As filed with the Securities and Exchange Commission on March 18, 2004.

Registration No. 333-69620

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 3

FORM S-1

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

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GE LIFE AND ANNUITY ASSURANCE COMPANY
(Exact name of registrant as specified in its charter)

Virginia 54-0283385 63
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(State or other jurisdiction (I.R.S. Employer (Primary Standard Industrial
of incorporation or organization) Identification Number) Classification Code)

6610 W. Broad Street
Richmond, Virginia 23230
(804) 281-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)

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Heather Harker
Vice President, Associate General Counsel, and Assistant Secretary
GE Life and Annuity Assurance Company
6610 W. Broad Street
Richmond, Virginia 23230
(804) 281-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Approximate date of commencement of proposed sale to the public: Continuously
on and after April 26, 2004.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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CALCULATION OF REGISTRATION FEE
================================================================================

Title of each
Class Amount Proposed maximum Proposed maximum
of Securities to be offering price aggregate Amount of
to be Registered registered per unit offering price registration fee**

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Guaranteed
Fixed Annuity
Contracts * * $50,000,000 N/A
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*The proposed maximum aggregate offering price is estimated solely for the
purposes of determining the registration fee. The amount to be registered and
the proposed maximum offering price per unit are not applicable since these
securities are not issued in predetermined amounts or units.
**Fees for registration were paid with Pre-Effective Amendment No. 1 to the
Registration Statement filed on December 13, 2001.

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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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Filed Pursuant to Rule 424(b)(3)
File Number 333-59786
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: (800) 352-9910

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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 April 26, 2004.

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

Table of Contents

Definitions.................................................

Summary.....................................................

Other Contracts.............................................

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

The Contract................................................
Purchasing a Contract....................................
Ownership................................................
Assignment...............................................

The Company.................................................
The Guarantee Account....................................
Guarantee Terms..........................................
Guaranteed Interest Rates................................
Free Withdrawal Amount...................................
Contract Value and Surrender Value.......................
Market Value Adjustment..................................
Transfers Before the End of a Guarantee Term.............

Surrenders and Partial Withdrawals..........................
Systematic Withdrawals of Interest.......................

Charges and Other Deductions................................
Surrender Charge.........................................
Deductions for Premium Taxes.............................
Commission Payments......................................

The Death Benefit...........................................
Death Benefit Upon Death Before the Annuity Date.........
Death Benefit Amount.....................................
Required Distributions...................................
Death Benefit After the Annuity Date.....................

The Annuity Commencement Date and Benefits at Annuity Date..
The Annuity Commencement Date............................
The Annuity Date.........................................

Optional Payment Plans......................................

Federal Tax Matters.........................................
Introduction.............................................
Taxation of Non-Qualified Contracts......................
Qualified Retirement Plans...............................
Moving Money From One Qualified Contract or Qualified
Plan to Another........................................
Federal Income Tax Withholding...........................
Changes in the Law.......................................

Requesting Payments.........................................

Sales of the Contract.......................................

Additional Information......................................
Owner Questions..........................................
Return Privilege.........................................
State Regulation.........................................
Records and Reports......................................
Other Information........................................

Legal Proceedings...........................................

GE Life and Annuity Assurance Company.......................

Experts.....................................................

Appendix....................................................
Market Value Adjustment Examples.........................

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 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 -- GE Life & Annuity Separate Account
6; a legally insulated, non-unitized separate account
established to hold amounts for this class of contracts.

Guarantee Term -- The period of time we guarantee a
specified credited rate(s) of interest under the contract.

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.

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.

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.

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 the 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.

What surrender charges are associated with the
contract? We may assess a surrender charge if you
surrender your contract or take a partial withdrawal from
the Contract Value within the first seven Contract Years.

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 free 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 annuitization, 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.

What happens if an Owner dies before the Annuity
Date? Before the Annuity Date, if any Owner (or any
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 or any another amount as required
by state law. See the "Additional Information -- Return
Privilege" provision of this prospectus.

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.

Financial Statements

The consolidated financial statements for the Company are
set forth herein.

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 If you wish to purchase a contract, you must apply for it
CONTRACT 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 interest. 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.

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) may 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.

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 Annuity 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.

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. We are obligated to pay
all amounts provided under the contract.

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. Capital Brokerage
Corporation's principal offices are located at 3001
Summer Street, 2nd Floor, Stamford, Connecticut 06905.

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 GE Life and Annuity Assurance
Company, see the provision entitled "GE Life and Annuity
Assurance Company."

THE GUARANTEE We established the Guarantee Account as a non-unitized
ACCOUNT 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 Account 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.

GUARANTEE A Guarantee Term is the number of years we will credit a
TERMS 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. However, any decision made to decrease or increase
the number of Guarantee Terms will not affect the
Guarantee Terms already in effect.

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 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
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 at the time
your Guarantee Term expires; 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.

Option 1 -- Surrenders at the end of a Guarantee
Term. To surrender your contract, we must receive your
written request, in 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.

Option 2 -- 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.

Option 3 -- 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 From time to time and at our sole discretion we set
INTEREST RATES 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 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 we
incur;

. 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.

FREE You may instruct us to send you all or a portion of the
WITHDRAWAL interest credited to your Contract Value during the prior
AMOUNT twelve months. This amount is known as the free
withdrawal amount. The free withdrawal amount will be
reduced by any prior free 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 Your Contract Value at any time is equal to your purchase
VALUE AND payment plus any interest credited to it, minus any prior
SURRENDER withdrawals including any surrender charges and premium
VALUE 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.

MARKET VALUE A Market Value Adjustment may decrease, increase or have
ADJUSTMENT 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 take a withdrawal from the 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) 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
partial withdrawal 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 Once each contract year after the first contract year,
BEFORE THE END you may transfer your entire Contract Value before the
OF A GUARANTEE 30-day window prior to the end of your current Guarantee
TERM 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.

Surrenders and Partial Withdrawals

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 You may elect systematic withdrawals of interest credited
WITHDRAWALS under the contract (in amounts of at least $100) on a
OF INTEREST 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.
However, payments can begin no sooner than one systematic
withdrawal period after the last withdrawal.

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.

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.

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.

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 Surrenders and partial withdrawals may be subject to a
CHARGE 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
Value. We will apply the Surrender Value modified by any
applicable 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). A Market Value
Adjustment is, however, assessed in accordance with the
section below.

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 We will deduct charges for any premium tax or other tax
FOR PREMIUM levied by any governmental entity either from your
TAXES purchase payment or Contract Value when incurred or when
we pay proceeds under the contract (proceeds include
amounts received due to surrender, partial withdrawal,
annuitization, 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%.

COMMISSION We sell the contracts through registered representatives
PAYMENTS 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.

The Death Benefit

DEATH BENEFIT If any Owner (or Annuitant if the Owner is a non-natural
UPON DEATH person) dies before the Annuity Date, the amount of
BEFORE THE proceeds available is the death benefit.
ANNUITY DATE
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 The death benefit equals the greater of:
AMOUNT
(1) the Contract Value; and

(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 General: In certain circumstances, federal tax law
DISTRIBUTIONS 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 Owner(s);

(2) Primary beneficiary;

(3) Contingent beneficiary; or

(4) Owner's estate.

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: 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 with the surviving spouse
as the new Owner, or the surviving spouse may
receive any death benefit payable. The surviving
spouse will become the Annuitant or he or she 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
such 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 a 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 any remaining Contract Value in a
lump sum. 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.

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 any value still remaining in a
lump sum 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 If any Owner, Annuitant or payee dies after the Annuity
AFTER THE Date, Income Payments will be made as stated in the
ANNUITY DATE section discussing income benefits. See "The Annuity
Commencement Date and Benefits at Annuity Date" provision
of this prospectus.

The Annuity Commencement Date and Benefits at Annuity Date

THE ANNUITY If any Annuitant is age 80 or younger when the contract
COMMENCEMENT DATE is issued, the Annuity Commencement Date cannot be
earlier than the 10th Contract Anniversary and cannot be
later than the Contract Anniversary following the
Annuitant's 90th birthday (or the younger Annuitant's
90th birthday if there is a Joint Annuitant), unless we
approve a different age. If all Annuitants are age 81 or
older when the contract is issued, the Annuity
Commencement Date will be the 10th Contract Anniversary
unless we approve a different date.

You may change the Annuity Commencement Date during any
30-day window prior to the end of your current Guarantee
Term. The new Annuity Commencement Date selected must
meet the requirements stated in the paragraph above. To
make a change, send written notice to our Home Office at
the address located on page 1 of this prospectus before
the end of your Guarantee Term. 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.

THE ANNUITY Monthly Income Payments are made under a life annuity
DATE 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 terminate 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.

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

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.

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 This part of the discussion describes some of the federal
NON-QUALIFIED income tax rules applicable to non-qualified contracts. A
CONTRACTS 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 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

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 Market
Value Adjustment.

Assignments and Pledges. The Code treats any assignment
or pledge of (or 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 payments. The Code may impose a penalty tax
equal to 10% of the amount of any payment from 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 payments 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 payment that you must include in income; and

. the amount that might be subject to the penalty tax
described above.

QUALIFIED We also designed the contracts for use in connection with
RETIREMENT certain types of retirement plans that receive favorable
PLANS 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
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"); and

. 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.

. 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 such 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);

. received as a series of substantially equal periodic
payments over 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 Rollovers and transfers. In many circumstances you may
FROM ONE move money between qualified contracts and qualified
QUALIFIED plans by means of a rollover or a transfer. Special rules
CONTRACT OR apply to such rollovers and transfers. If you do not
QUALIFIED PLAN follow the applicable rules, you may suffer adverse
TO ANOTHER 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 We will withhold and remit to the IRS a part of the
INCOME TAX taxable portion of each distribution made under a
WITHHOLDING 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 This discussion is based on the Code, IRS regulations,
LAW and interpretations existing on the date of this
prospectus. Congress, the IRS, and the courts may modify
these authorities, however, sometimes retroactively.

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, and receipt of all required forms. We will
determine payment amounts as of the date on which our
Home Office receives the payment request or due proof of
death, and receipt of all required forms. 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.

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 seven 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 may defer making any payments attributable to a check
or draft that has not cleared until we are satisfied that
the check or draft has been paid by the bank on which it
is drawn.

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 3001 Summer Street, 2nd Floor,
Stamford, Connecticut 06905. 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 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
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.

Additional Information

OWNER The obligations to Owners under the contracts are ours.
QUESTIONS 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 Within the 20-day free-look period after you receive the
PRIVILEGE 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 As a life insurance company organized and operated under
REGULATION 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. The Commission
conducts a full examination of our operations at least
every five years.

RECORDS AND At least once each year, we will send you a report
REPORTS 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 We have filed a Registration Statement with the SEC,
INFORMATION 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.

Legal Proceedings

We, like other insurance companies, are 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, 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 our Consolidated Financial Statements.

On October 8, 2003, we agreed in principle to settle the
case entitled McBride v. Life Insurance Co. of Virginia
dba GE Life and Annuity Assurance Co. The McBride case
was filed on November 1, 2000 in Georgia state court. On
December 1, 2000, we successfully removed the case to the
United States District Court for the Middle District of
Georgia. The complaint was brought as a class action on
behalf of current and former owners of certain of our
universal life insurance policies, and alleges improper
practices in connection with the sale and administration
of those universal life policies. We vigorously deny
liability with respect to the plaintiff's allegations.
Nevertheless, to avoid the risks and costs associated
with protracted litigation and to resolve our differences
with contract holders, we agreed in principle on October
8, 2003 to settle the case on a nationwide class action
basis. The settlement documents have not been finalized,
nor has any proposed settlement been submitted to the
proposed class and the United States District Court for
approval, and a final settlement is not certain.

On a periodic basis, we evaluate and establish our best
estimate of reserves for litigation and other
contingencies. In connection with this litigation, we
have accrued an additional reserve. While uncertainty
exists, based on current information and circumstances,
we believe that our reserve is within the range of
reasonably foreseeable costs of bringing the matter to a
conclusion.

Capital Brokerage Corporation, the principal underwriter,
is not engaged in any litigation of any material nature.

GE Life and Annuity Assurance Company

BUSINESS GE Life and Annuity Assurance Company (the "Company",
"we", "us", or "our" unless context otherwise requires)
is a stock life insurance company operating under a
charter granted by the Commonwealth of Virginia on March
21, 1871 as The Life Insurance Company of Virginia.
General Electric Capital Corporation ("GE Capital")
acquired us from Aon Corporation on April 1, 1996. GE
Capital subsequently contributed us to its wholly owned
subsidiary, GE Financial Assurance Holdings, Inc., ("GE
Financial Assurance") and ultimately the majority of the
outstanding common stock to General Electric Capital
Assurance Company ("GECA" or "GE Capital Assurance"). As
part of an internal reorganization of GE Financial
Assurance's insurance subsidiaries, the Harvest Life
Insurance Company ("Harvest") merged into us on January
1, 1999. At this time we were renamed GE Life and Annuity
Assurance Company. Harvest's former parent, Federal Home
Life Insurance Company ("Federal"), received our common
stock in exchange for its interest in Harvest.

We principally offer annuity contracts, guaranteed
investment contracts, funding agreements, and life
insurance. We do business in the District of Columbia and
all states, except New York. Our principal offices are
located at 6610 West Broad Street, Richmond, Virginia
23230.

We are one of a number of subsidiaries of GE Financial
Assurance, a holding company that, through its
subsidiaries, provides consumers financial security
solutions by selling a wide variety of insurance,
investment and retirement products, primarily in North
America. Our product offerings are divided along two
segments of consumer needs: (1) Retirement Income and
Investments and (2) Protection. We also have a Corporate
and Other segment, which consists primarily of net
realized investment gains (losses), interest and other
financing expenses, and unallocated corporate income and
expenses.

As an integral part of GE Financial Assurance, we are
able to leverage the strengths of an international
organization. We do so to offer consumers a wide variety
of products through the convenience of diverse
distribution channels. In addition, we are able to
utilize GE Financial Assurance's centers of excellence to
provide world-class customer service within a competitive
cost structure.

Our financial information, including the information
contained in this report filed on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and
any amendments to the above mentioned reports, will be
made available upon request. Alternatively, reports filed
with the United States Securities and Exchange Commission
("SEC") may be viewed or obtained at the SEC Public
Reference Room in Washington, D.C., or at the SEC's
Internet site at www.sec.gov.

OWNERSHIP At December 31, 2003, all of our outstanding common stock
was owned directly and indirectly by GE Financial
Assurance. GE Financial Assurance acquired approximately
three percent of our outstanding common stock, pursuant
to a Stock Purchase Agreement, dated November 18, 2003 by
and between Phoenix Life Insurance Company and GE
Financial Assurance. GE Capital Assurance and Federal
both indirect subsidiaries of GE Financial Assurance, own
approximately eighty-five percent and twelve percent of
our outstanding common stock, respectively. GE Financial
Assurance is a wholly owned, direct subsidiary of GEI,
Inc., which in turn is a wholly owned direct subsidiary
of GE Capital, which in turn is a wholly owned subsidiary
of General Electric Capital Services, Inc., which in turn
is a wholly owned direct subsidiary of General Electric
Company ("GE"). At December 31, 2003, all of our
outstanding non-voting preferred stock was owned by
Brookfield Life Assurance Company Limited ("BLAC") as a
result of a contribution on November 7, 2003 of our
preferred shares by GE Financial Assurance. BLAC is a
wholly owned direct subsidiary of GE Financial Assurance.

On November 18, 2003, GE issued a press release
announcing its intention to pursue an initial public
offering ("IPO") of a new company named Genworth
Financial, Inc. ("Genworth") that will comprise most of
its life and mortgage insurance operations, including us.
GE filed a registration statement with the U.S.
Securities and Exchange Commission in January 2004 and
expects to complete the IPO in the first half of 2004,
subject to market conditions and receipt of various
regulatory approvals.

STRATEGY We believe that changes in demographics such as the
increased number of baby boomers entering middle and late
middle age, longer life expectancies due to healthy
lifestyles and medical advances, and the reduction in
government and employer-sponsored benefit programs have
increased, and will continue to increase, the demand for
innovative products and services to solve financial needs
and challenges. Our strategy is designed to take
advantage of these trends by offering a broad array of
insurance and investment products and services to meet
key consumer financial needs at each stage of life. We do
this through two primary channels of distribution.

Our approach is to maintain distinct product and
distribution capabilities designed to deliver innovative
products and services that help consumers invest,
protect, and retire. Most of our products are targeted at
middle- to upper-income consumers. To date, we have
operated entirely in the United States.

Our strategy is to be a consumer retirement income and
personal protection provider through (i) intense customer
focus, (ii) core growth of product capabilities,
distribution reach, and service content, and (iii) cost
and speed effectiveness. These elements are

further supported by a strong foundation of operating
fundamentals. Our strategy consists of the following
elements:

. Customer Focus. We focus on two sets of customers:
(1) consumers and (2) distribution
partners/producers. Our core concept is to be
customer needs driven and to simplify consumers'
financial lives. To accomplish this, we offer not
only products but also financial planning tools and
education to enable personalized solutions that
provide options and choices for consumers and their
advisors. By providing financial solutions for every
stage of a consumer's life, either directly or
through our affiliates, we believe we will
differentiate ourselves from our competitors and
create an affinity with customers that will
translate into lifetime relationships. Our products
are designed to enable the growing retired
population to convert their invested assets into
reliable retirement income.

. Growth. This element begins with our focus on
driving core business growth, building our
distribution capabilities, and maintaining a broad
range of fresh, innovative products and services. We
focus on key customer groups and distribution
channels that are well positioned to maximize
marketplace penetration. We believe that our
customers are becoming increasingly sophisticated in
assessing their needs for savings, insurance, and
retirement. Our products and services are designed
to meet needs based on input from consumers and the
distributors who service them. To obtain this input,
we endeavor to create and maintain direct contact
with both our key consumer and distribution groups.
We see branding as increasingly important in the
competitive financial services industry. We
therefore actively promote the GE brand, which is
highly attractive to consumers and distributors.

Our distribution strategy is focused on penetrating
our targeted markets through three types of
distribution methods: financial intermediaries,
independent producers, and dedicated sales
specialists.

Through each distribution method, we believe core
growth will be driven by the following factors:

. strong product development;

. disciplined marketing and sales;

. expansion of specific distribution relationships;
and

. selective cross marketing of products.

In addition, we believe our commitment to technology
investments has allowed us to capitalize on two
fundamental opportunities to further accelerate our
growth:

(1)making our existing businesses and ways of
serving consumers more effective by being
faster and more cost efficient; and

(2)creating entirely new product and service
capabilities or processes to build new ways of
reaching consumers and our distributors.

Although our primary focus is on increasing our
sales of existing products by enhancing our
marketing, new product development and service
capabilities, and driving distribution efficiency,
we will continue to consider opportunities to enter
new markets. We believe entry into these new markets
will be accomplished through:

. development of new products for sale through
existing or new channels;

. creation of new distribution segments; and

. alliances with entities with presence in
attractive markets or distribution channels.

. Cost and Speed Competitiveness. We recognize that
consolidation in the financial services industry
will create fewer, but larger, competitors. Our
ability to effectively compete will be dependent
upon many factors, including our ability to maintain
or achieve operating scale and reduce our expenses
through areas such as eliminating duplicate
functions, utilizing affiliates in lower cost
locations (such as India) to centralize back office
processes, leveraging buying power, and the use of
enhanced technology to achieve operational
efficiencies. In addition, we believe the speed and
responsiveness of business processes is critical to
being competitive. While we believe that the
diversity of GE Financial Assurance's distribution
channels is also a competitive advantage, we
recognize the need to coordinate our efforts with
our affiliates to provide a unified face to our
customers and distributors. We are committed to
service excellence through the implementation of
quality initiatives and technology to provide timely
and efficient response to all consumer inquiries,
needs, and requests. In addition, we are
continuously analyzing means by which we can
leverage technology. We believe the benefits from
this initiative include improved customer service,
expanded product and service offerings, and
increased operating efficiency for both our
customers and us. We believe that our continued
success will be predicated upon our ability to
achieve game-changing efficiencies through the use
of new technologies, digital processes, and the
Internet.

. Strong Foundation of Operating Fundamentals. Our
dedication to providing quality products to our
customers rests on maintaining a strong risk
management, compliance and controllership focus. We
believe this focus provides a solid foundation for
our successful execution of our business strategy.
Risk management, compliance and controllership
processes and practices have been a long-standing
strength of ours. We have developed processes and
practices appropriate for our operating businesses
by leveraging the experience of the GE system. We
maintain a dynamic system of internal controls
designed to ensure financial reporting, appropriate
design of products and management of in force blocks
of business, sound investment management, adherence
to compliances and regulatory practices, protection
of physical and intellectual property, and efficient
use of resources.

OPERATING During the fourth quarter 2003, we redefined our
SEGMENTS operating segments. Management realigned the business on
a product line and market basis to intensify its focus on
return on equity, optimum deployment of capital and
distribution effectiveness. As a result of this change,
our operations are conducted under two reporting segments
corresponding to customer needs: 1) Retirement Income and
Investments and 2) Protection.

We also have a Corporate and Other segment, which
consists primarily of net realized investment gains
(losses), interest and other financing expenses, and
unallocated corporate income and expenses.

RETIREMENT Through our Retirement Income and Investments segment, we
INCOME AND offer deferred annuities (variable and fixed), guaranteed
INVESTMENTS investment contracts ("GICs") and funding agreements, and
SEGMENT variable life insurance. We offer these products to a
broad range of consumers, generally aged 45 and older,
who want to accumulate tax-deferred assets for
retirement, desire a tax-efficient source of income
during their retirement, and seek to protect against
outliving their assets during retirement.

Products

DEFERRED ANNUITIES Purchase payments related to single and flexible purchase
payment deferred annuities are reported as deposit
liabilities in accordance with accounting principles
generally accepted in the United States of America ("U.S.
GAAP").

