As filed Pursuant to Rule 424(b)(3)
File No. 333-69620
Prospectus For Single Purchase Payment
Modified Guaranteed Annuity Contract
Issued by:
GE Life and Annuity Assurance Company
6610 West Broad Street
Richmond, Virginia 23230
Telephone: (804) 281-6000
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This prospectus gives details about the contract that you should know before
investing. Please read this prospectus carefully and keep it for future
reference.
This prospectus describes a single purchase payment modified guaranteed annuity
contract (the "contract") for individuals offered by GE Life and Annuity
Assurance Company (the "Company," "we," "us," or "our"). You may purchase the
Contract on a non-qualified basis ("Non-Qualified Contracts") or for use with
certain qualified retirement plans ("Qualified Contracts").
The contract provides a means for you to allocate a single purchase payment of
$5,000 or more ($2,000 or more for Individual Retirement Accounts ("IRAs")) to
our Guarantee Account for a specified investment period, known as a Guarantee
Term. You select a Guarantee Term from a number of Guaranteed Terms we offer at
the time of your purchase payment. We typically offer Guarantee Terms ranging
from 1 to 10 years, although we may not offer each of these Guarantee Terms in
the future. Not all the Guarantee Terms are available in all states or in all
markets. Your purchase payment will earn interest for the initial Guarantee
Term you select based on the interest rates we offer at the time of your
purchase payment. For any Guarantee Term, we will credit a Guaranteed Interest
Rate. We may credit a different Guaranteed Interest Rate for each year of a
Guarantee Term.
If you surrender your contract or withdraw any portion of your Contract Value
before the end of a Guarantee Term, we may assess a surrender charge on the
amount you withdraw. We may apply a Market Value Adjustment to the proceeds
paid in connection with any withdrawal or transfer. We may also apply a Market
Value Adjustment in determining your Annuity Commencement Value. Under certain
conditions, you may withdraw earned interest without a surrender charge or
Market Value Adjustment. Withdrawals of interest will be subject to income tax
and may be subject to a 10% tax penalty if taken before age 59 1/2.
On the Annuity Date, we will apply your Surrender Value, modified by any Market
Value Adjustment, to a monthly income payment, to an Optional Payment Plan you
have selected, or you may take that amount in one lump sum payment. The
Optional Payment Plans include:
. life income with payments guaranteed for 10, 15 or 20 years;
. payments for a fixed period from 1 to 30 years;
. payments of a fixed amount until the amount we hold is exhausted;
. annual payments of interest earned from proceeds left with us; or
. life income based on the lives of two payees with payments guaranteed for
10 years.
The Securities and Exchange Commission ("SEC") has not approved or disapproved
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
The date of this prospectus is May 1, 2002.
This contract:
. Is Not a bank deposit
. Is Not FDIC insured
. Is Not insured or endorsed by a bank or any federal government agency
. Is Not available in every state
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Table of Contents
Definitions................................................................. 4
Summary..................................................................... 6
Other Contracts............................................................. 9
Financial Statements........................................................ 10
The Contract................................................................ 11
The Company................................................................. 13
Surrenders and Partial Withdrawals.......................................... 19
Charges and Other Deductions................................................ 22
The Death Benefit........................................................... 25
Benefits at Annuity Commencement Date....................................... 28
Optional Payment Plans...................................................... 29
Federal Tax Matters......................................................... 31
Requesting Payments......................................................... 38
Sales of the Contract....................................................... 39
Additional Information...................................................... 41
GE Life and Annuity Assurance Company....................................... 42
Appendix A.................................................................. A-1
GE Life and Annuity Assurance Company Financial Statements
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Definitions
The following terms are used throughout this prospectus:
Annuitant/Joint Annuitant -- The person(s) named in the contract whose age and,
where appropriate, gender, determine Income Payments.
Annuity Commencement Date -- The date stated on your contract's data pages as
the date on which Income Payments are scheduled to commence, provided the
Annuitant(s) is living on that date. The Annuity Commencement Date may be
changed after the Contract Date during the 30-day period immediately prior to
the end of a Guarantee Term.
Annuity Commencement Value -- Your Surrender Value on the business day
immediately preceding the Annuity Date modified by any Market Value Adjustment.
We use the Annuity Commencement Value to determine the amount of each Income
Payment or lump sum payment.
Annuity Date -- The date on which Income Payments start.
Code -- The Internal Revenue Code of 1986, as amended.
Contract Date -- The date we issue your contract and your contract becomes
effective. Your Contract Date is shown on your contract's data pages. We use
the Contract Date to determine Contract Years and Contract anniversaries.
Contract Value -- Your purchase payment and interest earnings under the
contract, minus any prior withdrawals including surrender charges and any
premium tax, modified by any prior Market Value Adjustment.
General Account -- Assets of the Company other than those allocated to any of
our separate investment accounts.
Guarantee Account -- A legally insulated, non-unitized separate account
established to hold amounts for this class of contracts.
Guaranteed Interest Rate -- A stated interest rate or rates we credit to the
Contract Value during a Guarantee Term.
Home Office -- Our offices at 6610 West Broad Street, Richmond, Virginia 23230.
Income Payment -- One of a series of payments made under either the monthly
income benefit or one of the Optional Payment Plans.
Guarantee Term -- The period of time we guarantee a specified credited rate(s)
of interest under the contract.
Market Value Adjustment -- A positive or negative adjustment we may apply to
the amount payable upon surrender, withdrawal or transfer. We may also apply a
Market Value Adjustment in determining your Annuity Commencement Value.
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Optional Payment Plan -- A plan whereby any part of the death benefit,
Surrender Value or Annuity Commencement Value can be left with us to provide
Income Payments to a payee.
Owner -- The person or persons (in the case of Joint Owners) entitled to
exercise all ownership rights stated in the contract (e.g., name beneficiaries,
make withdrawals). The Owners are shown on the contract's data pages and on any
application. "You" or "your" refers to the Owner or Joint Owners.
Surrender Value -- The Contract Value on the date we receive your written
request for surrender at our Home Office, less any applicable premium tax and
surrender charge.
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Summary
How is a contract issued? We will issue the contract when we receive and accept
your complete application information and your purchase payment. See the
provision entitled "Issuing a Contract."
How does this contract work? The contract permits you to allocate a single
purchase payment to our Guarantee Account for the Guarantee Term you select. On
the Annuity Date, we apply your Annuity Commencement Value to purchase a series
of monthly Income Payments (sometimes known as annuity payments). You may also
elect Income Payments under an Optional Payment Plan or a lump sum payment.
Certain features described in this prospectus may vary from your contract. See
the provision entitled "The Contract" of this prospectus for more information.
Please refer to your contract for these provisions that apply specifically to
you.
How does my purchase payment earn interest? You allocate your purchase payment
(less any applicable premium taxes) to the Guarantee Account for a Guarantee
Term you select. Your allocation will earn interest at the Guaranteed Interest
Rate(s) we credit for that Guarantee Term. We may credit a different rate of
interest for any Guarantee Term from one year to the next. See the provision
entitled "Guarantee Terms."
What happens at the end of a Guarantee Term? At the end of any Guarantee Term,
a subsequent Guarantee Term will begin. Unless you instruct us otherwise, the
subsequent Guarantee Term will generally be the same duration as the expiring
Guarantee Term. If we are not offering a Guarantee Term of the same duration,
the subsequent Guarantee Term will be the next shortest Guarantee Term, which
does not extend beyond the Annuity Commencement Date. If we do not offer a
Guarantee Term that expires on or before the Annuity Commencement Date, the
subsequent Guarantee Term will be the Guarantee Term that first expires after
the Annuity Commencement Date. We will pay interest on your Contract Value in a
subsequent Guarantee Term at our declared Guaranteed Interest Rate applicable
to that Guarantee Term on the day the subsequent Guarantee Term begins. See the
provision entitled "Guarantee Terms" in this prospectus.
Is the contract available to Qualified Plans? Yes. We may issue the Contract in
connection with retirement plans that qualify for preferential income tax
treatment as defined under the Code. We may also issue the contract on a non-
qualified basis.
May I surrender the contract or take a partial withdrawal? Yes. You may
surrender the Contract for its Surrender Value modified by any applicable
Market Value Adjustment at any time before the Annuity Date. You may also take
partial withdrawals from Contract Value. A partial withdrawal will reduce your
Death Benefit.
For more information on surrenders and partial withdrawals, see the "Surrenders
and Partial Withdrawals" provision in the prospectus.
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What surrender charges are associated with the contract? If you surrender your
Contract or withdraw Contract Value within the first seven Contract Years, we
may assess a surrender charge.
The surrender charge will be anywhere from 7% to 1% of the amount withdrawn,
depending on the contract year of your surrender or partial withdrawal. We will
also apply a Market Value Adjustment to partial withdrawals and surrenders from
the Guarantee Account.
You may withdraw an amount up to the free withdrawal amount without the
imposition of a surrender charge or Market Value Adjustment. The free
withdrawal amount equals the interest credited under the contract for the
twelve-month period prior to the date of the partial withdrawal. We will reduce
the available free withdrawal amount by the amount of any prior partial
withdrawal during that twelve-month period. We will also waive the surrender
charge if you apply your Contract Value upon surrender to certain Optional
Payment Plans. See the "Charges and Other Deductions" provision of this
prospectus.
Are there any other charges? Yes. If your state assesses a premium tax with
respect to your contract, then at the time your contract incurs such tax (or at
such other time as we may choose), we will deduct the premium tax from your
purchase payment or from proceeds at surrender, partial withdrawal, death or
the Annuity Date, as applicable. See the "Charges and Other Deductions"
provision of this prospectus.
For a complete discussion of all charges associated with the contract, see the
"Charges and Other Deductions" provision of this prospectus.
We pay compensation to broker-dealers who sell the contracts. For a discussion
of this compensation, see the "Sales of the Contract" provision of this
prospectus.
What is a Market Value Adjustment? The Market Value Adjustment is an amount we
deduct from or add to the amount payable upon surrender, partial withdrawal, or
transfer if such event occurs outside the 30-day period immediately prior to
the end of a Guarantee Term (the "30-day window"). We may also apply the Market
Value Adjustment in determining your Annuity Commencement Value if the Annuity
Date falls outside the 30-day window. The Market Value Adjustment formula in
the contract reflects the relationship between the Guaranteed Interest Rate
associated with the Guarantee Term from which the surrender, partial
withdrawal, transfer or Income Payments are taken, and the Guaranteed Interest
Rate for a Guarantee Term with a duration equal to the number of years
remaining in the Guarantee Term from which the surrender, partial withdrawal,
transfer or Income Payments are taken. See the "Market Value Adjustment"
provision of this prospectus.
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What happens if an Owner dies before the Annuity Date? Before the Annuity Date,
if any Owner or Annuitant, if the Owner is a non-natural person, dies while the
contract is in force, the death benefit becomes payable to the designated
beneficiary. The Code imposes certain distribution rules on designated
beneficiaries. We may pay a death benefit to the designated beneficiary. The
death benefit will be the greater of:
(1) the Contract Value; or
(2) the Surrender Value modified by any applicable Market Value Adjustment.
The death benefit is calculated as of the date we receive the paperwork
necessary to process the death claim ("due proof of death") but there
are other requirements and conditions. See "The Death Benefit" provision
of this prospectus.
What annuity benefit does the contract provide? On the Annuity Date, we will
apply your Annuity Commencement Value to a monthly income payment, an Optional
Payment Plan you select, or pay that amount in one lump sum payment. The
Optional Payment Plans are:
(1) life income with payments, guaranteed for 10, 15 or 20 years;
(2) payments for a fixed period from 1 to 30 years;
(3) payments of a fixed amount until the amount we hold is exhausted;
(4) annual payments of interest earned from proceeds left with us; or
(5) life income based on the lives of two payees with payments guaranteed
for 10 years.
Do I have a refund or return privilege? Yes. You have the right to return the
contract to us at our Home Office and have us cancel the contract within a
certain number of days (usually 20 days from the date you receive the contract,
but some states have longer periods).
If you exercise this right, we will cancel the contract as of the day we
receive your request and send you a refund equal to your purchase payment
adjusted by any Market Value Adjustment. See the "Additional Information --
Return Privilege" provision of this prospectus.
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Other Contracts
We offer other single purchase payment modified guaranteed annuity contracts,
which also offer Guarantee Terms. These contracts have different charges that
could affect the interest we may credit.
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Financial Statements
The consolidated financial statements for the Company are set forth herein.
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The Contract
The contract is a single purchase payment modified guaranteed annuity contract.
We describe your rights and benefits below and in the contract. Your contract
may differ in certain respects from the description in this prospectus due to
variations in state insurance law requirements. Your contract reflects what
specifically applies to you.
PURCHASING A CONTRACT
If you wish to purchase a contract, you must apply for it through an authorized
sales representative. The sales representative will send your completed
application to us, and we will decide whether to accept or reject it. If we
accept your application, our legally authorized officers prepare and execute a
contract. We may send the contract directly to you or to you through your sales
representative. See the "Sales of the Contract" provision of the prospectus.
To apply for a contract, the Owner(s) and Annuitant(s) must be age 85 or
younger. We may sell the contract for use with certain qualified retirement
plans. If you are purchasing the contract for use with such a plan, you must be
eligible to participate in the plan. Please be aware that if you are purchasing
the contract for use with a qualified retirement plan, the contract includes
features such as tax deferral on accumulated earnings. Qualified retirement
plans provide their own tax deferral benefit. Please consult a tax adviser to
determine whether the contract is an appropriate investment for you.
Purchasing the contract through a tax free "Section 1035 Exchange." Section
1035 of the Code generally permits you to exchange one annuity contract for
another in a "tax-free exchange." Therefore, you can use the proceeds from one
or more annuity contracts to make your purchase payment for this contract.
Before making an exchange to acquire this contract, you should carefully
compare this contract to your current contract. You may have to pay a surrender
charge under your current contract to exchange it for this contract and this
contract has its own surrender charge, which would apply to you. The benefits
under this contract may be different than those of your current contract. In
addition, you may have to pay federal income and penalty taxes on the exchange
if it does not qualify for Section 1035 treatment. You should not exchange
another contract for this contract unless you determine, after evaluating all
of the facts, that the exchange is in your best interests. Please note that the
person trying to sell you the contract will generally earn a commission.
OWNERSHIP
As Owner(s), you have all the rights under the contract, subject to the rights
of any irrevocable beneficiary. Two persons may apply for a contract as Joint
Owners. Joint Owners who are spouses have equal undivided interests in the
contract. This means that each may exercise any ownership rights on behalf of
the other except for ownership changes. Non-Spouse Joint Owners must exercise
ownership rights jointly.
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Joint Owners also have the right of survivorship. This means if a Joint Owner
dies his or her interest in the contract passes to the surviving Owner. You
must have our approval to add a Joint Owner after we issue the contract. During
the Annuitant(s)'s life, you can change the Owner(s) to another Owner(s) and
the beneficiary(s) to another beneficiary(s), except for any irrevocable
beneficiary. You may change an irrevocable beneficiary only with the written
consent of that beneficiary.
An Owner (other than a non-natural person) can name a Joint Annuitant.
Purchase payment. You may purchase the contract with a single purchase payment
of $5,000 or more ($2,000 or more for IRAs). You must obtain our prior approval
before purchase payments for any Contract issued by the Company exceed
$1,000,000.
ASSIGNMENT
An Owner of a Non-Qualified Contract may assign some or all of his or her
rights under the contract. An assignment must occur before the Maturity Date
and while the Annuitant is still living. Once proper notice of the assignment
is recorded by our Home Office, the assignment will become effective as of the
date the written request was signed.
Qualified Contracts, IRAs and Tax Sheltered Annuities may not be assigned,
pledged or otherwise transferred except where allowed by law.
We are not responsible for the validity or tax consequences of any assignment.
We are not liable for any payment or settlement made before the assignment is
recorded. Assignments will not be recorded until our Home Office receives
sufficient direction from the Owner and the assignee regarding the proper
allocation of contract rights.
Amounts pledged or assigned will be treated as distributions and will be
included in gross income to the extent that the cash value exceeds the
investment in the contract for the taxable year in which it was pledged or
assigned. Amounts assigned may be subject to a tax penalty equal to 10% of the
amount included in gross income.
Assignment of the entire Contract Value may cause the portion of the contract
exceeding the total investment in the contract and previously taxed amounts to
be included in gross income for federal income tax purposes each year that the
assignment is in effect.
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The 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 contracts. We do business in 49 states and the District of
Columbia. Our principal offices are at 6610 West Broad Street, Richmond,
Virginia 23230. Before January 1, 1999, our name was The Life Insurance Company
of Virginia.
Capital Brokerage Corporation serves as principal underwriter for the contracts
and is a broker/dealer registered with the SEC. GNA corporation directly owns
the stock of Capital Brokerage Corporation. GNA Corporation, Capital Brokerage
Corporation, GE Financial Assurance Holding, Inc. and GE Investments Funds,
Inc. are affiliates of the Company.
We are a charter 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.
For more information about us, see the provision entitled "GE Life and Annuity
Assurance Company."
THE GUARANTEE ACCOUNT
We established the Guarantee Account as a non-unitized separate account under
Virginia insurance law. Assets of the Guarantee Account will at all times equal
at least the reserves and other contract liabilities supported by the Guarantee
Account. The assets of the Guarantee Account are available to cover the
liabilities of our General Account to the extent that the assets of the
Guarantee Amount exceed the contract liabilities. Income and both realized and
unrealized gains or losses from the assets of the Guarantee Account are
credited to or charged against the Guarantee Account without regard to the
income, gains, or losses arising out of any other business we may conduct.
Subject to statutory authority, we have sole discretion over the investment of
assets of the Guarantee Account.
Amounts in the Guarantee Account do not reflect the investment performance of
our General Account, or any portion thereof.
Due to certain exclusionary provisions of the Investment Company Act of 1940
(the "1940 Act"), we have not registered either the Guarantee Account or our
General Account as an investment company under the 1940 Act. Accordingly,
neither our Guarantee Account nor our General Account is subject to regulation
under the 1940 Act. We have, however, registered the Contracts under the
Securities Act of 1933. Therefore, the Contracts are subject to regulation
under the federal securities laws, including provisions of the federal
securities laws relating to the accuracy of statements made in a registration
statement.
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GUARANTEE TERMS
A Guarantee Term is the number of years we will credit a Guaranteed Interest
Rate(s) to your Contract Value. Typically, we offer Guarantee Terms ranging
from 1 to 10 years though all Guarantee Terms may not be available in all
states or in all markets. We may at any time decrease or increase the number of
Guarantee Terms we offer.
Initial Guarantee Term. Your purchase payment (less any applicable premium tax)
will earn interest for the initial Guarantee Term you select at a Guaranteed
Interest Rate we offer. For any initial Guarantee Term, we may credit a
different Guaranteed Interest Rate for each year of the Guarantee Term. Your
purchase payment earns interest at the Guaranteed Interest Rate in effect from
the date your purchase payment is credited to the Guarantee Account through the
first Contract Year or until you transfer to another Guarantee Term, take a
partial withdrawal or surrender the contract. For an initial Guarantee Term
with a duration of more than one year, after the first Contract Year your
Contract Value will earn interest at the Guaranteed Interest Rate we credit for
the remainder of the initial Guarantee Term or until you transfer to another
Guarantee Term, take a partial withdrawal or surrender the Contract.
Subsequent Guarantee Terms. During the 30-day window, prior to the end of a
Guarantee Term, you may select from the following options:
(1) Surrender or take a partial withdrawal of your ending Contract Value
without a Market Value Adjustment (we will, however, impose a surrender
charge if the surrender or partial withdrawal occurs prior to the end
of your third contract year);
(2) Instruct us to apply the ending Contract Value to another Guarantee
Term that you select from the Guarantee Terms we are then offering; or
(3) Do nothing and allow a subsequent Guarantee Term to begin
automatically. The interest rate declared for the new term may be
different than the interest rate credited during the prior term.
Surrenders at the end of a Guarantee Term. To surrender your contract, we must
receive your written request, on a form acceptable to us, at our Home Office no
later than the end of the 30-day window prior to the end of a Guarantee Term.
Upon surrender, we will pay the Surrender Value of the contract. Any
surrendered amount may be subject to income taxes, and a 10% tax penalty may
apply if you are younger than age 59 1/2 at the time of the withdrawal.
If you surrender your contract before or after the 30-day window, prior to the
end of a Guarantee Term a Market Value Adjustment will apply. In addition, you
may be assessed a surrender charge.
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Selecting a subsequent Guarantee Term. To apply your ending Contract Value to a
subsequent Guarantee Term, we must receive your written request, on a form
acceptable to us, at our Home Office no later than the end of the 30-day window
prior to the end of a Guarantee Term. At least 45 days prior to the expiration
of your current Guarantee Term, we will send you written notice of the
expiration of the Guarantee Term and a list of the subsequent Guarantee Terms
we offer. You may select a subsequent Guarantee Term only from the Guarantee
Terms we are offering at the time your current Guarantee Term expires. Any
subsequent Guarantee Term may not extend past the Annuity Commencement Date for
your contract.
Automatic subsequent Guarantee Terms. A subsequent Guarantee Term automatically
begins when the prior Guarantee Term ends if you do not instruct us otherwise
under the first or second options described in the "Subsequent Guarantee Terms"
provision of this prospectus. Your ending Contract Value becomes the beginning
Contract Value for the subsequent Guarantee Term. The subsequent Guarantee Term
will be the Guarantee Term with the same duration as the expiring Guarantee
Term if the subsequent Guarantee Term does not extend past the Annuity
Commencement Date. If a Guarantee Term of the same duration as the expiring
Guarantee Term is not available or is a term that would extend beyond the
Annuity Commencement Date, we will transfer your Contract Value to the next
shortest Guarantee Term that does not go beyond the Annuity Commencement Date.
If we do not offer a Guarantee Term that expires on or before the Annuity
Commencement Date, we will transfer your Contract Value to the Guarantee Term
that first expires after the Annuity Commencement Date. You must allocate your
entire Contract Value to the subsequent Guarantee Term.
Guaranteed Interest Rates in subsequent Guarantee Terms. Your beginning
Contract Value for any subsequent Guarantee Term earns interest at the rate we
declare and is in effect for the first year of the subsequent Guarantee Term.
We may credit a different Guaranteed Interest Rate for each year of the
subsequent Guarantee Term. Our Guaranteed Interest Rates for subsequent
Guarantee Terms may differ from our Guaranteed Interest Rates for prior
Guarantee Terms of the same duration.
GUARANTEED INTEREST RATES
From time to time and at our sole discretion we set Guaranteed Interest Rates
for each available Guarantee Term. In determining these Guaranteed Interest
Rates we consider the interest rates available on the types of instruments in
which we intend to invest the proceeds attributable to the contracts. We will
invest proceeds attributable to the contracts primarily in investment-grade
fixed income securities (i.e., securities rated by Standard and Poor's rating
system to be suitable for prudent investors). We are not obligated to invest
according to any particular strategy, except
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as may be required by applicable law. You will have no direct or indirect
interest in these investments. We consider other factors in determining
Guaranteed Interest Rates, including:
. regulatory and tax requirements;
. sales commissions and administrative expenses the Company incurs;
. general economic trends; and
. competitive factors.
We make the final determination as to the Guaranteed Interest Rates we declare.
We cannot predict or guarantee what future interest rates we will declare.
To find out the current Guaranteed Interest Rate for a Guarantee Term, please
contact our Home Office at the telephone number listed on page 1 of this
prospectus or your sales representative. You can also find this information on
www.GEFinancialPro.com.
FREE WITHDRAWAL AMOUNT
You may instruct us to send you all or a portion of the interest credited to
your Contract Value during the prior twelve months. This amount is known as the
free withdrawal amount. The free withdrawal amount will be reduced by any prior
withdrawal during that twelve-month period. Interest withdrawals remove money
from a Guarantee Term that would otherwise compound even more interest on a
daily basis. Because of this interruption of interest compounding, the more
interest you withdraw, the less interest your contract will earn over time.
Larger withdrawals reduce the compounding of interest more than smaller
withdrawals; frequent withdrawals hinder the compounding process more than
infrequent withdrawals; and earlier withdrawals reduce your interest more than
later withdrawals.
We will not impose a surrender charge or Market Value Adjustment if you
withdraw the free withdrawal amount, but your withdrawal may be subject to
federal and state income tax and may include a 10% tax penalty if the
withdrawal is taken prior to age 59 1/2. See the "Federal Tax Matters"
provision of this prospectus.
CONTRACT VALUE AND SURRENDER VALUE
Your Contract Value at any time is equal to your purchase payment plus any
interest credited to it, minus any prior withdrawals including any surrender
charges and premium tax modified by any prior Market Value Adjustment.
The Surrender Value is equal to the Contract Value, minus any surrender charges
and premium tax that would apply in the case of a full surrender. Your
Surrender Value modified by any applicable Market Value Adjustment is the
amount you would be entitled to receive if you surrender your Contract.
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MARKET VALUE ADJUSTMENT
A Market Value Adjustment may decrease, increase or have no effect on the
Contract Value you withdraw or transfer. We will apply a Market Value
Adjustment to amounts in excess of the free withdrawal amount:
(1) whenever you withdraw Contract Value (unless made within the 30-day
window prior to the end of the current Guarantee Term);
(2) on the Annuity Date if the Annuity Date does not fall within the 30-day
window prior to the end of the current Guarantee Term; and
(3) will also apply a Market Value Adjustment to the Contract Value when you
transfer to a different Guarantee Term (unless the amount is transferred
within the 30-day window prior to the end of the current Guarantee
Term).
We determine the Market Value Adjustment by multiplying the amount you
withdraw, transfer or apply to the monthly income benefit option or an Optional
Payment Plan by the factor set forth below.
((1 + i) / (1 + j))/n/365/
n = the number of days from the date of surrender, partial withdrawal,
transfer to another Guarantee Term or from the Annuity Date to the end of
your current Guarantee Term.
i = the Guaranteed Interest Rate in effect for the current Guarantee Term.
j = the Guaranteed Interest Rate, determined at the time of surrender,
partial withdrawal, transfer to another Guarantee Term or upon the Annuity
Date, for a Guarantee Term with a duration equal to "n." If we do not offer
a Guarantee Term with a duration equal to "n," "j" will be a linear
interpolation of the Guaranteed Interest Rates for Guarantee Terms with
durations that immediately precede and follow "n." If we offer only
Guarantee Terms with longer durations than "n," "j" will be the Guaranteed
Interest Rate for the Guarantee Term with the shortest duration we offer. If
we offer only Guarantee Terms with shorter durations than "n," "j" will be
the Guaranteed Interest Rate for the Guarantee Term with the longest
duration we offer.
A Market Value Adjustment may be positive, negative or result in no change. In
general, if interest rates are rising, you bear the risk that any Market Value
Adjustment will likely be negative and reduce the amount available for the
partial withdrawal, surrender or transfer. On the other hand, if interest rates
are falling, it is more likely that you will receive a positive Market Value
Adjustment that increases the amount available for partial withdrawal,
surrender or transfer. In the event of surrender or payment under the monthly
income benefit option or an Optional Payment Plan, we will add or subtract any
Market Value Adjustment from your Surrender Value to determine your Annuity
Commencement Value. In the event of a
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partial withdrawal, surrender or transfer, we will add or subtract any Market
Value Adjustment from the total amount withdrawn or transferred.
Illustrations of how the Market Value Adjustment works are included in Appendix
A.
TRANSFERS BEFORE THE END OF A GUARANTEE TERM
Once each contract year after the first contract year, you may transfer your
entire Contract Value before the 30-day window prior to the end of your current
Guarantee Term to another Guarantee Term with a duration of five or more years.
The transfer will be effective as of the date we receive your request at our
Home Office in a form acceptable to us. Your transfer will be subject to any
applicable Market Value Adjustment. See the "Charges and Other Deductions"
provision of this prospectus.
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Surrenders and Partial Withdrawals
We will allow you to surrender the contract or take partial withdrawals subject
to the following.
You may take a partial withdrawal and/or surrender at any time before the
Annuity Date. We will not process any partial withdrawal request that would
reduce your Contract Value to less than $2,000. You may surrender your contract
at any time. A partial withdrawal or surrender is effective as of the date we
receive your request at our Home Office in a form acceptable to us.
Partial withdrawals and surrenders may be subject to a surrender charge and a
Market Value Adjustment. See the "Charges and Other Deductions" provision of
this prospectus. A partial withdrawal will also reduce your Death Benefit. See
the "The Death Benefit" provision of this prospectus. Withdrawals of the free
withdrawal amount are not subject to a surrender charge or a Market Value
Adjustment.
In addition, you may be subject to income tax and, if you are younger than age
59 1/2 at the time of the surrender or partial withdrawal, a 10% penalty tax. A
surrender or a partial withdrawal may also be subject to income tax
withholding. See the "Federal Tax Matters" provision of this prospectus.
SYSTEMATIC WITHDRAWALS OF INTEREST
You may elect systematic withdrawals of interest credited under the contract
(in amounts of at least $100) on a monthly, quarterly, semi-annual or annual
basis. Depending upon the frequency of the systematic withdrawals you elect,
the monthly, quarterly, semi-annual or annual period immediately preceding a
systematic withdrawal will be known as the systematic withdrawal period. The
maximum amount available for any systematic withdrawal is the interest we
credit under the contract during the prior systematic withdrawal period. You
may elect payments to begin at any time after the first systematic withdrawal
period under the contract.
After payments begin, you may change the frequency and/or amount of your
payments once per calendar quarter. To participate in a systematic withdrawal
program, you must complete our authorization form. You can obtain the form from
an authorized sales representative or our annuity Customer Service Center by
calling the telephone number or writing to the address listed on page 1 of this
prospectus.
Your systematic withdrawals may not exceed the maximum amount. If at any time
the systematic withdrawal amount would exceed the maximum, we will lower the
systematic withdrawal amount otherwise payable to equal the available maximum
amount.
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A systematic withdrawal program will terminate automatically when a systematic
withdrawal would cause the remaining Contract Value to be less than $2,000. If
a systematic withdrawal would cause the Contract Value to be less than $2,000,
then we will not process that systematic withdrawal transaction. If any amount
withdrawn pursuant to systematic withdrawals would be or becomes less than
$100, we reserve the right to reduce the frequency of payments to an interval
that would result in each payment being at least $100. You may discontinue
systematic withdrawals at any time by notifying us in writing or by calling our
Home Office at the address and telephone number listed on page 1 of the
prospectus.
When you consider systematic withdrawals, please remember that each systematic
withdrawal is subject to Federal income taxes on any portion considered gain
for tax purposes. In addition, you may be assessed a 10% Federal penalty tax on
systematic withdrawals if you are younger than age 59 1/2 at the time of the
withdrawal.
Both partial withdrawals at your specific request and withdrawals under a
systematic withdrawal program will reduce the free withdrawal amount.
Telephone withdrawals. You may take partial withdrawals from your contract by
calling us, provided that we received your prior written authorization allowing
us to process such telephone requests at our Home Office. However, you only can
surrender your contract by writing our Home Office at the address listed on
page 1 of this prospectus.
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 or
prohibit partial withdrawal requests made by telephone.
To request a partial withdrawal by telephone, please call us at 1-800-352-9910.
Special note on reliability. Please note that the telephone system may not
always be available. Although we have taken precautions to help our systems
handle heavy use, we cannot promise complete reliability under all
circumstances. If you are experiencing problems, you can make your transaction
request by writing to our Home Office at the address listed on page 1 of this
prospectus.
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Surrender Value. The amount payable on surrender of your contract is the
Surrender Value as of the date we receive your surrender request in a form
acceptable to us modified by any Market Value Adjustment. The Surrender Value
equals the Contract Value on the date we receive your request, less any
applicable surrender charge and premium tax charge. We will pay the Surrender
Value modified by any Market Value Adjustment in a lump sum, unless you elect
one of the Optional Payment Plans. See the "Optional Payment Plans" provision
of this prospectus. We may waive surrender charges upon surrender if you elect
certain Optional Payment Plans. See the "Charges and Other Deductions"
provision of this prospectus.
21
Charges and Other Deductions
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the contracts. We incur certain
costs and expenses for the distribution and administration of the contracts and
for providing the benefits payable thereunder. The amount of a charge may not
necessarily correspond to the costs associated with providing the services or
benefits indicated by the designation of the charge. For example, surrender
charges we collect may not fully cover all of the sales and distribution
expenses we actually incur. We also may realize a profit on a charge.
SURRENDER CHARGE
Surrenders and partial withdrawals may be subject to a surrender charge.
Generally, we will assess a surrender charge as a percentage of Contract Value
withdrawn or surrendered during the first 7 Contract Years in excess of the
free withdrawal amount. After the third Contract Year, we will not assess a
surrender charge on a surrender or partial withdrawal you request during the
30-day window prior to the end of your Guarantee Term.
The surrender charge percentage is as follows:
Surrender Charge as a
Contract Year in Which Percentage of Amount
Surrender or Withdrawal Made Withdrawn
--------------------------------------------------------------------------
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 and after 0%
--------------------------------------------------------------------------
Waiver of Surrender Charge. We will waive the surrender charge if you surrender
your contract and apply your Contract Value to one of the following Optional
Payment Plans:
(1) Plan 1 (Life Income with Period Certain);
(2) Plan 2 (Income for a Fixed Period of 5 or more years); or
(3) Plan 5 (Joint Life and Survivor Income).
If you elect one of the above Optional Payment Plans, then the amount applied
to the Optional Payment Plan will be the Contract Value, minus any premium tax,
and modified by any Market Value Adjustment, if applicable.
You may also select Optional Payment Plan 3 or Plan 4 upon surrender, although
we will assess surrender charges and any applicable premium tax against your
Contract
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Value. We will apply the Surrender Value, and if applicable modify the
Surrender Value by a Market Value Adjustment to the selected plan. See the
"Optional Payment Plans" provision of this prospectus.
We will also waive the surrender charge arising from a surrender or partial
withdrawal before Income Payments begin if, at the time we receive the request,
we have received due proof that the Owner has a qualifying confinement to a
state licensed or legally operated hospital or nursing facility for a minimum
period as set forth in the contract (provided the confinement began at least 90
days after the Contract Date).
We will not impose the surrender charge upon your withdrawal of the free
withdrawal amount.
Market Value Adjustment. Surrenders, partial withdrawals and transfers from one
Guaranteed Term to another may be subject to a Market Value Adjustment. We
assess the Market Value Adjustment on the proceeds payable or transferred. We
will also apply a Market Value Adjustment in determining your Annuity
Commencement Value. We calculate the Market Value Adjustment separately for
each transaction.
We will not apply a Market Value Adjustment to the proceeds payable or
transferred in the following cases:
. A surrender or partial withdrawal from a Guarantee Term made during the
30-day window prior to the end of a Guarantee Term;
. If you elect a transfer of Contract Value from a Guarantee Term to a new
Guarantee Term during the 30-day window prior to the end of a Guarantee
Term;
. Annuity commencement during the 30-day window prior to the end of a
Guarantee Term; or
. Payment of the free withdrawal amount.
DEDUCTIONS FOR PREMIUM TAXES
We will deduct charges for any premium tax or other tax levied by any
governmental entity either from your purchase payment or Contract Value when
incurred or when we pay proceeds under the contract (proceeds includes amounts
received due to surrender, partial withdrawal, annuity commencement, and/or
death).
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes depend
upon the law of your state. The tax generally ranges from 0.0% to 3.5%.
23
COMMISSION PAYMENTS
We sell the contracts through registered representatives of broker-dealers.
These registered representatives are also appointed and licensed as insurance
agents of the Company. We pay commissions to broker-dealers for selling the
contracts. You do not directly pay these commissions, we do. We intend to
recover the commissions, marketing, administrative and other expenses and the
cost of contract benefits through fees and charges imposed under the contract.
See the "Sales of the Contract" provision of this prospectus for more
information.
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The Death Benefit
DEATH BENEFIT UPON DEATH BEFORE THE ANNUITY DATE
If any Owner (or Annuitant if the Owner is a non-natural person) dies before
the Annuity Date, the amount of proceeds available is the death benefit.
The death benefit is calculated as of the date that we receive due proof of
death. Until we receive complete written settlement instructions from the
designated beneficiary, values will remain in the Guarantee Account.
Upon receipt of due proof of death (generally, due proof is a certified copy of
the death certificate or a certified copy of the decree of a court of competent
jurisdiction as to a finding of death), we will treat the death benefit in
accordance with your instructions, subject to distribution rules and
termination of contract provisions described elsewhere.
Unless otherwise distributed pursuant to the distribution rules stated below,
we will pay death benefit proceeds in one lump sum unless the beneficiary
elects an Optional Payment Plan. See the "Optional Payment Plans" provision of
this prospectus.
DEATH BENEFIT AMOUNT
The death benefit equals the greater of:
(1) the Contract Value; or
(2) the Surrender Value modified by any applicable Market Value Adjustment.
The death benefit is calculated as of the date of receipt of due proof of
death.
REQUIRED DISTRIBUTIONS
General: In certain circumstances, federal tax law requires that distributions
be made under the contract upon the first death of:
. an Owner or Joint Owner; or
. the Annuitant or Joint Annuitant, if any Owner is a non-natural person
(an entity, such as a trust or corporation).
The discussion below describes the methods available for distributing the value
of the contract upon death.
Designated Beneficiary: At the death of any Owner or any Annuitant, if any
Owner is a non-natural person, the person or entity first listed below who is
alive or in existence on the date of death will become the designated
beneficiary:
(1) Owner or Joint Owners;
(2) Primary beneficiary;
(3) Contingent beneficiary; or
(4) Owner's estate.
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The designated beneficiary may choose one of the payment choices listed below,
subject to the distribution rules stated below. If there is more than one
designated beneficiary, we will treat each one separately in applying the tax
law's rules described below.
Distribution Rules: The distributions required by Federal tax law differ
depending on whether the designated beneficiary is the spouse of the deceased
Owner or of the Annuitant, if any Owner is a non-natural person. Upon receipt
of due proof of death, the designated beneficiary will instruct us how to treat
the proceeds subject to the distribution rules discussed below.
. Spouses -- If the designated beneficiary is the surviving spouse of the
deceased person, the contract may be continued in force with the
surviving spouse as the new Owner or the surviving spouse may receive
any death benefit payable. The surviving spouse may designate a new
Annuitant. At the death of the surviving spouse, this provision may not
be used again, even if the surviving spouse remarries. In that case, the
rules for non-spouses will apply.
. Non-Spouses -- If the designated beneficiary is not the surviving spouse
of the deceased person, the contract cannot be continued in force
indefinitely. Instead, upon the death of any Owner (or any Annuitant, if
any Owner is a non-natural person) payments must be made to (or for the
benefit of) the designated beneficiary under one of the following
payment choices:
(1) Receive the death benefit in one lump sum payment upon receipt of due
proof of death.
(2) Receive the Contract Value at any time during the five-year period
following the date of death through withdrawals or surrendering the
contract. At the end of the five-year period, we will pay in a lump
sum any remaining Contract Value. Contract Value will be modified for
any Market Value Adjustment unless payment is made within the 30-day
window prior to the end of the Guarantee Term. See the "Requesting
Payments" provision in this prospectus.
(3) Apply the death benefit to provide an Income Payment under Optional
Payment Plan 1 or 2. The first Income Payment must be made no later
than one year after the date of death. Also, the Income Payment
period must be either the lifetime of the designated beneficiary or a
period not exceeding the designated beneficiary's life expectancy.
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If the designated beneficiary makes no choice within 30 days following receipt
of due proof of death, we will pay the death benefit as a lump sum within the
earlier of 5 years following the date of death or 60 days following receipt of
due proof of death. If the designated beneficiary dies before we have
distributed the entire death benefit, we will pay in a lump sum any value still
remaining to the person named by the designated beneficiary. If no person is so
named, we will pay the designated beneficiary's estate.
Under payment choices 1 and 2, the contract will terminate upon payment of all
available proceeds. Under payment choice 3, this contract will terminate when
we apply the Contract Value to provide Income Payments.
