382,888) (92,788)
Cost of insurance and
administrative expense
(note 3).............. (961,590) (761,285) (453,919) (700,630) (488,436) (379,891)
Transfer gain (loss)
and transfer fees..... 1,907 (1,620) (111,502) 4,166 (7,217) (24,254)
Transfers (to) from the
Guarantee Account..... 96 -- -- -- -- --
Interfund transfers.... 808,447 702,040 (71,575) (10,036,753) (5,024,217) (3,025,038)
----------- --------- --------- ----------- ---------- ----------
Increase (decrease) in
net assets from
capital transactions.. 2,844,023 1,902,495 890,265 1,707,630 1,072,009 1,668,722
----------- --------- --------- ----------- ---------- ----------
Increase (decrease) in
net assets............. 1,775,957 3,161,610 1,899,691 2,072,195 1,295,311 1,809,675
Net assets at beginning
of year................ 8,469,290 5,307,680 3,407,989 5,366,902 4,071,591 2,261,916
----------- --------- --------- ----------- ---------- ----------
Net assets at end of
period................. $10,245,247 8,469,290 5,307,680 7,439,097 5,366,902 4,071,591
=========== ========= ========= =========== ========== ==========
GE Investments Funds, Inc. (continued)
------------------------------------------------------------
International Equity
Total Return Fund Fund
-------------------------------- --------------------------
Year ended December 31, Year ended December 31,
-------------------------------- --------------------------
2000 1999 1998 2000 1999 1998
---------- --------- --------- -------- ------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 85,613 57,566 181,452 (332) (654) 5,294
Net realized gain
(loss)................ 33,478 10,066 (62,109) 6,362 5,881 93
Unrealized appreciation
(depreciation) on
investments........... (117,815) 319,427 423,954 (103,450) 34,706 8,003
Capital gain
distributions......... 175,795 102,400 -- 53,038 16,048 --
---------- --------- --------- -------- ------- -------
Increase (decrease) in
net assets from
operations............ 177,071 489,459 543,297 (44,382) 55,981 13,390
---------- --------- --------- -------- ------- -------
From capital
transactions:
Net premiums........... 333,781 251,092 252,081 137,598 152,398 27,099
Loan interest.......... (65) (279) (327) (1) 14 1
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- (16,660) (21,333) -- (7,573) --
Surrenders............. (45,274) (23,097) (16,053) (23,625) (86) (497)
Loans.................. (29,824) (24,984) (8,458) (2,706) (24,626) (733)
Cost of insurance and
administrative expense
(note 3).............. (403,065) (406,244) (385,697) (28,911) (40) (10,088)
Transfer gain (loss)
and transfer fees..... (1,634) (706) 26,522 2,417 -- 303
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 67,090 (27,330) 84,003 60,560 (27,880) 10,770
---------- --------- --------- -------- ------- -------
Increase (decrease) in
net assets from
capital transactions.. (78,991) (248,208) (69,262) 145,332 92,207 26,855
---------- --------- --------- -------- ------- -------
Increase (decrease) in
net assets............. 98,080 241,251 474,035 100,950 148,188 40,245
Net assets at beginning
of year................ 4,318,954 4,077,703 3,603,668 263,937 115,749 75,504
---------- --------- --------- -------- ------- -------
Net assets at end of
period................. $4,417,034 4,318,954 4,077,703 364,887 263,937 115,749
========== ========= ========= ======== ======= =======
F-26
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
GE Investments Funds, Inc. (continued)
-----------------------------------------------------
Real Estate Securities
Fund Global Income Fund
-------------------------- -------------------------
Year ended December 31, Year ended December 31,
-------------------------- -------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 21,293 20,269 11,599 (475) 858 1,662
Net realized gain
(loss)................ (2,380) (14,908) (13,410) (1,161) (128) 3,656
Unrealized appreciation
(depreciation) on
investments........... 129,283 (10,218) (64,135) 548 (4,715) 1,314
Capital gain
distributions......... 2,638 1,216 12,450 -- 95 84
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
operations............ 150,834 (3,641) (53,496) (1,088) (3,890) 6,716
-------- ------- ------- ------- ------- -------
From capital
transactions:
Net premiums........... 134,428 121,762 210,779 28,092 23,325 15,696
Loan interest.......... 28 47 (6) -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- (11,787) -- -- -- --
Surrenders............. (7,402) (1,244) (3,842) -- (1,142) --
Loans.................. (6,672) (51,101) (660) -- -- --
Cost of insurance and
administrative expense
(note 3).............. (54,400) (90) (49,575) (8,183) (5,884) (4,405)
Transfer gain (loss)
and transfer fees..... 71 -- (872) (5) 66 128
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 68,374 22,778 41,309 (1,609) 37,663 8,773
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
capital transactions.. 134,427 80,365 197,133 18,295 54,028 20,192
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets............. 285,261 76,724 143,637 17,207 50,138 26,908
Net assets at beginning
of year................ 420,770 344,046 200,409 86,269 36,131 9,223
-------- ------- ------- ------- ------- -------
Net assets at end of
period................. $706,031 420,770 344,046 103,476 86,269 36,131
======== ======= ======= ======= ======= =======
GE Investments Funds, Inc. (continued)
-----------------------------------------------------
Mid-Cap Value Equity
Fund Income Fund
-------------------------- -------------------------
Year ended December 31, Year ended December 31,
-------------------------- -------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 2,661 1,738 507 29,038 18,370 17,873
Net realized gain
(loss)................ 12,924 14,236 (305) (1,516) (78) 3,321
Unrealized appreciation
(depreciation) on
investments........... 26,637 22,084 11,219 18,549 (28,051) 4,423
Capital gain
distributions......... 26,834 -- 5,046 -- 662 3,666
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
operations............ 69,056 38,058 16,467 46,071 (9,097) 29,283
-------- ------- ------- ------- ------- -------
From capital
transactions:
Net premiums........... 261,618 219,094 108,124 91,288 68,061 59,967
Loan interest.......... (171) (57) 34 60 11 (75)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (11,287) (10,051) -- (2,340) -- --
Surrenders............. (995) (4,932) (2,851) (11,208) (3,866) (29,103)
Loans.................. (2,425) (20,880) (1,112) (8,163) (2,087) (665)
Cost of insurance and
administrative expense
(note 3).............. (61,515) (40,864) (13,611) (37,715) (34,405) (32,512)
Transfer gain (loss)
and transfer fees..... (7,220) (8,769) (3,719) (391) (166) (444)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... (12,847) 167,398 95,455 60,679 (45,407) 29,042
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
capital transactions.. 165,158 300,939 182,320 92,210 (17,859) 26,210
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets............. 234,214 338,997 198,787 138,281 (26,956) 55,493
Net assets at beginning
of year................ 551,343 212,346 13,559 406,588 433,544 378,051
-------- ------- ------- ------- ------- -------
Net assets at end of
period................. $785,557 551,343 212,346 544,869 406,588 433,544
======== ======= ======= ======= ======= =======
F-27
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
GE Investments Funds, Inc. (continued)
---------------------------------------------------------
U.S. Equity Fund Premier Growth Equity Fund
--------------------------- ----------------------------
Period from
Year ended December 31, Year ended June 9, 1999 to
--------------------------- December 31, December 31,
2000 1999 1998 2000 1999
---------- ------- ------ ------------ ---------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 2,850 223 222 (1,657) (95)
Net realized gain
(loss)................ 11,564 2,835 144 4,260 344
Unrealized appreciation
(depreciation) on
investments........... (73,997) 6,670 3,300 (64,695) 13,285
Capital gain
distributions......... 47,509 10,093 600 34,574 4,011
---------- ------- ------ ------- -------
Increase (decrease) in
net assets from
operations........... (12,074) 19,821 4,266 (27,518) 17,545
---------- ------- ------ ------- -------
From capital
transactions:
Net premiums........... 1,015,166 137,612 30,322 310,829 35,871
Loan interest.......... (4) -- -- (22) --
Transfers (to) from the
general account of GE
Life & Annuity: --
Death benefits......... -- -- -- -- --
Surrenders............. (48) (462) (80) (22,123) --
Loans.................. (245,449) -- -- (7,398) --
Cost of insurance and
administrative expense
(note 3).............. (57,642) (26,579) (2,198) (57,487) (5,472)
Transfer gain (loss)
and transfer fees..... 1,643 (459) 172 227 1,248
Transfers (to) from the
Guarantee Account..... -- -- -- -- --
Interfund transfers.... 111,757 38,985 18,463 283,767 88,483
---------- ------- ------ ------- -------
Increase (decrease) in
net assets from
capital
transactions......... 825,423 149,097 46,679 507,793 120,130
---------- ------- ------ ------- -------
Increase (decrease) in
net assets............. 813,349 168,918 50,945 480,275 137,675
Net assets at beginning
of year................ 219,863 50,945 -- 137,675 --
---------- ------- ------ ------- -------
Net assets at end of
period................. $1,033,212 219,863 50,945 617,950 137,675
========== ======= ====== ======= =======
Oppenheimer Variable Account Funds
-----------------------------------------------------------
Bond Fund/VA Capital Appreciation Fund/VA
-------------------------- -------------------------------
Year ended December 31, Year ended December 31,
-------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 45,734 18,170 2,656 (32,555) (15,766) (231)
Net realized gain
(loss)................ (17,389) (1,863) 2,899 341,073 205,534 89,327
Unrealized appreciation
(depreciation) on
investments........... 6,329 (29,542) 11,167 (741,677) 1,083,816 270,706
Capital gain
distributions......... -- 2,165 4,848 340,197 130,214 211,836
-------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets from
operations............ 34,674 (11,070) 21,570 (92,962) 1,403,798 571,638
-------- ------- ------- --------- --------- ---------
From capital
transactions:
Net premiums........... 154,114 148,327 164,138 1,083,344 823,296 687,713
Loan interest.......... (422) 18 (39) (2,064) (802) (398)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (711) -- -- -- (3,528) --
Surrenders............. (29,789) (13,864) (17,769) (210,937) (104,939) (137,732)
Loans.................. (6,652) (838) (1,348) (41,303) (44,498) (10,897)
Cost of insurance and
administrative expense
(note 3).............. (64,402) (63,471) (40,698) (358,047) (302,052) (260,178)
Transfer gain (loss)
and transfer fees..... (231) 211 188 6,844 (383) (93)
Transfers (to) from the
Guarantee Account..... -- -- -- 135 -- --
Interfund transfers.... 6,376 108,262 51,994 247,162 (28,758) 100,907
-------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 58,283 178,645 156,466 725,134 338,336 379,322
-------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets............. 92,957 167,575 178,036 632,172 1,742,134 950,960
Net assets at beginning
of year................ 638,024 470,449 292,413 4,971,007 3,228,873 2,277,913
-------- ------- ------- --------- --------- ---------
Net assets at end of
period................. $730,981 638,024 470,449 5,603,179 4,971,007 3,228,873
======== ======= ======= ========= ========= =========
F-28
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Oppenheimer Variable Account Funds (continued)
------------------------------------------------------------------
Aggressive Growth Fund/VA High Income Fund/VA
--------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (56,204) (32,351) (15,402) 202,953 114,888 24,691
Net realized gain
(loss)................ 1,589,430 393,176 93,644 (51,805) (9,827) 3,380
Unrealized appreciation
(depreciation) on
investments........... (2,708,169) 2,690,916 277,402 (245,369) (37,389) (81,675)
Capital gain
distributions......... 272,808 -- 83,215 -- -- 45,551
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
operations........... (902,135) 3,051,741 438,859 (94,221) 67,672 (8,053)
----------- --------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 1,297,342 706,892 826,696 374,363 445,041 464,843
Loan interest.......... (8,257) (459) 171 (717) 890 (313)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (5,763) (2,341) -- -- (215) (3,028)
Surrenders............. (840,901) (160,601) (139,804) (72,713) (82,275) (91,485)
Loans.................. (104,373) (187,114) (62,192) (6,121) (44,238) (16,569)
Cost of insurance and
administrative expense
(note 3).............. (457,737) (345,495) (336,566) (153,413) (170,939) (190,705)
Transfer gain (loss)
and transfer fees..... (48,749) (9,130) 2,879 (7) (1,499) 2,861
Transfers (to) from the
Guarantee Account..... -- -- (257) 79 (4) --
Interfund transfers.... 1,141,624 (235,950) (1,915) 621,109 43,275 46,306
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 973,186 (234,198) 289,012 762,580 190,036 211,910
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets............. 71,051 2,817,543 727,871 668,359 257,708 203,857
Net assets at beginning
of year................ 6,644,490 3,826,947 3,099,076 2,112,316 1,854,608 1,650,751
----------- --------- --------- --------- --------- ---------
Net assets at end of
period................. $ 6,715,541 6,644,490 3,826,947 2,780,675 2,112,316 1,854,608
=========== ========= ========= ========= ========= =========
Oppenheimer Variable Account Variable Insurance Products
Funds (continued) Fund
--------------------------------- -------------------------------
Multiple Strategies Fund/VA Equity-Income Portfolio
--------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 38,760 23,700 1,420 65,482 51,476 35,688
Net realized gain
(loss)................ 8,523 12,030 10,586 73,790 273,786 235,107
Unrealized appreciation
(depreciation) on
investments........... (56,039) 16,700 (5,312) (25,951) (193,819) 97,581
Capital gain
distributions......... 67,524 43,483 37,972 432,830 224,259 275,448
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
operations........... 58,768 95,913 44,666 546,151 355,702 643,824
----------- --------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 337,229 193,685 235,155 1,462,253 1,437,479 1,528,326
Loan interest.......... (204) (5) (157) (2,861) 956 (659)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- (253) -- (44,417) (26,021) (4,313)
Surrenders............. (53,311) (26,225) (8,552) (333,879) (195,718) (292,782)
Loans.................. (8,792) (8,254) (9,879) (33,487) (150,364) (48,745)
Cost of insurance and
administrative expense
(note 3).............. (70,787) (68,019) (68,755) (491,665) (579,765) (625,045)
Transfer gain (loss)
and transfer fees..... (1,814) (182) (109) (6,693) (4,942) 3,459
Transfers (to) from the
Guarantee Account..... -- -- -- 85 -- --
Interfund transfers.... 70,636 (53,287) (12,778) (254,327) (644,610) 111,431
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 272,957 37,460 134,925 295,009 (162,985) 671,672
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets............. 331,725 133,373 179,591 841,160 192,717 1,315,496
Net assets at beginning
of year................ 979,430 846,057 666,466 6,905,805 6,713,088 5,397,592
----------- --------- --------- --------- --------- ---------
Net assets at end of
period................. $ 1,311,155 979,430 846,057 7,746,965 6,905,805 6,713,088
=========== ========= ========= ========= ========= =========
F-29
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Variable Insurance Products Fund (continued)
-------------------------------------------------------------------
Growth Portfolio Overseas Portfolio
---------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
---------------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (64,333) (42,481) (14,134) 20,736 15,836 20,552
Net realized gain
(loss)................ 398,024 453,879 728,950 57,421 112,501 98,578
Unrealized appreciation
(depreciation) on
investments........... (2,754,089) 1,452,235 630,736 (896,242) 685,935 (8,287)
Capital gain
distributions......... 1,130,176 864,641 675,592 249,470 53,190 103,670
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
operations........... (1,290,222) 2,728,274 2,021,144 (568,615) 867,462 214,513
----------- ---------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 2,000,171 1,388,701 1,067,020 299,243 364,398 357,948
Loan interest.......... (6,381) (4,205) (3,767) (862) (189) (1,149)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (5,738) (14,970) (2,159) -- (3,758) --
Surrenders............. (508,978) (438,334) (303,094) (175,642) (92,920) (94,164)
Loans.................. (128,213) (133,503) (67,251) (35,474) (37,514) (10,363)
Cost of insurance and
administrative expense
(note 3).............. (685,241) (614,236) (550,302) (155,987) (164,565) (172,299)
Transfer gain (loss)
and transfer fees..... (442) (14,687) (32,108) 3,634 (2,197) 3,188
Transfers (to) from the
Guarantee Account..... 208 -- -- 344 -- --
Interfund transfers.... 206,956 (344,635) 735,023 (38,525) (89,327) 7,063
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
capital transactions.. 872,342 (175,869) 843,362 (103,269) (26,072) 90,224
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets............. (417,880) 2,552,405 2,864,506 (671,884) 841,390 304,737
Net assets at beginning
of year................ 10,378,658 7,826,253 4,961,747 2,885,307 2,043,917 1,739,180
----------- ---------- --------- --------- --------- ---------
Net assets at end of
period................. $ 9,960,778 10,378,658 7,826,253 2,213,423 2,885,307 2,043,917
=========== ========== ========= ========= ========= =========
Variable Insurance
Products Fund II--
Variable Insurance Products Fund II Service Class 2
------------------------------------------------------------------ ------------------
Asset Manager Contrafund Contrafund
Portfolio Portfolio Portfolio
-------------------------------- -------------------------------- ------------------
Period from
Year ended December 31, Year ended December 31, December 26, 2000
-------------------------------- -------------------------------- to December 31,
2000 1999 1998 2000 1999 1998 2000
---------- --------- --------- ---------- --------- --------- ------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 123,489 119,444 101,217 (23,339) (11,736) (3,583) --
Net realized gain
(loss)................ 23,604 64,747 58,132 120,743 354,876 228,313 15
Unrealized appreciation
(depreciation) on
investments........... (739,967) 89,931 32,734 (1,216,788) 425,779 398,426 (14)
Capital gain
distributions......... 370,224 195,289 395,701 632,524 135,201 108,073 --
---------- --------- --------- ---------- --------- --------- ---
Increase (decrease) in
net assets from
operations........... (222,650) 469,411 587,784 (486,860) 904,120 731,229 1
---------- --------- --------- ---------- --------- --------- ---
From capital
transactions:
Net premiums........... 490,848 477,913 513,149 2,063,887 1,028,819 947,585 47
Loan interest.......... 255 (525) (263) (1,762) (1,317) (583) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (10,608) (2,250) (4,354) -- -- (3,241) --
Surrenders............. (360,416) (104,369) (197,464) (278,017) (127,334) (118,374) --
Loans.................. (109,631) (33,108) (31,787) (89,473) (45,515) (45,386) --
Cost of insurance and
administrative expense
(note 3).............. (262,101) (282,330) (311,542) (455,295) (391,276) (322,452) (15)
Transfer gain (loss)
and transfer fees..... 1,942 (1,929) 689 (11,573) (12,817) 26,399 1
Transfers (to) from the
Guarantee Account..... -- -- -- 129 -- (102) --
Interfund transfers..... 7,464 (188,976) (89,254) 489,400 179 403,462 --
---------- --------- --------- ---------- --------- --------- ---
Increase (decrease) in
net assets from
capital
transactions......... (242,247) (135,574) (120,826) 1,717,296 450,739 887,308 33
---------- --------- --------- ---------- --------- --------- ---
Increase (decrease) in
net assets............. (464,897) 333,837 466,958 1,230,436 1,354,859 1,618,537 34
Net assets at beginning
of year................ 4,970,200 4,636,363 4,169,405 4,986,719 3,631,860 2,013,323 --
---------- --------- --------- ---------- --------- --------- ---
Net assets at end of
period................. $4,505,303 4,970,200 4,636,363 6,217,155 4,986,719 3,631,860 34
========== ========= ========= ========== ========= ========= ===
F-30
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Variable Insurance
Products Fund III--
Variable Products Fund III Service Class 2
--------------------------------------------------------- -------------------
Growth & Income Growth Opportunities Mid Cap
Portfolio Portfolio Portfolio
----------------------------- -------------------------- -------------------
Period from
Year ended December 31, Year ended December 31, December 26, 2000
----------------------------- -------------------------- to December 31,
2000 1999 1998 2000 1999 1998 2000
---------- -------- ------- -------- ------- ------- -------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 1,703 (1,877) (1,403) 2,240 317 (415) --
Net realized gain
(loss)................ 5,240 28,022 2,566 (20,425) 10,345 3,612 15
Unrealized appreciation
(depreciation) on
investments........... (104,078) 21,930 59,468 (101,453) (1,242) 35,308 (13)
Capital gain
distributions......... 60,673 5,692 337 28,489 5,663 2,865 --
---------- -------- ------- -------- ------- ------- ---
Increase (decrease) in
net assets from
operations........... (36,462) 53,767 60,968 (91,149) 15,083 41,370 2
---------- -------- ------- -------- ------- ------- ---
From capital
transactions:
Net premiums........... 602,839 444,542 202,919 169,666 160,164 71,954 47
Loan interest.......... (26) 11 -- (7) (114) (31) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (10,246) -- -- -- -- -- --
Surrenders............. (991) (12,518) (2,976) (11,073) (1,860) (448) --
Loans.................. (3,457) (1,076) 2,468 (2,686) (479) (6,446) --
Cost of insurance and
administrative expense
(note 3).............. (147,027) (107,292) (31,238) (57,881) (54,942) (24,940) (15)
Transfer gain (loss)
and transfer fees..... (9,573) (9,848) 4,369 (7,620) 14 976 --
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- -- --
Interfund transfers.... 49,174 59,059 125,535 (57,345) 45,257 132,314 --
---------- -------- ------- -------- ------- ------- ---
Increase (decrease) in
net assets from
capital
transactions......... 480,693 372,878 301,077 33,054 148,040 173,379 32
---------- -------- ------- -------- ------- ------- ---
Increase (decrease) in
net assets............. 444,231 426,645 362,045 (58,095) 163,123 214,749 34
Net assets at beginning
of year................ 836,049 409,404 47,359 449,449 286,326 71,577 --
---------- -------- ------- -------- ------- ------- ---
Net assets at end of
period................. $1,280,280 836,049 409,404 391,354 449,449 286,326 34
========== ======== ======= ======== ======= ======= ===
Federated Insurance Series
-----------------------------------------------------
High Income Bond Fund
American Leaders Fund II II
-------------------------- -------------------------
Year ended December 31, Year ended December 31,
-------------------------- -------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 1,206 (64) (654) 28,392 13,735 2,146
Net realized gain
(loss)................ (5,539) 8,624 (245) (12,093) (2,384) 1,890
Unrealized appreciation
(depreciation) on
investments........... 1,613 (17,252) 22,437 (51,127) (10,198) (3,246)
Capital gain
distributions......... 16,824 32,275 8,313 -- 1,345 882
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
operations........... 14,104 23,583 29,851 (34,828) 2,498 1,672
-------- ------- ------- ------- ------- -------
From capital
transactions:
Net premiums........... 207,940 253,145 161,541 138,080 127,454 76,550
Loan interest.......... (2) 113 25 7 (48) 60
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (4,163) -- -- -- -- --
Surrenders............. (19,904) (10,302) (6,132) (859) (4,636) (3,973)
Loans.................. 21 37 (1,072) (1,395) (105) (3,721)
Cost of insurance and
administrative expense
(note 3).............. (64,533) (60,062) (31,404) (36,046) (26,844) (21,339)
Transfer gain (loss)
and transfer fees..... (172) (4,143) (1,069) (299) 660 (94)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... (27,455) 79,528 120,045 (37,371) 58,046 16,748
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
capital
transactions......... 91,732 258,316 241,934 62,117 154,527 64,231
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets............. 105,836 281,899 271,785 27,289 157,025 65,903
Net assets at beginning
of year................ 599,913 318,014 46,229 317,734 160,709 94,806
-------- ------- ------- ------- ------- -------
Net assets at end of
period................. $705,749 599,913 318,014 345,023 317,734 160,709
======== ======= ======= ======= ======= =======
F-31
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Federated Insurance
Series (continued)
--------------------------
Utility Fund II
--------------------------
Year ended December 31,
--------------------------
2000 1999 1998
-------- ------- -------
Increase (decrease) in net assets
From operations:
Net investment income (expense).................. $ 8,625 4,216 268
Net realized gain (loss)......................... 973 3,277 5,077
Unrealized appreciation (depreciation) on
investments..................................... (57,701) (16,132) 11,499
Capital gain distributions....................... 7,615 12,525 10,132
-------- ------- -------
Increase (decrease) in net assets from
operations..................................... (40,488) 3,886 26,976
-------- ------- -------
From capital transactions:
Net premiums..................................... 73,940 89,180 81,174
Loan interest.................................... (25) (68) 7
Transfers (to) from the general account of GE
Life & Annuity:
Death benefits................................... -- -- --
Surrenders....................................... (5,790) (2,117) (2,124)
Loans............................................ (1,351) (11,083) (315)
Cost of insurance and administrative expense
(note 3)........................................ (26,993) (27,107) (19,854)
Transfer gain (loss) and transfer fees........... 27 (1,353) (312)
Transfers (to) from the Guarantee Account........ -- -- --
Interfund transfers.............................. 48,195 80,135 (910)
-------- ------- -------
Increase (decrease) in net assets from capital
transactions................................... 88,003 127,587 57,666
-------- ------- -------
Increase (decrease) in net assets................. 47,515 131,473 84,642
Net assets at beginning of year................... 379,391 247,918 163,276
-------- ------- -------
Net assets at end of period....................... $426,906 379,391 247,918
======== ======= =======
Alger American Fund
-------------------------------------------------------------------
Small Capitalization Portfolio LargeCap Growth Portfolio
--------------------------------- --------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- --------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (14,966) (10,141) (6,707) (28,149) (15,070) (4,931)
Net realized gain
(loss)................ 2,186 (6,385) (65,245) 33,463 390,753 60,482
Unrealized appreciation
(depreciation) on
investments........... (1,371,045) 405,230 102,269 (1,302,238) 99,476 293,124
Capital gain
distributions......... 735,999 183,620 119,910 513,858 224,152 156,070
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets from
operations........... (647,826) 572,324 150,227 (783,066) 699,311 504,745
----------- --------- --------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 611,961 370,003 367,472 1,913,171 885,773 322,362
Loan interest.......... (1,270) 92 94 (389) 49 79
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- -- (743) (2,978) -- (828)
Surrenders............. (110,032) (45,840) (24,987) (56,419) (29,769) (132,389)
Loans.................. (35,753) (19,152) (29,830) (17,073) (10,722) 10,255
Cost of insurance and
administrative expense
(note 3).............. (167,382) (124,312) (108,923) (349,953) (238,219) (130,212)
Transfer gain (loss)
and transfer fees..... 4,196 1,435 8,000 (6,464) (2,742) 6,290
Transfers (to) from the
Guarantee Account..... -- (4) -- -- (4) --
Interfund transfers.... (253,290) 400,632 (11,610) 403,555 96,272 381,092
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 48,430 582,854 199,473 1,883,450 700,638 456,649
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets............. (599,396) 1,155,178 349,700 1,100,384 1,399,949 961,394
Net assets at beginning
of year................ 2,324,573 1,169,395 819,695 3,226,455 1,826,506 865,112
----------- --------- --------- ---------- --------- ---------
Net assets at end of
period................. $ 1,725,177 2,324,573 1,169,395 4,326,839 3,226,455 1,826,506
=========== ========= ========= ========== ========= =========
F-32
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
PBHG Insurance Series Fund, Inc.