Variable Annuities. A variable annuity has an
accumulation period and a payout period. Variable
annuities allow the contract owner to allocate all or a
portion of his account value to separate accounts that
invest in investment accounts that are distinct from our
general account and track the performance of available
underlying mutual funds. Assets held in separate accounts
supporting variable annuity contracts aggregated $7,765.8
million, $6,962.6 million, and $8,739.5 million, at
December 31, 2003, 2002, and 2001, respectively. Our
deposit liabilities not held in the separate account for
variable annuities (i.e., amounts included in future
annuity and contract benefits on the Consolidated Balance
Sheets) were $2,689.3 million, $1,929.3 million, and
$1,319.3 million as of December 31, 2003, 2002, and 2001,
respectively. Our purchase payments received for variable
annuities during these same periods were $1,822.6
million, $1,595.2 million, and $2,278.7 million,
respectively.

Our variable annuity contracts permit the contract owner
to withdraw all or part of the purchase payments paid,
plus the amount credited to his account, subject to
contract terms, such as surrender charges. The cash
surrender value of a variable annuity contract depends
upon the value of the assets that have been allocated to
the contract, how long those assets have been in the
contract and the investment performance of the mutual
funds to which the contract owner has allocated assets.

Variable annuities provide us with fee-based revenue in
the form of expense charges and, in some cases, mortality
charges. These fees equal a percentage of the contract
owner's assets in the separate account and typically
range from 1.15% to 1.70% per annum. We also receive fees
charged on assets allocated to our separate account to
cover administrative costs, as well as a portion of the
management fees from the underlying mutual funds in which
assets are invested.

We also offer variable annuities with fixed account
options and with bonus features. Variable annuities with
fixed account options enable the contract owner to
allocate a portion of his account value to the fixed
account, which pays a fixed interest crediting rate. The
portion of the account value allocated to the fixed
account option represents general account liability for
us and functions similarly to a traditional fixed
annuity, whereas for the portion allocated to the
separate account, the contractholder bears the investment
risk. Our variable annuities with bonus features entitle
the contract owner to an additional increase to his
account value upon making a purchase payment. However,
variable annuities with bonus features are subject to
different surrender

charge schedules and expense charges than variable
annuities without the bonus feature.

Variable annuity contracts provide for a guaranteed
minimum death benefit, or GMDB, which provides the
contract owner's survivors a minimum account value upon
the contract owner's death. Our contract owners have the
option to purchase at an additional charge a GMDB rider,
which provides for richer death benefits. As of December
31, 2003, the account value of our variable annuities
with GMDBs was approximately $10.5 billion, with related
death benefit exposure of approximately $1.6 billion. We
have reinsured approximately 63% of the account value and
86% of this in-force exposure. Assuming every contract
owner died on December 31, 2003, as of that date,
contracts with GMDB features not covered by reinsurance
had an account value of $3.9 billion and a related death
benefit exposure of $234 million net amount at risk. In
addition to reinsurance, we establish reserves equal to
the accumulated value of the charges for the benefit less
any actual death benefit claims paid to date. We have
self-insured the GMDB benefits over time, and we have no
reinsurance coverage for policies issued after January
2003. In May 2003, we provided consumers with more
choices by unbundling the types of GMDBs available and
have priced each benefit separately. We will continue to
monitor the importance of individual features and their
pricing to meet customer needs that conform to company
performance expectations.

We continually review potential new variable annuity
products and pursue only those where we believe we can
achieve targeted returns in light of the risks involved.
For example, unlike several of our competitors, we have
not offered variable annuity products with traditional
guaranteed minimum income benefits, or GMIBs, or with
guaranteed minimum accumulation benefits, or GMABs.
Traditional GMIB products guarantee a specified minimum
appreciation rate for a period of time after annuity
payments commence. GMAB products guarantee a customer's
account will be no less than the original investment at
the end of the specified accumulation period, plus a
specified interest rate.

Although we do not offer traditional GMIBs or GMABs, we
have been able to capitalize on the demand for products
with guarantees through our GE Retirement Answer product,
or GERA(TM), which we launched in April 2002. GERA(TM) is
a variable deferred annuity that has a minimum 10-year
scheduled accumulation period for customers who desire
guaranteed minimum income streams at the end of an
accumulation period. If a contract owner makes the
required scheduled purchase payments, he is guaranteed a
minimum income stream at the end of the accumulation
period. The actual income stream may exceed the
guaranteed minimum based upon the performance of the
underlying portfolios in the separate account. Based on
key product design features, some of which have patents
pending, we believe GERA(TM) allows us to provide our

customers a guaranteed income annuity product that
mitigates a number of the risks that accompany guaranteed
minimum income benefits offered by many of our
competitors.

Fixed Annuities. We offer fixed single premium deferred
annuities, or SPDAs, which provides for a single premium
payment at time of issue, an accumulation period and an
annuity payout period at some future date. During the
accumulation period, we credit the account value of the
annuity with interest earned at an interest rate, called
the crediting rate. The crediting rate is guaranteed
initially for a period of one to seven years, at the
contract owner's option, and thereafter is subject to
change based upon competitive factors, prevailing market
rates and product profitability. Each contract also has a
minimum guaranteed crediting rate. Our fixed annuity
contracts are funded by our general account, and the
accrual of interest during the accumulation period is
generally on a tax-deferred basis to the owner. The
majority of our fixed annuity contract owners retain
their contracts for 5-10 years. After the period
specified in the annuity contract, the contract owner may
elect to take the proceeds from the annuity as a single
payment or over time.

Our fixed annuity contracts permit the contract owner at
any time during the accumulation period to withdraw all
or part of the single premium paid, plus the amount
credited to his account, subject to contract provisions
such as surrender charges that vary depending upon the
terms of the product. The contracts impose surrender
charges that typically vary from 5.0% to 8.0% of the
account value, starting in the year of deposit and
decreasing to zero over a 5- to 7-year period. The
contract owner also may withdraw annually up to 10% of
the account value without penalty. Approximately $302.5
million, or 35% of the total account value of our fixed
annuities as of December 31, 2003, were subject to
surrender charges. Our purchase payment liabilities for
fixed annuities as of December 31, 2003, 2002, and 2001
were $864.3 million, $944.9 million, and $1,030.0
million, respectively. Our purchase payments received for
these same periods were $5.6 million, $59.2 million, and
$99.2 million, respectively.

At least once each month, we set an interest crediting
rate for newly issued SPDAs. We maintain the initial
crediting rate for a minimum period of one year or the
guarantee period, whichever is longer. Thereafter, we may
adjust the crediting rate no more frequently than once
per year for any given SPDA contract. Our in-force fixed
annuity products (other than MVAs, defined below)
generally have minimum guaranteed crediting rates ranging
from 3.5% to 4.0% for the life of the contract, and
currently we are crediting rates between 3.5% and 6.1% on
a majority of those products. The most frequent minimum
guaranteed crediting rate as of December 31, 2003, was
4.0%.

A subset of our fixed annuities is the fixed market value
adjusted deferred annuity ("MVA"). This annuity is an
SPDA with an MVA feature that increases or decreases the
surrender value of the contract in the event that a
contractholder surrenders the annuity prior to the end of
the guarantee term. The MVA reflects changes in interest
rates since the beginning of the guarantee term, thereby
protecting us from losses due to higher interest rates at
the time of surrender. Our MVA annuities generally have
terms of 5, 7, 8, and 10 years. Interest rates credited
on our in-force MVA contracts ranged from 3.0% to 6.5%
during 2003. In 2003, issued MVA contracts had surrender
charges of 6.0% of the account value starting in the year
of policy issue and will decrease to zero at the annuity
commencement date (generally age 90 or 10 years after
issue). The owner may withdraw the previous 12 months of
interest without penalty. At least once each month, we
establish an interest-crediting rate for new MVA
contracts. In determining our interest-crediting rate on
new contracts, management considers our competitive
position, prevailing market rates, and the profitability
of the MVA annuity product. After contract issue, we
maintain the initial crediting rate for the guarantee
period. Thereafter, the contract may renew into any
guarantee term from those that we offer. The minimum
guaranteed crediting rate for the MVA annuity product is
3% for the life of the contract. The fixed MVA annuity
was a new product in 2002. Our purchase payment
liabilities as of December 31, 2003 and 2002 were $53.3
million and $47.9 million, respectively. Our purchase
payments received for these same periods were $5.9
million and $47.1 million, respectively.

GUARANTEED We offer guaranteed investment contracts, or GICs, and
INVESTMENT CONTRACTS funding agreements, which are deposit-type products that
AND FUNDING pay a guaranteed return to the contract owner on
AGREEMENTS specified dates. GICs are purchased by ERISA-qualified
plans, including 401(k) plans. Funding agreements are
purchased by institutional accredited investors for
various kinds of funds and accounts that are not
ERISA-qualified. Purchasers of funding agreements include
money market funds, bank common trust funds and other
corporate and trust accounts, and private investors in
the U.S. and other countries. Our deposit liabilities for
GICs and funding agreements as of December 31, 2003 and
2002 were $4,052 million and $5,263 million,
respectively. Our new deposits received for the years
ended December 31, 2003 and 2002 were $520.8 million and
$724.9 million, respectively.

Substantially all our GICs allow for the payment of
benefits at contract value to ERISA plan participants
prior to contract maturity in the event of death,
disability, retirement, or change in investment election.
We carefully underwrite these risks before issuing a GIC
to a plan and historically have been able to effectively
manage our exposure to these benefit payments. Our GICs
typically credit interest at a fixed interest rate and
have a fixed-maturity generally ranging from two to six
years. Contract owners may terminate our GICs upon 90
days' notice, but subject to an adjustment to the contract

value for changes in the level of interest rates from the
time the GIC was issued. These options have rarely been
exercised.

Our funding agreements generally credit interest on
deposits at a floating rate tied to an external market
index. To hedge our exposure to fluctuations in interest
rates, we invest the proceeds backing floating-rate
funding agreements in floating-rate assets. Some of our
funding agreements are purchased by money market funds,
bank common trust funds and other short-term investors.
These funding agreements typically are renewed annually,
and generally contain "put" provisions, through which
either we or the contractholder has an option to
terminate the funding agreement for any reason after
giving notice within the contract's specified notice
period, which is generally 90 days but can be less than
30 days. GE Capital has agreed to guarantee our
obligations under funding agreements that were issued
prior to November 18, 2003 and certain renewals with a
final maturity on or before June 30, 2005. As of December
31, 2003, the aggregate amount outstanding of these
funding agreements was approximately $1,187 million, of
which those with put option notice periods of 90 days was
$875 million, and those with put option notice periods of
30 days was $200 million. We issue the remainder of our
funding agreements to trust accounts to back medium-term
notes purchased by investors. These funding agreements
contain no early termination provisions and typically are
issued for terms of one to seven years. As of December
31, 2003, the aggregate amount of these types of funding
agreements was $436.0 million.

The risk management process for funding agreements
requires controls on both the liabilities and the assets
supporting this product. The liabilities have limits on
exposure to a customer, on "put" exposure to individual
customers and on the overall portfolio put exposure.
Further, we have established limits for exposure to asset
types, maturity terms, index mismatch, and quality
ratings. Collectively, we believe these risk management
approaches provide for sound product line liquidity.

VARIABLE LIFE We offer variable life insurance products that provide
INSURANCE insurance coverage through a policy that gives the policy
owner flexibility in investment choices and, in some
products, in premium payments and coverage amounts. Our
variable life products enable the policy owner to
allocate all or a portion of his premiums to separate
accounts that invest in investment accounts that are
distinct from our general account and track the
performance of selected underlying mutual funds,
including funds from Fidelity Investments, AIM
Investments, and GE Mutual Funds. There is no guaranteed
minimum rate of return in these subaccounts, and the
policy owner bears the entire risk associated with the
performance of these subaccounts. Some of our variable
life insurance products also permit the policy owner to
allocate all or a portion of his account value to our
general account, in which case we credit interest at
specified

rates, subject to certain guaranteed minimums, which are
comparable to the minimum rates in effect for our fixed
annuities.

Similar to our variable annuity products, we collect
specified mortality and expense charges, fees charged on
assets allocated to the separate account to cover
administrative services and costs, and a portion of the
management fees from the various underlying mutual funds
in which the assets are invested. We collect cost of
insurance charges on our variable life insurance products
to compensate us for the mortality risk of the guaranteed
death benefit particularly in the early years of the
policy when the death benefit is significantly higher
than the value of the policy owner's account.

PROTECTION Through our Protection segment, we offer universal life
SEGMENT insurance, interest-sensitive whole life insurance, and
accident and health insurance. Life insurance products
provide protection against financial hardship after the
death of an insured by providing cash payment to the
beneficiaries of the policy owner. Customers use accident
and health insurance to protect their income and assets
from the adverse economic impacts of significant health
care costs.

PRODUCTS We offer permanent life insurance products that provide
LIFE INSURANCE protection for the entire life of the insured and allow
for cash value accumulation. These products include
interest-sensitive whole life ("ISWL") and universal life
insurance ("UL"). Our life insurance policies provide a
death benefit payable upon death of the insured. Owners
of permanent insurance pay premiums that are applied to
their account value, net of any expense charges. We
deduct cost of insurance charges, which vary by age,
gender, plan, and class of insurance from the account
value. We determine our cost of insurance each year in
advance, which is subject to a maximum stated in each
policy. The owner may access their account value through
policy loans, partial withdrawals, or full surrender of
the policy. Some withdrawals and surrenders are subject
to surrender charges. Our premiums collected on life
insurance in-force for the years ended December 31, 2003,
2002, and 2001 were $211.1 million, $211.8 million, and
$238.8 million, respectively. First year premiums
received for these same periods were $26.5 million, $28.1
million, and $37.5 million, respectively.

We credit the policyholder account value for ISWL and UL
policies with interest at an interest rate we determine
in advance and generally guarantee for a policy year at a
time. Policies have a minimum credited interest rate,
which varies by policy and ranges from 4.0% to 5.5%. ISWL
and UL differ in two major ways. ISWL requires the
contractholder to pay a fixed premium we determine each
year, while UL allows a contractholder to determine the
amount of premium to be paid, subject to certain

minimum and maximum values. Also, the ISWL death benefit
is fixed at issue, while the contractholder may decrease
and (subject to evidence of good health) increase the
death benefit on a UL policy.

ACCIDENT AND HEALTH The primary product in this line is Medicare supplement
INSURANCE insurance. Our Medicare supplement insurance provides
coverage for Medicare-qualified expenses that are not
covered by Medicare because of applicable deductible or
maximum limits. These products are sold to individuals
through dedicated sales specialists.

PRODUCT/SERVICE Our primary product service centers for creating and
CENTERS servicing our products are located in Richmond and
Lynchburg, Virginia.

We leverage GE Financial Assurance's international
presence to support these service centers through an
affiliate's operations in India. The Indian operations
provide call center support, internet assistance, and new
business administration to promote cost efficiencies and
to enhance customer service.

Financial Strength

Ratings with respect to financial strength have become an
important factor in establishing the competitive position
of insurance companies. Ratings are important to
maintaining public confidence in us and our ability to
market our products. The following reflects ratings for
each of the rating agency's opinion of our financial
strength, operating performance, and ability to meet our
obligations to policyholders.

A.M. Best Rating S&P Rating Moody's Rating
---------------- ----------------- ---------------

A+ (superior) AA- (very strong) Aa3 (excellent)

A.M. Best states that its "A+" (superior) rating is
assigned to those companies that have, in its opinion, a
superior ability to meet their ongoing obligations to
policyholders. The "A+" (superior) rating is the
second-highest of fifteen ratings assigned by A.M. Best,
which range from "A++" (superior) to "F" (in liquidation).

S&P states that an insurer rated "AA" (very strong) has
very strong financial security characteristics that
outweigh any vulnerabilities, and is highly likely to
have the ability to meet financial commitments. The "AA"
range is the second-highest of the four ratings ranges
that meet these criteria, and also is the second-highest
of nine financial strength rating ranges assigned by S&P,
which range from "AAA" to "R". A plus (+) or minus (-)
shows relative standing in a rating category.

Moody's states that insurance companies rated "Aa"
(excellent) offer excellent financial security. Moody's
states that companies in this group constitute what are
generally known as high-grade companies. The "Aa" range
is the second-highest of nine financial strength rating
ranges assigned by Moody's, which range from "Aaa" to
"C". Numeric modifiers are used to refer to the ranking
within the group, with 1 being the highest and 3 being
the lowest.

A.M. Best, S&P, and Moody's review their ratings
periodically and we cannot assure you that we will
maintain our current ratings in the future. Other
agencies may also rate our company on a solicited or an
unsolicited basis.

Marketing and Distribution

We distribute our products through an extensive and
diversified distribution network comprised of the
following channels:

. Financial intermediaries, including banks,
securities brokerage firms, and independent
broker/dealers;

. Independent producers, including brokerage general
agencies, affluent market producer groups and
specialized brokers; and

. Dedicated sales specialists, including long-term
care sales agents and affiliated networks of both
accountants and personal financial advisers.

We believe this access to a variety of distribution
channels enables us to respond effectively to changing
consumer needs and distribution trends. We have
strategically positioned our multi-channel distribution
network to capture a broad share of the distributor and
consumer markets and to accommodate different consumer
preferences in how to purchase insurance and financial
services products.

GE Financial Assurance has developed a web portal called
GEFinancialPro.com for our distribution channels and for
those of our affiliates. This web portal improves
productivity for financial intermediaries and agents by
enabling business submissions, account tracking, and
status updates through the Internet. In addition, GE
Financial Assurance has developed GEFinancialService.com,
for intermediaries and consumers. This site provides
similar services for these customers, giving them the
ability to change information like addresses and their
investment accounts online.

FINANCIAL Financial Intermediaries. Banks and securities brokerage
INTERMEDIARIES firms are a significant channel for our fixed and
variable annuities, and life insurance products. This
channel is focused on the growing retirement income
market and has increased the sales force to capture a
larger share of the variable annuity marketplace.
Approximately 20% of our variable annuity product sales
in 2003 were through two national stock brokerage firms.
However, we do not believe that the loss of such business
would have a long-term adverse effect on our business and
operations due to our competitive position in the
marketplace, the availability of business from other
distributors, the growth of the independent broker-dealer
and financial planner channels, and our mix and
penetration of other products.

INDEPENDENT BGAs. We, as well as our affiliates, distribute many of
PRODUCERS our products through more than 250 independent insurance
brokerage firms located throughout the United States.
These BGAs market our products through licensed insurance
agents or brokers, who also represent other companies. We
believe our consistent commitment to this system has
helped us earn a reputation as a leading provider of
insurance products among BGAs.

Financial Planners, Accountants, and Affluent Market
Producer Groups. We sell some of our products through
financial planners, accountants, and affluent market
producer groups. These groups emphasize providing
investment and insurance products to middle and upper
income individuals. We believe that financial planners,
accountants, and affluent market producer groups present
a sound opportunity for growth within the intermediary
distribution channel.

Specialized Brokers. We sell GICs via fund managers,
employee benefit investment advisors, directly to large
employee benefit plans, and through GIC brokers. We sell
funding agreements directly, as well as through brokers.

DEDICATED SALES Our dedicated sales forces consist primarily of
SPECIALISTS non-employees who sell some of our products on an
exclusive basis. All non-employee dedicated sales force
agents are affiliated with an insurance agency. We
compensate dedicated sales forces primarily on a
commission basis.

These agents develop customized solutions for customers'
future financial requirements by using our annuity and
life insurance products. They offer customers financial
profiles to assist their understanding and development of
financial objectives. They identify prospective customers
through:

. direct mail solicitation;

. educational seminars;

. policyholder referrals; and targeted promotions
linked to our national advertising campaigns.

Competition

We operate in a highly competitive environment. We
believe GE Financial Assurance has assembled a unique
collection of products and distribution channels, in
which we participate. Many other companies actively
compete for sales in our markets, including other major
insurers, banks, other financial institutions, mutual
fund and money asset management firms, and specialty
providers. In many of our product lines, we face
competition from competitors that have greater market
share or breadth of distribution, offer a broader range
of products, services or features, assume a greater level
of risk, have lower profitability expectations, or have
higher claims paying ratings than we do. Many competitors
offer similar products and use similar distribution
channels. The substantial expansion of banks' and
insurance companies' distribution capacities and
expansion of product features in recent years has
intensified pressure on margins and production levels and
has increased the level of competition in many of our
business lines.

We believe competition is based on several factors,
including product features, customer service, brand
reputation, penetration of key distribution channels,
breadth of product offering, product innovations, and
price.

Risk Management, Compliance, and Controllership

Risk management is a critical part of our business, and
we have adopted rigorous risk management processes in
virtually every aspect of our operation, including
product development, underwriting, investment management,
asset-liability management, and technology development
projects. For example, our commitment to risk management
processes, compliance, and controllership processes
include requiring underwriting of all new products and
reviews of all existing product performance, both of
which are reviewed by a team of risk managers and
actuaries. In addition, both internal and external
periodic reviews of our products, internal processes, and
pricing strategies are conducted. We also have obtained
Insurance Marketplace Standards Association ("IMSA")
certification and have committed to engrain compliance
into each and every business function that touches our
customers. Our compliance objective is not to just comply
with rules and regulations but also demonstrate a level
of business integrity that instills consumer trust in our
products and in the insurance industry in general. In
recognition of this commitment, we have received the
American Council of Life Insurers highest award for
integrity, the ACLI Integrity First Award, two of the
last three years.

We maintain a dynamic system of disclosure controls and
procedures, including internal controls over financial
reporting designed to ensure reliable financial
record-keeping, transparent financial reporting and
disclosure, and protection of physical and intellectual
property. We utilize internal auditors who conduct
various audits each year. Senior management oversees the
scope and results of these reviews. We continuously
reinforce key employee responsibilities around the world
through GE's integrity policies, which requires
compliance with law and policy, including financial
integrity and avoiding conflicts of interest. These
integrity policies are provided to each employee. The
team of internal auditors conducts extensive inquires
into compliance with these policies. A strong compliance
culture requires employees to raise any concerns and
prohibits retribution for doing so. All employees,
including top management, are accountable for compliance
with integrity policies.