DEATH BENEFIT AFTER THE ANNUITY DATE
If any Owner, Annuitant or payee dies after the Annuity Date, Income Payments
will be made as stated in the section discussing income benefits. See the
"Benefits at Annuity Commencement Date" provision of this prospectus.
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Benefits at Annuity Commencement Date
You must select an Annuity Commencement Date in your application. This date may
not be earlier than the 10th Contract Anniversary and no later than the
Contract Anniversary following the Annuitant's 90th birthday (or the younger
Annuitant's 90th birthday for Joint Annuitants), unless we approve a different
date. You can change the Annuity Commencement Date during any 30-day window
prior to the end of your current Guarantee Term. To make a change, send written
notice to our Home Office, at the address located on page 1 of this prospectus
before the Annuity Commencement Date. If you change the Annuity Commencement
Date, the Annuity Commencement Date will then mean the new Annuity Commencement
Date you select.
If the Annuitant is still living on the Annuity Commencement Date, we will pay
you or your designated payee the monthly Income Payments described below
beginning on that date. We may deduct premium taxes from your payments.
Monthly Income Payments are made under a life annuity payment plan with a
period certain of 10 years, 15 years, or 20 years. If you do not select a
period certain, we will use a life annuity payment plan with a 10-year period
certain. The guaranteed amount payable will earn interest at 3% compounded
yearly. We may decide at our sole discretion to pay a higher rate of interest.
We will make Income Payments monthly unless you elect in writing quarterly,
semi-annual or annual installments. Instead, you may choose to receive the
Contract Value in one lump sum in which case we will cancel the contract. You
may also choose to receive Income Payments under the Optional Payment Plans
described below. Once Income Payments commence, the amount and period of Income
Payments cannot be changed.
28
Optional Payment Plans
You may apply your Surrender Value adjusted for any applicable Market Value
Adjustment, Death Benefit proceeds or your Annuity Commencement Value to an
Optional Payment Plan. If you surrender the contract and select Plan 1, Plan 2
(with a fixed period of 5 or more years), or Plan 5, then the amount applied to
the Plan is the Contract Value minus any premium tax modified by any applicable
Market Value Adjustment. If the Annuity Date falls within the 30-day window
prior to the end of the current Guarantee Term, we will not apply a Market
Value Adjustment.
During the Annuitant's life, you (or the designated beneficiary at your death)
can choose an Optional Payment Plan. If you change a designated beneficiary,
your Plan selection will not remain in effect unless you request otherwise. Any
election or change in a Plan must be sent to our Home Office in a form
acceptable to us. We do not allow any changes after Income Payments begin. If
an Optional Payment Plan has not been chosen at the death of the Owner (or
Annuitant, if the Owner is a non-natural person), your designated beneficiary
can choose a Plan when we pay the death benefit.
We will make Income Payments monthly unless you request otherwise. The amount
of each payment under an Optional Payment Plan must be at least $100. Payments
made under an Optional Payment Plan at the death of any Owner (or any
Annuitant, if any Owner is a non-natural person), must conform to the rules as
outlined in the "Death Benefit" provision.
We may make an age adjustment to determine the amount of your Income Payments.
We will adjust the age according to the age adjustment table shown in your
contract.
Fixed Income Payments. We will transfer proceeds applied to a fixed income
option to our General Account. Payments made will equal or exceed those
required by the state where we deliver the contract. We determine fixed Income
Payments on the date we receive due proof of the Owner's death or on surrender.
Payments under Optional Payment Plan 4 (Interest Income) will begin at the end
of the first interest period after the date proceeds are otherwise payable.
Optional Payment Plans. The contract provides five Optional Payment Plans, each
of which is payable on a fixed basis. If any payee is not a natural person, our
consent must be obtained before selecting an Optional Payment Plan. Following
are explanations of the Optional Payment Plans available.
Plan 1 -- Life Income with Period Certain. This option guarantees monthly
payments for the lifetime of the payee with a minimum number of years of
payments. If the payee lives longer than the minimum period, payments will
continue for his or her life. The period can be 10, 15, or 20 years.
Payments are determined according to the table in the Monthly Income Benefit
section of the
29
contract. Guaranteed amounts payable are determined assuming an interest
rate of 3% compounded annually. We may increase this rate and the amount of
any payment. The payee selects the designated period. If the payee dies
during the minimum period, we will discount the amount of the remaining
guaranteed payments at the same rate used in calculating Income Payments. We
will pay the discounted amount in one sum to the payee's estate unless
otherwise provided.
Plan 2 -- Income for a Fixed Period. This option guarantees periodic
payments (monthly, quarterly, semi-annually or annually) for a fixed period
not longer than 30 years. Payments will be made according to the table in
the contract. Guaranteed amounts payable are determined assuming an interest
rate of 3% compounded annually. We may increase this rate and the amount of
any payment. If the payee dies, we will discount the amount of the remaining
guaranteed payments to the date of the payee's death at the same rate used
in calculating Income Payments. We will pay the discounted amount in one sum
to the Payee's estate unless otherwise provided.
Plan 3 -- Income of a Definite Amount. This option provides periodic
payments (monthly, quarterly, semi-annually or annually) of a definite
amount to be paid. 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. Unpaid
proceeds will earn interest at 3% compounded annually. We may increase this
rate. If we do, the payment period will be extended. 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. This option provides for periodic payments
(monthly, quarterly, semi-annually or annually) of interest earned from the
proceeds left with us. Payments will begin at the end of the first period
chosen. Proceeds left under this plan will earn interest at 3% compounded
annually. We may increase this rate and the amount of any payment. 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. This option provides for us to
make monthly payments to two payees for a guaranteed minimum of 10 years.
The settlement age of each payee must be at least 35 when payments begin.
The amounts payable under this plan are determined assuming an interest rate
of 3% compounded annually. We may increase this rate and the amount of any
payment. 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 rate used in
calculating Income Payments. We will pay the discounted amount in one sum to
the last surviving payee's estate unless otherwise provided.
30
Federal Tax Matters
INTRODUCTION
This part of the prospectus discusses the federal income tax treatment of the
contract. The federal income tax treatment of the contract is complex and
sometimes uncertain. The federal income tax rules may vary with your particular
circumstances. This discussion does not address all of the federal income tax
rules that may affect you and your contract. This discussion also does not
address other federal tax consequences, or state or local tax consequences,
associated with a contract. As a result, you should always consult a tax
advisor about the application of tax rules to your individual situation.
TAXATION OF NON-QUALIFIED CONTRACTS
This part of the discussion describes some of the federal income tax rules
applicable to Non-Qualified Contracts. A Non-Qualified Contract is a contract
not issued in connection with a qualified retirement plan receiving special tax
treatment under the Code, such as an individual retirement annuity or a section
401(k) plan.
Tax Deferral on Earnings. The federal income tax law does not tax any increase
in an Owner's Contract Value until there is a distribution from the contract.
However, certain requirements must be satisfied in order for this general rule
to apply, including:
. An individual must own the contract (or the tax law must treat the
contract as owned by an individual); and
. The contract's Annuity Commencement Date must not occur near the end of
the Annuitant's life expectancy.
This part of the prospectus discusses each of these requirements.
Contracts not owned by an individual -- no tax deferral and loss of interest
deduction. As a general rule, the Code does not treat a contract that is owned
by an entity (rather than an individual) as an annuity contract for federal
income tax purposes. The entity owning the contract pays tax currently on the
excess of the Contract Value over the purchase payments paid for the contract.
Contracts issued to a corporation or a trust are examples of contracts where
the Owner pays current tax on the contract's earnings.
There are several exceptions to this rule. For example, the Code treats a
contract as owned by an individual if the nominal owner is a trust or other
entity that holds the contract as an agent for an individual. However, this
exception does not apply in the case of any employer that owns a contract to
provide deferred compensation for its employees.
In the case of a contract issued after June 8, 1997 to a taxpayer that is not
an individual, or a contract held for the benefit of an entity, the entity will
lose its
31
deduction for a portion of its otherwise deductible interest expenses. This
disallowance does not apply if the Owner pays tax on the annual increase in the
Contract Value. Entities that are considering purchasing the contract, or
entities that will benefit from someone else's ownership of a contract, should
consult a tax advisor.
Age at which annuity payouts must begin. Federal income tax rules do not
expressly identify a particular age by which annuity payouts must begin.
However, those rules do require that an annuity contract provide for
amortization, through annuity payouts, of the contract's purchase payments paid
and earnings. If annuity payments begin on a date that the IRS determines does
not satisfy these rules, interest and gains under the contract could be taxable
each year as they accrue.
No guarantees regarding tax treatment. We make no guarantees regarding the tax
treatment of any contract or of any transaction involving a contract. However,
the remainder of this discussion assumes that your contract will be treated as
an annuity contract for federal income tax purposes and that the tax law will
not impose tax on any increase in your contract Value until there is a
distribution from your contract.
Partial withdrawals and surrenders. A partial withdrawal occurs when you
receive less than the total amount of the contract's Surrender Value. In the
case of a partial withdrawal, you will pay tax on the amount you receive to the
extent of the gain in your contract, i.e. the excess Contract Value before the
partial withdrawal over your "investment in the contract." (This term is
explained below.) This income (and all other income from your contract) is
ordinary income. The Code imposes a higher rate of tax on ordinary income than
it does on capital gains.
A surrender occurs when you receive the total amount of the Contract's
Surrender Value. In the case of a surrender, you will pay tax on the amount you
receive to the extent it exceeds your "investment in the contract."
Your "investment in the contract" generally equals the total of your purchase
payments under the contract, reduced by any amounts you previously received
from the contract that you did not include in your income.
In the case of systematic withdrawals, the amount of each withdrawal should be
considered a distribution and each taxed in the same manner as a withdrawal
from the contract.
There is some uncertainty regarding the tax treatment of the Market Value
Adjustment when the Market Value Adjustment is applied. The IRS has authority
to address this uncertainty. However, as of the date of this prospectus, the
IRS has not issued any clarifying regulations. In the event of a withdrawal, to
determine the extent to which your Contract Value exceeds your "investment in
the contract," we will disregard the amount of the MVA.
Assignments and Pledges. The Code treats any assignment or pledge of (or
32
agreement to assign or pledge) any portion of your Contract Value as a
withdrawal of such amount or portion.
Gifting a contract. If you transfer ownership of your contract -- without
receiving a payment equal to your Contract Value -- to a person other than your
spouse (or to your former spouse incident to divorce), you will pay tax on your
Contract Value to the extent it exceeds your "investment in the contract." In
such a case, the new owner's "investment in the contract" will be increased to
reflect the amount included in your income.
Taxation of annuity payouts. The Code imposes tax on a portion of each annuity
payout (at ordinary income tax rates) and treats a portion as a nontaxable
return of your "investment in the contract." We will notify you annually of the
taxable amount of your annuity payout.
Pursuant to the Code, you will pay tax on the full amount of your annuity
payouts once you have recovered the total amount of the "investment in the
contract." If annuity payouts cease because of the death of the Annuitant and
before the total amount of the "investment in the contract" has been recovered,
the unrecovered amount generally will be deductible.
If proceeds are left with us (Optional Payment Plan 4), they are taxed in the
same manner as a surrender. The Owner must pay tax currently on the interest
credited on these proceeds. This treatment could also apply to Plan 3 if the
payee is at an advanced age, such as age 80 or older.
Taxation of death benefits. We may distribute amounts from your contract
because of the death of an Owner, a Joint Owner, or an Annuitant. The tax
treatment of these amounts depends on whether the Owner, Joint Owner, or
Annuitant dies before or after the contract's Annuity Date.
Before the contract's Annuity Date. If received under an annuity payout option,
death benefits are taxed in the same manner as annuity payouts.
If not received under an annuity payout option, death benefits are taxed in the
same manner as a withdrawal.
After the contract's Annuity Date. If received in accordance with the existing
annuity payout option, death benefits are excludible from income to the extent
that they do not exceed the unrecovered "investment in the contract." All
annuity payouts in excess of the unrecovered "investment in the contract" are
includible in income.
If received in a lump sum, the tax law imposes tax on death benefits to the
extent that they exceed the unrecovered "investment in the contract" at that
time.
Penalty taxes payable on partial withdrawals, surrenders, or Annuity
Payouts. The Code may impose a penalty tax equal to 10% of the amount of any
payment from
33
your contract that is included in your gross income. The Code does not impose
the 10% penalty tax if one of several exceptions applies. These exceptions
include withdrawals, surrenders, or annuity payouts that:
. you receive on or after you reach age 59 1/2;
. you receive because you became disabled (as defined in the tax law);
. a beneficiary receives on or after the death of the Owner; or
. you receive as a series of substantially equal periodic payments for the
life (or life expectancy) of the taxpayer.
Special rules if you own more than one contract. In certain circumstances, you
must combine some or all of the Non-Qualified Contracts you own in order to
determine the amount of an annuity payout, a surrender or a withdrawal that you
must include in income. For example:
. if you purchase a contract offered by this prospectus and also purchase
at approximately the same time an immediate annuity, the IRS may treat
the two contracts as one contract;
. if you purchase two or more deferred annuity contracts from the same life
insurance company (or its affiliates) during any calendar year, the Code
treats all such contracts as one contract.
The effects of such aggregation are not clear. However, it could affect:
. the amount of a surrender, a withdrawal or an annuity payout that you
must include in income; and
. the amount that might be subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
We also designed the contracts for use in connection with certain types of
retirement plans that receive favorable treatment under the Code. Contracts
issued to or in connection with a qualified retirement plan are called
"Qualified Contracts." In considering the appropriateness of the contract for
use as a Qualified Contract, you should take into account that this contract
must be purchased with a single purchase payment. Generally, this requirement
will limit use of the contract to situations involving a rollover or transfer
from another qualified retirement plan. We do not currently offer all of the
types of Qualified Contracts described, and may not offer them in the future.
Prospective purchasers should contact our Home Office to learn the availability
of Qualified Contracts at any given time.
The federal income tax rules applicable to qualified plans are complex and
varied. As a result, this prospectus makes no attempt to provide more than
general information
34
about use of the contract with the various types of qualified plans. Persons
intending to use the contract in connection with a qualified plan should obtain
advice from a competent advisor.
Types of Qualified Contracts. Some of the different types of Qualified
Contracts include:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Simplified Employee Pensions ("SEPs")
. Savings Incentive Matched Plan for Employees ("SIMPLE plans" including
"SIMPLE IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit-sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans")
Terms of Qualified Plans and Qualified Contracts. The terms of a qualified
retirement plan may affect your rights under a Qualified Contract. When issued
in connection with a qualified plan, we will amend a contract as generally
necessary to conform to the requirements of the type of plan. However, the
rights of any person to any benefits under qualified plans may be subject to
the terms and conditions of the plans themselves, regardless of the terms and
conditions of the contract. In addition, we are not bound by the terms and
conditions of qualified retirement plans to the extent such terms and
conditions contradict the contract, unless we consent.
Treatment of Qualified Contracts compared with Non-
Qualified Contracts. Although some of the federal income tax rules are the same
for both Qualified and Non-Qualified Contracts, many of the rules are
different. For example:
. The Code generally does not impose tax on the earnings under either
Qualified or Non-Qualified Contracts until received.
. The Code does not limit the amount of purchase payments and the time at
which purchase payments can be made under Non-Qualified Contracts.
However, the Code does limit both the amount and frequency of purchase
payments made to Qualified Contracts.
35
. The Code does not allow a deduction for purchase payments made for Non-
Qualified Contracts, but sometimes allows a deduction or exclusion from
income for purchase payments made to a Qualified Contract.
The federal income tax rules applicable to qualified plans and Qualified
Contracts vary with the type of plan and contract. For example:
. Federal tax rules limit the amount of purchase payments that can be made
and the tax deduction or exclusion that may be allowed for the purchase
payments. These limits vary depending on the type of qualified plan and
the circumstances of the plan participant, e.g., the participant's
compensation.
. Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the
Owner must begin receiving payments from the contract in certain minimum
amounts by a certain age, typically age 70 1/2. However, these "minimum
distribution rules" do not apply to a Roth IRA.
Amounts received under Qualified Contracts. Federal income tax rules generally
include distributions from a Qualified Contract in your income as ordinary
income. Purchase payments that are deductible or excludible from income do not
create "investment in the contract." Thus, under many Qualified Contracts there
will be no "investment in the contract" and you include the total amount you
receive in your income. There are exceptions. For example, you do not include
amounts received from a Roth IRA if certain conditions are satisfied. For
example, failure to comply with the minimum distribution rules applicable to
certain qualified plans, such as Traditional IRAs, will result in the
imposition of an excise tax. This excise tax generally equals 50% of the amount
by which a minimum required distribution exceeds the actual distribution from
the qualified plan.
Federal penalty taxes payable on distributions. The Code may impose a penalty
tax equal to 10% of the amount of any payment from your Qualified Contract that
is includible in your income. The Code does not impose the penalty tax if one
of several exceptions apply. The exceptions vary depending on the type of
Qualified Contract you purchase. For example, in the case of an IRA, exceptions
provide that the penalty tax does not apply to a withdrawal, surrender, or
annuity payout:
. received on or after the Owner reaches age 59 1/2;
. received on or after the Owner's death or because of the Owner's
disability (as defined in the tax law);
36
. received as a series of substantially equal periodic payments for the
life (or life expectancy) of the taxpayer; or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
MOVING MONEY FROM ONE QUALIFIED CONTRACT OR QUALIFIED PLAN TO ANOTHER
Rollovers and Transfers. In many circumstances you may move money between
Qualified Contracts and qualified plans by means of a rollover or a transfer.
Special rules apply to such rollovers and transfers. If you do not follow the
applicable rules, you may suffer adverse federal income tax consequences,
including paying taxes which you might not otherwise have had to pay. You
should always consult a qualified advisor before you move or attempt to move
funds between any Qualified Contract or plan and another Qualified Contract or
plan.
Direct Rollovers. The direct rollover rules apply to certain payments (called
"eligible rollover distributions") from section 401(a) plans, section 403(a) or
(b) plans, H.R. 10 plans, and Qualified Contracts used in connection with these
types of plans. (The direct rollover rules do not apply to distributions from
IRAs or certain section 457 plans). The direct rollover rules require federal
income tax equal to 20% of the eligible rollover distribution to be withheld
from the amount of the distribution, unless the Owner elects to have the amount
directly transferred to certain Qualified Contracts or plans.
Prior to receiving an eligible rollover distribution from us, we will provide
you with a notice explaining these requirements and how you can avoid 20%
withholding by electing a direct rollover.
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a contract unless the distributee notifies us at or
before the time of the distribution that he or she elects not to have any
amounts withheld. In certain circumstances, federal income tax rules may
require us to withhold tax. At the time you request a withdrawal, surrender, or
annuity payout, we will send you forms that explain the withholding
requirements.
CHANGES IN THE LAW
This discussion is based on the Code, IRS regulations, and interpretations
existing on the date of this prospectus. Congress, the IRS, and the courts may
modify these authorities, however, sometimes retroactively.
37
Requesting Payments
To request a payment, you must provide us with notice in a form satisfactory to
us. We will ordinarily pay any partial withdrawal or surrender proceeds within
seven days after receipt at our Home Office of a request in good order for a
partial withdrawal or surrender. We also will ordinarily make payment of lump
sum death benefit proceeds within seven days from the receipt of due proof of
death. We will determine payment amounts as of the date on which our Home
Office receives the payment request or due proof of death.
In most cases, when we pay death benefit proceeds in a lump sum, we will pay
these proceeds either:
(1) to your designated beneficiary 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, in the amount of the
death benefit 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 proceeds 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 designated beneficiary with regard to the form of
death benefit payment, we will automatically establish the GE Secure Access
Account.
We reserve the right to defer payments from the Guarantee Account or our
General Account for a withdrawal and surrender for up to six months from the
date we receive your payment request.
38
Sales of the Contract
Capital Brokerage Corporation (doing business in Indiana, Minnesota, New
Mexico, and Texas as GE Capital Brokerage Corporation) ("Capital Brokerage") is
the distributor and principal underwriter of the Contracts. Capital Brokerage,
a Washington corporation and an affiliate of ours, is located at 6630 W. Broad
Street, Richmond, Virginia 23230. Capital Brokerage is registered with the SEC
under the Securities Exchange Act of 1934 (the "1934 Act") as a broker-dealer,
and is a member of the National Association of Securities Dealers, Inc.
("NASD").
Capital Brokerage offers the contracts through its registered representatives
who are registered with the NASD and with the states in which they do business.
More information about Capital Brokerage and its registered persons is
available at http://www.nasdr.com or by calling 1-800-289-9999. You also can
obtain an investor brochure from NASD Regulation describing its Public
Disclosure Program. Registered representatives with Capital Brokerage are also
licensed as insurance agents in the states in which they do business and are
appointed with the Company.
We pay commissions and other marketing related expenses associated with the
promotion and sales of the contracts to Capital Brokerage. The amount of the
commission varies but is not expected to exceed approximately 5% of your
purchase payment. We may, on occasion, pay a higher commission for a short
period of time as a special promotion. We pay commissions either as a
percentage of the purchase payment at the time we receive it, as a percentage
of Contract Value on an ongoing basis, or in some cases, a combination of both.
The commission or a portion of it will be returned to us if the contract is
surrendered during the first Contract Year.
We may offer a range of initial commission and persistency trail commission
options (which will take into account, among other things, the length of the
Guarantee Term). We may pay commissions on the election of subsequent guarantee
terms if the Contract Value is applied to a subsequent guarantee term.
When a contract is sold through a registered representative of Capital
Brokerage, Capital Brokerage passes through a portion of the sales commission
to the registered representative who sold the contract. Because registered
representatives of Capital Brokerage are also agents of ours, they may be
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.
Capital Brokerage may enter into selling agreements with other broker-dealers
(including our affiliate, Terra Securities Corporation) registered under the
1934 Act to sell the Contracts. Under these agreements, the commission paid to
the broker-dealer is not expected to exceed the amount described above. When a
contract is sold through another broker-dealer, Capital Brokerage passes
through the entire amount of the sales commission to the selling broker-dealer;
that broker-dealer may
39
retain a portion of the commission before it pays the registered representative
who sold the contract.
We also may make other payments for services that do not directly involve the
sales of the contracts. 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 investment
expenses and costs of contract benefits through charges imposed under the
contracts. Commissions paid on the contracts, including other incentives and
payments, are not charged directly to you.
40
Additional Information
OWNER QUESTIONS
The obligations to Owners under the contracts are ours. Please direct your
questions and concerns to us at our Home Office at the address and telephone
number listed on page 1 of this prospectus.
RETURN PRIVILEGE
Within the 20-day free-look period after you receive the contract, you may
cancel it for any reason by delivering or mailing it postage prepaid, to our
Home Office, Annuity New Business, 6610 W. Broad Street, Richmond, Virginia
23230. If you cancel your contract, it will be void. Unless state law requires
that we return your purchase payment, the amount of the refund you receive will
equal your purchase payment adjusted for any Market Value Adjustment.
STATE REGULATION
As a life insurance company organized and operated under the laws of the
Commonwealth of Virginia, we are subject to provisions governing life insurers
and to regulation by the Virginia Commissioner of Insurance.
Our books and accounts are subject to review and examination by the State
Corporation Commission of the Commonwealth of Virginia at all times. That the
Commission conducts a full examination of our operations at least every five
years.
RECORDS AND REPORTS
At least once each year, we will send you a report showing information about
your contract for the period covered by the report. The report will show your
purchase payment, Contract Value, Surrender Value, interest credited,
withdrawals and charges made during the statement period. In addition, when you
make your purchase payment and withdrawals, you will receive a written
confirmation of these transactions.
OTHER INFORMATION
We have filed a Registration Statement with the SEC, under the 1933 Act, for
the Contracts 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 the Company
and the contracts offered. Statements in this prospectus about the content of
contracts and other legal instruments are summaries. For the complete text of
those contracts and instruments, please refer to those documents as filed with
the SEC and available on the SEC's website at http://www.sec.gov.
41
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Financial Statements
December 31, 2001
(With Independent Auditors' Report Thereon)
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Table of Contents
December 31, 2001
Page
----
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities....................................... F-2
Statements of Operations................................................... F-11
Statements of Changes in Net Assets........................................ F-34
Notes to Financial Statements.............................................. F-61
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, Premier Growth Equity, Value Equity, and Small-
Cap Value Equity Funds; the Oppenheimer Variable Account Funds--Bond, Capital
Appreciation, Aggressive Growth, High Income, and Multiple Strategies
Funds/VA; the Oppenheimer Variable Account Funds-Class 2 Shares--Global
Securities and Main Street Growth & Income Funds/VA; the Variable Insurance
Products Fund--Equity-Income, Growth, and Overseas Portfolios; the Variable
Insurance Products Fund- Service Class 2--Equity-Income and Growth 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 and Growth & Income Portfolios; the
Federated Insurance Series--American Leaders, High Income Bond, Utility, and
International Small Company Funds II; the Federated Insurance Series- Service
Shares--High Income Bond Fund 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, Global Technology,
Aggressive Growth, Capital Appreciation, Worldwide Growth, International
Growth, Balanced, and Growth Portfolios; the Goldman Sachs Variable Insurance
Trust--Growth and Income, and Mid Cap Value Funds; the Salomon Brothers
Variable Series Funds Inc.--Strategic Bond, Investors, and Total Return Funds;
the Dreyfus--The Dreyfus Socially Responsible Growth Fund, Inc. and the
Dreyfus Investment Portfolios-Emerging Markets Portfolio; the MFS Variable
Insurance Trust--MFS New Discovery, MFS Investors Growth Stock, MFS Investors
Trust, and MFS Utility Series; the Rydex Variable Trust--OTC Fund; the
Alliance Variable Products Series Fund, Inc.--Premier Growth, Growth and
Income, and Quasar Portfolios; the AIM Variable Insurance Funds, Inc.--AIM
V.I. Capital Appreciation, AIM V.I. Growth, and AIM V.I. Value Funds; and the
PIMCO Variable Insurance Trust--Foreign Bond, Long-Term U.S. Government Bond,
High Yield Bond, and Total Return Bond Portfolios) as of December 31, 2001,
the related statements of operations and statements of changes in net assets
for each of the years or lesser periods in the three year period then ended,
and the financial highlights for the year or lesser period then ended. These
financial statements and financial highlights are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements and financial highlights 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, 2001, 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 and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the portfolios constituting GE Life & Annuity Separate Account II as
of December 31, 2001, the results of their operations and changes in their net
assets for each of the years or lesser periods in the three year period then
ended, and their financial highlights for the year or lesser period then ended
in conformity with accounting principles generally accepted in the United
States of America.
/s/ KPMG LLP
Richmond, Virginia
February 26, 2002
F-1
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities
December 31, 2001
GE Investments Funds, Inc.
--------------------------------------------------------------------------------------------------------------
Small-
Inter- Real Mid-Cap Premier Cap
Money Total national Estate Global Value U.S. Growth Value Value
S&P 500 Market Return Equity Securities Income Equity Income Equity Equity Equity Equity
Index Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
----------- --------- --------- -------- ---------- ------- --------- ------- --------- ------- ------ -------
Assets
Investments in GE
Investments
Funds, Inc., at
fair value (note
2):
S&P 500 Index
Fund (542,915
shares; cost--
$12,906,475)... $11,504,367 -- -- -- -- -- -- -- -- -- -- --
Money Market
Fund (9,832,052
shares; cost--
$9,832,052).... -- 9,832,052 -- -- -- -- -- -- -- -- -- --
Total Return
Fund (127,353
shares; cost--
$1,943,149).... -- -- 1,845,340 -- -- -- -- -- -- -- -- --
International
Equity Fund
(51,591 shares;
cost--
$563,688)...... -- -- -- 427,170 -- -- -- -- -- -- -- --
Real Estate
Securities Fund
(65,743 shares;
cost--
$891,378)...... -- -- -- -- 971,683 -- -- -- -- -- -- --
Global Income
Fund (14,951
shares; cost--
$145,015)...... -- -- -- -- -- 139,792 -- -- -- -- -- --
Mid-Cap Value
Equity Fund
(89,773 shares;
cost--
$1,397,802).... -- -- -- -- -- -- 1,405,838 -- -- -- -- --
Income Fund
(63,262 shares;
cost--
$776,091)...... -- -- -- -- -- -- -- 775,596 -- -- -- --
U.S. Equity Fund
(39,733 shares;
cost--
$1,408,520).... -- -- -- -- -- -- -- -- 1,279,785 -- -- --
Premier Growth
Equity Fund
(13,633 shares;
cost--
$1,060,537).... -- -- -- -- -- -- -- -- -- 945,277 -- --
Value Equity
Fund (8,169
shares; cost--
$73,218)....... -- -- -- -- -- -- -- -- -- -- 73,599 --
Small-Cap Value
Equity Fund
(8,596 shares;
cost--
$98,238)....... -- -- -- -- -- -- -- -- -- -- -- 103,239
Dividend
Receivable...... -- -- -- -- -- -- -- -- -- -- -- --
Receivable from
affiliate....... 520 3,282 -- 14 -- 8 -- 24 77 34 -- --
Receivable for
units sold...... 13,519 2,496 8,546 -- 164 -- 360 44 2,228 726 1,650 1,729
----------- --------- --------- ------- ------- ------- --------- ------- --------- ------- ------ -------
Total assets.... 11,518,406 9,837,830 1,853,886 427,184 971,847 139,800 1,406,198 775,664 1,282,090 946,037 75,249 104,968
----------- --------- --------- ------- ------- ------- --------- ------- --------- ------- ------ -------
Liabilities
Accrued expenses
payable to
affiliate (note
4).............. 4,180 24,830 18,083 1,062 1,611 946 1,637 4,620 294 214 17 23
Payable for units
withdrawn....... 995 1,844 -- 86 43 6 122 5 -- 43 -- --
----------- --------- --------- ------- ------- ------- --------- ------- --------- ------- ------ -------
Total
liabilities.... 5,175 26,674 18,083 1,148 1,654 952 1,759 4,625 294 257 17 23
----------- --------- --------- ------- ------- ------- --------- ------- --------- ------- ------ -------
Net assets
attributable to
variable life
policyholders... $11,513,231 9,811,156 1,835,803 426,036 970,193 138,848 1,404,439 771,039 1,281,796 945,780 75,232 104,945
=========== ========= ========= ======= ======= ======= ========= ======= ========= ======= ====== =======
Outstanding
units: Type I... 88,043 131,894 29,464 8,794 19,511 4,666 16,101 33,971 6,600 16,957 -- --
=========== ========= ========= ======= ======= ======= ========= ======= ========= ======= ====== =======
Net asset value
per unit: Type
I............... $ 49.38 19.32 40.16 13.04 22.12 10.24 17.44 12.33 11.41 10.02 -- --
=========== ========= ========= ======= ======= ======= ========= ======= ========= ======= ====== =======
Outstanding
units: Type II.. 145,112 375,930 16,248 23,877 24,349 8,893 64,428 28,562 105,740 77,433 8,331 8,753
=========== ========= ========= ======= ======= ======= ========= ======= ========= ======= ====== =======
Net asset value
per unit: Type
II.............. $ 49.38 19.32 40.16 13.04 22.12 10.24 17.44 12.33 11.41 10.02 9.03 11.99
=========== ========= ========= ======= ======= ======= ========= ======= ========= ======= ====== =======
F-2
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
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 (98,465
shares; cost --
$1,106,712)............ $1,103,795 -- -- -- -- -- --
Capital Appreciation
Fund/VA (152,528 shares;
cost -- $5,758,549)........ -- 5,579,462 -- -- -- -- --
Aggressive Growth Fund/VA
(117,244 shares; cost --
$6,220,936)............ -- -- 4,774,170 -- -- -- --
High Income Fund/VA
(348,230 shares; cost --
$3,458,987)............ -- -- -- 2,973,888 -- -- --
Multiple Strategies
Fund/VA (90,568 shares;
cost -- $1,431,422)..... -- -- -- -- 1,394,753 -- --
Investments in Oppenheimer
Variable Account Funds --
Class 2 Shares, at fair
value
(note 2):
Global Securities Fund/VA
(7,939 shares; cost --
$183,376).............. -- -- -- -- -- 180,849 --
Main Street Growth &
Income Fund/VA (9,198
shares; cost --
$176,832).............. -- -- -- -- -- -- 174,296
Dividend Receivable....... -- -- -- -- -- -- --
Receivable from
affiliate................ -- -- -- 40 -- -- --
Receivable for units
sold..................... -- 3,761 1,754 -- 267 1,592 --
---------- --------- --------- --------- --------- ------- -------
Total assets............. 1,103,795 5,583,223 4,775,924 2,973,928 1,395,020 182,441 174,296
---------- --------- --------- --------- --------- ------- -------
Liabilities
Accrued expenses payable
to affiliate (note 4).... 1,594 1,836 2,282 1,352 1,405 41 41
Payable for units
withdrawn................ 306 322 -- 336 33 -- 68
---------- --------- --------- --------- --------- ------- -------
Total liabilities........ 1,900 2,158 2,282 1,688 1,438 41 109
---------- --------- --------- --------- --------- ------- -------
Net assets attributable to
variable life
policyholders............ $1,101,895 5,581,065 4,773,642 2,972,240 1,393,582 182,400 174,187
========== ========= ========= ========= ========= ======= =======
Outstanding units: Type
I........................ 21,130 60,645 75,849 51,746 25,511 -- --
========== ========= ========= ========= ========= ======= =======
Net asset value per unit:
Type I................... $ 26.23 62.80 49.81 34.30 37.25 -- --
========== ========= ========= ========= ========= ======= =======
Outstanding units: Type
II....................... 20,879 28,225 19,988 34,909 11,900 21,714 21,746
========== ========= ========= ========= ========= ======= =======
Net asset value per unit:
Type II.................. $ 26.23 62.80 49.81 34.30 37.25 8.40 8.01
========== ========= ========= ========= ========= ======= =======
F-3
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
Variable
Insurance
Products
Variable Insurance Fund II --
Variable Insurance Products Products Fund -- Variable Insurance Service Variable Insurance
Fund Service Class 2 Products Fund II Class 2 Products Fund III
------------------------------ ------------------- ------------------- ---------- -----------------------
Equity- Equity- Asset Contra- Growth & Growth
Income Growth Overseas Income Growth Manager fund Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- --------- --------- --------- ---------- --------- -------------
Assets
Investments in
Variable
Insurance
Products Fund,
at fair value
(note 2):
Equity-Income
Portfolio
(340,947
shares; cost --
$7,801,694)... $7,756,533 -- -- -- -- -- -- -- -- --
Growth Portfolio
(249,302
shares; cost --
$9,976,621)... -- 8,379,050 -- -- -- -- -- -- -- --
Overseas
Portfolio
(126,396
shares; cost --
$2,425,233)... -- -- 1,754,371 -- -- -- -- -- -- --
Investments in
Variable
Insurance
Products Fund
Service Class 2,
at fair value
(note 2):
Equity-Income
Portfolio
(11,135 shares;
cost --
$252,668)..... -- -- -- 251,531 -- -- -- -- -- --
Growth Portfolio
(13,001 shares;
cost --
$449,381)..... -- -- -- -- 433,469 -- -- -- -- --
Investments in
Variable
Insurance
Products Fund
II, at fair
value (note 2):
Asset Manager
Portfolio
(281,375
shares; cost --
$4,460,827)... -- -- -- -- -- 4,082,758 -- -- -- --
Contrafund
Portfolio
(294,413
shares; cost --
$6,809,251)... -- -- -- -- -- -- 5,926,540 -- -- --
Investments in
Variable
Insurance
Products Fund
II -- Service
Class 2, at fair
value (note 2):
Contrafund
Portfolio
(9,594 shares;
cost --
$189,805)..... -- -- -- -- -- -- -- 191,874 -- --
Investments in
Variable
Insurance
Products Fund
III, at fair
value (note 2):
Growth & Income
Portfolio
(102,341
shares; cost --
$1,508,251)... -- -- -- -- -- -- -- -- 1,349,882 --
Growth
Opportunities
Portfolio
(27,577 shares;
cost --
$500,540)..... -- -- -- -- -- -- -- -- -- 417,236
Investments in
Variable
Insurance
Products Fund
III -- Service
Class 2, at fair
value (note 2):
Mid Cap
Portfolio
(5,944 shares;
cost --
$110,637)..... -- -- -- -- -- -- -- -- -- --
Growth & Income
Portfolio
(8,962 shares;
cost --
$117,933)..... -- -- -- -- -- -- -- -- -- --
Dividend
Receivable...... -- -- -- -- -- -- -- -- -- --
Receivable from
affiliate....... 6 -- -- -- -- -- 154 -- -- --
Receivable for
units sold...... 5,647 2,404 2,699 253 47 244 2,120 140 200 --
---------- --------- --------- ------- ------- --------- --------- ------- --------- -------
Total assets.... 7,762,186 8,381,454 1,757,070 251,784 433,516 4,083,002 5,928,814 192,014 1,350,082 417,236
---------- --------- --------- ------- ------- --------- --------- ------- --------- -------
Liabilities
Accrued expenses
payable to
affiliate (note
4).............. 4,054 2,557 1,051 58 101 1,481 3,136 43 1,336 884
Payable for units
withdrawn....... -- -- -- -- -- 40 -- -- 287 87
---------- --------- --------- ------- ------- --------- --------- ------- --------- -------
Total
liabilities.... 4,054 2,557 1,051 58 101 1,521 3,136 43 1,623 971
========== ========= ========= ======= ======= ========= ========= ======= ========= =======
Net assets
attributable to
variable life
policyholders... $7,758,132 8,378,897 1,756,019 251,726 433,415 4,081,481 5,925,678 191,971 1,348,459 416,265
========== ========= ========= ======= ======= ========= ========= ======= ========= =======
Outstanding
units: Type I .. 134,736 108,530 65,937 -- -- 131,477 111,945 -- 22,841 12,762
========== ========= ========= ======= ======= ========= ========= ======= ========= =======
Net asset value
per unit: Type
I............... $ 47.84 58.68 23.97 -- -- 29.16 26.71 -- 15.03 11.06
========== ========= ========= ======= ======= ========= ========= ======= ========= =======
Outstanding
units: Type II
................ 27,433 34,260 7,322 25,792 60,788 8,491 109,907 23,700 66,877 24,875
========== ========= ========= ======= ======= ========= ========= ======= ========= =======
Net asset value
per unit: Type
II.............. $ 47.84 58.68 23.97 9.76 7.13 29.16 26.71 8.10 15.03 11.06
========== ========= ========= ======= ======= ========= ========= ======= ========= =======
Variable Insurance
Products Fund III
-- Service Class 2
-------------------
Growth &
Mid Cap Income
Portfolio Portfolio
--------- ---------
Assets
Investments in
Variable
Insurance
Products Fund,
at fair value
(note 2):
Equity-Income
Portfolio
(340,947
shares; cost --
$7,801,694)... -- --
Growth Portfolio
(249,302
shares; cost --
$9,976,621)... -- --
Overseas
Portfolio
(126,396
shares; cost --
$2,425,233)... -- --
Investments in
Variable
Insurance
Products Fund
Service Class 2,
at fair value
(note 2):
Equity-Income
Portfolio
(11,135 shares;
cost --
$252,668)..... -- --
Growth Portfolio
(13,001 shares;
cost --
$449,381)..... -- --
Investments in
Variable
Insurance
Products Fund
II, at fair
value (note 2):
Asset Manager
Portfolio
(281,375
shares; cost --
$4,460,827)... -- --
Contrafund
Portfolio
(294,413
shares; cost --
$6,809,251)... -- --
Investments in
Variable
Insurance
Products Fund
II -- Service
Class 2, at fair
value (note 2):
Contrafund
Portfolio
(9,594 shares;
cost --
$189,805)..... -- --
Investments in
Variable
Insurance
Products Fund
III, at fair
value (note 2):
Growth & Income
Portfolio
(102,341
shares; cost --
$1,508,251)... -- --
Growth
Opportunities
Portfolio
(27,577 shares;
cost --
$500,540)..... -- --
Investments in
Variable
Insurance
Products Fund
III -- Service
Class 2, at fair
value (note 2):
Mid Cap
Portfolio
(5,944 shares;
cost --
$110,637)..... 115,845 --
Growth & Income
Portfolio
(8,962 shares;
cost --
$117,933)..... -- 117,133
Dividend
Receivable...... -- --
Receivable from
affiliate....... -- --
Receivable for
units sold...... 2,420 193
--------- ---------
Total assets.... 118,265 117,326
--------- ---------
Liabilities
Accrued expenses
payable to
affiliate (note
4).............. 26 28
Payable for units
withdrawn....... -- --
--------- ---------
Total
liabilities.... 26 28
========= =========
Net assets
attributable to
variable life
policyholders... 118,239 117,298
========= =========
Outstanding
units: Type I .. -- --
========= =========
Net asset value
per unit: Type
I............... -- --
========= =========
Outstanding
units: Type II
................ 12,355 13,655
========= =========
Net asset value
per unit: Type
II.............. 9.57 8.59
========= =========
F-4
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
Federated
Insurance
Series --
Service PBHG Insurance
Federated Insurance Series Shares Alger American Fund Series Fund, Inc.