------------------------------------------------------
PBHG Large Cap Growth
Portfolio PBHG Growth II Portfolio
-------------------------- --------------------------
Year ended December 31, Year ended December 31,
-------------------------- --------------------------
2000 1999 1998 2000 1999 1998
--------- ------- ------ --------- ------- ------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (3,470) (815) (327) (6,440) (979) (239)
Net realized gain
(loss)................ 26,713 5,563 3,310 (39,454) 34,202 (197)
Unrealized appreciation
(depreciation) on
investments........... (140,754) 71,826 13,650 (379,884) 81,393 8,666
Capital gain
distributions......... 16,716 -- -- 24,260 -- --
--------- ------- ------ --------- ------- ------
Increase (decrease) in
net assets from
operations........... (100,795) 76,574 16,633 (401,518) 114,616 8,230
--------- ------- ------ --------- ------- ------
From capital
transactions:
Net premiums........... 251,415 50,946 38,098 408,658 57,283 19,247
Loan interest.......... (318) (132) 15 (19) -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- -- -- -- -- --
Surrenders............. (8,368) (2,203) (949) (12,942) (6,046) (286)
Loans.................. (2,622) (336) (6,899) 21 -- --
Cost of insurance and
administrative expense
(note 3).............. (55,642) (20,936) (9,007) (59,614) (13,614) (8,107)
Transfer gain (loss)
and transfer fees..... (639) (882) (239) 20,256 (29) (1,497)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 520,503 14,590 14,195 724,334 60,751 30,191
--------- ------- ------ --------- ------- ------
Increase (decrease) in
net assets from
capital
transactions......... 704,329 41,047 35,214 1,080,694 98,345 39,548
--------- ------- ------ --------- ------- ------
Increase (decrease) in
net assets............. 603,534 117,621 51,847 679,176 212,961 47,778
Net assets at beginning
of year................ 195,976 78,355 26,508 281,839 68,878 21,100
--------- ------- ------ --------- ------- ------
Net assets at end of
period................. $ 799,510 195,976 78,355 961,015 281,839 68,878
========= ======= ====== ========= ======= ======
Janus Aspen Series
-------------------------------------------------------------------
Aggressive Growth Portfolio Growth Portfolio
--------------------------------- --------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- --------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (66,159) 33,562 (13,622) (47,980) (20,029) 64,610
Net realized gain
(loss)................ 1,590,590 861,331 171,826 926,526 379,537 115,203
Unrealized appreciation
(depreciation) on
investments........... (6,150,760) 3,141,869 488,613 (2,851,716) 1,328,882 576,941
Capital gain
distributions......... 1,036,376 111,141 -- 582,454 21,779 65,314
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets from
operations........... (3,589,953) 4,147,903 646,817 (1,390,716) 1,710,169 822,068
----------- --------- --------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 2,593,333 1,082,138 624,199 2,720,659 1,295,975 731,597
Loan interest.......... (4,263) (1,654) 113 (2,643) (37) 114
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (25,424) (6,162) (826) -- (5,481) (857)
Surrenders............. (376,000) (129,518) (129,710) (246,021) (115,738) (112,392)
Loans.................. (162,782) (154,373) (41,049) (103,157) (48,269) (5,077)
Cost of insurance and
administrative expense
(note 3).............. (705,131) (385,151) (220,183) (577,235) (383,988) (247,297)
Transfer gain (loss)
and transfer fees..... 6,165 24,215 18,812 4,808 8,881 537
Transfers (to) from the
Guarantee Account..... 76 -- -- 136 -- --
Interfund transfers.... 1,321,543 1,428,558 (391,359) 329,279 1,134,259 208,382
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 2,647,517 1,858,053 (140,003) 2,125,826 1,885,602 575,007
----------- --------- --------- ---------- --------- ---------
Increase (decrease) in
net assets............. (942,436) 6,005,956 506,814 735,110 3,595,771 1,397,075
Net assets at beginning
of year................ 8,537,962 2,532,006 2,025,192 6,953,844 3,358,073 1,960,998
----------- --------- --------- ---------- --------- ---------
Net assets at end of
period................. $ 7,595,526 8,537,962 2,532,006 7,688,954 6,953,844 3,358,073
=========== ========= ========= ========== ========= =========
F-33
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series (continued)
------------------------------------------------------------------
Worldwide Growth Portfolio Balanced Portfolio
--------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (59,638) (34,278) 80,755 15,911 31,242 30,414
Net realized gain
(loss)................ 863,289 404,104 233,014 99,542 79,219 24,529
Unrealized appreciation
(depreciation) on
investments........... (3,765,784) 3,266,899 623,292 (526,341) 321,542 216,533
Capital gain
distributions......... 873,121 -- 43,815 288,437 -- 5,970
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
operations........... (2,089,012) 3,636,725 980,876 (122,451) 432,003 277,446
----------- --------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 3,876,978 1,535,217 1,375,973 2,146,366 542,890 389,374
Loan interest.......... (3,126) (1,750) (462) (159) (227) (51)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (28,708) (24,630) (1,493) (834) -- --
Surrenders............. (543,262) (104,073) (169,492) (75,731) (27,562) (8,613)
Loans.................. (111,625) (77,866) (55,021) (6,129) (6,685) (17,190)
Cost of insurance and
administrative expense
(note 3).............. (814,036) (598,888) (464,790) (263,344) (186,241) (100,651)
Transfer gain (loss)
and transfer fees..... (10,924) 4,454 552 (1,864) (275) 3,680
Transfers (to) from the
Guarantee Account..... 43 -- (100) 167 -- --
Interfund transfers.... 845,226 163,874 355,363 393,362 274,258 143,125
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 3,210,566 896,338 1,040,530 2,191,834 596,158 409,674
----------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets............. 1,121,554 4,533,063 2,021,406 2,069,383 1,028,161 687,120
Net assets at beginning
of year................ 9,633,288 5,100,225 3,078,819 2,347,345 1,319,184 632,064
----------- --------- --------- --------- --------- ---------
Net assets at end of
period................. $10,754,842 9,633,288 5,100,225 4,416,728 2,347,345 1,319,184
=========== ========= ========= ========= ========= =========
Janus Aspen Series (continued)
---------------------------------------------------------
Flexible Income International Growth
Portfolio Portfolio
-------------------------- -----------------------------
Year ended December 31, Year ended December 31,
-------------------------- -----------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 3,545 11,342 3,869 (11,591) (5,997) 7,137
Net realized gain
(loss)................ (3,171) (1,786) 1,687 242,420 54,154 40,482
Unrealized appreciation
(depreciation) on
investments........... 6,251 (8,109) (74) (990,444) 923,354 16,463
Capital gain
distributions......... 7,790 566 167 133,743 -- 1,528
-------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets from
operations........... 14,415 2,013 5,649 (625,872) 971,511 65,610
-------- ------- ------- --------- --------- -------
From capital
transactions:
Net premiums........... 93,871 47,950 44,607 815,490 299,992 375,304
Loan interest.......... (49) -- -- (798) (36) 8
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (9,904) -- (1,195) (4,447) -- (645)
Surrenders............. (339) (4,556) (908) (40,049) (17,243) (19,180)
Loans.................. (3,411) -- -- (14,621) (24,736) (432)
Cost of insurance and
administrative expense
(note 3).............. (25,627) (21,676) (16,727) (229,236) (113,927) (76,148)
Transfer gain (loss)
and transfer fees..... (141) 134 (213) (27) (177) 2,743
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 43,210 79,252 (2,619) 613,105 354,820 168,918
-------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets from
capital
transactions......... 97,610 101,104 22,945 1,139,417 498,693 450,568
-------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets............. 112,025 103,117 28,594 513,545 1,470,204 516,178
Net assets at beginning
of year................ 202,361 99,244 70,650 2,307,190 836,986 320,808
-------- ------- ------- --------- --------- -------
Net assets at end of
period................. $314,386 202,361 99,244 2,820,735 2,307,190 836,986
======== ======= ======= ========= ========= =======
F-34
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series
(continued) Janus Aspen Series -- Service Shares
------------------------------- --------------------------------------
Capital Appreciation Global Life Sciences Global Technology
Portfolio Portfolio Portfolio
------------------------------- -------------------- -----------------
Period from
Year ended December 31, May 29, 2000 to Period from
------------------------------- December 31, May 4, 2000 to
2000 1999 1998 2000 December 31, 2000
----------- --------- ------- -------------------- -----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (3,607) (7,224) (1,219) (329) 430
Net realized gain
(loss)................ 187,808 82,791 28,363 268 (3,121)
Unrealized appreciation
(depreciation) on
investments........... (1,022,359) 513,292 45,429 13,723 (58,896)
Capital gain
distributions......... 23,952 5,853 -- -- --
----------- --------- ------- ------- -------
Increase (decrease) in
net assets from
operations........... (814,206) 594,712 72,573 13,662 (61,587)
----------- --------- ------- ------- -------
From capital
transactions:
Net premiums........... 2,024,377 717,055 106,588 6,124 31,857
Loan interest.......... (778) 196 300 -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... (4,334) -- -- -- --
Surrenders............. (48,345) (7,847) (374) -- --
Loans.................. (3,780) (4,636) -- -- --
Cost of insurance and
administrative expense
(note 3).............. (320,394) (144,381) (25,927) (1,850) (2,865)
Transfer gain (loss)
and transfer fees..... 15,603 (9,482) (8,962) 50 (1,221)
Transfers (to) from the
Guarantee Account..... 2 -- -- -- --
Interfund transfers.... 544,469 837,693 79,406 179,502 169,898
----------- --------- ------- ------- -------
Increase (decrease) in
net assets from
capital
transactions......... 2,206,820 1,388,598 151,031 183,826 197,669
----------- --------- ------- ------- -------
Increase (decrease) in
net assets............. 1,392,614 1,983,310 223,604 197,488 136,082
Net assets at beginning
of year................ 2,215,534 232,224 8,620 -- --
----------- --------- ------- ------- -------
Net assets at end of
period................. $ 3,608,148 2,215,534 232,224 197,488 136,082
=========== ========= ======= ======= =======
Goldman Sachs Variable Insurance Trust
-------------------------------------------------------------------------
Growth and Income Fund Mid Cap Value Fund
------------------------------------ ------------------------------------
Year ended Year ended
December 31, Period from December 31, Period from
---------------- October 1, 1998 to ---------------- August 28, 1998 to
2000 1999 December 31, 1998 2000 1999 December 31, 1998
-------- ------ ------------------ ------- ------- ------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (119) 127 76 1,552 2,614 291
Net realized gain
(loss)................ 480 585 120 (24,105) 87 3,047
Unrealized appreciation
(depreciation) on
investments........... (5,835) (222) 496 73,668 (2,647) 2,320
Capital gain
distributions......... -- -- -- 12,030 -- --
-------- ------ ------ ------- ------- ------
Increase (decrease) in
net assets from
operations........... (5,474) 490 692 63,145 54 5,658
-------- ------ ------ ------- ------- ------
From capital
transactions:
Net premiums........... 90,257 14,501 9,253 102,494 43,005 6,190
Loan interest.......... (10) -- -- (19) -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- -- -- -- -- --
Surrenders............. -- (171) -- (2,292) -- --
Loans.................. (1,210) -- -- (1,443) -- --
Cost of insurance and
administrative expense
(note 3).............. (7,347) (3,588) (294) (15,516) (5,287) (1,091)
Transfer gain (loss)
and transfer fees..... 1,036 (7) (2) (501) 14 (3,036)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 17,275 (350) 784 (92,118) 330,218 85,487
-------- ------ ------ ------- ------- ------
Increase (decrease) in
net assets from
capital
transactions......... 100,001 10,385 9,741 (9,395) 367,950 87,550
-------- ------ ------ ------- ------- ------
Increase (decrease) in
net assets............. 94,527 10,875 10,433 53,750 368,004 93,208
Net assets at beginning
of year................ 21,308 10,433 -- 461,212 93,208 --
-------- ------ ------ ------- ------- ------
Net assets at end of
period................. $115,835 21,308 10,433 514,962 461,212 93,208
======== ====== ====== ======= ======= ======
F-35
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Salomon Brothers Variable Series Fund Inc.
-------------------------------------------------------------------
Strategic Bond Total Return
Fund Investors Fund Fund
--------------- ----------------------------------- --------------
Year ended Year ended Period from Year ended
December 31, December 31, December 8, 1998 to December 31,
--------------- -------------- December 31, --------------
2000 1999 2000 1999 1998 2000 1999
------- ------ ------- ----- ------------------- ------ ------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 5,371 2,610 1,706 24 5 183 23
Net realized gain
(loss)................ 490 3 (538) 22 -- (785) (1)
Unrealized appreciation
(depreciation) on
investments........... (671) (1,908) (3,818) 232 53 (349) (37)
Capital gain
distributions......... -- -- 10,551 -- -- -- --
------- ------ ------- ----- ----- ------ ------
Increase (decrease) in
net assets from
operations........... 5,190 705 7,901 278 58 (951) (15)
------- ------ ------- ----- ----- ------ ------
From capital
transactions:
Net premiums........... 13,416 56,140 34,882 7,246 -- 6,591 344
Loan interest.......... -- -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits......... -- -- -- -- -- -- --
Surrenders............. (2,816) -- -- -- -- -- --
Loans.................. -- -- -- -- -- -- --
Cost of insurance and
administrative expense
(note 3).............. (5,654) (2,890) (4,593) (897) -- (967) (216)
Transfer gain (loss)
and transfer fees..... (86) (156) 2,261 36 -- 1,183 1
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- -- --
Interfund transfers.... 33,334 1,755 324,070 1,695 1,472 205 1,008
------- ------ ------- ----- ----- ------ ------
Increase (decrease) in
net assets from
capital
transactions......... 38,194 54,849 356,620 8,080 1,472 7,012 1,137
------- ------ ------- ----- ----- ------ ------
Increase (decrease) in
net assets............. 43,384 55,554 364,521 8,358 1,530 6,061 1,122
Net assets at beginning
of year................ 55,554 -- 9,888 1,530 -- 1,122 --
------- ------ ------- ----- ----- ------ ------
Net assets at end of
period................. $98,938 55,554 374,409 9,888 1,530 7,183 1,122
======= ====== ======= ===== ===== ====== ======
Alliance Variable AIM Variable
MFS Variable Products Series Insurance Funds,
Dreyfus Insurance Trust Rydex Variable Trust Fund, Inc. Inc.
-------------------- -------------------- -------------------- -------------------- --------------------
The Dreyfus Socially
Responsible Growth MFS New Discovery Premier Growth AIM V.I. Capital
Fund, Inc. Series OTC Fund Portfolio Appreciation Fund
-------------------- -------------------- -------------------- -------------------- --------------------
Period from Period from Period from Period from Period from
December 26, 2000 to December 26, 2000 to December 26, 2000 to December 26, 2000 to December 26, 2000 to
December 31, 2000 December 31, 2000 December 31, 2000 December 31, 2000 December 31, 2000
-------------------- -------------------- -------------------- -------------------- --------------------
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... $ -- -- -- -- --
Net realized gain
(loss).......... 15 15 10 15 15
Unrealized
appreciation
(depreciation)
on investments.. (14) (13) (10) (15) (14)
Capital gain
distributions... -- -- -- -- --
----- --- --- --- ---
Increase
(decrease) in
net assets from
operations..... 1 2 -- -- 1
----- --- --- --- ---
From capital
transactions:
Net premiums..... 47 47 31 47 47
Loan interest.... -- -- -- -- --
Transfers (to)
from the general
account of GE
Life & Annuity:
Death benefits... -- -- -- -- --
Surrenders....... -- -- -- -- --
Loans............ -- -- -- -- --
Cost of insurance
and
administrative
expense (note
3).............. (15) (15) (10) (15) (15)
Transfer gain
(loss) and
transfer fees... 1 2 2 1 1
Transfers (to)
from the
Guarantee
Account......... -- -- -- -- --
Interfund
transfers....... -- -- -- -- --
----- --- --- --- ---
Increase
(decrease) in
net assets from
capital
transactions... 33 34 23 33 33
----- --- --- --- ---
Increase
(decrease) in net
assets........... 34 36 23 33 34
Net assets at
beginning of
year............. -- -- -- -- --
----- --- --- --- ---
Net assets at end
of period........ $ 34 36 23 33 34
===== === === === ===
See accompanying notes to financial statements.
F-36
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements
December 31, 2000
(1) Description of Entity
GE Life & Annuity Separate Account II (the Account) is a separate investment
account established in 1986 by GE Life and Annuity Assurance Company (GE Life
& Annuity) under the laws of the Commonwealth of Virginia. The Account
operates as a unit investment trust under the Investment Company Act of 1940.
The Account is used to fund certain benefits for flexible premium variable
life insurance policies issued by GE Life & Annuity. GE Life and Annuity
Assurance Company is a stock life insurance company operating under a charter
granted by the Commonwealth of Virginia on March 21, 1871. A majority of the
capital stock of GE Life & Annuity is owned by General Electric Capital
Assurance Company. General Electric Capital Assurance Company and its parent,
GE Financial Assurance Holdings, Inc., are indirect, wholly-owned subsidiaries
of General Electric Capital Company (GE Capital). GE Capital, a diversified
financial services company, is a wholly-owned subsidiary of General Electric
Company (GE), a New York corporation.
In November 2000, 34 new investment subdivisions were added to the Account
for Type II policies (see note 2). The Value Equity and Small-Cap Value Equity
Funds each invests in a designated portfolio of the GE Investments Funds, Inc.
The Global Securities Fund/VA and the Main Street Growth & Income Fund/VA each
invests in a designated portolio of the Oppenheimer Variable Account Funds.
The Equity-Income and Growth Portfolios each invests in a designated portfolio
of the Variable Insurance Products Fund -- Service Class 2. The Contrafund
Portfolio invests in a designated portfolio of the Variable Insurance Products
Fund II -- Service Class 2. The Growth & Income and Mid Cap Portfolios each
invests in a designated portfolio of the Variable Insurance Products Fund
III -- Service Class 2. The International Small Company Fund II invests in a
designated portfolio of the Federated Insurance Series. The High Income Bond
Fund II invests in a designated portfolio of the Federated Insurance Series --
Service Shares. The Aggressive Growth, Growth, Capital Appreciation, Worldwide
Growth, International Growth, and Balanced Portfolios each invests in a
designated portfolio of the Janus Aspen Series -- Service Shares. The AIM V.I.
Capital Appreciation, AIM V.I. Growth and AIM V.I. Value Funds each invests
solely in a designated portfolio of the AIM Variable Insurance Funds. The
Growth and Income, Premier Growth, and Quasar Portfolios each invests in a
designated portfolio of the Alliance Variable Products Series Fund, Inc. The
Dreyfus Investment Portfolios-Emerging Markets Portfolio and the Dreyfus
Socially Responsible Growth Fund, Inc. each invests solely in designated
portfolios of Dreyfus. The Foreign Bond, Long-Term U.S. Government Bond, High
Yield Bond, and Total Return Bond Portfolios each invests in a designated
portfolio of the PIMCO Variable Insurance Trust. The OTC Fund invests in a
designated portfolio of the Rydex Variable Trust. The MFS Growth Series, the
MFS Growth With Income Series, the MFS New Discovery Series, and the MFS
Utility Series each invests in a designated portfolio of the MFS Variable
Insurance Trust. Although the funds noted above were available effective
November 2000, no amounts were issued for some funds.
In October 2000, the Alger American Fund changed the name of its Growth
Portfolio to the LargeCap Growth Portfolio.
In April 2000, two new investment subdivisions were added to the Account for
both Type I and Type II policies (see note 2). The Global Life Sciences
Portfolio and the Global Technology Portfolio each invests solely in a
designated portfolio of the Janus Aspen Series -- Service Shares. All
designated portfolios described above are series type mutual funds.
In May 2000, GE Investments Funds, Inc. changed the name of its Value Equity
Fund to the Mid-Cap Value Equity Fund.
In June 1999, a new investment subdivision, Premier Growth Equity Fund, was
added to the Account for both Type I and Type II policies (see note 2). The
Premier Growth Equity Fund invests solely in a designated portfolio of the GE
Investments Funds, Inc. and is a series type mutual fund. In May 1999, the
Oppenheimer Variable Account Growth Fund changed its name to the Oppenheimer
Variable Account Capital Appreciation Fund/VA.