We are keenly aware of the importance of full and open
presentation of our financial position and operating
results. To facilitate this, we maintain a Disclosure
Committee, which consists of senior executives who
possess exceptional knowledge of our business. We have
asked this Committee to evaluate our disclosure controls
and procedures, as well as the completeness and accuracy
of our financial disclosures, and to report their
findings to us.

Underwriting and Pricing

Insurance underwriting involves a determination of the
type and amount of risk that an insurer is willing to
accept. Our underwriters evaluate each policy application
on the basis of the information provided by the applicant
and others. We follow detailed and uniform underwriting
practices and procedures, including using certified
digital underwriting applications, designed to properly
assess and quantify risks before issuing coverage to
qualified applicants. The long-term profitability of our
products is affected by the degree to which future
experience deviates from these assumptions. We generally
do not underwrite individual lives in our annuity
products, other than some income annuities. Instead, we
price our products based upon our expected investment
returns and our expectations for mortality, longevity,
and persistency for the group of our contractholders as a
whole, taking into account mortality improvements in the
general population and our historical experience. We
price variable and immediate deferred annuities by
analyzing longevity and persistency risk, volatility of
expected earnings on our assets under management, and the
expected time to retirement. We price our GICs using
pricing models that estimate both expected cash flows and
likely variance from those expectations caused by
reallocations of assets by plan participants. We price
fixed income annuities using our mortality experience and
assumptions regarding continued improvement in annuitant
longevity, as well as assumptions regarding investment
yields at the time of issue and thereafter.

Reserves

We calculate and maintain as liabilities actuarially
determined reserves that are calculated to meet our
future obligations. Future benefit liabilities for
traditional long-duration life insurance contracts and
accident and health insurance are based on assumptions
with regard to interest, mortality, morbidity, and
voluntary withdrawal, and are determined at the date of
issue of the policy or date of acquisitions, and may
include margins for adverse deviation. These assumptions
are appropriate for the contracts being valued, and are
computed such that, the reserve amounts, together with
additions from premiums to be received and with interest
on such reserves compounded annually at certain assumed
rates, are expected to be sufficient to meet our policy
obligations for withdrawal, morbidity, and death.

Future benefit liabilities for non-traditional long
duration contracts such as interest sensitive life,
variable annuities, and variable life insurance, are
generally based on policyholder account values, to
include premiums collected, interest credited, deduction
of policy charges, and market performance. Reserves for
guaranteed minimum death benefits for variable annuities
are based on accumulated charges less claims. Reserves
include contract reserves, unearned premiums, due and
unpaid premiums, premium deposits, claims reported but
not yet paid, and claims incurred but not reported.

The stability of non-traditional long duration contract
reserves on contracts such as interest sensitive life,
variable annuities, and variable life insurance is
enhanced by policy restrictions on the withdrawal of
funds. Withdrawals in excess of allowable penalty-free
amounts are generally assessed a surrender charge during
a penalty period ranging up to 10 years. Depending on the
product, the basis for surrender charges can be a
percentage of premium, a percentage of accumulation
value, or a factor related to face amount of insurance.
Such percentages and factors generally decrease gradually
during the penalty period. Surrender charges are set at
levels to protect us from loss on early terminations.
This lengthens the effective duration of policy
liabilities and improves our ability to maintain
profitability on such policies. For traditional long
duration contracts, funds are either not available for
withdrawal or are based on fully withdrawable fixed
tables of surrender values.

Reinsurance

We follow the industry practice of reinsuring (ceding)
portions of our insurance risks with reinsurance
companies. The use of reinsurance permits us to write
policies in amounts larger than the risk we are willing
to retain and also to continue writing a larger volume of
new business. The maximum amount of individual life
insurance we normally retain on any one insured with an
issue age up to and including 75 is $1 million and for
issue ages over 75 is $100,000. Certain accident and
health insurance policies are reinsured on either a quota
share or excess of loss basis. We also used reinsurance
for our GMDB options offered in variable annuities. We
cede insurance primarily on an "automatic" basis, under
which risks are ceded to a reinsurer on specific blocks
of business where the underlying risks meet certain
predetermined criteria. To a lesser extent, we cede
insurance risks on a "facultative" basis, under which the
reinsurer's prior approval is required on each risk
reinsured. Use of reinsurance does not discharge us, as
the insurer, from liability on the insurance ceded. We,
as the insurer, are required to pay the full amount of
our insurance obligations even in circumstances where we
are entitled or able to receive payments from our
reinsurer. At December 31, 2003, we had approximately 41%
and 31%, respectively, of our variable annuity and life
insurance net at risk exposures reinsured with one
company.

Regulation

GENERAL Our insurance business is subject to comprehensive state
REGULATION AT regulation and supervision throughout the United States.
STATE LEVEL The laws of the various jurisdictions establish
supervisory agencies with broad administrative powers
with respect to, among other things, licensing to
transact business, licensing agents, admitting of assets,
regulating premium rates, approving policy forms,
regulating unfair trade and claims practices,
establishing reserve requirements and solvency standards,
fixing maximum interest rate on life insurance policy
loans and minimum rates for accumulation of surrender
values, restricting certain transactions between
affiliates, and regulating the type, amounts, and
valuations of investments permitted.

State statutory and regulatory restrictions limit the
amount of dividends or distributions an insurance company
may pay to its shareholders without regulatory approval.

Virginia, our state of domicile, allows insurance
companies domiciled in the state to pay dividends up to
the lesser of 10% of prior year statutory surplus or 100%
of prior year statutory net gain from operations.
Dividends paid or distributed within any twelve
consecutive months in excess of the prescribed limits are
deemed extraordinary and require formal approval by the
Commonwealth of Virginia State Corporation Commission,
Bureau of Insurance (the "Commission").

Virginia insurance laws provide that no person may
acquire control of us without the prior approval of the
Commission. Any person who acquires beneficial ownership
of 10% or more of our voting securities would be presumed
to have acquired control. However, the Commission may,
upon application, determine otherwise.

We are required to file detailed annual statements with
the Commission and with insurance supervisory departments
in each of the jurisdictions in which we do business. Our
operations and accounts are subject to examination by
these departments at regular intervals. We prepare
statutory financial statements in accordance with
accounting practices prescribed or permitted by the
Commission, our principal insurance regulator. Prescribed
statutory accounting practices include publications of
the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general
administrative rules.

The NAIC has established risk-based capital ("RBC")
standards to determine the amount of Total Adjusted
Capital (as defined by NAIC) that an insurance company
must have, taking into account the risk characteristics
of such company's investments and liabilities. The
formula establishes a standard of capital adequacy that
is related to risk. The RBC formula establishes capital
requirements for four categories of risk: asset risk,
insurance risk, interest rate risk and business risk. For
each category, the capital requirements are determined by
applying specified factors to various assets,

premium, reserve and other items, with the factor being
higher for items with greater underlying risk and lower
for items with less risk. The formula is used by
insurance regulators as an early warning tool to identify
deteriorating or weakly capitalized companies for the
purpose of initiating regulatory action. At December 31,
2003, the company had total adjusted capital in excess of
amounts requiring company action or any level of
regulatory action at any prescribed RBC Level.

REGULATORY State insurance regulators and the NAIC are continually
INITIATIVES re-examining existing laws and regulations, with a
specific focus on insurance company investments and
solvency issues, risk-adjusted capital guidelines,
interpretation of existing laws, development of new laws,
implementation of non-statutory guidelines, and
circumstances under which dividends may be paid.

These initiatives may be adopted by the various states in
which we are licensed. However, the ultimate content and
timing of any statutes and regulations adopted by the
states cannot be determined at this time. It is
impossible to predict the future impact of changing state
and federal regulations on our operations. In addition,
there can be no assurance that existing or future
insurance-related laws and regulations will not become
more restrictive.

REGULATION AT Although the federal government does not directly
FEDERAL LEVEL regulate the business of insurance, federal legislation
and administrative policies in several areas, including
financial services regulation, pension regulation, and
federal taxation, can significantly and adversely affect
the insurance industry and our business.

For example, the federal government has from time to time
considered other legislative or regulatory changes that
could affect us. This includes:

. legislation relating to the deferral of taxation on
the accretion of value within certain annuity and
life insurance products;

. changes in ERISA regulations; and

. the alteration of the federal income tax structure.

The ultimate effect of any of these changes, if
implemented, is uncertain. However, both the persistency
of our existing products and our ability to sell products
may be materially impacted in the future.

Another example is the implementation of the Health
Insurance Portability and Accountability Act of 1996
("HIPAA"). HIPAA established various requirements related

to health benefit plans including medical, dental, and
long-term care insurance plans. It generally applies to
insurers, providers, and employers. When enacted in 1996,
its initial focus was on health benefit plan portability.
HIPAA also contains administrative simplification and
privacy provisions that were designed to encourage the
electronic exchange of health care information and the
protection of personal health information. The privacy
provisions are to be implemented through regulations
issued by the Secretary of Health and Human Services,
which regulations were issued in December 2000. HIPAA
provides for significant fines and other penalties for
wrongful disclosure of protected health information. We
have modified certain aspects of our infrastructure and
procedures to comply with the new requirements.

SECURITIES LAWS Some of our policies and contracts are subject to
regulation under the federal securities laws administered
by the SEC and certain state securities laws. Some of our
separate accounts are registered as unit investment
trusts under the Investment Company Act of 1940, as
amended. Some of our annuity contracts and all of our
variable life insurance policies are registered under the
Securities Act of 1933, as amended. Distribution of our
variable products is subject to broker-dealer regulation
by the SEC and the NASD, Inc.

Federal and state securities laws and regulations are
primarily intended to benefit owners of our variable
annuity and variable life insurance products. These laws
and regulations generally grant supervisory agencies
broad administrative powers, including the power to limit
or restrict the carrying on of business for failure to
comply with these laws and regulations. In such event,
the possible sanctions that may be imposed include
suspension of individual employees, suspension or
revocation of one or more registered separate account's
registration as an investment company, censure, and fines.

ERISA We provide certain products and services to certain
employee benefit plans that are subject to ERISA or the
Internal Revenue Code of 1986, as amended. As such, our
activities are subject to the restrictions imposed by
ERISA and the Internal Revenue Code, including the
requirement under ERISA that fiduciaries must perform
their duties solely in the interests of ERISA plan
participants and beneficiaries and the requirement under
ERISA and the Internal Revenue Code that fiduciaries may
not cause a covered plan to engage in certain prohibited
transactions with persons who have certain relationships
with respect to such plans. The applicable provisions of
ERISA and the Internal Revenue Code are subject to
enforcement by the U.S. Department of Labor, the Internal
Revenue Service and the Pension Benefit Guaranty
Corporation.

U.S. PATRIOT ACT The USA Patriot Act of 2001, or the Patriot Act, enacted
in response to the terrorist attacks on September 11,
2001, contains anti-money laundering and financial
transparency laws and mandates the implementation of
various new regulations applicable to broker/dealers and
other financial services companies including insurance
companies. The Patriot Act seeks to promote cooperation
among financial institutions, regulators and law
enforcement entities in identifying parties that may be
involved in terrorism or money laundering. Anti-money
laundering laws outside of the U.S. contain similar
provisions. The increased obligations of financial
institutions to identify their customers, watch for and
report suspicious transactions, respond to requests for
information by regulatory authorities and law enforcement
agencies, and share information with other financial
institutions, require the implementation and maintenance
of internal practices, procedures and controls. We
believe that we have implemented, and that we maintain,
appropriate internal practices, procedures and controls
to enable us to comply with the provisions of the Patriot
Act.

PRIVACY OF CONSUMER U.S. federal and state laws and regulations require
INFORMATION financial institutions, including insurance companies, to
protect the security and confidentiality of consumer
financial information and to notify consumers about their
policies and practices relating to their collection and
disclosure of consumer information and their policies
relating to protecting the security and confidentiality
of that information. Similarly, federal and state laws
and regulations also govern the disclosure and security
of consumer health information. In particular,
regulations promulgated by the U.S. Department of Health
and Human Services regulate the disclosure and use of
protected health information by health insurers and
others, the physical and procedural safeguards employed
to protect the security of that information, and the
electronic transmission of such information. Congress and
state legislatures are expected to consider additional
legislation relating to privacy and other aspects of
consumer information.

FORWARD-LOOKING This document includes certain "forward-looking
STATEMENTS statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward looking statements
include statements which represent our belief regarding
potential investments gains and losses, recoverability of
intangible assets, the effects of competition, the impact
of adopting accounting rules, the risk profile of our
products, the effectiveness of our liability assets
management program, and the adequacy of reserves. These
statements are based on our current expectation and are
subject to uncertainty and changes in circumstances.
Actual results may differ materially from these
expectations due to changes in global economic, business,
competitive market, and regulatory factors, many of which
are beyond our control. We undertake no obligation to
publicly update or revise any forward-looking statements,
whether as a result of new information, future
developments or otherwise.

Properties

We conduct our business from various facilities, all of
which are leased except for one building in Richmond,
Virginia, which we own.

Legal Proceedings

We, like other insurance companies, are 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, the ultimate outcome of
which, and any effect on us, 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 our
Consolidated Financial Statements.

We were named as a defendant in a lawsuit, McBride v.
Life Insurance Co. of Virginia dba GE Life and Annuity
Assurance Co., related to the sale of universal life
insurance policies. The complaint was filed on November
1, 2000 as a class action on behalf of all persons who
purchased certain of our universal life insurance
policies and alleges improper practices in connection
with the sale and administration of universal life
policies. The plaintiffs sought unspecified compensatory
and punitive damages. On December 1, 2000, we removed the
case to the U.S. District Court for the Middle District
of Georgia. No class has been certified. We have
vigorously denied liability with respect to the
plaintiff's allegations. Nevertheless, to avoid the risks
and costs associated with protracted litigation and to
resolve our differences with policyholders, we agreed in
principle on October 8, 2003, to settle the case on a
nationwide class action basis. The settlement provides
benefits to the class, and allows us to continue to serve
our customers' needs undistracted by disruptions caused
by litigation. The settlement documents have not been
finalized, nor has any proposed settlement been submitted
to the proposed class or for court approval, and a final
settlement is not certain. In the third quarter of 2003,
we accrued $50 million in reserves relating to this
litigation, which represents our best estimate of
bringing this matter to conclusion. The precise amount of
payments in this matter cannot be estimated because they
are dependent upon court approval of the class and
related settlement, the number of individuals who
ultimately will seek relief in the claim form process of
any approved class settlement, the identity of such
claimants and whether they are entitled to relief under
the settlement terms and the nature of the relief to
which they are entitled.

Submission of Matters to a Vote of Security Holders

Information omitted in accordance with General
Instruction I (2)(c).

Market For the Registrant's Common Equity and Related Shareholder Matters

At December 31, 2003, all of our common stock, our sole
class of common equity on the date hereof, is owned by GE
Financial Assurance, GE Capital Assurance, and Federal.
Accordingly, there is no public trading market for our
common equity.

As previously discussed, our ability to pay dividends is
restricted by state insurance law (See "Regulation,
General Regulation at State Level").

Selected Financial Data

Information omitted in accordance with General
Instruction I (2)(a).

Management's Discussion and Analysis of Results of Operations and Financial
Condition

The following analysis of the consolidated financial
condition and results of our operations should be read in
conjunction with our Consolidated Financial Statements
and the notes thereto included herein.

OPERATING Year Ended December 31, 2003 Compared to
RESULTS Year Ended December 31, 2002

Overview. Net earnings in 2003 were $19.7 million, a
$96.1 million, or 83%, decrease from 2002. The decrease
is partially due to a reserve accrual of $50.0 million
($33.0 million after tax) associated with a settlement
agreement in principle that we reached on October 8,
2003, in connection with a putative class action lawsuit.
Additionally, the timing of the equity market changes in
2003 as compared to 2002 adversely impacted our product
fee revenues. Lower interest rates during the year have
resulted in lower investment yields on our fixed maturity
portfolio, partially offset by reduced interest crediting
rates on certain of our contracts and policies.

Net investment income. Net investment income decreased
$62.2 million, or 10.4%, to $538.0 million in 2003 from
$600.2 million in the prior year. These decreases are
primarily a result of a decrease in weighted average
investment yields to 4.67% in 2003 from 5.23% in 2002 due
to the overall declining interest rate environment.

Net realized investment gains. Net realized investment
gains (losses) consist of gross realized investment gains
and gross realized investment (losses), including charges
related to impairments. Net realized investment gains
(losses) decreased $51.4 million to $3.9 million in 2003
from $55.3 million in 2002. For 2003, gross realized
gains and (losses) were $80.2 million and $(76.3)
million, respectively. Realized losses for 2003 included
$26.4 million of impairments that were primarily
attributable to fixed-maturity and equity securities. For
2002, gross realized gains and (losses) were $181.1
million and $(125.8) million, respectively. Included in
these gains were $17.6 million related to a
securitization transaction conducted by our indirect
parent. Realized losses for 2002 included $77.4 million
of impairments, primarily attributable to fixed-maturity
and equity securities that included $29.5 million of
impairments on securities issued by WorldCom Inc. and its
affiliates.

Cost of insurance. Cost of insurance increased $27.3
million, or 21.7% to $153.1 million in 2003 from $125.8
million in 2002. The increase was primarily due to
premium refunds received from a terminated reinsurance
treaty.

Variable product fees. Variable product fees decreased
$7.6 million, or 6.7%, to $106.3 million in 2003 from
$113.9 million in 2002. The decrease in variable product
fees primarily resulted from a decrease in the daily
average separate account values.

Other income. Other income decreased $9.4 million, or
20.9%, to $35.5 million in 2003 from $44.9 million in
2002. The decrease was partly attributable to lower
surrender fee income on variable annuity products.

Interest credited. Interest credited represents interest
credited on behalf of policyholder and contractholder
general account balances. Interest credited decreased
$51.5 million, or 11.1%, to $410.6 million for 2003 from
$462.1 million for 2002. This decrease was primarily
attributable to the decline in GICs and funding
agreements product liabilities and crediting rates,
offset in part by an increase in interest credited
resulting from more variable annuity policyholders
selecting the fixed account option on their contracts, on
which we credit interest. The decrease in interest
credited was also the result of a reduction in our
weighted average crediting rates to 4.0% for 2003 from
4.29% for 2002.

Our weighted average crediting rates for
interest-sensitive life products decreased to 5.2% in
2003 from 5.78% for the prior year. Changes in our base
crediting rates are implemented in response to changes in
market conditions, the prevailing interest rate
environment, contractual provisions, and other factors.
We monitor market conditions closely and reset interest
crediting rates as deemed appropriate in accordance with
the terms of the underlying contracts. During the year,
the crediting rates on a number of fixed annuity blocks
were reduced to their guaranteed minimum crediting rates.

Benefits and other changes in policy reserves. Benefits
and other changes in policy reserves consist primarily of
reserve activity related to current claims and future
policy benefits on long-duration life and health
insurance products as well as claims cost incurred during
the year under these contracts. In addition, the bonus
feature of our bonus variable annuity product is
initially accounted for as a benefit. These costs
increased $67.5 million, or 37.9%, to $245.7 million in
2003 from $178.2 in 2002. The increase was primarily a
result of increased death benefits on universal and whole
life policies and higher sales of our bonus variable
annuity products.

Underwriting, Acquisition, and Insurance Expenses, net of
deferrals. Underwriting, acquisition, and insurance
expenses, net of deferrals, increased $49.7 million, or
50.0%, to $149.0 million in 2003 from $99.3 million in
the prior year. This increase was primarily the result of
a reserve accrual of $50.0 million associated with a
settlement agreement in principle that we reached on
October 8, 2003, in connection with a putative class
action lawsuit.

Amortization of deferred acquisition costs and
intangibles. Amortization of deferred acquisition costs
and intangibles decreased $28.2 million, or 19.2%, to
$118.9 million in 2003 from $147.1 million in 2002. The
decrease is primarily the result of the impact

of higher amortization in 2002 due to lower equity
valuation of assets in our variable annuity separate
accounts.

Provision (benefit) for income taxes. Provision
(benefit) for income taxes decreased $46.0 million to
($3.1) million in 2003 from $42.9 million in 2002. The
Company's effective tax rate of (19%) in 2003 was 46.0
percentage points lower than the effective tax rate of
27.0% in 2002. This decrease is primarily attributable to
the higher dividends received deduction benefits recorded
in 2002 over lower pre-tax income. In 2002, the
additional recorded benefits were related to a change in
estimate of the 2001 dividends received deduction.

Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001

Overview. Net earnings before cumulative effect of
change in accounting principle in 2002 were $115.8
million, a $13.8 million, or 10.6%, decrease from 2001.
The decline in the equity markets adversely impacted our
product fee revenues and resulted in an increased
amortization expense of deferred acquisition costs on
certain variable annuities products. Declining interest
rates during the year have resulted in lower investment
yields on our fixed maturity portfolio, partially offset
by reduced interest crediting rates to our
contractholders.

Net investment income. Net investment income decreased
$98.7 million, or 14.1%, to $600.2 million in 2002 from
$698.9 million in the prior year. These decreases are
primarily a result of a decrease in weighted average
investment yields to 5.23% in 2002 from 6.51% in 2001 due
to the overall declining interest rate environment in
addition to a block of floating rate securities included
in the portfolio. This decrease was partially offset by
higher levels of average invested assets ($11,784 million
in 2002 as compared to $11,031 million in 2001).

Net realized investment gains. Net realized investment
gains increased $26.2 million to $55.3 million in 2002
from $29.1 million in 2001. Investment gains (losses) are
comprised of gross investment gains and gross investment
(losses). For 2002, gross gains and (losses) were $181.1
million and $(125.8) million, respectively. Included in
these gains were $17.6 million related to a
securitization transaction conducted by our indirect
parent. Impairment losses recognized for 2002 were $77.4
million ($48.8 million after tax) including $40.6 million
($25.6 million after tax) from the telecommunications and
cable industries, of which $29.5 million ($18.6 million
after taxes) was recognized in the second quarter
following the events relating to World Com, Inc. For
2001, gross gains and (losses) were $100.5 million and
$(71.4) million, respectively. Included in the gross
realized investment losses are other than temporary
declines in value of $24.1 million (including $15.4
million related to Enron in 2001).