------------------------------------------ ----------- ------------------------ -------------------
PBHG
American High International High Small LargeCap Large Cap PBHG
Leaders Income Bond Utility Small Company Income Bond Capitalization Growth Growth Growth II
Fund II Fund II Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio
-------- ----------- ------- ------------- ----------- -------------- --------- --------- ---------
Assets
Investments in
Federated
Insurance Series,
at fair value
(note 2):
American Leaders
Fund II (41,943
shares; cost --
$842,292)....... $807,405 -- -- -- -- -- -- -- --
High Income Bond
Fund II (60,768
shares; cost --
$551,387)....... -- 469,132 -- -- -- -- -- -- --
Utility Fund II
(43,579 shares;
cost --
$554,540)....... -- -- 451,916 -- -- -- -- -- --
International
Small Company
Fund II (3,924
shares;
cost --
$21,376)........ -- -- -- 21,780 -- -- -- -- --
Investments in
Federated
Insurance
Series -- Service
Shares, at fair
value (note 2):
High Income Bond
Fund II (4,511
shares; cost --
$35,245)........ -- -- -- -- 34,826 -- -- -- --
Investments in
Alger American
Fund, at fair
value (note 2):
Small
Capitalization
Portfolio (88,869
shares; cost --
$2,415,546)..... -- -- -- -- -- 1,470,783 -- -- --
LargeCap Growth
Portfolio
(120,885 shares;
cost --
$5,832,681)..... -- -- -- -- -- -- 4,444,959 -- --
Investments in PBHG
Insurance Series
Fund, Inc., at
fair value (note
2):
PBHG Large Cap
Growth Portfolio
(45,870 shares;
cost --
$1,057,276)..... -- -- -- -- -- -- -- 807,313 --
PBHG Growth II
Portfolio (66,048
shares; cost --
$1,209,288)..... -- -- -- -- -- -- -- -- 742,382
Dividend
Receivable........ -- -- -- -- -- -- -- -- --
Receivable from
affiliate......... -- -- 27 -- -- -- 73 -- 25
Receivable for
units sold........ -- 216 -- -- -- 2,723 695 356 374
-------- ------- ------- ------ ------ --------- --------- ------- -------
Total assets...... 807,405 469,348 451,943 21,780 34,826 1,473,506 4,445,727 807,669 742,781
-------- ------- ------- ------ ------ --------- --------- ------- -------
Liabilities
Accrued expenses
payable to
affiliate (note
4)................ 1,238 1,069 501 5 8 1,476 1,811 1,627 1,284
Payable for units
withdrawn......... 117 56 307 -- 10 1,212 312 17 23
-------- ------- ------- ------ ------ --------- --------- ------- -------
Total
liabilities...... 1,355 1,125 808 5 18 2,688 2,123 1,644 1,307
-------- ------- ------- ------ ------ --------- --------- ------- -------
Net assets
attributable to
variable life
policyholders..... $806,050 468,223 451,135 21,775 34,808 1,470,818 4,443,604 806,025 741,474
======== ======= ======= ====== ====== ========= ========= ======= =======
Outstanding units:
Type I ........... 20,425 15,482 13,254 -- -- 96,584 97,453 18,707 21,511
======== ======= ======= ====== ====== ========= ========= ======= =======
Net asset value per
unit: Type I...... $ 17.45 14.44 15.14 -- -- 8.88 19.62 17.44 11.07
======== ======= ======= ====== ====== ========= ========= ======= =======
Outstanding units:
Type II .......... 25,767 16,943 16,543 3,635 3,727 69,049 129,030 27,510 45,469
======== ======= ======= ====== ====== ========= ========= ======= =======
Net asset value per
unit: Type II..... 17.45 14.44 15.14 5.99 9.34 8.88 19.62 17.44 11.07
======== ======= ======= ====== ====== ========= ========= ======= =======
F-5
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
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 (214,097
shares; cost --
$8,120,536).......... $4,705,845 -- -- -- -- -- --
Growth Portfolio
(303,975 shares;
cost -- $8,231,829)... -- 6,043,014 -- -- -- -- --
Worldwide Growth
Portfolio (298,896
shares; cost --
$10,230,706)......... -- -- 8,530,482 -- -- -- --
Balanced Portfolio
(235,980 shares;
cost -- $5,602,152)... -- -- -- 5,326,069 -- -- --
Flexible Income
Portfolio (42,828
shares; cost --
$500,630)............ -- -- -- -- 499,370 -- --
International Growth
Portfolio (115,020
shares; cost --
$3,251,774).......... -- -- -- -- -- 2,699,530 --
Capital Appreciation
Portfolio (143,943
shares; cost --
$3,931,279).......... -- -- -- -- -- -- 2,982,502
Dividends Receivable.... -- -- -- -- -- -- --
Receivable from
affiliate.............. 98 179 291 206 -- 113 169
Receivable for units
sold................... 12,500 18 970 15,336 -- 894 --
---------- --------- --------- --------- ------- --------- ---------
Total assets........... 4,718,443 6,043,211 8,531,743 5,341,611 499,370 2,700,537 2,982,671
---------- --------- --------- --------- ------- --------- ---------
Liabilities
Accrued expenses payable
to affiliate (note 4).. 4,520 1,789 2,523 2,219 1,381 1,741 6,229
Payable for units
withdrawn.............. -- 199 -- 289 69 153 491
---------- --------- --------- --------- ------- --------- ---------
Total liabilities...... 4,520 1,988 2,523 2,508 1,450 1,894 6,720
---------- --------- --------- --------- ------- --------- ---------
Net assets attributable
to variable life
policyholders.......... $4,713,923 6,041,223 8,529,220 5,339,103 497,920 2,698,643 2,975,951
========== ========= ========= ========= ======= ========= =========
Outstanding units: Type
I ..................... 114,341 136,463 186,134 82,439 9,034 50,194 22,414
========== ========= ========= ========= ======= ========= =========
Net asset value per
unit: Type I........... $ 21.06 22.14 25.76 22.95 15.60 18.49 20.69
========== ========= ========= ========= ======= ========= =========
Outstanding units: Type
II .................... 109,492 136,402 144,970 150,202 22,884 95,757 121,421
========== ========= ========= ========= ======= ========= =========
Net asset value per
unit: Type II.......... $ 21.06 22.14 25.76 22.95 15.60 18.49 20.69
========== ========= ========= ========= ======= ========= =========
F-6
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
Janus Aspen Series -- Service Shares
--------------------------------------------------------------------------------------------
Global Global Aggressive Capital Worldwide International
Life Sciences Technology Growth Appreciation Growth Growth Balanced Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------- ---------- ---------- ------------ --------- ------------- --------- ---------
Assets
Investments in Janus
Aspen Series -- Service
Shares, at fair value
(note 2):
Global Life Sciences
Portfolio (25,271
shares; cost --
$204,082)............ $195,848 -- -- -- -- -- -- --
Global Technology
Portfolio (35,564
shares; cost --
$230,149)............ -- 145,103 -- -- -- -- -- --
Aggressive Growth
Portfolio (5,375
shares; cost --
$132,630)............ -- -- 116,797 -- -- -- -- --
Capital Appreciation
Portfolio (5,971
shares; cost --
$127,873)............ -- -- -- 122,829 -- -- -- --
Worldwide Growth
Portfolio (5,293
shares; cost --
$159,739)............ -- -- -- -- 150,207 -- -- --
International Growth
Portfolio (4,878
shares; cost --
$121,785)............ -- -- -- -- -- 113,664 -- --
Balanced Portfolio
(24,117 shares;
cost -- $570,294)..... -- -- -- -- -- -- 562,178 --
Growth Portfolio (6,573
shares; cost --
$143,997)............ -- -- -- -- -- -- -- 129,878
Dividends Receivable.... -- -- -- -- -- -- -- --
Receivable from
affiliate.............. 13 1 -- -- -- -- -- --
Receivable for units
sold................... 1,901 76 -- -- 3,070 91 455 257
-------- ------- ------- ------- ------- ------- ------- -------
Total assets........... 197,762 145,180 116,797 122,829 153,277 113,755 562,633 130,135
-------- ------- ------- ------- ------- ------- ------- -------
Liabilities
Accrued expenses payable
to affiliate (note 4).. 45 33 28 27 36 26 131 31
Payable for units
withdrawn.............. -- -- 66 40 -- -- -- --
-------- ------- ------- ------- ------- ------- ------- -------
Total liabilities...... 45 33 94 67 36 26 131 31
-------- ------- ------- ------- ------- ------- ------- -------
Net assets attributable
to variable life
policyholders.......... $197,717 145,147 116,703 122,762 153,241 113,729 562,502 130,104
======== ======= ======= ======= ======= ======= ======= =======
Outstanding units: Type
I ..................... 6,051 9,570 -- -- -- -- -- --
======== ======= ======= ======= ======= ======= ======= =======
Net asset value per
unit: Type I........... $ 9.49 4.26 -- -- -- -- -- --
======== ======= ======= ======= ======= ======= ======= =======
Outstanding units: Type
II .................... 14,783 24,502 28,395 19,212 22,940 17,206 61,208 21,087
======== ======= ======= ======= ======= ======= ======= =======
Net asset value per
unit: Type II.......... $ 9.49 4.26 4.11 6.39 6.68 6.61 9.19 6.17
======== ======= ======= ======= ======= ======= ======= =======
F-7
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
Goldman Sachs
Variable Insurance Salomon Brothers
Trust Variable Series Funds 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
(12,601 shares; cost --
$130,710)................. $117,568 -- -- -- --
Mid Cap Value Fund (114,354
shares; cost --
$1,214,513)............... -- 1,291,061 -- -- --
Investments in Salomon
Brothers Variable Series
Funds Inc., at fair value
(note 2):
Strategic Bond Fund (29,933
shares; cost -- $303,166).. -- -- 299,931 -- --
Investors Fund (61,157
shares; cost -- $832,434).. -- -- -- 782,194 --
Total Return Fund (5,956
shares; cost -- $62,624)... -- -- -- -- 61,882
Dividends Receivable.......... -- -- -- -- --
Receivable from affiliate..... 10 84 15 28 1
Receivable for units sold..... -- 5 -- -- --
-------- --------- ------- ------- ------
Total assets.............. 117,578 1,291,150 299,946 782,222 61,883
-------- --------- ------- ------- ------
Liabilities
Accrued expenses payable to
affiliate (note 4)........... 27 297 67 180 14
Payable for units withdrawn... 17 165 -- -- 125
-------- --------- ------- ------- ------
Total liabilities......... 44 462 67 180 139
-------- --------- ------- ------- ------
Net assets attributable to
variable life policyholders.. $117,534 1,290,688 299,879 782,042 61,744
======== ========= ======= ======= ======
Outstanding units: Type I .... 837 29,382 3,651 21,398 2,210
======== ========= ======= ======= ======
Net asset value per unit: Type
I............................ $ 7.93 12.24 11.56 14.68 11.29
======== ========= ======= ======= ======
Outstanding units: Type II ... 13,984 76,066 22,290 31,874 3,259
======== ========= ======= ======= ======
Net asset value per unit: Type
II........................... $ 7.93 12.24 11.56 14.68 11.29
======== ========= ======= ======= ======
F-8
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
Rydex
Variable Alliance Variable Products
Dreyfus MFS Variable Insurance Trust Trust Series Fund, Inc.
------------------------- ------------------------------------- -------- -----------------------------
Dreyfus
The Dreyfus Investment MFS
Socially Portfolios -- Investors MFS Growth
Responsible Emerging MFS New Growth Investors MFS Premier and
Growth Markets Discovery Stock Trust Utility Growth Income Quasar
Fund, Inc. Portfolio Series Series Series Series OTC Fund Portfolio Portfolio Portfolio
Assets ----------- ------------- --------- --------- --------- ------- -------- --------- --------- ---------
Investments in
Dreyfus, at fair
value (note 2):
The Dreyfus
Socially
Responsible
Growth Fund,
Inc.
(999 shares;
cost --
$27,950)...... $ 26,631 -- -- -- -- -- -- -- -- --
Dreyfus
Investment
Portfolios --
Emerging
Markets
Portfolio
(679 shares;
cost --
$6,052)....... -- 6,435 -- -- -- -- -- -- -- --
Investments in
MFS Variable In-
surance Trust,
at fair value
(note 2):
MFS New
Discovery
Series (4,287
shares; cost --
$59,349)...... -- -- 65,248 -- -- -- -- -- -- --
MFS Investors
Growth Stock
Series
(7,647 shares;
cost --
$70,763)...... -- -- -- 73,946 -- -- -- -- -- --
MFS Investors
Trust Series
(4,264 shares;
cost --
$74,393)...... -- -- -- -- 72,825 -- -- -- -- --
MFS Utility
Series (11,891
shares; cost --
$219,169)..... -- -- -- -- -- 189,060 -- -- -- --
Investments in
Rydex Variable
Trust, at fair
value (note 2):
OTC Fund (1,418
shares; cost --
$21,659)...... -- -- -- -- -- -- 20,992 -- -- --
Investments in
Alliance
Variable
Products Series
Fund, Inc., at
fair value (note
2):
Premier Growth
Portfolio
(4,610 shares;
cost --
$124,253)..... -- -- -- -- -- -- -- 115,242 -- --
Growth and
Income
Portfolio
(19,501 shares;
cost --
$437,179)..... -- -- -- -- -- -- -- -- 429,617 --
Quasar Portfolio
(2,233 shares;
cost --
$22,775)...... -- -- -- -- -- -- -- -- -- 22,287
Dividends
Receivable...... -- -- -- -- -- -- -- -- -- --
Receivable from
affiliate....... -- -- -- -- -- -- -- -- -- --
Receivable for
units sold...... -- 1,599 1,746 62 -- 141 -- -- 2,989 1,587
-------- ----- ------ ------ ------ ------- ------ ------- ------- ------
Total assets.... 26,631 8,034 66,994 74,008 72,825 189,201 20,992 115,242 432,606 23,874
-------- ----- ------ ------ ------ ------- ------ ------- ------- ------
Liabilities
Accrued expenses
payable to
affiliate (note
4).............. 6 2 15 17 17 45 5 27 100 5
Payable for units
withdrawn....... 5 -- -- -- 22 -- 20 12 -- --
-------- ----- ------ ------ ------ ------- ------ ------- ------- ------
Total
liabilities.... 11 2 15 17 39 45 25 39 100 5
-------- ----- ------ ------ ------ ------- ------ ------- ------- ------
Net assets
attributable to
variable life
policyholders... $ 26,620 8,032 66,979 73,991 72,786 189,156 20,967 115,203 432,506 23,869
======== ===== ====== ====== ====== ======= ====== ======= ======= ======
Outstanding
units: Type I .. -- -- -- -- -- -- -- -- -- --
======== ===== ====== ====== ====== ======= ====== ======= ======= ======
Net asset value
per unit: Type
I............... $ -- -- -- -- -- -- -- -- -- --
======== ===== ====== ====== ====== ======= ====== ======= ======= ======
Outstanding
units: Type II
................ 3,973 906 7,898 11,383 8,997 25,912 5,028 16,309 42,611 3,292
======== ===== ====== ====== ====== ======= ====== ======= ======= ======
Net asset value
per unit: Type
II.............. $ 6.70 8.87 8.48 6.50 8.09 7.30 4.17 7.05 10.15 7.25
======== ===== ====== ====== ====== ======= ====== ======= ======= ======
F-9
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 2001
AIM Variable Insurance Funds, Inc. PIMCO Variable Insurance Trust
---------------------------------- -------------------------------------------------
AIM V.I. Capital AIM V.I. AIM V.I. Foreign Long-Term High Yield Total Return
Appreciation Growth Value Bond U.S. Government Bond Bond
Fund Fund Fund Portfolio Bond Portfolio Portfolio Portfolio
Assets ---------------- -------- -------- --------- --------------- ---------- ------------
Investments in AIM Vari-
able Insurance Funds,
Inc., at fair value
(note 2):
AIM V.I. Capital
Appreciation Fund
(4,413 shares; cost --
$104,748)............ $95,860 -- -- -- -- -- --
AIM V.I. Growth Fund
(4,979 shares; cost --
$87,786)............. -- 81,512 -- -- -- -- --
AIM V.I. Value Fund
(6,487 shares; cost --
$157,022)............ -- -- 151,461 -- -- -- --
Investments in PIMCO
Variable Insurance
Trust, at fair value
(note 2):
Foreign Bond Portfolio
(823 shares; cost --
$7,943).............. -- -- -- 7,978 -- -- --
Long-Term U.S.
Government Bond
Portfolio
(9,489 shares; cost --
$101,867)............ -- -- -- -- 97,452 -- --
High Yield Bond
Portfolio (6,039
shares; cost --
$48,465)............. -- -- -- -- -- 47,590 --
Total Return Bond
Portfolio (11,367
shares; cost --
$114,144)............ -- -- -- -- -- -- 112,418
Dividends Receivable.... -- -- -- 25 361 283 329
Receivable from affili-
ate.................... -- -- -- -- -- -- --
Receivable for units
sold................... 1,862 1,621 1,457 -- 839 -- 1,073
------- ------ ------- ----- ------ ------ -------
Total assets........... 97,722 83,133 152,918 8,003 98,652 47,873 113,820
------- ------ ------- ----- ------ ------ -------
Liabilities
Accrued expenses payable
to affiliate (note 4).. 24 19 36 3 22 11 27
Payable for units with-
drawn.................. -- -- -- 7 -- 36 --
------- ------ ------- ----- ------ ------ -------
Total liabilities...... 24 19 36 10 22 47 27
------- ------ ------- ----- ------ ------ -------
Net assets attributable
to variable life poli-
cyholders.............. $97,698 83,114 152,882 7,993 98,630 47,826 113,793
======= ====== ======= ===== ====== ====== =======
Outstanding units: Type
I ..................... -- -- -- -- -- -- --
======= ====== ======= ===== ====== ====== =======
Net asset value per
unit: Type I........... $ -- -- -- -- -- -- --
======= ====== ======= ===== ====== ====== =======
Outstanding units: Type
II .................... 16,503 16,297 19,328 723 8,682 4,802 10,197
======= ====== ======= ===== ====== ====== =======
Net asset value per
unit: Type II.......... $ 5.92 5.10 7.91 11.06 11.36 9.96 11.16
======= ====== ======= ===== ====== ====== =======
See accompanying notes to financial statements.
F-10
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations
GE Investments Funds, Inc.
---------------------------------------------------------------------------------------
S&P 500 Index Fund Money Market Fund Total Return Fund
---------------------------------- ----------------------- ---------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------------- ----------------------- ---------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
----------- ---------- --------- ------- ------- ------- -------- -------- -------
Investment income:
Income -- Ordinary
dividends............. $ 118,485 86,280 60,042 320,605 412,757 261,216 47,137 115,971 87,229
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 31,076 35,989 35,117 19,389 20,609 20,306 25,312 28,179 28,286
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 46,372 30,208 13,313 39,781 27,583 17,608 4,620 2,179 1,377
----------- ---------- --------- ------- ------- ------- -------- -------- -------
Net investment income
(expense).............. 41,037 20,083 11,612 261,435 364,565 223,302 17,205 85,613 57,566
----------- ---------- --------- ------- ------- ------- -------- -------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (241,043) 369,151 367,307 -- -- 3 (69,715) 33,478 10,066
Unrealized appreciation
(depreciation) on
investments........... (1,390,103) (1,654,687) 797,281 -- -- (3) (168,952) (117,815) 319,427
Capital gain
distributions......... 142,797 197,387 82,915 -- -- -- 22,821 175,795 102,400
----------- ---------- --------- ------- ------- ------- -------- -------- -------
Net realized and
unrealized gain (loss)
on investments......... (1,488,349) (1,088,149) 1,247,503 -- -- -- (215,846) 91,458 431,893
----------- ---------- --------- ------- ------- ------- -------- -------- -------
Increase (decrease) in
net assets from
operations............. $(1,447,312) (1,068,066) 1,259,115 261,435 364,565 223,302 (198,641) 177,071 489,459
=========== ========== ========= ======= ======= ======= ======== ======== =======
F-11
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
GE Investments Funds, Inc. (continued)
------------------------------------------------------------------------------------
International Equity
Fund Real Estate Securities Fund Global Income Fund
-------------------------- ----------------------------- -------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
-------------------------- ----------------------------- -------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
-------- -------- ------ ------------------ --------- ------- ------- -------
Investment income:
Income -- Ordinary
dividends............. $ 4,082 1,828 669 33,077 25,202 23,112 -- 138 1,257
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 816 799 792 2,787 2,295 2,004 350 276 258
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 1,937 1,361 531 2,929 1,614 839 603 337 141
-------- -------- ------ -------- --------- --------- ------- ------- -------
Net investment income
(expense).............. 1,329 (332) (654) 27,361 21,293 20,269 (953) (475) 858
-------- -------- ------ -------- --------- --------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (23,637) 6,362 5,881 21,020 (2,380) (14,908) (439) (1,161) (128)
Unrealized appreciation
(depreciation) on
investments........... (69,841) (103,450) 34,706 25,627 129,283 (10,218) (2,041) 548 (4,715)
Capital gain
distributions......... 1,787 53,038 16,048 9,374 2,638 1,216 -- -- 95
-------- -------- ------ -------- --------- --------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (91,691) (44,050) 56,635 56,021 129,541 (23,910) (2,480) (613) (4,748)
-------- -------- ------ -------- --------- --------- ------- ------- -------
Increase (decrease) in
net assets from
operations............. $(90,362) (44,382) 55,981 83,382 150,834 (3,641) (3,433) (1,088) (3,890)
======== ======== ====== ======== ========= ========= ======= ======= =======
F-12
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
GE Investments Funds, Inc. (continued)
------------------------------------------------------------------------
Mid-Cap Value
Equity Fund Income Fund U.S. Equity Fund
----------------------- ---------------------- ------------------------
Year ended December Year ended December Year ended December
31, 31, 31,
----------------------- ---------------------- ------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
-------- ------ ------ ------ ------ ------- ------- ------- ------
Investment income:
Income -- Ordinary
dividends............. $ 9,669 7,136 4,044 37,231 32,350 21,400 8,665 7,043 1,122
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 1,468 1,004 824 2,885 2,789 2,983 369 207 74
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 6,244 3,471 1,482 2,393 523 47 7,947 3,986 825
-------- ------ ------ ------ ------ ------- ------- ------- ------
Net investment income
(expense).............. 1,957 2,661 1,738 31,953 29,038 18,370 349 2,850 223
-------- ------ ------ ------ ------ ------- ------- ------- ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 11,651 12,924 14,236 8,257 (1,516) (78) (38,750) 11,564 2,835
Unrealized appreciation
(depreciation) on
investments........... (51,905) 26,637 22,084 4,061 18,549 (28,051) (64,708) (73,997) 6,670
Capital gain
distributions......... 49,463 26,834 -- -- -- 662 4,651 47,509 10,093
-------- ------ ------ ------ ------ ------- ------- ------- ------
Net realized and
unrealized gain (loss)
on investments......... 9,209 66,395 36,320 12,318 17,033 (27,467) (98,807) (14,924) 19,598
-------- ------ ------ ------ ------ ------- ------- ------- ------
Increase (decrease) in
net assets from
operations............. $ 11,166 69,056 38,058 44,271 46,071 (9,097) (98,458) (12,074) 19,821
======== ====== ====== ====== ====== ======= ======= ======= ======
F-13
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
GE Investments Funds, Inc. (continued)
--------------------------------------------------------------------------
Small-Cap
Premier Growth Equity Fund Value Equity Fund Value Equity Fund
---------------------------------- ------------------- -------------------
Year ended Period from Period from Period from
December 31, June 9, 1999 to February 8, 2001 to February 6, 2001 to
----------------- December 31, December 31, December 31,
2001 2000 1999 2001 2001
-------- ------- --------------- ------------------- -------------------
Investment income:
Income -- Ordinary
dividends............ $ 899 731 124 414 315
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4)............. 1,078 922 103 -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4)............. 4,456 1,466 116 170 278
-------- ------- ------ ---- -----
Net investment income
(expense).............. (4,635) (1,657) (95) 244 37
-------- ------- ------ ---- -----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss) .............. (31,948) 4,260 344 (235) 138
Unrealized
appreciation
(depreciation) on
investments.......... (63,850) (64,695) 13,285 381 5,001
Capital gain
distributions........ 27,619 34,574 4,011 -- 2,827
-------- ------- ------ ---- -----
Net realized and
unrealized gain (loss)
on investments......... (68,179) (25,861) 17,640 146 7,966
-------- ------- ------ ---- -----
Increase (decrease) in
net assets from
operations............. $(72,814) (27,518) 17,545 390 8,003
======== ======= ====== ==== =====
F-14
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Oppenheimer Variable Account Funds
---------------------------------------------------------------------------------------------
Bond Fund/VA Capital Appreciation Fund/VA Aggressive Growth Fund/VA
------------------------- ------------------------------- ---------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------------- ---------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
-------- ------- ------- ---------- -------- --------- ---------- ---------- ---------
Investment income:
Income -- Ordinary
dividends............. $ 60,057 50,243 21,896 34,724 6,375 11,323 48,679 -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 3,717 3,141 3,043 27,622 31,916 24,680 28,381 50,940 30,929
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 2,980 1,368 683 12,183 7,014 2,409 7,219 5,264 1,422
-------- ------- ------- ---------- -------- --------- ---------- ---------- ---------
Net investment income
(expense).............. 53,360 45,734 18,170 (5,081) (32,555) (15,766) 13,079 (56,204) (32,351)
-------- ------- ------- ---------- -------- --------- ---------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 283 (17,389) (1,863) (57,828) 341,073 205,534 (867,864) 1,589,430 393,176
Unrealized appreciation
(depreciation) on
investments........... 1,054 6,329 (29,542) (1,272,757) (741,677) 1,083,816 (2,024,100) (2,708,169) 2,690,916
Capital gain
distributions......... -- -- 2,165 521,076 340,197 130,214 759,549 272,808 --
-------- ------- ------- ---------- -------- --------- ---------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments......... 1,337 (11,060) (29,240) (809,509) (60,407) 1,419,564 (2,132,415) (845,931) 3,084,092
-------- ------- ------- ---------- -------- --------- ---------- ---------- ---------
Increase (decrease) in
net assets from opera-
tions.................. $ 54,697 34,674 (11,070) (814,590) (92,962) 1,403,798 (2,119,336) (902,135) 3,051,741
======== ======= ======= ========== ======== ========= ========== ========== =========
F-15
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Oppenheimer Variable Account
Oppenheimer Variable Account Funds (continued) Funds -- Class 2 Shares
------------------------------------------------------ ------------------------------------
Multiple Strategies Global Securities Main Street Growth
High Income Fund/VA Fund/VA Fund/VA & Income Fund/VA
---------------------------- ------------------------ ----------------- ------------------
Year ended December Period from Period from
Year ended December 31, 31, January 8, 2001 January 8, 2001
---------------------------- ------------------------ to to
2001 2000 1999 2001 2000 1999 December 31, 2001 December 31, 2001
--------- -------- ------- ------- ------- ------ ----------------- ------------------
Investment income:
Income -- Ordinary
dividends.............. $ 300,155 218,695 129,252 51,792 46,491 30,217 122 33
Expenses -- Mortality
and expense risk
charges --
Type I (note 4)...... 12,831 12,726 13,177 6,390 6,140 5,751 -- --
Expenses -- Mortality
and expense risk
charges --
Type II (note 4)..... 8,610 3,016 1,187 3,619 1,591 766 572 592
--------- -------- ------- ------- ------- ------ ------ ------
Net investment income
(expense).............. 278,714 202,953 114,888 41,783 38,760 23,700 (450) (559)
--------- -------- ------- ------- ------- ------ ------ ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... (64,193) (51,805) (9,827) (16,984) 8,523 12,030 (2,033) (843)
Unrealized
appreciation
(depreciation) on
investments.......... (185,472) (245,369) (37,389) (74,627) (56,039) 16,700 (2,527) (2,536)
Capital gain
distributions........ -- -- -- 69,177 67,524 43,483 2,295 --
--------- -------- ------- ------- ------- ------ ------ ------
Net realized and
unrealized gain (loss)
on investments......... (249,665) (297,174) (47,216) (22,434) 20,008 72,213 (2,265) (3,379)
--------- -------- ------- ------- ------- ------ ------ ------
Increase (decrease) in
net assets from
operations............. $ 29,049 (94,221) 67,672 19,349 58,768 95,913 (2,715) (3,938)
========= ======== ======= ======= ======= ====== ====== ======
F-16
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products Fund
--------------------------------------------------------------------------------------------
Equity-Income Portfolio Growth Portfolio Overseas Portfolio
---------------------------- --------------------------------- ---------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------- --------------------------------- ---------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
--------- ------- -------- ---------- ---------- --------- -------- -------- -------
Investment income:
Income -- Ordinary
dividends............. $ 129,307 114,887 100,754 7,051 11,358 17,646 105,667 39,615 32,601
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 46,260 44,056 46,384 48,645 65,126 56,960 12,658 17,644 16,186
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 8,705 5,349 2,894 14,289 10,565 3,167 1,423 1,235 579
--------- ------- -------- ---------- ---------- --------- -------- -------- -------
Net investment income
(expense).............. 74,342 65,482 51,476 (55,883) (64,333) (42,481) 91,586 20,736 15,836
--------- ------- -------- ---------- ---------- --------- -------- -------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (18,170) 73,790 273,786 (617,911) 398,024 453,879 (138,056) 57,421 112,501
Unrealized appreciation
(depreciation) on
investments........... (877,761) (25,951) (193,819) (1,874,368) (2,754,089) 1,452,235 (619,667) (896,242) 685,935
Capital gain
distributions......... 363,289 432,830 224,259 662,803 1,130,176 864,641 167,022 249,470 53,190
--------- ------- -------- ---------- ---------- --------- -------- -------- -------
Net realized and
unrealized gain (loss)
on investments......... (532,642) 480,669 304,226 (1,829,476) (1,225,889) 2,770,755 (590,701) (589,351) 851,626
--------- ------- -------- ---------- ---------- --------- -------- -------- -------
Increase (decrease) in
net assets from
operations............. $(458,300) 546,151 355,702 (1,885,359) (1,290,222) 2,728,274 (499,115) (568,615) 867,462
========= ======= ======== ========== ========== ========= ======== ======== =======
F-17
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products
Fund -- Service Class 2 Variable Insurance Products Fund II
--------------------------------- ---------------------------------------------------------
Equity-Income Growth
Portfolio Portfolio Asset Manager Portfolio Contrafund Portfolio
---------------- ---------------- --------------------------- -----------------------------
Period from Period from
January 24, 2001 January 24, 2001 Year ended December 31, Year ended December 31,
to December 31, to December 31, --------------------------- -----------------------------
2001 2001 2001 2000 1999 2001 2000 1999
---------------- ---------------- -------- -------- ------- -------- ---------- -------
Investment income:
Income -- Ordinary
dividends............. $ 30 -- 180,444 157,145 153,442 47,416 17,425 18,437
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. -- -- 28,446 32,686 33,559 21,672 25,515 23,952
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 680 1,483 1,757 970 439 20,537 15,249 6,221
------- ------- -------- -------- ------- -------- ---------- -------
Net investment income
(expense).............. (650) (1,483) 150,241 123,489 119,444 5,207 (23,339) (11,736)
------- ------- -------- -------- ------- -------- ---------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (1,555) (4,153) (92,739) 23,604 64,747 (250,115) 120,743 354,876
Unrealized appreciation
(depreciation) on
investments........... (1,137) (15,912) (351,254) (739,967) 89,931 (758,337) (1,216,788) 425,779
Capital gain
distributions......... 86 30 67,666 370,224 195,289 167,353 632,524 135,201
------- ------- -------- -------- ------- -------- ---------- -------
Net realized and
unrealized gain (loss)
on investments (2,606) (20,035) (376,327) (346,139) 349,967 (841,099) (463,521) 915,856
------- ------- -------- -------- ------- -------- ---------- -------
Increase (decrease) in
net assets from
operations............. $(3,256) (21,518) (226,086) (222,650) 469,411 (835,892) (486,860) 904,120
======= ======= ======== ======== ======= ======== ========== =======
F-18
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products
Fund II -- Service Class 2 Variable Insurance Products Fund III
------------------------------ ------------------------------------------------------------------
Contrafund Portfolio Growth & Income Portfolio Growth Opportunities Portfolio
------------------------------ ------------------------------ -----------------------------------
Period from
Year ended December 26, 2000 Year ended December 31, Year ended December 31,
December 31, to December 31, ------------------------------ -----------------------------------
2001 2000 2001 2000 1999 2001 2000 1999
------------ ----------------- --------- --------- -------- ---------- ----------- ----------
Investment income:
Income -- Ordinary
dividends............. $ 1 -- 16,081 9,297 2,804 1,448 5,618 3,049
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. -- -- 2,367 2,010 2,165 886 1,654 1,866
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 508 -- 6,944 5,584 2,516 2,018 1,724 866
------ --- --------- --------- ------- ---------- ----------- ---------
Net investment income
(expense).............. (507) -- 6,770 1,703 (1,877) (1,456) 2,240 317
------ --- --------- --------- ------- ---------- ----------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (796) 15 (48,530) 5,240 28,022 (47,931) (20,425) 10,345
Unrealized appreciation
(depreciation) on
investments........... 2,083 (14) (134,587) (104,078) 21,930 (19,350) (101,453) (1,242)
Capital gain
distributions......... 3 -- 51,628 60,673 5,692 -- 28,489 5,663
------ --- --------- --------- ------- ---------- ----------- ---------
Net realized and
unrealized gain (loss)
on investments......... 1,290 1 (131,489) (38,165) 55,644 (67,281) (93,389) 14,766
------ --- --------- --------- ------- ---------- ----------- ---------
Increase (decrease) in
net assets from
operations............. $ 783 1 (124,719) (36,462) 53,767 (68,737) (91,149) 15,083
====== === ========= ========= ======= ========== =========== =========
F-19
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Variable Insurance Products Fund III -- Service
Class 2
-----------------------------------------------
Growth & Income
Mid Cap Portfolio Portfolio
------------------------------ ----------------
Period from Period from
Year ended December 26, 2000 January 18, 2001
December 31, to December 31, to December 31,
2001 2000 2001
------------ ----------------- ----------------
Investment income:
Income -- Ordinary
dividends................... $ -- -- 1
Expenses -- Mortality and
expense risk charges -- Type
I (note 4).................. -- -- --
Expenses -- Mortality and
expense risk charges -- Type
II (note 4)................. 277 -- 389
------ --- ------
Net investment income
(expense)..................... (277) -- (388)
------ --- ------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)..... (197) 15 (459)
Unrealized appreciation
(depreciation) on
investments................. 5,221 (13) (800)
Capital gain distributions... -- -- 3
------ --- ------
Net realized and unrealized
gain (loss) on investments.... 5,024 2 (1,256)
------ --- ------
Increase (decrease) in net
assets from operations........ $4,747 2 (1,644)
====== === ======
F-20
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Federated Insurance Series
-------------------------------------------------------------------------------
American Leaders High Income Bond
Fund II Fund II Utility Fund II
------------------------- ------------------------- -------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------- ------------------------- -------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
-------- ------ ------- ------- ------- ------- ------- ------- -------
Investment income:
Income -- Ordinary
dividends............. $ 10,434 5,560 3,192 43,741 30,830 15,467 15,059 11,457 6,452
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 2,314 2,080 1,774 1,622 1,346 1,149 1,479 1,623 1,634
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 3,321 2,274 1,482 1,592 1,092 583 1,870 1,209 602
-------- ------ ------- ------- ------- ------- ------- ------- -------
Net investment income
(expense).............. 4,799 1,206 (64) 40,527 28,392 13,735 11,710 8,625 4,216
-------- ------ ------- ------- ------- ------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (8,386) (5,539) 8,624 (19,309) (12,093) (2,384) (12,211) 973 3,277
Unrealized appreciation
(depreciation) on
investments........... (44,740) 1,613 (17,252) (24,033) (51,127) (10,198) (70,258) (57,701) (16,132)
Capital gain
distributions......... 4,548 16,824 32,275 -- -- 1,345 -- 7,615 12,525
-------- ------ ------- ------- ------- ------- ------- ------- -------
Net realized and
unrealized gain (loss)
on investments......... (48,578) 12,898 23,647 (43,342) (63,220) (11,237) (82,469) (49,113) (330)
-------- ------ ------- ------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
operations............. $(43,779) 14,104 23,583 (2,815) (34,828) 2,498 (70,759) (40,488) 3,886
======== ====== ======= ======= ======= ======= ======= ======= =======
F-21
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Federated Insurance
Federated Insurance Series Series --
(continued) Service Shares Alger American Fund
--------------------------- ------------------- ------------------------------------------------------------
International Small Company High Income Bond Small Capitalization
Fund II Fund II Portfolio LargeCap Growth Portfolio
--------------------------- ------------------- ----------------------------- -----------------------------
Period from Period from
February 6, 2001 to March 27, 2001 to Year ended December 31, Year ended December 31,
December 31, December 31, ----------------------------- -----------------------------
2001 2001 2001 2000 1999 2001 2000 1999
--------------------------- ------------------- -------- ---------- ------- -------- ---------- -------
Investment
income:
Income --
Ordinary
dividends...... $-- -- 743 -- -- 10,186 -- 2,264
Expenses --
Mortality and
expense risk
charges -- Type
I (note 4)..... -- -- 6,426 11,091 9,129 13,924 15,002 13,062
Expenses --
Mortality and
expense risk
charges -- Type
II (note 4).... 34 118 4,203 3,875 1,012 18,454 13,147 4,272
---- ---- -------- ---------- ------- -------- ---------- -------
Net investment
income
(expense)....... (34) (118) (9,886) (14,966) (10,141) (22,192) (28,149) (15,070)
---- ---- -------- ---------- ------- -------- ---------- -------
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss).... (40) (78) (525,268) 2,186 (6,385) (640,911) 33,463 390,753
Unrealized
appreciation
(depreciation)
on
investments.... 404 (419) (54,181) (1,371,045) 405,230 (576,288) (1,302,238) 99,476
Capital gain
distributions.. -- -- -- 735,999 183,620 552,329 513,858 224,152
---- ---- -------- ---------- ------- -------- ---------- -------
Net realized and
unrealized gain
(loss) on
investments..... 364 (497) (579,449) (632,860) 582,465 (664,870) (754,917) 714,381
---- ---- -------- ---------- ------- -------- ---------- -------
Increase
(decrease) in
net assets from
operations...... $330 (615) (589,335) (647,826) 572,324 (687,062) (783,066) 699,311
==== ==== ======== ========== ======= ======== ========== =======
F-22
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
PBHG Insurance Series Fund, Inc.