In October 1998, three new investment subdivisions were added to the Account
for both Type I and Type II policies. The Investors Fund, Strategic Bond Fund,
and the Total Return Fund each invest solely in a designated portfolio of the
Salomon Brothers Variable Series Fund. There were no amounts issued in either
the Strategic Bond or Total Return Funds during 1998.
F-37
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(1) Description of Entity -- continued
In May 1998, three new investment subdivisions were added to the Account,
for both Type I and Type II policies. The U.S. Equity Fund invests solely in a
designated portfolio of the GE Investments Funds, Inc. The Mid Cap Value and
Growth and Income Funds each invest solely in a designated portfolio of the
Goldman Sachs Variable Insurance Trust Fund. All designated portfolios
described above are series type mutual funds.
(2) Summary of Significant Accounting Policies
(a) Unit Class
There are two unit classes included in the Account. Type I units are sold
under policy forms P1096 and P1251. Type II units are sold under policy forms
P1250 and P1250CR. Type II unit sales began in the first half of 1998.
(b) Investments
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income distributions
are recorded on the ex-dividend date. Realized gains and losses on investments
are determined on the average cost basis. The units and unit values are
disclosed as of the last business day in the applicable year or period.
The aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the year or lesser period ended December 31, 2000 were:
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ----------- -----------
GE Investments Funds, Inc.:
S&P 500 Index Fund.................................... $ 6,136,047 $ 3,066,325
Money Market Fund..................................... 26,357,121 24,483,825
Total Return Fund..................................... 768,931 582,685
International Equity Fund............................. 345,203 148,777
Real Estate Securities Fund........................... 313,810 155,926
Global Income Fund.................................... 39,822 22,252
Mid-Cap Value Equity Fund............................. 458,056 255,875
Income Fund........................................... 211,998 90,506
U.S. Equity Fund...................................... 1,198,760 321,569
Premier Growth Equity Fund............................ 726,135 185,112
Oppenheimer Variable Account Funds:
Bond Fund/VA.......................................... 415,127 324,180
Capital Appreciation Fund/VA.......................... 2,182,095 1,148,789
Aggressive Growth Fund/VA............................. 5,154,944 3,964,218
High Income Fund/VA................................... 1,469,839 503,035
Multiple Strategies Fund/VA........................... 615,745 236,292
Variable Insurance Products Fund:
Equity-Income Portfolio............................... 2,630,924 1,831,261
Growth Portfolio...................................... 4,513,114 2,560,367
Overseas Portfolio.................................... 827,039 660,150
Variable Insurance Products Fund II:
Asset Manager Portfolio............................... 1,236,403 984,545
Contrafund Portfolio.................................. 4,481,489 2,162,283
Variable Insurance Products Fund -- Service Class 2:
Contrafund Portfolio.................................. 47 15
F-38
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ----------- -----------
Variable Insurance Products Fund III:
Growth & Income Portfolio............................ $ 1,610,757 $ 1,067,800
Growth Opportunities Portfolio....................... 537,929 474,272
Variable Insurance Products Fund III -- Service Class
2:
Mid Cap Portfolio.................................... 47 15
Federated Insurance Series:
American Leaders Fund II............................. 331,323 222,376
High Income Bond Fund II............................. 214,812 124,411
Utility Fund II...................................... 193,853 89,545
Alger American Fund:
Small Capitalization Portfolio....................... 1,937,825 1,157,230
LargeCap Growth Portfolio............................ 3,787,228 1,415,718
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio...................... 889,727 172,693
PBHG Growth II Portfolio............................. 3,937,725 2,839,360
Janus Aspen Series:
Aggressive Growth Portfolio.......................... 12,663,198 9,055,193
Growth Portfolio..................................... 6,763,801 4,095,701
Worldwide Growth Portfolio........................... 6,791,045 2,773,812
Balanced Portfolio................................... 3,207,725 709,681
Flexible Income Portfolio............................ 250,634 146,601
International Growth Portfolio....................... 2,345,266 1,088,051
Capital Appreciation Portfolio....................... 3,994,828 1,765,984
Janus Aspen Series -- Service Shares:
Global Life Sciences Portfolio....................... 188,753 5,223
Global Technology Portfolio.......................... 297,779 99,655
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund............................... 130,303 30,382
Mid Cap Value Fund................................... 341,004 323,095
Salomon Brothers Variable Series Fund Inc.:
Strategic Bond Fund.................................. 87,712 43,458
Investors Fund....................................... 377,066 8,108
Total Return Fund.................................... 9,691 2,453
Dreyfus:
The Dreyfus Socially Responsible Growth Fund, Inc.... 48 15
MFS Variable Insurance Trust:
MFS New Discovery Series............................. 49 15
Rydex Variable Trust:
OTC Fund............................................. 33 10
Alliance Variable Products Series Fund, Inc.:
Premier Growth Portfolio............................. 48 15
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund................... 48 15
(c) Capital Transactions
The increase (decrease) in outstanding units from capital transactions for
the years or lesser periods ended December 31, 2000, 1999, and 1998 are as
follows:
F-39
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
GE Investments Funds, Inc.
-----------------------------------------------------
S&P 500 Money Total Real Estate
Index Market Return International Securities
Fund Fund Fund Equity Fund Fund
------- -------- ------- ------------- -----------
Type I Units:
Units outstanding at
December 31, 1997........ 82,478 139,024 117,921 5,950 10,723
------ -------- ------- ------ ------
From capital transactions:
Net premiums............ 9,623 112,037 5,873 1,468 8,323
Loan interest........... (7) 153 (10) -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... -- (73) (662) -- --
Surrenders.......... 23 (7,598) (498) (35) (201)
Loans............... (301) (5,530) (263) (51) (37)
Cost of insurance
and administrative
expenses........... (4,258) (16,515) (11,632) (660) (2,557)
Transfers (to) from the
Guarantee Account...... -- -- -- -- --
Interfund transfers..... (1,774) (103,800) (210) 740 1,263
------ -------- ------- ------ ------
Net increase (decrease) in
units from capital
transactions............. 3,306 (21,326) (7,402) 1,462 6,791
------ -------- ------- ------ ------
Units outstanding at
December 31, 1998........ 85,784 117,698 110,519 7,412 17,514
------ -------- ------- ------ ------
From capital transactions:
Net premiums............ 15,661 37,026 4,245 1,433 5,331
Loan interest........... (1) 9 (8) 1 3
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... (222) -- (44) -- --
Surrenders.......... (4,503) (9,425) (622) (449) (488)
Loans............... (2,322) (9,247) (673) (5) (81)
Cost of insurance
and administrative
expenses........... (8,750) (12,766) (9,984) (510) (2,392)
Transfers (to) from the
Guarantee Account...... -- -- -- -- --
Interfund transfers..... (346) 7,179 (1,367) (1,909) (912)
------ -------- ------- ------ ------
Net increase (decrease) in
units from capital
transactions............. (483) 12,776 (8,453) (1,439) 1,461
------ -------- ------- ------ ------
Units outstanding at
December 31, 1999........ 85,301 130,474 102,066 5,973 18,975
------ -------- ------- ------ ------
From capital transactions:
Net premiums............ 11,079 84,019 3,501 2,397 5,567
Loan interest........... (53) (392) (1) -- 2
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... (13) (37) -- -- --
Surrenders.......... (5,058) (15,640) (1,097) (392) (442)
Loans............... (369) (5,601) (597) (104) (429)
Cost of insurance
and administrative
expenses........... (5,792) (10,318) (8,902) (446) (2,533)
Transfers (to) from the
Guarantee Account...... 1 -- -- -- --
Interfund transfers..... (2,390) (29,187) (322) (111) (2,358)
------ -------- ------- ------ ------
Net increase (decrease) in
units from capital
transactions............. (2,595) 22,844 (7,418) 1,344 (193)
------ -------- ------- ------ ------
Units outstanding at
December 31, 2000........ 82,706 153,318 94,648 7,317 18,782
====== ======== ======= ====== ======
F-40
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
GE Investments Funds, Inc. (continued)
------------------------------------------------------
Global Mid-Cap Premier
Income Value Equity Income U.S. Growth Equity
Fund Fund Fund Equity Fund Fund
------ ------------ ------ ----------- -------------
Type I Units:
Units outstanding at
December 31, 1997....... 896 1,028 37,767 -- --
----- ----- ------ ----- ------
From capital
transactions:
Net premiums........... 1,593 2,656 5,943 30 --
Loan interest.......... -- 3 (7) -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits..... -- -- -- -- --
Surrenders......... -- (211) (2,891) -- --
Loans.............. -- (84) (66) -- --
Cost of insurance
and administrative
expenses.......... (464) (648) (3,205) (22) --
Transfers (to) from the
Guarantee Account..... -- -- -- -- --
Interfund transfers.... 985 2,342 2,659 10 --
----- ----- ------ ----- ------
Net increase (decrease)
in units from capital
transactions............ 2,114 4,058 2,433 18 --
----- ----- ------ ----- ------
Units outstanding at De-
cember 31, 1998......... 3,010 5,086 40,200 18 --
----- ----- ------ ----- ------
From capital
transactions:
Net premiums........... 1,215 1,407 4,423 302 275
Loan interest.......... -- 4 1 -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits..... -- -- -- -- --
Surrenders......... (107) (301) (373) -- --
Loans.............. -- (18) (201) -- --
Cost of insurance
and administrative
expenses.......... (259) (775) (2,961) (113) (69)
Transfers (to) from the
Guarantee Account..... -- -- -- -- --
Interfund transfers.... (3) 3,672 (4,367) 1,727 5,227
----- ----- ------ ----- ------
Net increase (decrease)
in units from capital
transactions............ 846 3,989 (3,478) 1,916 5,433
----- ----- ------ ----- ------
Units outstanding at
December 31, 1999....... 3,856 9,075 36,722 1,934 5,433
----- ----- ------ ----- ------
From capital
transactions:
Net premiums........... 1,184 2,303 3,840 435 2,120
Loan interest.......... -- -- 6 -- 1
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits..... -- (677) (219) -- --
Surrenders......... -- (58) (1,049) -- (1,681)
Loans.............. -- (32) (764) -- 42
Cost of insurance
and administrative
expenses.......... (192) (614) (2,725) (184) (747)
Transfers (to) from the
Guarantee Account..... -- -- -- -- --
Interfund transfers.... (104) (741) 18 659 8,440
----- ----- ------ ----- ------
Net increase (decrease)
in units from capital
transactions............ 888 181 (893) 910 8,175
----- ----- ------ ----- ------
Units outstanding at
December 31, 2000....... 4,744 9,256 35,829 2,844 13,608
===== ===== ====== ===== ======
F-41
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Oppenheimer Variable Account Funds
----------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
------- ------------ ---------- ------- ----------
Type I Units:
Units outstanding at
December 31, 1997.......... 13,037 54,030 76,126 48,043 22,561
------ ------ ------- ------ ------
From capital transactions:
Net premiums.............. 4,915 12,058 23,331 11,931 5,523
Loan interest............. (2) (8) 5 (9) (5)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- (88) --
Surrenders............ (776) (2,931) (4,257) (2,666) (277)
Loans................. (59) (232) (1,894) (483) (320)
Cost of insurance and
administrative
expenses............. (1,448) (5,205) (10,077) (5,457) (2,167)
Transfers (to) from the
Guarantee Account........ -- -- (8) -- --
Interfund transfers....... 1,572 1,707 (2,098) 1,100 (457)
------ ------ ------- ------ ------
Net increase (decrease) in
units from capital
transactions............... 4,202 5,389 5,002 4,328 2,297
------ ------ ------- ------ ------
Units outstanding at
December 31, 1998.......... 17,239 59,419 81,128 52,371 24,858
------ ------ ------- ------ ------
From capital transactions:
Net premiums.............. 3,765 940 10,658 8,672 3,427
Loan interest............. 1 (2) (8) 25 --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- (7) (41) (6) (8)
Surrenders............ (592) (202) (2,676) (2,276) (788)
Loans................. (36) (79) (3,253) (1,224) (248)
Cost of insurance and
administrative
expenses............. (1,479) (453) (5,482) (4,185) (1,754)
Transfers (to) from the
Guarantee Account........ -- -- -- -- --
Interfund transfers....... 109 (198) (4,525) (1,264) (1,536)
------ ------ ------- ------ ------
Net increase (decrease) in
units from capital
transactions............... 1,768 (1) (5,327) (258) (907)
------ ------ ------- ------ ------
Units outstanding at
December 31, 1999.......... 19,007 59,418 75,801 52,113 23,951
------ ------ ------- ------ ------
From capital transactions:
Net premiums.............. 2,783 5,150 (16,055) 7,017 2,511
Loan interest............. -- (23) 231 (20) (6)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (31) -- -- -- --
Surrenders............ (1,238) (2,242) 23,486 (2,046) (1,388)
Loans................. (149) (599) 2,544 (28) (240)
Cost of insurance and
administrative
expenses............. (1,350) (2,843) 10,019 (3,407) (1,375)
Transfers (to) from the
Guarantee Account........ -- 2 -- 2 --
Interfund transfers....... (302) (1,109) (19,382) (3,150) (291)
------ ------ ------- ------ ------
Net increase (decrease) in
units from capital
transactions............... (287) (1,664) 843 (1,632) (789)
------ ------ ------- ------ ------
Units outstanding at
December 31, 2000.......... 18,720 57,754 76,644 50,481 23,162
====== ====== ======= ====== ======
F-42
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Variable Insurance Products Variable Insurance
Fund Products Fund II
----------------------------- --------------------
Equity- Asset
Income Growth Overseas Manager Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ----------
Type I Units:
Units outstanding at
December 31, 1997.......... 134,168 115,551 72,315 163,699 97,028
------- ------- ------ ------- -------
From capital transactions:
Net premiums.............. 33,122 17,733 14,458 16,997 30,522
Loan interest............. (16) (69) (49) (9) (26)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (107) (39) -- (155) (144)
Surrenders............ (7,257) (5,525) (3,976) (7,043) (5,242)
Loans................. (1,208) (1,226) (438) (1,134) (1,902)
Cost of insurance and
administrative
expenses............. (15,042) (9,854) (7,205) (11,046) (13,480)
Transfers (to) from the
Guarantee Account........ -- -- -- -- (5)
Interfund transfers....... 477 13,237 250 (3,207) 13,189
------- ------- ------ ------- -------
Net increase (decrease) in
units from capital
transactions............... 9,969 14,257 3,040 (5,597) 22,912
------- ------- ------ ------- -------
Units outstanding at
December 31, 1998.......... 144,137 129,808 75,355 158,102 119,940
------- ------- ------ ------- -------
From capital transactions:
Net premiums.............. 25,811 13,506 8,226 14,013 20,627
Loan interest............. 22 (68) (6) (17) (46)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (157) (243) (112) (75) --
Surrenders............ (4,410) (7,080) (2,762) (3,495) (4,709)
Loans................. (3,312) (2,060) (1,115) (1,110) (1,173)
Cost of insurance and
administrative
expenses............. (11,683) (8,374) (4,317) (9,169) (10,938)
Transfers (to) from the
Guarantee Account........ -- -- -- -- --
Interfund transfers....... (15,909) (10,368) (3,401) (6,414) (14,178)
------- ------- ------ ------- -------
Net increase (decrease) in
units from capital
transactions............... (9,638) (14,687) (3,487) (6,267) (10,417)
------- ------- ------ ------- -------
Units outstanding at
December 31, 1999.......... 134,499 115,121 71,868 151,835 109,523
------- ------- ------ ------- -------
From capital transactions:
Net premiums.............. 21,197 9,283 7,554 11,519 31,544
Loan interest............. (62) (72) (26) 8 (78)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (974) (12) -- -- --
Surrenders............ (7,208) (5,756) (4,806) (11,517) (15,153)
Loans................. (756) (1,268) (1,084) (3,503) (5,845)
Cost of insurance and
administrative
expenses............. (9,006) (5,436) (4,024) (7,719) (14,930)
Transfers (to) from the
Guarantee Account........ 2 2 11 -- 8
Interfund transfers....... (6,467) (350) (3,161) (488) 2,231
------- ------- ------ ------- -------
Net increase (decrease) in
units from capital
transactions............... (3,274) (3,609) (5,536) (11,700) (2,223)
------- ------- ------ ------- -------
Units outstanding at
December 31, 2000.......... 131,225 111,512 66,332 140,135 107,300
======= ======= ====== ======= =======
F-43
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Variable Insurance
Products Fund III Federated Insurance Series
----------------------- ----------------------------
Growth & Growth American High
Income Opportunities Leaders Income Bond Utility
Portfolio Portfolio Fund II Fund II Fund II
--------- ------------- -------- ----------- -------
Type I Units:
Units outstanding at
December 31, 1997........ 3,813 5,805 3,169 6,188 9,543
------ ------ ------ ------ ------
From capital transactions:
Net premiums............ 8,879 2,947 6,297 3,841 3,173
Loan interest........... -- (2) 2 4 --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... -- -- -- -- --
Surrenders.......... (219) (3) (394) (254) (121)
Loans............... (19) (483) (69) (238) (18)
Cost of insurance
and administrative
expenses........... (1,697) (1,664) (1,728) (1,274) (1,035)
Transfers (to) from the
Guarantee Account...... -- -- -- -- --
Interfund transfers..... 6,067 9,681 6,131 985 (87)
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............. 13,011 10,476 10,239 3,064 1,912
------ ------ ------ ------ ------
Units outstanding at
December 31, 1998........ 16,824 16,281 13,408 9,252 11,455
------ ------ ------ ------ ------
From capital transactions:
Net premiums............ 3,421 2,186 5,066 2,703 1,671
Loan interest........... 1 (6) 7 (3) (1)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... -- -- -- -- --
Surrenders.......... (652) (100) (637) (296) (111)
Loans............... (32) -- 3 (7) --
Cost of insurance
and administrative
expenses........... (1,730) (1,384) (1,849) (891) (930)
Transfers (to) from the
Guarantee Account...... -- -- -- -- --
Interfund transfers..... (2,229) (1,296) 637 1,142 (83)
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............. (1,221) (600) 3,227 2,648 546
------ ------ ------ ------ ------
Units outstanding at
December 31, 1999........ 15,603 15,681 16,635 11,900 12,001
------ ------ ------ ------ ------
From capital transactions:
Net premiums............ 2,286 2,645 3,920 2,699 1,956
Loan interest........... (1) -- -- -- 2
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits...... -- -- (229) -- --
Surrenders.......... (36) (686) (1,037) (56) (374)
Loans............... (24) (26) -- (91) (87)
Cost of insurance
and administrative
expenses........... (1,951) (1,311) (1,280) (1,101) (995)
Transfers (to) from the
Guarantee Account...... -- -- -- -- --
Interfund transfers..... 2,146 (6,937) (790) (557) (613)
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............. 2,420 (6,315) 584 894 (111)
------ ------ ------ ------ ------
Units outstanding at
December 31, 2000........ 18,023 9,366 17,219 12,794 11,890
====== ====== ====== ====== ======
F-44
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------ --------------------
Small LargeCap PBHG Large PBHG
Capitalization Growth Cap Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- --------- ---------- ---------
Type I Units:
Units outstanding at December 31,
1997............................ 76,251 63,799 2,254 1,972
------- ------- ------ ------
From capital transactions:
Net premiums................... 32,605 17,385 2,279 1,203
Loan interest.................. 9 5 1 --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. (72) (53) -- --
Surrenders................. (2,415) (8,436) (57) (16)
Loans...................... (2,883) 653 (569) --
Cost of insurance and
administrative expenses... (10,216) (7,880) (608) (565)
Transfers (to) from the
Guarantee Account............. -- -- -- --
Interfund transfers............ (4,182) 20,083 1,170 185
------- ------- ------ ------
Net increase (decrease) in units
from capital transactions....... 12,846 21,757 2,216 807
------- ------- ------ ------
Units outstanding at December 31,
1998............................ 89,097 85,556 4,470 2,779
------- ------- ------ ------
From capital transactions:
Net premiums................... 14,158 18,292 1,496 4,760
Loan interest.................. 6 3 (9) --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- --
Surrenders................. (2,787) (1,514) (133) (1,121)
Loans...................... (1,178) (537) (21) --
Cost of insurance and
administrative expenses... (6,036) (7,299) (563) (1,461)
Transfers (to) from the
Guarantee Account............. -- -- -- --
Interfund transfers............ 20,595 (15,368) 221 (137)
------- ------- ------ ------
Net increase (decrease) in units
from capital transactions....... 24,758 (6,423) 991 2,041
------- ------- ------ ------
Units outstanding at December 31,
1999............................ 113,855 79,133 5,461 4,820
------- ------- ------ ------
From capital transactions:
Net premiums................... 13,261 7,544 913 770
Loan interest.................. (64) (6) (12) (1)
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- --
Surrenders................. (5,798) (1,136) (168) (200)
Loans...................... (2,382) (912) (96) 1
Cost of insurance and
administrative expenses... (5,601) (3,937) (481) (443)
Transfers (to) from the
Guarantee Account............. -- -- -- --
Interfund transfers............ (25,194) 692 11,038 10,917
------- ------- ------ ------
Net increase (decrease) in units
from capital transactions....... (25,778) 2,245 11,194 11,044
------- ------- ------ ------
Units outstanding at December 31,
2000............................ 88,077 81,378 16,655 15,864
======= ======= ====== ======
F-45
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series
--------------------------------------------------
Aggressive Worldwide Flexible
Growth Growth Growth Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- ---------
Type I Units:
Units outstanding at
December 31, 1997.......... 116,793 108,163 161,110 42,477 5,589
------- ------- ------- ------ ------
From capital transactions:
Net premiums.............. 24,642 27,838 47,797 12,861 2,801
Loan interest............. 6 6 (21) (3) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (43) (45) (68) -- (84)
Surrenders............ (6,780) (5,890) (7,737) (520) (64)
Loans................. (2,146) (267) (2,519) (1,038) --
Cost of insurance and
administrative
expenses............. (10,966) (12,198) (20,085) (5,313) (1,139)
Transfers (to) from the
Guarantee Account........ -- -- (5) -- --
Interfund transfers....... (23,977) 9,558 11,118 5,127 (291)
------- ------- ------- ------ ------
Net increase (decrease) in
units from capital
transactions............... (19,264) 19,002 28,480 11,114 1,223
------- ------- ------- ------ ------
Units outstanding at
December 31, 1998.......... 97,529 127,165 189,590 53,591 6,812
------- ------- ------- ------ ------
From capital transactions:
Net premiums.............. 12,369 16,689 38,292 6,407 251
Loan interest............. (46) (1) (76) (10) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (171) (161) (222) -- --
Surrenders............ (3,586) (3,363) (5,000) (955) (326)
Loans................. (4,215) (1,314) (2,004) (105) --
Cost of insurance and
administrative
expenses............. (7,317) (7,290) (21,189) (4,660) (952)
Transfers (to) from the
Guarantee Account........ -- -- -- -- --
Interfund transfers....... 25,088 18,674 (6,785) 8,897 208
------- ------- ------- ------ ------
Net increase (decrease) in
units from capital
transactions............... 22,122 23,234 3,016 9,574 (819)
------- ------- ------- ------ ------
Units outstanding at
December 31, 1999.......... 119,651 150,399 192,606 63,165 5,993
------- ------- ------- ------ ------
From capital transactions:
Net premiums.............. 10,645 15,555 17,285 8,479 2,277
Loan interest............. (82) (77) (40) (4) (3)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- (536) (35) --
Surrenders............ (6,097) (6,949) (11,327) (2,981) --
Loans................. (1,857) (2,904) (2,135) (213) (216)
Cost of insurance and
administrative
expenses............. (6,532) (7,528) (9,763) (3,837) (571)
Transfers (to) from the
Guarantee Account........ 2 4 1 7 --
Interfund transfers....... 8,820 (17,553) 2,902 5,692 (1,291)
------- ------- ------- ------ ------
Net increase (decrease) in
units from capital
transactions............... 4,899 (19,452) (3,613) 7,108 196
------- ------- ------- ------ ------
Units outstanding at
December 31, 2000.......... 124,550 130,947 188,993 70,273 6,189
======= ======= ======= ====== ======
F-46
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series Janus Aspen Series --
(continued) Service Shares
-------------------------- ------------------------
International Capital Global Global
Growth Appreciation Life Sciences Technology
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ------------- ----------
Type I Units:
Units outstanding at
December 31, 1997......... 23,264 684 -- --
------ ------ ----- -----
From capital transactions:
Net premiums............. 8,858 4,038 -- --
Loan interest............ -- 22 -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (39) -- -- --
Surrenders........... (1,149) (27) -- --
Loans................ (26) -- -- --
Cost of insurance and
administrative
expenses............ (3,657) (1,554) -- --
Transfers (to) from the
Guarantee Account....... -- -- -- --
Interfund transfers...... 3,504 5,052 -- --
------ ------ ----- -----
Net increase (decrease) in
units from capital
transactions.............. 7,491 7,531 -- --
------ ------ ----- -----
Units outstanding at
December 31, 1998......... 30,755 8,215 -- --
------ ------ ----- -----
From capital transactions:
Net premiums............. 6,335 2,077 -- --
Loan interest............ 5 7 -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- --
Surrenders........... (867) (284) -- --
Loans................ (31) (98) -- --
Cost of insurance and
administrative
expenses............ (3,152) (1,822) -- --
Transfers (to) from the
Guarantee Account....... -- -- -- --
Interfund transfers...... 1,272 14,138 -- --
------ ------ ----- -----
Net increase (decrease) in
units from capital
transactions.............. 3,562 14,018 -- --
------ ------ ----- -----
Units outstanding at
December 31, 1999......... 34,317 22,233 -- --
------ ------ ----- -----
From capital transactions:
Net premiums............. 5,302 3,681 104 34
Loan interest............ 3 (3) -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- --
Surrenders........... (1,262) (312) -- --
Loans................ (555) (211) -- --
Cost of insurance and
administrative
expenses............ (2,490) (1,943) (33) (35)
Transfers (to) from the
Guarantee Account....... -- -- -- --
Interfund transfers...... 6,892 1,075 4,191 7,802
------ ------ ----- -----
Net increase (decrease) in
units from capital
transactions.............. 7,890 2,287 4,262 7,801
------ ------ ----- -----
Units outstanding at
December 31, 2000......... 42,207 24,520 4,262 7,801
====== ====== ===== =====
F-47
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------ --------------------------
Growth and Mid Cap Total
Income Value Strategic Investors Return
Fund Fund Bond Fund Fund Fund
---------- ------- --------- --------- ------
Type I Units:
Units outstanding at December
31, 1997....................... -- -- -- -- --
---- ------- --- ------ ---
From capital transactions:
Net premiums.................. -- -- -- -- --
Loan interest................. -- -- -- -- --
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits............ -- -- -- -- --
Surrenders................ -- -- -- -- --
Loans..................... -- -- -- -- --
Cost of insurance and
administrative expenses.. (13) -- -- -- --
Transfers (to) from the
Guarantee Account............ -- -- -- -- --
Interfund transfers........... 94 -- -- 126 --
---- ------- --- ------ ---
Net increase (decrease) in units
from capital transactions...... 81 -- -- 126 --
---- ------- --- ------ ---
Units outstanding at December
31, 1998....................... 81 -- -- 126 --
---- ------- --- ------ ---
From capital transactions:
Net premiums.................. -- 2,906 -- -- 25
Loan interest................. -- -- -- -- --
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits............ -- -- -- -- --
Surrenders................ -- -- -- -- --
Loans..................... -- -- -- -- --
Cost of insurance and
administrative expenses.. (8) (160) -- (15) (16)
Transfers (to) from the
Guarantee Account............ -- -- -- -- --
Interfund transfers........... (73) 44,496 -- -- 94
---- ------- --- ------ ---
Net increase (decrease) in units
from capital transactions...... (81) 47,242 -- (15) 103
---- ------- --- ------ ---
Units outstanding at December
31, 1999....................... -- 47,242 -- 111 103
---- ------- --- ------ ---
From capital transactions:
Net premiums.................. 18 1,553 -- 9 345
Loan interest................. (1) (3) -- -- --
Transfers (to) from the
general account of GE Life &
Annuity:
Death benefits............ -- -- -- -- --
Surrenders................ -- (304) -- -- --
Loans..................... (146) (191) -- -- --
Cost of insurance and
administrative expenses.. (7) (668) (2) (23) (61)
Transfers (to) from the
Guarantee Account............ -- -- -- -- --
Interfund transfers........... 172 (34,476) 102 10,119 12
---- ------- --- ------ ---
Net increase (decrease) in units
from capital transactions...... 36 (34,089) 100 10,105 296
---- ------- --- ------ ---
Units outstanding at December
31, 2000....................... 36 13,153 100 10,216 399
==== ======= === ====== ===
F-48
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
GE Investments Funds, Inc.