Variable product fees. Variable product fees decreased
$17.2 million or 13.1%, to $113.9 million in 2002 from
$131.1 million in 2001. The decrease in variable product
fees primarily resulted from a decline in the daily
average separate account values as a result of the
unfavorable conditions in the equity markets.

Interest credited. Interest credited decreased $71.7
million, or 13.4%, to $462.1 million in 2002 from $533.8
million in 2001. This decrease was a result of overall
lower crediting rates and lower floating rate liabilities
in the institutional stable value products offset in part
by an increase in the liabilities of the fixed account
investment option of our variable annuity product.

Our weighted average crediting rates for annuities
decreased to 4.29% in 2002 from 4.73% for the prior year.
Our weighted average crediting rates for
interest-sensitive life products increased to 5.78% in
2002 from 5.75% for the prior year. Changes in our base
crediting rates are implemented in response to changes in
market conditions, the prevailing interest rate
environment, contractual provisions, and other factors.
We monitor market conditions closely and reset interest
crediting rates as deemed appropriate in accordance with
the terms of the underlying contracts. During 2002, the
crediting rates on a number of fixed annuity blocks were
reduced to their guaranteed minimum crediting rates.

Benefits and other changes in policy reserves. Benefits
and other changes in policy reserves include both
activity to future policy benefits on long-duration life
and health insurance products as well as claims cost
incurred during the year under these contracts. In
addition, the bonus feature of our bonus variable annuity
product is initially accounted for as a benefit. These
amounts decreased $4.1 million, or 2.2%, to $178.2
million in 2002 from $182.3 in 2001. The decrease is a
result of lower sales of our bonus variable annuity
products offset in part by higher levels of mortality on
the Company's life insurance products in 2002 compared to
the prior year and to a non-recurring release of reserves
for life insurance products taken in 2001.

Underwriting, acquisition, and insurance expenses, net of
deferrals. Underwriting, acquisition, and insurance
expenses, net of deferrals, increased $12.0 million, or
13.7%, to $99.3 million in 2002 from $87.3 million in
2001. This increase was primarily a result of a decrease
in the amount of commissions and acquisition costs
deferred in 2002.

Amortization of deferred acquisition costs and
intangibles. Amortization of deferred acquisition costs
and intangibles increased $15.8 million, or 12.0%, to
$147.1 million in 2002 from $131.3 million in 2001. The
increase is a result of the impact of accelerated
amortization in 2002 due to lower equity valuation of
assets in our variable annuity separate accounts.

Provision for income taxes. Provision for income taxes
decreased $27.2 million, or 38.8%, to $42.9 million in
2002 from $70.1 million in 2001. Our effective tax rate
of 27.0% in 2002 was 8.1 percentage points lower than the
effective tax rate of 35.1% in 2001. This decrease is
primarily attributable to the tax impact in 2002 of
discontinued amortization of non-deductible goodwill,
dividend received deductions, and the impact of recurring
permanent items on lower pre-tax net income.

SEGMENTS During the fourth quarter 2003, we redefined our
OPERATIONS operating segments. Management realigned the business on
a product line and market basis to intensify its focus on
return on equity, optimum deployment of capital and
distribution effectiveness. As of a result of this
change, our operations are conducted under two reporting
segments corresponding to customer needs: Retirement
Income and Investments and Protection. We also have a
Corporate and Other segment, which consists primarily of
net realized investment gains (losses), interest and
other financing expenses, and unallocated corporate
income and expenses. Prior to this, our three reporting
segments were Total Annuities, Life, and All Other.

RETIREMENT INCOME The following table sets forth certain summarized
AND INVESTMENTS financial data for our Retirement Income and Investments
segment for the years ended December 31, 2003, 2002, and
2001.

2003 2002 2001
------ ------ ------

Revenues:
Net investment income $402.7 $457.1 $529.8
Premiums (1.7) 1.0 .8
All other revenues 150.8 157.3 167.6
------ ------ ------
Total revenues 551.8 615.4 698.2
------ ------ ------
Benefits and expenses:
Interest credited 316.5 365.8 438.6
Benefits and other changes in policy
reserves 45.5 26.8 42.8
All other operating costs and
expenses 131.3 150.7 120.1
------ ------ ------
Total benefits and expenses 493.3 543.3 601.5
------ ------ ------
Income before income taxes, and
cumulative effect of change in
accounting principle (operating
income) $ 58.5 $ 72.1 $ 96.7
====== ====== ======
---------------------------------------------------------------

Year Ended December 31, 2003 Compared to
Year Ended December 31, 2002

Total revenues in this segment decreased $63.6 million to
$551.8 million for 2003 from $615.4 million in 2002. The
decrease in revenues was primarily the result of a
decrease in net investment income attributable to
declining yields on invested assets.

This decrease was also the result of a decrease in fee
income on variable annuities primarily attributable to
lower equity values of the assets in our separate
accounts. Total benefits and expenses in this segment
decreased $50.0 million to $493.3 million for 2003 from
$543.3 in 2002. The decrease in total benefits and
expenses were primarily attributable to the decline in
the GIC and funding agreement liabilities and crediting
rates. Our operating income from this segment decreased
18.9% in 2003 to $58.5 million from $72.1 million in
2002. This decrease was primarily attributable to
declining yields on invested assets and a decrease in
variable product fee income.

Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001

Total revenues in this segment decreased $82.8 million to
$615.4 million for 2002 from $698.2 million in 2001. The
decline in revenues is primarily attributable to lower
weighted average investment yields resulting from the
overall declining interest rate environment in addition
to a block of floating rate securities included in the
portfolio. These decreases were partially offset by
higher levels of average invested assets and higher
realized investment gains. The unfavorable equity market
performance also impacted variable product fees (included
in All other revenues) which decreased as a result of
lower daily average separate account values.

Operating income from this segment represented 45.4% and
48.4% of our total operating income for years ended
December 31, 2002 and 2001, respectively. Our operating
income from this segment decreased 25.4% in 2002 to $72.1
million from $96.7 million in 2001. This decrease
primarily resulted from unfavorable equity markets which
lowered revenues offset in part by lower interest
credited, lower commission and acquisition costs
resulting from the decline in the variable annuity sales,
and an additional adjustment of $39.6 million made to
amortization expense resulting from the equity market
performance. The discontinuation of goodwill amortization
with the adoption of SFAS 142, lower reduced
compensation, and other cost saving initiatives resulting
from integration and consolidation activities also
reduced expenses in 2002.

PROTECTION The following table sets forth certain summarized
financial data for our Protection segment for the years
ended December 31, 2003, 2002, and 2001.

2003 2002 2001
------ ------ ------

Revenues:
Net investment income $152.5 $160.5 $168.1
Premiums 105.7 102.3 107.6
Other revenues 143.8 123.7 125.2
------ ------ ------
Total revenues 402.0 386.5 400.9
------ ------ ------
Benefits and expenses:
Interest credited 94.1 96.9 95.2
Benefits and other changes in policy
reserves 200.2 150.2 139.5
Other operating costs and expenses 89.3 88.4 103.1
------ ------ ------
Total benefits and expenses 383.6 335.5 337.8
------ ------ ------
Income before income taxes, and
cumulative effect of change in
accounting principle (operating
income) $ 18.4 $ 51.0 $ 63.1
====== ====== ======
--------------------------------------------------------------

Year Ended December 31, 2003 Compared to
Year Ended December 31, 2002

Total revenues in this segment increased $15.5 million to
$402.0 million for 2003 from $386.5 million in 2002. The
increase in revenues was primarily the result of an
increase in other revenues attributable to an increase in
cost of insurance revenues on universal life policies.
Benefits and expenses in this segment increased $48.1
million to $383.6 million for 2003 from $335.5 million in
2002. The increase in benefits and expenses was primarily
attributable to an increase in death benefits on
universal life and whole life policies. Our operating
income from this segment decreased 63.9% in 2003 to $18.4
million from $51.0 million in 2002. This decrease was
primarily attributable to the increased death benefits on
universal life and whole life policies.

Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001

Total revenues in this segment decreased $14.4 million to
$386.5 million for 2002 from $400.9 million in 2001. The
decrease primarily resulted from a decrease in investment
and premium income.

Operating income from this segment represented 32.1% and
31.6% of our total operating income for the years ended
December 31, 2002 and 2001, respectively. Our operating
income from this segment decreased 19.2% in 2002 to $51.0
million from $63.1 million in 2001. The decrease
primarily resulted from the decreased investment and
premium income. Other operating costs also decreased,
however, the benefit that was gained was offset by higher
charges related to policy costs.

CORPORATE AND OTHER The following table sets forth certain summarized
financial data for our Corporate and Other segment for
the years ended December 31, 2003, 2002, and 2001.

2003 2002 2001
------ ------ -----

Revenues:
Net investment income $(17.2) $(17.4) $ 1.0
Premiums -- 2.0 --
Other revenues 4.2 58.9 34.3
------ ------ -----
Total revenues (13.0) 43.5 35.3
------ ------ -----
Benefits and expenses:
Interest credited, benefits and
other changes in policy reserves -- .6 --
Other operating costs and expenses 47.3 7.3 (4.6)
------ ------ -----
Total benefits and expenses 47.3 7.9 (4.6)
------ ------ -----
Income before income taxes, and
cumulative effect of change
in accounting principle (operating
income (loss)) $(60.3) $ 35.6 $39.9
====== ====== =====
----------------------------------------------------------------

Year Ended December 31, 2003 Compared to
Year Ended December 31, 2002

Total revenues in this segment decreased $56.5 million to
$(13.0) million for 2003 from $43.5 million in 2002. This
decrease primarily resulted from a decrease in net
realized investment gains. Benefits and expenses in this
segment increased $39.4 million to $47.3 million for 2003
from $7.9 million in 2002. The increase in benefits and
expenses was primarily attributable to a reserve and
expense accrual of $50 million associated with a
settlement agreement in principle that we reached on
October 8, 2003, in connection with a putative class
action lawsuit.

Our operating income from this segment decreased $95.9
million in 2003 to $(60.3) million from $35.6 million in
2002. This decrease primarily resulted from the decrease
in net realized investment gains and the increase in the
class action lawsuit reserve and expense accrual.

Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001

Total revenues in this segment increased $8.2 million to
$43.5 million for 2002 from $35.3 million in 2001. This
increase primarily resulted from the increase in net
realized gains offset by the decrease in net investment
income.

Operating income from this segment represented 22.4% and
20.0% of our total operating income for years ended
December 31, 2002 and 2001, respectively. Our operating
income from this segment decreased 10.7% in 2002 to $35.6
million from $39.9 million in 2001. This decrease
primarily resulted from the $11.9 million increase in
other operating costs and expenses which was offset by
the $8.2 million increase in revenue.

Capital Resources and Liquidity

STATEMENT OF Total Investments. Total investments decreased $261.8
FINANCIAL million, or 2.3%, at December 31, 2003 from December 31,
POSITION 2002. The decrease was primarily a result of sales of
fixed maturity portfolio investments to fund the excess
of maturing contracts as compared to deposits from new
sales.

Investment securities comprise mainly investment grade
debt securities. Investment securities were $9,666.7
million, including gross unrealized gains and losses of
$278.7 million and $71.1 million, respectively at
December 31, 2003 ($10,093.9 million, including gross
unrealized gains and losses of $259.6 million and $250.7
million, respectively, as of December 31, 2002). Market
value for these purposes is defined by relevant
accounting standards and should not be viewed as a
forecast of future gains or losses. We estimate that
available gains, net of hedging position and estimated
impairment of intangibles and other assets, could be as
much as $117.0 million.

Impairment of Investment Securities. We regularly review
each investment security for impairment in accordance
with our impairment policy, which includes both
quantitative and qualitative criteria. Quantitative
measures include length of time and amount that each
security position is in an unrealized loss position, and
for fixed maturity securities, whether the issuer is in
compliance with terms and covenants of the security. Our
qualitative criteria include the financial strength and
specific prospects for the issuer as well as our intent
to hold the security until recovery. Our impairment
reviews involve our finance and risk teams as well as the
portfolio management and research capabilities of GEAM.
Our qualitative review attempts to identify those issuers
with a greater than 50% chance of default in the coming
twelve months. These securities are characterized as
"at-risk" of impairment. As of December 31, 2003,
securities "at risk" of impairment had aggregate
unrealized losses of $10 million.

For fixed maturity securities, we recognize an impairment
charge to earnings in the period in which we determine
that we do not expect to either collect principal and
interest in accordance with the contractual terms of the
instruments or to recover based on underlying collateral
values and considering events such as payment default,
bankruptcy or disclosure of fraud. For equity securities,
we recognize an impairment charge in the period in which
we determine that the security will not recover to book
within a reasonable period. We measure impairment charges
based on the difference between the book value of the
security and its fair value. Fair value is based on
quoted market price, except for certain infrequently
traded securities where we estimate values using
internally developed pricing models. These models are
based upon common valuation techniques and require us to
make assumptions regarding credit quality, liquidity and
other factors that affect estimated values.

During 2003, 2002 and 2001, we recognized impairment
losses of $26.2 million, $77.4 million and $24.1 million,
respectively. We generally intend to hold securities in
unrealized loss positions until they recover. However,
from time to time, we sell securities in the normal
course of managing our portfolio to meet diversification,
credit quality, yield and liquidity requirements.

The following table presents the gross unrealized losses
and estimated fair values of our investment securities,
aggregated by investment type and length of time that
individual investment securities have been in a
continuous unrealized loss position, at December 31, 2003

Less than 12 Months 12 Months of More
------------------------------ ----------------------------
Fair Unrealized # of Fair Unrealized # of
Description of Securities Value Losses Securities Value Losses Securities
- ------------------------- -------- ---------- ---------- ------ ---------- ----------

Fixed maturities:
U.S. government and
agencies $ 7.1 $ (.1) 2 $ -- $ -- --
State and municipal .9 -- 2 -- -- --
Government - non U.S. 14.1 (.1) 4 -- -- --
U.S. corporate 1,009.2 (30.2) 129 249.5 (18.7) 37
Corporate - non U.S. 172.4 (4.9) 41 42.8 (3.3) 4
Asset Backed 220.2 (3.9) 22 75.0 (.4) 6
Mortgage Backed 550.9 (9.4) 79 3.8 (.1) 6
-------- ------ --- ------ ------ --
Subtotal, fixed maturities 1,974.8 (48.6) 279 371.1 (22.5) 53
Equity securities -- -- -- -- -- --
-------- ------ --- ------ ------ --
Total temporarily impaired
securities $1,974.8 $(48.6) 279 $371.1 $(22.5) 53
======== ====== === ====== ====== ==
Investment Grade 1,862.7 (42.4) 257 273.0 (9.9) 29
Below Investment Grade 112.1 (6.2) 22 98.1 (12.6) 24
-------- ------ --- ------ ------ --
Total $1,974.8 $(48.6) 279 $371.1 $(22.5) 53
======== ====== === ====== ====== ==
- --------------------------------------------------------------------------------------

Separate Account Assets and Liabilities. Separate
account assets and liabilities represent funds held for
the exclusive benefit of variable annuity and variable
life contract holders. As of December 31, 2003, we held
$8,034.9 million of separate account assets. The increase
of $852.1 million, or 11.9%, from $7,182.8 million at
December 31, 2002 was related primarily to the favorable
market performance of the underlying securities and an
increase from growth of the GERA(TM) product.

Future Annuity and Contract Benefits. Future annuity and
contract benefits decreased $530.3 million, to $10,241.2
million at December 31, 2003 from $10,771.5 million at
December 31, 2002. The decrease is primarily attributable
to the GIC and funding agreement liability decline, which
resulted from maturities outpacing sales. This decrease
is partially offset by an increase in liabilities for the
variable annuity fixed account investment option
resulting from a shift in consumer preference to fixed
annuities as a result of adverse equity markets.

STATEMENT OF Shareholders' interest increased $117.8 million to
CHANGES IN $1,822.0 million at December 31, 2003 from $1,704.2
SHAREHOLDERS' million at December 31, 2002. This increase was primarily
INTEREST attributed to an increase in unrealized gains on invested
securities during the year of $99.7 million.

INTEREST RATE Interest rate changes may affect the sale and
MANAGEMENT profitability of our annuity, ISWL, UL, and other
products. For example, if interest rates rise, competing
investments (such as annuities or life insurance offered
by our competitors, certificates of deposit, mutual
funds, and similar instruments) may become more
attractive to potential purchasers of our products. We
may need to adjust certain crediting rates on our line of
products in order to meet competitive pressures. We
constantly monitor interest earnings on existing assets
and yields available on new investments and sell policies
and annuities that permit flexible responses to interest
rate changes as part of our management of interest
spreads.

We use derivative financial instruments to mitigate or
eliminate certain financial and market risks, including
those related to changes in interest rates. As a matter
of policy, we do not engage in derivative market-making,
speculative derivative trading, or other speculative
derivative activities. More detailed information
regarding these financial instruments, as well as the
strategies and policies for their use, is contained in
Notes 1 and 10 to the Consolidated Financial Statements.

We have managed our exposure to changes in interest
rates, in part, by monitoring and managing the duration
of our investment portfolio assets with the duration of
our liabilities. Established practices require that
derivative financial instruments relate to specific asset
or liability transactions or to currency exposure, if any.

Market fluctuations could negatively affect the business.
Significant changes in equity market performance expose
insurance companies to the risk of not earning
anticipated policy fees from variable products,
accelerating amortization of deferred acquisition costs,
or requiring additional liabilities for death benefits
exceeding the policyholder account balance. If the equity
markets fail to improve, we may recognize additional
amortization of deferred acquisition costs. Market
fluctuations may also increase trade volumes that could
expose insurers to gains or losses in traded securities
underlying their separate accounts. Declining market
returns may result in lower sales of certain of our
variable products.

We are exposed to prepayment risk in certain of our
business activities, such as in our investment portfolio
and annuities activities. We use swaptions, to mitigate
prepayment

risk. These swaptions are governed by the credit risk
policies described below and are transacted in either
exchange-traded or over-the-counter markets.

Counterparty credit risk is managed on an individual
counterparty, which means that gains and losses are
netted for each counterparty to determine the amount at
risk. When a counterparty exceeds credit exposure limits
in terms of amounts owed to us, typically as a result of
changes in market conditions (see table below), no
additional transactions are executed until the exposure
with that counterparty is reduced to an amount that is
within the established limit. All swaps are executed
under master swap agreements containing mutual credit
downgrade provisions that provide the ability to require
assignment or termination in the event either party is
downgraded below A3 or A-.

Swaps, purchased options, and forwards with contractual
maturities longer than one year are executed within the
credit policy constraints provided in the table below. We
may, however, enter into derivative transactions for
durations of five years or longer with lower rated
counterparties (Moody's Aa3 and S&P's AA-) if the
agreements governing such transactions require both us
and the counterparties to provide collateral in certain
circumstances.

Credit rating
Counterparty Credit Criteria Standard & Poor's
---------------------------- -----------------

Term of transaction
Between one and five years AA-
Greater than five years AAA
Credit exposure limits
Up to $50 million AA-
Up to $75 million AAA
----------------------------------------------

The conversion of interest rate risk into credit risk
results in a need to monitor counterparty credit risk
actively. At December 31, 2003 and 2002, there were no
notional amounts of long-term derivatives for which the
counterparty credit criteria were rated below AA-.

Following is an analysis of credit risk exposures as of
December 31, 2003:

Percentage of Notional Derivative Exposure by
Counterparty Credit Rating

Moody's
-------

Aaa 86%
Aa 14%
-----------

The SEC requires that registrants provide information
about potential effects of changes in interest rates.
Although the rules offer alternatives for presenting this

information, none of the alternatives are without
limitations. The following discussion is based on
so-called "shock-tests," which model effects of interest
rate and currency shifts on the reporting company. Shock
tests, while probably the most meaningful analysis
permitted, are constrained by several factors, including
the necessity to conduct the analysis based on a single
point in time and by their inability to include the
extraordinarily complex market reactions that normally
would arise from the market shifts modeled. While the
results of shock tests for changes in interest rates, as
described below, may have some limited use as benchmarks,
they should not be viewed as forecasts.

One means of assessing exposure to interest rate changes
is a duration-based analysis that measures the potential
loss in net earnings resulting from a hypothetical
decrease in interest rates of 100 basis points across all
maturities (sometimes referred to as a "parallel shift in
the yield curve"). Under this model, with all else held
constant, we estimate that such a decrease, including
repricing in the securities portfolio; would decrease the
2004 net earnings by approximately $1.5 million based on
year-end 2003 positions.

LIQUIDITY The principal liquidity requirements for our insurance
operations are our contractual obligations to contract
holders and annuitants. Contractual obligations include
payments of claims under outstanding insurance policies
and annuities, contract withdrawals, and surrender
benefits. The primary sources for meeting these
contractual obligations are investment activities and
cash generated from operating activities. We maintain a
committed credit line with an indirect parent, GNA, of
$500 million to provide liquidity to meet normal
variation in cash requirements.

For the years ended December 31, 2003, 2002, and 2001
cash flows provided by (used in) operating and certain
financing activities were $(410.2) million, ($242.2)
million, and $1,110.2 million, respectively. These
amounts include net cash provided by (used in) financing
activities relating to investment contract issuances
accounted for as deposit liabilities under U.S. GAAP and
redemptions of $(937.8) million, ($617.5) million, and
$553.4 million for the years ended December 31, 2003,
2002, and 2001, respectively.

The nature and quality of the various types of
investments purchased by a life insurance company must
comply with the statutes and regulations imposed by the
various jurisdictions in which those entities are
incorporated. Following is a breakdown of the credit
quality of our fixed maturity portfolio at December 31,
2003.