--------------------------------------------------------
PBHG Large Cap Growth
Portfolio PBHG Growth II Portfolio
--------------------- ---------------------------
Year ended December 31, Year ended December 31,
--------------------------- ---------------------------
2001 2000 1999 2001 2000 1999
--------- -------- ------ -------- -------- -------
Investment income:
Income -- Ordinary
dividends.............. $ -- -- -- -- -- --
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4)............... 2,481 2,179 606 1,849 2,932 569
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4)............... 3,443 1,291 209 3,690 3,508 410
--------- -------- ------ -------- -------- -------
Net investment income
(expense).............. (5,924) (3,470) (815) (5,539) (6,440) (979)
--------- -------- ------ -------- -------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................. (126,586) 26,713 5,563 (317,919) (39,454) 34,202
Unrealized appreciation
(depreciation) on
investments............ (194,777) (140,754) 71,826 (176,939) (379,884) 81,393
Capital gain
distributions.......... -- 16,716 -- -- 24,260 --
--------- -------- ------ -------- -------- -------
Net realized and
unrealized gain (loss)
on investments......... (321,363) (97,325) 77,389 (494,858) (395,078) 115,595
--------- -------- ------ -------- -------- -------
Increase (decrease) in
net assets from
operations............. $(327,287) (100,795) 76,574 (500,397) (401,518) 114,616
========= ======== ====== ======== ======== =======
F-23
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Janus Aspen Series
-------------------------------------------------------------------------------------------------------
Aggressive Growth Portfolio Growth Portfolio Worldwide Growth Portfolio
---------------------------------- --------------------------------- ---------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------------- --------------------------------- ---------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Investment
income:
Income --
Ordinary
dividends...... $ -- -- 65,274 1,516 5,764 10,964 23,897 17,398 11,433
Expenses --
Mortality and
expense risk
charges -- Type
I (note 4)..... 21,231 41,861 24,955 23,882 32,961 25,172 37,670 53,602 38,848
Expenses --
Mortality and
expense risk
charges -- Type
II (note 4).... 18,366 24,298 6,757 24,469 20,783 5,821 28,526 23,434 6,863
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Net investment
income
(expense)....... (39,597) (66,159) 33,562 (46,835) (47,980) (20,029) (42,299) (59,638) (34,278)
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss).... (2,163,009) 1,590,590 861,331 (504,796) 926,526 379,537 (336,670) 863,289 404,104
Unrealized
appreciation
(depreciation)
on
investments.... (945,349) (6,150,760) 3,141,869 (1,497,702) (2,851,716) 1,328,882 (2,197,594) (3,765,784) 3,266,899
Capital gain
distributions.. -- 1,036,376 111,141 16,402 582,454 21,779 21,135 873,121 --
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Net realized and
unrealized gain
(loss) on
investments..... (3,108,358) (3,523,794) 4,114,341 (1,986,096) (1,342,736) 1,730,198 (2,513,129) (2,029,374) 3,671,003
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Increase
(decrease) in
net assets from
operations...... $(3,147,955) (3,589,953) 4,147,903 (2,032,931) (1,390,716) 1,710,169 (2,555,428) (2,089,012) 3,636,725
=========== ========== ========= ========== ========== ========= ========== ========== =========
F-24
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Janus Aspen Series (continued)
--------------------------------------------------------------------------------------------
Balanced Portfolio Flexible Income Portfolio International Growth Portfolio
---------------------------- --------------------------- ----------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------- --------------------------- ----------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
--------- -------- ------- -------- -------- -------- ---------- ---------- ----------
Investment income:
Income -- Ordinary
dividends............. $ 71,790 37,643 43,936 14,946 5,264 12,568 10,773 9,018 2,819
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 13,094 11,335 9,328 763 522 715 6,476 8,171 4,231
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 23,448 10,397 3,366 2,602 1,197 511 12,735 12,438 4,585
--------- -------- ------- -------- -------- -------- ---------- ---------- ---------
Net investment income
(expense).............. 35,248 15,911 31,242 11,581 3,545 11,342 (8,438) (11,591) (5,997)
--------- -------- ------- -------- -------- -------- ---------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (31,657) 99,542 79,219 3,126 (3,171) (1,786) (248,523) 242,420 54,154
Unrealized appreciation
(depreciation) on
investments........... (345,870) (526,341) 321,542 518 6,251 (8,109) (518,693) (990,444) 923,354
Capital gain
distributions......... 67,312 288,437 -- 14,150 7,790 566 18,619 133,743 --
--------- -------- ------- -------- -------- -------- ---------- ---------- ---------
Net realized and
unrealized gain (loss)
on investments......... (310,215) (138,362) 400,761 17,794 10,870 (9,329) (748,597) (614,281) 977,508
--------- -------- ------- -------- -------- -------- ---------- ---------- ---------
Increase (decrease) in
net assets from
operations............. $(274,967) (122,451) 432,003 29,375 14,415 2,013 (757,035) (625,872) 971,511
========= ======== ======= ======== ======== ======== ========== ========== =========
F-25
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Janus Aspen Series
(continued)
------------------------------
Capital Appreciation
Portfolio
------------------------------
Year ended December 31,
------------------------------
2001 2000 1999
--------- ---------- -------
Investment income:
Income -- Ordinary dividends................. $ 14,349 18,596 509
Expenses -- Mortality and expense risk
charges -- Type I (note 4).................. 3,909 5,528 3,352
Expenses -- Mortality and expense risk
charges -- Type II (note 4)................. 19,036 16,675 4,381
--------- ---------- -------
Net investment income (expense)................ (8,596) (3,607) (7,224)
--------- ---------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)..................... (389,507) 187,808 82,791
Unrealized appreciation (depreciation) on
investments................................. (485,835) (1,022,359) 513,292
Capital gain distributions................... 25,976 23,952 5,853
--------- ---------- -------
Net realized and unrealized gain (loss) on
investments................................... (849,366) (810,599) 601,936
--------- ---------- -------
Increase (decrease) in net assets from
operations.................................... $(857,962) (814,206) 594,712
========= ========== =======
F-26
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Janus Aspen Series -- Service Shares
--------------------------------------------------------------------------------------------------------
Aggressive Capital Worldwide International
Global Life Sciences Global Technology Growth Appreciation Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------------------- ------------------------- ------------ ------------ ------------ -------------
Period from Period from Period from Period from Period from Period from
May 29, May 4, January 24, January 24, January 24, February 8,
Year ended 2000 to Year ended 2000 to 2001 to 2001 to 2001 to 2001 to
December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2000 2001 2001 2001 2001
------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
Investment
income:
Income --
Ordinary
dividends...... $ -- -- -- 827 -- 223 106 161
Expenses --
Mortality and
expense risk
charges --
Type I
(note 4)....... 336 134 311 178 -- -- -- --
Expenses --
Mortality and
expense risk
charges --
Type II
(note 4)....... 1,036 195 557 219 421 320 571 478
-------- ------ ------- ------- ------- ------ ------- ------
Net investment
income
(expense)....... (1,372) (329) (868) 430 (421) (97) (465) (317)
-------- ------ ------- ------- ------- ------ ------- ------
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss).... (11,785) 268 (35,371) (3,121) (3,531) (1,703) (2,767) (1,167)
Unrealized
appreciation
(depreciation)
on
investments.... (21,957) 13,723 (26,150) (58,896) (15,833) (5,044) (9,532) (8,121)
Capital gain
distributions.. -- -- 886 -- -- 268 202 464
-------- ------ ------- ------- ------- ------ ------- ------
Net realized and
unrealized gain
(loss) on
investments..... (33,742) 13,991 (60,635) (62,017) (19,364) (6,479) (12,097) (8,824)
-------- ------ ------- ------- ------- ------ ------- ------
Increase
(decrease) in
net assets from
operations...... $(35,114) 13,662 (61,503) (61,587) (19,785) (6,576) (12,562) (9,141)
======== ====== ======= ======= ======= ====== ======= ======
Balanced Growth
Portfolio Portfolio
------------ ------------
Period from Period from
January 8, February 9,
2001 to 2001 to
December 31, December 31,
2001 2001
------------ ------------
Investment
income:
Income --
Ordinary
dividends...... 4,780 --
Expenses --
Mortality and
expense risk
charges --
Type I
(note 4)....... -- --
Expenses --
Mortality and
expense risk
charges --
Type II
(note 4)....... 1,801 471
------------ ------------
Net investment
income
(expense)....... 2,979 (471)
------------ ------------
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss).... (1,637) (2,304)
Unrealized
appreciation
(depreciation)
on
investments.... (8,116) (14,119)
Capital gain
distributions.. 2,481 169
------------ ------------
Net realized and
unrealized gain
(loss) on
investments..... (7,272) (16,254)
------------ ------------
Increase
(decrease) in
net assets from
operations...... (4,293) (16,725)
============ ============
F-27
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Goldman Sachs Variable Insurance Trust
-----------------------------------------------
Growth and
Income Fund Mid Cap Value Fund
---------------------- -----------------------
Year ended Year ended
December 31, December 31,
---------------------- -----------------------
2001 2000 1999 2001 2000 1999
-------- ------ ---- ------- ------- ------
Investment income:
Income -- Ordinary
dividends................... $ 557 427 242 11,248 3,725 3,355
Expenses -- Mortality and
expense risk charges -- Type
I (note 4).................. 30 11 3 1,780 1,012 293
Expenses -- Mortality and
expense risk charges -- Type
II (note 4)................. 783 535 112 4,658 1,161 448
-------- ------ ---- ------- ------- ------
Net investment income
(expense)................... (256) (119) 127 4,810 1,552 2,614
-------- ------ ---- ------- ------- ------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)..... (3,274) 480 585 36,070 (24,105) 87
Unrealized appreciation
(depreciation) on
investments................. (7,580) (5,835) (222) 3,206 73,668 (2,647)
Capital gain distributions... -- -- -- 58,096 12,030 --
-------- ------ ---- ------- ------- ------
Net realized and unrealized
gain (loss) on investments.. (10,854) (5,355) 363 97,372 61,593 (2,560)
-------- ------ ---- ------- ------- ------
Increase (decrease) in net
assets from operations...... $(11,110) (5,474) 490 102,182 63,145 54
======== ====== ==== ======= ======= ======
F-28
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Salomon Brothers Variable Series Funds Inc.
--------------------------------------------------------------------------
Strategic Bond Fund Investors Fund Total Return Fund
---------------------- --------------------- ----------------------------
Year ended Year ended
December 31, December 31, Year ended December 31,
---------------------- --------------------- ----------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
------- ----- ------ ------- ------ ---- -------- --------- -------
Investment income:
Income -- Ordinary
dividends............. $11,601 5,918 2,773 5,735 2,505 44 1,304 210 27
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4).............. 112 5 -- 1,853 155 14 77 23 4
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4).............. 1,283 542 163 2,985 644 6 192 4 --
------- ----- ------ ------- ------ --- -------- --------- ------
Net investment income
(expense).............. 10,206 5,371 2,610 897 1,706 24 1,035 183 23
------- ----- ------ ------- ------ --- -------- --------- ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 1,040 490 3 (6,871) (538) 22 (93) (785) (1)
Unrealized appreciation
(depreciation) on
investments........... (656) (671) (1,908) (46,707) (3,818) 232 (356) (349) (37)
Capital gain
distributions......... -- -- -- 7,551 10,551 -- -- -- --
------- ----- ------ ------- ------ --- -------- --------- ------
Net realized and
unrealized gain (loss)
on investments......... 384 (181) (1,905) (46,027) 6,195 254 (449) (1,134) (38)
------- ----- ------ ------- ------ --- -------- --------- ------
Increase (decrease) in
net assets from
operations............. $10,590 5,190 705 (45,130) 7,901 278 586 (951) (15)
======= ===== ====== ======= ====== === ======== ========= ======
F-29
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Dreyfus
-------------------------------------------------------------
The Dreyfus Socially Dreyfus Investment Portfolios-
Responsible Growth Fund, Inc. Emerging Markets Portfolio
------------------------------ ------------------------------
Period from
Period from April 6, 2001
Year ended December 26, 2000 to
December 31, to December 31,
2001 December 31, 2000 2001
------------ ----------------- ------------------------------
Investment income:
Income -- Ordinary
dividends............ $ 15 -- 37
Expenses -- Mortality
and expense risk
charges -- Type I
(note 4)............. -- -- --
Expenses -- Mortality
and expense risk
charges -- Type II
(note 4)............. 97 -- 18
------- --- ---
Net investment income
(expense).............. (82) -- 19
------- --- ---
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)............... (728) 15 (18)
Unrealized
appreciation
(depreciation) on
investments.......... (1,305) (14) 383
Capital gain
distributions........ -- -- --
------- --- ---
Net realized and
unrealized gain (loss)
on investments......... (2,033) 1 365
------- --- ---
Increase (decrease) in
net assets from
operations............. $(2,115) 1 384
======= === ===
F-30
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
MFS Variable Insurance Trust Rydex Variable Trust
------------------------------------------------------------------ -------------------------
MFS Investors MFS Investors MFS
Growth Stock Trust Utility
MFS New Discovery Series Series Series Series OTC Fund
------------------------- ------------- ------------- ------------ -------------------------
Period from Period from Period from Period from Period from
December 26, January 23, February 14, March 14, December 26,
Year ended 2000 to 2001 to 2001 to 2001 to Year ended 2000 to
December 31, December 31, December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2001 2001 2001 2000
------------ ------------ ------------- ------------- ------------ ------------ ------------
Investment income:
Income -- Ordinary
dividends............. $ -- -- 3 35 2,118 -- --
Expenses -- Mortality
and expense risk
charges --
Type I (note 4)...... -- -- -- -- -- -- --
Expenses -- Mortality
and expense risk
charges --
Type II (note 4)..... 148 -- 136 219 652 77 --
------ --- ----- ------ ------- ------ ---
Net investment income
(expense).............. (148) -- (133) (184) 1,466 (77) --
------ --- ----- ------ ------- ------ ---
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (261) 15 (319) (331) (4,518) (710) 10
Unrealized appreciation
(depreciation) on
investments........... 5,912 (13) 3,183 (1,568) (30,109) (657) (10)
Capital gain
distributions......... 23 -- 34 190 5,580 -- --
------ --- ----- ------ ------- ------ ---
Net realized and
unrealized gain (loss)
on investments......... 5,674 2 2,898 (1,709) (29,047) (1,367) --
------ --- ----- ------ ------- ------ ---
Increase (decrease) in
net assets from
operations............. $5,526 2 2,765 (1,893) (27,581) (1,444) --
====== === ===== ====== ======= ====== ===
F-31
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
Alliance Variable Products Series Fund, Inc.
---------------------------------------------------
Growth and
Income Quasar
Premier Growth Portfolio Portfolio Portfolio
------------------------- ------------ ------------
Period from Period from Period from
December 26, February 6, February 8,
Year ended 2000 to 2001 to 2001 to
December 31, December 31, December 31, December 31,
2001 2000 2001 2001
------------ ------------ ------------ ------------
Investment income:
Income -- Ordinary
dividends............... $ -- -- 865 --
Expenses -- Mortality and
expense risk charges --
Type I (note 4)........ -- -- -- --
Expenses -- Mortality and
expense risk charges --
Type II (note 4)....... 478 -- 1,268 87
------- --- ------ ----
Net investment income
(expense)................. (478) -- (403) (87)
------- --- ------ ----
Net realized and unrealized
gain (loss) on
investments:
Net realized gain
(loss).................. (1,431) 15 (1,604) (723)
Unrealized appreciation
(depreciation) on
investments............. (8,996) (15) (7,562) (488)
Capital gain
distributions........... 4,460 -- 6,702 391
------- --- ------ ----
Net realized and unrealized
gain (loss) on
investments............... (5,967) -- (2,464) (820)
------- --- ------ ----
Increase (decrease) in net
assets from operations.... $(6,445) -- (2,867) (907)
======= === ====== ====
F-32
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Operations, Continued
AIM Variable Insurance Funds, Inc. PIMCO Variable Insurance Trust
--------------------------------------------------- ------------------------------------------------------
AIM V.I. Long-Term High Yield Total Return
AIM V.I. Capital AIM V.I. Value Foreign Bond U.S. Government Bond Bond
Appreciation Fund Growth Fund Fund Portfolio Bond Portfolio Portfolio Portfolio
------------------------- ------------ ------------ ------------ --------------- ------------ ------------
Period from Period from Period from Period from Period from Period from
December 26, February 9, February 19, February 9, February 8, February 6,
Year ended 2000 to 2001 to 2001 to Year ended 2001 to 2001 to 2001 to
December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2001 2001 2001 2001 2001
------------ ------------ ------------ ------------ ------------ --------------- ------------ ------------
Investment
income:
Income --
Ordinary
dividends...... $ -- -- 186 185 119 1,668 1,655 1,664
Expenses --
Mortality and
expense risk
charges -- Type
I (note 4)..... -- -- -- -- -- -- -- --
Expenses --
Mortality and
expense risk
charges -- Type
II (note 4).... 308 -- 321 488 25 255 150 275
------- --- ------ ------ --- ------ ------ ------
Net investment
income
(expense)....... (308) -- (135) (303) 94 1,413 1,505 1,389
------- --- ------ ------ --- ------ ------ ------
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss).... (1,557) 15 (1,284) (1,319) 16 34 (200) 76
Unrealized
appreciation
(depreciation)
on
investments.... (8,874) (14) (6,274) (5,561) 35 (4,415) (875) (1,726)
Capital gain
distributions.. 7,510 -- -- 2,806 -- 3,287 -- 2,082
------- --- ------ ------ --- ------ ------ ------
Net realized and
unrealized gain
(loss) on
investments..... (2,921) 1 (7,558) (4,074) 51 (1,094) (1,075) 432
------- --- ------ ------ --- ------ ------ ------
Increase
(decrease) in
net assets from
operations...... $(3,229) 1 (7,693) (4,377) 145 319 430 1,821
======= === ====== ====== === ====== ====== ======
See accompanying notes to financial statements.
F-33
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets
GE Investments Funds, Inc.
----------------------------------------------------------------------------------------------------------
S&P 500 Index Fund Money Market Fund Total Return Fund
----------------------------------- ----------------------------------- --------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
----------------------------------- ----------------------------------- --------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
------------ ---------- --------- ---------- ----------- ---------- ---------- --------- ---------
Increase
(decrease) in
net assets
From operations:
Net investment
income
(expense)...... $ 41,037 20,083 11,612 261,435 364,565 223,302 17,205 85,613 57,566
Net realized
gain (loss).... (241,043) 369,151 367,307 -- -- 3 (69,715) 33,478 10,066
Unrealized
appreciation
(depreciation)
on
investments.... (1,390,103) (1,654,687) 797,281 -- -- (3) (168,952) (117,815) 319,427
Capital gain
distributions.. 142,797 197,387 82,915 -- -- -- 22,821 175,795 102,400
------------ ---------- --------- ---------- ----------- ---------- ---------- --------- ---------
Increase
(decrease) in
net assets
from
operations.... (1,447,312) (1,068,066) 1,259,115 261,435 364,565 223,302 (198,641) 177,071 489,459
------------ ---------- --------- ---------- ----------- ---------- ---------- --------- ---------
From capital
transactions:
Net premiums.... 3,715,507 3,412,694 2,348,331 10,363,439 13,180,675 7,117,726 473,317 333,781 251,092
Loan interest... (5,026) (5,227) (199) (1,929) (6,351) 132 (1,352) (65) (279)
Transfers (to)
from the
general account
of GE Life and
Annuity:
Death benefits.. (3,222) (12,065) (10,568) (18,829) (649) -- (14,229) -- (16,660)
Surrenders...... (343,512) (367,160) (226,385) (525,461) (291,605) (143,091) (2,358,024) (45,274) (23,097)
Loans........... (118,177) (33,079) (147,819) (416,073) (441,223) (382,888) (66,062) (29,824) (24,984)
Cost of
insurance and
administrative
expense (note
4)............. (1,287,498) (961,590) (761,285) (973,595) (700,630) (488,436) (445,803) (403,065) (406,244)
Transfer gain
(loss) and
transfer fees.. (8,482) 1,907 (1,620) 28,566 4,166 (7,217) 468 (1,634) (706)
Transfers (to)
from the
Guarantee
Account........ -- 96 -- -- -- -- -- -- --
Interfund
transfers...... 765,706 808,447 702,040 (6,345,494) (10,036,753) (5,024,217) 29,095 67,090 (27,330)
------------ ---------- --------- ---------- ----------- ---------- ---------- --------- ---------
Increase
(decrease) in
net assets
from capital
transactions.. 2,715,296 2,844,023 1,902,495 2,110,624 1,707,630 1,072,009 (2,382,590) (78,991) (248,208)
------------ ---------- --------- ---------- ----------- ---------- ---------- --------- ---------
Increase
(decrease) in
net assets...... 1,267,984 1,775,957 3,161,610 2,372,059 2,072,195 1,295,311 (2,581,231) 98,080 241,251
Net assets at
beginning of
year............ 10,245,247 8,469,290 5,307,680 7,439,097 5,366,902 4,071,591 4,417,034 4,318,954 4,077,703
------------ ---------- --------- ---------- ----------- ---------- ---------- --------- ---------
Net assets at end
of period....... $ 11,513,231 10,245,247 8,469,290 9,811,156 7,439,097 5,366,902 1,835,803 4,417,034 4,318,954
============ ========== ========= ========== =========== ========== ========== ========= =========
F-34
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
GE Investments Funds, Inc. (continued)
--------------------------------------------------------------------------------
Real Estate Securities
International Equity Fund Fund Global Income Fund
--------------------------- ------------------------- ------------------------
Year ended December
Year ended December 31, Year ended December 31, 31,
--------------------------- ------------------------- ------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
-------- -------- ------- ------- ------- ------- ------- ------- ------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 1,329 (332) (654) 27,361 21,293 20,269 (953) (475) 858
Net realized gain
(loss)................ (23,637) 6,362 5,881 21,020 (2,380) (14,908) (439) (1,161) (128)
Unrealized appreciation
(depreciation) on
investments........... (69,841) (103,450) 34,706 25,627 129,283 (10,218) (2,041) 548 (4,715)
Capital gain
distributions......... 1,787 53,038 16,048 9,374 2,638 1,216 -- -- 95
-------- -------- ------- ------- ------- ------- ------- ------- ------
Increase (decrease) in
net assets from
operations........... (90,362) (44,382) 55,981 83,382 150,834 (3,641) (3,433) (1,088) (3,890)
-------- -------- ------- ------- ------- ------- ------- ------- ------
From capital
transactions:
Net premiums........... 163,122 137,598 152,398 180,106 134,428 121,762 49,071 28,092 23,325
Loan interest.......... 94 (1) 14 (39) 28 47 -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- (7,573) (5,470) -- (11,787) -- -- --
Surrenders............. 1,521 (23,625) (86) (27,417) (7,402) (1,244) (231) -- (1,142)
Loans.................. (2,509) (2,706) (24,626) (1,285) (6,672) (51,101) (168) -- --
Cost of insurance and
administrative expense
(note 4).............. (35,400) (28,911) (40) (94,415) (54,400) (90) (13,499) (8,183) (5,884)
Transfer gain (loss)
and transfer fees..... (407) 2,417 -- (120) 71 -- 12 (5) 66
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- -- -- -- --
Interfund transfers.... 25,090 60,560 (27,880) 129,420 68,374 22,778 3,620 (1,609) 37,663
-------- -------- ------- ------- ------- ------- ------- ------- ------
Increase (decrease) in
net assets from
capital
transactions......... 151,511 145,332 92,207 180,780 134,427 80,365 38,805 18,295 54,028
-------- -------- ------- ------- ------- ------- ------- ------- ------
Increase (decrease) in
net assets............. 61,149 100,950 148,188 264,162 285,261 76,724 35,372 17,207 50,138
Net assets at beginning
of year................ 364,887 263,937 115,749 706,031 420,770 344,046 103,476 86,269 36,131
-------- -------- ------- ------- ------- ------- ------- ------- ------
Net assets at end of
period................. $426,036 364,887 263,937 970,193 706,031 420,770 138,848 103,476 86,269
======== ======== ======= ======= ======= ======= ======= ======= ======
F-35
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
GE Investments Funds, Inc. (continued)
--------------------------------------------------------------------------------------
Mid-Cap Value Equity Fund Income Fund U.S. Equity Fund
---------------------------- ------------------------- -----------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------- ------------------------- -----------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
---------- ------- ------- ------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 1,957 2,661 1,738 31,953 29,038 18,370 349 2,850 223
Net realized gain
(loss)................ 11,651 12,924 14,236 8,257 (1,516) (78) (38,750) 11,564 2,835
Unrealized appreciation
(depreciation) on
investments........... (51,905) 26,637 22,084 4,061 18,549 (28,051) (64,708) (73,997) 6,670
Capital gain
distributions......... 49,463 26,834 -- -- -- 662 4,651 47,509 10,093
---------- ------- ------- ------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets from
operations........... 11,166 69,056 38,058 44,271 46,071 (9,097) (98,458) (12,074) 19,821
---------- ------- ------- ------- ------- ------- --------- --------- -------
From capital
transactions:
Net premiums........... 440,256 261,618 219,094 218,541 91,288 68,061 339,189 1,015,166 137,612
Loan interest.......... 720 (171) (57) 241 60 11 (3,354) (4) --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (9,928) (11,287) (10,051) -- (2,340) -- (413) -- --
Surrenders............. (6,251) (995) (4,932) (19,467) (11,208) (3,866) (7,880) (48) (462)
Loans.................. (4,587) (2,425) (20,880) (65,525) (8,163) (2,087) (8,626) (245,449) --
Cost of insurance and
administrative expense
(note 4).............. (122,026) (61,515) (40,864) (62,355) (37,715) (34,405) (110,537) (57,642) (26,579)
Transfer gain (loss)
and transfer fees..... (5,375) (7,220) (8,769) 540 (391) (166) (3,744) (39,714) (9,921)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- -- -- -- --
Interfund transfers.... 314,907 (12,847) 167,398 109,924 60,679 (45,407) 142,407 111,757 38,985
---------- ------- ------- ------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets from
capital
transactions......... 607,716 165,158 300,939 181,899 92,210 (17,859) 347,042 784,066 139,635
---------- ------- ------- ------- ------- ------- --------- --------- -------
Increase (decrease) in
net assets............. 618,882 234,214 338,997 226,170 138,281 (26,956) 248,584 813,349 168,918
Net assets at beginning
of year................ 785,557 551,343 212,346 544,869 406,588 433,544 1,033,212 219,863 50,945
---------- ------- ------- ------- ------- ------- --------- --------- -------
Net assets at end of
period................. $1,404,439 785,557 551,343 771,039 544,869 406,588 1,281,796 1,033,212 219,863
========== ======= ======= ======= ======= ======= ========= ========= =======
F-36
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
GE Investments Funds, Inc. (continued)
---------------------------------------------------------------------
Value Equity Small-Cap Value
Premier Growth Equity Fund Fund Equity Fund
----------------------------------- ---------------- ----------------
Year ended Period from Period from Period from
December 31, June 9, 1999 to February 8, 2001 February 6, 2001
------------------ December 31, to December 31, to December 31,
2001 2000 1999 2001 2001
--------- ------- --------------- ---------------- ----------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (4,635) (1,657) (95) 244 37
Net realized gain
(loss)............... (31,948) 4,260 344 (235) 138
Unrealized
appreciation
(depreciation) on
investments.......... (63,850) (64,695) 13,285 381 5,001
Capital gain
distributions........ 27,619 34,574 4,011 -- 2,827
--------- ------- ------- ------ -------
Increase
(decrease) in net
assets from
operations....... (72,814) (27,518) 17,545 390 8,003
--------- ------- ------- ------ -------
From capital
transactions:
Net premiums.......... 452,145 310,829 35,871 63,094 88,486
Loan interest......... (442) (22) -- -- --
Transfers (to) from
the general account
of GE Life and
Annuity:
Death benefits...... -- -- -- -- --
Surrenders.......... (6,043) (22,123) -- -- --
Loans............... (22,764) (7,398) -- -- (1,095)
Cost of insurance
and administrative
expense (note 4)... (143,575) (57,487) (5,472) (6,363) (8,524)
Transfer gain (loss)
and transfer fees.. (2,700) 227 1,248 (199) (1,564)
Transfers (to) from
the Guarantee
Account............ -- -- -- -- --
Interfund transfers... 124,023 283,767 88,483 18,310 19,639
--------- ------- ------- ------ -------
Increase
(decrease) in net
assets from
capital
transactions..... 400,644 507,793 120,130 74,842 96,942
--------- ------- ------- ------ -------
Increase (decrease) in
net assets............. 327,830 480,275 137,675 75,232 104,945
Net assets at beginning
of year................ 617,950 137,675 -- -- --
--------- ------- ------- ------ -------
Net assets at end of
period................. $ 945,780 617,950 137,675 75,232 104,945
========= ======= ======= ====== =======
F-37
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Oppenheimer Variable Account Funds
--------------------------------------------------------------
Bond Fund/VA Capital Appreciation Fund/VA
---------------------------- --------------------------------
Year ended December 31, Year ended December 31,
---------------------------- --------------------------------
2001 2000 1999 2001 2000 1999
---------- ------- ------- ---------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 53,360 45,734 18,170 (5,081) (32,555) (15,766)
Net realized gain
(loss)................ 283 (17,389) (1,863) (57,828) 341,073 205,534
Unrealized appreciation
(depreciation) on
investments........... 1,054 6,329 (29,542) (1,272,757) (741,677) 1,083,816
Capital gain
distributions......... -- -- 2,165 521,076 340,197 130,214
---------- ------- ------- ---------- --------- ---------
Increase (decrease) in
net assets from
operations........... 54,697 34,674 (11,070) (814,590) (92,962) 1,403,798
---------- ------- ------- ---------- --------- ---------
From capital
transactions:
Net premiums........... 189,923 154,114 148,327 1,071,529 1,083,344 823,296
Loan interest.......... (546) (422) 18 (4,811) (2,064) (802)
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- (711) -- (12,006) -- (3,528)
Surrenders............. (22,364) (29,789) (13,864) (94,578) (210,937) (104,939)
Loans.................. (2,681) (6,652) (838) (75,457) (41,303) (44,498)
Cost of insurance and
administrative expense
(note 4).............. (103,621) (64,402) (63,471) (471,327) (358,047) (302,052)
Transfer gain (loss)
and transfer fees..... 688 (231) 211 (2,636) 6,844 (383)
Transfers (to) from the
Guarantee Account..... -- -- -- -- 135 --
Interfund transfers.... 254,818 6,376 108,262 381,762 247,162 (28,758)
---------- ------- ------- ---------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 316,217 58,283 178,645 792,476 725,134 338,336
---------- ------- ------- ---------- --------- ---------
Increase (decrease) in
net assets............. 370,914 92,957 167,575 (22,114) 632,172 1,742,134
Net assets at beginning
of year................ 730,981 638,024 470,449 5,603,179 4,971,007 3,228,873
---------- ------- ------- ---------- --------- ---------
Net assets at end of
period................. $1,101,895 730,981 638,024 5,581,065 5,603,179 4,971,007
========== ======= ======= ========== ========= =========
F-38
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,
---------------------------------- -------------------------------
2001 2000 1999 2001 2000 1999
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 13,079 (56,204) (32,351) 278,714 202,953 114,888
Net realized gain
(loss)................ (867,864) 1,589,430 393,176 (64,193) (51,805) (9,827)
Unrealized appreciation
(depreciation) on
investments........... (2,024,100) (2,708,169) 2,690,916 (185,472) (245,369) (37,389)
Capital gain
distributions......... 759,549 272,808 -- -- -- --
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
operations........... (2,119,336) (902,135) 3,051,741 29,049 (94,221) 67,672
----------- ---------- --------- --------- --------- ---------
From capital
transactions:
Net premiums........... 1,125,573 1,297,342 706,892 393,755 374,363 445,041
Loan interest.......... (7,533) (8,257) (459) (1,623) (717) 890
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (500) (5,763) (2,341) -- -- (215)
Surrenders............. (213,564) (840,901) (160,601) (48,712) (72,713) (82,275)
Loans.................. (170,906) (104,373) (187,114) (35,396) (6,121) (44,238)
Cost of insurance and
administrative expense
(note 4).............. (458,349) (457,737) (345,495) (208,105) (153,413) (170,939)
Transfer gain (loss)
and transfer fees..... 11 (48,749) (9,130) 1,304 (7) (1,499)
Transfers (to) from the
Guarantee Account..... -- -- -- -- 79 (4)
Interfund transfers.... (97,295) 1,141,624 (235,950) 61,293 621,109 43,275
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 177,437 973,186 (234,198) 162,516 762,580 190,036
----------- ---------- --------- --------- --------- ---------
Increase (decrease) in
net assets............. (1,941,899) 71,051 2,817,543 191,565 668,359 257,708
Net assets at beginning
of year................ 6,715,541 6,644,490 3,826,947 2,780,675 2,112,316 1,854,608
----------- ---------- --------- --------- --------- ---------
Net assets at end of
period................. $ 4,773,642 6,715,541 6,644,490 2,972,240 2,780,675 2,112,316
=========== ========== ========= ========= ========= =========
F-39
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Oppenheimer Variable Account Oppenheimer Variable Account Funds --
Funds (continued) Class 2 Shares
---------------------------- -------------------------------------
Main Street
Global Securities Growth & Income
Multiple Strategies Fund/VA Fund/VA Fund/VA
------------------------------ ------------------ ------------------
Year ended December 31, Period from Period from
------------------------------ January 8, 2001 to January 8, 2001 to
2001 2000 1999 December 31, 2001 December 31, 2001
---------- --------- ------- ------------------ ------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ 41,783 38,760 23,700 (450) (559)
Net realized gain
(loss)............... (16,984) 8,523 12,030 (2,033) (843)
Unrealized
appreciation
(depreciation) on
investments.......... (74,627) (56,039) 16,700 (2,527) (2,536)
Capital gain
distributions........ 69,177 67,524 43,483 2,295 --
---------- --------- ------- ------- -------
Increase
(decrease) in net
assets from
operations....... 19,349 58,768 95,913 (2,715) (3,938)
---------- --------- ------- ------- -------
From capital
transactions:
Net premiums.......... 259,724 337,229 193,685 145,286 144,665
Loan interest......... (362) (204) (5) -- --
Transfers (to) from
the general account
of GE Life and
Annuity: -- --
Death benefits...... -- -- (253) -- --
Surrenders.......... (189,587) (53,311) (26,225) (1,649) --
Loans............... (3,177) (8,792) (8,254) (1,703) --
Cost of insurance
and administrative
expense (note 4)... (116,135) (70,787) (68,019) (15,634) (19,487)
Transfer gain (loss)
and transfer fees.. (2,575) (1,814) (182) 327 (139)
Transfers (to) from
the Guarantee
Account............ -- -- -- -- --
Interfund transfers... 115,190 70,636 (53,287) 58,488 53,086
---------- --------- ------- ------- -------
Increase
(decrease) in net
assets from
capital
transactions..... 63,078 272,957 37,460 185,115 178,125
---------- --------- ------- ------- -------
Increase (decrease) in
net assets............. 82,427 331,725 133,373 182,400 174,187
Net assets at beginning
of year................ 1,311,155 979,430 846,057 -- --
---------- --------- ------- ------- -------
Net assets at end of
period................. $1,393,582 1,311,155 979,430 182,400 174,187
========== ========= ======= ======= =======
F-40
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Variable Insurance Products Fund
-----------------------------------------------------------------------------------------------------
Equity-Income Portfolio Growth Portfolio Overseas Portfolio
-------------------------------- ---------------------------------- -------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
-------------------------------- ---------------------------------- -------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
---------- --------- --------- ---------- ---------- ---------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)........... $ 74,342 65,482 51,476 (55,883) (64,333) (42,481) 91,586 20,736 15,836
Net realized gain
(loss).............. (18,170) 73,790 273,786 (617,911) 398,024 453,879 (138,056) 57,421 112,501
Unrealized
appreciation
(depreciation) on
investments......... (877,761) (25,951) (193,819) (1,874,368) (2,754,089) 1,452,235 (619,667) (896,242) 685,935
Capital gain
distributions....... 363,289 432,830 224,259 662,803 1,130,176 864,641 167,022 249,470 53,190
---------- --------- --------- ---------- ---------- ---------- --------- --------- ---------
Increase (decrease)
in net assets from
operations......... (458,300) 546,151 355,702 (1,885,359) (1,290,222) 2,728,274 (499,115) (568,615) 867,462
---------- --------- --------- ---------- ---------- ---------- --------- --------- ---------
From capital
transactions:
Net premiums......... 1,118,104 1,462,253 1,437,479 1,529,238 2,000,171 1,388,701 331,330 299,243 364,398
Loan interest........ (11,426) (2,861) 956 (8,246) (6,381) (4,205) (2,307) (862) (189)
Transfers (to) from
the general account
of GE Life and
Annuity:
Death benefits....... (1,602) (44,417) (26,021) (479) (5,738) (14,970) (1,189) -- (3,758)
Surrenders........... (194,252) (333,879) (195,718) (331,207) (508,978) (438,334) (71,236) (175,642) (92,920)
Loans................ (97,491) (33,487) (150,364) (72,721) (128,213) (133,503) (26,364) (35,474) (37,514)
Cost of insurance and
administrative
expense (note 4).... (606,262) (491,665) (579,765) (764,274) (685,241) (614,236) (145,824) (155,987) (164,565)
Transfer gain (loss)
and transfer fees... (3,345) (6,693) (4,942) 14,290 (442) (14,687) (1,352) 3,634 (2,197)
Transfers (to) from
the Guarantee
Account............. -- 85 -- -- 208 -- -- 344 --
Interfund transfers.. 265,741 (254,327) (644,610) (63,123) 206,956 (344,635) (41,347) (38,525) (89,327)
---------- --------- --------- ---------- ---------- ---------- --------- --------- ---------
Increase (decrease)
in net assets from
capital
transactions....... 469,467 295,009 (162,985) 303,478 872,342 (175,869) 41,711 (103,269) (26,072)
---------- --------- --------- ---------- ---------- ---------- --------- --------- ---------
Increase (decrease) in
net assets........... 11,167 841,160 192,717 (1,581,881) (417,880) 2,552,405 (457,404) (671,884) 841,390
Net assets at
beginning of year.... 7,746,965 6,905,805 6,713,088 9,960,778 10,378,658 7,826,253 2,213,423 2,885,307 2,043,917
---------- --------- --------- ---------- ---------- ---------- --------- --------- ---------
Net assets at end of
period............... $7,758,132 7,746,965 6,905,805 8,378,897 9,960,778 10,378,658 1,756,019 2,213,423 2,885,307
========== ========= ========= ========== ========== ========== ========= ========= =========
F-41
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Variable Insurance Products
Fund --
Service Class 2 Variable Insurance Products Fund II
--------------------------------- -----------------------------------------------------------------
Equity-Income
Portfolio Growth Portfolio Asset Manager Portfolio Contrafund Portfolio
---------------- ---------------- ------------------------------- --------------------------------
Period from Period from
January 24, 2001 January 24, 2001 Year ended December 31, Year ended December 31,
to December 31, to December 31, ------------------------------- --------------------------------
2001 2001 2001 2000 1999 2001 2000 1999
---------------- ---------------- --------- --------- --------- --------- ---------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)........... $ (650) (1,483) 150,241 123,489 119,444 5,207 (23,339) (11,736)
Net realized gain
(loss).............. (1,555) (4,153) (92,739) 23,604 64,747 (250,115) 120,743 354,876
Unrealized
appreciation
(depreciation) on
investments......... (1,137) (15,912) (351,254) (739,967) 89,931 (758,337) (1,216,788) 425,779
Capital gain
distributions....... 86 30 67,666 370,224 195,289 167,353 632,524 135,201
-------- ------- --------- --------- --------- --------- ---------- ---------
Increase (decrease)
in net assets from
operations......... (3,256) (21,518) (226,086) (222,650) 469,411 (835,892) (486,860) 904,120
-------- ------- --------- --------- --------- --------- ---------- ---------
From capital
transactions:
Net premiums......... 182,605 304,507 419,495 490,848 477,913 1,165,439 2,063,887 1,028,819
Loan interest........ -- -- (2,904) 255 (525) (6,427) (1,762) (1,317)
Transfers (to) from
the general account
of GE Life and
Annuity:
Death benefits....... -- -- (1,952) (10,608) (2,250) (15,585) -- --
Surrenders........... (1,595) (726) (297,502) (360,416) (104,369) (180,932) (278,017) (127,334)
Loans................ (83) (2,211) (8,657) (109,631) (33,108) (43,956) (89,473) (45,515)
Cost of insurance and
administrative
expense (note 4).... (17,063) (34,692) (275,158) (262,101) (282,330) (561,176) (455,295) (391,276)