----------------------------------------------------
S&P 500 Money Total Real Estate
Index Market Return International Securities
Fund Fund Fund Equity Fund Fund
------- -------- ------ ------------- -----------
Type II Units:
Units outstanding at
December 31, 1997......... -- -- -- -- --
------ -------- ------ ------ ------
From capital transactions:
Net premiums............. 14,211 203,673 1,858 444 4,046
Loan interest............ -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- -- -- --
Surrenders........... -- -- -- -- (16)
Loans................ -- -- -- -- --
Cost of insurance and
administrative
expenses................ (1,193) (6,092) (323) (44) (252)
Interfund transfers...... 2,066 (76,055) 2,682 9 1,224
------ -------- ------ ------ ------
Net increase (decrease) in
units from capital
transactions.............. 15,084 121,526 4,217 409 5,002
------ -------- ------ ------ ------
Units outstanding at
December 31, 1998......... 15,084 121,526 4,217 409 5,002
------ -------- ------ ------ ------
From capital transactions:
Net premiums............. 28,289 373,827 2,488 8,139 2,648
Loan interest............ (3) -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... -- -- (400) -- --
Surrenders........... (219) (61) -- -- (285)
Loans................ (661) (13,879) -- -- --
Cost of insurance and
administrative
expenses............ (6,092) (16,872) (941) (1,016) (956)
Interfund transfers...... 12,671 (292,484) 625 277 2,408
------ -------- ------ ------ ------
Net increase (decrease) in
units from capital
transactions.............. 33,985 50,531 1,772 7,400 3,815
------ -------- ------ ------ ------
Units outstanding at
December 31, 1999......... 49,069 172,057 5,989 7,809 8,817
------ -------- ------ ------ ------
From capital transactions:
Net premiums............. 44,038 647,376 4,610 5,582 3,519
Loan Interest............ (30) 30 -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits....... (183) -- -- -- --
Surrenders........... (723) (922) (15) (976) (92)
Loans................ (155) (18,960) (133) (58) (60)
Cost of insurance and
administrative
expenses............ (9,636) (28,722) (980) (1,226) (1,213)
Interfund transfers...... 15,638 (526,790) 1,933 3,533 5,691
------ -------- ------ ------ ------
Net increase (decrease) in
units from capital
transactions.............. 48,949 72,012 5,415 6,855 7,845
------ -------- ------ ------ ------
Units outstanding at
December 31, 2000......... 98,018 244,069 11,404 14,664 16,662
====== ======== ====== ====== ======
F-49
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
GE Investments Funds, Inc. (continued)
---------------------------------------------------
Global Mid-Cap U.S. Premier
Income Value Equity Income Equity Growth Equity
Fund Fund Fund Fund Fund
------ ------------ ------ ------- -------------
Type II Units:
Units outstanding at
December 31, 1997.......... -- -- -- -- --
----- ------ ------ ------- ------
From capital transactions:
Net premiums.............. 134 5,572 14 3,071 --
Loan interest............. -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ -- (6) -- (8) --
Loans................. -- -- -- -- --
Cost of insurance and
administrative expenses.. (24) (386) (24) (203) --
Interfund transfers....... -- 4,923 214 1,879 --
----- ------ ------ ------- ------
Net increase (decrease) in
units from capital
transactions............... 110 10,103 204 4,739 --
----- ------ ------ ------- ------
Units outstanding at
December 31, 1998.......... 110 10,103 204 4,739 --
----- ------ ------ ------- ------
From capital transactions:
Net premiums.............. 953 11,785 2,123 11,266 3,298
Loan interest............. -- (8) -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- (604) -- -- --
Surrenders............ -- -- -- (39) --
Loans................. -- (1,237) -- -- --
Cost of insurance and
administrative
expenses............. (287) (1,693) (353) (2,119) (475)
Interfund transfers....... 3,476 6,445 (10) 1,503 3,411
----- ------ ------ ------- ------
Net increase (decrease) in
units from capital
transactions............... 4,142 14,688 1,760 10,611 6,234
----- ------ ------ ------- ------
Units outstanding at
December 31, 1999.......... 4,252 24,791 1,964 15,350 6,234
----- ------ ------ ------- ------
From capital transactions:
Net premiums.............. 1,514 14,289 4,616 79,617 24,853
Loan Interest............. -- (11) -- -- (3)
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ -- (2) -- (4) (209)
Loans................. -- (121) -- (19,352) (686)
Cost of insurance and
administrative
expenses............. (596) (3,282) (790) (4,366) (4,235)
Interfund transfers....... (50) (31) 5,555 8,173 16,059
----- ------ ------ ------- ------
Net increase (decrease) in
units from capital
transactions............... 868 10,842 9,381 64,068 35,779
----- ------ ------ ------- ------
Units outstanding at
December 31, 2000.......... 5,120 35,633 11,345 79,418 42,013
===== ====== ====== ======= ======
F-50
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Oppenheimer Variable Account Funds
----------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
------- ------------ ---------- ------- ----------
Type II Units
Units outstanding at
December 31, 1997.......... -- -- -- -- --
------ ------ ------ ------ ------
From capital transactions:
Net premiums.............. 2,180 2,669 1,554 1,658 2,207
Loan interest............. -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ -- -- -- -- --
Loans................. -- -- -- -- --
Cost of insurance and
administrative
expenses............. (319) (343) (145) (103) (63)
Interfund transfers....... 675 456 1,719 255 46
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............... 2,536 2,782 3,128 1,810 2,190
------ ------ ------ ------ ------
Units outstanding at
December 31, 1998.......... 2,536 2,782 3,128 1,810 2,190
------ ------ ------ ------ ------
From capital transactions:
Net premiums.............. 2,591 5,822 1,518 3,721 2,421
Loan interest............. -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ (1) (3) (109) -- --
Loans................. -- (61) (2) -- --
Cost of insurance and
administrative
expenses............. (1,241) (1,163) (489) (557) (294)
Interfund transfers....... 4,538 1,282 391 2,515 (67)
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............... 5,887 5,877 1,309 5,679 2,060
------ ------ ------ ------ ------
Units outstanding at
December 31, 1999.......... 8,423 8,659 4,437 7,489 4,250
------ ------ ------ ------ ------
From capital transactions:
Net premiums.............. 3,727 8,639 7,531 3,789 6,711
Loan Interest............. (18) (3) -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- (60) -- --
Surrenders............ (61) (385) (41) (33) (66)
Loans................. (133) 92 (142) (151) --
Cost of insurance and
administrative
expenses............. (1,382) (1,661) (1,046) (1,006) (557)
Interfund transfers....... 548 4,361 4,683 21,506 2,226
------ ------ ------ ------ ------
Net increase (decrease) in
units from capital
transactions............... 2,681 11,043 10,925 24,105 8,314
------ ------ ------ ------ ------
Units outstanding at
December 31, 2000.......... 11,104 19,702 15,362 31,594 12,564
====== ====== ====== ====== ======
F-51
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Variable Insurance
Variable Insurance Variable Insurance Product Fund II --
Products Fund Products Fund II Service Class 2
----------------------------- -------------------- ------------------
Equity- Asset
Income Growth Overseas Manager Contrafund Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- ------------------
Type II Units:
Units outstanding at
December 31, 1997...... -- -- -- -- -- --
------ ------ ----- ----- ------ ---
From capital
transactions:
Net premiums.......... 4,605 1,787 590 1,321 11,842 --
Loan interest......... -- -- -- -- -- --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- -- -- --
Surrenders........ -- (2) -- -- (35) --
Loans............. -- -- -- -- (123) --
Cost of insurance
and
administrative
expenses......... (436) (186) (63) (67) (904) --
Interfund transfers... 2,211 171 44 24 4,847 --
------ ------ ----- ----- ------ ---
Net increase (decrease)
in units from capital
transactions........... 6,380 1,770 571 1,278 15,627 --
------ ------ ----- ----- ------ ---
Units outstanding at
December 31, 1998...... 6,380 1,770 571 1,278 15,627 --
------ ------ ----- ----- ------ ---
From capital
transactions:
Net premiums.......... 6,469 8,198 3,033 1,964 16,460 --
Loan interest......... -- -- -- -- (3) --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... (413) -- -- -- -- --
Surrenders........ (27) (28) -- -- (33) --
Loans............. (93) (96) -- 1 (487) --
Cost of insurance
and
administrative
expenses......... (1,395) (1,444) (669) (280) (3,385) --
Interfund transfers... 1,232 4,342 868 85 13,182 --
------ ------ ----- ----- ------ ---
Net increase (decrease)
in units from capital
transactions........... 5,773 10,972 3,232 1,770 25,734 --
------ ------ ----- ----- ------ ---
Units outstanding at
December 31, 1999...... 12,153 12,742 3,803 3,048 41,361 --
------ ------ ----- ----- ------ ---
From capital
transactions:
Net premiums.......... 10,355 14,836 1,494 4,225 46,731 6
Loan Interest......... -- (2) -- -- (13) --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- (58) -- (344) -- --
Surrenders........ (109) (196) (528) -- (571) --
Loans............. 21 (241) -- -- 324 --
Cost of insurance
and
administrative
expenses......... (1,692) (2,703) (698) (665) (6,124) (2)
Interfund transfers... 847 2,917 1,860 737 13,836 --
------ ------ ----- ----- ------ ---
Net increase (decrease)
in units from capital
transactions........... 9,422 14,553 2,128 3,953 54,183 4
------ ------ ----- ----- ------ ---
Units outstanding at
December 31, 2000...... 21,575 27,295 5,931 7,001 95,544 4
====== ====== ===== ===== ====== ===
F-52
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Variable Insurance
Variable Insurance Product Fund III--
Products Fund III Service Class 2 Federated Insurance Series
----------------------- ------------------ ----------------------------
Growth & Growth American High
Income Opportunities Mid Cap Leaders Income Bond Utility
Portfolio Portfolio Portfolio Fund II Fund II Fund II
--------- ------------- ------------------ -------- ----------- -------
Type II Units:
Units outstanding at
December 31, 1997...... -- -- -- -- -- --
------ ------ --- ------ ------ ------
From capital
transactions:
Net premiums.......... 6,034 2,476 -- 3,993 1,042 1,404
Loan interest......... -- -- -- -- -- --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- -- -- --
Surrenders........ -- (31) -- -- -- --
Loans............. 201 -- -- -- -- --
Cost of insurance
and
administrative
expenses......... (599) (208) -- (282) (90) (89)
Interfund transfers... 3,160 245 -- 1,544 85 35
------ ------ --- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 8,796 2,482 -- 5,255 1,037 1,350
------ ------ --- ------ ------ ------
Units outstanding at
December 31, 1998...... 8,796 2,482 -- 5,255 1,037 1,350
------ ------ --- ------ ------ ------
From capital
transactions:
Net premiums.......... 22,463 7,729 -- 9,243 5,365 2,927
Loan interest......... -- -- -- -- -- (3)
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- -- -- --
Surrenders........ (32) -- -- (1) -- --
Loans............. (29) (31) -- (1) -- (566)
Cost of insurance
and
administrative
expenses......... (4,444) (1,892) -- (1,629) (812) (478)
Interfund transfers... 5,886 4,477 -- 3,735 2,531 4,176
------ ------ --- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 23,844 10,283 -- 11,347 7,084 6,056
------ ------ --- ------ ------ ------
Units outstanding at
December 31, 1999...... 32,640 12,765 -- 16,602 8,121 7,406
------ ------ --- ------ ------ ------
From capital
transactions:
Net premiums.......... 33,328 9,434 4 7,800 6,245 2,366
Loan Interest......... (1) (1) -- -- -- (3)
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... (604) -- -- -- -- --
Surrenders........ (23) (196) -- (60) -- --
Loans............. (181) (163) -- 1 -- --
Cost of insurance
and
administrative
expenses......... (6,767) (2,883) (1) (2,355) (1,237) (628)
Interfund transfers... 804 1,759 -- (747) (1,862) 3,128
------ ------ --- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 26,556 7,950 3 4,639 3,146 4,863
------ ------ --- ------ ------ ------
Units outstanding at
December 31, 2000...... 59,196 20,715 3 21,241 11,267 12,269
====== ====== === ====== ====== ======
F-53
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
PBHG Insurance
Alger American Fund Series Fund, Inc.
------------------------ --------------------
Small LargeCap PBHG Large PBHG
Capitalization Growth Cap Growth Growth II
Portfolio Portfolio Portfolio Portfolio
-------------- --------- ---------- ---------
Type II Units:
Units outstanding at December 31,
1997............................ -- -- -- --
------ ------- ------ ------
From capital transactions:
Net premiums................... 2,957 2,770 812 367
Loan interest.................. -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- --
Surrenders................. -- -- (20) (8)
Loans...................... -- -- -- --
Cost of insurance and
administrative expenses... (317) (366) (127) (74)
Interfund transfers............ 3,104 3,686 -- 2,930
------ ------- ------ ------
Net increase (decrease) in units
from capital transactions....... 5,744 6,090 665 3,215
------ ------- ------ ------
Units outstanding at December 31,
1998............................ 5,744 6,090 665 3,215
------ ------- ------ ------
From capital transactions:
Net premiums................... 9,990 24,310 1,792 1,601
Loan interest.................. -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- --
Surrenders................. (36) (72) (13) --
Loans...................... -- (32) (1) --
Cost of insurance and
administrative expenses... (1,870) (4,566) (786) (290)
Interfund transfers............ 4,696 17,028 709 3,114
------ ------- ------ ------
Net increase (decrease) in units
from capital transactions....... 12,780 36,668 1,701 4,425
------ ------- ------ ------
Units outstanding at December 31,
1999............................ 18,524 42,758 2,366 7,640
------ ------- ------ ------
From capital transactions:
Net premiums................... 22,719 63,374 7,754 15,546
Loan Interest.................. (9) (7) -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- (113) -- --
Surrenders................. (548) (742) (128) (249)
Loans...................... 338 476 1 --
Cost of insurance and
administrative expenses... (4,168) (8,439) (1,454) (1,811)
Interfund transfers............ 11,015 14,478 7,439 14,346
------ ------- ------ ------
Net increase (decrease) in units
from capital transactions....... 29,347 69,027 13,612 27,832
------ ------- ------ ------
Units outstanding at December 31,
2000............................ 47,871 111,785 15,978 35,472
====== ======= ====== ======
F-54
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series
--------------------------------------------------
Aggressive Worldwide Flexible
Growth Growth Growth Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- ---------
Type II Units:
Units outstanding at
December 31, 1997.......... -- -- -- -- --
------ ------- ------- ------- ------
From capital transactions:
Net premiums.............. 8,732 9,826 15,030 10,226 365
Loan interest............. -- -- -- -- --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- -- -- --
Surrenders............ -- (23) (22) -- --
Loans................. -- -- -- -- --
Cost of insurance and
administrative
expenses............. (594) (753) (1,180) (735) (44)
Interfund transfers....... 3,849 1,299 5,095 3,376 111
------ ------- ------- ------- ------
Net increase (decrease) in
units from capital
transactions............... 11,987 10,349 18,923 12,867 432
------ ------- ------- ------- ------
Units outstanding at
December 31, 1998.......... 11,987 10,349 18,923 12,867 432
------ ------- ------- ------- ------
From capital transactions:
Net premiums.............. 20,475 25,736 27,011 18,588 3,248
Loan interest............. -- -- (8) (1) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ -- -- (717) -- --
Surrenders............ -- (48) (92) (326) --
Loans................. (70) (127) (1,325) (203) --
Cost of insurance and
administrative
expenses............. (3,896) (4,807) (6,014) (3,963) (612)
Interfund transfers....... 16,837 17,635 10,749 3,842 5,581
------ ------- ------- ------- ------
Net increase (decrease) in
units from capital
transactions............... 33,346 38,389 29,604 17,937 8,217
------ ------- ------- ------- ------
Units outstanding at
December 31, 1999.......... 45,333 48,738 48,527 30,804 8,649
------ ------- ------- ------- ------
From capital transactions:
Net premiums.............. 40,498 62,852 76,826 77,905 4,109
Loan Interest............. (5) (1) (33) (2) --
Transfers (to) from the
general account of GE
Life & Annuity:
Death benefits........ (497) -- (111) -- (704)
Surrenders............ (1,505) (275) (776) (153) (24)
Loans................. (1,402) (125) (376) (40) --
Cost of insurance and
administrative
expenses............. (7,524) (9,210) (9,251) (6,852) (1,178)
Interfund transfers....... 17,382 26,573 17,721 10,273 4,522
------ ------- ------- ------- ------
Net increase (decrease) in
units from capital
transactions............... 46,947 79,814 84,000 81,131 6,725
------ ------- ------- ------- ------
Units outstanding at
December 31, 2000.......... 92,280 128,552 132,527 111,935 15,374
====== ======= ======= ======= ======
F-55
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Janus Aspen Series Janus Aspen Series-
(continued) Service Shares
-------------------------- ----------------------
International Capital Global Life Global
Growth Appreciation Sciences Technology
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ----------- ----------
Type II Units:
Units outstanding at December
31, 1997.................... -- -- -- --
------ ------- ------ ------
From capital transactions:
Net premiums............... 15,053 3,233 -- --
Loan interest.............. -- -- -- --
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits......... -- -- -- --
Surrenders............. -- -- -- --
Loans.................. -- -- -- --
Cost of insurance and
administrative
expenses.............. (999) (279) -- --
Interfund transfers........ 7,307 595 -- --
------ ------- ------ ------
Net increase (decrease) in
units from capital
transactions................ 21,361 3,549 -- --
------ ------- ------ ------
Units outstanding at December
31, 1998.................... 21,361 3,549 -- --
------ ------- ------ ------
From capital transactions:
Net premiums............... 9,638 27,320 -- --
Loan interest.............. (7) -- -- --
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits......... -- -- -- --
Surrenders............. -- (1) -- --
Loans.................. (1,336) (80) -- --
Cost of insurance and
administrative
expenses.............. (2,838) (3,898) -- --
Interfund transfers........ 18,259 18,547 -- --
------ ------- ------ ------
Net increase (decrease) in
units from capital
transactions................ 23,716 41,888 -- --
------ ------- ------ ------
Units outstanding at December
31, 1999.................... 45,077 45,437 -- --
------ ------- ------ ------
From capital transactions:
Net premiums............... 21,102 58,726 469 3,278
Loan Interest.............. (29) (21) -- --
Transfers (to) from the
general account of GE Life
& Annuity:
Death benefits......... (145) (136) -- --
Surrenders............. -- (1,122) -- --
Loans.................. 98 145 -- --
Cost of insurance and
administrative
expenses.............. (4,898) (7,593) (140) (259)
Interfund transfers........ 12,859 15,688 12,612 9,075
------ ------- ------ ------
Net increase (decrease) in
units from capital
transactions................ 28,987 65,687 12,941 12,094
------ ------- ------ ------
Units outstanding at December
31, 2000.................... 74,064 111,124 12,941 12,094
====== ======= ====== ======
F-56
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Goldman Sachs
Variable Insurance Salomon Brothers Variable
Trust Series Fund Inc.