BBB/Baa or above 83.8%
BB/Ba and below 4.3%
Not Rated 11.9%
------
Total portfolio 100.0%
======
-----------------------

Certain of our products contain provisions for charges
for surrender of, or withdrawals from, the policy. At
December 31, 2003 and December 31, 2002, approximately
66% of our annuity contracts were subject to surrender
charges or contained non-surrender provisions. Certain of
our funding agreements have termination provisions.

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. Dividends in excess of the
prescribed limits or the earned surplus are deemed
extraordinary and require formal state insurance
department approval. We are able to pay $23.7 million in
dividends in 2004 without obtaining regulatory approval.
See "Insurance Regulation -- Regulation at State Level."

We have used off-balance sheet securitization
transactions to mitigate and diversify our asset risk
position and to adjust the asset class mix in our
portfolio by reinvesting securitization proceeds in
accordance with our approved investment guidelines. We
have not used securitization transactions to provide us
with additional liquidity, and we do not anticipate using
securitization transactions for that purpose in the
future. The transactions involved securitizations of some
of our receivables and investments that were secured by
commercial mortgage loans, fixed maturities or other
receivables, consisting primarily of policy loans. Total
securitized assets remaining as of December 31, 2003 and
2002 were $349.8 and $409.5 million, respectively.

Securitization transactions resulted in net gains, before
taxes, of approximately $5.8 and $17.0 million for the
years ended December 31, 2002 and 2001, respectively.
There were no securitization transactions in 2003.

We have arranged for the assets that we have transferred
in securitization transactions to be serviced by us
directly, or pursuant to arrangements with GEAM and with
General Motors Acceptance Corporation. Servicing
activities include ongoing review, credit monitoring,
reporting, and collection activities.

Support. Financial support is provided under credit
support agreements, in which our direct parent, GE
Financial Assurance, provides limited recourse for a
maximum of $119 million of credit losses in such
entities. We do not provide any such recourse. Assets
with credit support are funded by demand notes that are
further enhanced with support provided by GE Capital.

Management has extensive experience in evaluating
economic, liquidity, and credit risk. In view of this
experience, the high quality of assets in these
qualifying entities, the historically robust quality of
commercial paper markets, and the historical reliability
of controls applied both to asset servicing and to
activities in the credit markets, management believes
that, under any reasonable future economic developments,
the likelihood is remote that any such arrangements could
have other than an inconsequential negative effect on our
operations, cash flows, or financial position.

Under FIN 46, Consolidation of Variable Interest
Entities, new consolidation criteria is applied to
certain SPE's, which it defines as "Variable Interest
Entities". Additional information about entities that
fall within the scope of FIN 46 is provided in Note 11.

As defined by reporting regulations, our consolidated
contractual obligations as of December 31, 2003, follow:

Payments due by period
----------------------------------------------
2005- 2007- 2009
(In millions) Total 2004 2006 2008 thereafter
------------- -------- -------- -------- -------- ----------

Borrowings $ 6.3 $ 6.3 $ -- $ -- $ --
Operating lease obligations 0.5 0.3 0.2 -- --
Insurance liabilities/ (a)/ 4,445.1 1,633.9 1,644.1 1,122.0 45.1
Other liabilities /(b)/ 378.0 378.0 -- -- --
--------------------------------------------------------------------------

/(a)/ Primarily includes guaranteed investment contracts,
structured settlements and single premium immediate
annuities based on scheduled payouts.
/(b)/ Because their future cash outflows are uncertain, the
following non-current liabilities are excluded from the
table above; deferred taxes, derivatives, deferred
revenue and other sundry items.

Critical Accounting Policies

The accounting policies discussed in this section are
those that we consider to be particularly critical to an
understanding of our financial statements because their
application places the most significant demands on our
ability to judge the effect of inherently uncertain
matters on our financial results. For all of these
policies, we caution that future events rarely develop
exactly as forecast, and our management's best estimates
may require adjustment.

Valuation of investment securities. We obtain values for
actively traded securities from external pricing
services. For private placement and infrequently traded
securities, we obtain quotes from brokers or we estimate
values using internally developed pricing models. These
models are based upon common valuation techniques and
require us to make assumptions regarding credit quality,
liquidity and other factors that affect estimated values.

Impairment of investment securities. Impairment of
investment securities results in a charge to earnings
when a market decline in the value of an investment to
below cost is other than temporary. We regularly review
each investment security for impairment based on criteria
that include the extent to which the cost of the
investment exceeds its market value, the length of time
that the market value of the investment has been reduced,
our ability to hold until recovery and the financial
health of and specific prospects for the issuer of the
security. We actively perform comprehensive market
research, monitor market conditions and segment our
investments by credit risk in order to minimize
impairment risks.

Deferred acquisition costs ("DAC") and other intangible
assets. As of December 31, 2003, we had $1,041.6 million
in deferred acquisition costs and other intangible
assets. DAC represents costs associated with the sale of
our insurance and annuity policies that are not charged
to income when incurred. Other intangible assets are
principally the present value of future profits ("PVFP")
on insurance policies acquired in purchase transactions.
DAC and other intangible assets are subsequently charged
to income, over the lives of the underlying contracts, in
relation to the anticipated emergence of revenue or
profits.

This amortization is based on commonly accepted actuarial
methods and reasonable assumptions about mortality,
morbidity, lapse rates, future yield on related
investments and, in the case of our variable products,
long-term market appreciation. The DAC amortization
methodology for our variable products (variable annuity
and variable universal life) includes a long-term market
average appreciation assumption of 8.5%. When actual
returns vary from the expected 8.5%, we assume a
reversion to this mean over a three to eight year period,
subject to the imposition of ceilings and floors. The
assumed returns over this reversion period are limited to
the 85/th/ percentile of 65 years of historical
performance.

We regularly review all of these assumptions and
periodically test DAC and other intangible assets for
recoverability. For annuities and deposit products, if
the current present value of estimated future gross
profits is less than the unamortized DAC for a line of
business, a charge to income is recorded for additional
DAC amortization. For other products, if the benefit
reserves plus the present value of anticipated future
premiums and interest earnings, for a line of business,
are less than the current estimate of the present value
of future benefits and expenses (including any
unamortized DAC or intangible assets), a charge to income
is recorded for additional DAC amortization and may be
recorded for increased benefit reserves.

Unfavorable experience with regard to expected expenses,
interest or investment returns, mortality, morbidity,
and/or withdrawals or lapses, might cause us to increase
the amortization of DAC and other intangible assets or to
record a charge to increase benefit reserves. Primarily
as a result of lower investment returns recoverability
margins have been significantly reduced in almost all
lines of business.

Goodwill impairment. Goodwill resulting from
acquisitions is tested for impairment at least annually
using a fair value approach, which requires the use of
estimates and judgment. To the extent the carrying amount
of goodwill exceeds its fair value, an impairment charge
to income would be recorded.

Insurance liabilities and reserves differ for long- and
short-duration insurance contracts. Measurement of
long-duration insurance liabilities (such as UL and ISWL
insurance policies) is based on approved actuarial
methods, but necessarily includes assumptions about
mortality and morbidty, lapse rates, and future yield on
related investments. Short-duration contracts such as
accident and health policies are accounted for based on
actuarial estimates of the amount of loss inherent in
that period's claims, including losses for which claims
have not been reported. Short-duration contracts loss
estimates rely on actuarial observations of ultimate loss
experience for similar historical events. Our future
annuity and contract benefits totaled $10,241.2 million
at December 31, 2003. Some of our variable products
include guaranteed minimum death benefit ("GMDB")
features and approximately 86% of this inforce exposure
is reinsured. For the self-insured block, we reserve 100%
of explicit and implicit GMDB charges less current period
claims. We continually evaluate the potential changes in
all benefits and loss estimates, both positive and
negative, and use the results of these evaluations both
to adjust recorded provisions and to adjust underwriting
criteria and product offerings. Further information about
insurance liabilities is provided in Note 6.

Other significant accounting policies, not involving the
same level of measurement uncertainties as those
discussed above, are nevertheless important to an
understanding of the financial statements. Policies
related to revenue recognition, financial instruments,
and consolidation policy require difficult judgments on
complex matters that are often subject to multiple
sources of authoritative guidance. Certain of these
matters are among topics currently under reexamination by
accounting standard setters and regulators. Although no
specific conclusion reached by these standard setters
appear likely to cause a material change in our
accounting policies, outcomes cannot be predicted with
confidence. Also see Note 1, Summary of Significant
Accounting Policies, which discusses accounting policies
that we must select when there are acceptable
alternatives.

NEW ACCOUNTING See Note 1 (r) and (s) to the Consolidated Financial
STANDARDS Statements for a discussion of recently issued accounting
pronouncements.

Quantitative and Qualitative Disclosures About Market Risk, Interest Rate and
Currency Risk Management

Information about potential effects of changes in
interest rates on us are discussed in the Interest Rate
and Currency Risk Management section of Item 7.

Experts

The consolidated financial statements and schedule of GE
Life and Annuity Assurance Company and subsidiary (the
Company) as of December 31, 2003 and 2002, and for each
of the years in the three-year period ended December 31,
2003, have been included herein in reliance upon the
reports of KPMG LLP, independent accountants, appearing
elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.

The reports of KPMG LLP dated February 6, 2004 with
respect to the financial statements of GE Life and
Annuity Assurance Company and subsidiary refer to a
change in accounting for goodwill and other intangible
assets in 2002 and for derivative instruments and hedging
activities in 2001.

Appendix

MARKET VALUE The formula used to determine the Market Value Adjustment
ADJUSTMENT factor is:
EXAMPLES ((1+i)/(1+j))/n/365/, where

n = the number of days to the end of your current
Guarantee Term
i = the Guaranteed Interest Rate in effect for your
current Guarantee Term
j =the currently offered Guaranteed Interest Rate for a
Guarantee Term with a duration of "n"

Examples of Market Value Adjustment at the end of the
third Contract Year based on a single purchase payment of
$100,000.00, a Guarantee Term of 10 years and a
Guaranteed Interest Rate of 4.00%

Contract Value at the end of the third Contract Year =
$100,000.00 x (1.04)/3/ = $112,486.40

Free Withdrawal Amount = Interest Credited to Contract
Value during the prior twelve months = $4,326.40

Surrender Charge = ($112,486.40 - $4,326.40) x .05 =
$5,408

Example #1: Full Surrender -- Negative Market Value
Adjustment
n = 2,555 (365 x 7)

i = 4.00%

j = 5.00%

MVA factor = (1.04/1.05)/7/ = .935208147

Amount Payable Upon Surrender = [(Contract Value - Free
Withdrawal Amount - Surrender Charge) x MVA factor] +
Free Withdrawal Amount

= [($112,486.40 - $4,326.40 - $5,408) x .935208147] +
$4,326.40

= $103,526.08

Example #2: Full Surrender -- Positive Market Value
Adjustment
n = 2,555 (365 x 7)

i = 4.00%

j = 3.00%

MVA factor = (1.04/1.03)/7/ = 1.069972959

Amount Payable Upon Surrender = [(Contract Value - Free
Withdrawal Amount - Surrender Charge) x MVA factor] +
Free Withdrawal Amount

= [($112,486.40 - $4,326.40 - $5,408) x 1.069972959] +
$4,326.40

= $114,268.26

A-1

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 (the Company) as of December 31, 2003
and 2002, 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, 2003. 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, 2003 and 2002, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Notes 1 and 4 to the consolidated financial statements, the
Company changed its method of accounting for goodwill and other intangible
assets in 2002. As discussed in Note 1 to the consolidated financial
statements, the Company changed its method of accounting for derivative
instruments and hedging activities in 2001.

/s/ KPMG LLP

Richmond, Virginia
February 6, 2004

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Consolidated Balance Sheets
(Dollar amounts in millions, except per share amounts)

December 31,
-------------------
2003 2002
--------- ---------

Assets
Investments:
Fixed maturities
available-for-sale, at fair
value................................. $ 9,640.7 $10,049.0
Equity securities
available-for-sale, at fair
value
Common stock......................... 24.7 41.3
Preferred stock,
non-redeemable..................... 1.3 3.6
Mortgage loans, net of valuation
allowance of $10.4 and $8.9 at
December 31, 2003 and December
31, 2002, respectively................ 1,262.3 1,034.7
Policy loans............................ 138.5 123.9
Short-term investments.................. 99.6 278.0
Other invested assets................... 162.1 60.5
--------- ---------
Total investments.................... 11,329.2 11,591.0
Cash and cash equivalents................... 12.4 --
Accrued investment income................... 127.8 160.4
Deferred acquisition costs.................. 897.0 827.2
Goodwill.................................... 117.3 107.4
Intangible assets........................... 144.6 207.7
Reinsurance recoverable..................... 160.7 174.4
Other assets................................ 38.7 30.1
Separate account assets..................... 8,034.9 7,182.8
--------- ---------
Total assets......................... $20,862.6 $20,281.0
========= =========
Liabilities and Shareholders' Interest
Liabilities:
Future annuity and contract
benefits.............................. $10,241.2 $10,771.5
Liability for policy and
contract claims....................... 42.6 240.4
Other policyholder liabilities.......... 147.8 208.1
Other liabilities....................... 399.4 69.1
Deferred income tax liability........... 174.7 104.9
Separate account liabilities............ 8,034.9 7,182.8
--------- ---------
Total liabilities.................... 19,040.6 18,576.8
--------- ---------
Shareholders' interest:
Net unrealized investment gains
(losses).............................. 87.7 (12.0)
Derivatives qualifying as hedges........ 0.4 2.3
--------- ---------
Accumulated non-owner changes in
shareholders' interest................ 88.1 (9.7)
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 shares authorized,
25,651 shares issued and
outstanding).......................... 25.6 25.6
Additional paid-in capital.............. 1,060.6 1,050.7
Retained earnings....................... 527.7 517.6
--------- ---------
Total shareholders' interest......... 1,822.0 1,704.2
--------- ---------
Total liabilities and
shareholders' interest............. $20,862.6 $20,281.0
========= =========

See Notes to Consolidated Financial Statements.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Consolidated Statements of Income
(Dollar amounts in millions)

Years Ended December 31,
-------------------------
2003 2002 2001
------ -------- --------

Revenues:
Net investment income................ $538.0 $ 600.2 $ 698.9
Net realized investment gains........ 3.9 55.3 29.1
Premiums............................. 104.0 105.3 108.4
Cost of insurance.................... 153.1 125.8 126.1
Variable product fees................ 106.3 113.9 131.1
Other income......................... 35.5 44.9 40.8
------ -------- --------
Total revenues................... 940.8 1,045.4 1,134.4
------ -------- --------
Benefits and expenses:
Interest credited.................... 410.6 462.1 533.8
Benefits and other changes in policy
reserves........................... 245.7 178.2 182.3
Underwriting, acquisition, and
insurance expenses, net of
deferrals.......................... 149.0 99.3 87.3
Amortization of deferred acquisition
costs and intangibles.............. 118.9 147.1 131.3
------ -------- --------
Total benefits and expenses...... 924.2 886.7 934.7
------ -------- --------
Income before income taxes and
cumulative effect of change in
accounting principle.................. 16.6 158.7 199.7
Provision for income taxes.............. (3.1) 42.9 70.1
------ -------- --------
Income before cumulative effect of
change in accounting principle........ 19.7 115.8 129.6
Cumulative effect of change in
accounting principle, net of tax...... -- -- (5.7)
------ -------- --------
Net income.............................. $ 19.7 $ 115.8 $ 123.9
====== ======== ========

See Notes to Consolidated Financial Statements.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Consolidated Statements of Shareholders' Interest
(Dollar amounts in millions, except share amounts)

Accumulated
Preferred Stock Common Stock Additional Non-owner Total
-------------- ------------- Paid-In Changes In Retained Shareholders'
Share Amount Share Amount Capital Equity Earnings Interest
------- ------ ------ ------ ---------- ----------- -------- -------------

Balances at January 1, 2001................. 120,000 $120.0 25,651 $25.6 $1,050.7 $(18.7) $297.1 $1,474.7
Changes other than transactions with
shareholders:
Net income............................... -- -- -- -- -- -- 123.9 123.9
Net unrealized gains on investment
securities (a)......................... -- -- -- -- -- 1.3 -- 1.3
Cumulative effect on adoption of
SFAS 133 (b)........................... -- -- -- -- -- (7.8) -- (7.8)
Derivatives qualifying as hedges (c)..... -- -- -- -- -- (0.3) -- (0.3)
--------
Total changes other than
transactions with shareholders..... 117.1
--------
Cash dividends declared and paid............ -- -- -- -- -- -- (9.6) (9.6)
------- ------ ------ ----- -------- ------ ------ --------
Balances at December 31, 2001............... 120,000 $120.0 25,651 $25.6 $1,050.7 $(25.5) $411.4 $1,582.2
Changes other than transactions with
shareholders:
Net income............................... -- -- -- -- -- -- 115.8 115.8
Net unrealized gains on investment
securities (a)......................... -- -- -- -- -- 5.4 -- 5.4
Derivatives qualifying as hedges (c)..... -- -- -- -- -- 10.4 -- 10.4
--------
Total changes other than
transactions with shareholders..... 131.6
--------
Cash dividends declared and paid............ -- -- -- -- -- -- (9.6) (9.6)
------- ------ ------ ----- -------- ------ ------ --------
Balances at December 31, 2002............... 120,000 $120.0 25,651 $25.6 $1,050.7 $ (9.7) $517.6 $1,704.2
Changes other than transactions with
shareholders:
Net income............................... -- -- -- -- -- -- 19.7 19.7
Net unrealized gains on investment
securities (a)......................... -- -- -- -- -- 99.7 -- 99.7
Derivatives qualifying as hedges (c)..... -- -- -- -- -- (1.9) -- (1.9)
--------
Total changes other than
transactions with shareholders..... 117.5
Contributed capital......................... -- -- -- -- 9.9 -- -- 9.9
Cash dividends declared and paid............ -- -- -- -- -- -- (9.6) (9.6)
------- ------ ------ ----- -------- ------ ------ --------
Balances at December 31, 2003............... 120,000 $120.0 25,651 $25.6 $1,060.6 $ 88.1 $527.7 $1,822.0
======= ====== ====== ===== ======== ====== ====== ========

- --------
(a)Presented net of deferred taxes of $(55.9), (1.8), and $0 in 2003, 2002, and
2001, respectively.
(b)Presented net of deferred taxes of $4.4.
(c)Presented net of deferred taxes of $1.0, $(5.9), and $0.2 in 2003, 2002, and
2001, respectively.

See Notes to Consolidated Financial Statements.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Consolidated Statements of Cash Flows
(Dollar amounts in millions)

Years Ended December 31,
-------------------------------
2003 2002 2001
--------- --------- ---------

Cash flows from operating activities:
Net income................................... $ 19.7 $ 115.8 $ 123.9
--------- --------- ---------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cumulative effect of change in
accounting principle, net of tax.......... -- -- 5.7
Change in future policy benefits............ 407.5 413.2 435.5
Net realized investments gains.............. (3.9) (55.3) (29.1)
Amortization of investment premiums
and discounts............................. 46.5 29.9 6.8
Acquisition costs deferred.................. (167.7) (116.3) (204.1)
Amortization of deferred acquisition
costs and intangibles..................... 118.9 147.1 131.3
Deferred income taxes....................... 18.3 21.8 51.1
Change in certain assets:
Decrease (increase) in:
Accrued investment income............... 32.6 48.0 7.5
Other, net.............................. (39.8) 6.6 (47.5)
Change in certain liabilities:
Increase (decrease) in:
Policy and contract claims.............. (183.9) 27.9 39.7
Other policyholder liabilities.......... (59.6) 117.0 (71.5)
Other liabilities....................... 339.0 (380.4) 107.5
--------- --------- ---------
Total adjustments.................... 507.9 259.5 432.9
--------- --------- ---------
Net cash provided by operating
activities................................ 527.6 375.3 556.8
--------- --------- ---------
Cash flows from investing activities:
Short term investment activity, net......... 178.4 (237.5) (22.9)
Proceeds from sales and maturities
of investment securities and other
invested assets........................... 4,328.8 6,087.4 3,904.1
Principal collected on mortgage and
policy loans.............................. 268.6 151.2 332.6
Purchases of investment securities
and other invested assets................. (3,819.5) (5,464.1) (5,182.8)
Mortgage loan originations and
increase in policy loans.................. (512.3) (252.8) (167.9)
--------- --------- ---------
Net cash provided by (used
in) investing activities........... 444.0 284.2 (1,136.9)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of investment
contracts................................. 3,107.0 3,495.1 3,642.8
Redemption and benefit payments on
investment contracts...................... (4,044.8) (4,112.6) (3,089.4)
Proceeds from short-term borrowings......... 346.5 388.4 301.1
Payments on short-term borrowings........... (358.3) (420.8) (336.2)
Cash dividends to shareholders.............. (9.6) (9.6) (9.6)
--------- --------- ---------
Net cash provided by (used
in) financing activities........... (959.2) (659.5) 508.7
--------- --------- ---------
Net decrease in cash and cash
equivalents........................ 12.4 -- (71.4)
Cash and cash equivalents at beginning
of year...................................... -- -- 71.4
--------- --------- ---------
Cash and cash equivalents at end of year....... $ 12.4 $ -- $ --
========= ========= =========

See Notes to Consolidated Financial Statements.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years Ended December 31, 2003, 2002 and 2001
(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 ("GELAAC") and
its subsidiary, Assigned Settlement, Inc. All significant intercompany accounts
and transactions have been eliminated in consolidation.