Transfer gain (loss)
and transfer fees... (2,452) 420 4,408 1,942 (1,929) (6,607) (11,573) (12,817)
Transfers (to) from
the Guarantee
Account............. -- -- -- -- -- -- 129 --
Interfund transfers.. 93,570 187,635 (35,466) 7,464 (188,976) 193,659 489,400 179
-------- ------- --------- --------- --------- --------- ---------- ---------
Increase (decrease)
in net assets from
capital
transactions....... 254,982 454,933 (197,736) (242,247) (135,574) 544,415 1,717,296 450,739
-------- ------- --------- --------- --------- --------- ---------- ---------
Increase (decrease) in
net assets........... 251,726 433,415 (423,822) (464,897) 333,837 (291,477) 1,230,436 1,354,859
Net assets at
beginning of year.... -- -- 4,505,303 4,970,200 4,636,363 6,217,155 4,986,719 3,631,860
-------- ------- --------- --------- --------- --------- ---------- ---------
Net assets at end of
period............... $251,726 433,415 4,081,481 4,505,303 4,970,200 5,925,678 6,217,155 4,986,719
======== ======= ========= ========= ========= ========= ========== =========
F-42
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Variable Insurance Products
Fund II -- Service Class 2 Variable Products Fund III
------------------------------ ----------------------------------------------------------
Growth Opportunities
Contrafund Portfolio Growth & Income Portfolio Portfolio
------------------------------ ------------------------------ --------------------------
Year ended Period from
December 31, December 26, 2000 Year ended December 31, Year ended December 31,
------------ to December 31, ------------------------------ --------------------------
2001 2000 2001 2000 1999 2001 2000 1999
------------ ----------------- --------- --------- -------- ------- -------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (507) -- 6,770 1,703 (1,877) (1,456) 2,240 317
Net realized gain
(loss)................ (796) 15 (48,530) 5,240 28,022 (47,931) (20,425) 10,345
Unrealized appreciation
(depreciation) on
investments........... 2,083 (14) (134,587) (104,078) 21,930 (19,350) (101,453) (1,242)
Capital gain
distributions......... 3 -- 51,628 60,673 5,692 -- 28,489 5,663
-------- --- --------- --------- -------- ------- -------- -------
Increase (decrease) in
net assets from
operations........... 783 1 (124,719) (36,462) 53,767 (68,737) (91,149) 15,083
-------- --- --------- --------- -------- ------- -------- -------
From capital
transactions:
Net premiums........... 177,998 47 456,163 602,839 444,542 181,609 169,666 160,164
Loan interest.......... -- -- (180) (26) 11 (211) (7) (114)
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- (14,248) (10,246) -- (3,491) -- --
Surrenders............. (97) -- (57,727) (991) (12,518) (17,866) (11,073) (1,860)
Loans.................. -- -- (24,862) (3,457) (1,076) 5,378 (2,686) (479)
Cost of insurance and
administrative expense
(note 4).............. (22,266) (15) (201,914) (147,027) (107,292) (64,050) (57,881) (54,942)
Transfer gain (loss)
and transfer fees..... 174 1 1,017 (9,573) (9,848) 329 (7,620) 14
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- -- -- --
Interfund transfers.... 35,345 -- 34,649 49,174 59,059 (8,050) (57,345) 45,257
-------- --- --------- --------- -------- ------- -------- -------
Increase (decrease) in
net assets from
capital
transactions......... 191,154 33 192,898 480,693 372,878 93,648 33,054 148,040
-------- --- --------- --------- -------- ------- -------- -------
Increase (decrease) in
net assets............. 191,937 34 68,179 444,231 426,645 24,911 (58,095) 163,123
Net assets at beginning
of year................ 34 -- 1,280,280 836,049 409,404 391,354 449,449 286,326
-------- --- --------- --------- -------- ------- -------- -------
Net assets at end of
period................. $191,971 34 1,348,459 1,280,280 836,049 416,265 391,354 449,449
======== === ========= ========= ======== ======= ======== =======
F-43
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Variable Insurance Products Fund III --
Service Class 2
----------------------------------------------
Growth & Income
Mid Cap Portfolio Portfolio
------------------------------ ---------------
Period from
Period from January 18,
Year ended December 26, 2000 2001 to
December 31, to December 31, December 31,
2001 2000 2001
------------ ----------------- ---------------
Increase (decrease) in net
assets
From operations:
Net investment income
(expense).................... $ (277) -- (388)
Net realized gain (loss)...... (197) 15 (459)
Unrealized appreciation
(depreciation) on
investments.................. 5,221 (13) (800)
Capital gain distributions.... -- -- 3
------- --- -------
Increase (decrease) in net
assets from operations... 4,747 2 (1,644)
------- --- -------
From capital transactions:
Net premiums.................. 93,186 47 104,157
Loan interest................. -- -- --
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits.............. -- -- --
Surrenders.................. -- -- --
Loans....................... -- -- --
Cost of insurance and
administrative expense
(note 4)................... (10,455) (15) (11,954)
Transfer gain (loss) and
transfer fees.............. (1,637) -- (763)
Transfers (to) from the
Guarantee Account.......... -- -- --
Interfund transfers........... 32,364 -- 27,502
------- --- -------
Increase (decrease) in net
assets from capital
transactions............. 113,458 32 118,942
------- --- -------
Increase (decrease) in net
assets......................... 118,205 34 117,298
Net assets at beginning of
year........................... 34 -- --
------- --- -------
Net assets at end of period..... 118,239 34 117,298
======= === =======
F-44
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Federated Insurance Series
-----------------------------------------------------
High Income Bond Fund
American Leaders Fund II II
-------------------------- -------------------------
Year ended December 31, Year ended December 31,
-------------------------- -------------------------
2001 2000 1999 2001 2000 1999
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 4,799 1,206 (64) 40,527 28,392 13,735
Net realized gain
(loss)................ (8,386) (5,539) 8,624 (19,309) (12,093) (2,384)
Unrealized appreciation
(depreciation) on
investments........... (44,740) 1,613 (17,252) (24,033) (51,127) (10,198)
Capital gain
distributions......... 4,548 16,824 32,275 -- -- 1,345
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
operations........... (43,779) 14,104 23,583 (2,815) (34,828) 2,498
-------- ------- ------- ------- ------- -------
From capital
transactions:
Net premiums........... 204,398 207,940 253,145 121,671 138,080 127,454
Loan interest.......... (180) (2) 113 2 7 (48)
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- (4,163) -- -- -- --
Surrenders............. (64,962) (19,904) (10,302) (15,555) (859) (4,636)
Loans.................. (29,813) 21 37 (10,255) (1,395) (105)
Cost of insurance and
administrative expense
(note 4).............. (76,221) (64,533) (60,062) (49,338) (36,046) (26,844)
Transfer gain (loss)
and transfer fees..... 2,093 (172) (4,143) 128 (299) 660
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 108,765 (27,455) 79,528 79,362 (37,371) 58,046
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets from
capital
transactions......... 144,080 91,732 258,316 126,015 62,117 154,527
-------- ------- ------- ------- ------- -------
Increase (decrease) in
net assets............. 100,301 105,836 281,899 123,200 27,289 157,025
Net assets at beginning
of year................ 705,749 599,913 318,014 345,023 317,734 160,709
-------- ------- ------- ------- ------- -------
Net assets at end of
period................. $806,050 705,749 599,913 468,223 345,023 317,734
======== ======= ======= ======= ======= =======
F-45
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Federated Insurance
Series --
Federated Insurance Series (continued) Service Shares
---------------------------------------------- -------------------
International Small High Income Bond
Utility Fund II Company Fund II Fund II
------------------------- ------------------- -------------------
Period from Period from
Year ended December 31, February 6, 2001 March 27, 2001
------------------------- to December 31, to December 31,
2001 2000 1999 2001 2001
------- ------- ------- ------------------- -------------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $11,710 8,625 4,216 (34) (118)
Net realized gain
(loss)............... (12,211) 973 3,277 (40) (78)
Unrealized
appreciation
(depreciation) on
investments.......... (70,258) (57,701) (16,132) 404 (419)
Capital gain
distributions........ -- 7,615 12,525 -- --
------- ------- ------- ------ ------
Increase
(decrease) in net
assets from
operations....... (70,759) (40,488) 3,886 330 (615)
------- ------- ------- ------ ------
From capital
transactions:
Net premiums.......... 122,890 73,940 89,180 21,728 17,541
Loan interest......... (17) (25) (68) -- --
Transfers (to) from
the general account
of GE Life and
Annuity:
Death benefits...... -- -- -- -- --
Surrenders.......... (1,751) (5,790) (2,117) -- --
Loans............... (21,789) (1,351) (11,083) -- --
Cost of insurance
and administrative
expense (note 4)... (39,623) (26,993) (27,107) (556) (3,143)
Transfer gain (loss)
and transfer fees.. (2,527) 27 (1,353) 157 (357)
Transfers (to) from
the Guarantee
Account.............. -- -- -- -- --
Interfund transfers... 37,805 48,195 80,135 116 21,382
------- ------- ------- ------ ------
Increase
(decrease) in net
assets from
capital
transactions..... 94,988 88,003 127,587 21,445 35,423
------- ------- ------- ------ ------
Increase (decrease) in
net assets............. 24,229 47,515 131,473 21,775 34,808
Net assets at beginning
of year................ 426,906 379,391 247,918 -- --
------- ------- ------- ------ ------
Net assets at end of
period................. 451,135 426,906 379,391 21,775 34,808
======= ======= ======= ====== ======
F-46
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Alger American Fund
-------------------------------------------------------------------
Small Capitalization Portfolio LargeCap Growth Portfolio
--------------------------------- --------------------------------
Year ended December 31, Year ended December 31,
--------------------------------- --------------------------------
2001 2000 1999 2001 2000 1999
---------- ---------- --------- --------- ---------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (9,886) (14,966) (10,141) (22,192) (28,149) (15,070)
Net realized gain
(loss)................ (525,268) 2,186 (6,385) (640,911) 33,463 390,753
Unrealized appreciation
(depreciation) on
investments........... (54,181) (1,371,045) 405,230 (576,288) (1,302,238) 99,476
Capital gain
distributions......... -- 735,999 183,620 552,329 513,858 224,152
---------- ---------- --------- --------- ---------- ---------
Increase (decrease) in
net assets from
operations........... (589,335) (647,826) 572,324 (687,062) (783,066) 699,311
---------- ---------- --------- --------- ---------- ---------
From capital
transactions:
Net premiums........... 482,385 611,961 370,003 928,250 1,913,171 885,773
Loan interest.......... (124) (1,270) 92 (1,317) (389) 49
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- (2,553) (2,978) --
Surrenders............. (47,241) (110,032) (45,840) (114,291) (56,419) (29,769)
Loans.................. (18,127) (35,753) (19,152) (40,844) (17,073) (10,722)
Cost of insurance and
administrative expense
(note 4).............. (168,872) (167,382) (124,312) (455,410) (349,953) (238,219)
Transfer gain (loss)
and transfer fees..... 4,836 4,196 1,435 (10,598) (6,464) (2,742)
Transfers (to) from the
Guarantee Account..... -- -- (4) -- -- (4)
Interfund transfers.... 82,119 (253,290) 400,632 500,590 403,555 96,272
---------- ---------- --------- --------- ---------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 334,976 48,430 582,854 803,827 1,883,450 700,638
---------- ---------- --------- --------- ---------- ---------
Increase (decrease) in
net assets............. (254,359) (599,396) 1,155,178 116,765 1,100,384 1,399,949
Net assets at beginning
of year................ 1,725,177 2,324,573 1,169,395 4,326,839 3,226,455 1,826,506
---------- ---------- --------- --------- ---------- ---------
Net assets at end of
period................. $1,470,818 1,725,177 2,324,573 4,443,604 4,326,839 3,226,455
========== ========== ========= ========= ========== =========
F-47
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,
---------------------------- ----------------------------
2001 2000 1999 2001 2000 1999
--------- -------- ------- -------- --------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (5,924) (3,470) (815) (5,539) (6,440) (979)
Net realized gain
(loss)................ (126,586) 26,713 5,563 (317,919) (39,454) 34,202
Unrealized appreciation
(depreciation) on
investments........... (194,777) (140,754) 71,826 (176,939) (379,884) 81,393
Capital gain
distributions......... -- 16,716 -- -- 24,260 --
--------- -------- ------- -------- --------- -------
Increase (decrease) in
net assets from
operations........... (327,287) (100,795) 76,574 (500,397) (401,518) 114,616
--------- -------- ------- -------- --------- -------
From capital
transactions:
Net premiums........... 324,499 251,415 50,946 234,038 408,658 57,283
Loan interest.......... (504) (318) (132) (163) (19) --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- (16,064) -- --
Surrenders............. (13,885) (8,368) (2,203) (3,643) (12,942) (6,046)
Loans.................. (24,922) (2,622) (336) (13,168) 21 --
Cost of insurance and
administrative expense
(note 4).............. (126,880) (55,642) (20,936) (87,140) (59,614) (13,614)
Transfer gain (loss)
and transfer fees..... (7,189) (639) (882) 789 20,256 (29)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 182,683 520,503 14,590 166,207 724,334 60,751
--------- -------- ------- -------- --------- -------
Increase (decrease) in
net assets from
capital
transactions......... 333,802 704,329 41,047 280,856 1,080,694 98,345
--------- -------- ------- -------- --------- -------
Increase (decrease) in
net assets............. 6,515 603,534 117,621 (219,541) 679,176 212,961
Net assets at beginning
of year................ 799,510 195,976 78,355 961,015 281,839 68,878
--------- -------- ------- -------- --------- -------
Net assets at end of
period................. $ 806,025 799,510 195,976 741,474 961,015 281,839
========= ======== ======= ======== ========= =======
F-48
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series
--------------------------------------------------------------------------------------------------------
Aggressive Growth Portfolio Growth Portfolio Worldwide Growth Portfolio
---------------------------------- --------------------------------- ---------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------------- --------------------------------- ---------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Increase
(decrease) in
net assets
From operations:
Net investment
income
(expense)...... $ (39,597) (66,159) 33,562 (46,835) (47,980) (20,029) (42,299) (59,638) (34,278)
Net realized
gain (loss).... (2,163,009) 1,590,590 861,331 (504,796) 926,526 379,537 (336,670) 863,289 404,104
Unrealized
appreciation
(depreciation)
on
investments.... (945,349) (6,150,760) 3,141,869 (1,497,702) (2,851,716) 1,328,882 (2,197,594) (3,765,784) 3,266,899
Capital gain
distributions.. -- 1,036,376 111,141 16,402 582,454 21,779 21,135 873,121 --
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Increase
(decrease) in
net assets from
operations...... (3,147,955) (3,589,953) 4,147,903 (2,032,931) (1,390,716) 1,710,169 (2,555,428) (2,089,012) 3,636,725
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
From capital
transactions:
Net premiums.... 1,615,157 2,593,333 1,082,138 1,545,485 2,720,659 1,295,975 1,902,711 3,876,978 1,535,217
Loan interest... (4,092) (4,263) (1,654) (2,082) (2,643) (37) (2,953) (3,126) (1,750)
Transfers (to)
from the
general account
of GE Life and
Annuity
Death benefits.. (3,010) (25,424) (6,162) (14,408) -- (5,481) (11,145) (28,708) (24,630)
Surrenders...... (243,562) (376,000) (129,518) (245,713) (246,021) (115,738) (352,727) (543,262) (104,073)
Loans........... (106,022) (162,782) (154,373) (85,943) (103,157) (48,269) (107,938) (111,625) (77,866)
Cost of
insurance and
administrative
expense (note
4)............. (641,796) (705,131) (385,151) (649,561) (577,235) (383,988) (878,111) (814,036) (598,888)
Transfer gain
(loss) and
transfer fees.. 34,140 6,165 24,215 (1,966) 4,808 8,881 7,048 (10,924) 4,454
Transfers (to)
from the
Guarantee
Account........ -- 76 -- -- 136 -- -- 43 --
Interfund
transfers...... (384,463) 1,321,543 1,428,558 (160,612) 329,279 1,134,259 (227,079) 845,226 163,874
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Increase
(decrease) in
net assets
from capital
transactions.. 266,352 2,647,517 1,858,053 385,200 2,125,826 1,885,602 329,806 3,210,566 896,338
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Increase
(decrease) in
net assets...... (2,881,603) (942,436) 6,005,956 (1,647,731) 735,110 3,595,771 (2,225,622) 1,121,554 4,533,063
Net assets at
beginning of
year............ 7,595,526 8,537,962 2,532,006 7,688,954 6,953,844 3,358,073 10,754,842 9,633,288 5,100,225
----------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
Net assets at end
of period....... $ 4,713,923 7,595,526 8,537,962 6,041,223 7,688,954 6,953,844 8,529,220 10,754,842 9,633,288
=========== ========== ========= ========== ========== ========= ========== ========== =========
F-49
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series (continued)
--------------------------------------------------------------------------------------------
Flexible Income International Growth
Balanced Portfolio Portfolio Portfolio
-------------------------------- ------------------------- -------------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
-------------------------------- ------------------------- -------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
---------- --------- --------- ------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ 35,248 15,911 31,242 11,581 3,545 11,342 (8,438) (11,591) (5,997)
Net realized gain
(loss)................ (31,657) 99,542 79,219 3,126 (3,171) (1,786) (248,523) 242,420 54,154
Unrealized appreciation
(depreciation) on
investments........... (345,870) (526,341) 321,542 518 6,251 (8,109) (518,693) (990,444) 923,354
Capital gain
distributions......... 67,312 288,437 -- 14,150 7,790 566 18,619 133,743 --
---------- --------- --------- ------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets from
operations........... (274,967) (122,451) 432,003 29,375 14,415 2,013 (757,035) (625,872) 971,511
---------- --------- --------- ------- ------- ------- --------- --------- ---------
From capital
transactions:
Net premiums........... 1,373,979 2,146,366 542,890 172,767 93,871 47,950 803,114 815,490 299,992
Loan interest.......... (3,730) (159) (227) (134) (49) -- (2,914) (798) (36)
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... (743) (834) -- -- (9,904) -- (2,191) (4,447) --
Surrenders............. (67,646) (75,731) (27,562) (47,768) (339) (4,556) (28,009) (40,049) (17,243)
Loans.................. (114,790) (6,129) (6,685) (17,845) (3,411) -- (66,806) (14,621) (24,736)
Cost of insurance and
administrative expense
(note 4).............. (461,382) (263,344) (186,241) (43,837) (25,627) (21,676) (294,056) (229,236) (113,927)
Transfer gain (loss)
and transfer fees..... (6,939) (1,864) (275) 339 (141) 134 (5,906) (27) (177)
Transfers (to) from the
Guarantee Account..... -- 167 -- -- -- -- -- -- --
Interfund transfers.... 478,593 393,362 274,258 90,637 43,210 79,252 231,711 613,105 354,820
---------- --------- --------- ------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets from
capital
transactions......... 1,197,342 2,191,834 596,158 154,159 97,610 101,104 634,943 1,139,417 498,693
---------- --------- --------- ------- ------- ------- --------- --------- ---------
Increase (decrease) in
net assets............. 922,375 2,069,383 1,028,161 183,534 112,025 103,117 (122,092) 513,545 1,470,204
Net assets at beginning
of year................ 4,416,728 2,347,345 1,319,184 314,386 202,361 99,244 2,820,735 2,307,190 836,986
---------- --------- --------- ------- ------- ------- --------- --------- ---------
Net assets at end of
period................. $5,339,103 4,416,728 2,347,345 497,920 314,386 202,361 2,698,643 2,820,735 2,307,190
========== ========= ========= ======= ======= ======= ========= ========= =========
F-50
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series (continued)
---------------------------------
Capital Appreciation Portfolio
---------------------------------
Year ended December 31,
---------------------------------
2001 2000 1999
---------- ---------- ---------
Increase (decrease) in net assets
From operations:
Net investment income (expense)........... $ (8,596) (3,607) (7,224)
Net realized gain (loss).................. (389,507) 187,808 82,791
Unrealized appreciation (depreciation) on
investments.............................. (485,835) (1,022,359) 513,292
Capital gain distributions................ 25,976 23,952 5,853
---------- ---------- ---------
Increase (decrease) in net assets from
operations........................... (857,962) (814,206) 594,712
---------- ---------- ---------
From capital transactions:
Net premiums.............................. 968,237 2,024,377 717,055
Loan interest............................. (1,779) (778) 196
Transfers (to) from the general account of
GE Life and Annuity:
Death benefits.......................... (15,260) (4,334) --
Surrenders.............................. (101,282) (48,345) (7,847)
Loans................................... (24,473) (3,780) (4,636)
Cost of insurance and administrative
expense (note 4)....................... (397,429) (320,394) (144,381)
Transfer gain (loss) and transfer fees.. 7,853 15,603 (9,482)
Transfers (to) from the Guarantee
Account................................ -- 2 --
Interfund transfers....................... (210,102) 544,469 837,693
---------- ---------- ---------
Increase (decrease) in net assets from
capital transactions................. 225,765 2,206,820 1,388,598
---------- ---------- ---------
Increase (decrease) in net assets........... (632,197) 1,392,614 1,983,310
Net assets at beginning of year............. 3,608,148 2,215,534 232,224
---------- ---------- ---------
Net assets at end of period................. $2,975,951 3,608,148 2,215,534
========== ========== =========
F-51
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series -- Service Shares
----------------------------------------------------------------------------------------------------
Capital
Aggressive Appreciation
Global Life Sciences Portfolio Global Technology Portfolio Growth Portfolio Portfolio
----------------------------------- --------------------------- ---------------- ----------------
Period from Period from Period from Period from
Year ended May 29, 2000 to Year ended May 4, 2000 to January 24, 2001 January 24, 2001
December 31, December 31, December 31, December 31, to December 31, to December 31,
2001 2000 2001 2000 2001 2001
--------------- ---------------- ------------ -------------- ---------------- ----------------
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... $ (1,372) (329) (868) 430 (421) (97)
Net realized gain
(loss).......... (11,785) 268 (35,371) (3,121) (3,531) (1,703)
Unrealized
appreciation
(depreciation)
on investments.. (21,957) 13,723 (26,150) (58,896) (15,833) (5,044)
Capital gain
distributions... -- -- 886 -- -- 268
--------------- -------------- ------- ------- ------- -------
Increase
(decrease) in
net assets from
operations..... (35,114) 13,662 (61,503) (61,587) (19,785) (6,576)
--------------- -------------- ------- ------- ------- -------
From capital
transactions:
Net premiums..... 108,333 6,124 88,650 31,857 124,909 122,926
Loan interest.... (12) -- (2) -- -- --
Transfers (to)
from the general
account of
GE Life and
Annuity:
Death benefits... -- -- -- -- -- --
Surrenders....... (78,530) -- (2,622) -- (134) --
Loans............ (9,201) -- 4,544 -- -- --
Cost of insurance
and
administrative
expense (note
4).............. (16,873) (1,850) (15,188) (2,865) (18,502) (12,027)
Transfer gain
(loss) and
transfer fees... 799 50 (626) (1,221) (100) (1,071)
Transfers (to)
from the
Guarantee
Account......... -- -- -- -- -- --
Interfund
transfers....... 30,827 179,502 (4,188) 169,898 30,315 19,510
--------------- -------------- ------- ------- ------- -------
Increase
(decrease) in
net assets from
capital
transactions... 35,343 183,826 70,568 197,669 136,488 129,338
--------------- -------------- ------- ------- ------- -------
Increase
(decrease) in net
assets........... 229 197,488 9,065 136,082 116,703 122,762
Net assets at
beginning of
year............. 197,488 -- 136,082 -- -- --
--------------- -------------- ------- ------- ------- -------
Net assets at end
of period........ $ 197,717 197,488 145,147 136,082 116,703 122,762
=============== ============== ======= ======= ======= =======
Worldwide Growth
Portfolio
----------------
Period from
January 24, 2001
to December 31,
2001
----------------
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... (465)
Net realized gain
(loss).......... (2,767)
Unrealized
appreciation
(depreciation)
on investments.. (9,532)
Capital gain
distributions... 202
----------------
Increase
(decrease) in
net assets from
operations..... (12,562)
----------------
From capital
transactions:
Net premiums..... 118,480
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
4).............. (18,421)
Transfer gain
(loss) and
transfer fees... (1,256)
Transfers (to)
from the
Guarantee
Account......... --
Interfund
transfers....... 67,045
----------------
Increase
(decrease) in
net assets from
capital
transactions... 165,803
----------------
Increase
(decrease) in net
assets........... 153,241
Net assets at
beginning of
year............. --
----------------
Net assets at end
of period........ 153,241
================
F-52
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Janus Aspen Series -- Service Shares (Continued)
-------------------------------------------------
International Balanced
Growth Portfolio Portfolio Growth Portfolio
---------------- --------------- ----------------
Period from Period from Period from
February 8, 2001 January 8, 2001 February 9, 2001
to December 31, to December 31, to December 31,
2001 2001 2001
---------------- --------------- ----------------
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................ $ (317) 2,979 (471)
Net realized gain (loss).. (1,167) (1,637) (2,304)
Unrealized appreciation
(depreciation) on
investments.............. (8,121) (8,116) (14,119)
Capital gain
distributions............ 464 2,481 169
-------- ------- -------
Increase (decrease) in
net assets from
operations........... (9,141) (4,293) (16,725)
-------- ------- -------
From capital transactions:
Net premiums.............. 46,389 461,037 88,364
Loan interest............. -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits.......... -- -- --
Surrenders.............. -- (2,029) --
Loans................... -- -- --
Cost of insurance and
administrative expense
(note 4)............... (8,842) (39,915) (15,092)
Transfer gain (loss) and
transfer fees.......... 655 (1,868) (750)
Transfers (to) from the
Guarantee Account...... -- -- --
Interfund transfers....... 84,668 149,570 74,307
-------- ------- -------
Increase (decrease) in
net assets from
capital
transactions......... 122,870 566,795 146,829
-------- ------- -------
Increase (decrease) in net
assets..................... 113,729 562,502 130,104
Net assets at beginning of
year....................... -- -- --
-------- ------- -------
Net assets at end of
period..................... $113,729 562,502 130,104
======== ======= =======
F-53
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Goldman Sachs Variable Insurance Trust
------------------------------------------------------
Growth and Income Fund Mid Cap Value Fund
------------------------- ---------------------------
Year ended December 31, Year ended December 31,
------------------------- ---------------------------
2001 2000 1999 2001 2000 1999
-------- ------- ------ --------- ------- -------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (256) (119) 127 4,810 1,552 2,614
Net realized gain
(loss)............... (3,274) 480 585 36,070 (24,105) 87
Unrealized
appreciation
(depreciation) on
investments.......... (7,580) (5,835) (222) 3,206 73,668 (2,647)
Capital gain
distributions........ -- -- -- 58,096 12,030 --
-------- ------- ------ --------- ------- -------
Increase
(decrease) in net
assets from
operations....... (11,110) (5,474) 490 102,182 63,145 54
-------- ------- ------ --------- ------- -------
From capital
transactions:
Net premiums.......... 28,803 90,257 14,501 253,541 102,494 43,005
Loan interest......... (18) (10) -- (1,001) (19) --
Transfers (to) from
the general account
of GE Life and
Annuity:
Death benefits...... -- -- -- -- -- --
Surrenders.......... (752) -- (171) (1,594) (2,292) --
Loans............... 63 (1,210) -- (10,992) (1,443) --
Cost of insurance
and administrative
expense (note 4)... (14,523) (7,347) (3,588) (74,000) (15,516) (5,287)
Transfer gain (loss)
and transfer fees.. 33 1,036 (7) (1,666) (501) 14
Transfers (to) from
the Guarantee
Account............ -- -- -- -- -- --
Interfund transfers... (797) 17,275 (350) 509,256 (92,118) 330,218
-------- ------- ------ --------- ------- -------
Increase
(decrease) in net
assets from
capital
transactions..... 12,809 100,001 10,385 673,544 (9,395) 367,950
-------- ------- ------ --------- ------- -------
Increase (decrease) in
net assets............. 1,699 94,527 10,875 775,726 53,750 368,004
Net assets at beginning
of year................ 115,835 21,308 10,433 514,962 461,212 93,208
-------- ------- ------ --------- ------- -------
Net assets at end of
period................. $117,534 115,835 21,308 1,290,688 514,962 461,212
======== ======= ====== ========= ======= =======
F-54
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Salomon Brothers Variable Series Funds Inc.
-------------------------------------------------
Strategic Bond Fund Investors Fund
------------------------ -----------------------
Year ended December Year ended December
31, 31,
------------------------ -----------------------
2001 2000 1999 2001 2000 1999
-------- ------ ------ ------- ------- -----
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................ $ 10,206 5,371 2,610 897 1,706 24
Net realized gain (loss).. 1,040 490 3 (6,871) (538) 22
Unrealized appreciation
(depreciation) on
investments.............. (656) (671) (1,908) (46,707) (3,818) 232
Capital gain
distributions............ -- -- -- 7,551 10,551 --
-------- ------ ------ ------- ------- -----
Increase (decrease) in
net assets from
operations........... 10,590 5,190 705 (45,130) 7,901 278
-------- ------ ------ ------- ------- -----
From capital transactions:
Net premiums.............. 115,354 13,416 56,140 83,234 34,882 7,246
Loan interest............. (429) -- -- (66) -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits.......... -- -- -- -- -- --
Surrenders.............. (51) (2,816) -- (523) -- --
Loans................... 2,000 -- -- 606 -- --
Cost of insurance and
administrative expense
(note 4)............... (20,135) (5,654) (2,890) (41,946) (4,593) (897)
Transfer gain (loss) and
transfer fees.......... 281 (86) (156) (739) 2,261 36
Transfers (to) from the
Guarantee Account...... -- -- -- -- -- --
Interfund transfers....... 93,331 33,334 1,755 412,197 324,070 1,695
-------- ------ ------ ------- ------- -----
Increase (decrease) in
net assets from
capital
transactions......... 190,351 38,194 54,849 452,763 356,620 8,080
-------- ------ ------ ------- ------- -----
Increase (decrease) in net
assets..................... 200,941 43,384 55,554 407,633 364,521 8,358
Net assets at beginning of
year....................... 98,938 55,554 -- 374,409 9,888 1,530
-------- ------ ------ ------- ------- -----
Net assets at end of
period..................... $299,879 98,938 55,554 782,042 374,409 9,888
======== ====== ====== ======= ======= =====
F-55
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Salomon Brothers
Variable Series
Funds Inc.
---------------------
Total Return Fund
---------------------
Year ended December
31,
---------------------
2001 2000 1999
------- ----- -----
Increase (decrease) in net assets
From operations:
Net investment income (expense)....................... $ 1,035 183 23
Net realized gain (loss).............................. (93) (785) (1)
Unrealized appreciation (depreciation) on
investments.......................................... (356) (349) (37)
Capital gain distributions............................ -- -- --
------- ----- -----
Increase (decrease) in net assets from operations... 586 (951) (15)
------- ----- -----
From capital transactions:
Net premiums.......................................... 41,452 6,591 344
Loan interest......................................... -- -- --
Transfers (to) from the general account of GE Life and
Annuity:
Death benefits....................................... -- -- --
Surrenders........................................... -- -- --
Loans................................................ -- -- --
Cost of insurance and administrative expense (note
4).................................................. (5,469) (967) (216)
Transfer gain (loss) and transfer fees............... (55) 1,183 1
Transfers (to) from the Guarantee Account............ -- -- --
Interfund transfers................................... 18,047 205 1,008
------- ----- -----
Increase (decrease) in net assets from capital
transactions....................................... 53,975 7,012 1,137
------- ----- -----
Increase (decrease) in net assets....................... 54,561 6,061 1,122
Net assets at beginning of year......................... 7,183 1,122 --
------- ----- -----
Net assets at end of period............................. $61,744 7,183 1,122
======= ===== =====
F-56
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Dreyfus
-------------------------------------------------
Dreyfus Investment
Portfolios --
The Dreyfus Socially Emerging Markets
Responsible Growth Fund, Inc. Portfolio
------------------------------ ------------------
Period from Period from
Year ended December 26, 2000 April 6, 2001
December 31, to December 31, to December 31,
2001 2000 2001
------------ ----------------- ------------------
Increase (decrease) in net
assets
From operations:
Net investment income
(expense)................. $ (82) -- 19
Net realized gain (loss)... (728) 15 (18)
Unrealized appreciation
(depreciation) on
investments............... (1,305) (14) 383
Capital gain
distributions............. -- -- --
------- --- ------
Increase (decrease) in
net assets from
operations.............. (2,115) 1 384
------- --- ------
From capital transactions:
Net premiums............... 31,492 47 8,227
Loan interest.............. -- -- --
Transfers (to) from the
general account of GE Life
and Annuity:
Death benefits........... -- -- --
Surrenders............... (1,444) -- --
Loans.................... -- -- --
Cost of insurance and
administrative expense
(note 4)................ (5,039) (15) (1,045)
Transfer gain (loss) and
transfer fees........... 1 1 (51)
Transfers (to) from the
Guarantee Account....... -- -- --
Interfund transfers........ 3,691 -- 517
------- --- ------
Increase (decrease) in
net assets from capital
transactions............ 28,701 33 7,648
------- --- ------
Increase (decrease) in net
assets...................... 26,586 34 8,032
Net assets at beginning of
year........................ 34 -- --
------- --- ------
Net assets at end of period.. $26,620 34 8,032
======= === ======
F-57
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
MFS Variable Insurance Trust
--------------------------------------------------------------------
MFS Investors MFS
Growth Stock Investors Trust MFS Utility
MFS New Discovery Series Series Series Series
------------------------- ------------- --------------- ------------
Period from Period from Period from Period from
December 26, January 23, February 14, March 14,
Year ended 2000 to 2001 to 2001 to 2001 to
December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2001 2001
------------ ------------ ------------- --------------- ------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (148) -- (133) (184) 1,466
Net realized gain
(loss)............... (261) 15 (319) (331) (4,518)
Unrealized
appreciation
(depreciation) on
investments.......... 5,912 (13) 3,183 (1,568) (30,109)
Capital gain
distributions........ 23 -- 34 190 5,580
------- --- ------ ------ -------
Increase
(decrease) in net
assets from
operations....... 5,526 2 2,765 (1,893) (27,581)
------- --- ------ ------ -------
From capital
transactions:
Net premiums.......... 42,247 47 62,346 57,502 151,260
Loan interest......... -- -- -- -- --
Transfers (to) from
the general account
of GE Life and
Annuity:
Death benefits...... -- -- -- -- --
Surrenders.......... -- -- -- -- --
Loans............... -- -- -- -- (968)
Cost of insurance
and administrative
expense (note 4)... (5,541) (15) (5,558) (4,881) (23,623)
Transfer gain (loss)
and transfer fees.. (28) 2 (263) 591 448
Transfers (to) from
the Guarantee
Account............ -- -- -- -- --
Interfund transfers... 24,739 -- 14,701 21,467 89,620
------- --- ------ ------ -------
Increase
(decrease) in net
assets from
capital
transactions..... 61,417 34 71,226 74,679 216,737
------- --- ------ ------ -------
Increase (decrease) in
net assets............. 66,943 36 73,991 72,786 189,156
Net assets at beginning
of year................ 36 -- -- -- --
------- --- ------ ------ -------
Net assets at end of
period................. $66,979 36 73,991 72,786 189,156
======= === ====== ====== =======
F-58
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
Rydex Variable Trust Alliance Variable Products Series Fund, Inc.
------------------------- ---------------------------------------------------
Growth and
Income Quasar
OTC Fund Premier Growth Portfolio Portfolio Portfolio
------------------------- ------------------------- ------------ ------------
Period from Period from Period from Period from
December 26, December 26, February 6, February 8,
Year ended 2000 to Year ended 2000 to 2001 to 2001 to
December 31, December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2000 2001 2001
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............. $ (77) -- (478) -- (403) (87)
Net realized gain
(loss)................ (710) 10 (1,431) 15 (1,604) (723)
Unrealized appreciation
(depreciation) on
investments........... (657) (10) (8,996) (15) (7,562) (488)
Capital gain
distributions......... -- -- 4,460 -- 6,702 391
------- --- ------- --- ------- ------
Increase (decrease) in
net assets from
operations........... (1,444) -- (6,445) -- (2,867) (907)
------- --- ------- --- ------- ------
From capital
transactions:
Net premiums........... 18,451 31 76,621 47 298,144 18,293
Loan interest.......... -- -- -- -- -- --
Transfers (to) from the
general account of GE
Life and Annuity:
Death benefits......... -- -- -- -- -- --
Surrenders............. -- -- (2,095) -- -- --
Loans.................. (966) -- (2,271) -- (85) --
Cost of insurance and
administrative expense
(note 4).............. (3,557) (10) (9,569) (15) (31,212) (3,938)
Transfer gain (loss)
and transfer fees..... 484 2 64 1 (458) (8)
Transfers (to) from the
Guarantee Account..... -- -- -- -- -- --
Interfund transfers.... 7,976 -- 58,865 -- 168,984 10,429
------- --- ------- --- ------- ------
Increase (decrease) in
net assets from
capital
transactions......... 22,388 23 121,615 33 435,373 24,776
------- --- ------- --- ------- ------
Increase (decrease) in
net assets............. 20,944 23 115,170 33 432,506 23,869
Net assets at beginning
of year................ 23 -- 33 -- -- --
------- --- ------- --- ------- ------
Net assets at end of
period................. $20,967 23 115,203 33 432,506 23,869
======= === ======= === ======= ======
F-59
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
AIM Variable Insurance Funds, Inc. PIMCO Variable Insurance Trust
--------------------------------------------------- ------------------------------------------------------
Long-Term High Yield Total Return
AIM V.I. Capital AIM V.I. AIM V.I. Foreign Bond U.S. Government Bond Bond
Appreciation Fund Growth Fund Value Fund Portfolio Bond Portfolio Portfolio Portfolio
------------------------- ------------ ------------ ------------ --------------- ------------ ------------
Period from Period from Period from Period from Period from Period from
December 26, February 9, February 19, February 9, February 8, February 6,
Year ended 2000 to 2001 to 2001 to Year ended 2001 to 2001 to 2001 to
December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2001 2001 2001 2001 2001
------------ ------------ ------------ ------------ ------------ --------------- ------------ ------------
Increase
(decrease) in
net assets
From operations:
Net investment
income
(expense)...... $ (308) -- (135) (303) 94 1,413 1,505 1,389
Net realized
gain (loss).... (1,557) 15 (1,284) (1,319) 16 34 (200) 76
Unrealized
appreciation
(depreciation)
on
investments.... (8,874) (14) (6,274) (5,561) 35 (4,415) (875) (1,726)
Capital gain
distributions.. 7,510 -- -- 2,806 -- 3,287 -- 2,082
-------- --- ------- ------- ------ ------ ------ -------
Increase
(decrease) in
net assets
from
operations.... (3,229) 1 (7,693) (4,377) 145 319 430 1,821
-------- --- ------- ------- ------ ------ ------ -------
From capital
transactions:
Net premiums.... 90,280 47 67,056 136,367 6,661 56,723 43,002 60,277
Loan interest... -- -- -- -- -- -- -- --
Transfers (to)
from the
general account
of GE Life and
Annuity:
Death benefits.. -- -- -- -- -- -- -- --
Surrenders...... -- -- -- (1,539) -- -- -- --
Loans........... -- -- 150 -- (84) -- (56) --
Cost of
insurance and
administrative
expense (note
4)............. (13,980) (15) (15,892) (20,116) (1,326) (8,853) (6,271) (7,086)
Transfer gain
(loss) and
transfer fees.. (322) 1 201 (81) 10 (1,195) (135) (46)
Transfers (to)
from the
Guarantee
Account........ -- -- -- -- -- -- -- --
Interfund
transfers...... 24,915 -- 39,292 42,628 2,587 51,636 10,856 58,827
-------- --- ------- ------- ------ ------ ------ -------
Increase
(decrease) in
net assets
from capital
transactions.. 100,893 33 90,807 157,259 7,848 98,311 47,396 111,972
-------- --- ------- ------- ------ ------ ------ -------
Increase
(decrease) in
net assets...... 97,664 34 83,114 152,882 7,993 98,630 47,826 113,793
Net assets at
beginning of
year............ 34 -- -- -- -- -- -- --
-------- --- ------- ------- ------ ------ ------ -------
Net assets at end
of period....... $ 97,698 34 83,114 152,882 7,993 98,630 47,826 113,793
======== === ======= ======= ====== ====== ====== =======
See accompanying notes to financial statements.