------------------ --------------------------
Growth and Mid Cap Total
Income Value Strategic Investors Return
Fund Fund Bond Fund Fund Fund
---------- ------- --------- --------- ------
Type II Units:
Units outstanding at December 31,
1997............................ -- -- -- -- --
------ ------ ----- ------ ---
From capital transactions:
Net premiums................... 1,115 742 -- -- --
Loan interest.................. -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- -- --
Surrenders................. -- -- -- -- --
Loans...................... -- -- -- -- --
Cost of insurance and
administrative expenses... (23) (131) -- -- --
Interfund transfers............ -- 10,240 -- -- --
------ ------ ----- ------ ---
Net increase (decrease) in units
from capital transactions....... 1,092 10,851 -- -- --
------ ------ ----- ------ ---
Units outstanding at December 31,
1998............................ 1,092 10,851 -- -- --
------ ------ ----- ------ ---
From capital transactions:
Net premiums................... 1,560 2,252 5,549 548 6
Loan interest.................. -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- -- --
Surrenders................. (18) -- -- -- --
Loans...................... -- -- -- -- --
Cost of insurance and
administrative expenses... (378) (478) (286) (53) (4)
Interfund transfers............ 35 (5,286) 173 128 --
------ ------ ----- ------ ---
Net increase (decrease) in units
from capital transactions....... 1,199 (3,512) 5,436 623 2
------ ------ ----- ------ ---
Units outstanding at December 31,
1999............................ 2,291 7,339 5,436 623 2
------ ------ ----- ------ ---
From capital transactions:
Net premiums................... 9,882 9,618 1,280 2,355 246
Loan Interest.................. -- -- -- -- --
Transfers (to) from the general
account of GE Life & Annuity:
Death benefits............. -- -- -- -- --
Surrenders................. -- -- (269) -- --
Loans...................... -- -- -- -- --
Cost of insurance and
administrative expenses... (800) (1,110) (538) (287) (26)
Interfund transfers............ 1,739 17,815 3,077 11,373 6
------ ------ ----- ------ ---
Net increase (decrease) in units
from capital transactions....... 10,821 26,323 3,550 13,441 226
------ ------ ----- ------ ---
Units outstanding at December 31,
2000............................ 13,112 33,662 8,986 14,064 228
====== ====== ===== ====== ===
F-57
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
Rydex Alliance Variable AIM Variable
MFS Variable Variable Products Series Insurance Funds,
Dreyfus Insurance Trust Trust Fund, Inc. Inc.
-------------------- --------------- -------- ----------------- -----------------
The Dreyfus Socially MFS New
Responsible Discovery Premier AIM V. I. Capital
Growth Fund, Inc. Series OTC Fund Growth Portfolio Appreciation Fund
-------------------- --------------- -------- ----------------- -----------------
Type II Units:
Units outstanding at
December 31, 1999...... -- -- -- -- --
--- --- --- --- ---
From capital
transactions:
Net premiums.......... 6 6 4 6 6
Loan Interest......... -- -- -- -- --
Transfers (to) from
the general account
of GE Life & Annuity:
Death benefits.... -- -- -- -- --
Surrenders........ -- -- -- -- --
Loans............. -- -- -- -- --
Cost of insurance
and
administrative
expenses......... (2) (2) (1) (2) (2)
Interfund transfers... -- -- -- -- --
--- --- --- --- ---
Net increase (decrease)
in units from capital
transactions........... 4 4 3 4 4
--- --- --- --- ---
Units outstanding at
December 31, 2000...... 4 4 3 4 4
=== === === === ===
F-58
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2000
(2) Summary of Significant Accounting Policies -- continued
(d) Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of GE Life & Annuity. GE Life & Annuity is
taxed as a life insurance company under the Internal Revenue Code (the Code).
GE Life & Annuity is included in the General Electric Capital Assurance
Company consolidated federal income tax return. Under existing federal income
tax law, no taxes are payable on the investment income or on the capital gains
of the Account.
(e) Use of Estimates
Financial statements prepared in conformity with accounting principles
generally accepted in the United States of America require management to make
estimates and assumptions that affect amounts and disclosures reported
therein. Actual results could differ from those estimates.
(3) Related Party Transactions
Net premiums transferred from GE Life & Annuity to the Account represent
gross premiums recorded by GE Life & Annuity on its flexible premium variable
life insurance policies, less deductions of 7.5% retained as compensation for
certain distribution expenses and premium taxes. In addition, there is a
deferred sales charge of up to 45% of the first year's premiums. This charge
will be deducted from the policy's cash value in equal installments at the
beginning of each of the policy years two through ten with any remaining
installments deducted at policy lapse or surrender.
If a policy is surrendered or lapses during the first nine years for Type I
policies or fifteen years for Type II policies, a charge is made by GE Life &
Annuity to cover the expenses of issuing the policy. The charge is a stated
percentage of the insurance amount and varies by the age of the policyholder
when issued and period of time that the policy has been in force. A charge
equal to the lesser of $25 or 2% of the amount paid on a partial surrender
will be made to compensate GE Life & Annuity for the costs incurred in
connection with the partial surrender.
A charge based on the policy specified amount of insurance, death benefit
option, cash values, duration, the insured's sex, issue age and risk class is
deducted from the policy cash values each month to compensate GE Life &
Annuity for the cost of insurance and any benefits added by rider. In
addition, GE Life & Annuity charges the Account for the mortality and expense
risk that GE Life & Annuity assumes. This charge is assessed through the daily
unit value calculation equal to an effective annual rate of .70% of the net
assets of the Account. For certain policies issued on or after May 1, 1993, GE
Life & Annuity will deduct a monthly administrative charge of $6 from the
policy cash value and for policies issued prior to May 1, 1993, GE Life &
Annuity will deduct a monthly administrative charge of $5 from the policy cash
value.
Capital Brokerage Corporation, an affiliate of GE Life & Annuity, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation serves
as principal underwriter for variable life insurance policies and variable
annuities issued by GE Life and Annuity.
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company. GE Investment Management Incorporated (Investment
Advisor), a wholly-owned subsidiary of GE, currently serves as investment
advisor to GE Investments Funds, Inc. As compensation for its services, the
Investment Advisor is paid an investment advisory fee by the Fund based on the
average daily net assets at an effective annual rate of .35% for the S&P 500
Index Fund, .50% for the Money Market, Income, and Total Return Funds, 1.00%
for the International Equity Fund, .85% for the Real Estate Securities Fund,
.60% for the Global Income Fund, .55% for the U.S. Equity Fund, and .65% for
the Mid-Cap Value Equity, Premier Growth Equity Funds, and Value Equity Funds
and 0.80% for the Small-Cap Value Equity Fund.
Certain officers and directors of GE Life & Annuity are also officers and
directors of Capital Brokerage Corporation.
F-59
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 29, 2001
(UNAUDITED)
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Table of Contents
September 29, 2001
Page
----
Financial Statements:
Consolidated Balance Sheets.............................................. I-1
Consolidated Statements of Income........................................ I-2
Consolidated Statements of Shareholders' Interest........................ I-3
Consolidated Statements of Cash Flows.................................... I-4
Notes to Consolidated Financial Statements (Unaudited)................... I-5
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
(Dollar amounts in millions)
(Unaudited)
September 29, December 31,
2001 2000
------------- ------------
ASSETS
Investments:
Fixed maturities available-for-sale, at fair
value............................................ $ 9,705.3 $ 9,260.5
Equity securities available-for-sale, at fair
value:
Common stocks.................................... 22.7 15.3
Preferred stocks, non-redeemable................. 23.5 20.8
Investment in affiliate........................... 2.6 2.6
Mortgage loans, net of valuation allowance of
$17.6 and $14.3 at September 29, 2001 and
December 31, 2000, respectively.................. 941.0 1,130.0
Policy loans...................................... 103.3 89.0
Real estate owned................................. 3.5 2.5
Other invested assets............................. 115.7 134.7
--------- ---------
Total investments............................... 10,917.6 10,655.4
--------- ---------
Cash & cash equivalents............................. 191.1 71.4
Accrued investment income........................... 211.5 215.9
Deferred acquisition costs.......................... 803.7 715.7
Intangible assets................................... 348.7 400.4
Reinsurance recoverable............................. 146.9 90.6
Other assets........................................ 200.3 69.9
Separate account assets............................. 8,169.1 10,393.2
--------- ---------
Total assets.................................... $20,988.9 $22,612.5
========= =========
LIABILITIES AND SHAREHOLDERS' INTEREST
Liabilities:
Future annuity and contract benefits.............. $10,180.8 $ 9,934.3
Liability for policy and contract claims.......... 188.0 140.4
Other policyholder liabilities.................... 194.0 164.0
Accounts payable and accrued expenses............. 569.5 473.9
Deferred income tax liability..................... 85.2 32.0
Separate account liabilities...................... 8,169.1 10,393.2
--------- ---------
Total liabilities............................... 19,386.6 21,137.8
--------- ---------
Shareholders' interest:
Net unrealized investment gains/(losses).......... 33.7 (18.7)
Derivatives qualifying as hedges.................. (7.6) --
--------- ---------
Accumulated non-owner changes in equity........... 26.1 (18.7)
Preferred stock, Series A ($1,000 par value,
$1,000 redemption and liquidation value, 200,000
shares authorized, 120,000 shares issued and
outstanding)..................................... 120.0 120.0
Common stock ($1,000 par value, 50,000 authorized,
25,651 shares issued and outstanding)............ 25.6 25.6
Additional paid-in capital........................ 1,050.7 1,050.7
Retained earnings................................. 379.9 297.1
--------- ---------
Total shareholders' interest.................... 1,602.3 1,474.7
--------- ---------
Total liabilities and shareholders' interest.... $20,988.9 $22,612.5
========= =========
See accompanying notes to consolidated financial statements.
I-1
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Statements of Income
(Dollar amounts in millions)
(Unaudited)
Nine Months Ended
---------------------------
September 29, September 30,
2001 2000
------------- -------------
Revenues:
Net investment income............................ $531.5 $ 513.4
Net realized investment gains.................... 14.1 6.5
Premiums......................................... 81.5 88.9
Cost of insurance................................ 97.6 94.7
Variable product fees............................ 100.3 109.8
Other income..................................... 31.5 42.4
------ -------
Total revenues................................. 856.5 855.7
------ -------
Benefits and expenses:
Interest credited................................ 408.9 387.4
Benefits and other changes in policy reserves.... 140.5 171.5
Commissions...................................... 126.9 182.7
General expenses................................. 95.9 89.5
Amortization of intangibles, net................. 36.2 35.9
Change in deferred acquisition costs, net........ (99.1) (188.4)
Interest expense................................. 2.2 0.6
------ -------
Total benefits and expenses.................... 711.5 679.2
------ -------
Income before income taxes and cumulative
effect of change in accounting principle...... 145.0 176.5
Provision for income taxes......................... 51.7 61.8
------ -------
Income before cumulative effect of change in
accounting principle.......................... 93.3 114.7
------ -------
Cumulative effect of change in accounting
principle, net of tax............................. (5.7) --
------ -------
Net income..................................... $ 87.6 $ 114.7
====== =======
See accompanying notes to consolidated financial statements.
I-2
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Statements of Shareholders' Interest
(Dollar amount in millions)
(Unaudited)
Preferred Accumulated
Stock Common Stock Additional Non-owner Total
-------------- ------------- Paid In Changes Retained Shareholders'
Shares Amount Shares Amount Capital in Equity Earnings Interest
------- ------ ------ ------ ---------- ----------- -------- -------------
Balances at December 31,
1999................... 120,000 $120.0 25,651 $25.6 $1,050.7 $(134.2) $143.6 $1,205.7
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- $163.1 163.1
Net unrealized
gains/(losses) on
investment securities
(a)................... -- -- -- -- -- $ 115.5 -- 115.5
--------
Total changes other
than transactions with
shareholders.......... 278.6
------
Cash dividend declared
and paid............... -- -- -- -- -- -- $ (9.6) (9.6)
------- ------ ------ ----- -------- ------- ------ --------
Balances at December 31,
2000................... 120,000 $120.0 25,651 $25.6 $1,050.7 $ (18.7) $297.1 $1,474.7
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- $ 87.6 87.6
Derivatives qualifying
as hedges............. -- -- -- -- -- $ (7.6) -- (7.6)
Net unrealized gains
(losses) on investment
securities (a)........ -- -- -- -- -- $ 52.4 -- 52.4
--------
Total changes other
than transactions with
shareholders.......... 132.4
Cash dividend declared
and paid............... -- -- -- -- -- -- $ (4.8) (4.8)
------- ------ ------ ----- -------- ------- ------ --------
Balances at September
29, 2001............... 120,000 $120.0 25,651 $25.6 $1,050.7 $ 26.1 $379.9 $1,602.3
======= ====== ====== ===== ======== ======= ====== ========
- -------
(a) Presented net of deferred taxes of $(16.5) at September 29, 2001 and
$(61.8) at December 31, 2000.
See accompanying notes to consolidated financial statements.
I-3
GE Life and Annuity Assurance Company and Subsidiary
Consolidated Statements of Cash Flows
(Dollar amounts in millions)
(Unaudited)
Nine Months Ended
---------------------------
September 29, September 30,
2001 2000
------------- -------------
Cash flows from operating activities:
Net income........................................ $ 87.6 $ 114.7
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting
principle, net of tax........................... 5.7
Cost of insurance and surrender fees............. (125.3) (125.7)
Decrease in future policy benefits............... 444.3 511.9
Net realized investment gains.................... (14.1) (6.5)
Amortization of investment premiums and
discounts....................................... 5.4 2.1
Amortization of intangibles...................... 36.2 35.9
Deferred income tax expense...................... 33.6 69.4
Changes in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income...................... 4.4 --
Deferred acquisition costs..................... (99.1) (188.4)
Other assets, net.............................. (129.1) 127.9
Increase (decrease) in:
Policy and contract claims..................... 41.1 1.7
Other policyholder liabilities................. 31.1 13.0
Accounts payable and accrued expenses.......... 85.2 60.2
--------- ---------
Total adjustments............................ 319.4 501.5
--------- ---------
Net cash provided by operating activities.... 407.0 616.2
--------- ---------
Cash flows from investing activities:
Short-term investment activity, net.............. 10.1 --
Proceeds from sales and maturities of investment
securities and other invested assets............ 2,512.8 1,169.1
Principal collected on mortgage and policy
loans........................................... 304.2 85.3
Purchases of investment securities and other
invested assets................................. (2,850.4) (1,375.4)
Mortgage loan originations and increase policy
loans........................................... (134.6) (407.4)
--------- ---------
Net cash used in investing activities........ (157.9) (528.4)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of investment contracts... 2,618.8 4,025.8
Redemption and benefit payments on investment
contracts....................................... (2,743.4) (3,943.3)
Cash dividends to shareholders................... (4.8) (4.8)
--------- ---------
Net cash (used in) provided by financing
activities.................................. (129.4) 77.7
--------- ---------
Net increase (decrease) in cash and cash
equivalents................................. 119.7 165.5
Cash and cash equivalents at beginning of
period.......................................... 71.4 70.0
--------- ---------
Cash and cash equivalents at end of period....... $ 191.1 $ 235.5
========= =========
See accompanying notes to consolidated financial statements.
I-4
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollar amounts in millions)
(Unaudited)
1. The accompanying consolidated September 29, 2001 financial statements
represent GE Life and Annuity Assurance Company and its consolidated
subsidiary, Assigned Settlements Inc. (collectively "the Company"). All
significant intercompany transactions have been eliminated.
2. These financial statements have been prepared on the basis of accounting
principals generally accepted in the United States of America ("U.S. GAAP").
The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts
and related disclosures. Actual results could differ from these estimates.
Certain prior year amounts have been reclassified to conform to the current
year presentation. The consolidated year-to-date financial statements are
unaudited. These statements include all adjustments (consisting of normal
recurring accruals) considered necessary by management to present a fair
statement of income and cash flows. The results reported in these consolidated
financial statements should not be regarded as balance sheet necessarily
indicative of results that may be expected for the entire year.
3. Certificates, money market funds and other time deposits with original
maturities of less than 90 days if any, are considered cash equivalents in the
Consolidated Balance Sheets and Consolidated Statements of Cash Flows.
4. The Financial Accounting Standards Board ("FASB") issued, then
subsequently amended, Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
became effective for the Company on January 1, 2001. Under SFAS No. 133, as
amended, all derivative instruments (including certain derivative instruments
embedded in other contracts) are recognized in the balance sheet at their fair
values and changes in fair value are recognized immediately in earnings,
unless derivatives qualify as hedges of future cash flows. For derivatives
qualifying as hedges of future cash flows, the effective portion of changes in
fair value is recorded temporarily in equity, then recognized in earnings
along with the related effects of the hedged items. Any ineffective portion of
a hedge is reported in earnings as it occurs.
The nature of the Company's business activities necessarily involves the
management of various financial and market risks, including those related to
changes in interest rates and equity prices. As discussed more fully in Notes
1 and 10 of the 2000 audited financial statements, the Company uses derivative
financial instruments to mitigate or eliminate certain of those risks. The
January 1, 2001 accounting change described above affected only the pattern
and timing of non-cash accounting recognition.
At January 1, 2001 the Company's financial statements were adjusted to
record a cumulative effect of adopting this accounting change, as follows:
Shareholders'
Earnings Interest
-------- -------------
Adjustment to fair value of derivatives (a).............. $(8.7) $(12.2)
Income tax effects....................................... 3.0 4.4
----- ------
Total.................................................... $(5.7) $ (7.8)
===== ======
- -------
(a) For earnings effect, amount shown is net of adjustment to hedged items.
A reconciliation of current period changes for the first nine months of
2001, net of applicable income taxes in the separate component of
shareholders' interest labeled "derivatives qualifying as hedges", follows:
Transition adjustment as of January 1, 2001........................ $(7.8)
Current period increases in fair value -- net...................... 0.2
-----
Balance at September 29, 2001...................................... $(7.6)
=====
I-5
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
(Dollar amounts in millions)
Unaudited
The cumulative effect on shareholders' interest was primarily attributable
to marking to market swap contracts used to hedge interest rate risk on
variable-rate borrowings. Increases in the fair value of these instruments are
attributable to decreases in short-term interest rates. Additional disclosures
required by SFAS No. 133, as amended, are provided in the following
paragraphs.
Hedges of Future Cash Flows
There was no ineffectiveness reported in the nine months ended September
29, 2001 in fair values of hedge positions. There were no amounts excluded
from the measure of effectiveness in the nine months ended September 29, 2001
related to the hedge of future cash flows.
Of the $(7.8) million transition adjustment recorded in shareholders'
interest at January 1, 2001, less than $(0.1) million, net of income taxes,
was reclassified to income during the nine month period ended September 29,
2001. The $(7.6) million, net of taxes, recorded in shareholders' interest at
September 29, 2001 is expected to be reclassified to future income,
contemporaneously with and primarily offsetting changes in interest expense
and interest income on floating-rate instruments. Of this amount $(0.1)
million, net of income taxes, are expected to be reclassified to earnings over
the twelve-month period ended September 30, 2002. The actual amounts that will
be reclassified to income over the next twelve months will vary from this
amount as a result of market conditions. No amounts were reclassified to
income during the first nine months ended September 29, 2001 in connection
with forecasted transactions that were no longer considered probable of
occurring.
At September 29, 2001, there were no derivative instruments hedging
forecasted transactions, except those related to payment of variable interest
on existing financial instruments.
Hedges of Recognized Assets, Liabilities and Firm Commitments
The ineffective portion of changes in fair values of hedge positions,
reported in the nine month period ended September 29, 2001 operations,
amounted to $0.1 million, before income taxes. These amounts were included in
net realized investment gains. There were no amounts excluded from the measure
of effectiveness.
Derivatives Not Designated as Hedges
At September 29, 2001, there were no derivatives that do not qualify for
hedge accounting under SFAS No. 133, as amended.
5. Included in our investment portfolio are certain debt securities issued
by Enron Corporation ("Enron") with a book value of approximately $20 million.
On December 2, 2001, Enron filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code. During the fourth quarter of
2001, management believed it was no longer probable that the Company would
receive all contractual payments when due on these securities. Accordingly,
the debt securities were written down by $15 million subsequent to September
29, 2001.
I-6
GE LIFE AND ANNUITY ASSURANCE COMPANY
Consolidated Financial Statements
Year ended December 31, 2000
(With Independent Auditors' Report Thereon)
GE LIFE AND ANNUITY ASSURANCE COMPANY
Table of Contents
Year ended December 31, 2000
Page
----
Independent Auditors' Report............................................... F-1
Consolidated Balance Sheets................................................ F-2
Consolidated Statements of Income.......................................... F-3
Consolidated Statements of Shareholders' Interest.......................... F-4
Consolidated Statements of Cash Flows...................................... F-5
Notes to Consolidated Financial Statements................................. F-6
Independent Auditors' Report
The Board of Directors
GE Life and Annuity Assurance Company:
We have audited the accompanying consolidated balance sheets of GE Life and
Annuity Assurance Company and subsidiary as of December 31, 2000 and 1999, and
the related consolidated statements of income, shareholders' interest, and
cash flows for each of the years in the three-year period ended December 31,
2000. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GE Life
and Annuity Assurance Company and subsidiary as of December 31, 2000 and 1999,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in note 15 to the consolidated financial statements, the
Company changed its method of accounting for insurance-related assessments in
1999.
/s/ KPMG LLP
Richmond, Virginia
January 22, 2001
F-1
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
(Dollar amounts in millions, except per share amounts)
December 31,
--------------------
2000 1999
--------- ---------
Assets
Investments:
Fixed maturities available-for-sale, at fair value...... $ 9,260.5 $ 8,033.7
Equity securities available-for-sale, at fair value:
Common stocks.......................................... 15.3 9.2
Preferred stocks, non-redeemable....................... 20.8 23.9
Investment in affiliate................................. 2.6 2.6
Mortgage loans, net of valuation allowance of $14.3 and
$23.3 at December 31, 2000 and 1999, respectively...... 1,130.0 810.5
Policy loans............................................ 89.0 58.5
Real estate owned....................................... 2.5 2.5
Other invested assets................................... 135.8 141.5
--------- ---------
Total investments...................................... 10,656.5 9,082.4
--------- ---------
Cash..................................................... 70.3 21.2
Accrued investment income................................ 215.9 190.2
Deferred acquisition costs............................... 715.7 482.5
Intangible assets........................................ 400.4 472.8
Reinsurance recoverable.................................. 90.6 72.4
Deferred income tax asset................................ -- 120.3
Other assets............................................. 69.9 269.7
Separate account assets.................................. 10,393.2 9,245.8
--------- ---------
Total assets........................................... $22,612.5 $19,957.3
========= =========
Liabilities and Shareholders' Interest
Liabilities:
Future annuity and contract benefits.................... $ 9,934.3 $ 9,063.0
Liability for policy and contract claims................ 140.4 110.7
Other policyholder liabilities.......................... 164.0 138.8
Accounts payable and accrued expenses................... 473.9 193.3
Deferred income tax liability........................... 32.0 --
Separate account liabilities............................ 10,393.2 9,245.8
--------- ---------
Total liabilities...................................... 21,137.8 18,751.6
--------- ---------
Shareholders' interest:
Net unrealized investment gains......................... (18.7) (134.2)
--------- ---------
Accumulated non-owner changes in equity................. (18.7) (134.2)
Preferred stock, Series A ($1,000 par value, $1,000
redemption and liquidation value, 200,000 shares
authorized, 120,000 shares issued and outstanding)..... 120.0 120.0
Common stock ($1,000 par value, 50,000 authorized,
25,651 shares issued and outstanding).................. 25.6 25.6
Additional paid-in capital.............................. 1,050.7 1,050.7
Retained earnings....................................... 297.1 143.6
--------- ---------
Total shareholders' interest........................... 1,474.7 1,205.7
--------- ---------
Total liabilities and shareholders' interest........... $22,612.5 $19,957.3
========= =========
See accompanying notes to consolidated financial statements.