All of GELAAC's outstanding common stock was owned directly and indirectly
by GE Financial Assurance Holdings, Inc. ("GE Financial Assurance"). GE
Financial Assurance acquired approximately three percent of our outstanding
common stock, pursuant to a Stock Purchase Agreement, dated November 18, 2003
by and between Phoenix Life Insurance Company and GE Financial Assurance.
General Electric Capital Assurance Company ("GE Capital Assurance") and Federal
Home Life Insurance Company ("Federal"), both indirect subsidiaries of GE
Financial Assurance, own approximately eighty-five percent and twelve percent
of our outstanding common stock, respectively. GE Financial Assurance is a
wholly owned, direct subsidiary of GEI, Inc., which in turn is a wholly owned
direct subsidiary of General Electric Capital Corporation, which in turn is a
wholly owned subsidiary of General Electric Capital Services, Inc., which in
turn is a wholly owned direct subsidiary of General Electric Company ("GE"). At
December 31, 2003, all of our outstanding non-voting preferred stock was owned
by Brookfield Life Assurance Company Limited ("BLAC") as a result of a
contribution on November 7, 2003 of our preferred shares by GE Financial
Assurance. BLAC is a wholly owned direct subsidiary of GE Financial Assurance.

On November 18, 2003, GE issued a press release announcing its intention to
pursue an initial public offering ("IPO") of a new company named Genworth
Financial, Inc. ("Genworth") that will comprise most of its life and mortgage
insurance operations, including GELAAC. GE filed a registration statement with
the U.S. Securities and Exchange Commission in January 2004 and expects to
complete the IPO in the first half of 2004, subject to market conditions and
receipt of various regulatory approvals.

(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.

Our product offerings are divided along two major segments of consumer
needs: (i) Retirement Income and Investments and (ii) Protection.

Retirement Income and Investment products are investment vehicles and
insurance contracts intended for contractholders who want to accumulate
tax-deferred assets for retirement, desire a tax-efficient source of income
during their retirement, and seek to protect against outliving their assets
during retirement. Our principal product lines under the Retirement Income and
Investments segment are deferred annuities (fixed or variable), variable life
insurance, and GICs and funding agreement products.

Protection products are intended to provide protection against financial
hardship primarily after the death of an insured, and to protect income and
assets from other adverse economic impacts of significant health care costs.
Our principal product lines under the Protection segment are life insurance
(universal and interest sensitive whole life) and accident and health insurance
products.

We distribute our products through three primary channels: financial
intermediaries (banks, securities brokerage firms, and independent
broker/dealers), independent producers (brokerage general agencies, affluent
market producer groups and

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

specialized brokers), and dedicated sales specialists (long term care sales
agents and affiliated networks of both accountants and personal financial
advisors). Approximately 21%, 26%, and 30% of our sales of life and annuity
products in 2003, 2002, and 2001, respectively, have been through two national
stock brokerage firms. Loss of all or a substantial portion of the business
provided by these stock brokerage firms could have a material adverse effect on
our business and operations. We do not believe, however, that the loss of such
business would have a long-term adverse effect because of our competitive
position in the marketplace, the availability of business from other
distributors, and our mix of other products.

(d) Revenues

Investment income is recorded when earned. Realized investment gains and
losses are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or, in the
case of life contingent annuities, when the contracts are issued. Premiums
received on institutional stable value products, annuity contracts without
significant mortality risk, and universal life products are not reported as
revenues but as deposits and included in 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 but less than a year are included in short
term investments.

(f) Investment Securities

We have designated all of our investment securities as available-for-sale
and report them in our Consolidated Balance Sheets at fair value. We obtain
values for actively traded securities from external pricing services. For
infrequently traded securities, we obtain quotes from brokers, or we estimate
values using internally developed pricing models. These models are based upon
common valuation techniques and require us to make assumptions regarding credit
quality, liquidity and other factors that affect estimated values. Changes in
the fair value of available-for-sale investments, net of the effect on deferred
acquisition costs ("DAC"), present value of future profits ("PVFP") and
deferred income taxes, are reflected as unrealized investment gains or losses
in a separate component of accumulated nonowner changes in shareholders'
interest and, accordingly, have no effect on net income.

Impairment of investment securities results in a charge to earnings when a
market decline in the value of an investment to below cost is other than
temporary. We regularly review each investment security for impairment based on
criteria that include the extent to which the cost of the investment exceeds
its market value, the length of the time that the market value of the
investment has been reduced, our ability to hold until recovery and the
financial health of and specific prospects for the issuer of the security. We
actively perform comprehensive market research, monitor market conditions and
segment our investments by credit risk in order to minimize impairment risks.

(g) Securities Lending Activity

We engage 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. We maintain effective control over
all loaned securities and, therefore, continue to report such securities as
fixed maturities in the Consolidated Balance Sheets.

Cash collateral received on securities lending transactions is reflected in
other invested assets with an offsetting liability recognized in other
liabilities for the obligation to return the collateral. Non-cash collateral,
such as a security received by us,

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

is not reflected in our assets in the Consolidated Balance Sheets, as we have
no right to sell or repledge the collateral. The fair value of collateral held
and included in other invested assets was $102.7 million at December 31, 2003.
We had no non-cash collateral at December 31, 2003.

(h) Net Investment Income

Investment income on mortgage-backed and asset-backed securities is
initially based upon yield, cash flow, and prepayment assumptions at the date
of purchase. Subsequent revisions in those assumptions are recorded using the
retrospective method, whereby the amortized cost of the securities is adjusted
to the amount that would have existed had the revised assumptions been in place
at the date of purchase. The adjustments to amortized cost are recorded as a
charge or credit to investment income. Net interest income and/or expense from
interest rate derivatives are included in investment income.

(i) Mortgage and Policy Loans

Mortgage and policy loans are stated at their unpaid principal balance.
Mortgage loans are stated net of an allowance 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 loans, if any. Write-downs and the change in reserves are
included in net realized investment gains and losses in the Consolidated
Statements of Income.

(j) Short-term Investments

Short-term investments 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 included in
other invested assets and is stated, generally, at cost less accumulated
depreciation. Other long-term investments are stated generally at amortized
cost.

(k) 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 commissions in excess of ultimate renewal
commissions, certain support costs such as underwriting and contract and policy
issue costs, and the bonus feature of certain variable annuity products. 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 quarterly to determine if they are
recoverable from future income, including investment income and, if not
considered recoverable, are charged to expense.

(l) Intangible Assets

Present Value of Future Profits -- In conjunction with the acquisition of a
block of insurance policies or investment contracts, a portion of the purchase
price is 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 estimated
present value of 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

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

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 our net income but rather as a
credit or charge to shareholders' interest, net of applicable income tax.

Goodwill -- As of January 1, 2002, we adopted Statement of Financial
Accounting Standard No. 142, Goodwill and Other Intangible Assets (SFAS 142).
Under SFAS 142, goodwill is no longer amortized but is tested for impairment
using a fair value approach, at the "reporting unit" level. A reporting unit is
the operating segment, or business one level below that operating segment (the
"component" level) if discrete financial information is prepared and regularly
reviewed by management at the component level. We recognize an impairment
charge for any amount by which the carrying amount of a report unit's goodwill
exceeds its fair value. We used discounted cash flows to establish fair values.
When available and as appropriate, we used comparative market multiples to
corroborate discounted cash flow results. When a business within a reporting
unit is disposed of, goodwill is allocated to the gain or loss on disposal
using the relative fair value methodology.

Before January 1, 2002, we amortized goodwill over our estimated period of
benefit on a straight-line basis; we amortized other intangible assets on
appropriate bases over their estimated lives. No amortization period exceeded
40 years. When an intangible asset's carrying value exceeded associated
expected operating cash flows, we considered it to be impaired and wrote it
down to fair value, which we determined based on either discounted future cash
flows or appraised values.

Software -- Purchased software and certain application development costs
related to internally developed software are capitalized, above de minimus
thresholds. When the software is ready for its intended use, the amounts
capitalized are amortized over the expected useful life, not to exceed 5 years.

We amortize the costs of other intangibles over their estimated useful lives
unless such lives are deemed indefinite. Amortizable intangible assets are
tested for impairment based on undiscounted cash flows and, if impaired,
written down to fair value based on either discounted cash flows or appraised
values. Intangible assets with indefinite lives are tested for impairment, at
least annually, and written down to fair value as required.

(m) Income Taxes

We file a consolidated life insurance federal income tax return with our
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.

(n) 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.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

(o) 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.

(p) 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, and (c) claim adjustment
expenses. Claim adjustment expenses include costs incurred in the claim
settlement process such as legal fees and costs to record, process, and adjust
claims.

(q) Separate Accounts

The separate account assets and liabilities represent funds held, and the
related liabilities for, the exclusive benefit of the variable annuity
contractholders and variable life policyholders. We receive mortality risk and
expense fees and administration charges from the underlying mutual fund
portfolios available in the separate accounts. The separate account assets are
carried at fair value and are equal to the liabilities that represent the
policyholders' equity in those assets.

(r) Accounting Changes

Under SFAS 142, goodwill is no longer amortized but is tested for impairment
using a fair value methodology. We stopped amortizing goodwill effective
January 1, 2002. Under SFAS 142, we were required to test all existing goodwill
for impairment as of January 1, 2002, on a "reporting unit" basis. No goodwill
impairment charge was taken as a result of our goodwill testing for impairment
in accordance with SFAS 142.

At January 1, 2001, we adopted SFAS 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 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 10.

At January 1, 2001, the cumulative effect of adopting this accounting
change, was 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 borrowings.
Decreases in the fair values of these instruments were attributable to declines
in interest rates since inception of the hedging arrangement. As a matter of
policy, we ensure that funding, including the effect of derivatives, of our
investment and other financial asset positions are substantially matched in
character (e.g., fixed vs. floating) and

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

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 January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities, which we adopted on July 1, 2003. No special purpose entities
("SPEs"), or assets previously sold to qualifying SPEs ("QSPEs"), were required
to be consolidated on our books.

(s) Accounting Pronouncements Not Yet Adopted

In July 2003, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate
Accounts, which we will adopt on January 1, 2004. This statement provides
guidance on separate account presentation and valuation, the accounting for
sales inducements and the classification and valuation of long-duration
contract liabilities. We do not expect the adoption of SOP 03-1 to have a
material impact on our results of operation or financial condition.

(2)Investment Securities

(a) General

For the years ended December 31, 2003, 2002, and 2001 the sources of our
investment income were as follows:

2003 2002 2001
------ ------ ------

Fixed maturities....... $467.2 $528.8 $615.2
Equity securities...... (.1) .8 2.9
Mortgage loans......... 81.8 73.2 80.9
Policy loans........... 10.8 6.3 7.1
Other investments...... (10.4) .6 .6
------ ------ ------
Gross investment income 549.3 609.7 706.7
Investment expenses.... (11.3) (9.5) (7.8)
------ ------ ------
Net investment income.. $538.0 $600.2 $698.9
====== ====== ======

For the years ended December 31, 2003, 2002, and 2001, gross realized
investment gains and losses from the sales of investment securities
available-for-sale were as follows:

2003 2002 2001
------ ------- ------

Gross realized investments:
Gains............................. 80.2 181.1 100.5
Losses, including impairments (a). (76.3) (125.8) (71.4)
------ ------- ------
Net realized investments gains....... $ 3.9 $ 55.3 $ 29.1
====== ======= ======

- --------
(a)Impairments were $(26.2), $(77.4), and $(24.1) in 2003, 2002, and 2001
respectively.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

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, 2003, 2002,
and 2001 are summarized as follows:

2003 2002 2001
------ ------ ------

Net unrealized gains (losses) on available-for-sale investment securities and other
invested assets before adjustments:
Fixed maturities................................................................ $204.6 $ 18.6 $(41.2)
Equity securities............................................................... 3.0 (9.7) (11.8)
------ ------ ------
Subtotal.................................................................... 207.6 8.9 (53.0)
------ ------ ------
Adjustments to the present value of future profits and deferred acquisitions costs. (72.6) (29.5) 25.2
Deferred income taxes.............................................................. (47.3) 8.6 10.4
------ ------ ------
Net unrealized gains (losses) on available-for-sale investment
securities................................................................ $ 87.7 $(12.0) $(17.4)
====== ====== ======

The change in the net unrealized gains (losses) on investment securities
reported in accumulated non-owner changes in equity is as follows:

2003 2002 2001
------ ------ ------

Net unrealized losses on investment securities -- beginning of year............ $(12.0) $(17.4) $(18.7)
Unrealized gains on investment securities, net --.............................. 102.2 41.3 20.2
Reclassification adjustments -- net of deferred taxes of $1.4, $19.4, and $10.2 (2.5) (35.9) (18.9)
------ ------ ------
Net unrealized gains (losses) on investment securities -- end of year.......... $ 87.7 $(12.0) $(17.4)
====== ====== ======

At December 31, 2003, and 2002, the amortized cost, gross unrealized gains
and losses, and fair values of our fixed maturities and equity securities
available-for-sale were as follows:

Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
2003
- ----

Fixed maturities:
U.S. government and agency........... $ 17.5 $ 0.6 $ (0.1) $ 18.0
State and municipal.................. 0.9 -- -- 0.9
Non-U.S. government.................. 67.8 4.9 (0.1) 72.6
U.S. corporate....................... 5,437.3 194.9 (48.9) 5,583.3
Non-U.S. corporate................... 874.5 27.2 (8.2) 893.5
Mortgage-backed...................... 1,819.1 33.6 (9.5) 1,843.2
Asset-backed......................... 1,219.0 14.5 (4.3) 1,229.2
-------- ------ ------ --------
Total fixed maturities........... 9,436.1 275.7 (71.1) 9,640.7
Common stocks and non-redeemable
preferred stocks...................... 23.0 3.0 -- 26.0
-------- ------ ------ --------
Total available-for-sale securities..... $9,459.1 $278.7 $(71.1) $9,666.7
======== ====== ====== ========

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

Gross Gross
Amortized Unrealized Unrealized
2002 Cost Gains Losses Fair Value
- ---- --------- ---------- ---------- ----------

Fixed maturities:
U.S. government and agency........... $ 29.4 $ 0.6 $ (0.2) $ 29.8
State and municipal.................. 1.0 -- -- 1.0
Non-U.S. government.................. 45.9 1.8 (0.1) 47.6
U.S. corporate....................... 6,063.8 161.5 (207.3) 6,018.0
Non-U.S. corporate................... 668.7 14.4 (15.9) 667.2
Mortgage-backed...................... 1,973.5 58.1 (3.9) 2,027.7
Asset-backed......................... 1,248.1 18.0 (8.4) 1,257.7
--------- ------ ------- ---------
Total fixed maturities........... 10,030.4 254.4 (235.8) 10,049.0
Common stocks and non-redeemable
preferred stocks...................... 54.6 5.2 (14.9) 44.9
--------- ------ ------- ---------
Total available-for-sale securities..... $10,085.0 $259.6 $(250.7) $10,093.9
========= ====== ======= =========

We regularly review each investment security for impairment in accordance
with our impairment policy, which includes both quantitative and qualitative
criteria. Quantitative measures include length of time and amount that each
security position is in an unrealized loss position, and for fixed maturity
securities, whether the issuer is in compliance with terms and covenants of the
security. Our qualitative criteria include the financial strength and specific
prospects for the issuer as well as our intent to hold the security until
recovery. Our impairment reviews involve our finance and risk teams as well as
the portfolio management and research capabilities of GEAM. Our qualitative
review attempts to identify those issuers with a greater than 50% chance of
default in the coming twelve months. These securities are characterized as
"at-risk" of impairment. As of December 31, 2003, securities "at risk" of
impairment had aggregate unrealized losses of $10 million.

For fixed maturity securities, we recognize an impairment charge to earnings
in the period in which we determine that we do not expect to either collect
principal and interest in accordance with the contractual terms of the
instruments or to recover based on underlying collateral values and considering
events such as payment default, bankruptcy or disclosure of fraud. For equity
securities, we recognize an impairment charge in the period in which we
determine that the security will not recover to book within a reasonable
period. We measure impairment charges based on the difference between the book
value of the security and its fair value. Fair value is based on quoted market
price, except for certain infrequently traded securities where we estimate
values using internally developed pricing models. These models are based upon
common valuation techniques and require us to make assumptions regarding credit
quality, liquidity and other factors that affect estimated values.

During 2003, 2002 and 2001, we recognized impairment losses of $26.2
million, $77.4 million and $24.1 million, respectively. We generally intend to
hold securities in unrealized loss positions until they recover. However, from
time to time, we sell securities in the normal course of managing our portfolio
to meet diversification, credit quality, yield and liquidity requirements.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

The following table presents the gross unrealized losses and estimated fair
values of our investment securities, on a historical basis, aggregated by
investment type and length of time that individual investment securities have
been in a continuous unrealized loss position, at December 31, 2003

Fixed maturities:
U.S. government and agencies.......... $ 7.1 $ (.1) 2 $ -- $ -- --
State and municipal................... .9 -- 2 -- -- --
Government - non U.S.................. 14.1 (.1) 4 -- -- --
U.S. corporate........................ 1,009.2 (30.2) 129 249.5 (18.7) 37
Corporate - non U.S................... 172.4 (4.9) 41 42.8 (3.3) 4
Asset Backed.......................... 220.2 (3.9) 22 75.0 (.4) 6
Mortgage Backed....................... 550.9 (9.4) 79 3.8 (.1) 6
-------- ------ --- ------ ------ --
Subtotal, fixed maturities............... 1,974.8 (48.6) 279 371.1 (22.5) 53
Equity securities........................ -- -- -- -- -- --
-------- ------ --- ------ ------ --
Total temporarily impaired securities. $1,974.8 $(48.6) 279 $371.1 $(22.5) 53
======== ====== === ====== ====== ==
Investment Grade......................... 1,862.7 (42.4) 257 273.0 (9.9) 29
Below Investment Grade................... 112.1 (6.2) 22 98.1 (12.6) 24
-------- ------ --- ------ ------ --
Total................................. $1,974.8 $(48.6) 279 $371.1 $(22.5) 53
======== ====== === ====== ====== ==

The investment securities at December 31, 2003 in an unrealized loss
position for less than twelve months, account for $48.6 million or 68% of the
total unrealized losses. Of the securities in this category, there was one
security with an unrealized loss in excess of $5 million. This security had
aggregate unrealized losses totaling $6.8 million. The amount of the unrealized
loss on this security is driven largely by the relative size of the holding,
the par value of which is $40 million. This security matures in 2029 and is
rated investment grade.

The investment securities in an unrealized loss position for twelve months
or more account for $22.5 million or 32% of the total unrealized losses. There
is one issuer that accounts for $3.3 million or 15% of the unrealized losses in
this category. This issuer, a national retail chain, is current on all terms,
shows improving trends with regard to liquidity and security price, and is not
considered at risk of impairment.

Aside from this issuer, no other single issuer has an aggregate unrealized
loss greater than $3 million.

The scheduled maturity distribution of the fixed maturity portfolio at
December 31, 2003 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 less............ $ 385.2 $ 388.2
Due one year through five years. 2,483.9 2,547.2
Due five years through ten years 2,247.0 2,326.0
Due after ten years............. 1,281.9 1,306.9
-------- --------
Subtotals.................... 6,398.0 6,568.3
Mortgage-backed securities...... 1,819.1 1,843.2
Asset-backed securities......... 1,219.0 1,229.2
-------- --------
Totals....................... $9,436.1 $9,640.7
======== ========

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

As of December 31, 2003, $1,078.2 million of our investments (excluding
mortgage and asset-backed securities) were subject to certain call provisions.

As required by law, we have amounts invested, with governmental authorities
and banks for the protection of policyholders, of $5.7 million as of December
31, 2003 and 2002.

As of December 31, 2003, approximately 24.9%, 11.7%, and 8.4% of our fixed
maturity portfolio was comprised of securities issued by the financial and
insurance, utility and energy, and consumer non-cyclicals 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
our fixed maturity 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, 2003, we did not hold any fixed maturity securities which
individually exceeded 10% of shareholders' interest.

The credit quality of the fixed maturity portfolio at December 31, 2003 and
2002 follows. The categories are based on the higher of the ratings published
by Standard & Poors or Moody's.

2003 2002
----------------- -----------------
Fair value Percent Fair value Percent
---------- ------- ---------- -------

Agencies and treasuries $ 379.2 3.9% $ 199.6 2.0%
AAA/Aaa................ 2,491.6 25.8 2,801.1 27.9
AA/Aa.................. 357.7 3.7 843.6 8.4
A/A.................... 2,335.6 24.2 2,842.6 28.3
BBB/Baa................ 2,521.8 26.2 2,170.9 21.6
BB/Ba.................. 245.4 2.6 370.7 3.7
B/B.................... 106.0 1.1 99.3 1.0
CC and below........... 55.3 0.6 19.6 0.2
Not rated.............. 1,148.1 11.9 701.6 6.9
-------- ----- --------- -----
Totals.............. $9,640.7 100.0% $10,049.0 100.0%
======== ===== ========= =====

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, 2003 and 2002, there were fixed maturities in default
(issuer has missed a coupon payment or entered bankruptcy) with a fair value of
$58.9 and $19.1, respectively.

We have limited partnership commitments outstanding of $7.4 and $11.6 at
December 31, 2003 and December 31, 2002, respectively.

(b) Mortgage and Real Estate Portfolio

For the years ended December 31, 2003 and 2002, respectively, we originated
$44.6 and $102.1 of mortgages secured by real estate in California, which
represents 9% and 43% of our total originations for those years.

We have 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 at December 31, 2003 and 2002 were $0 and
$15.3, respectively.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

"Impaired" loans are defined under U.S. 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 our commercial loans.

Under these principles, we have two types of "impaired" loans: loans
requiring allowances for losses (none as of December 31, 2003 and 2002) and
loans expected to be fully recoverable because the carrying amount has been
reduced previously through charge-offs or deferral of income recognition ($1.2
and $3.7 as of December 31, 2003 and 2002, respectively). Average investment in
impaired loans during December 31, 2003, 2002, and 2001 was $2.8, $5.1, and
$6.8 and interest income earned on these loans while they were considered
impaired was $0.1, $0.5, and $0.9 for the years ended December 31, 2003, 2002,
and 2001, respectively.