F-60
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements
December 31, 2001
(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
and 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 and Annuity. GE Life and Annuity is
a stock life insurance company -- operating under a charter granted by the
Commonwealth of Virginia on March 21, 1871. A majority of GE Life and
Annuity's capital stock 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, directly or indirectly, a wholly-owned
subsidiary of General Electric Company (GE), a New York corporation.
During 2001, MFS Variable Insurance Trust changed the name of its MFS Growth
Series to MFS Investors Growth Stock Series and its MFS Growth With Income
Series to MFS Investors Trust Series.
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 portfolio 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.
In May 2000, GE Investments Funds, Inc. changed the name of its Value Equity
Fund to the Mid-Cap Value Equity Fund.
F-61
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
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.
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.
(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.
(c) 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. The account will not be taxed
as a regulated investment company under subchapter M of the code. Under
existing federal income tax law, no taxes are payable on the investment income
or on the capital gains of the Account.
(d) 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.
F-62
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
(3) Purchases and Sales of Investments
The aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the year or lesser period ended December 31, 2001 were:
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ----------- -----------
GE Investment Funds, Inc.:
S&P 500 Index Fund.................................. $ 5,427,654 $ 2,547,789
Money Market Fund................................... 18,531,789 15,979,462
Total Return Fund................................... 633,152 2,984,209
International Equity Fund........................... 222,361 66,460
Real Estate Securities Fund......................... 449,311 230,952
Global Income Fund.................................. 55,592 17,515
Mid-Cap Value Equity Fund........................... 1,083,042 423,767
Income Fund......................................... 610,060 395,792
U.S. Equity Fund.................................... 606,322 255,336
Premier Growth Equity Fund.......................... 685,610 261,345
Value Equity Fund................................... 80,336 6,883
Small-Cap Value Equity Fund......................... 111,974 13,874
Oppenheimer Variable Account Funds:
Bond Fund/VA........................................ 701,906 318,680
Capital Appreciation Fund/VA........................ 2,280,698 974,204
Aggressive Growth Fund/VA........................... 4,890,213 3,944,522
High Income Fund/VA................................. 831,214 388,875
Multiple Strategies Fund/VA......................... 621,302 447,656
Global Securities Fund/VA........................... 209,395 23,986
Main Street Growth & Income Fund/VA................. 201,029 23,354
Variable Insurance Products Fund:
Equity-Income Portfolio............................. 2,514,998 1,615,882
Growth Portfolio.................................... 4,997,642 4,103,959
Overseas Portfolio.................................. 744,596 447,317
Variable Insurance Products Fund -- Service Class 2:
Equity-Income Portfolio............................. 283,306 29,083
Growth Portfolio.................................... 504,573 51,039
Variable Insurance Products Fund II:
Asset Manager Portfolio............................. 821,781 802,450
Contrafund Portfolio................................ 2,271,960 1,550,189
Variable Insurance Products Fund II -- Service Class
2:
Contrafund Portfolio................................ 217,777 27,223
Variable Insurance Products Fund III:
Growth & Income Portfolio........................... 609,442 358,016
Growth Opportunities Portfolio...................... 271,393 179,352
Variable Insurance Products Fund III -- Service Class
2:
Mid Cap Portfolio................................... 126,856 16,069
Growth & Income Portfolio........................... 132,111 13,719
F-63
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ---------- -----------
Federated Insurance Series:
American Leaders Fund II.............................. $ 381,086 $ 226,824
High Income Bond Fund II.............................. 276,940 110,561
Utility Fund II....................................... 191,688 84,891
International Small Company Fund II................... 22,005 589
Federated Insurance Series -- Service Shares:
High Income Bond Fund II.............................. 38,757 3,434
Alger American Fund:
Small Capitalization Portfolio........................ 1,057,462 730,884
LargeCap Growth Portfolio............................. 3,514,178 2,174,306
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio....................... 904,717 577,173
PBHG Growth II Portfolio.............................. 789,761 515,135
Janus Aspen Series:
Aggressive Growth Portfolio........................... 4,088,009 3,867,266
Growth Portfolio...................................... 2,336,645 1,973,759
Worldwide Growth Portfolio............................ 2,387,012 2,072,811
Balanced Portfolio.................................... 2,170,460 885,739
Flexible Income Portfolio............................. 419,016 233,962
International Growth Portfolio........................ 2,481,001 1,833,059
Capital Appreciation Portfolio........................ 1,705,193 1,457,766
Janus Aspen Series -- Service Shares:
Global Life Sciences Portfolio........................ 167,598 135,529
Global Technology Portfolio........................... 158,157 87,640
Aggressive Growth Portfolio........................... 156,932 20,771
Capital Appreciation Portfolio........................ 148,352 18,776
Worldwide Growth Portfolio............................ 185,948 23,442
International Growth Portfolio........................ 132,787 9,835
Balanced Portfolio.................................... 636,566 64,635
Growth Portfolio...................................... 164,257 17,956
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund................................ 38,980 26,437
Mid Cap Value Fund.................................... 1,138,685 400,427
Salomon Brothers Variable Series Funds Inc.:
Strategic Bond Fund................................... 273,168 73,264
Investors Fund........................................ 629,083 167,802
Total Return Fund..................................... 60,672 5,567
Dreyfus:
The Dreyfus Socially Resposible Growth Fund, Inc. .... 37,373 8,743
Dreyfus Investment Portfolios-Emerging Markets
Portfolio............................................ 7,119 1,049
MFS Variable Insurance Trust:
MFS New Discovery Series.............................. 65,517 5,956
MFS Investors Growth Stock Series..................... 77,403 6,321
MFS Investors Trust Series............................ 79,833 5,109
MFS Utility Series.................................... 252,586 28,899
F-64
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ---------- -----------
Rydex Variable Trust:
OTC Fund............................................... $ 28,545 $ 6,209
Alliance Variable Products Series Fund, Inc.:
Premier Growth Portfolio............................... 140,055 14,419
Growth and Income Portfolio............................ 474,677 35,894
Quasar Portfolio....................................... 28,524 5,026
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund..................... 121,455 15,198
AIM V.I. Growth Fund................................... 105,130 16,060
AIM V.I. Value Fund.................................... 184,187 25,846
PIMCO Variable Insurance Trust:
Foreign Bond Portfolio................................. 9,705 1,778
Long-Term U.S. Government Bond Portfolio............... 112,682 10,849
High Yield Bond Portfolio.............................. 56,048 7,383
Total Return Bond Portfolio............................ 122,729 8,661
(4) Related Party Transaction
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 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. Certain officers and directors of GE
Life & Annuity are also officers and directors of Capital Brokerage
Corporation.
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
F-65
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
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, .65% for the Mid-Cap
Value Equity, Premier Growth Equity, and Value Equity Funds and .80% for the
Small-Cap Value Equity Fund.
F-66
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
(5) Capital Transactions
The increase (decrease) in outstanding units and amounts, by type and by
subaccount, from capital transactions with policyholders for each of the years
or lesser periods in the three year period ended December 31, 2001 are as
follows:
GE Investments Funds, Inc.
-------------------------------------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
------------------ ------------------- -------------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- --------- ------- ---------- ------- ----------- ------ -------- ------ --------
Type I Units:
Units Purchased.... 15,661 $ 744,224 37,026 $ 557,961 4,245 $ 157,657 1,433 $ 24,206 5,331 $ 81,409
Units Redeemed..... (15,798) (750,728) (31,429) (473,611) (11,331) (420,907) (963) (16,303) (2,958) (45,263)
Units Exchanged.... (346) (16,449) 7,179 108,179 (1,367) (50,779) (1,909) (32,237) (912) (13,928)
------- --------- ------- ---------- ------- ----------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions with
policyholders
during the year
ended
December 31, 1999.. (483) $ (22,953) 12,776 $ 192,528 (8,453) $ (314,029) (1,439) $(24,334) 1,461 $ 22,218
======= ========= ======= ========== ======= =========== ====== ======== ====== ========
Units Purchased.... 11,079 706,803 84,019 1,476,976 3,501 142,502 2,397 39,071 5,567 73,027
Units Redeemed..... (11,285) (719,991) (31,988) (562,304) (10,597) (431,415) (942) (15,345) (3,402) (44,625)
Units Exchanged.... (2,389) (152,370) (29,187) (513,090) (322) (13,095) (111) (1,807) (2,358) (30,935)
------- --------- ------- ---------- ------- ----------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions with
policyholders
during the year
ended
December 31, 2000.. (2,595) $(165,559) 22,844 $ 401,581 (7,418) $ (302,007) 1,344 $ 21,919 (193) $ (2,532)
======= ========= ======= ========== ======= =========== ====== ======== ====== ========
Units Purchased.... 17,149 856,011 81,244 1,550,922 4,061 161,424 2,207 31,129 3,070 69,588
Units Redeemed..... (11,921) (595,054) (27,399) (523,042) (69,874) (2,776,932) (570) (8,031) (3,343) (75,776)
Units Exchanged.... 109 5,418 (75,269) (1,436,855) 629 24,993 (160) (2,261) 1,002 22,712
------- --------- ------- ---------- ------- ----------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions with
policyholders
during the year
ended December 31,
2001............... 5,337 $ 266,375 (21,424) $ (408,975) (65,184) $(2,590,515) 1,477 $ 20,837 729 $ 16,524
======= ========= ======= ========== ======= =========== ====== ======== ====== ========
F-67
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
GE Investments Funds, Inc. (continued)
--------------------------------------------------------------------------------------
Mid-Cap Premier
Global Income Value Equity Income U.S. Equity Growth Equity
Fund Fund Fund Fund Fund
--------------- ---------------- ---------------- --------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
----- -------- ------ -------- ------ -------- ----- -------- ------ --------
Type I Units:
Units Purchased........ 1,215 $12,987 1,407 $ 23,058 4,423 $ 45,880 302 $ 3,700 275 $ 2,854
Units Redeemed......... (366) (3,910) (1,090) (17,863) (3,534) (36,656) (113) (1,387) (69) (714)
Units Exchanged........ (3) (29) 3,672 60,192 (4,367) (45,305) 1,727 21,124 5,227 54,347
----- ------- ------ -------- ------ -------- ----- ------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 1999..... 846 $ 9,048 3,989 $ 65,387 (3,478) $(36,081) 1,916 $23,436 5,433 $ 56,488
===== ======= ====== ======== ====== ======== ===== ======= ====== ========
Units Purchased........ 1,184 12,400 2,303 38,399 3,840 41,033 435 5,345 2,120 24,871
Units Redeemed......... (192) (2,009) (1,381) (23,019) (4,751) (50,769) (184) (2,264) (2,385) (27,975)
Units Exchanged........ (104) (1,089) (741) (12,362) 18 195 659 8,099 8,440 98,992
----- ------- ------ -------- ------ -------- ----- ------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2000..... 888 $ 9,302 181 $ 3,018 (893) $ (9,542) 910 $11,180 8,175 $ 95,889
===== ======= ====== ======== ====== ======== ===== ======= ====== ========
Units Purchased........ 174 1,855 3,788 65,476 3,415 38,507 3,340 39,247 4,507 44,290
Units Redeemed......... (252) (2,690) (1,089) (18,828) (7,735) (87,218) (428) (5,022) (2,275) (22,354)
Units Exchanged........ -- -- 4,146 71,658 2,462 27,761 844 9,927 1,117 10,972
----- ------- ------ -------- ------ -------- ----- ------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2001..... (78) $ (835) 6,845 $118,306 (1,858) $(20,950) 3,756 $44,152 3,349 $ 32,908
===== ======= ====== ======== ====== ======== ===== ======= ====== ========
F-68
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Oppenheimer Variable Account Funds
----------------------------------------------------------------------------------------------
Capital Multiple
Appreciation Aggressive Growth High Income Strategies
Bond Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
---------------- ----------------- ------------------- ----------------- -----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ -------- ------ --------- ------- ---------- ------ --------- ------ ---------
Type I Units:
Units Purchased....... 3,765 $ 87,986 940 $ 487,166 10,658 $ 612,713 8,672 $ 313,464 3,427 $ 114,003
Units Redeemed........ (2,106) (49,221) (743) (384,948) (11,460) (658,798) (7,666) (277,090) (2,798) (93,086)
Units Exchanged....... 109 2,556 (198) (102,737) (4,525) (260,171) (1,264) (45,699) (1,536) (51,086)
------ -------- ------ --------- ------- ---------- ------ --------- ------ ---------
Net increase
(decrease) from
capital transactions
with policyholders
during the year ended
December 31, 1999.... 1,768 $ 41,321 (1) $ (519) (5,327) $ (306,256) (258) $ (9,325) (907) $ (30,169)
====== ======== ====== ========= ======= ========== ====== ========= ====== =========
Units Purchased....... 2,783 63,630 5,150 416,272 (16,055) 572,133 7,017 245,521 2,511 92,071
Units Redeemed........ (2,768) (63,277) (5,707) (461,259) 36,280 (1,292,852) (5,501) (192,506) (3,009) (110,348)
Units Exchanged....... (302) (6,915) (1,107) (89,522) (19,382) 690,679 (3,148) (110,110) (291) (10,666)
------ -------- ------ --------- ------- ---------- ------ --------- ------ ---------
Net increase
(decrease) from
capital transactions
with policyholders
during the year ended
December 31, 2000.... (287) $ (6,562) (1,664) $(134,509) 843 $ (30,040) (1,632) $ (57,095) (789) $ (28,943)
====== ======== ====== ========= ======= ========== ====== ========= ====== =========
Units Purchased....... 3,206 82,621 6,968 426,830 2,918 473,513 5,929 209,303 3,867 144,913
Units Redeemed........ (2,539) (65,430) (5,696) (348,906) (3,769) (611,634) (6,047) (213,471) (3,147) (117,926)
Units Exchanged....... 1,743 44,910 1,619 99,145 56 9,088 1,383 48,826 1,629 61,062
------ -------- ------ --------- ------- ---------- ------ --------- ------ ---------
Net increase
(decrease) from
capital transactions
with policyholders
during the year ended
December 31, 2001.... 2,410 $ 62,101 2,891 $ 177,069 (795) $ (129,033) 1,265 $ 44,658 2,349 $ 88,049
====== ======== ====== ========= ======= ========== ====== ========= ====== =========
F-69
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Variable Insurance Products Fund Variable Insurance Products Fund II
------------------------------------------------------------- --------------------------------------
Equity-Income Overseas Asset Manager Contrafund
Portfolio Growth Portfolio Portfolio Portfolio Portfolio
------------------- -------------------- ------------------ ------------------ ------------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- ---------- ------- ----------- ------- --------- ------- --------- ------- ---------
Type I Units:
Units
Purchased...... 25,811 $1,138,293 13,506 $ 832,621 8,226 $ 276,716 14,013 $ 418,518 20,627 $ 553,523
Units Redeemed.. (19,540) (861,743) (17,825) (1,098,875) (8,312) (279,606) (13,866) (414,135) (16,866) (452,605)
Units
Exchanged...... (15,909) (701,615) (10,368) (639,186) (3,401) (114,405) (6,414) (191,557) (14,178) (380,469)
------- ---------- ------- ----------- ------- --------- ------- --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 1999....... (9,638) $ (425,066) (14,687) $ (905,440) (3,487) $(117,295) (6,267) $(187,174) (10,417) $(279,551)
======= ========== ======= =========== ======= ========= ======= ========= ======= =========
Units
Purchased...... 21,197 966,580 9,283 795,230 7,554 247,150 11,519 360,477 31,544 539,990
Units Redeemed.. (18,006) (821,065) (12,544) (1,074,634) (9,940) (325,204) (22,731) (711,365) (36,006) (616,370)
Units
Exchanged...... (6,465) (294,802) (348) (29,771) (3,150) (103,060) (488) (15,263) 2,239 38,326
------- ---------- ------- ----------- ------- --------- ------- --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2000....... (3,274) $ (149,288) (3,609) $ (309,175) (5,536) $(181,114) (11,700) $(366,152) (2,223) $ (38,054)
======= ========== ======= =========== ======= ========= ======= ========= ======= =========
Units
Purchased...... 15,453 787,892 12,435 741,149 71,979 231,857 11,413 326,667 15,337 499,479
Units Redeemed.. (13,771) (702,127) (13,514) (805,486) (57,261) (184,450) (18,960) (542,679) (13,439) (437,660)
Units
Exchanged...... 1,829 93,247 (1,903) (113,402) (15,113) (48,681) (1,111) (31,798) 2,747 89,443
------- ---------- ------- ----------- ------- --------- ------- --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2001....... 3,511 $ 179,012 (2,982) $ (177,739) (395) $ (1,274) (8,658) $(247,810) 4,645 $ 151,262
======= ========== ======= =========== ======= ========= ======= ========= ======= =========
F-70
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Variable Insurance Products
Fund III Federated Insurance Series
---------------------------------- ----------------------------------
Growth
Growth & Income Opportunities American High Income
Portfolio Portfolio Leaders Fund II Bond Fund II
---------------- ---------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ -------- ------ -------- ------ -------- ------ --------
Type I Units:
Units Purchased........ 3,421 $ 62,857 2,186 $ 40,551 5,066 $ 81,805 2,703 $ 42,342
Units Redeemed......... (2,413) (44,331) (1,490) (27,641) (2,476) (39,986) (1,197) (18,750)
Units Exchanged........ (2,229) (40,954) (1,296) (24,037) 637 10,295 1,142 17,883
------ -------- ------ -------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 1999..... (1,221) $(22,429) (600) $(11,126) 3,227 $ 52,114 2,648 $ 41,474
====== ======== ====== ======== ====== ======== ====== ========
Units Purchased........ 2,286 37,865 2,645 31,669 3,920 71,257 2,699 41,421
Units Redeemed......... (2,012) (33,327) (2,023) (24,218) (2,546) (46,281) (1,248) (19,147)
Units Exchanged........ 2,146 35,547 (6,937) (83,083) (790) (14,359) (557) (8,551)
------ -------- ------ -------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2000..... 2,420 $ 40,085 (6,315) $(75,632) 584 $ 10,617 894 $ 13,724
====== ======== ====== ======== ====== ======== ====== ========
Units Purchased........ 6,181 98,539 4,720 54,997 3,632 64,311 2,195 33,708
Units Redeemed......... (3,050) (48,621) (1,688) (19,663) (1,950) (34,533) (2,512) (38,572)
Units Exchanged........ 1,687 26,887 364 4,241 1,524 26,979 3,005 46,149
------ -------- ------ -------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2001..... 4,818 $ 76,805 3,396 $ 39,575 3,206 $ 56,757 2,688 $ 41,285
====== ======== ====== ======== ====== ======== ====== ========
F-71
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Federated
Insurance
Series PBHG Insurance Series Fund,
(continued) Alger American Fund Inc.
---------------- -------------------------------------- ----------------------------------
Small PBHG Large Cap
Capitalization LargeCap Growth PBHG Growth II
Utility Fund II Portfolio Growth Portfolio Portfolio Portfolio
---------------- ------------------ ------------------ ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ -------- ------- --------- ------- --------- ------ -------- ------ --------
Type I Units:
Units Purchased........ 1,671 $ 31,884 14,158 $ 230,268 18,292 $ 340,244 1,496 $ 22,387 4,760 $ 25,675
Units Redeemed......... (1,042) (19,878) (9,995) (162,555) (9,347) (173,859) (726) (10,861) (2,582) (13,927)
Units Exchanged........ (83) (1,586) 20,595 334,950 (15,368) (285,849) 221 3,301 (137) (737)
------ -------- ------- --------- ------- --------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 1999..... 546 $ 10,420 24,758 $ 402,663 (6,423) $(119,464) 991 $ 14,827 2,041 $ 11,011
====== ======== ======= ========= ======= ========= ====== ======== ====== ========
Units Purchased........ 1,956 30,314 13,261 230,638 7,544 244,920 913 25,091 770 26,180
Units Redeemed......... (1,454) (22,529) (13,845) (240,804) (5,991) (194,501) (757) (20,800) (643) (21,863)
Units Exchanged........ (613) (9,504) (25,194) (438,170) 692 22,452 11,038 303,390 10,917 371,379
------ -------- ------- --------- ------- --------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2000..... (111) $ (1,720) (25,778) $(448,335) 2,245 $ 72,872 11,194 $307,681 11,044 $375,696
====== ======== ======= ========= ======= ========= ====== ======== ====== ========
Units Purchased........ 2,719 45,464 12,697 173,758 9,656 260,628 875 31,750 1,247 32,605
Units Redeemed......... (1,226) (20,497) (8,381) (114,691) (6,640) (179,217) (1,076) (39,023) (1,354) (35,392)
Units Exchanged........ (129) (2,161) 4,191 57,353 13,059 352,458 2,253 81,707 5,754 150,347
------ -------- ------- --------- ------- --------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2001..... 1,364 $ 22,806 8,507 $ 116,420 16,075 $ 433,869 2,052 $ 74,434 5,647 $147,560
====== ======== ======= ========= ======= ========= ====== ======== ====== ========
F-72
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Janus Aspen Series
-------------------------------------------------------------------------------------------------
Aggressive Growth Worldwide Growth Balanced Flexible Income
Portfolio Growth Portfolio Portfolio Portfolio Portfolio
------------------ ------------------ ------------------- ----------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- --------- ------- --------- ------- ---------- ------ --------- ------ --------
Type I Units:
Units
Purchased...... 12,369 $ 446,648 16,689 $ 567,608 38,292 $ 777,339 6,407 $ 137,139 251 $ 3,514
Units Redeemed.. (15,335) (553,762) (12,129) (412,522) (28,491) (578,381) (5,730) (122,642) (1,278) (17,865)
Units
Exchanged...... 25,088 906,003 18,674 635,144 (6,785) (137,733) 8,897 190,396 208 2,904
------- --------- ------- --------- ------- ---------- ------ --------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 1999....... 22,122 $ 798,889 23,234 $ 790,230 3,016 $ 61,225 9,574 $ 204,893 (819) $(11,447)
======= ========= ======= ========= ======= ========== ====== ========= ====== ========
Units
Purchased...... 10,645 522,136 15,555 529,230 17,285 781,260 8,479 204,547 2,277 36,036
Units Redeemed.. (14,568) (714,486) (17,458) (593,959) (23,801) (1,075,772) (7,070) (170,551) (790) (12,503)
Units
Exchanged...... 8,822 432,611 (17,549) (597,070) 2,903 131,207 5,699 137,472 (1,291) (20,431)
------- --------- ------- --------- ------- ---------- ------ --------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2000....... 4,899 $ 240,261 (19,452) $(661,800) (3,613) $ (163,305) 7,108 $ 171,467 196 $ 3,102
======= ========= ======= ========= ======= ========== ====== ========= ====== ========
Units
Purchased...... 18,271 477,503 20,539 586,290 31,345 740,278 12,746 302,608 2,214 34,307
Units Redeemed.. (19,579) (511,688) (16,335) (466,279) (30,516) (720,710) (9,234) (219,236) (794) (12,305)
Units
Exchanged...... (8,901) (232,630) 1,312 37,455 (3,688) (87,090) 8,654 205,437 1,425 22,093
------- --------- ------- --------- ------- ---------- ------ --------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2001....... (10,209) $(266,815) 5,516 $ 157,466 (2,859) $ (67,522) 12,166 $ 288,809 2,845 $ 44,095
======= ========= ======= ========= ======= ========== ====== ========= ====== ========
International
Growth Portfolio
------------------
Units $ Amount
------- ----------
Type I Units:
Units
Purchased...... 6,335 $ 126,045
Units Redeemed.. (4,045) (80,483)
Units
Exchanged...... 1,272 25,306
------- ----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 1999....... 3,562 $ 70,868
======= ==========
Units
Purchased...... 5,302 168,276
Units Redeemed.. (4,304) (136,590)
Units
Exchanged...... 6,892 218,694
------- ----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2000....... 7,890 $ 250,379
======= ==========
Units
Purchased...... 11,636 229,951
Units Redeemed.. (5,968) (117,942)
Units
Exchanged...... 2,319 45,828
------- ----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2001....... 7,987 $ 157,837
======= ==========
F-73
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Janus Aspen
Series Janus Aspen Series -- Service Goldman Sachs Variable
(continued) Shares Insurance Trust
---------------- -------------------------------- -----------------------------------
Capital Global Life Global
Appreciation Sciences Technology Growth and Mid Cap
Portfolio Portfolio Portfolio Income Fund Value Fund
---------------- --------------- --------------- --------------- ------------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ -------- ----- -------- ----- -------- ----- -------- ------- ---------
Type I Units:
Units Purchased........ 2,077 $ 57,249 -- $ -- -- $ -- -- $ -- 2,906 $ 24,420
Units Redeemed......... (2,197) (60,555) -- -- -- -- (8) (72) (160) (1,345)
Units Exchanged........ 14,138 389,776 -- -- -- -- (73) (679) 44,496 373,851
------ -------- ----- ------- ----- ------- ---- ------- ------- ---------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 1999..... 14,018 $386,471 -- $ -- -- $ -- (81) $ (750) 47,242 $ 396,926
====== ======== ===== ======= ===== ======= ==== ======= ======= =========
Units Purchased........ 3,681 147,172 104 1,094 34 361 18 150 1,553 11,720
Units Redeemed......... (2,469) (98,711) (33) (351) (35) (374) (154) (1,275) (1,166) (8,796)
Units Exchanged........ 1,075 42,978 4,191 44,099 7,802 82,724 172 1,422 (34,476) (260,257)
------ -------- ----- ------- ----- ------- ---- ------- ------- ---------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2000..... 2,287 $ 91,439 4,262 $44,841 7,801 $82,710 36 $ 298 (34,089) $(257,333)
====== ======== ===== ======= ===== ======= ==== ======= ======= =========
Units Purchased........ 4,438 96,860 981 8,808 627 3,675 836 6,799 9,658 111,261
Units Redeemed......... (4,219) (92,074) (163) (1,466) (345) (2,021) (16) (132) (1,118) (12,884)
Units Exchanged........ (2,325) (50,737) 971 8,708 1,487 8,705 (19) (156) 7,689 88,583
------ -------- ----- ------- ----- ------- ---- ------- ------- ---------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2001..... (2,106) $(45,951) 1,789 $16,050 1,769 $10,359 801 $ 6,511 16,229 $ 186,960
====== ======== ===== ======= ===== ======= ==== ======= ======= =========
F-74
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Salomon Brothers Variable Series Funds Inc.
--------------------------------------------------
Strategic Total
Bond Investors Return
Fund Fund Fund
--------------- ---------------- ---------------
Units $ Amount Units $ Amount Units $ Amount
----- -------- ------ -------- ----- --------
Type I Units:
Units Purchased............. -- $ -- -- $ -- 25 $ 270
Units Redeemed.............. -- -- (15) (194) (16) (169)
Units Exchanged............. -- -- -- -- 94 1,008
----- ------- ------ -------- ----- -------
Net increase (decrease) from
capital transactions with
policyholders during the
year
ended December 31, 1999.... -- $ -- (15) $ (194) 103 $ 1,110
===== ======= ====== ======== ===== =======
Units Purchased............. -- -- 9 139 345 3,824
Units Redeemed.............. (2) (17) (23) (356) (61) (679)
Units Exchanged............. 102 1,075 10,119 156,272 12 138
----- ------- ------ -------- ----- -------
Net increase (decrease) from
capital transactions with
policyholders during the
year
ended December 31, 2000.... 100 $ 1,058 10,105 $156,055 296 $ 3,282
===== ======= ====== ======== ===== =======
Units Purchased............. 1,367 15,562 266 4,189 540 6,057
Units Redeemed.............. (192) (2,184) (516) (8,137) (153) (1,718)
Units Exchanged............. 2,376 27,062 11,432 180,636 1,424 15,981
----- ------- ------ -------- ----- -------
Net increase (decrease) from
capital transactions with
policyholders during the
year
ended December 31, 2001.... 3,551 $40,440 11,182 $176,688 1,811 $20,320
===== ======= ====== ======== ===== =======
F-75
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
GE Investments Funds, Inc.
---------------------------------------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Fund Fund Fund Fund Fund
-------------------- --------------------- ----------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- ----------- -------- ----------- ------ --------- ------ -------- ------ --------
Type II Units:
Units
Purchased...... 28,289 $ 1,604,107 373,827 $ 6,559,765 2,488 $ 93,435 8,139 $128,192 2,648 $ 40,353
Units Redeemed.. (6,975) (395,527) (30,812) (540,672) (1,341) (50,357) (1,016) (16,008) (1,241) (18,912)
Units
Exchanged...... 12,671 718,489 (292,484) (5,132,395) 625 23,449 277 4,357 2,408 36,706
------- ----------- -------- ----------- ------ --------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 33,985 $ 1,927,069 50,531 $ 886,697 1,772 $ 66,527 7,400 $116,541 3,815 $ 58,147
======= =========== ======== =========== ====== ========= ====== ======== ====== ========
Units
Purchased...... 44,038 2,705,892 647,376 11,703,699 4,610 191,279 5,582 98,528 3,519 61,400
Units Redeemed.. (10,727) (659,129) (48,574) (878,154) (1,128) (46,812) (2,260) (39,900) (1,365) (23,821)
Units
Exchanged...... 15,638 960,914 (526,790) (9,523,663) 1,933 80,184 3,533 62,367 5,691 99,308
------- ----------- -------- ----------- ------ --------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 48,949 $ 3,007,677 72,012 $ 1,301,882 5,415 $ 224,651 6,855 $120,995 7,845 $136,888
======= =========== ======== =========== ====== ========= ====== ======== ====== ========
Units
Purchased...... 54,801 2,859,496 466,484 8,812,516 7,282 311,893 9,277 131,993 5,168 110,518
Units Redeemed.. (22,277) (1,162,380) (74,788) (1,412,847) (2,534) (108,539) (1,986) (28,262) (2,471) (52,852)
Units
Exchanged...... 14,570 760,292 (259,835) (4,908,639) 96 4,102 1,922 27,352 4,990 106,708
------- ----------- -------- ----------- ------ --------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 47,094 $ 2,457,408 131,861 $ 2,491,030 4,844 $ 207,456 9,213 $131,083 7,687 $164,374
======= =========== ======== =========== ====== ========= ====== ======== ====== ========
Global
Income
Fund
-----------------
Units $ Amount
------- ---------
Type II Units:
Units
Purchased...... 953 $10,338
Units Redeemed.. (287) (3,116)
Units
Exchanged...... 3,476 37,692
------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 4,142 $44,914
======= =========
Units
Purchased...... 1,514 15,692
Units Redeemed.. (596) (6,174)
Units
Exchanged...... (50) (520)
------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 868 $ 8,997
======= =========
Units
Purchased...... 4,495 47,215
Units Redeemed.. (1,067) (11,207)
Units
Exchanged...... 345 3,620
------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 3,773 $39,628
======= =========
F-76
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
GE Investments Funds, Inc. (continued)
---------------------------------------------------------------------------------------------------------------
Mid-Cap U.S. Premier Value Small-Cap
Value Equity Income Equity Growth Equity Equity Value Equity
Fund Fund Fund Fund Fund Fund
----------------- ----------------- ------------------ ------------------ --------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ --------- ------ --------- ------- --------- ------- --------- ----- -------- ------ --------
Type II Units:
Units
Purchased...... 11,785 $ 196,036 2,123 $ 22,181 11,266 $ 133,912 3,298 $ 33,017 -- $ -- -- $ --
Units Redeemed.. (3,542) (58,922) (353) (3,691) (2,158) (25,654) (475) (4,759) -- -- -- --
Units
Exchanged...... 6,445 107,206 (10) (102) 1,503 17,862 3,411 34,136 -- -- -- --
------ --------- ------ --------- ------- --------- ------- --------- ----- -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 14,688 $ 244,320 1,760 $ 18,388 10,611 $ 126,120 6,234 $ 62,394 -- $ -- -- $ --
====== ========= ====== ========= ======= ========= ======= ========= ===== ======== ====== ========
Units
Purchased...... 14,289 223,219 4,616 50,255 79,617 1,009,821 24,853 285,957 -- -- -- --
Units Redeemed.. (3,416) (53,373) (790) (8,597) (23,722) (300,879) (5,133) (59,055) -- -- -- --
Units
Exchanged...... (31) (485) 5,555 60,485 8,173 103,657 16,059 184,775 -- -- -- --
------ --------- ------ --------- ------- --------- ------- --------- ----- -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 10,842 $ 169,361 9,381 $ 102,143 64,068 $ 812,599 35,779 $ 411,677 -- $ -- -- $ --
====== ========= ====== ========= ======= ========= ======= ========= ===== ======== ====== ========
Units
Purchased...... 21,811 374,781 15,321 180,034 25,747 299,943 38,997 407,855 7,004 63,094 34,151 88,486
Units Redeemed.. (7,172) (123,244) (5,096) (59,886) (10,797) (125,786) (14,387) (150,468) (706) (6,362) (854) (9,618)
Units
Exchanged...... 14,156 243,249 6,992 82,164 11,372 132,481 10,810 113,051 2,033 18,310 1,745 19,639
------ --------- ------ --------- ------- --------- ------- --------- ----- -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 28,795 $ 494,786 17,217 $ 202,312 26,322 $ 306,638 35,420 $ 370,438 8,331 $ 75,042 35,042 $ 98,507
====== ========= ====== ========= ======= ========= ======= ========= ===== ======== ====== ========
F-77
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Oppenheimer Variable Account Funds
-----------------------------------------------------------------------------------------------
Capital Aggressive High Multiple
Bond Appreciation Growth Income Strategies
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA
----------------- ----------------- ------------------- ----------------- -----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ --------- ------ --------- ------ ----------- ------ --------- ------ ---------
Type II Units:
Units
Purchased...... 2,591 $ 60,341 5,822 $ 336,129 1,518 $ 94,178 3,721 $ 131,577 2,421 $ 79,683
Units Redeemed.. (1,242) (28,932) (1,227) (70,871) (600) (37,212) (557) (19,688) (294) (9,671)
Units
Exchanged...... 4,538 105,706 1,282 73,980 391 24,222 2,515 88,970 (67) (2,201)
------ --------- ------ --------- ------ ----------- ------ --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 5,887 $ 137,115 5,877 $ 339,239 1,309 $ 81,188 5,679 $ 200,860 2,060 $ 67,811
====== ========= ====== ========= ====== =========== ====== ========= ====== =========
Units
Purchased...... 3,727 90,483 8,639 667,072 7,531 725,209 3,789 128,842 6,711 245,158
Units Redeemed.. (1,594) (38,698) (1,957) (151,092) (1,289) (124,179) (1,190) (40,459) (623) (22,746)
Units
Exchanged...... 548 13,291 4,361 336,818 4,683 450,945 21,506 731,299 2,226 81,301
------ --------- ------ --------- ------ ----------- ------ --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2000....... 2,681 $ 65,076 11,043 $ 852,798 10,925 $ 1,051,974 24,105 $ 819,681 8,314 $ 303,714
====== ========= ====== ========= ====== =========== ====== ========= ====== =========
Units
Purchased...... 4,139 107,303 8,891 644,700 9,843 652,060 5,246 184,452 3,403 114,810
Units Redeemed.. (2,460) (63,781) (4,265) (309,272) (3,611) (239,217) (2,286) (80,366) (5,672) (191,335)
Units
Exchanged...... 8,096 209,908 3,897 282,617 (1,606) (106,383) 355 12,466 1,605 54,128
------ --------- ------ --------- ------ ----------- ------ --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2001....... 9,775 $ 253,430 8,523 $ 618,045 4,626 $ 306,460 3,315 $ 116,552 (664) $ (22,397)
====== ========= ====== ========= ====== =========== ====== ========= ====== =========
Oppenheimer Variable Account
Funds -- Class 2 Shares
-------------------------------------
Global Main Street
Securities Growth & Income
Fund/VA Fund/VA
------------------ ------------------
Units $ Amount Units $ Amount
------- ---------- ------- ----------
Type II Units:
Units
Purchased...... -- $ -- -- $ --
Units Redeemed.. -- -- -- --
Units
Exchanged...... -- -- -- --
------- ---------- ------- ----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... -- $ -- -- $ --
======= ========== ======= ==========
Units
Purchased...... -- -- -- --
Units Redeemed.. -- -- -- --
Units
Exchanged...... -- -- -- --
------- ---------- ------- ----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2000....... -- $ -- -- $ --
======= ========== ======= ==========
Units
Purchased...... 17,072 145,286 17,647 144,665
Units Redeemed.. (2,231) (18,985) (2,377) (19,486)
Units
Exchanged...... 6,873 58,488 6,476 53,086
------- ---------- ------- ----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended December
31, 2001....... 21,714 $ 184,789 21,746 $ 178,265
======= ========== ======= ==========
F-78
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Variable Insurance Products
Variable Insurance Products Fund Fund -- Service Class 2
------------------------------------------------------- ----------------------------------
Equity-Income Growth Overseas Equity-Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
----------------- ------------------ ---------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ --------- ------ ---------- ------ -------- ------ -------- ------ --------
Type II Units:
Units
Purchased...... 6,469 $ 299,186 8,198 $ 556,080 3,033 $ 87,683 -- $ -- -- $ --
Units Redeemed.. (1,928) (89,169) (1,568) (106,373) (669) (19,340) -- -- -- --
Units
Exchanged...... 1,232 57,005 4,342 294,551 868 25,078 -- -- -- --
------ --------- ------ ---------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 5,773 $ 267,022 10,972 $ 744,257 3,232 $ 93,421 -- $ -- -- $ --
====== ========= ====== ========== ====== ======== ====== ======== ====== ========
Units
Purchased...... 10,355 495,673 14,836 1,204,941 1,494 52,093 -- -- -- --
Units Redeemed.. (1,780) (85,244) (3,200) (259,916) (1,226) (42,761) -- -- -- --
Units
Exchanged...... 847 40,560 2,917 236,935 1,860 64,879 -- -- -- --
------ --------- ------ ---------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 9,422 $ 450,989 14,553 $1,181,960 2,128 $ 74,210 -- $ -- -- $ --
====== ========= ====== ========== ====== ======== ====== ======== ====== ========
Units
Purchased...... 6,584 330,212 11,756 788,090 3,121 99,472 18,295 182,605 40,726 304,507
Units Redeemed.. (4,165) (208,906) (5,541) (371,442) (1,960) (62,471) (1,878) (18,740) (5,033) (37,629)
Units
Exchanged...... 3,439 172,494 750 50,279 230 7,334 9,375 93,570 25,095 187,635
------ --------- ------ ---------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 5,858 $ 293,800 6,965 $ 466,927 1,391 $ 44,335 25,792 $257,435 60,788 $454,513
====== ========= ====== ========== ====== ======== ====== ======== ====== ========
Variable Insurance
Variable Insurance Products Fund Products Fund II --
II Service Class 2
-------------------------------------- ---------------------
Asset Manager Contrafund Contrafund
Portfolio Portfolio Portfolio
----------------- -------------------- ---------------------
Units $ Amount Units $ Amount Units $ Amount
------- --------- -------- ----------- --------- -----------
Type II Units:
Units
Purchased...... 1,964 $ 59,395 16,460 $ 475,296 -- $ --
Units Redeemed.. (279) (8,447) (3,908) (112,838) -- --
Units
Exchanged...... 85 2,582 13,182 380,649 -- --
------- --------- -------- ----------- --------- -----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 1,770 $ 53,529 25,734 $ 743,107 -- $ --
======= ========= ======== =========== ========= ===========
Units
Purchased...... 4,225 130,372 46,731 1,523,897 6 47
Units Redeemed.. (1,009) (31,136) (6,384) (208,177) (2) (15)
Units
Exchanged...... 737 22,727 13,836 451,202 -- --
------- --------- -------- ----------- --------- -----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 3,953 $121,962 54,183 $1,766,922 4 $ 32
======= ========= ======== =========== ========= ===========
Units
Purchased...... 3,029 92,828 23,928 665,959 22,085 177,998
Units Redeemed.. (1,419) (43,495) (13,309) (370,417) (2,775) (22,363)
Units
Exchanged...... (120) (3,669) 3,744 104,216 4,386 35,345
------- --------- -------- ----------- --------- -----------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 1,490 $ 45,664 14,363 $ 399,758 23,696 $ 190,980
======= ========= ======== =========== ========= ===========
F-79
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Variable Insurance
Variable Insurance Products Fund III -- Service
Products Fund III Class 2
------------------------------------ ----------------------------------
Growth & Growth Growth &
Income Opportunities Mid Cap Income
Portfolio Portfolio Portfolio Portfolio
------------------ ---------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- --------- ------ -------- ------ -------- ------ --------
Type II Units:
Units
Purchased...... 22,463 $ 381,685 7,729 $119,613 -- $ -- -- $ --
Units Redeemed.. (4,505) (76,543) (1,923) (29,754) -- -- -- --
Units
Exchanged...... 5,886 100,014 4,477 69,294 -- -- -- --
------- --------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 1999.. 23,844 $ 405,155 10,283 $159,152 -- $ -- -- $ --
======= ========= ====== ======== ====== ======== ====== ========
Units
Purchased...... 33,328 564,975 9,434 137,997 4 47 -- --
Units Redeemed.. (7,576) (128,420) (3,243) (47,429) (1) (15) -- --
Units
Exchanged...... 804 13,627 1,759 25,738 -- -- -- --
------- --------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2000.. 26,556 $ 450,182 7,950 $116,307 3 $ 32 -- $ --
======= ========= ====== ======== ====== ======== ====== ========
Units
Purchased...... 23,870 357,624 9,799 126,613 10,001 93,186 11,882 104,157
Units Redeemed.. (16,707) (250,311) (4,688) (60,577) (1,122) (10,455) (1,364) (11,954)
Units
Exchanged...... 518 7,761 (951) (12,291) 3,473 32,364 3,137 27,502
------- --------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2001.. 7,681 $ 115,074 4,160 $ 53,745 12,352 $115,095 13,655 $119,705
======= ========= ====== ======== ====== ======== ====== ========
Federated Insurance Series
-----------------------------------------------------------------------
American High International
Leaders Income Bond Utility Small Company
Fund II Fund II Fund II Fund II
------------------ ----------------- ----------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- ---------- ------- --------- ------- --------- ------ ---------
Type II Units:
Units
Purchased...... 9,243 $ 171,340 5,365 $ 85,113 2,927 $ 57,296 -- $ --
Units Redeemed.. (1,631) (30,228) (812) (12,883) (1,047) (20,496) -- --
Units
Exchanged...... 3,735 69,233 2,531 40,164 4,176 81,721 -- --
------- ---------- ------- --------- ------- --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 1999..11,347 $ 210,345 7,084 $112,394 6,056 $118,522 -- $ --
======= ========== ======= ========= ======= ========= ====== =========
Units
Purchased...... 7,800 136,683 6,245 96,659 2,366 43,626 -- --
Units Redeemed.. (2,414) (42,300) (1,237) (19,147) (631) (11,629) -- --
Units
Exchanged...... (747) (13,097) (1,862) (28,820) 3,128 57,700 -- --
------- ---------- ------- --------- ------- --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2000.. 4,639 $ 81,287 3,146 $ 48,692 4,863 $ 89,696 -- $ --
======= ========== ======= ========= ======= ========= ====== =========
Units
Purchased...... 7,438 140,087 5,902 87,963 4,429 77,425 3,710 21,728
Units Redeemed.. (7,255) (136,643) (2,454) (36,572) (2,441) (42,683) (95) (557)
Units
Exchanged...... 4,343 81,786 2,228 33,213 2,286 39,966 20 116
------- ---------- ------- --------- ------- --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2001.. 4,526 $ 85,230 5,676 $ 84,604 4,274 $ 74,708 3,635 $21,287
======= ========== ======= ========= ======= ========= ====== =========
F-80
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Federated
Insurance
Series --
Service PBHG Insurance Series Fund,
Shares Alger American Fund Inc.