F-2
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Statements of Income
(Dollar amounts in millions)
Years Ended December 31,
--------------------------
2000 1999 1998
-------- -------- ------
Revenues:
Net investment income............................. $ 708.9 $ 638.2 $574.7
Net realized investment gains..................... 4.3 12.0 29.6
Premiums.......................................... 116.3 123.9 123.1
Cost of insurance................................. 126.0 129.0 128.5
Variable product fees............................. 148.7 90.2 60.8
Other income...................................... 49.2 24.6 22.3
-------- -------- ------
Total revenues................................... 1,153.4 1,017.9 939.0
-------- -------- ------
Benefits and expenses:
Interest credited................................. 532.6 440.8 378.4
Benefits and other changes in policy reserves..... 223.6 214.7 178.4
Commissions....................................... 229.3 192.1 112.8
General expenses.................................. 124.8 124.7 111.0
Amortization of intangibles, net.................. 43.7 58.3 64.8
Change in deferred acquisition costs, net......... (237.7) (179.1) (74.7)
Interest expense.................................. 1.1 1.9 2.2
-------- -------- ------
Total benefits and expenses...................... 917.4 853.4 772.9
-------- -------- ------
Income before income taxes and cumulative effect
of accounting change............................ 236.0 164.5 166.1
Provision for income taxes......................... 72.9 56.6 60.3
-------- -------- ------
Income before cumulative effect of accounting
change.......................................... 163.1 107.9 105.8
-------- -------- ------
Cumulative effect of accounting change, net of
tax............................................... -- 5.0 --
-------- -------- ------
Net income....................................... $ 163.1 $ 112.9 $105.8
======== ======== ======
See accompanying notes to consolidated financial statements.
F-3
GE LIFE AND ANNUITY ASSURANCE COMPANY
Consolidated Statements of Shareholders' Interest
(Dollar amounts in millions)
Common Stock
Preferred Declared Accumulated
Stock Common Stock but not Issued Additional Non-owner Total
-------------- ------------- --------------- Paid-In Changes Retained Shareholders'
Shares Amount Shares Amount Shares Amount Capital in Equity Earnings Interest
------- ------ ------ ------ ------- ------ ---------- ----------- -------- -------------
Balances at December 31,
1997................... -- $ -- 7,010 $ 7.0 -- $ -- $1,058.4 $ 87.7 $ 193.1 $1,346.2
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 105.8 105.8
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (29.9) -- (29.9)
--------
Total changes other
than transactions with
shareholders.......... 75.9
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (120.0) (120.0)
Preferred stock
dividend............... 120,000 120.0 -- -- -- -- -- -- (120.0) --
Common stock dividend
declared but not
issued................. -- -- -- -- 18,641 18.6 -- -- (18.6) --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- (8.3) -- -- (8.3)
------- ------ ------ ----- ------- ------ -------- ------- ------- --------
Balances at December 31,
1998................... 120,000 120.0 7,010 7.0 18,641 18.6 1,050.1 57.8 40.3 1,293.8
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 112.9 112.9
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- (192.0) -- (192.0)
--------
Total changes other
than transactions with
shareholders.......... (79.1)
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (9.6) (9.6)
Common stock issued..... -- -- 18,641 18.6 (18,641) (18.6) -- -- -- --
Adjustment to reflect
purchase method........ -- -- -- -- -- -- 0.6 -- -- 0.6
------- ------ ------ ----- ------- ------ -------- ------- ------- --------
Balances at December 31,
1999................... 120,000 120.0 25,651 25.6 -- -- 1,050.7 (134.2) 143.6 1,205.7
Changes other than
transactions with
shareholders:
Net income............. -- -- -- -- -- -- -- -- 163.1 163.1
Net unrealized losses
on investment
securities (a)........ -- -- -- -- -- -- -- 115.5 -- 115.5
--------
Total changes other
than transactions with
shareholders.......... 278.6
Cash dividend declared
and paid............... -- -- -- -- -- -- -- -- (9.6) (9.6)
------- ------ ------ ----- ------- ------ -------- ------- ------- --------
Balances at December 31,
2000................... 120,000 $120.0 25,651 $25.6 -- $ -- $1,050.7 $ (18.7) $ 297.1 $1,474.7
======= ====== ====== ===== ======= ====== ======== ======= ======= ========
- -------
(a) Presented net of deferred taxes of $(61.8), $103.3 and $16.1 in 2000, 1999
and 1998, respectively.
See accompanying notes to consolidated financial statements.
F-4
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Dollar amounts in millions)
Years Ended December 31,
-------------------------------
2000 1999 1998
--------- --------- ---------
Cash flows from operating activities:
Net income................................... $ 163.1 $ 112.9 $ 105.8
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Cost of insurance and surrender fees........ (149.3) (169.5) (171.6)
Increase in future policy benefits.......... 688.9 565.5 440.6
Net realized investment gains............... (4.3) (12.0) (29.6)
Amortization of investment premiums and
discounts.................................. (3.4) (1.3) (1.3)
Amortization of intangibles................. 43.7 58.3 64.8
Deferred income tax expense (benefit)....... 94.5 25.0 29.5
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income................. (25.7) (48.6) 1.5
Deferred acquisition costs................ (237.7) (179.1) (74.7)
Other assets, net......................... 188.2 (200.1) (30.3)
Increase (decrease) in:
Policy and contract claims................ 25.5 (43.4) 18.0
Other policyholder liabilities............ 26.8 20.0 2.5
Accounts payable and accrued expenses..... 276.2 73.8 19.6
--------- --------- ---------
Total adjustments....................... 923.4 88.6 269.0
--------- --------- ---------
Net cash provided by operating
activities............................. 1,086.5 201.5 374.8
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sales and maturities of
investment securities and other invested
assets...................................... 1,997.0 1,702.2 2,238.0
Principal collected on mortgage loans........ 102.1 103.3 138.3
Proceeds collected from policy loan
securitization.............................. -- 145.1 --
Purchase of investment securities and other
invested assets............................. (3,017.1) (3,086.2) (2,685.4)
Mortgage loan originations and increase in
policy loans................................ (437.4) (170.4) (212.3)
--------- --------- ---------
Net cash used in investing activities... (1,355.4) (1,306.0) (521.4)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issue of investment contracts.. 5,274.4 4,717.6 2,280.0
Redemption and benefit payments on investment
contracts................................... (4,946.8) (3,593.4) (2,016.2)
Cash dividend to shareholders................ (9.6) (9.6) (120.0)
--------- --------- ---------
Net cash provided by financing
activities............................. 318.0 1,114.6 143.8
--------- --------- ---------
Net increase (decrease) in cash and
equivalents............................ 49.1 10.1 (2.8)
Cash and cash equivalents at beginning of
year......................................... 21.2 11.1 13.9
--------- --------- ---------
Cash and cash equivalents at end of year...... $ 70.3 $ 21.2 $ 11.1
========= ========= =========
See accompanying notes to consolidated financial statements.
F-5
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the historical
operations and accounts of GE Life and Annuity Assurance Company and its
subsidiary, Assigned Settlements Inc. (collectively the "Company" or
"GELAAC"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Effective January 1, 1999, an affiliated company, The Harvest Life Insurance
Company ("Harvest") merged into The Life Insurance Company of Virginia ("LOV")
with the merged Company renamed GE Life and Annuity Assurance Company
("GELAAC"). Harvest's former parent, Federal Home Life Insurance Company
("FHLIC"), received common stock of GELAAC in exchange for its interest in
Harvest. FHLIC is an indirect wholly-owned subsidiary of GE Financial
Assurance Holdings, Inc. ("GEFAHI"). As the merged entities were under common
control, the transaction has been accounted for similar to a pooling of
interest. Accordingly, the financial statements have been restated for GELAAC
for the year ended December 31, 1998 as if Harvest had been a part of LOV as
of January 1, 1998.
The majority of GELAAC's outstanding common stock is owned by General
Electric Capital Assurance Company ("GECA"). GECA is an indirect wholly-owned
subsidiary of GEFAHI, which is an indirect wholly-owned subsidiary of GE
Capital Corporation ("GECC"). GECC is an indirect wholly-owned subsidiary of
General Electric Company.
(b) Basis of Presentation
The accompanying consolidated financial statements have been prepared on the
basis of accounting principles generally accepted in the United States of
America ("GAAP") for insurance companies. The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts and related disclosures. Actual
results could differ from those estimates.
(c) Products
The Company's product offerings are divided along two major segments of
consumer needs: (i) Wealth Accumulation and Transfer and (ii) Lifestyle
Protection and Enhancement.
The Company's principal product lines under the Wealth Accumulation and
Transfer segment are (i) annuities (deferred and immediate; either fixed or
variable); (ii) life insurance (universal, variable, ordinary and group),
(iii) guaranteed investment contracts ("GICs") including funding agreements
and (iv) mutual funds. Wealth Accumulation and Transfer products are used by
customers as vehicles for accumulating wealth, often on a tax-deferred basis,
transferring wealth to beneficiaries, or providing a means to replace the
insured's income in the event of premature death. The Company's distribution
of Wealth Accumulation and Transfer products is accomplished through two
distribution methods: (i) intermediaries and (ii) career or dedicated sales
forces.
The Company's principal product lines under the Lifestyle Protection and
Enhancement segment are (i) long-term care insurance and (ii) supplemental
accident and health insurance. Lifestyle Protection and Enhancement products
are used by customers as vehicles to protect their income and assets from the
adverse economic impacts of significant health care costs or other
unanticipated events that cause temporary or permanent loss of earnings
capabilities (including the ability to repay certain indebtedness). The
Company's distribution of Lifestyle Protection and Enhancement products is
accomplished through two distribution methods: (i) intermediaries and (ii)
career or dedicated sales forces.
F-6
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
Approximately 18%, 17% and 20% of premium and annuity consideration
collected, in 2000, 1999, and 1998, respectively, came from customers residing
in the South Atlantic region of the United States, and approximately 24%, 17%
and 27% of premium and annuity consideration collected, in 2000, 1999, and
1998, respectively, came from customers residing in the Mid-Atlantic region of
the United States.
Although the Company markets its products through numerous distributors,
approximately 25%, 28% and 20% of the Company's sales of variable products in
2000, 1999, and 1998, respectively, have been through two specific national
stockbrokerage firms (part of the Wealth Accumulation and Transfer segment.)
Loss of all or a substantial portion of the business provided by these
stockbrokerage firms could have a material adverse effect on the business and
operations of the Company. The Company does not believe, however, that the
loss of such business would have a long-term adverse effect because of the
Company's competitive position in the marketplace, the availability of
business from other distributors, and the Company's mix of other products.
(d) Revenues
Investment income is recorded when earned. Realized investment gains and
losses are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or, in the
case of life contingent immediate annuities, when the contracts are issued.
Premiums received under annuity contracts without significant mortality risk
and premiums received on universal life products are not reported as revenues
but as liabilities for future annuity and contract benefits. Cost of insurance
is charged to universal life policyholders based upon at risk amounts, and is
recognized as revenue when due. Variable product fees are charged to variable
annuity and variable life policyholders based upon the daily net assets of the
policyholders' account values, and are recognized as revenue when charged.
Other income consists primarily of surrender charges on certain policies.
Surrender charges are recognized as income when the policy is surrendered.
(e) Investments
The Company has designated its fixed maturities (bonds, notes, mortgage-
backed securities, asset-backed securities and redeemable preferred stock) and
equity securities (common and non-redeemable preferred stock) as available-
for-sale. The fair value for regularly traded fixed maturities and equity
securities is based on individual quoted market prices. For fixed maturities
not regularly traded, fair values are estimated using values obtained from
independent pricing services or, are estimated by discounting expected future
cash flows using a current market rate applicable to the credit quality,
industry sector, call features and maturity of the investments, as applicable.
Changes in the fair values of investments available-for-sale, net of the
effect on deferred policy acquisition costs, present value of future profits
and deferred federal income taxes are reflected as unrealized investment gains
or losses and, accordingly, have no effect on net income, but are shown as a
component of accumulated non-owner changes in equity in the Consolidated
Statements of Shareholders' Interest. Unrealized losses that are considered
other than temporary are recognized in earnings through an adjustment to the
amortized cost basis of the underlying securities. The allowance for losses is
determined primarily on the basis of management's best estimate of probable
losses, including specific allowances for known troubled credits, if any.
Writedowns and the change in reserves are included in net realized investment
gains and losses in the Consolidated Statements of Income. In general, the
Company ceases to accrue investment income when interest or dividend payments
are 90 days in arrears.
Investment income on mortgage-backed and asset-backed securities is
initially based upon yield, cash flow and prepayment assumptions at the date
of purchase. Subsequent revisions in those assumptions are recorded using the
retrospective method, whereby the amortized cost of the securities is adjusted
to the amount that would have existed had the revised assumptions been in
place at the date of purchase. The adjustments to amortized cost are recorded
as a charge or credit to investment income.
F-7
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
Mortgage loans and policy loans are carried at their unpaid principal
balance, net of allowances for estimated uncollectible amounts. Short-term
investments, if any, are carried at amortized cost which approximates fair
value. Equity securities are carried at fair value. Investments in limited
partnerships are generally accounted for under the equity method of
accounting. Real estate is carried, generally, at cost less accumulated
depreciation. Other long-term investments are carried generally at amortized
cost.
Under certain securities lending transactions, the Company requires the
borrower provide collateral, consisting primarily of cash and government
securities, on a daily basis, in amounts equal to or exceeding 102% of the
market value of the applicable securities loaned.
(f) Deferred Acquisition Costs
Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts.
Deferred acquisition costs include first-year commissions in excess of
recurring renewal commissions, as well as other qualified non-commission
policy acquisition costs. For investment and universal life type contracts,
amortization is based on the present value of anticipated gross profits from
investments, interest credited, surrender and other policy charges, and
mortality and maintenance expenses. Amortization is adjusted retroactively
when current estimates of future gross profits to be realized are revised. For
other long-duration insurance contracts, the acquisition costs are amortized
in relation to the estimated benefit payments or the present value of expected
future premiums.
Deferred acquisition costs are reviewed to determine if they are recoverable
from future income, including investment income, and, if not considered
recoverable, are charged to expense.
(g) Intangible Assets
Present Value of Future Profits -- In conjunction with the acquisition of
the Company, a portion of the purchase price was assigned to the right to
receive future gross profits arising from existing insurance and investment
contracts. This intangible asset, called present value of future profits
(PVFP), represents the actuarially determined present value of the projected
future cash flows from the acquired policies.
Goodwill -- Goodwill is amortized over a period of 20 years on the straight-
line method. Goodwill in excess of associated expected operating cash flows is
considered to be impaired and is written down to fair value. No such write-
downs have occurred.
(h) Federal Income Taxes
Deferred income taxes have been provided for the effects of temporary
differences between financial reporting and tax bases of assets and
liabilities and have been measured using the enacted marginal tax rates and
laws that are currently in effect.
(i) Reinsurance
Premium revenue, benefits, underwriting, acquisition and insurance expenses
are reported net of the amounts relating to reinsurance ceded to other
companies. Amounts due from reinsurers for incurred future claims are
reflected in the reinsurance recoverable asset. The cost of reinsurance is
accounted for over the terms of the related treaties using assumptions
consistent with those used to account for the underlying reinsured policies.
(j) Future Annuity and Contract Benefits
Future annuity and contract benefits consist of the liability for investment
contracts, insurance contracts and accident and health contracts. Investment
contract liabilities are generally equal to the policyholder's current account
value. The
F-8
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
liability for insurance and accident and health contracts is calculated based
upon actuarial assumptions as to mortality, morbidity, interest, expense and
withdrawals, with experience adjustments for adverse deviation where
appropriate.
(k) Liability for Policy and Contract Claims
The liability for policy and contract claims represents the amount needed to
provide for the estimated ultimate cost of settling claims relating to insured
events that have occurred on or before the end of the respective reporting
period. The estimated liability includes requirements for future payments of
(a) claims that have been reported to the insurer, and (b) claims related to
insured events that have occurred but that have not been reported to the
insurer as of the date the liability is estimated.
(l) Separate Account Assets and Liabilities
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life contract owners.
The Company receives mortality risk fees and administration charges from the
variable mutual fund portfolios. The separate account assets are carried at
fair value and are equivalent to the liabilities that represent the
policyholders' equity in those assets.
The Company has periodically transferred capital to the separate accounts to
provide for the initial purchase of investments in new mutual fund portfolios.
As of December 31, 2000, approximately $67.9 of the Company's other invested
assets related to its capital investments in the separate accounts.
(m) Interest Rate Risk Management
As a matter of policy, the Company does not engage in derivatives trading,
market-making or other speculative activities.
The Company uses interest rate floors primarily to minimize the risk on
investment contracts with minimum guaranteed interest rates. The Company
requires all interest rate floors to be designated and accounted for as hedges
of specific assets, liabilities or committed transactions; resulting payments
and receipts are recognized contemporaneously with effects of hedged
transactions. A payment or receipt arising from early termination of an
effective hedge is accounted for as an adjustment to the basis of the hedged
transaction.
Instruments used as hedges must be effective at reducing the risk associated
with the exposure being hedged and must be designated as a hedge at the
inception of the contract. Accordingly, changes in market values of hedged
instruments must be highly correlated with changes in market values of
underlying hedged items both at inception of the hedge and over the life of
the hedge contract. Any instrument designated but ineffective as a hedge is
marked to market and recognized in operations immediately.
F-9
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
(2) Investments
(a) General
The sources of investment income of the Company as of December 31, were as
follows:
2000 1999 1998
------ ------ ------
Fixed maturities..................................... $624.9 $560.1 $489.8
Equity securities.................................... -- -- 4.9
Mortgage loans....................................... 80.0 66.9 64.2
Policy loans......................................... 4.6 14.0 14.4
Other investments.................................... 6.7 2.5 6.7
------ ------ ------
Gross investment income.............................. 716.2 643.5 580.0
Investment expenses.................................. (7.3) (5.3) (5.3)
------ ------ ------
Net investment income................................ $708.9 $638.2 $574.7
====== ====== ======
For the years ended December 31, sales proceeds and gross realized
investment gains and losses from the sales of investment securities available-
for-sale were as follows:
2000 1999 1998
------ ------ --------
Sales proceeds..................................... $874.2 $590.3 $1,330.0
====== ====== ========
Gross realized investment:
Gains............................................. 29.3 28.6 43.8
Losses............................................ (25.0) (16.6) (14.2)
------ ------ --------
Net realized investment gains...................... $ 4.3 $ 12.0 $ 29.6
====== ====== ========
The additional proceeds from the investments presented in the Consolidated
Statements of Cash Flows result from principal collected on mortgage-backed
securities, asset-backed securities, maturities, calls and sinking fund
payments.
Net unrealized gains and losses on investment securities and other invested
assets classified as available-for-sale are reduced by deferred income taxes
and adjustments to the present value of future profits and deferred policy
acquisition costs that would have resulted had such gains and losses been
realized. Net unrealized gains and losses on available-for-sale investment
securities and other invested assets reflected as a separate component of
shareholders' interest as of December 31, are summarized as follows:
2000 1999 1998
------ ------- ------
Net unrealized gains/(losses) on available-for-
sale investment securities and other invested
assets before adjustments:
Fixed maturities................................ $(34.4) $(245.0) $138.2
Equity securities............................... (1.6) (0.4) 5.5
Other invested assets........................... (3.2) (4.1) 2.3
------ ------- ------
Subtotal....................................... (39.2) (249.5) 146.0
====== ======= ======
Adjustments to the present value of future
profits and deferred acquisition costs.......... 10.1 43.1 (57.1)
Deferred income taxes............................ 10.4 72.2 (31.1)
------ ------- ------
Net unrealized gains/(losses).................. $(18.7) $(134.2) $ 57.8
====== ======= ======
F-10
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
The change in the net unrealized gains (losses) on investment securities
reported in accumulated non-owner changes in equity is as follows:
2000 1999 1998
------- ------ ------
Net unrealized gains (losses) on investment
securities -- beginning of year................... $(134.2) $ 57.8 $ 87.7
Unrealized gains (losses) on investment
securities -- net of deferred taxes of ($63.3),
$99.1 and $5.7.................................... 118.3 (184.2) (10.7)
Reclassification adjustments - net of deferred
taxes of $1.5, $4.5 and $10.4..................... (2.8) (7.8) (19.2)
------- ------ ------
Net unrealized gain (losses) on investment
securities - end of year.......................... (18.7) (134.2) 57.8
======= ====== ======
At December 31, the amortized cost, gross unrealized gains and losses, and
fair values of the Company's fixed maturities and equity securities available-
for-sale were as follows:
Gross Gross
Amortized unrealized unrealized Fair
2000 cost gains losses value
---- --------- ---------- ---------- --------
Fixed maturities:
U.S. government and agency....... $ 10.3 $ 0.3 $ -- $ 10.6
State and municipal.............. 1.3 -- -- 1.3
Non-U.S. government.............. 3.0 -- -- 3.0
U.S. corporate................... 5,705.5 24.2 (148.8) 5,580.9
Non-U.S. corporate............... 851.2 35.3 (2.2) 884.3
Mortgage-backed.................. 1,762.2 44.0 -- 1,806.2
Asset-backed..................... 961.4 12.8 -- 974.2
-------- ------ ------- --------
Total fixed maturities.......... 9,294.9 116.6 (151.0) 9,260.5
Common stocks and non-redeemable
preferred stocks................. 37.7 0.9 (2.5) 36.1
-------- ------ ------- --------
Total available-for-sale
securities....................... $9,332.6 $117.5 $(153.5) $9,296.6
======== ====== ======= ========
Gross Gross
Amortized unrealized unrealized Fair
1999 cost gains losses value
---- --------- ---------- ---------- --------
Fixed maturities:
U.S. government and agency....... $ 9.8 $ 0.1 $ (0.2) $ 9.7
State and municipal.............. 1.5 -- -- 1.5
Non-U.S. government.............. 3.0 -- (0.2) 2.8
U.S. corporate................... 4,936.3 21.4 (227.6) 4,730.1
Non-U.S. corporate............... 624.6 8.1 (17.8) 614.9
Mortgage-backed.................. 1,696.5 16.9 (27.4) 1,686.0
Asset-backed..................... 1,007.0 1.5 (19.8) 988.7
-------- ------ ------- --------
Total fixed maturities.......... 8,278.7 48.0 (293.0) 8,033.7
Common stocks and non-redeemable
preferred stocks................. 33.5 1.3 (1.7) 33.1
-------- ------ ------- --------
Total available-for-sale
securities....................... $8,312.2 $ 49.3 $(294.7) $8,066.8
======== ====== ======= ========
F-11
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 2000 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right to
call or prepay obligations with or without call or prepayment penalties.