The following table presents the activity in the allowance for losses during
the years ended December 31, 2003, 2002, and 2001:

2003 2002 2001
----- ----- -----

Balance at January 1................................ $ 8.9 $18.2 $14.3
(Benefit) provision (credited) charged to operations 1.5 (9.3) 2.3
Amounts written off, net of recoveries.............. -- -- 1.6
----- ----- -----
Balance at December 31.............................. $10.4 $ 8.9 $18.2
===== ===== =====

During 2002, as part of its on-going analysis of exposure to losses arising
from mortgage loans, we recognized $11.6 reduction in its allowance for losses.

The allowance for losses on mortgage loans at December 31, 2003, 2002, and
2001 represented 0.8%, 0.8%, and 1.9% of gross mortgage loans, respectively.
There were no non-income producing mortgage loans as of December 31, 2003 and
2002.

(3)Deferred Acquisition Costs

Activity impacting deferred acquisition costs for the years ended December
31, 2003, 2002, and 2001 was as follows:

2003 2002 2001
------ ------- ------

Unamortized balance at January 1............................. $843.3 $ 838.2 $712.9
Cost deferred................................................ 167.7 116.3 204.1
Amortization, net............................................ (87.2) (111.2) (78.8)
------ ------- ------
Unamortized balance at December 31........................... 923.8 843.3 838.2
Cumulative effect of net unrealized investment gains (losses) (26.8) (16.1) 15.6
------ ------- ------
Balance at December 31....................................... $897.0 $ 827.2 $853.8
====== ======= ======

(4)Intangible Assets and Goodwill

At December 31, 2003 and 2002 the gross carrying amount and accumulated
amortization of intangibles subject to amortization were as follows:

2003 2002
-------------------------- --------------------------
Gross Carrying Accumulated Gross Carrying Accumulated
Amount Amortization Amount Amortization
-------------- ------------ -------------- ------------

Present Value of Future Profits ("PVFP") $508.8 $(380.7) $541.0 $(352.2)
Capitalized Software.................... 26.2 (10.1) 26.8 (8.7)
All Other............................... 1.0 (0.6) 1.3 (0.5)
------ ------- ------ -------
Total................................ $536.0 $(391.4) $569.1 $(361.4)
====== ======= ====== =======

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

(a) Present Value of Future Profits

The method used by us 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 we must earn in order to accept the inherent risks.

The following table presents the activity in PVFP for the years ended
December 31, 2003, 2002, and 2001:

2003 2002 2001
------ ------ ------

Unamortized balance at January 1............................................... $202.2 $235.1 $278.1
Interest accreted as 5.4%, 6.0% and 6.4% for December 31, 2003, 2002, and 2001,
respectively................................................................. 10.2 13.2 16.3
Amortization................................................................... (38.5) (46.1) (59.3)
------ ------ ------
Unamortized balance December 31................................................ 173.9 202.2 235.1
Cumulative effect of net unrealized investment losses.......................... (45.8) (13.4) 9.6
------ ------ ------
Balance at December 31......................................................... $128.1 $188.8 $244.7
====== ====== ======

The estimated percentage of the December 31, 2003 balance, before the effect
of unrealized investment gains or losses, to be amortized over each of the next
five years is as follows:

2004 12.3%
2005 12.0%
2006 11.6%
2007 11.2%
2008 10.6%

(b) Goodwill

Goodwill amortization was $7.0 for the year ended December 31, 2001. The
accumulated amortization at December 31, 2003, 2002 and 2001 was $43.3, $43.3,
and $36.3, respectively. Under SFAS 142 (effective January 1, 2002), goodwill
is no longer amortized but is tested for impairment using a fair value
methodology.

As of December 31, 2003 goodwill was comprised of the following:

Retirement
Income &
Investments Protection Total
----------- ---------- ------

Balance at January 1, 2001........... $58.6 $55.8 $114.4
Amortization......................... 3.8 3.2 7.0
----- ----- ------
Balance at December 31, 2001 and 2002 $54.8 $52.6 $107.4
===== ===== ======
Additions............................ 5.0 4.9 9.9
----- ----- ------
Balance at December 31, 2003......... $59.8 $57.5 $117.3
===== ===== ======

The effects on earnings excluding such goodwill amortization from 2001 was
as follows:

2001
------

Net income as reported.................... $123.9
======
Net income excluding goodwill amortization $130.9
======

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

(5)Reinsurance

We are involved in both the cession and assumption of reinsurance with other
companies. Our reinsurance consists primarily of long-duration contracts that
are entered into with financial institutions and related party reinsurance.
Although these reinsurance agreements contractually obligate the reinsurers to
reimburse us, they do not discharge us from our primary liabilities and we
remain 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 any one insured with an issue age up to and
including 75 is $1 and for issue ages over 75 is $0.1. Certain accident and
health insurance policies are reinsured on either a quota share or excess of
loss basis. We also use reinsurance for guaranteed minimum death benefit
("GMDB") options on most of our variable annuity products. At December 31,2003,
we had approximately 41% and 31%, respectively, of our variable annuity and
life insurance net at risk exposures reinsured with one company.

Net life insurance in force as of December 31 is summarized as follows:

2003 2002 2001
--------- --------- ---------

Direct life insurance in force...... $26,889.2 $28,964.5 $31,199.2
Amounts ceded to other companies.... (4,129.4) (4,575.9) (5,272.9)
Amounts assumed from other companies 1,970.2 2,092.9 2,247.7
--------- --------- ---------
Net in force........................ $24,730.0 $26,481.5 $28,174.0
========= ========= =========
Percentage of amount assumed to net. 8.0% 7.9% 8.0%
========= ========= =========

The effects of reinsurance on premiums earned for the years ended December
31, 2003, 2002, and 2001 were as follows:

2003 2002 2001
------ ------ ------

Direct............................. $122.9 $117.9 $128.8
Assumed............................ 2.5 4.8 3.3
Ceded.............................. (21.4) (17.4) (23.7)
------ ------ ------
Net premiums earned................ $104.0 $105.3 $108.4
------ ------ ------
Percentage of amount assumed to net 2.4% 4.6% 3.1%
====== ====== ======

Due to the nature of our insurance contracts, premiums earned approximate
premiums written.

Reinsurance recoveries recognized as a reduction of benefits amounted to
$77.7, $87.6, and $58.0 for the years ended December 31, 2003, 2002, and 2001,
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

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001)
(Dollar amounts in millions)

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 reserve 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 our experience and the experience of the insurance
industry, adjusted for current trends. Any changes in the estimated liability
are reflected in income as the estimates are revised.

The following chart summarizes the major assumptions underlying our recorded
liabilities for future annuity and contract benefits:

Mortality/ December 31,
Withdraw Morbidity Interest Rate -------------------
Assumption Assumption Assumption 2003 2002
---------- ---------- ------------- --------- ---------

Investment contracts........................... N/A N/A N/A $ 8,069.0 $ 8,592.0
Limited payment contracts...................... None (a) 6.76% 6.3 30.3
Traditional life insurance contracts........... Company 6.7% grading
Experience (b) to 6.5% 319.6 316.6
Universal life type contracts.................. N/A N/A N/A 1,792.5 1,780.8
Accident and health............................ Company 7.5% grading
Experience (c) to 4.5% 53.8 51.8
--------- ---------
Total future annuity and contracts benefits. $10,241.2 $10,771.5
========= =========

- --------
(a)Either the United States Population Table, 1983 Group Annuitant Mortality
Table or 1983 Individual Annuity Mortality Table and Company experience.
(b)Principally modifications of the 1965-70 or 1975-80 Select and Ultimate
Tables and Company experience.
(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 (benefit) for income taxes for the years ended December
31, 2003, 2002, and 2001 consisted of the following components:

2003 2002 2001
------ ----- -----

Current federal income tax..... $(21.4) $19.8 $18.2
Deferred federal income tax.... 18.3 20.8 49.1
------ ----- -----
Subtotal-federal income tax. (3.1) 40.6 67.3
------ ----- -----
Current state income tax....... -- 1.3 0.8
Deferred state income tax...... -- 1.0 2.0
------ ----- -----
Subtotal-state income tax... -- 2.3 2.8
------ ----- -----
Total income tax........ $ (3.1) $42.9 $70.1
====== ===== =====

The reconciliation of the federal statutory rate to the effective income tax
rate for the years ended December 31, 2003, 2002, and 2001 is as follows:

2003 2002 2001
----- ---- ----

Statutory U.S. federal income tax rate............. 35.0% 35.0% 35.0%
State income tax, net of federal income tax benefit (0.1) 0.5 0.5
Non-deductible goodwill amortization............... -- -- 1.2
Dividends-received deduction....................... (53.1) (9.1) (2.9)
Other, net......................................... (0.8) 0.6 1.3
----- ---- ----
Effective rate.................................. (19.0)% 27.0% 35.1%
===== ==== ====

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

The components of the net deferred income tax liability at December 31, 2003
and 2002 are as follows:

2003 2002
------ ------

Assets:
Insurance reserves amounts...................... $118.9 $146.8
Investments..................................... 9.8 --
Net unrealized losses on investment securities.. -- 8.6
Net unrealized losses on derivatives............ 1.0 --
Accruals........................................ 21.9 3.5
Other........................................... 0.6 --
------ ------
Total deferred income tax asset............. 152.2 158.9
====== ======
Liabilities:
Net unrealized gains on investment securities... 47.3 --
Investments..................................... -- 8.1
Present value of future profits................. 39.7 43.7
Deferred acquisition costs...................... 234.6 203.6
Other........................................... 5.3 8.4
------ ------
Total deferred income tax liability......... 326.9 263.8
------ ------
Net deferred income tax liability........ $174.7 $104.9
====== ======

Based on an analysis of our 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 us to
realize remaining deferred tax assets. Accordingly, no valuation allowance for
deferred tax assets is deemed necessary.

We paid federal and state taxes of $7.3 for the year ended December 31,
2003. For the years ended December 31, 2002 and 2001, we received refunds of
$16.4 and $23.9, respectively.

At December 31, 2003 and 2002, the deferred income tax liability was $174.7
and $104.9, respectively. At December 31, 2003 and 2002, the current income tax
liability was $4.8 and $30.3, respectively.

(8)Related Party Transactions

We pay investment advisory fees and other fees to affiliates. Amounts
incurred for these items aggregated $60.7, $36.8, and $18.3 for the years ended
December 31, 2003, 2002, and 2001, respectively. We charge affiliates for
certain services and for the use of facilities and equipment which aggregated
$55.6, $58.4, and $68.1, for the years ended December 31, 2003, 2002, and 2001,
respectively.

In May 2002, we entered into an investment management agreement with GE
Asset Management Incorporated ("GEAM") under which we paid $10.5 in 2003 and
$8.9 in 2002 to GEAM as compensation for the investment services.

During 2002, we sold certain assets to an affiliate at a fair value
established as if it were an arms-length, third party transaction, which
resulted in a gain of $17.6.

We pay interest on outstanding amounts under a credit funding agreement with
GNA Corporation, the parent company of GECA. We have a credit line of $500 with
GNA. Interest expense under this agreement was $0.1, $0.1, and $0.6 for the
years ended December 31, 2003, 2002, and 2001 respectively. We pay interest at
the cost of funds of GNA Corporation, which were 1.3% and 1.95%, as of December
31, 2003 and 2002, respectively. The amounts outstanding as of December 31,
2003 and 2002 were $6.3 and $18.1, respectively, and are included with other
liabilities in the Consolidated Balance Sheets.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

(9)Litigation

We, like other insurance companies, are subject to legal and regulatory
actions in the ordinary course of our business, including class actions. Our
pending legal and regulatory actions include proceedings specific to us and
others generally applicable to business practices in the industries in which we
operate. Plaintiffs in class action and other lawsuits against us may seek very
large or indeterminate amounts, including punitive and treble damages. Given
the large or indeterminate amounts sought in certain of these matters and the
inherent unpredictability of litigation, it is possible that an adverse outcome
in some of our matters could have a material adverse effect on our consolidated
financial condition or results of operation.

We were named as a defendant in a lawsuit in Georgia, McBride v. Life
Insurance Co. of Virginia dba GE Life and Annuity Assurance Co., related to the
sale of universal life insurance policies. The complaint was filed on November
1, 2000 as a class action on behalf of all persons who purchased certain of our
universal life insurance policies and alleges improper practices in connection
with the sale and administration of universal life policies. The plaintiffs
sought unspecified compensatory and punitive damages. On December 1, 2000, we
removed the case to the U.S. District Court for the Middle District of Georgia.
No class has been certified. We have vigorously denied liability with respect
to the plaintiff's allegations. Nevertheless, to avoid the risks and costs
associated with protracted litigation and to resolve our differences with
policyholders, we agreed in principle on October 8, 2003, to settle the case on
a nationwide class action basis. The settlement provides benefits to the class,
and allows us to continue to serve our customers' needs undistracted by
disruptions caused by litigation. The settlement documents have not been
finalized, nor has any proposed settlement been submitted to the proposed class
or for court approval, and a final settlement is not certain. In the third
quarter of 2003, we accrued $50 million in reserves relating to this
litigation, which represents our best estimate of bringing this matter to
conclusion. The precise amount of payments in this matter cannot be estimated
because they are dependent upon court approval of the class and related
settlement, the number of individuals who ultimately will seek relief in the
claim form process of any approved class settlement, the identity of such
claimants and whether they are entitled to relief under the settlement terms
and the nature of the relief to which they are entitled.

(10)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 disclosure of fair
value; such items include cash and cash equivalents, investment securities,
separate accounts, and derivative financial instruments. Other financial assets
and liabilities - those not carried at fair value - are discussed below. Apart
from certain of our borrowings and certain marketable securities, few of the
instruments discussed below are actively traded and their fair values must
often be determined using models. The fair value estimates are made at a
specific point in time, based upon available market information and judgments
about the financial instruments, including estimates of the timing and amount
of expected future cash flows and the credit standing of counterparties. Such
estimates do not reflect any premium or discount that could result from
offering for sale at one time our entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates cannot be
substantiated by comparison to independent markets, nor can the disclosed value
be realized in immediate settlement of the financial instrument.

The bases on which we estimate fair values are as follows:

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.

Other financial 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.

Borrowings. Based on market quotes or comparables.

Investment contract benefits. Based on expected future cash flows,
discounted at currently offered discount rates for immediate annuity
contracts or cash surrender value for single premium deferred annuities.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

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.

The following represents the fair value of financial assets and liabilities
at December 31,

2003 2002
----------------------------- -----------------------------
Assets (Liabilities) Assets (Liabilities)
----------------------------- -----------------------------
Notional Carrying Estimated Notional Carrying Estimated
Amount Amount Fair Value Amount Amount Fair Value
-------- --------- ---------- -------- --------- ----------

Assets:
Mortgage loans....................... (a) $ 1,262.3 $ 1,309.7 (a) $ 1,034.7 $ 1,124.7
Other financial instruments.......... (a) 0.9 0.9 (a) 1.6 1.6
Liabilities:
Borrowings and related instruments:
Borrowings....................... (a) (6.3) (6.3) (a) (18.1) (18.1)
Investment contract benefits..... (a) (8,069.0) (8,134.4) (a) (8,592.0) (8,711.1)
Other firm commitments:
Ordinary course of business lending
commitments........................ -- -- -- 15.3 -- --
Commitments to fund limited partnerships 7.4 -- -- 11.6 -- --

- --------
(a)These financial instruments do not have notional amounts.

A reconciliation of current period changes for the years ended December 31,
2003 and 2002, net of applicable income taxes in the separate component of
shareholders' interest labeled "derivatives qualifying as hedges", follows:

2003 2002
----- -----

Net Other Comprehensive Income Balances as of January 1.. $ 2.3 $(8.1)
Current period decreases (increases) in fair value -- net (0.3) 9.2
Reclassification to earnings, net........................ (1.6) 1.2
----- -----
Balance at December 31................................... $ 0.4 $ 2.3
===== =====

Hedges of Future Cash Flows

There was none and less than $.01 of ineffectiveness reported in the twelve
months ended December 31, 2003 and 2002, respectively, in fair values of hedge
positions. There were no amounts excluded from the measure of effectiveness in
the twelve months ended December 31, 2003 and 2002 related to the hedge of
future cash flows.

The $0.4, net of taxes, recorded in shareholders' interest at December 31,
2003 is expected to be reclassified to future income, contemporaneously with
and primarily offsetting changes in interest expense and interest income on
floating-rate instruments. Of this amount $1.7, net of income taxes, is
expected to be reclassified to earnings over the twelve-month period ending
December 31, 2004. Actual amounts may vary from this amount as a result of
market conditions. The amount of $(1.6) net of income taxes was reclassified to
income over the twelve months ended December 31, 2003. No amounts were
reclassified to income during the twelve months ended December 31, 2003 and
2002 in connection with forecasted transactions that were no longer considered
probable of occurring.

Derivatives Not Designated as Hedges

At December 31, 2003, there were no derivatives that do not qualify for
hedge accounting under SFAS 133, as amended.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

(11)Non-controlled Entities

One of the most common forms of off-balance sheet arrangements is asset
securitization. We use GE Capital sponsored and third party entities to
facilitate asset securitizations. As part of this strategy, management
considers the relative risks and returns of our alternatives and predominately
uses GE Capital sponsored entities. Management believes these transactions
could be readily executed through third party entities at insignificant
incremental cost.

The following table summarizes the current balance of assets sold to Special
Purpose Entities ("SPEs") at December 31:

2003 2002
------ ------

Assets secured by:
Commercial mortgage loans. $137.1 $162.4
Fixed maturities.......... 105.4 129.9
Other receivables......... 107.3 117.2
------ ------
Total assets.......... $349.8 $409.5
====== ======

Each of the categories of assets shown in the table above represents
portfolios of assets that are highly rated. Examples of each category include:
commercial mortgage loans -- loans on diversified commercial property; fixed
maturities- domestic and foreign, corporate and government securities; other
receivables -- primarily policy loans.

We evaluate the economic, liquidity and credit risk related to the above
SPEs and believe that the likelihood is remote that any such arrangements could
have a significant adverse effect on our operations, cash flows, or financial
position. Financial support for certain SPE's is provided under credit support
agreements, in which GE Financial Assurance provides limited recourse for a
maximum of $119 million of credit losses in such entities. Assets with credit
support are funded by demand notes that are further enhanced with support
provided by GE Capital. We may record liabilities, for such guarantees based on
our best estimate of probable losses. To date, no SPE has incurred a loss.

Sales of securitized assets to SPEs result in a gain or loss amounting to
the net of sales proceeds, the carrying amount of net assets sold, the fair
value of servicing rights and retained interests and an allowance for losses.
Sales resulted in net gains on securitizations of approximately $5.8 million,
and $17 million in 2002, and 2001, respectively. There were no security
transactions in 2003. The net realized gains and losses are included in net
realized gains within our Consolidated Statements of Income Retained interests
and recourse obligations related to such sales that are recognized in our
consolidated financial statements are as follows:

December 31,
-----------------------
2003 2002
----------- -----------
Fair Fair
Cost Value Cost Value
----- ----- ----- -----

Retained interests -- assets $14.5 $15.6 $17.0 $20.9
Servicing assets............ -- -- -- --
Recourse liability.......... -- -- -- --
----- ----- ----- -----
Total.................... $14.5 $15.6 $17.0 $20.9
===== ===== ===== =====

Retained interest. In certain securitization transactions, we retain an
interest in transferred assets. Those interests take various forms and may be
subject to credit prepayment and interest rate risks.

Servicing assets. Following a securitization transaction, we retain the
responsibility for servicing the receivables, and, as such, are entitled to
receive an ongoing fee based on the outstanding principal balances of the
receivables. There are no servicing assets nor liabilities recorded as the
benefits of servicing the assets are adequate to compensate an independent
servicer for its servicing responsibilities.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

Recourse liability. As described previously, under credit support agreements
we provide recourse for credit losses in special purpose entities. We provide
for expected credit losses under these agreements and such amounts approximate
fair value.

(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 within certain
limits. The limits are generally based on the lesser of 10% of the prior year
surplus or prior year net gain from operations. Dividends in excess of the
prescribed limits or our earned surplus require formal approval from the
Commonwealth of Virginia State Corporation Commission, Bureau of Insurance.
Based on statutory results as of December 31, 2003, we are able to distribute
$23.7 in dividends in 2004 without obtaining regulatory approval.

We declared and paid dividends of $9.6 for each of the years ended December
31, 2003, 2002, and 2001.

(13)Supplementary Financial Data

We file 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 U.S. 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. We have no permitted accounting practices.

For the years ended December 31, 2003, 2002, and 2001, statutory net (loss)
income and statutory capital and surplus is summarized below:

2003 2002 2001
------ ------ ------

Statutory net loss........... $(28.0) $(48.8) $(20.5)
Statutory capital and surplus $562.4 $550.7 $584.4

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, we periodically
monitor our RBC level. At December 31, 2003 and 2002 we exceeded the minimum
required RBC levels.

(14)Operating Segment Information

During the fourth quarter 2003, we redefined our operating segments.
Management realigned the business on a product line and market basis to
intensify its focus on return on equity, optimum deployment of capital and
distribution effectiveness. As a result of this change, our operations are
conducted under two reporting segments corresponding to customer needs:
Retirement Income and Investments and Protection.

Retirement Income and Investments comprised of products offered to consumers
who want to accumulate tax-deferred assets for retirement, desire a
tax-efficient source of income during their retirement, and seek to protect
against outliving their assets during retirement.

Protection comprised of products offered to consumers to provide protection
against financial hardship after the death of an insured and to protect income
and assets from the adverse economic impacts of significant health care costs.
See Note (1)(c) for further discussion of our principal product lines within
these two segments.