--------------- -------------------------------------- ----------------------------------
High Small LargeCap PBHG Large PBHG
Income Bond Capitalization Growth Cap Growth Growth II
Fund II Portfolio Portfolio Portfolio Portfolio
--------------- ----------------- ------------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
----- -------- ------- -------- ------- ---------- ------ -------- ------ --------
Type II Units:
Units Purchased........ -- $ -- 9,990 $139,735 24,310 $ 545,529 1,792 $ 28,559 1,601 $ 31,608
Units Redeemed......... -- -- (1,906) (26,657) (4,670) (104,803) (800) (12,747) (290) (5,734)
Units Exchanged........ -- -- 4,696 65,678 17,028 382,117 709 11,288 3,114 61,488
----- ------- ------- -------- ------- ---------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 1999..... -- $ -- 12,780 $178,756 36,668 $ 822,843 1,701 $ 27,101 4,425 $ 87,362
===== ======= ======= ======== ======= ========== ====== ======== ====== ========
Units Purchased........ -- -- 22,719 381,323 63,374 1,668,250 7,754 226,325 15,546 382,478
Units Redeemed......... -- -- (4,387) (73,633) (8,825) (232,311) (1,581) (46,149) (2,060) (50,690)
Units Exchanged........ -- -- 11,015 184,880 14,478 381,103 7,439 217,113 14,346 352,955
----- ------- ------- -------- ------- ---------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2000..... -- $ -- 29,347 $492,569 69,027 $1,817,042 13,612 $397,288 27,832 $684,742
===== ======= ======= ======== ======= ========== ====== ======== ====== ========
Units Purchased........ 1,827 17,541 30,583 308,627 30,253 667,622 12,666 292,749 15,196 201,433
Units Redeemed......... (327) (3,144) (11,859) (119,674) (19,721) (435,197) (5,502) (127,166) (6,396) (84,785)
Units Exchanged........ 2,227 21,382 2,454 24,766 6,713 148,132 4,368 100,976 1,197 15,860
----- ------- ------- -------- ------- ---------- ------ -------- ------ --------
Net increase (decrease)
from capital
transactions with
policyholders during
the year ended
December 31, 2001..... 3,727 $35,779 21,178 $213,719 17,245 $ 380,557 11,532 $266,559 9,997 $132,508
===== ======= ======= ======== ======= ========== ====== ======== ====== ========
F-81
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Janus Aspen Series
----------------------------------------------------------------------------------------------------------
Aggressive Worldwide Flexible
Growth Growth Growth Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
-------------------- -------------------- -------------------- -------------------- -----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- ----------- ------- ----------- ------- ----------- ------- ----------- ------ ---------
Type II Units:
Units
Purchased...... 20,475 $ 635,489 25,736 $ 728,367 27,011 $ 757,878 18,588 $ 405,751 3,248 $ 44,435
Units Redeemed.. (3,966) (123,097) (4,982) (140,990) (8,156) (228,826) (4,493) (98,072) (612) (8,368)
Units
Exchanged...... 16,837 522,555 17,635 499,115 10,749 301,607 3,842 83,862 5,581 76,349
------- ----------- ------- ----------- ------- ----------- ------- ----------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 33,346 $ 1,034,947 38,389 $ 1,086,492 29,604 $ 830,659 17,937 $ 391,541 8,217 $ 112,416
======= =========== ======= =========== ======= =========== ======= =========== ====== =========
Units
Purchased...... 40,498 2,071,196 62,852 2,191,429 76,826 3,095,718 77,905 1,941,819 4,109 57,834
Units Redeemed.. (10,933) (559,116) (9,611) (335,096) (10,547) (424,986) (7,047) (175,646) (1,906) (26,827)
Units
Exchanged...... 17,382 889,009 26,573 926,485 17,721 714,062 10,273 256,058 4,522 63,641
------- ----------- ------- ----------- ------- ----------- ------- ----------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 46,947 $ 2,401,089 79,814 $ 2,782,819 84,000 $ 3,384,795 81,131 $ 2,022,230 6,725 $ 94,649
======= =========== ======= =========== ======= =========== ======= =========== ====== =========
Units
Purchased...... 39,239 1,137,655 32,782 959,195 37,061 1,162,432 44,784 1,071,372 9,477 138,460
Units Redeemed.. (16,790) (486,793) (18,163) (531,428) (20,155) (632,165) (17,935) (429,054) (6,658) (97,280)
Units
Exchanged...... (5,237) (151,833) (6,769) (198,067) (4,463) (139,989) 11,418 273,156 4,691 68,545
------- ----------- ------- ----------- ------- ----------- ------- ----------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 17,212 $ 499,029 7,850 $ 229,700 12,443 $ 390,278 38,267 $ 915,474 7,510 $ 109,725
======= =========== ======= =========== ======= =========== ======= =========== ====== =========
International Capital
Growth Apperciation
Portfolio Portfolio
------------------- ---------------------
Units $ Amount Units $ Amount
-------- ---------- -------- ------------
Type II Units:
Units
Purchased...... 9,638 $ 173,947 27,320 $ 659,806
Units Redeemed.. (4,181) (75,460) (3,979) (96,114)
Units
Exchanged...... 18,259 329,514 18,547 447,917
-------- ---------- -------- ------------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 23,716 $ 428,001 41,888 $ 1,011,610
======== ========== ======== ============
Units
Purchased...... 21,102 647,215 58,726 1,877,205
Units Redeemed.. (4,974) (152,561) (8,727) (278,920)
Units
Exchanged...... 12,859 394,411 15,688 501,492
-------- ---------- -------- ------------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 28,987 $ 889,064 65,687 $ 2,099,777
======== ========== ======== ============
Units
Purchased...... 25,741 573,163 34,005 871,376
Units Redeemed.. (12,396) (276,034) (17,489) (448,148)
Units
Exchanged...... 8,348 185,884 (6,219) (159,365)
-------- ---------- -------- ------------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 21,693 $ 483,013 10,297 $ 263,863
======== ========== ======== ============
F-82
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Janus Aspen Series -- Service Shares
-------------------------------------------------------------------------------------------------------------
Global Life Global Aggressive Capital Worldwide International
Sciences Technology Growth Appreciation Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------------ ---------------- ---------------- ---------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------- --------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Type II Units:
Units Purchased.. -- $ -- -- $ -- -- $ -- -- $ -- -- $ -- -- $ --
Units Redeemed.. -- -- -- -- -- -- -- -- -- -- -- --
Units Exchanged.. -- -- -- -- -- -- -- -- -- -- -- --
------- --------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 1999.. -- $ -- -- $ -- -- $ -- -- $ -- -- $ -- -- $ --
======= ========= ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
Units Purchased.. 469 5,030 3,278 31,497 -- -- -- -- -- -- -- --
Units Redeemed.. (140) (1,499) (259) (2,491) -- -- -- -- -- -- -- --
Units Exchanged.. 12,612 135,403 9,075 87,174 -- -- -- -- -- -- -- --
------- --------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2000.. 12,941 $ 138,935 12,094 $116,180 -- $ -- -- $ -- -- $ -- -- $ --
======= ========= ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
Units Purchased.. 9,913 99,524 17,332 84,975 25,967 124,909 18,110 122,926 16,270 118,480 6,531 46,389
Units Redeemed.. (10,274) (103,150) (2,294) (11,249) (3,874) (18,634) (1,772) (12,027) (2,536) (18,466) (1,245) (8,842)
Units Exchanged.. 2,203 22,119 (2,630) (12,894) 6,302 30,315 2,874 19,510 9,206 67,045 11,920 84,668
------- --------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2001.. 1,842 $ 18,493 12,408 $ 60,832 28,395 $136,590 19,212 $130,409 22,940 $167,059 17,206 $122,215
======= ========= ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
Balanced Growth
Portfolio Portfolio
----------------- -----------------
Units $ Amount Units $ Amount
------- --------- ------- ---------
Type II Units:
Units Purchased.. -- $ -- -- $ --
Units Redeemed.. -- -- -- --
Units Exchanged.. -- -- -- --
------- --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 1999.. -- $ -- -- $ --
======= ========= ======= =========
Units Purchased.. -- -- -- --
Units Redeemed.. -- -- -- --
Units Exchanged.. -- -- -- --
------- --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2000.. -- $ -- -- $ --
======= ========= ======= =========
Units Purchased.. 49,623 461,037 12,626 88,364
Units Redeemed.. (4,514) (41,945) (2,156) (15,092)
Units Exchanged.. 16,099 149,570 10,617 74,307
------- --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2001..61,208 $568,662 21,087 $147,579
======= ========= ======= =========
F-83
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Goldman Sachs
Variable Insurance Trust Salomon Brothers Variable Series Funds Inc.
---------------------------------- ---------------------------------------------------
Growth and Mid Cap Strategic Total
Income Value Bond Investors Return
Fund Fund Fund Fund Fund
---------------- ---------------- ---------------- ---------------- ---------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ -------- ------ -------- ------ -------- ------ -------- ----- --------
Type II Units:
Units
Purchased...... 1,560 $ 14,501 2,252 $ 18,585 5,549 $ 56,140 548 $ 7,246 6 $ 74
Units Redeemed.. (396) (3,687) (478) (3,942) (286) (2,890) (53) (704) (4) (48)
Units
Exchanged...... 35 329 (5,286) (43,632) 173 1,755 128 1,695 -- --
------ -------- ------ -------- ------ -------- ------ -------- ----- -------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... 1,199 $ 11,143 (3,512) $(28,990) 5,436 $ 55,005 623 $ 8,237 2 $ 26
====== ======== ====== ======== ====== ======== ====== ======== ===== =======
Units
Purchased...... 9,882 90,107 9,618 90,774 1,280 13,416 2,355 34,743 246 2,767
Units Redeemed.. (800) (7,292) (1,110) (10,475) (807) (8,453) (287) (4,238) (26) (287)
Units
Exchanged...... 1,739 15,852 17,815 168,139 3,077 32,259 11,373 167,798 6 67
------ -------- ------ -------- ------ -------- ------ -------- ----- -------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 10,821 $ 98,667 26,323 $248,438 3,550 $ 37,222 13,441 $198,304 226 $ 2,547
====== ======== ====== ======== ====== ======== ====== ======== ===== =======
Units
Purchased...... 3,064 22,004 12,356 142,280 8,873 99,792 5,087 79,045 3,182 35,396
Units Redeemed.. (2,103) (15,099) (6,487) (74,703) (1,461) (16,431) (2,175) (33,791) (337) (3,749)
Units
Exchanged...... (89) (642) 36,535 420,673 5,892 66,269 14,898 231,561 186 2,066
------ -------- ------ -------- ------ -------- ------ -------- ----- -------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 872 $ 6,263 42,404 $488,250 13,304 $149,630 17,810 $276,815 3,031 $33,713
====== ======== ====== ======== ====== ======== ====== ======== ===== =======
Dreyfus
---------------------------------
Dreyfus
The Dreyfus Investment
Socially Portfolios-
Responsible Emerging
Growth Fund, Markets
Inc. Portfolio
---------------- ----------------
Units $ Amount Units $ Amount
------ --------- ------ ---------
Type II Units:
Units
Purchased...... -- $ -- -- $ --
Units Redeemed.. -- -- -- --
Units
Exchanged...... -- -- -- --
------ --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... -- $ -- -- $ --
====== ========= ====== =========
Units
Purchased...... 6 47 -- --
Units Redeemed.. (2) (15) -- --
Units
Exchanged...... -- -- -- --
------ --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 4 $ 32 -- $ --
====== ========= ====== =========
Units
Purchased...... 4,356 31,492 968 8,227
Units Redeemed.. (897) (6,483) (123) (1,044)
Units
Exchanged...... 510 3,691 61 517
------ --------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 3,969 $28,700 906 $ 7,700
====== ========= ====== =========
F-84
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Rydex
MFS Variable Insurance Trust Variable Trust
-------------------------------------------------------------------- ----------------
MFS New MFS Investors
Discovery Growth Stock MFS Investors MFS Utility
Series Series Trust Series Series OTC Fund
--------------- ---------------- --------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount Units $ Amount
----- -------- ------ -------- ----- -------- ------ -------- ------ --------
Type II Units:
Units Purchased.. -- $ -- -- $ -- -- $ -- -- $ -- -- $ --
Units Redeemed.. -- -- -- -- -- -- -- -- -- --
Units Exchanged.. -- -- -- -- -- -- -- -- -- --
----- ------- ------ ------- ----- ------- ------ -------- ------ -------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 1999.. -- $ -- -- $ -- -- $ -- -- $ -- -- $ --
===== ======= ====== ======= ===== ======= ====== ======== ====== =======
Units Purchased.. 6 47 -- -- -- -- -- -- 4 31
Units Redeemed.. (2) (15) -- -- -- -- -- -- (1) (10)
Units Exchanged.. -- -- -- -- -- -- -- -- -- --
----- ------- ------ ------- ----- ------- ------ -------- ------ -------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2000.. 4 $ 32 -- $ -- -- $ -- -- $ -- 3 $ 21
===== ======= ====== ======= ===== ======= ====== ======== ====== =======
Units Purchased.. 5,428 42,247 9,927 62,346 6,983 57,502 18,121 151,260 4,233 18,451
Units Redeemed.. (712) (5,541) (885) (5,558) (593) (4,881) (2,946) (24,591) (1,038) (4,523)
Units Exchanged.. 3,178 24,739 2,341 14,701 2,607 21,467 10,737 89,620 1,830 7,976
----- ------- ------ ------- ----- ------- ------ -------- ------ -------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2001..7,894 $61,445 11,383 $71,489 8,997 $74,088 25,912 $216,289 5,025 $21,904
===== ======= ====== ======= ===== ======= ====== ======== ====== =======
Alliance Variable Products Series Fund, Inc.
-----------------------------------------------------
Premier Growth and
Growth Income Quasar
Fund Portfolio Portfolio
----------------- ------------------ ----------------
Units $ Amount Units $ Amount Units $ Amount
------- --------- ------- ---------- ------ ---------
Type II Units:
Units Purchased.. -- $ -- -- $ -- -- $ --
Units Redeemed.. -- -- -- -- -- --
Units Exchanged.. -- -- -- -- -- --
------- --------- ------- ---------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 1999.. -- $ -- -- $ -- -- $ --
======= ========= ======= ========== ====== =========
Units Purchased.. 6 47 -- -- -- --
Units Redeemed.. (2) (15) -- -- -- --
Units Exchanged.. -- -- -- -- -- --
------- --------- ------- ---------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2000.. 4 $ 32 -- $ -- -- $ --
======= ========= ======= ========== ====== =========
Units Purchased.. 10,298 76,621 29,150 298,144 2,430 18,293
Units Redeemed.. (1,873) (13,935) (3,060) (31,297) (523) (3,938)
Units Exchanged.. 7,912 58,865 16,521 168,984 1,385 10,429
------- --------- ------- ---------- ------ ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31, 2001..16,337 $121,551 42,611 $ 435,831 3,292 $24,784
======= ========= ======= ========== ====== =========
F-85
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
AIM Variable Insurance Funds, Inc.
----------------------------------------------------
AIM V.I.
Capital AIM V.I. AIM V.I.
Appreciation Growth Value
Fund Fund Fund
---------------- ---------------- ----------------
Units $ Amount Units $ Amount Units $ Amount
------ -------- ------ -------- ------ --------
Type II Units:
Units
Purchased...... -- $ -- -- $ -- -- $ --
Units Redeemed.. -- -- -- -- -- --
Units
Exchanged...... -- -- -- -- -- --
------ -------- ------ ------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... -- $ -- -- $ -- -- $ --
====== ======== ====== ======= ====== ========
Units
Purchased...... 6 47 -- -- -- --
Units Redeemed.. (2) (15) -- -- -- --
Units
Exchanged...... -- -- -- -- -- --
------ -------- ------ ------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... 4 $ 32 -- $ -- -- $ --
====== ======== ====== ======= ====== ========
Units
Purchased...... 14,717 90,280 12,062 67,056 16,751 136,367
Units Redeemed.. (2,279) (13,980) (2,832) (15,742) (2,660) (21,655)
Units
Exchanged...... 4,061 24,915 7,067 39,292 5,237 42,628
------ -------- ------ ------- ------ --------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 16,499 $101,215 16,297 $90,606 19,328 $157,340
====== ======== ====== ======= ====== ========
PIMCO Variable Insurance Trust
-------------------------------------------------------------------
Long-Term U.S. High Total
Foreign Bond Government Yield Bond Return Bond
Portfolio Bond Portfolio Fund Fund
--------------- ---------------- ---------------- -----------------
Units $ Amount Units $ Amount Units $ Amount Units $ Amount
------ -------- ------ --------- ------ --------- ------- ---------
Type II Units:
Units
Purchased...... -- $ -- -- $ -- -- $ -- -- $ --
Units Redeemed.. -- -- -- -- -- -- -- --
Units
Exchanged...... -- -- -- -- -- -- -- --
------ -------- ------ --------- ------ --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
1999........... -- $ -- -- $ -- -- $ -- -- $ --
====== ======== ====== ========= ====== ========= ======= =========
Units
Purchased...... -- -- -- -- -- -- -- --
Units Redeemed.. -- -- -- -- -- -- -- --
Units
Exchanged...... -- -- -- -- -- -- -- --
------ -------- ------ --------- ------ --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2000........... -- $ -- -- $ -- -- $ -- -- $ --
====== ======== ====== ========= ====== ========= ======= =========
Units
Purchased...... 614 6,661 4,949 56,723 4,345 43,002 5,487 60,277
Units Redeemed.. (130) (1,410) (772) (8,853) (640) (6,327) (645) (7,086)
Units
Exchanged...... 239 2,587 4,505 51,636 1,097 10,856 5,355 58,827
------ -------- ------ --------- ------ --------- ------- ---------
Net increase
(decrease) from
capital
transactions
with
policyholders
during the year
ended
December 31,
2001........... 723 $7,838 8,682 $99,506 4,802 $47,531 10,197 $112,018
====== ======== ====== ========= ====== ========= ======= =========
F-86
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
(6) Financial Highlights
A summary by type and by subaccount of the outstanding units, unit values,
net assets, expense ratios, investment income ratios, and total return ratios,
for the year or lesser period ended December 31, 2001, follows.
Expenses as a percentage of average net assets represent the annualized
contract expenses of the separate account, consisting of mortality and expense
charges for each period indicated. The ratios include only those expenses that
result in a direct reduction to unit values. Charges made directly to
policyholder accounts through the redemption of units and expenses of the
underlying funds are excluded.
The investment income ratio represents the ordinary dividends received by
the subaccount from the underlying mutual fund, divided by average net assets.
The recognition of investment income by the subaccount is affected by the
timing of the declaration of ordinary dividends by the underlying fund in
which the subaccounts invest.
The total return for the period indicated includes changes in the value of
the underlying fund and reflects deductions for all items included in the
expense ratio.
Year or lesser period ended December 31, 2001
------------------------------------------------------------
Net Assets Expenses as a
------------------------- % of Average Investment Total
Units Unit Value 000s Net Assets Income Ratio Return
------- ---------- ------ ------------- ------------ -------
Type I:
GE Investments Funds,
Inc.:
S&P 500 Index Fund..... 88,043 $49.38 $4,348 0.70% 1.09% (12.88)%
Money Market Fund...... 131,894 19.32 2,548 0.70% 3.82% 3.24 %
Total Return Fund...... 29,464 40.16 1,183 0.70% 1.14% (3.57)%
International Equity
Fund................... 8,794 13.04 115 0.70% 1.05% (21.42)%
Real Estate Securities
Fund................... 19,511 22.12 432 0.70% 4.09% 11.05 %
Global Income Fund..... 4,666 10.24 48 0.70% 0.00% (2.37)%
Mid-Cap Value Equity
Fund................... 16,101 17.44 281 0.70% 0.89% (0.38)%
Income Fund............ 33,971 12.33 419 0.70% 5.04% 6.67 %
U.S. Equity Fund....... 6,600 11.41 75 0.70% 0.74% (9.12)%
Premier Growth Equity
Fund................... 16,957 10.02 170 0.70% 0.12% (9.78)%
Oppenheimer Variable
Account Funds:
Bond Fund/VA........... 21,130 26.23 554 0.70% 6.40% 7.03 %
Capital Appreciation
Fund/VA................ 60,645 62.80 3,809 0.70% 0.62% (13.19)%
Aggressive Growth
Fund/VA................ 75,849 49.81 3,778 0.70% 0.96% (31.75)%
High Income Fund/VA.... 51,746 34.30 1,775 0.70% 10.05% 1.25 %
Multiple Strategies
Fund/VA................ 25,511 37.25 950 0.70% 3.71% 1.50 %
Variable Insurance
Products Fund:
Equity-Income
Portfolio.............. 134,736 47.84 6,446 0.70% 1.67% (5.62)%
Growth Portfolio....... 108,530 58.68 6,369 0.70% 0.08% (18.23)%
Overseas Portfolio..... 65,937 23.97 1,581 0.70% 5.37% (21.72)%
F-87
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Year or lesser period ended December 31, 2001
------------------------------------------------------------
Net Assets Expenses as a
------------------------- % of Average Investment Total
Units Unit Value 000s Net Assets Income Ratio Return
------- ---------- ------ ------------- ------------ -------
Type I:
Variable Insurance
Products Fund II:
Asset Manager
Portfolio............. 131,477 $29.16 $3,834 0.70% 4.25% (4.77)%
Contrafund Portfolio... 111,945 26.71 2,990 0.70% 0.80% (12.86)%
Variable Insurance
Products Fund III:
Growth & Income
Portfolio............. 22,841 15.03 343 0.70% 1.23% (9.39)%
Growth Opportunities
Portfolio............. 12,762 11.06 141 0.70% 0.35% (15.02)%
Federated Insurance
Series:
American Leaders Fund
II.................... 20,425 17.45 356 0.70% 1.33% (4.89)%
High Income Bond Fund
II.................... 15,482 14.44 224 0.70% 9.79% 0.67 %
Utility Fund II........ 13,254 15.14 201 0.70% 3.23% (14.33)%
Alger American Fund:
Small Capitalization
Portfolio............. 96,584 8.88 858 0.70% 0.05% (30.01)%
LargeCap Growth
Portfolio............. 97,453 19.62 1,912 0.70% 0.22% (12.44)%
PBHG Insurance Series
Fund, Inc.:
PBHG Large Cap Growth
Portfolio............. 18,707 17.44 326 0.70% 0.00% (28.79)%
PBHG Growth II
Portfolio............. 21,511 11.07 238 0.70% 0.00% (40.89)%
Janus Aspen Series:
Aggressive Growth
Portfolio............. 114,341 21.06 2,408 0.70% 0.00% (39.88)%
Growth Portfolio....... 136,463 22.14 3,021 0.70% 0.02% (25.26)%
Worldwide Growth
Portfolio............. 186,134 25.76 4,795 0.70% 0.26% (22.98)%
Balanced Portfolio..... 82,439 22.95 1,892 0.70% 1.41% (5.34)%
Flexible Income
Portfolio............. 9,034 15.60 141 0.70% 3.21% 6.98 %
International Growth
Portfolio............. 50,194 18.49 928 0.70% 0.40% (23.78)%
Capital Appreciation
Portfolio............. 22,414 20.69 464 0.70% 0.44% (22.22)%
Janus Aspen Series --
Service Shares:
Global Life Sciences
Portfolio............. 6,051 9.49 57 0.70% 0.00% (17.34)%
Global Technology
Portfolio............. 9,570 4.26 41 0.70% 0.00% (37.76)%
Goldman Sachs Variable
Insurance Trust:
Growth and Income
Fund.................. 837 7.93 7 0.70% 0.49% (9.98)%
Mid Cap Value Fund..... 29,382 12.24 360 0.70% 1.24% 11.26 %
Salomon Brothers
Variable Series Funds
Inc.:
Strategic Bond Fund.... 3,651 11.56 42 0.70% 5.91% 6.17 %
Investors Fund......... 21,398 14.68 314 0.70% 0.84% (4.82)%
Total Return Fund...... 2,210 11.29 25 0.70% 3.41% (1.50)%
Type II:
GE Investments Funds,
Inc.:
S&P 500 Index Fund..... 145,112 49.38 7,166 0.70% 1.09% (12.88)%
Money Market Fund...... 375,930 19.32 7,263 0.70% 3.82% 3.24 %
F-88
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Year or lesser period ended December 31, 2001
------------------------------------------------------------
Net Assets Expenses as a
------------------------- % of Average Investment Total
Units Unit Value 000s Net Assets Income Ratio Return
------- ---------- ------ ------------- ------------ -------
Type II:
Total Return Fund...... 16,248 $40.16 $ 653 0.70% 1.14% (3.57)%
International Equity
Fund.................. 23,877 13.04 311 0.70% 1.05% (21.42)%
Real Estate Securities
Fund.................. 24,349 22.12 539 0.70% 4.09% 11.05 %
Global Income Fund..... 8,893 10.24 91 0.70% 0.00% (2.37)%
Mid-Cap Value Equity
Fund.................. 64,428 17.44 1,124 0.70% 0.89% (0.38)%
Income Fund............ 28,562 12.33 352 0.70% 5.04% 6.67 %
U.S. Equity Fund....... 105,740 11.41 1,206 0.70% 0.74% (9.12)%
Premier Growth Equity
Fund.................. 77,433 10.02 776 0.70% 0.12% (9.78)%
Value Equity Fund...... 8,331 9.03 75 0.70% 1.40% (9.40)%
Small-Cap Value Equity
Fund.................. 8,753 11.99 105 0.70% 0.65% 9.20 %
Oppenheimer Variable
Account Funds:
Bond Fund/VA........... 20,879 26.23 548 0.70% 6.40% 7.03 %
Capital Appreciation
Fund/VA............... 28,225 62.80 1,773 0.70% 0.62% (13.19)%
Aggressive Growth
Fund/VA............... 19,988 49.81 996 0.70% 0.96% (31.75)%
High Income Fund/VA.... 34,909 34.30 1,197 0.70% 10.05% 1.25 %
Multiple Strategies
Fund/VA............... 11,900 37.25 443 0.70% 3.71% (10.91)%
Oppenheimer Variable
Account Funds -- Class
2 Shares:
Global Securities
Fund/VA............... 21,714 8.40 182 0.70% 0.14% (12.79)%
Main Street Growth &
Income Fund/VA........ 21,746 8.01 174 0.70% 0.04% (10.91)%
Variable Insurance
Products Funds:
Equity-Income
Portfolio............. 27,433 47.84 1,312 0.70% 1.67% (5.62)%
Growth Portfolio....... 34,260 58.68 2,010 0.70% 0.08% (18.23)%
Overseas Portfolio..... 7,322 23.97 176 0.70% 5.37% (21.72)%
Variable Insurance
Products Funds --
Service Class 2:
Equity-Income
Portfolio............. 25,792 9.76 252 0.70% 0.03% (5.89)%
Growth Portfolio....... 60,788 7.13 433 0.70% 0.00% (18.44)%
Variable Insurance
Products Funds II:
Asset Manager
Portfolio............. 8,491 29.16 248 0.70% 4.25% (4.77)%
Contrafund Portfolio... 109,907 26.71 2,936 0.70% 0.80% (12.86)%
Variable Insurance
Products Funds II --
Service Class 2:
Contrafund Portfolio... 23,700 8.10 192 0.70% 0.00% (13.09)%
Variable Insurance
Products Funds III:
Growth & Income
Portfolio............. 66,877 15.03 1,005 0.70% 1.23% (9.39)%
Growth Opportunities
Portfolio............. 24,875 11.06 275 0.70% 0.35% (15.02)%
Variable Insurance
Products Funds III --
Service Class 2:
Mid Cap Portfolio...... 12,355 9.57 118 0.70% 0.00% (4.19)%
Growth & Income
Portfolio............. 13,655 8.59 117 0.70% 0.00% (9.65)%
Federated Insurance
Series:
American Leaders Fund
II.................... 25,767 17.45 450 0.70% 1.33% (4.89)%
High Income Bond Fund
II.................... 16,943 14.44 245 0.70% 9.79% 0.67%
F-89
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Year or lesser period ended December 31, 2001
------------------------------------------------------------
Net Assets Expenses as a
------------------------- % of Average Investment Total
Units Unit Value 000s Net Assets Income Ratio Return
------- ---------- ------ ------------- ------------ -------
Type II:
Utility Fund II........ 16,543 $15.14 $ 250 0.70% 3.23% (14.33)%
International Small
Company Fund II....... 3,635 5.99 22 0.70% 0.00% (30.51)%
Federated Insurance
Series -- Service
Shares:
High Income Bond Fund
II.................... 3,727 9.34 35 0.70% 0.00% 0.66 %
Alger American Fund:
Small Capitalization
Portfolio............. 69,049 8.88 613 0.70% 0.05% (30.01)%
LargeCap Growth
Portfolio............. 129,030 19.62 2,532 0.70% 0.22% (12.44)%
PBHG Insurance Series
Fund, Inc.:
PBHG Large Cap Growth
Portfolio............. 27,510 17.44 480 0.70% 0.00% (28.79)%
PBHG Growth II
Portfolio............. 45,469 11.07 503 0.70% 0.00% (40.89)%
Janus Aspen Series:
Aggressive Growth
Portfolio............. 109,492 21.06 2,306 0.70% 0.00% (39.88)%
Growth Portfolio....... 136,402 22.14 3,020 0.70% 0.02% (25.26)%
Worldwide Growth
Portfolio............. 144,970 25.76 3,734 0.70% 0.26% (22.98)%
Balanced Portfolio..... 150,202 22.95 3,447 0.70% 1.41% (5.34)%
Flexible Income
Portfolio............. 22,884 15.60 357 0.70% 3.21% 6.98 %
International Growth
Portfolio............. 95,757 18.49 1,771 0.70% 0.40% (23.78)%
Capital Appreciation
Portfolio............. 121,421 20.69 2,512 0.70% 0.44% (22.22)%
Janus Aspen Series --
Service Shares:
Global Life Sciences
Portfolio............. 14,783 9.49 140 0.70% 0.00% (17.34)%
Global Technology
Portfolio............. 24,502 4.26 104 0.70% 0.00% (37.76)%
Aggressive Growth
Portfolio............. 28,395 4.11 117 0.70% 0.00% (40.02)%
Capital Appreciation
Portfolio............. 19,212 6.39 123 0.70% 0.44% (22.38)%
Worldwide Growth
Portfolio............. 22,940 6.68 153 0.70% 0.12% (23.16)%
International Growth
Portfolio............. 17,206 6.61 114 0.70% 0.20% (23.97)%
Balanced Portfolio..... 61,208 9.19 563 0.70% 1.70% (5.57)%
Growth Portfolio....... 21,087 6.17 130 0.70% 0.00% (25.43)%
Goldman Sachs Variable
Insurance Trust:
Growth and Income
Fund.................. 13,984 7.93 111 0.70% 0.49% (9.98)%
Mid Cap Value Fund..... 76,066 12.24 931 0.70% 1.24% 11.26 %
Salomon Brothers
Variable Series Funds
Inc.:
Strategic Bond Fund.... 22,290 11.56 258 0.70% 5.91% 6.17 %
Investors Fund......... 31,874 14.68 468 0.70% 0.84% (4.82)%
Total Return Fund...... 3,259 11.29 37 0.70% 3.41% (1.50)%
Dreyfus:
The Dreyfus Socially
Responsible Growth
Fund, Inc. ........... 3,973 6.70 27 0.70% 0.11% (23.12)%
Dreyfus Investment
Portfolios -- Emerging
Markets Portfolio..... 906 8.87 8 0.70% 1.31% 2.59 %
MFS Variable Insurance
Trust:
MFS New Discovery
Series................ 7,898 8.48 67 0.70% 0.00% (5.92)%
MFS Investors Growth
Stock Series.......... 11,383 6.50 74 0.70% 0.01% (25.36)%
F-90
GE LIFE & ANNUITY SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 2001
Year or lesser period ended December 31, 2001
---------------------------------------------------------
Net Assets Expenses as a
---------------------- % of Average Investment Total
Units Unit Value 000s Net Assets Income Ratio Return
------ ---------- ---- ------------- ------------ -------
Type II:
MFS Investors Trust
Series................ 8,997 $ 8.09 $ 73 0.70% 0.09% (16.69)%
MFS Utility Series..... 25,912 7.30 189 0.70% 2.12% (24.98)%
Rydex Variable Trust:
OTC Fund............... 5,028 4.17 21 0.70% 0.00% (35.63)%
Alliance Variable
Products Series Fund,
Inc.:
Premier Growth
Portfolio............. 16,341 7.05 115 0.70% 0.00% (17.98)%
Growth and Income
Portfolio............. 42,611 10.15 433 0.70% 0.40% (0.55)%
Quasar Portfolio....... 3,292 7.25 24 0.70% 0.00% (13.47)%
AIM Variable Insurance
Funds, Inc.:
AIM V.I. Capital
Appreciation Fund..... 16,503 5.92 98 0.70% 0.00% (23.82)%
AIM V.I. Growth Fund... 16,297 5.10 83 0.70% 0.35% (34.35)%
AIM V.I. Value Fund.... 19,328 7.91 153 0.70% 0.23% (13.18)%
PIMCO Variable Insurance
Trust:
Foreign Bond
Portfolio............. 723 11.06 8 0.70% 3.20% 6.84 %
Long-Term U.S.
Government Bond
Portfolio............. 8,682 11.36 99 0.70% 3.84% 5.11 %
High Yield Bond
Portfolio............. 4,802 9.96 48 0.70% 6.63% 1.63 %
Total Return Bond
Portfolio............. 10,197 11.16 114 0.70% 3.53% 7.61 %
F-91
GE LIFE AND ANNUITY ASSURANCE COMPANY
Financial Statements
Year ended December 31, 2001
(With Independent Auditors' Report Thereon)
GE LIFE AND ANNUITY ASSURANCE COMPANY
Table of Contents
December 31, 2001
Page
----
Financial Statements:
Consolidated Balance Sheets.............................................. F-2
Consolidated Statements of Income........................................ F-3
Consolidated Statements of Shareholders' Interest........................ F-4
Consolidated Statements of Cash Flows.................................... F-6
Notes to the Consolidated Financial Statements........................... F-7
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, 2001 and 2000,
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,
2001. 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, 2001 and 2000,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.
As discussed in notes 1 and 11 to the consolidated financial statements,
the Company changed its method of accounting for derivatives in 2001.
As discussed in notes 1 and 9 to the consolidated financial statements,
the Company changed its method of accounting for insurance-related assessments
in 1999.