Amortized Fair
Cost Value
--------- --------
Due in one year or less.................................. $ 329.1 $ 330.8
Due one year through five years.......................... 3,009.6 2,984.2
Due five years through ten years......................... 1,855.7 1,830.2
Due after ten years...................................... 1,376.9 1,334.9
-------- --------
Subtotals.............................................. 6,571.3 6,480.1
Mortgage-backed securities............................... 1,762.2 1,806.2
Asset-backed securities.................................. 961.4 974.2
-------- --------
Totals................................................. $9,294.9 $9,260.5
======== ========
As required by law, the Company has investments on deposit with governmental
authorities and banks for the protection of policyholders of $5.6 and $5.9 as
of December 31, 2000 and 1999, respectively.
As of December 31, 2000, approximately 28.0% and 18.2% of the Company's
investment portfolio is comprised of securities issued by the manufacturing
and financial industries, respectively, the vast majority of which are rated
investment grade, and which are senior secured bonds. No other industry group
comprises more than 10% of the Company's investment portfolio. This portfolio
is widely diversified among various geographic regions in the United States,
and is not dependent on the economic stability of one particular region.
As of December 31, 2000 the Company did not hold any fixed maturity
securities which exceeded 10% of shareholders' interest.
The credit quality of the fixed maturity portfolio at December 31, follows.
The categories are based on the higher of the ratings published by Standard &
Poors or Moody's.
2000 1999
---------------- ----------------
Fair Fair
value Percent value Percent
-------- ------- -------- -------
Agencies and treasuries................... $ 226.8 2.5% $ 284.7 3.5%
AAA/Aaa................................... 2,406.5 26.0 2,080.7 25.9
AA/Aa..................................... 645.7 7.0 461.7 5.7
A/A....................................... 2,161.3 23.3 1,807.5 22.5
BBB/Baa................................... 2,259.4 24.4 2,078.2 25.9
BB/Ba..................................... 365.9 4.0 368.2 4.6
B/B....................................... 168.0 1.8 191.6 2.4
CCC/Ca.................................... 10.1 0.1 0.7 0.0
CC/Ca..................................... 2.9 0.0 0.1 0.0
C......................................... -- 0.0 -- 0.0
D......................................... 4.4 0.0 -- 0.0
Not rated................................. 1,009.5 10.9 760.3 9.5
-------- ----- -------- -----
Totals.................................. $9,260.5 100.0% $8,033.7 100.0%
======== ===== ======== =====
F-12
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa are generally regarded
as investment grade securities. Some agencies and treasuries (that is, those
securities issued by the United States government or an agency thereof) are
not rated, but all are considered to be investment grade securities. Finally,
some securities, such as private placements, have not been assigned a rating
by any rating service and are therefore categorized as "not rated." This has
neither positive nor negative implications regarding the value of the
security.
At December 31, 2000 and 1999, there were fixed maturities in default with a
fair value of $6.4 and $1.0, respectively.
(b) Mortgage and Real Estate Portfolio
The Company's mortgage and real estate portfolio is distributed by
geographic location and type. However, the Company has concentration exposures
in certain regions and in certain types as shown in the following two tables.
Geographic distribution as of December 31, 2000:
Mortgage Real Estate
-------- -----------
South Atlantic.......................................... 30.5% 100.0%
Pacific................................................. 26.8 --
East North Central...................................... 10.5 --
West South Central...................................... 6.8 --
Mountain................................................ 9.9 --
Other................................................... 15.5 --
----- -----
Totals................................................ 100.0% 100.0%
===== =====
Type distribution as of December 31, 2000:
Mortgage Real Estate
-------- -----------
Office Building......................................... 26.6% -- %
Retail.................................................. 26.5 100.0
Industrial.............................................. 34.6 --
Apartments.............................................. 8.8 --
Other................................................... 3.5 --
----- -----
Totals................................................ 100.0% 100.0%
===== =====
"Impaired" loans are defined under GAAP as loans for which it is probable
that the lender will be unable to collect all amounts due according to the
original contractual terms of the loan agreement. That definition excludes,
among other things, leases or large groups of smaller-balance homogenous
loans, and therefore applies principally to the Company's commercial loans.
Under these principles, the Company has two types of "impaired" loans as of
December 31, 2000 and 1999: loans requiring allowances for losses and loans
expected to be fully recoverable because the carrying amount has been reduced
previously through charge-offs or deferral of income recognition ($0.0 and
$6.3, respectively). There was no allowance for losses on these loans as of
December 31, 2000, 1999 and 1998. Average investment in impaired loans during
2000, 1999 and 1998 was $11.5, $15.0 and $20.0 and interest income earned on
these loans while they were considered impaired was $.8, $2.6 and $1.8 for the
years ended 2000, 1999 and 1998, respectively.
F-13
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
The following table shows the activity in the allowance for losses during
the years ended December 31:
2000 1999 1998
------ ----- -----
Balance on January 1.................................... $ 23.3 $20.9 $17.7
Provision (benefit) charged (credited) to operations.... (11.1) 1.6 1.5
Amounts written off, net of recoveries.................. 2.1 0.8 1.7
------ ----- -----
Balance -- at December 31............................... $ 14.3 $23.3 $20.9
====== ===== =====
During 2000, as part of its on-going analysis of exposure to losses arising
from mortgage loans, the Company recognized a $12.7 reduction in its allowance
for losses.
The allowance for losses on mortgage loans at December 31, 2000, 1999 and
1998 represented 1.3%, 2.8% and 2.7% of gross mortgage loans, respectively.
The Company had $5.0, $4.5 and $5.6 of non-income producing mortgage loan
investments as of December 31, 2000, 1999 and December 31, 1998, respectively.
(3) Deferred Acquisition Costs
Activity impacting deferred policy acquisition costs for the years ended
December 31, was as follows:
2000 1999 1998
------ ------ ------
Unamortized balance -- at January 1................ $475.2 $296.1 $221.4
Costs deferred..................................... 304.4 218.9 107.0
Amortization, net.................................. (66.7) (39.8) (32.3)
------ ------ ------
Unamortized balance -- at December 31.............. 712.9 475.2 296.1
Cumulative effect of net unrealized investment
(gains) losses.................................... 2.8 7.3 (13.3)
------ ------ ------
Balance at December 31............................. $715.7 $482.5 $282.8
====== ====== ======
(4) Intangibles
(a) Present Value of Future Profits (PVFP)
PVFP reflects the estimated fair value of the Company's life insurance
business in-force and represents the portion of the cost to acquire the
Company that is allocated to the value of the right to receive future cash
flows from investment and insurance contracts existing at the date of
acquisition. Such value is the present value of the actuarially determined
projected cash flows for the acquired policies discounted at an appropriate
rate.
PVFP is amortized, net of accreted interest, in a manner similar to the
amortization of deferred acquisition costs. Interest accretes at rates
credited to policyholders on underlying contracts. Recoverability of PVFP is
evaluated periodically by comparing the current estimate of expected future
gross profits to the unamortized asset balance. If such a comparison indicates
that the expected gross profits will not be sufficient to recover PVFP, the
difference is charged to expense.
PVFP is further adjusted to reflect the impact of unrealized gains or losses
on fixed maturities classified as available for sale in the investment
portfolios. Such adjustments are not recorded in the Company's net income but
rather as a credit or charge to shareholders' interest, net of applicable
income tax.
F-14
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
The components of PVFP are as follows:
2000 1999 1998
------ ------ ------
Unamortized balance -- at January 1................ $314.8 $367.0 $426.9
Interest accrued at 6.40%, 7.19% and 6.25% for
2000, 1999, and 1998, respectively................ 17.1 21.9 24.0
Amortization....................................... (53.8) (74.1) (83.9)
------ ------ ------
Unamortized balance -- at December 31.............. 278.1 314.8 367.0
Cumulative effect of net unrealized investment
(gains) losses.................................... 7.3 35.8 (43.8)
------ ------ ------
Balance -- at December 31.......................... $285.4 $350.6 $323.2
====== ====== ======
The estimated percentage of the December 31, 2000 balance, before the effect
of unrealized investment gains or losses, to be amortized over each of the
next five years is as follows:
2001........................................ 13.5%
2002........................................ 11.2
2003........................................ 9.5
2004........................................ 8.1
2005........................................ 6.9
(b) Goodwill
At December 31, 2000 and 1999, total unamortized goodwill was $114.4 and
$121.4, respectively, which is shown net of accumulated amortization and
adjustments of $36.3 and $29.3 for the years ended December 31, 2000 and 1999,
respectively. Goodwill amortization was $7.0, $6.0, and $4.9 for the years
ending December 31, 2000, 1999 and 1998, respectively. Cumulative adjustments
to goodwill totaled ($6.8) and ($27.6) for the years ending December 31, 1999
and 1998, respectively.
(5) Reinsurance and Claim Reserves
GELAAC is involved in both the cession and assumption of reinsurance with
other companies. GELAAC's reinsurance consists primarily of long-duration
contracts that are entered into with financial institutions and related party
reinsurance. Although these reinsurance agreements contractually obligate the
reinsurers to reimburse the Company, they do not discharge the Company from
its primary liabilities and the Company remains liable to the extent that the
reinsuring companies are unable to meet their obligations.
In order to limit the amount of loss retention, certain policy risks are
reinsured with other insurance companies. The maximum of individual ordinary
life insurance normally retained by the Company on any one life policy is $1.
The Company does not have significant reinsurance contracts with any one
reinsurer that could have a material impact on its results of operations.
The effects of reinsurance on premiums written and earned for the years
ended December 31 were as follows:
2000 1999 1998
------ ------ ------
Direct............................................... $345.9 $348.0 $427.5
Assumed.............................................. 18.4 17.9 19.2
Ceded................................................ (122.0) (113.0) (195.1)
------ ------ ------
Net premiums earned.................................. $242.3 $252.9 $251.6
------ ------ ------
Percentage of amount assumed to net.................. 8% 7% 8%
====== ====== ======
Due to the nature of the Company's insurance contracts, premiums earned
approximate premiums written. The above premium amounts include cost of
insurance charges on universal life policies.
F-15
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
During 1998, a significant portion of GELAAC's ceded premiums related to
group life and health premiums. During 1998, GELAAC was the primary carrier
for the State of Virginia employees group life and health plan. By statute,
GELAAC had to reinsure these risks with other Virginia domiciled companies who
wished to participate.
Incurred losses and loss adjustment expenses are net of reinsurance of
$54.3, $68.2 and $112.4 for the years ended December 31, 2000, 1999 and 1998,
respectively.
(6) Future Annuity and Contract Benefits
(a) Investment Contracts
Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales of
investment contracts are recognized by providing a liability equal to the
current account value of the policyholder's contracts. Interest rates credited
to investment contracts are guaranteed for the initial policy term with
renewal rates determined as necessary by management.
(b) Insurance Contracts
Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future benefits
of insurance contracts is the present value of such benefits based on
mortality, morbidity, and other assumptions which were appropriate at the time
the policies were issued or acquired. These assumptions are periodically
evaluated for potential premium deficiencies. Reserves for cancelable accident
and health insurance are based upon unearned premiums, claims incurred but not
reported, and claims in the process of settlement. This estimate is based on
the experience of the insurance industry and the Company, adjusted for current
trends. Any changes in the estimated liability are reflected in income as the
estimates are revised.
The following chart summarizes the major assumptions underlying the
Company's recorded liabilities for future annuity and contract benefits:
Mortality/ December 31,
Withdrawal Morbidity Interest Rate -----------------
Assumption Assumption Assumption 2000 1999
------------------ ---------- -------------------- -------- --------
Investment Contracts.... N/A N/A N/A $7,759.7 $6,891.1
Limited-payment
Contracts.............. None (a) 4.0-9.3% 17.4 16.3
Traditional life
insurance contracts.... Company Experience (b) 7.0% 362.3 380.8
Universal life-type
contracts.............. N/A N/A N/A 1,747.5 1,730.2
Accident & Health....... Company Experience (c) 7.5% grading to 5.5% 47.4 44.6
-------- --------
Total future annuity and
contract benefits...... $9,934.3 $9,063.0
======== ========
- -------
(a) Either the United States Population Table, 1983 Group Annuitant Mortality
Table or 1983 Individual Annuitant Mortality Table.
(b) Principally modifications of the 1965-70 or 1975-80 Select and Ultimate
Tables.
(c) The 1958 Commissioner's Standard Ordinary Table, 1964 modified and 1987
Commissioner's Disability Tables, and Company experience.
(7) Income Taxes
GELAAC and its subsidiary have been included in the life insurance company
consolidated federal income tax return of GECA and are also subject to a
separate tax-sharing agreement, as approved by state insurance regulators, the
provisions of which are substantially the same as the tax-sharing agreement
with GE Capital.
F-16
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
The total provision for income taxes for the years ended December 31,
consisted of the following components:
2000 1999 1998
------ ----- -----
Current federal income tax provision (benefit).......... $(20.8) $29.3 $29.2
Deferred federal income tax provision................... 90.5 24.9 28.7
------ ----- -----
Subtotal-federal provision............................ 69.7 54.2 57.9
Current state income tax provision (benefit)............ (0.8) 2.3 1.6
Deferred state income tax provision..................... 4.0 0.1 0.8
------ ----- -----
Subtotal-state provision.............................. 3.2 2.4 2.4
------ ----- -----
Total income tax provision............................ $ 72.9 $56.6 $60.3
====== ===== =====
The reconciliation of the federal statutory rate to the effective income tax
rate at December 31, is as follows:
2000 1999 1998
---- ---- ----
Statutory U.S. federal income tax rate..................... 35.0% 35.0% 35.0%
State income tax........................................... 0.5 0.5 0.5
Non-deductible goodwill amortization....................... 1.0 1.2 1.0
Dividends-received deduction............................... (1.7) (1.6) 0.0
Other, net................................................. (3.9) (0.7) (0.2)
---- ---- ----
Effective rate........................................... 30.9% 34.4% 36.3%
==== ==== ====
The components of the net deferred income tax asset (liability) at December
31 are as follows:
2000 1999
------ ------
Assets:
Insurance reserve amounts................................... $165.6 $149.0
Investments................................................. -- 10.7
Net unrealized investment losses on investment securities... 10.4 72.2
Other....................................................... -- 22.2
------ ------
Total deferred tax assets.................................. 176.0 254.1
------ ------
Liabilities:
Investments................................................. 5.3 --
Present value of future profits............................. 50.3 59.6
Deferred acquisition costs.................................. 149.6 74.2
Other....................................................... 2.8 --
------ ------
Total deferred tax liabilities............................. 208.0 133.8
------ ------
Net deferred income tax asset (liability).................. $(32.0) $120.3
====== ======
Based on an analysis of the Company's tax position, management believes it
is more likely than not that the results of future operations and
implementation of tax planning strategies will generate sufficient taxable
income enabling the Company to realize remaining deferred tax assets.
Accordingly, no valuation allowance for deferred tax assets is deemed
necessary.
The Company paid $41.1, $41.8 and $25.6, for federal and state income taxes
for the years ended December 31, 2000, 1999 and 1998, respectively.
F-17
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
(8) Related Party Transactions
GELAAC pays investment advisory fees and other fees to affiliates. Amounts
incurred for these items aggregated $11.1, $14.8 and $11.5 for the years ended
December 31, 2000, 1999 and 1998, respectively. GELAAC charges affiliates for
certain services and for the use of facilities and equipment which aggregated
$55.2, $45.1 and $19.1, for the years ended December 31, 2000, 1999 and 1998,
respectively.
GELAAC pays interest on outstanding amounts under a credit funding agreement
with GNA Corporation, the parent company of GECA. Interest expense under this
agreement was $1.1, $1.9 and $2.2 for the years ended December 31, 2000, 1999
and 1998, respectively. There were no outstanding borrowings at December 31,
1999, while balances outstanding were $85.7 and $64.3 at December 31, 2000 and
1998, respectively.
During 1998, GELAAC sold $18.5 of third-party preferred stock investments to
an affiliate. This resulted in a gain on sale of $3.9, which is included in
net realized investment gains.
(9) Commitments and Contingencies
(a) Mortgage Loan Commitments
GELAAC has certain investment commitments to provide fixed-rate loans. The
investment commitments, which would be collateralized by related properties of
the underlying investments, involve varying elements of credit and market
risk. Investment commitments outstanding as of December 31, 2000 and 1999,
totaled $3.6 and $30.8, respectively.
(b) Guaranty Association Assessments
The Company is required by state law to participate in the guaranty
associations of the various states in which they do business. The state
guaranty associations ensure payment of guaranteed benefits, with certain
restrictions, to policyholders of impaired or insolvent insurance companies by
assessing all other companies involved in similar lines of business.
There are currently several unrelated insurance companies which had
substantial amounts of annuity business in the process of liquidation or
rehabilitation. The Company paid assessments of $.5, $.1, and $3.1 to various
state guaranty associations during 2000, 1999 and 1998, respectively. At
December 31, 2000 and 1999, accounts payable and accrued expenses include $4.6
and $4.1, respectively, related to estimated future payments. Also, see note
15.
(c) Litigation
The Company and its subsidiary are defendants in various cases of litigation
considered to be in the normal course of business. The Company believes that
the outcome of such litigation will not have a material effect on its
financial position or results of operations.
(10) Fair Value of Financial Instruments
The Company has no derivative financial instruments as of December 31, 2000
and 1999 other than mortgage loan commitments of $9.6 and $53.0 and interest
rate floors of $10.5 and $13.9, respectively. The notional value of the
interest rate floors at December 31, 2000 and 1999, was $1,800 and the floors
expire from September 2003 to October 2003. During the year ended December 31,
2000, the Company purchased a total notional value of $6.0 in swaptions and
$370.0 in interest rate swaps. The swaptions expire in December, 2023. The
interest rate swaps mature from February, 2004 to December, 2048.
F-18
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
Fair value estimates are made at a specific point in time based on relevant
market information and valuation methodologies considered appropriate by
management. These estimates may be subjective in nature and involve
uncertainties and significant judgment in the interpretation of current market
data. Therefore, the fair values presented are not necessarily indicative of
amounts the Company could realize or settle currently. Changes in the
assumptions could significantly affect the estimates. As such, the derived
fair value estimates cannot necessarily be substantiated by comparison to
independent markets and may differ from the amounts that might be involved in
an immediate settlement of the instrument. The Company does not necessarily
intend to dispose of or liquidate such instruments prior to maturity. Fair
value estimates are made at a specific point in time based on relevant market
information and valuation methodologies considered appropriate by management.
These estimates may be subjective in nature and involve uncertainties and
significant judgment in the interpretation of current market data. Therefore,
the fair values presented are not necessarily indicative of amounts the
Company could realize or settle currently. Changes in the assumptions could
significantly affect the estimates. As such, the derived fair value estimates
cannot necessarily be substantiated by comparison to independent markets and
may differ from the amounts that might be involved in an immediate settlement
of the instrument. The Company does not necessarily intend to dispose of or
liquidate such instruments prior to maturity.
Financial instruments that, as a matter of accounting policy, are reflected
in the accompanying consolidated financial statements at fair value are not
included in the following disclosures. Such items include fixed maturities,
equity securities and certain other invested assets. The carrying value of
policy loans and short-term investments approximate fair value at both
December 31, 2000 and 1999.
At December 31, the carrying amounts and fair value of the Company's
financial instruments were as follows:
2000 1999
----------------- -----------------
Carrying Fair Carrying Fair
amount value amount value
-------- -------- -------- --------
Mortgage loans......................... $1,130.0 $1,174.0 $ 810.5 $ 819.4
Investment type insurance contracts.... 7,759.7 7,339.5 6,891.1 6,849.8
Interest rate floors................... 10.5 1.8 13.9 1.2
Swaptions.............................. 0.5 0.4 -- --
Interest rate swaps.................... -- (12.2) -- --
The fair value of mortgage loans is estimated by discounting the estimated
future cash flows using interest rates applicable to current loan origination,
adjusted for credit risk.
The estimated fair value of investment contracts is the amount payable on
demand (cash surrender value) for deferred annuities and the net present value
based on interest rates currently offered on similar contracts for non-life
contingent immediate annuities. Fair value disclosures are not required for
insurance contracts.
(11) Restrictions on Dividends
Insurance companies are restricted by states as to the aggregate amount of
dividends they may pay to their parent in any consecutive twelve-month period
without regulatory approval. Generally, dividends may be paid out of earned
surplus without approval with thirty days prior written notice within certain
limits. The limits are generally based on 10% of the prior year surplus (net
of adjustments in some cases) and prior year statutory income (net gain from
operations, net income adjusted for realized capital gains, or net investment
income). Dividends in excess of the prescribed limits or the Company's earned
surplus require formal state insurance commission approval. Based on statutory
results as of December 31, 2000, the Company is able to payout $59.4 in
dividends in 2001 without obtaining regulatory approval.
F-19
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
On December 3, 1998, the Company received approval from the Commonwealth of
Virginia for, and declared, a dividend payable in cash, preferred stock and/or
common stock at the election of each shareholder. GEFAHI elected to receive
cash and preferred stock and GECA elected to receive common stock. A cash
dividend of $120 was paid and a Series A preferred stock dividend of $120 was
issued to GEFAHI on December 15, 1998. The Series A preferred stock has a par
value of $1,000 per share, is redeemable at par at the Company's election, and
is not subject to call penalties. Dividends on the preferred stock are
cumulative and payable semi-annually at the annual rate of 8.0% of the par
value. The Series A preferred stock is not convertible into any other security
of the Company, and the holders thereof have no voting rights except with
respect to any proposed changes in the preferences and special rights of such
stock. GECA received its dividend in the form of 18,641 shares of newly issued
common stock in 1999.
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners ("NAIC")
that are prepared on an accounting basis prescribed by such authorities
(statutory basis). Statutory accounting practices differ from GAAP in several
respects, causing differences in reported net income and shareholders'
interest. Permitted statutory accounting practices encompass all accounting
practices not so prescribed but that have been specifically allowed by state
insurance authorities. The Company has no significant permitted accounting
practices.
At December 31, statutory net income and statutory capital and surplus is
summarized below:
2000 1999 1998
------ ------ ------
Statutory net income................................... $ 68.0 $ 70.8 $ 70.1
Statutory capital and surplus.......................... $593.5 $542.5 $577.5
The NAIC adopted Risk Based Capital ("RBC") requirements to evaluate the
adequacy of statutory capital and surplus in relation to risks associated with
(i) asset quality, (ii) insurance risk, (iii) interest rate risk, and (iv)
other business factors. The RBC formula is designated as an early warning tool
for the states to identify possible under-capitalized companies for the
purpose of initiating regulatory action. In the course of operations, the
Company periodically monitors its RBC level. At December 31, 2000, the Company
exceeded the minimum required RBC levels.
(13) Operating Segment Information
The Company conducts its operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to increase
the policyholder's wealth, transfer wealth to beneficiaries or provide a means
for replacing the income of the insured in the event of premature death, and
(2) Lifestyle Protection and Enhancement, comprised of products intended to
protect accumulated wealth and income from the financial drain of unforeseen
events. See Note (1)(c) for further discussion of the Company's principal
product lines within these two segments.