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

The following is a summary of industry segment activity for December 31,
2003, 2002, and 2001:

Retirement
Income & Corporate
December 31, 2003 -- Segment Data Investments Protection & Other Consolidated
- --------------------------------- ----------- ---------- --------- ------------

Net investment income................... $ 402.7 $ 152.5 $(17.2) $ 538.0
Net realized investment gains........... -- -- 3.9 3.9
Premiums................................ (1.7) 105.7 -- 104.0
Other revenues.......................... 150.8 143.8 .3 294.9
--------- -------- ------ ---------
Total revenues....................... 551.8 402.0 (13.0) 940.8
--------- -------- ------ ---------
Interest credited, benefits, and other
changes in policy reserves............ 362.0 294.3 -- 656.3
Underwriting, acquisition, and
insurance expenses, net of deferrals.. 46.4 55.3 47.3 149.0
Amortization of deferred acquisition
costs and intangibles................. 84.9 34.0 -- 118.9
--------- -------- ------ ---------
Total benefits and expenses.......... 493.3 383.6 47.3 924.2
--------- -------- ------ ---------
Income before income taxes........... $ 58.5 $ 18.4 $(60.3) $ 16.6
========= ======== ====== =========
Provision (benefit) for income taxes. $ 14.7 $ 6.5 $(24.3) $ (3.1)
========= ======== ====== =========
Net income (loss).................... $ 43.8 $ 11.9 $(36.0) $ 19.7
========= ======== ====== =========
Total assets............................ $17,412.4 $2,758.1 $692.1 $20,862.6
========= ======== ====== =========

Retirement
Income & Corporate
December 31, 2002 -- Segment Data Investments Protection & Other Consolidated
- --------------------------------- ----------- ---------- --------- ------------

Net investment income................... $ 457.1 $ 160.5 $(17.4) $ 600.2
Net realized investment gains........... -- -- 55.3 55.3
Premiums................................ 1.0 102.3 2.0 105.3
Other revenues.......................... 157.3 123.7 3.6 284.6
--------- -------- ------ ---------
Total revenues....................... 615.4 386.5 43.5 1,045.4
--------- -------- ------ ---------
Interest credited, benefits, and other
changes in policy reserves............ 392.6 247.1 .6 640.3
Underwriting, acquisition, and
insurance expenses, net of deferrals.. 37.1 57.8 4.4 99.3
Amortization of deferred acquisition
costs and intangibles................. 113.6 30.6 2.9 147.1
--------- -------- ------ ---------
Total benefits and expenses.......... 543.3 335.5 7.9 886.7
--------- -------- ------ ---------
Income before income taxes........... $ 72.1 $ 51.0 $ 35.6 $ 158.7
========= ======== ====== =========
Provision (benefit) for income taxes. $ 26.0 $ 18.1 $ (1.2) $ 42.9
========= ======== ====== =========
Net income........................... $ 46.1 $ 32.9 $ 36.8 $ 115.8
========= ======== ====== =========
Total assets............................ $17,116.4 $2,777.5 $387.1 $20,281.0
========= ======== ====== =========

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements -- Continued

Years Ended December 31, 2003, 2002 and 2001
(Dollar amounts in millions)

Retirement
Income & Corporate
December 31, 2001 -- Segment Data Investments Protection & Other Consolidated
- --------------------------------- ----------- ---------- --------- ------------

Net investment income................... $ 529.8 $ 168.1 $ 1.0 $ 698.9
Net realized investment gains........... -- -- 29.1 29.1
Premiums................................ .8 107.6 -- 108.4
Other revenues.......................... 167.6 125.2 5.2 298.0
--------- -------- ------ ---------
Total revenues....................... 698.2 400.9 35.3 1,134.4
--------- -------- ------ ---------
Interest credited, benefits, and other
changes in policy reserves............ 481.4 234.7 -- 716.1
Underwriting, acquisition, and
insurance expenses, net of deferrals.. 29.4 65.0 (7.1) 87.3
Amortization of deferred acquisition
costs and intangibles................. 90.7 38.1 2.5 131.3
--------- -------- ------ ---------
Total benefits and expenses.......... 601.5 337.8 (4.6) 934.7
--------- -------- ------ ---------
Income before income taxes and
cumulative effect of change in
accounting practice................ $ 96.7 $ 63.1 $ 39.9 $ 199.7
========= ======== ====== =========
Provision for income taxes........... $ 34.4 $ 23.5 $ 12.2 $ 70.1
========= ======== ====== =========
Income before cumulative effect of
change in accounting practice...... $ 62.3 $ 39.6 27.7 $ 129.6
========= ======== ====== =========
Cumulative effect of change in
accounting practice................ $ -- $ -- $ (5.7) $ (5.7)
========= ======== ====== =========
Net income........................... $ 62.3 $ 39.6 $ 22.0 $ 123.9
========= ======== ====== =========
Total assets............................ $18,990.6 $2,802.3 $575.3 $22,368.2
========= ======== ====== =========

(15)Quarterly Financial Data (unaudited)

Summarized quarterly financial data for the years ended December 31, 2003
and 2002 were as follows:

First Quarter Second Quarter Third Quarter Fourth Quarter
------------- ------------- -------------- -------------
2003 2002 2003 2002 2003 2002 2003 2002
------ ------ ------ ------ ------ ------ ------ ------

Net investment income................... $137.9 $154.7 $137.1 $150.4 $137.9 $152.6 $125.1 $142.5
------ ------ ------ ------ ------ ------ ------ ------
Total revenues.......................... $250.9 $267.2 $227.7 $210.9 $227.1 $279.7 $235.1 $287.6
------ ------ ------ ------ ------ ------ ------ ------
Earnings (loss) before cumulative
effect of change in accounting
principle (1).......................... $ 24.9 $ 32.7 $ 9.7 $ (0.4) $(21.9) $ 24.1 $ 7.0 $ 59.4
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)....................... $ 24.9 $ 32.7 $ 9.7 $ (0.4) $(21.9) $ 24.1 $ 7.0 $ 59.4
------ ------ ------ ------ ------ ------ ------ ------

- --------
(1)See note 1 (r) of the Consolidated Financial Statements.

INDEPENDENT AUDITORS' REPORT

The Board of Directors
GE Life and Annuity Assurance Company:

Under the date of February 6, 2004, we reported on the consolidated balance
sheets of GE Life and Annuity Assurance Company and subsidiary (the Company) as
of December 31, 2003 and 2002, 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, 2003, which are included herein. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedules included herein. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Richmond, Virginia
February 6, 2004

Schedule III
GE LIFE AND ANNUITY ASSURANCE COMPANY

Supplemental Insurance Information
(Dollar amounts in millions)

Future Annuity
And Contract
Benefits &
Liability
Deferred For Policy and Other
Acquisition Contract Unearned Policyholder Premium
Segment Costs Claims Premiums Liabilities Revenue
- ------- ----------- --------------- ------------- ------------ --------

December 31, 2003:
Retirement Income & Investments...... $817.0 $ 8,032.8 $ -- $120.2 $ (1.7)
Protection........................... 80.0 2,251.0 24.8 2.8 105.7
Corporate & Other.................... -- -- -- -- --
------ --------- ------ ------ ------
Total............................ $897.0 $10,283.8 $ 24.8 $123.0 $104.0
====== ========= ====== ====== ======
December 31, 2002:
Retirement Income & Investments...... $756.8 $ 8,779.5 $ -- $174.8 $ 1.0
Protection........................... 86.5 2,238.6 25.5 1.3 102.3
Corporate & Other.................... (16.1) (6.2) -- 6.5 2.0
------ --------- ------ ------ ------
Total............................ $827.2 $11,011.9 $ 25.5 $182.6 $105.3
====== ========= ====== ====== ======
December 31, 2001:
Retirement Income & Investments...... $ .8
Protection........................... 107.6
Corporate & Other.................... --
------
Total............................ $108.4
======

Interest Underwriting, Amortization
Credited & Acquisition, of Deferred
Net Benefits and and Insurance Acquisition
Investment Other Changes Expenses, net Costs and Premiums
Segment Income Policy Reserves of deferrals Intangibles Written
- ------- ----------- --------------- ------------- ------------ --------
December 31, 2003:
Retirement Income & Investments...... $402.7 $ 362.0 $ 46.4 $ 84.9 $ (1.7)
Protection........................... 152.5 294.3 55.3 34.0 105.4
Corporate & Other.................... (17.2) -- 47.3 -- --
------ --------- ------ ------ ------
Total............................ $538.0 $ 656.3 $149.0 $118.9 $103.7
====== ========= ====== ====== ======
December 31, 2002:
Retirement Income & Investments...... $457.1 $ 392.6 $ 37.1 $113.6 $ 1.0
Protection........................... 160.5 247.1 57.8 30.6 102.1
Corporate & Other.................... (17.4) .6 4.4 2.9 2.0
------ --------- ------ ------ ------
Total............................ $600.2 $ 640.3 $ 99.3 $147.1 $105.1
====== ========= ====== ====== ======
December 31, 2001:
Retirement Income & Investments...... $529.8 $ 481.4 $ 29.4 $ 90.7 $ .8
Protection........................... 168.1 234.7 65.0 38.1 106.0
Corporate & Other.................... 1.0 -- (7.1) 2.5 --
------ --------- ------ ------ ------
Total............................ $698.9 $ 716.1 $ 87.3 $131.3 $106.8
====== ========= ====== ====== ======

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The expenses in connection with the issuance and distribution of the
contract, other than any underwriting discounts and commissions, are as follows:

Securities and Exchange Commission
Registration Fees (approximate amount we
will wire).............................. $11,711.00 (based on a total of
$50,000,000 Proposed Maximum
Aggregate Offering)
Printing and engraving.................... 12,500.00
Accounting fees and expenses.............. 3,500.00
Legal fees and expenses................... 35,500.00
Miscellaneous............................. __2,500.00
Total expenses (approximate).............. $54,011.00
==========

- --------
* Registered previously with Pre-Effective Amendment No. 1 filed on December
13, 2001.

Item 14. Indemnification of Directors and Officers.

Sections 13.1-697, 13.1-698 and 13.1-702 of the Code of Virginia, in brief,
allow a corporation to indemnify any person made party to a proceeding because
such person is or was a director, officer, employee, or agent of the
corporation, against liability incurred in the proceeding if: (1) he conducted
himself in good faith; and (2) he believed that (a) in the case of conduct in
his official capacity with the corporation, his conduct was in its best
interests; and (b) in all other cases, his conduct was at least not opposed to
the corporation's best interests and (3) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful. The
termination of a proceeding by judgment, order, settlement or conviction is
not, of itself, determinative that the director, officer, employee, or agent of
the corporation did not meet the standard of conduct described. A corporation
may not indemnify a director, officer, employee, or agent of the corporation in
connection with a proceeding by or in the right of the corporation, in which
such person was adjudged liable to the corporation, or in connection with any
other proceeding charging improper personal benefit to such person, whether or
not involving action in his official capacity, in which such person was
adjudged liable on the basis that personal benefit was improperly received by
him. Indemnification permitted under these sections of the Code of Virginia in
connection with a proceeding by or in the right of the corporation is limited
to reasonable expenses incurred in connection with the proceeding.

General Electric Company's insurance program extends directors' and
officers' liability insurance coverage to the directors and officers of its
subsidiary companies, including GE Life and Annuity Assurance Company. In
addition, Section V of the Amended and Restated Articles of Incorporation of GE
Life and Annuity Assurance Company further provide that:

A. In this Article:

"applicant" means the person seeking indemnification pursuant to this
Article;

"expenses" includes counsel fees;

"liability" means the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefit
plan, or reasonable expenses incurred with respect to a proceeding;

"party" includes an individual who was, is, or is threatened to be made a
named defendant or respondent in a proceeding; and

"proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal.

B. In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or

its shareholders for monetary damages with respect to any transaction,
occurrence or course of conduct, whether prior or subsequent to the effective
date of this Article, except for liability resulting from such person's having
engaged in willful misconduct or a knowing violation of the criminal law or any
federal or state securities law.

C. The Corporation shall indemnify (i) any person who was or is a party to
any proceeding, including a proceeding brought by a shareholder in the right of
the Corporation or brought by or on behalf of shareholders of the Corporation,
by reason of the fact that he or she is or was a director or officer of the
Corporation, or (ii) any director or officer who is or was serving at the
request of the Corporation as a director, trustee, partner or officer of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, against any liability incurred by him or her in connection
with such proceeding unless he or she engaged in willful misconduct or a
knowing violation of the criminal law. A person is considered to be serving an
employee benefit plan at the Corporation's request if his or her duties to the
Corporation also impose duties on, or otherwise involve services by, him or her
to the plan or to participants in or beneficiaries of the plan. The Board of
Directors is hereby empowered, by a majority vote of a quorum of disinterested
directors, to enter into a contract to indemnify any director or officer in
respect of any proceedings arising from any act or omission, whether occurring
before or after the execution of such contract.

D. No amendment or repeal of this Article shall have any effect on the
rights provided under this Article with respect to any act or omission
occurring prior to such amendment or repeal. The Corporation shall promptly
take all such actions, and make all such determinations, as shall be necessary
or appropriate to comply with its obligation to make any indemnity under this
Article and shall promptly pay or reimburse all reasonable expenses, including
attorneys' fees, incurred by any such director, officer, employee or agent in
connection with such actions and determinations or proceedings of any kind
arising therefrom.

E. The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the applicant did not meet the standard of
conduct described in Section (B) or (C) of this Article.

F. Any indemnification under Section (C) of this Article (unless ordered by
a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the applicant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in Section (C).

The determination shall be made:

(1) By the Board of Directors by a majority vote of a quorum consisting of
directors not at the time parties to the proceeding;

(2) If a quorum cannot be obtained under subsection (1) of this Section, by
majority vote of a committee duly designated by the Board of Directors (in
which designation directors who are parties may participate), consisting solely
of two or more directors not at the time parties to the proceeding;

(3) By special legal counsel

(a) Selected by the Board of Directors or its committee in the manner
prescribed in subsection (1) or (2) of this Section; or

(b) If a quorum of the Board of Directors cannot be obtained under
subsection (1) of this Section and a committee cannot be designated under
subsection (2) of this Section, selected by majority vote of the full Board of
Directors, in which selection directors who are parties may participate; or

(4) By the shareholders, but shares owned by or voted under the control of
directors who are at the time parties to the proceeding may not be voted on the
determination.

Any evaluation as to reasonableness of expenses shall be made in the same
manner as the determination that indemnification is appropriate, except that if
the determination is made by special legal counsel, such evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (3)
of this Section (F) to select counsel.

Notwithstanding the foregoing, in the event there has been a change in the
composition of a majority of the Board of Directors after the date of the
alleged act or omission with respect to which indemnification is claimed, any
determination as to indemnification and advancement of expenses with respect to
any claim for indemnification made pursuant to this Article shall be made by
special legal counsel agreed upon by the Board of Directors and the applicant.
If the Board of Directors and the applicant are unable to agree upon such
special legal counsel the Board of Directors and the applicant each shall
select a nominee, and the nominees shall select such special legal counsel.

G. (1) The Corporation shall pay for or reimburse the reasonable expenses
incurred by any applicant who is a party to a proceeding in advance of final
disposition of the proceeding or the making of any determination under Section
(C) if the applicant furnishes the Corporation:

(a) a written statement of his or her good faith belief that he or she has
met the standard of conduct described in Section (C); and

(b) a written undertaking, executed personally or on his or her behalf, to
repay the advance if it is ultimately determined that he or she did not meet
such standard of conduct.

(2) The undertaking required by paragraph (b) of subsection (1) of this
Section shall be an unlimited general obligation of the applicant but need not
be secured and may be accepted without reference to financial ability to make
repayment.

(3) Authorizations of payments under this section shall be made by the
persons specified in Section (F).

H. The Board of Directors is hereby empowered, by majority vote of a quorum
consisting of disinterested directors, to cause the Corporation to indemnify or
contract to indemnify any person not specified in Section (B) or (C) of this
Article who was, is or may become a party to any proceeding, by reason of the
fact that he or she is or was an employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in Section (C). The
provisions of Sections (D) through (G) of this Article shall be applicable to
any indemnification provided hereafter pursuant to this Section (H).

I. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by him or her in
any such capacity or arising from his or her status as such, whether or not the
Corporation would have power to indemnify him or her against such liability
under the provisions of this Article.

J. Every reference herein to directors, officers, employees or agents shall
include former directors, officers, employees and agents and their respective
heirs, executors and administrators. The indemnification hereby provided and
provided hereafter pursuant to the power hereby conferred by this Article on
the Board of Directors shall not be exclusive of any other rights to which any
person may be entitled, including any right under policies of insurance that
may be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this Article. Such
rights shall not prevent or restrict the power of the Corporation to make or
provide for any further indemnity, or provisions for determining entitlement to
indemnity, pursuant to one or more indemnification agreements, bylaws, or other
arrangements (including, without limitation, creation of trust funds or
security interests funded by letters of credit or other means) approved by the
Board of Directors (whether or not any of the directors of the Corporation
shall be a party to or beneficiary of any such agreements, bylaws or
arrangements); provided, however, that any provision of such agreements, bylaws
or other arrangements shall not be effective if and to the extent that it is
determined to be contrary to this Article or applicable laws of the
Commonwealth of Virginia.

K. Each provision of this Article shall be severable, and an adverse
determination as to any such provision shall in no way affect the validity of
any other provision.

* * *

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

Item 15. Recent Sales of Unregistered Securities.

Not applicable.

Item 16. Exhibits.

(1)(a) Underwriting Agreement. Previously filed December 12, 2001 to Form S-1 for GE Life and Annuity
Assurance Company, Registration No. 333-69786.

(1)(b) Broker-Dealer Sales Agreement. Previously filed December 12, 2001 to Form S-1 for GE Life and
Annuity Assurance Company, Registration No. 333-69786.

(2) Not applicable.

(3)(a) Certificate of Incorporation of The Life Insurance Company of Virginia. Previously filed on May 1,
1998 with Post-Effective Amendment No. 9 to Form N-4 for GE life & Annuity Separate Account 4,
Registration No. 033-76334.

(3)(a)(i) Amended and Restated Articles of Incorporation of GE Life and Annuity Assurance Company.
Previously filed on September 1, 2000 with Post-Effective Amendment No. 1 to Form N-4 for GE
Life & Annuity Separate Account 4, Registration No. 333-31172.

(4) Contract. Previously filed on September 19, 2001 on Form S-1 for GE Life and Annuity Assurance
Company, Registration No. 333-69620.

(4)(b) SEP Endorsements, Form P5090 7/97 and Form 5094 7/98. Previously filed on May 1, 1998 with
Post-Effective Amendment No. 9 to Form N-4 for GE life & Annuity Separate Account 4,
Registration No. 033-76334.

(4)(b)(i) Individual Retirement Annuity Endorsement, Form 5090 7/97. Previously filed on May 1, 1998 with
Post-Effective Amendment No. 9 to Form N-4 for GE life & Annuity Separate Account 4,
Registration No. 033-76334.

(4)(b)(ii) Roth Individual Retirement Annuity Endorsement, Form P5133 11/00. Previously filed on
September 19, 2001 on Form S-1 for GE Life and Annuity Assurance Company, Registration No.
333-69620.

(4)(b)(iii) Section 403(b) Annuity Endorsement, Form 5145 12/00. Previously filed on September 19, 2001 on
Form S-1 for GE Life and Annuity Assurance Company, Registration No. 333-69620.

(4)(c) Application. Previously filed August 20, 2001 to Form S-1 for GE Life and Annuity Assurance
Company, Registration No. 333-67902.

(5) Opinion and Consent of Counsel. Filed herewith.

(6) Not applicable.

(7) Not applicable.

(8) Not applicable.

(9) Not applicable.

(10) Not applicable.

(11) Not applicable.

(12) Not applicable.

(13) Not applicable.

(14) Not applicable.

(15) Not applicable.

(16) Not applicable.

(17) Not applicable.

(18) Not applicable.

(19) Not applicable.

(20) Not applicable.

(21) Not applicable.

(22) Not applicable.

(23) Consent of Independent Auditors. Filed herewith.

(24) Power of Attorney previously filed on February 18, 2003 with Post-Effective Amendment No. 7 to
Form N-4 for GE Life & Annuity Separate Account 4, Registration No. 333-31172.

(25) Not applicable.

(26) Not applicable.

(27) Not applicable.

(99) Resolution of Board of Directors of GE Life and Annuity Assurance Company authorizing the
establishment of GE Life & Annuity Variable Account 6. Previously filed on August 20, 2001 to
Form S-1 for GE Life and Annuity Assurance Company, Registration No. 333-67902.

Item 17. Undertakings.

(A) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
an amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of an amendment any of the
securities being registered which remain unsold at the termination of the
offering.

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

SIGNATURES

As required by the Securities Act of 1933, the Registrant has duly caused
this Amendment No. 3 to the Registration Statement on Form S-1 to be signed on
its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, in the County of Henrico in the Commonwealth of
Virginia, on the 18th day of March, 2004.

GE LIFE AND ANNUITY ASSURANCE COMPANY
(Registrant)

By: /s/ HEATHER HARKER
-----------------------------
Heather Harker
Vice President, Associate
General Counsel and Assistant
Secretary

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.

Name Title Date
---- ----- ----

* Director, President and Chief March 18, 2004
- ----------------------------- Executive Officer
Pamela S. Schutz

* Director, Senior Vice March 18, 2004
- ----------------------------- President and Chief Actuary
Paul A. Haley

* Director and Senior Vice March 18, 2004
- ----------------------------- President
Leon E. Roday

* Director and Senior Vice March 18, 2004
- ----------------------------- President
Elliot A. Rosenthal

* Director and Senior Vice March 18, 2004
- ----------------------------- President
Geoffrey S. Stiff

* Director and Senior Vice March 18, 2004
- ----------------------------- President
Thomas M. Stinson

* Senior Vice President and March 18, 2004
- ----------------------------- Chief Financial Officer
Kelly L. Groh

* Vice President and Controller March 18, 2004
- -----------------------------
John E. Karaffa

/s/ HEATHER HARKER Vice President, Associate March 18, 2004
- ----------------------------- General Counsel and
Heather Harker Assistant Secretary

*By: /s/ HEATHER HARKER , pursuant to Power of March 18, 2004
------------------- Attorney executed on January
Heather Harker 14, 2003