/s/ KPMG LLP
Richmond, Virginia
January 15, 2002
F-1
GE LIFE AND ANNUITY ASSURANCE COMPANY
AND SUBSIDIARY
Consolidated Balance Sheets
(Dollar amounts in millions, except per share amounts)
December 31,
--------------------
2001 2000
--------- ---------
Assets
Investments:
Fixed maturities available-for-sale, at fair value..... $10,539.6 $ 9,260.5
Equity securities available-for-sale, at fair value:
Common stocks........................................ 20.6 15.3
Preferred stocks, non-redeemable..................... 17.2 20.8
Investment in affiliate................................ 2.6 2.6
Mortgage loans, net of valuation allowance of $18.2 and
$14.3 at December 31, 2001 and 2000, respectively..... 938.8 1,130.0
Policy loans........................................... 109.4 89.0
Real estate owned...................................... 3.5 2.5
Other invested assets.................................. 147.4 134.7
--------- ---------
Total investments.................................... 11,779.1 10,655.4
--------- ---------
Cash and cash equivalents.............................. -- 71.4
Accrued investment income.............................. 208.4 215.9
Deferred acquisition costs............................. 853.8 715.7
Intangible assets...................................... 352.9 400.4
Reinsurance recoverable................................ 151.1 90.6
Other assets........................................... 117.0 69.9
Separate account assets................................ 8,994.3 10,393.2
--------- ---------
Total assets......................................... $22,456.6 $22,612.5
========= =========
Liabilities and Shareholders' Interest
Liabilities:
Future annuity and contract benefits................... $10,975.3 $ 9,934.3
Liability for policy and contract claims............... 189.0 140.4
Other policyholder liabilities......................... 91.4 164.0
Accounts payable and accrued expenses.................. 548.9 473.9
Deferred income tax liability.......................... 75.5 32.0
Separate account liabilities........................... 8,994.3 10,393.2
--------- ---------
Total liabilities.................................... 20,874.4 21,137.8
--------- ---------
Shareholders' interest:
Net unrealized investment losses....................... (17.4) (18.7)
Derivatives qualifying as hedges....................... (8.1) --
--------- ---------
Accumulated non-owner changes in equity................ (25.5) (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...................................... 411.4 297.1
--------- ---------
Total shareholders' interest......................... 1,582.2 1,474.7
--------- ---------
Total liabilities and shareholders' interest......... $22,456.6 $22,612.5
========= =========
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,
----------------------------
2001 2000 1999
-------- -------- --------
Revenues:
Net investment income.......................... $ 698.9 $ 708.9 $ 638.2
Net realized investment gains.................. 29.1 4.3 12.0
Premiums....................................... 108.4 116.3 123.9
Cost of insurance.............................. 126.1 126.0 129.0
Variable product fees.......................... 131.1 148.7 90.2
Other income................................... 40.8 49.2 24.6
-------- -------- --------
Total revenues............................... 1,134.4 1,153.4 1,017.9
-------- -------- --------
Benefits and expenses:
Interest credited.............................. 533.8 532.6 440.8
Benefits and other changes in policy reserves.. 182.3 223.6 214.7
Commissions.................................... 162.7 229.3 192.1
General expenses............................... 129.0 124.8 124.7
Amortization of intangibles, net............... 50.0 43.7 58.3
Change in deferred acquisition costs, net...... (125.3) (237.7) (179.1)
Interest expense............................... 2.2 1.1 1.9
-------- -------- --------
Total benefits and expenses.................. 934.7 917.4 853.4
-------- -------- --------
Income before income taxes and cumulative
effect of change in accounting principle.... 199.7 236.0 164.5
Provision for income taxes....................... 70.1 72.9 56.6
-------- -------- --------
Income before cumulative effect of change in
accounting principle.......................... 129.6 163.1 107.9
-------- -------- --------
Cumulative effect of change in accounting
principle, net of tax........................... (5.7) -- 5.0
-------- -------- --------
Net income..................................... $ 123.9 $ 163.1 $ 112.9
======== ======== ========
See accompanying Notes to Consolidated Financial Statements.
F-3
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Statements of Shareholders' Interest
(Dollar amounts in millions)
Common Stock
Preferred Declared
Stock Common Stock but not Issued
-------------- ------------- ---------------
Shares Amount Shares Amount Shares Amount
------- ------ ------ ------ ------- ------
Balances at December 31, 1998.... 120,000 $120.0 7,010 $ 7.0 18,641 $ 18.6
Changes other than transactions
with shareholders:
Net income...................... -- -- -- -- -- --
Net unrealized losses on
investment securities (a)...... -- -- -- -- -- --
Total changes other than
transactions with
shareholders...................
Cash dividend declared and paid.. -- -- -- -- -- --
Common stock issued.............. -- -- 18,641 18.6 (18,641) (18.6)
Adjustment to reflect purchase
method.......................... -- -- -- -- -- --
------- ------ ------ ----- ------- ------
Balances at December 31, 1999.... 120,000 120.0 25,651 25.6 -- --
Changes other than transactions
with shareholders:
Net income...................... -- -- -- -- -- --
Net unrealized gains on
investment securities (a)...... -- -- -- -- -- --
Total changes other than
transactions with
shareholders...................
Cash dividend declared and paid.. -- -- -- -- -- --
------- ------ ------ ----- ------- ------
Balances at December 31, 2000.... 120,000 120.0 25,651 25.6 -- --
Changes other than transactions
with shareholders:
Net income...................... -- -- -- -- -- --
Net unrealized gains on
investment securities (a)...... -- -- -- -- -- --
Cumulative effect on
shareholders' interest of
adopting SFAS 133 (b).......... -- -- -- -- -- --
Derivatives qualifying as
hedges......................... -- -- -- -- -- --
Total changes other than
transactions with
shareholders...................
Cash dividend declared and paid.. -- -- -- -- -- --
------- ------ ------ ----- ------- ------
Balances at December 31, 2001.... 120,000 $120.0 25,651 $25.6 -- $ --
======= ====== ====== ===== ======= ======
(a) Presented net of deferred taxes of $0, $(61.8) and $103.6 in 2001, 2000 and
1999, respectively.
(b) Presented net of deferred taxes of $4.4.
See accompanying Notes to Consolidated Financial Statements.
F-4
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Consolidated Statements of Shareholders' Interest
(Dollar amounts in millions)
Accumulated
Additional Non-owner Total
Paid-In Changes in Retained Shareholders'
Capital Equity Earnings Interest
---------- ----------- -------- -------------
Balances at December 31, 1998.... $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.............. -- -- -- -
Adjustment to reflect purchase
method.......................... 0.6 -- -- 0.6
-------- ------- ------ --------
Balances at December 31, 1999.... 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 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.... 1,050.7 (18.7) 297.1 1,474.7
Changes other than transactions
with shareholders:
Net income...................... -- -- 123.9 123.9
Net unrealized gains on
investment securities (a)...... -- 1.3 -- 1.3
Cumulative effect on
shareholders' interest of
adopting SFAS 133 (b).......... -- (7.8) -- (7.8)
Derivatives qualifying as
hedges......................... -- (0.3) -- (0.3)
--------
Total changes other than
transactions with
shareholders................... 117.1
Cash dividend declared and paid.. -- -- (9.6) (9.6)
-------- ------- ------ --------
Balances at December 31, 2001.... $1,050.7 $ (25.5) $411.4 $1,582.2
======== ======= ====== ========
(a) Presented net of deferred taxes of $0, $(61.8) and $103.6 in 2001, 2000 and
1999, respectively.
(b) Presented net of deferred taxes of $4.4.
See accompanying Notes to Consolidated Financial Statements.
F-5
GE LIFE AND ANNUITY ASSURANCE COMPANY
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(In millions)
Years Ended December 31,
-------------------------------
2001 2000 1999
--------- --------- ---------
Cash flows from operating activities:
Net income.................................... $ 123.9 $ 163.1 $ 112.9
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of change in accounting
principle, net of tax...................... 5.7 -- (5.0)
Cost of insurance and surrender fees........ (155.9) (149.3) (169.5)
Decrease in future policy benefits.......... 589.9 688.9 565.5
Net realized investment gains............... (29.1) (4.3) (12.0)
Amortization of investment premiums and
discounts.................................. 6.8 (3.4) (1.3)
Amortization of intangibles................. 50.0 43.7 58.3
Deferred income tax expense................. 51.1 94.5 25.0
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income................. 7.5 (25.7) (48.6)
Deferred acquisition costs................ (125.3) (237.7) (179.1)
Other assets, net......................... (45.0) 188.2 (195.1)
Increase (decrease) in:
Policy and contract claims................ 39.7 25.5 (43.4)
Other policyholder liabilities............ (71.5) 26.8 20.0
Accounts payable and accrued expenses..... 72.4 276.2 73.8
--------- --------- ---------
Total adjustments....................... 396.3 923.4 88.6
--------- --------- ---------
Net cash provided by operating
activities............................. 520.2 1,086.5 201.5
--------- --------- ---------
Cash flows from investing activities:
Short-term investment activity, net......... (22.9) (17.6) --
Proceeds from sales and maturities of
investment securities and other invested
assets..................................... 3,904.1 1,997.0 1,702.2
Principal collected on mortgage and policy
loans...................................... 332.6 102.1 103.3
Proceeds collected from policy loan
securitization............................. -- -- 145.1
Purchases of investment securities and other
invested assets............................ (5,182.8) (3,047.2) (3,037.4)
Mortgage loan originations and increase in
policy loans............................... (167.9) (437.4) (170.4)
--------- --------- ---------
Net cash used in investing activities... (1,136.9) (1,403.1) (1,257.2)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issue of investment
contracts.................................. 4,120.9 5,274.4 4,717.6
Redemption and benefit payments on
investment contracts....................... (3,566.0) (4,946.8) (3,593.4)
Cash dividends to shareholders.............. (9.6) (9.6) (9.6)
--------- --------- ---------
Net cash provided by financing
activities............................. 545.3 318.0 1,114.6
--------- --------- ---------
Net increase (decrease) in cash and
equivalents............................ (71.4) 1.4 58.9
Cash and cash equivalents at beginning of
year......................................... 71.4 70.0 11.1
--------- --------- ---------
Cash and cash equivalents at end of year...... $ -- $ 71.4 $ 70.0
========= ========= =========
See accompanying Notes to Consolidated Financial Statements.
F-6
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999
(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.
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 GE Financial Assurance Holdings, Inc. ("GEFAHI"), which is an
indirect wholly-owned subsidiary of General Electric Capital Corporation
("GECC"). GECC is a wholly-owned subsidiary of General Electric Capital
Services, Inc. ("GE Capital Services"), which in turn is wholly-owned,
directly or indirectly, by General Electric Company.
(b) Basis of Presentation
These consolidated financial statements have been prepared on the basis of
accounting principles 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
those estimates. Certain prior year amounts have been reclassified to conform
to the current year presentation.
(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.
Wealth Accumulation and Transfer products are investment vehicles and
insurance contracts 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. The Company's principal product lines
under the Wealth Accumulation and Transfer segment are annuities (deferred and
immediate; either fixed or variable), life insurance (universal, variable,
ordinary and group) and guaranteed investment contracts ("GICs") including
funding agreements.
Lifestyle Protection and Enhancement products are intended to protect
accumulated wealth and income from the financial drain of unforeseen events.
The Company's principal product line under the Lifestyle Protection and
Enhancement segment is accident and health insurance.
The Company distributes its products through two primary channels:
intermediaries (such as brokerage general agents, banks, securities brokerage
firms, financial planning firms, accountants, affluent market producers and
specialized brokers) and career or dedicated sales forces, who distribute
certain of the Company's products on an exclusive basis, some of whom are not
employees of the Company. Approximately 30%, 25% and 28% of the Company's
sales of variable products in 2001, 2000 and 1999, respectively, have been
through two specific national stockbrokerage firms. 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.
F-7
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
The Company offers insurance products throughout the United States of
America (except New York). Approximately 17%, 18% and 17% of premium and
annuity consideration collected, in 2001, 2000 and 1999, respectively, came
from customers residing in the South Atlantic region of the United States,
approximately 23%, 24% and 17% of premium and annuity consideration collected,
in 2001, 2000 and 1999, respectively, came from customers residing in the Mid-
Atlantic region of the United States and approximately 13%, 9% and 11% of
premium and annuity consideration collected, in 2001, 2000 and 1999,
respectively, came from customers residing in California.
(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) Cash and Cash Equivalents
Certificates, money market funds and other time deposits with original
maturities of less than 90 days are considered cash equivalents in the
Consolidated Balance Sheets and Consolidated Statements of Cash Flows. Items
with maturities greater than 90 days are included in other invested assets.
(f) Investment Securities
The Company has designated its fixed maturities (bonds, notes and
redeemable preferred stock) and its 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 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 acquisition costs, present value of future profits and
deferred income taxes are reflected as unrealized investment gains or losses
in a separate component of shareholders' interest and, accordingly, have no
effect on net income. Investment securities are regularly reviewed for
impairment based on criteria that include the extent to which cost exceeds
market value, the duration of the market decline and the financial health of
and specific prospects for the issuer. 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 Company engages in
certain securities lending transactions, which require the borrower to provide
collateral, primarily consisting of cash and government securities, on a daily
basis, in amounts equal to or exceeding 102% of the fair value of the
applicable securities loaned.
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
F-8
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
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.
Mortgage and policy loans are stated at their unpaid principal balance, net
of allowances for estimated uncollectible amounts. 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.
Write-downs and the change in reserves are included in net realized investment
gains and losses in the Consolidated Statements of Income.
Short-term investments, if any, are stated at amortized cost which
approximates fair value. Equity securities (including seed money for new
mutual fund portfolios) are stated at fair value. Investments in limited
partnerships are generally accounted for under the equity method of
accounting. Real estate is stated, generally, at cost less accumulated
depreciation. Other long-term investments are stated generally at amortized
cost.
(g) Deferred Acquisition Costs
Acquisition costs include costs and expenses which vary with and are
primarily related to the acquisition of insurance and investment contracts.
Acquisition costs include first-year commissions in excess of recurring
renewal commissions, and certain support costs such as underwriting and policy
issue 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.
(h) 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.
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-9
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
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.
(i) Federal Income Taxes
The Company files a consolidated life insurance federal income tax return
with its parent, GECA and its life insurance affiliates. The method of income
tax allocation is subject to written agreement authorized by the Board of
Directors. Allocation is based on the separate return liabilities with offsets
for losses and credits utilized to reduce current consolidated tax liability.
Intercompany tax balances are settled quarterly, with a final settlement after
filing of the federal income tax return.
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.
(j) 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 and estimated 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.
(k) 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 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.
(l) 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.
(m) Separate Accounts
The separate account assets and liabilities represent funds held, and the
related liabilities for, the exclusive benefit of the variable annuity and
variable life contract holders. 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 equal 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, 2001, approximately $55.9 of the Company's
other invested assets related to its capital investments is in the separate
accounts.
F-10
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
(n) Accounting Changes
At January 1, 2001, the Company adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended. Under SFAS 133 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 the
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 hedges is
reported in earnings as it occurs. Further information about derivative
instruments is provided in Note 11.
At January 1, 2001, the Company's consolidated 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
----- ------
Totals................................................ $(5.7) $ (7.8)
===== ======
- --------
(a) For earnings effect, amount shown is net of hedged items.
The cumulative effect on shareholders' interest was primarily attributable
to marking to market swap contracts used to hedge variable-rate investments.
Decreases in the fair values of these instruments were attributable to changes
in interest rates since inception of the hedging arrangement. As a matter of
policy, the Company ensures that funding, including the effect of derivatives,
of its investment and other financial asset positions are substantially
matched in character (e.g., fixed vs. floating) and duration. As a result,
declines in the fair values of these effective derivatives are offset by
unrecognized gains on the related financing assets and hedged items, and
future net earnings will not be subject to volatility arising from interest
rate changes.
In November 2000, the Emerging Issues Task Force of the Financial
Accounting Standards Board (FASB) reached a consensus on accounting for
impairment of retained beneficial interests (EITF 99-20). Under this
consensus, impairment of certain beneficial interests in securitized assets
must be recognized when (1) the asset's fair value is below its carrying
value, and (2) it is probable that there has been an adverse change in
estimated cash flows. Previously, impairment on such assets was recognized
when the asset's carrying value exceeded estimated cash flows discounted at a
risk free rate of return. The effect of adopting EITF 99-20 at January 1, 2001
was not significant to the Company's operating results.
See Note 9 for Change in Accounting for Insurance-Related Assessments in
1999.
(o) Accounting Pronouncement Not Yet Adopted
SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets, modify the accounting for business combinations, goodwill
and identifiable intangible assets. As of January 1, 2002, all goodwill and
indefinite-lived intangible assets must be tested for impairment, and, if
necessary, a transition adjustment will be recognized. Management does not
believe there will be any goodwill impairment under these new standards.
Amortization of goodwill will cease as of January 1, 2002, and thereafter, all
goodwill and any
F-11
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
indefinite-lived intangible assets must be tested at least annually for
impairment. The effect of the non-amortization provision on 2002 operations
will be affected by 2002 acquisitions, if any, and cannot be forecast, but if
these rules had applied to goodwill in 2001, management believes that full-
year 2001 net earnings would have increased by approximately $7.
(2) Investment Securities
(a) General
For the years ended December 31, the sources of investment income of the
Company were as follows:
2001 2000 1999
------ ------ ------
Fixed maturities..................................... $615.2 $623.1 $557.9
Equity securities.................................... 1.7 1.8 2.2
Mortgage loans....................................... 80.9 80.0 66.9
Policy loans......................................... 7.1 4.6 14.0
Other investments.................................... 1.8 6.7 2.5
------ ------ ------
Gross investment income.............................. 706.7 716.2 643.5
Investment expenses.................................. (7.8) (7.3) (5.3)
------ ------ ------
Net investment income................................ $698.9 $708.9 $638.2
====== ====== ======
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:
2001 2000 1999
-------- ------ ------
Sales proceeds..................................... $2,663.3 $874.2 $590.3
======== ====== ======
Gross realized investment:
Gains............................................ 100.5 29.3 28.6
Losses........................................... (71.4) (25.0) (16.6)
-------- ------ ------
Net realized investment gains...................... $ 29.1 $ 4.3 $ 12.0
======== ====== ======
The additional proceeds from investments presented in the Company's
Consolidated Statements of Cash Flows result from principal collected on
mortgage and 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 PVFP and deferred 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:
F-12
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
2001 2000 1999
------ ------ -------
Net unrealized gains (losses) on available-for-
sale investment securities and other invested
assets before adjustments:
Fixed maturities............................... $(41.2) $(34.4) $(245.0)
Equity securities.............................. 4.6 (1.6) (0.4)
Other invested assets.......................... (16.4) (3.2) (4.1)
------ ------ -------
Subtotal..................................... (53.0) (39.2) (249.5)
====== ====== =======
Adjustments to the present value of future
profits and deferred acquisition costs.......... 25.2 10.1 43.1
Deferred income taxes............................ 10.4 10.4 72.2
------ ------ -------
Net unrealized losses on available-for-sale
investment securities....................... $(17.4) $(18.7) $(134.2)
====== ====== =======
The change in the net unrealized gains (losses) on investment securities
reported in accumulated non-owner changes in equity is as follows:
2001 2000 1999
------ ------- -------
Net unrealized gains (losses) on investment
securities --beginning of year................... $(18.7) $(134.2) $ 57.8
Unrealized gains (losses) on investment
securities -- net of deferred taxes of ($5.1),
($63.3) and $99.1................................ 10.8 118.3 (184.2)
Reclassification adjustments -- net of deferred
taxes of $5.1, $1.5 and $4.5..................... (9.5) (2.8) (7.8)
------ ------- -------
Net unrealized losses on investment securities --
end of year..................................... $(17.4) $ (18.7) $(134.2)
====== ======= =======
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
2001 cost gains losses value
---- --------- ---------- ---------- ---------
Fixed maturities:
U.S. government and agency....... $ 5.1 $ 0.1 $ -- $ 5.2
State and municipal.............. 1.2 -- -- 1.2
Non-U.S. government ............. 37.0 0.2 (0.5) 36.7
U.S. corporate................... 5,976.7 93.6 (199.4) 5,870.9
Non-U.S. corporate............... 819.5 10.5 (18.0) 812.0
Mortgage-backed.................. 2,217.3 50.9 (7.3) 2,260.9
Asset-backed..................... 1,524.0 31.5 (2.8) 1,552.7
--------- ------ ------- ---------
Total fixed maturities......... 10,580.8 186.8 (228.0) 10,539.6
Common stocks and non-redeemable
preferred stocks................ 33.2 4.8 (0.2) 37.8
--------- ------ ------- ---------
Total available-for-sale
securities...................... $10,614.0 $191.6 $(228.2) $10,577.4
========= ====== ======= =========
F-13
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
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
======== ====== ======= ========
The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 2001 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.................................... $ 131.3 $ 131.3
Due one year through five years............................ 2,518.4 2,524.6
Due five years through ten years........................... 2,570.8 2,524.9
Due after ten years........................................ 1,619.0 1,545.2
--------- ---------
Subtotals................................................ 6,839.5 6,726.0
Mortgage-backed securities................................. 2,217.3 2,260.9
Asset-backed securities.................................... 1,524.0 1,552.7
--------- ---------
Totals................................................... $10,580.8 $10,539.6
========= =========
As of December 31, 2001, $1,175.0 of the Company's investments (excluding
mortgage and asset-backed securities) were subject to certain call provisions.
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders of $5.5
and $5.6 as of December 31, 2001 and 2000, respectively.
As of December 31, 2001, approximately 20.7%, 17.2% and 14.3% of the
Company's investment portfolio is comprised of securities issued by the
manufacturing, financial and utilities 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, 2001 the Company did not hold any fixed maturity
securities which exceeded 10% of shareholders' interest.
F-14
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
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.
2001 2000
----------------- ------------------
Fair
value Percent Fair value Percent
--------- ------- ---------- -------
Agencies and treasuries................. $ 250.5 2.4% $ 226.8 2.5%
AAA/Aaa................................. 3,232.4 30.7 2,406.5 26.0
AA/Aa................................... 841.9 8.0 645.7 7.0
A/A..................................... 2,432.5 23.1 2,161.3 23.3
BBB/Baa................................. 2,366.6 22.4 2,259.4 24.4
BB/Ba................................... 346.2 3.3 365.9 4.0
B/B..................................... 95.6 0.9 168.0 1.8
CCC/Ca.................................. 10.0 0.1 10.1 0.1
Not rated............................... 963.9 9.1 1,016.8 11.0
--------- ----- -------- -----
Totals.................................. $10,539.6 100.0% $9,260.5 100.1%
========= ===== ======== =====
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa3 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, 2001 and 2000, there were fixed maturities in default
(issuer has missed a coupon payment or entered bankruptcy) with a fair value
of $11.7 and $6.4, respectively.
The Company has limited partnership commitments outstanding of $16.0 and
$51.5 at December 31, 2001 and 2000, 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, 2001:
Mortgage Real Estate
-------- -----------
South Atlantic.......................................... 26.8% 100.0%
Mid Atlantic............................................ 10.3 --
Pacific................................................. 30.7 --
East North Central...................................... 10.0 --
West South Central...................................... 4.6 --
Mountain................................................ 9.8 --
Other................................................... 7.8 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
F-15
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
Type distribution as of December 31, 2001:
Mortgage Real Estate
-------- -----------
Office Building......................................... 27.6% -- %
Retail.................................................. 26.1 100.0
Industrial.............................................. 28.0 --
Apartments.............................................. 12.9 --
Other................................................... 5.4 --
----- -----
Totals.................................................. 100.0% 100.0%
===== =====
For the years ended December 31, 2001 and 2000, respectively, the Company
originated $36.0 and $96.6 of mortgages secured by real estate in California,
which represents 25% and 22% of the Company's total U.S. originations for
those years.
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, 2001 and 2000,
totaled $6.7 and $3.6 respectively.
"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:
loans requiring allowances for losses (none as of December 31, 2001 and 2000)
and loans expected to be fully recoverable because the carrying amount has
been reduced previously through charge-offs or deferral of income recognition
($7.6 and $6.3, as of December 31, 2001 and 2000, respectively). Average
investment in impaired loans during 2001, 2000 and 1999 was $6.8, $11.5 and
$15.0 and interest income earned on these loans while they were considered
impaired was $0.9, $0.8 and $2.6 for the years ended 2001, 2000 and 1999,
respectively.
The following table presents the activity in the allowance for losses
during the years ended December 31:
2001 2000 1999
----- ----- -----
Balance at January 1..................................... $14.3 $23.3 $20.9
Provision (benefit) charged (credited) to operations..... 2.3 (11.1) 1.6
Amounts written off, net of recoveries................... 1.6 2.1 0.8
----- ----- -----
Balance at December 31................................... $18.2 $14.3 $23.3
===== ===== =====
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, 2001, 2000 and
1999 represented 1.9%, 1.3% and 2.8% of gross mortgage loans, respectively.
The Company had $5.0 and $4.5 of non-income producing mortgage loans as of
December 31, 2000 and 1999, respectively. There were no non-income producing
mortgage loans as of December 31, 2001.
F-16
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
(3) Deferred Acquisition Costs
Activity impacting deferred policy acquisition costs for the years ended
December 31, was as follows:
2001 2000 1999
------ ------ ------
Unamortized balance at January 1................... $712.9 $475.2 $296.1
Costs deferred..................................... 204.1 304.4 218.9
Amortization, net.................................. (78.8) (66.7) (39.8)
------ ------ ------
Unamortized balance at December 31................. 838.2 712.9 475.2
Cumulative effect of net unrealized investment
losses............................................ 15.6 2.8 7.3
------ ------ ------
Financial statement balance at December 31......... $853.8 $715.7 $482.5
====== ====== ======
(4) Intangible Assets
(a) Present Value of Future Profits
The method used by the Company to value PVFP in connection with
acquisitions of life insurance entities is summarized as follows: (1) identify
the future gross profits attributable to certain lines of business, (2)
identify the risks inherent in realizing those gross profits, and (3) discount
those gross profits at the rate of return that the Company must earn in order
to accept the inherent risks.
The following table presents the activity in PVFP for the years ended
December 31:
2001 2000 1999
------ ------ ------
Unamortized balance at January 1................... $278.1 $314.8 $367.0
Interest accreted at 6.57%, 5.94% and 6.64% for
2001, 2000 and 1999, respectively................. 16.3 17.1 21.9
Amortization....................................... (59.3) (53.8) (74.1)
------ ------ ------
Unamortized balance at December 31................. 235.1 278.1 314.8
Cumulative effect of net unrealized investment
losses............................................ 9.6 7.3 35.8
------ ------ ------
Financial statement balance at December 31......... $244.7 $285.4 $350.6
====== ====== ======
The estimated percentage of the December 31, 2001 balance, before the
effect of unrealized investment gains or losses, to be amortized over each of
the next five years is as follows:
2002................................... 11.8%
2003................................... 9.7
2004................................... 8.4
2005................................... 7.3
2006................................... 6.5
(b) Goodwill
At December 31, 2001 and 2000, total unamortized goodwill was $107.4 and
$114.4, respectively, which is shown net of accumulated amortization and
adjustments of $43.3 and $36.3 for the years ended December 31,
F-17
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
2001 and 2000, respectively. Goodwill amortization was $7.0, $7.0 and $6.0 for
the years ending December 31, 2001, 2000 and 1999, respectively.
(5) Reinsurance
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 companies. 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 earned for the years ended December
31 were as follows:
2001 2000 1999
------ ------ ------
Direct............................................... $128.8 $145.6 $166.6
Assumed.............................................. 3.3 3.3 3.0
Ceded................................................ (23.7) (32.5) (45.7)
------ ------ ------
Net premiums earned.................................. $108.4 $116.4 $123.9
------ ------ ------
Percentage of amount assumed to net.................. 3% 3% 2%
====== ====== ======
Due to the nature of the Company's insurance contracts, premiums earned
approximate premiums written.
Reinsurance recoveries recognized as a reduction of benefits amounted to
$58.0, $54.3 and $68.2 for the years ended December 31, 2001, 2000 and 1999,
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 less the present
value of future net premiums, 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.
F-18
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
The following chart summarizes the major assumptions underlying the
Company's recorded liabilities for future annuity and contract benefits:
Mortality/ Interest December 31,
Withdrawal Morbidity Rate ------------------
Assumption Assumption Assumption 2001 2000
---------- ---------- ------------ --------- --------
Investment contracts.... N/A N/A N/A $ 8,788.6 $7,759.7
Limited-payment
contracts.............. None (a) 3.5-10.0% 17.9 17.4
Traditional life
insurance contracts.... Company (b) 7.0% grading 344.2 362.3
Experience to 6.5%
Universal life-type
contracts.............. N/A N/A N/A 1,774.9 1,747.5
Accident and health..... Company (c) 7.5% grading 49.7 47.4
Experience to 4.75%
--------- --------
Total future annuity and
contract benefits...... $10,975.3 $9,934.3
========= ========
- --------
(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
The total provision for income taxes for the years ended December 31
consisted of the following components:
2001 2000 1999
----- ------ -----
Current federal income tax provision (benefit).......... $18.2 $(20.8) $29.3
Deferred federal income tax provision................... 49.1 90.5 24.9
----- ------ -----
Subtotal-federal provision............................ 67.3 69.7 54.2
----- ------ -----
Current state income tax provision (benefit)............ 0.8 (0.8) 2.3
Deferred state income tax provision..................... 2.0 4.0 0.1
----- ------ -----
Subtotal-state provision.............................. 2.8 3.2 2.4
----- ------ -----
Total income tax provision............................ $70.1 $ 72.9 $56.6
===== ====== =====
The reconciliation of the federal statutory rate to the effective income
tax rate at December 31 is as follows:
2001 2000 1999
---- ---- ----
Statutory U.S. federal income tax rate..................... 35.0% 35.0% 35.0%
State income tax, net of federal income tax benefit........ 0.5 0.5 0.5
Non-deductible goodwill amortization....................... 1.2 1.0 1.2
Dividends-received deduction............................... (2.9) (1.7) (1.6)
Other, net................................................. 1.3 (3.9) (0.7)
---- ---- ----
Effective rate........................................... 35.1% 30.9% 34.4%
==== ==== ====
F-19
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
The components of the net deferred tax liability at December 31 are as
follows:
2001 2000
------ ------
Assets:
Insurance reserve amounts................................... $161.8 $165.6
Net unrealized losses on investment securities.............. 10.4 10.4
Net unrealized loss on derivatives.......................... 5.0 --
------ ------
Total deferred income tax assets.......................... 177.2 176.0
------ ------
Liabilities:
Investments................................................. 1.6 5.3
Present value of future profits............................. 47.3 50.3
Deferred acquisition costs.................................. 194.6 149.6
Other....................................................... 9.2 2.8
------ ------
Total deferred income tax liabilities..................... 252.7 208.0
------ ------
Net deferred income tax liability......................... $ 75.5 $ 32.0
====== ======
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 received a refund of federal and state taxes for the year ended
December 31, 2001 of $23.9, and paid $41.1 and $41.8, for federal and state
income taxes for the years ended December 31, 2000 and 1999, respectively.
(8) Related Party Transactions
GELAAC pays investment advisory fees and other fees to affiliates. Amounts
incurred for these items aggregated $18.3, $11.1 and $14.8 for the years ended
December 31, 2001, 2000 and 1999, respectively. GELAAC charges affiliates for
certain services and for the use of facilities and equipment which aggregated
$68.1, $55.2 and $45.1, for the years ended December 31, 2001, 2000 and 1999,
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 $0.6, $1.1 and $1.9 for the years ended December 31,
2001, 2000 and 1999, respectively. The Company pays interest at the cost of
funds of GNA Corporation, which was 2.8%, 6.9% and 5.9% as of December 31,
2001, 2000 and 1999, respectively. The amounts outstanding as of December 31,
2001 and 2000 were $50.5 and $85.7, respectively, and are included with
accounts payable and accrued expenses in the Consolidated Balance Sheets.
(9) 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.
F-20
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
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 $0.1, $0.5, and $0.1 to
various state guaranty associations during 2001, 2000 and 1999, respectively.
At December 31, 2001 and 2000, accounts payable and accrued expenses include
$4.7 and $4.6, respectively, related to estimated future payments.
Effective January 1, 1999, the Company adopted SOP No. 97-3 and has
reported the effect of this adoption as a cumulative effect of a change in
accounting principle, which served to increase 1999 net income by $5.0 (net of
income taxes of $2.8).
(10) Litigation
The Company, like other insurance 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. Except for the McBride case
described below, which is still in its preliminary stages, and its ultimate
outcome, and any effect on the Company, cannot be determined at this time,
management believes that at the present time there are no pending or
threatened lawsuits that are reasonably likely to have a material adverse
impact on the Company's Consolidated Financial Statements.
On November 1, 2000, the Company was named as a defendant in a lawsuit
filed in Georgia state court related to the sale of universal life insurance
policies (McBride v. Life Insurance Co. of Virginia dba GE Life and Annuity
Assurance Co.). On December 1, 2000, the Company successfully removed the case
to the United States District Court for the Middle District of Georgia. The
complaint is brought as a class action on behalf of all persons who purchased
certain universal life insurance policies from the Company and alleges
improper sales practices in connection with the sale of universal life
insurance policies. No class has been certified. On February 27, 2002, the
Court denied the Company's motion for summary judgment. The McBride litigation
is still in its preliminary stages, and its ultimate outcome, and any effect
on the Company, cannot be determined at this time. The Company intends to
defend this lawsuit, including plaintiff's efforts to certify a nationwide
class action, vigorously.
(11) Fair Value of Financial Instruments
Assets and liabilities that are reflected in the Consolidated Financial
Statements at fair value are not included in the following disclosures; such
items include cash and cash equivalents, investment securities, separate
accounts and beginning in 2001, derivative financial instruments. Other assets
and liabilities--those not carried at fair value--are discussed in the
following pages. Apart from certain borrowings and certain marketable
securities, few of the instruments discussed below are actively traded and
their fair values must be determined using models. Although management has
made every effort to develop the fairest representation of fair value for this
section, it would be unusual if the estimates could actually have been
realized at December 31, 2001 or 2000.
A description of how fair values are estimated follows:
Borrowings. Based on market quotes or comparables.
Mortgage loans. Based on quoted market prices, recent transactions and/or
discounted future cash flows, using rates at which similar loans would have
been made to similar borrowers.
Investment contract benefits. Based on expected future cash flows,
considering expected renewal premiums, claims, refunds and servicing costs,
discounted at a current market rate.
All other instruments. Based on comparable market transactions, discounted
future cash flows, quoted market prices, and /or estimates of the cost to
terminate or otherwise settle obligations.
F-21
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
Information about certain financial instruments that were not carried at
fair value at December 31, 2001 and 2000, is summarized as follows:
2001 2000
----------------------------- -----------------------------
Assets (Liabilities) Assets (Liabilities)
----------------------------- -----------------------------
Notional Carrying Fair Notional Carrying Fair
Amount amount value Amount amount value
-------- --------- --------- -------- --------- ---------
Assets:
Mortgage loans......... (a) $ 938.8 $ 978.4 (a) $ 1,130.0 $ 1,174.0
Other financial
instruments........... (a) 17.8 17.8 (a) 9.3 9.3
Liabilities:
Borrowings and related
instruments:
Borrowings............. (a) (50.5) (50.5) (a) (85.7) (85.7)
Investment contract
benefits.............. -- (8,788.6) (8,812.3) -- (7,759.7) (7,339.5)
Other firm commitments:
Ordinary course of
business lending
commitments........... 6.7 -- -- 3.6 -- --
- --------
(a) These financial instruments do not have notional amounts.
On January 1, 2001 GELAAC adopted SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, as discussed in Note 1. The paragraphs
that follow provide additional information about derivatives and hedging
relationships in accordance with SFAS 133.
Under SFAS 133, 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 the 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. As discussed more fully in Note 1 of the 2001
audited financial statements, the Company uses derivative financial
instruments to mitigate or eliminate certain of those risks. The January 1,
2001, accounting change previously described 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
----- ------
Totals................................................ $(5.7) $ (7.8)
===== ======
--------
(a) For earnings effect, amount shown is net of hedged items.
F-22
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
A reconciliation of current period changes for the twelve months ended
December 31, 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 decreases in fair value -- net........................ (0.1)
Reclassification to earnings, net.................................... (0.2)
-----
Balance at December 31, 2001......................................... $(8.1)
=====
The cumulative effect on shareholders' interest was primarily attributable
to marking to market swap contracts used to hedge interest rate risk on
variable-rate investments. Decreases in the fair value of these instruments
are attributable to changes in interest rates. Additional disclosures required
by SFAS No. 133, as amended, are provided in the following paragraphs.
Hedges of Future Cash Flows
There was less than $0.1 of ineffectiveness reported in the twelve months
ended December 31, 2001 in fair values of hedge positions. There were no
amounts excluded from the measure of effectiveness in the twelve months ended
December 31, 2001 related to the hedge of future cash flows.
Of the $(7.8) transition adjustment recorded in shareholders' interest at
January 1, 2001, $(0.2), net of income taxes, was reclassified to income
during the twelve month period ended December 31, 2001. The $(8.1), net of
taxes, recorded in shareholders' interest at December 31, 2001 is expected to
be reclassified to future income, contemporaneously with and primarily
offsetting changes in interest income on floating-rate instruments. Of this
amount $(0.2), net of income taxes, are expected to be reclassified to
earnings over the twelve-month period ended December 31, 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 twelve months ended December 31, 2001 in
connection with forecasted transactions that were no longer considered
probable of occurring.
At December 31, 2001, there were derivative instruments hedging the
reinvestment risk of forecasted purchases of bonds that would occur within one
month of year end.
Hedges of Recognized Assets, Liabilities and Firm Commitments
The ineffective portion of changes in fair values of hedge positions,
reported in the twelve month period ended December 31, 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 December 31, 2001, there were no derivatives that do not qualify for
hedge accounting under SFAS 133, as amended.
(12) 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, based on the
lesser of 10% of the
F-23
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
prior year statutory surplus and 100% of prior year statutory net gain from
operations. 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, 2001, the Company is able to distribute
$58.4 in dividends in 2002 without obtaining regulatory approval.
The Company declared and paid dividends of $9.6 for the years ended
December 31, 2001, 2000 and 1999.
(13) 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. The impact of adoption of codification increased statutory capital
and surplus by $16.6, primarily related to the recognition of certain deferred
tax assets.
For the years ended December 31, statutory net income (loss) and statutory
capital and surplus is summarized below (unaudited):
2001 2000 1999
------ ------ ------
Statutory net income (loss)........................... $(20.5) $ 68.0 $ 70.8
Statutory capital and surplus......................... $584.4 $593.5 $542.5
The NAIC has adopted Risk Based Capital ("RBC") requirements to evaluate
the adequacy of statutory capital and surplus in relation to risks associated
with (i) asset risk, (ii) insurance risk, (iii) interest rate risk, and (iv)
business risks. 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, 2001 and 2000, the
Company exceeded the minimum required RBC levels.
(14) 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-24
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
The following is a summary of industry segment activity for 2001, 2000 and
1999:
2001 -- Segment Data
Lifestyle
Wealth Protection
Accumulation &
& Transfer Enhancement Consolidated
------------ ----------- ------------
Net investment income................. $ 695.8 $ 3.1 $ 698.9
Net realized investment gains......... 29.1 -- 29.1
Premiums.............................. 48.2 60.2 108.4
Other revenues........................ 297.8 0.2 298.0
--------- ------ ---------
Total revenues...................... 1,070.9 63.5 1,134.4
--------- ------ ---------
Interest credited, benefits, and other
changes in policy reserves........... 674.1 42.0 716.1
Commissions........................... 146.8 15.9 162.7
Amortization of intangibles........... 47.9 2.1 50.0
Other operating costs and expenses.... 0.7 5.2 5.9
--------- ------ ---------
Total benefits and expenses......... 869.5 65.2 934.7
--------- ------ ---------
Income (loss) before income taxes
and cumulative effect of change in
accounting principle............... $ 201.4 $ (1.7) $ 199.7
========= ====== =========
Total Assets.......................... $22,288.6 $168.0 $22,456.6
========= ====== =========
2000 -- Segment Data
Lifestyle
Wealth Protection
Accumulation &
& 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 1,153.4
--------- ------ ---------
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
========= ====== =========
F-25
GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements -- Continued
December 31, 2001, 2000 and 1999
(Dollar amounts in millions)
1999 -- Segment Data
Lifestyle
Wealth Protection
Accumulation &
& 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 1,017.9
--------- ------ ---------
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 and
cumulative effect of change in
accounting principle............... $ 159.8 $ 4.7 $ 164.5
========= ====== =========
Total Assets.......................... $19,774.2 $183.1 $19,957.3
========= ====== =========
F-26