F-20
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
The following is a summary of industry segment activity for 2000, 1999 and
1998:
Wealth Lifestyle
Accumulation & Protection &
2000 -- Segment Data Transfer Enhancement Consolidated
- -------------------- -------------- ------------ ------------
Net investment income................ $ 703.5 $ 5.4 $ 708.9
Net realized investment gains........ 4.3 -- 4.3
Premiums............................. 55.3 61.0 116.3
Other revenues....................... 316.2 7.7 323.9
--------- ------ ---------
Total revenues..................... 1,079.3 74.1 1153.4
--------- ------ ---------
Interest credited, benefits, and
other changes in policy reserves.... 715.3 40.9 756.2
Commissions.......................... 212.8 16.5 229.3
Amortization of intangibles.......... 41.5 2.2 43.7
Other operating costs and expenses... (119.7) 7.9 (111.8)
--------- ------ ---------
Total benefits and expenses........ 849.9 67.5 917.4
--------- ------ ---------
Income before income taxes......... $ 229.4 $ 6.6 $ 236.0
========= ====== =========
Total Assets......................... $22,440.7 $171.8 $22,612.5
========= ====== =========
Wealth Lifestyle
Accumulation & Protection &
1999 -- Segment Data Transfer Enhancement Consolidated
- -------------------- -------------- ------------ ------------
Net investment income................ $ 634.2 $ 4.0 $ 638.2
Net realized investment gains........ 12.0 -- 12.0
Premiums............................. 67.8 56.1 123.9
Other revenues....................... 243.6 0.2 243.8
--------- ------ ---------
Total revenues..................... 957.6 60.3 1017.9
--------- ------ ---------
Interest credited, benefits, and
other changes in policy reserves.... 617.0 38.5 655.5
Commissions.......................... 179.7 12.4 192.1
Amortization of intangibles.......... 56.2 2.1 58.3
Other operating costs and expenses... (55.1) 2.6 (52.5)
--------- ------ ---------
Total benefits and expenses........ 797.8 55.6 853.4
--------- ------ ---------
Income before income taxes......... $ 159.8 $ 4.7 $ 164.5
========= ====== =========
Total Assets......................... $19,774.2 $183.1 $19,957.3
========= ====== =========
F-21
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2000, 1999 and 1998
(Dollar amounts in millions)
Lifestyle
Wealth Protection
Accumulation & &
1998 -- Segment Data Transfer Enhancement Consolidated
- -------------------- -------------- ----------- ------------
Net investment income................. $ 569.4 $ 5.3 $ 574.7
Net realized investment gains......... 29.6 -- 29.6
Premiums.............................. 101.4 21.7 123.1
Other revenues........................ 211.1 0.5 211.6
--------- ----- ---------
Total revenues...................... 911.5 27.5 939.0
--------- ----- ---------
Interest credited, benefits, and other
changes in policy reserves........... 560.7 (3.9) 556.8
Commissions........................... 106.2 6.6 112.8
Amortization of intangibles........... 55.1 9.7 64.8
Other operating costs and expenses.... 26.0 12.5 38.5
--------- ----- ---------
Total benefits and expenses......... 748.0 24.9 772.9
--------- ----- ---------
Income before income taxes.......... $ 163.5 $ 2.6 $ 166.1
========= ===== =========
Total Assets.......................... $14,661.1 $99.8 $14,760.9
========= ===== =========
(14) New Accounting Standards
The Financial Accounting Standards Board ("FASB") has issued, then
subsequently amended, Statement of Financial Accounting Standards ("SFAS") No.
133, Accounting for Derivative Instruments and Hedging Activities, effective
for GELAAC on January 1, 2001. Upon adoption, all derivative instruments
(including certain derivative instruments embedded in other contracts) will be
recognized in the balance sheets at fair value; changes in such fair values
must be recognized immediately in earnings unless specific hedging criteria
are met. Effects of qualifying changes in fair value will be recorded in
equity pending recognition in earnings as offsets to the related earnings
effects of the hedged items. Management estimates that, at January 1, 2001,
the effects on its consolidated financial statements of adopting SFAS No. 133,
as amended, will be a one-time reduction of net earnings of less than $6, and
a one-time reduction of equity, excluding the net earnings effect, of less
than $8. The precise transition effect is uncertain because the accounting for
certain derivatives and hedging relationships in accordance with SFAS No. 133
is subject to further interpretation by the FASB.
(15) Cumulative Effect of Accounting Change
In 1997, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 97-3, Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments. This SOP provided guidance on
accounting by insurance and other enterprises for guaranty-fund and certain
other insurance-related assessments. The SOP requires enterprises to recognize
(1) a liability for assessments when (a) an assessment has been asserted or
information available prior to issuance of the financial statements indicates
it is probable that an assessment will be asserted, (b) the underlying cause
of the asserted or probable assessment has occurred on or before the date of
the financial statements, and (c) the amount of the loss can be reasonably
estimated and (2) an asset for an amount when it is probable that a paid or
accrued assessment will result in an amount that is recoverable from premium
tax offsets or policy surcharges from in-force policies.
Effective January 1, 1999, the Company adopted SOP 97-3 and has reported the
favorable impact of this adoption as a cumulative effect of a change in
accounting principle amounting to $5 (net of tax of $2.8).
F-22
PART II
OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Sections 13.1-698 and 13.1-702 of the Code of Virginia, in brief, allow a
corporation to indemnify any person made party to a proceeding because such
person is or was a director, officer, employee, or agent of the corporation,
against liability incurred in the proceeding if: (1) he conducted himself in
good faith; and (2) he believed that (a) in the case of conduct in his
official capacity with the corporation, his conduct was in its best interests;
and (b) in all other cases, his conduct was at least not opposed to the
corporation's best interests and (3) in the case of any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. The
termination of a proceeding by judgment, order, settlement or conviction is
not, of itself, determinative that the director, officer, employee, or agent
of the corporation did not meet the standard of conduct described. A
corporation may not indemnify a director, officer, employee, or agent of the
corporation in connection with a proceeding by or in the right of the
corporation, in which such person was adjudged liable to the corporation, or
in connection with any other proceeding charging improper personal benefit to
such person, whether or not involving action in his official capacity, in
which such person was adjudged liable on the basis that personal benefit was
improperly received by him. Indemnification permitted under these sections of
the Code of Virginia in connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in connection with the
proceeding.
Section 5 of the By-Laws of GE Life and Annuity Assurance Company further
provides that:
(a) The Corporation shall indemnify each director, officer and employee
of this Company who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that
he is or was a director, officer or employee of the Corporation, or is or
was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgements [sic],
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of
the Corporation, and with respect to any criminal action, had no cause to
believe his conduct unlawful. The termination of any action, suit or
proceeding by judgement [sic], order, settlement, conviction, or upon a
plea of nolo contendere, shall not of itself create a presumption that the
person did not act in good faith, or in a manner opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, believed his conduct unlawful.
(b) The Corporation shall indemnify each director, officer or employee
of the Corporation who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgement [sic] in its favor by
reason of the fact that he is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that 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
II-1
for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(c) Any indemnification under subsections (a) and (b) (unless ordered by
a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer or employee is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors of the
Corporation by a majority vote of a quorum consisting of the directors who
were not parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders of the Corporation.
(d) Expenses (including attorneys' fees) incurred in defending an
action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized in
the manner provided in subsection (c) upon receipt of an undertaking by or
on behalf of the director, officer or employee to repay such amount to the
Corporation unless it shall ultimately be determined that he is entitled to
be indemnified by the Corporation as authorized in this Article.
(e) The Corporation shall have the power to make any other or further
indemnity to any person referred to in this section except an indemnity
against gross negligence or willful misconduct.
(f) Every reference herein to director, officer or employee shall
include every director, officer or employee, or former director, officer or
employee of the Corporation and its subsidiaries and shall enure to the
benefit of the heirs, executors and administrators of such person.
(g) The foregoing rights and indemnification shall not be exclusive of
any other rights and indemnification to which the directors, officers and
employees of the Corporation may be entitled according to law.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to the foregoing provisions, or otherwise, the depositor
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 is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the depositor of expenses
incurred or paid by a director, officer or controlling person of the depositor
in 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 depositor 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.
REPRESENTATION PURSUANT TO SECTION 26(E)(2)(A)
GE Life and Annuity Assurance Company hereby represents that the fees and
charges deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by GE Life & Annuity.
II-2
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of pages.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The Signatures.
Written consents of the following persons:
(a) Donita King
(c) Paul Haley, F.S.A.
(d) KPMG LLP
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
(1)(a) Resolution of the Board of Directors of The Life Insurance Company of Virginia
authorizing the establishment of Separate Account II.(6)
(1)(a)(i) Resolution of Board of Directors of GE Life and Annuity Assurance Company
authorizing changing the name of Life of Virginia Separate Account II to GE
Life and Annuity Separate Account II.(8)
(1)(b) Resolution of the Board of Directors of Life of Virginia authorizing the
addition of Investment Subdivisions to Separate Account II.(6)
(1)(c) Resolution of the Board of Directors of Life of Virginia authorizing the
establishment of Investment Subdivisions of Separate Account II which invest in
shares of the Fidelity Variable Insurance Products Fund II Asset Manager
Portfolio and Neuberger and Berman Advisers Management Trust Balanced
Portfolio.(6)
(1)(d) Resolution of the Board of Directors of Life of Virginia authorizing the
establishment of Investment Subdivisions of Separate Account II which invest in
shares of Janus Aspen Series, Growth Portfolio, Aggressive Growth Portfolio and
Worldwide Growth Portfolio.(6)
(1)(e) Resolution of the Board of Directors of Life of Virginia authorizing the
establishment of Investment Subdivisions of Separate Account II which invest in
shares of the Utility Fund of the Investment Management Series.(6)
(1)(f) Resolution of the Board of Directors of Life of Virginia authorizing the
establishment of two additional Investment Subdivisions of Separate Account II
which invest in shares of the Corporate Bond Fund of the Insurance Management
Series and the Contrafund Portfolio of the Variable Insurance Products Fund
II.(6)
(1)(g) Resolution of Board of Directors of Life of Virginia authorizing the
establishment of two additional Investment Subdivisions of Separate Account II
which invest in shares of the International Equity Portfolio and the Real
Estate Securities Portfolio of the Life of Virginia Series Fund.(6)
(1)(h) Resolution of the Board of Directors of Life of Virginia authorizing the
establishment of four additional Investment Subdivisions of Separate Account II
which invest in shares of the Alger American Growth Portfolio and the Alger
American Small Capitalization Portfolio of The Alger American Fund, and the
Balanced Portfolio and Flexible Income Portfolio of the Janus Aspen Series.(1)
II-3
(1)(i) Resolution of the Board of Directors of Life of Virginia authorizing the
establishment of two additional Investment Subdivisions of Separate Account II
investing in shares of the Federated American Leaders Fund II of the Federated
Insurance Series, and the International Growth Portfolio of the Janus Aspen
Series.(2)
(1)(j) Resolution of the Board of Directors of Life of Virginia authorizing additional
Investment Subdivisions investing in shares of Growth and Income Portfolio and
Growth Opportunities Portfolio of Variable Insurance Products Fund III; Growth
II Portfolio and Large Cap Growth Portfolio of the PBHG Insurance Series Fund,
Inc.; and Global Income Fund and Value Equity Fund of GE Investments Funds,
Inc.(3)
(1)(k) Resolution of the Board of Directors of Life of Virginia authorizing additional
Investment Subdivisions investing in shares of Capital Appreciation Portfolio
of Janus Aspen Series.(3)
(1)(l) Resolution of the Board of Directors of Life of Virginia authorizing additional
Investment Subdivisions investing in shares of Goldman Sachs Growth and Income
Fund and Goldman Sachs Mid Cap Equity Fund of Goldman Sachs Variable Insurance
Trust Fund, Inc. and U.S. Equity Fund of GE Investments Funds, Inc.(6)
(1)(m) Resolution of Board of Directors of Life of Virginia authorizing additional
Investment Subdivisions investing in shares of the Salomon Brothers Variable
Investors Fund, Salomon Brothers Variable Total Return Fund and Salomon
Brothers Variable Strategic Bond Fund of Salomon Brothers Variable Series Fund,
Inc.(8)
(1)(n) Resolution of the Board of Directors of GE Life and Annuity Assurance Company
authorizing additional Investment Subdivisions investing in shares of GE
Premier Growth Equity Fund of GE Investment Funds, Inc.(8)
(1)(o) Resolution of the Board of Directors of GE Life and Annuity Assurance Company
authorizing change in name of Investment Subdivisions investing in shares of
Oppenheimer Variable Account Funds and Mid Cap Value Fund of Goldman Sachs
Variable Insurance Trust.(8)
(1)(p) Resolution of the Board of Directors of GE Life and Annuity Assurance Company
authorizing change in name of Investment Subdivisions investing in shares of
Mid-Cap Value Equity Fund of GE Investments Funds, Inc. Value Equity Fund;
authorizing additional Investment Subdivisions investing in shares Global Life
Sciences Portfolio and Global Technology Portfolio of the Janus Aspen
Series.(11)
(1)(q) Resolution of the Board of Directors of GE Life and Annuity Assurance Company
authorizing additional Investment Subaccounts investing in shares of AIM
Variable Insurance Funds, Inc.; Alliance Variable Products Series Fund, Inc.;
Dreyfus; Federated Insurance Series; Fidelity Variable Insurance Products
Funds; GE Investments Funds, Inc.; Janus Aspen Series; MFS(R) Variable
Insurance Trust; Oppenheimer Variable Account Funds; PIMCO Variable Insurance
Trust; Rydex Variable Trust.(13)
1A(2) Not Applicable
1A(3)(a) Underwriting Agreement dated December 12, 1997 between The Life Insurance
Company of Virginia and Capital Brokerage Corporation.(5)
1A(3)(b) Broker-Dealer Sales Agreement, dated December 13, 1997.(5)
1A(4) Not Applicable
1A(5) Policy Form Single Life, P1258 7/01.(16)
II-4
1A(5)(i) Policy Form Joint and Last Survivor, P1259 7/01.(16)
1A(5)(a) Endorsement to policy
(a) Accelerated Benefit Rider.(14)
(b) Disability Benefit Rider (waiver of cost).(6)
(c) Insurance Rider for Additional Insured Person.(6)
(d) Children's Insurance Rider.(6)
(e) Accidental Death Benefit Rider.(6)
(f) Joint Life Level Term Insurance Rider.(9)
(g) Policy Split Option Rider.(9)
1A(6)(a) Articles of Incorporation of GE Life and Annuity Assurance Company.(14)
1A(6)(b) By-Laws of GE Life and Annuity Assurance Company.(14)
1A(7) Not Applicable
1A(8)(a) Participation Agreement among Variable Insurance Products Fund, Fidelity
Distributors Corporation, and The Life Insurance Company of Virginia.(6)
1A(8)(a)(i) Amendment to Participation Agreement among Variable Insurance Products Fund,
Fidelity Distributors Corporation, and The Life Insurance Company of
Virginia.(2)
1A(8)(a)(ii) Amendment to Participation Agreement Variable Insurance Products Fund, Fidelity
Distributors Corporation and GE Life and Annuity Assurance Company.(13)
1A(8)(b) Participation Agreement among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and The Life Insurance Company of Virginia.(6)
1A(8)(b)(i) Amendment to Participation Agreement among Variable Insurance Products Fund II,
Fidelity Distributors Corporation, and The Life Insurance Company of
Virginia.(2)
1A(8)(b)(ii) Amendment to Participation Agreement Variable Insurance Products Fund II,
Fidelity Distributors Corporation and GE Life and Annuity Assurance
Company.(12)
1A(8)(c) Participation Agreement between Oppenheimer Variable Account Funds, Oppenheimer
Management Corporation, and The Life Insurance Company of Virginia.(6)
1A(8)(c)(i) Amendment to the Participation Agreement between Oppenheimer Variable Account
Funds, Oppenheimer Management Corporation, and The Life Insurance Company of
Virginia.(6)
1A(8)(c)(ii) Amendment to Agreement between Oppenheimer Variable Account Funds, Oppenheimer
Management Corporation, and The Life Insurance Company of Virginia.(13)
1A(8)(d) Fund Participation Agreement between Janus Aspen Series and The Life Insurance
Company of Virginia.(13)
1A(8)(d)(i) Amendment to the Participation Agreement between Janus Aspen Series and GE Life
and Annuity Assurance Company.(11)
1A(8)(e) Fund Participation Agreement between Insurance Management Series, Federated
Securities Corporation, and The Life Insurance Company of Virginia.(6)
1A(8)(e)(i) Amendment to Participation Agreement between Federated Securities Corporation
and GE Life and Annuity Assurance Company.(12)
II-5
1A(8)(f) Fund Participation Agreement between The Alger American Fund, Fred Alger and
Company, Inc., and The Life Insurance Company of Virginia.(1)
1A(8)(f)(i) Amendment to Fund Participation Agreement between The Alger American Fund, Fred
Alger and Company, Inc. and GE Life and Annuity Assurance Company.(8)
1A(8)(g) Fund Participation Agreement between Variable Insurance Products Fund III and
The Life Insurance Company of Virginia.(3)
1A(8)(g)(i) Amendment to Participation Agreement Variable Insurance Products Fund II,
Fidelity Distributors Corporation and GE Life and Annuity Assurance
Company.(12)
1A(8)(h) Fund Participation Agreement between PBHG Insurance Series Fund, Inc., and The
Life Insurance Company of Virginia.(3)
1A(8)(i) Fund Participation Agreement between Goldman Sachs Variable Insurance Trust
Fund and The Life Insurance Company of Virginia.(6)
1A(8)(j) Fund Participation Agreement between Salomon Brothers Variable Series Fund and
The Life Insurance Company of Virginia.(7)
1A(8)(k) Fund Participation Agreement between GE Investments Funds, Inc. and The Life
Insurance Company of Virginia.(7)
1A(8)(k)(i) Amendment to Fund Participation Agreement between GE Investments Funds, Inc.
and GE Life and Annuity Assurance Company.(8)
1A(8)(k)(ii) Amendment to Fund Participation Agreement between GE Investments Funds, Inc.
and GE Life and Annuity Assurance Company.(11)
1A(8)(l) Participation Agreement between AIM Variable Insurance Series and GE Life and
Annuity Assurance Company.(12)
1A(8)(m) Participation Agreement between Alliance Variable Products Series Fund, Inc.
and GE Life and Annuity Assurance Company.(12)
1A(8)(n) Participation Agreement between Dreyfus and GE Life and Annuity Assurance
Company.(12)
1A(8)(o) Participation Agreement between MFS(R) Variable Insurance Trust and GE Life and
Annuity Assurance Company.(12)
1A(8)(p) Participation Agreement between PIMCO Variable Insurance Trust and GE Life and
Annuity Assurance Company.(12)
1A(8)(q) Participation Agreement between Rydex Variable Trust and GE Life and Annuity
Assurance Company.(12)
1A(9) Administrative Agreement.(6)
1A(10) Application for Variable Life Policy.(4)
2 See Exhibit 1(A)5
3(a) Opinion and Consent of Counsel.(17)
3(c) Consent of KPMG LLP.(17)
4 Not Applicable
5 Not Applicable
6 Opinion and Consent of Paul Haley, Actuary.(17)
II-6
7 Memorandum describing GE Life and Annuity Issuance, Transfer, Redemption and
Exchange Procedures for the Policies.(15)
8 Power of Attorney dated April 15, 1999.(8)
8(a) Power of Attorney dated December 17, 1999.(10)
8(b) Power of Attorney dated April 4, 2000.(11)
8(c) Power of Attorney dated June 30, 2000.(13)
8(d) Power of Attorney dated July 21, 2000.(14)
8(e) Power of Attorney dated June 15, 2001.(16)
8(f) Power of Attorney dated December 1, 2001.(17)
- --------
(1) Filed September 28, 1995 with Post-Effective Amendment No. 12 to Form S-6
for Life of Virginia Separate Account II, Registration No. 33-9651.
(2) Filed May 1, 1996 with Post-Effective Amendment No. 13 to Form S-6 for
Life of Virginia Separate Account II, Registration No. 33-9651.
(3) Filed May 1, 1997 with Post-Effective Amendment No. 14 to Form S-6 for
Life of Virginia Separate Account II, Registration No. 33-9651.
(4) Filed November 18, 1997 with Pre-Effective Amendment No. 1 to Form S-6
for Life of Virginia Separate Account II, Registration No. 333-32071.
(5) Filed February 20, 1998 with Pre-Effective Amendment No. 1 for Life of
Virginia Separate Account II, Registration No. 333-41031.
(6) Filed May 1, 1998 with Post-Effective Amendment No. 15 for Life of
Virginia Separate Account II, Registration No. 33-9651.
(7) Filed December 18, 1998 with Pre-Effective Amendment No. 1 to Form N-4
for Life of Virginia Separate Account 4, Registration No. 333-62695.
(8) Filed April 30, 1999 with Post Effective Amendment No. 2 to Form S-6 for
GE Life & Annuity Separate Account II, Registration No. 333-32071.
(9) Filed October 13, 1999 with the Pre-Effective Amendment No. 1 to Form S-6
for GE Life & Annuity Separate Account II, Registration No. 333-82311.
(10) Filed December 21, 1999 with initial filing to Form N-4 for GE Life &
Annuity Separate Account 4, Registration No. 333-96513.
(11) Filed April 28, 2000 with Post-Effective Amendment No. 22 to Form S-6 for
GE Life & Annuity Separate Account III Registration No. 33-12470.
(12) Filed June 23, 2000 with Pre-Effective Amendment No. 1 to Form N-4 for GE
Life & Annuity Separate Account 4, Registration No. 333- 31171.
(13) Filed July 5, 2000 with Initial Filing to Form S-6 for GE Life & Annuity
Separate Account II, Registration No. 333-40820.
(14) Filed August 25, 2000 with Pre-Effective Amendment 1 to Form S-6 for GE
Life and Annuity Separate Account III, Registration No. 333-37856.
(15) Filed September 28, 2000 with Pre-Effective Amendment/Form S-6 for GE
Life and Annuity Separate Account II, Registration No. 333-40820.
(16) Filed October 31, 2001 with Initial Filing - Form S-6 for GE Life and
Annuity Separate Account II, Registration No. 333-72572.
(17) Filed Herein.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
GE Life & Annuity Separate Account II, certifies that it has duly caused this
amendment to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the County of Henrico in the Commonwealth of Virginia, on the
17 day of January, 2002.
GE Life & Annuity Separate Account
II
GE Life and Annuity Assurance
Company (Depositor)
/s/ Heather C. Harker
By: _________________________________
Heather C. Harker
Assistant Vice President and
Associate General Counsel
Pursuant to the requirements of the Securities Act of 1933, GE Life and
Annuity Assurance Company certifies that it has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the
County of Henrico in the Commonwealth of Virginia on the 17 day of January,
2002.
GE Life and Annuity Assurance
Company
/s/ Heather C. Harker
By: _________________________________
Heather C. Harker
Assistant Vice President and
Associate General Counsel
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Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date(s) indicated.
Signature Title Date
--------- ----- ----
* Director, Chief Executive 1/17/02
______________________________________ Officer
Pamela S. Schutz
* Director, Senior Vice 1/17/02
______________________________________ President
Thomas M. Stinson
* Chief Financial Officer 1/17/02
______________________________________
Timothy C. Stonesifer
* Controller 1/17/02
______________________________________
Susan M. Mann
* Director 1/17/02
______________________________________
Victor C. Moses
* Director 1/17/02
______________________________________
Geoffrey S. Stiff
/s/ Heather C. Harker Assistant Vice President 1/17/02
______________________________________ and Associate General
Heather C. Harker Counsel
* Director 1/17/02
______________________________________
Elliot A. Rosenthal
/s/ Heather C. Harker , pursuant to Power of 1/17/02
*By: _________________________________ Attorney executed on
Heather C. Harker December 1, 2001.
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EXHIBIT LIST
3(a) Consent of Counsel
3(b) Consent of KPMG LLP
6 Consent of Actuary
8(f) Power of Attorney
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