-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BNZ5QzyvAJs9Lt89R8t9UAaeMAubxTnLoPLFlEW4gVfjrXIQefCzGA0KGEO8lELi uIsInd85F/YFJnlo3zRebQ== 0000916641-99-000045.txt : 19990128 0000916641-99-000045.hdr.sgml : 19990128 ACCESSION NUMBER: 0000916641-99-000045 CONFORMED SUBMISSION TYPE: N-4/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19990127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GE LIFE & ANNUITY ASSURANCE CO IV CENTRAL INDEX KEY: 0000822616 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 540283385 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 333-62695 FILM NUMBER: 99514201 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 811-05343 FILM NUMBER: 99514202 BUSINESS ADDRESS: STREET 1: 6610 W BROAD ST CITY: RICHMOND STATE: VA ZIP: 23230 BUSINESS PHONE: 8042896815 MAIL ADDRESS: STREET 1: P.O. BOX 27601 CITY: RICHMOND STATE: VA ZIP: 23261-7601 FORMER COMPANY: FORMER CONFORMED NAME: LIFE OF VIRGINIA SEPARATE ACCOUNT 4 DATE OF NAME CHANGE: 19920703 N-4/A 1 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 N-4/A As filed with the Securities and Exchange Commission on January , 1999. File No. 333-62695 File No. 811-05343 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 Registration Statement Under the Securities Act of 1933 X Pre-Effective Amendment No.2 Post-Effective Amendment No. For Registration Under the Investment Company Act of 1940 X Amendment No. 36 GE Life & Annuity Separate Account 4 (Exact Name of Registrant) GE Life and Annuity Assurance Company (Name of Depositor) 6610 W. Broad Street Richmond, Virginia 23230 (Address of Depositor's Principal Executive Office) Depositor's Telephone Number: (804) 281-6000 Patricia L. Dysart Assistant Vice President and Associate General Counsel GE Life and Annuity Assurance Company 6610 W. Broad Street Richmond, Virginia 23230 (Name and address of Agent for Service) Copy to: Stephen E. Roth, Esquire Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, D.C. 20004-24104 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the registration statement. Title of Securities Being Registered: Interests in a Separate Account Under Flexible Premium Variable Annuity Policies Filing Fee: None The Registrant hereby amends this Registration Statement on such 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. GE Life & Annuity Separate Account 4 Prospectus For Flexible Premium Variable Deferred Annuity Policy Form P1152 1/99 Issued by: Home Office: GE Life and Annuity Assurance Company 6610 West Broad Street Richmond, Virginia 23230 Telephone: (804) 281-6000 This Prospectus describes an individual flexible premium variable deferred annuity policy issued by GE Life and Annuity Assurance Company. Variable annuities are long-term vehicles designed to provide retirement income. Under the policy, you accumulate account value that you can use to buy retirement income payments. The income payments can be variable or fixed in amount. You pick the date when payments start. If the annuitant dies before payments start, your beneficiary may receive a death benefit. Generally, you do not pay current federal income tax on any growth in the policy until you receive it. Under some qualified plans, an exclusion from your income will be allowed generally equal to the amount of your contributions to the plan. This may include contributions made by way of premium payments to this policy when used in connection with such qualified plans. The minimum amount you need to purchase the policy is $10,000. Investments (premium payments), including the automatic bonus credits we provide you, may accumulate account value on a variable or fixed basis, or both. If you choose our variable option , we will invest your premium payments and bonus credits in mutual fund ("Fund") portfolios. The portfolios are: Janus Aspen Series: Growth Portfolio, Aggressive Growth Portfolio, International Growth Portfolio, Worldwide Growth Portfolio, Balanced Portfolio, Flexible Income Portfolio, Capital Appreciation Portfolio Variable Insurance Products Fund: VIP Equity-Income Portfolio, VIP Overseas Portfolio, VIP Growth Portfolio Variable Insurance Products Fund II: VIP II Asset Manager Portfolio, VIP II Contrafund Portfolio Variable Insurance Products Fund III: VIP III Growth & Income Portfolio, VIP III Growth Opportunities Portfolio GE Investments Funds, Inc.: S&P 500 Index Fund, Money Market Fund, Total Return Fund, International Equity Fund, Real Estate Securities Fund, Value Equity Fund, Income Fund, U.S. Equity Fund Oppenheimer Variable Account Funds: Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund, Oppenheimer High Income Fund, Oppenheimer Multiple Strategies Fund Federated Insurance Series: Federated American Leaders Fund II, Federated Utility Fund II, Federated High Income Bond Fund II The Alger American Fund: Alger American Growth Portfolio, Alger American Small Capitalization Portfolio Goldman Sachs Variable Insurance Trust: Goldman Sachs Growth and Income Fund, Goldman Sachs Mid Cap Equity Fund Salomon Brothers Variable Series Fund* Salomon Investors Fund, Salomon Total Return Fund, Salomon Strategic Bond Fund *Not all of these portfolios may be available in all states or markets. You bear the investment risk if you allocate your premium payments and bonus credits to our variable option. Your account value will depend on the performance of the portfolios. If you choose our fixed option, your premium payments and bonus credits will grow at a rate of at least 3%. We take the investment risk of premium payments and bonus credits allocated to our fixed option. The fixed option may not be available in all states. The Securities and Exchange Commission has not approved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Shares in the portfolios and interests in the policies are not deposits or obligations of, or guaranteed or endorsed by, a bank, and the shares and interests are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency; they are subject to investment risks, including possible loss of principal. This Prospectus details the information about the policy that you should know before you buy a policy and make premium payments. You should also review the prospectuses for the Funds and keep all prospectuses for future reference. We filed a statement of additional information (SAI), dated ____ __, 1999, concerning the policy with the Securities and Exchange Commission (SEC) and its terms are made part of this Prospectus. If you would like a free copy, call us at 1-800-352-9910. The SAI and other information about the policy is available on the SEC's internet site at http://www.sec.gov. A table of contents for the SAI appears on the last page of this Prospectus. This Prospectus is dated ____ __, 1999 Table of Contents Page Definitions................................................................... Expense tables................................................................ Synopsis...................................................................... Condensed Financial Information............................................... Investment Results............................................................ Financial Statements.......................................................... GE Life and Annuity Assurance Company......................................... Account 4..................................................................... The Guarantee Account......................................................... Charges and Other Deductions.................................................. The Policy.................................................................... Income Payments............................................................... Federal Tax Matters........................................................... Voting Rights................................................................. Requesting Payments........................................................... Distribution of the Policies.................................................. Owner Questions............................................................... Return Privilege.............................................................. State Regulation.............................................................. Records and Reports........................................................... Other Information............................................................. Year 2000 Readiness Disclosure................................................ Legal Matters................................................................. Table of Contents for Statement of Additional Information..................... This prospectus does not constitute an offering in any jurisdiction in which such offering may not lawfully be made. Definitions We have tried to make this Prospectus as understandable for you as possible. However, in explaining how the Policy works, we have had to use certain terms that have special meanings. We define these terms below. Account 4 -- GE Life & Annuity Separate Account 4, a separate investment account we established to receive and invest premiums paid under the Policy and other variable annuity policies we issue. We divide Account 4 into Investment Subdivisions, each of which invests in a portfolio of the Funds. Account Value -- The value of the Policy equal to the amount allocated to the Investment Subdivisions of Account 4 and the Guarantee Account. Accumulation Unit -- An accounting unit of measure we use in calculating the Account Value in Account 4 before the Maturity Date. Annuitant -- The Annuitant is the person you named in the Policy upon whose age and, where appropriate, sex, we determine monthly income benefits. Annuity Unit -- An accounting unit of measure we use in the calculation of the amount of the second and each subsequent variable income payment. Bonus Credit -- A bonus credit is the "enhanced premium amount" described in your Policy. For qualifying Policies, it is an amount we will add to each premium payment we receive. It is not considered a "premium payment" under the Policy. Code -- The Internal Revenue Code of 1986, as amended. Company -- GE Life and Annuity Assurance Company. "We", "us" or "our" refers to the Company. Contingent Annuitant -- The person named by the Owner who at the death of the Annuitant prior to the Maturity Date may become the Annuitant in certain circumstances. Death Benefit -- The benefit provided under a Policy upon the death of an Annuitant prior to the Maturity Date. Designated Beneficiary(ies) -- The person(s) designated in the Policy who is alive (or in existence for non-natural designations) on the date of an Owner's, Joint Owner's or Annuitant's death and who will be treated as the sole Owner of the Policy following such a death. General Account -- The assets of the Company that are not segregated in any of the separate investment accounts of the Company. Guarantee Account -- Part of our General Account that provides a Guaranteed Interest Rate for a specified Guarantee Period. This account is not part of and does not depend on the investment performance of Account 4. Guarantee Amount - An allocation to the Guarantee Account. Guarantee Period -- A specific period for which we agree to credit a particular effective annual rate of interest. Guaranteed Interest Rate -- The applicable effective annual rate of interest that we will pay on a Guarantee Amount. The Guaranteed Interest Rate will be at least three percent per year. Maturity Date -- The date stated in the Policy on which income payments are scheduled to commence, if the Annuitant is living on that date. Owner -- The person or persons (in the case of Joint Owners) entitled to receive income payments after the Maturity Date. The Owner also is entitled to the ownership rights stated in the Policy during the lifetime of the Annuitant and in any application. "You" or "your" refers to the Owner or Joint Owners. Policy Date -- The date the Policy is issued and becomes effective. Your Policy Date is shown in your Policy and is used to determine Policy years and anniversaries. Surrender Value -- The Account Value less any applicable surrender charge, premium tax, and optional benefit charges. Valuation Day -- For each Investment Subdivision, each day on which the New York Stock Exchange is open for business except for days that the Fund does not value its shares. Valuation Period -- The period between the close of business on a Valuation Day and the close of business on the next succeeding Valuation Day. Expense Table This table describes the various costs and expenses that you will pay (either directly or indirectly) if you purchase the Policy. The table reflects expenses of the Policy, of the Investment Subdivisions of Account 4, and of the portfolios. For more complete descriptions of the various costs and expenses involved, see Charges and Other Deductions in this Prospectus, and the Fund prospectuses. Premium taxes may also be applicable, although they do not appear in the table. Owner transaction expenses: The maximum surrender charge (as a percentage of premium payments surrendered/withdrawn): 8% We reduce the surrender charge percentage over time. In general, the later a redemption occurs after a premium payment is surrendered or withdrawn, the lower the surrender charge with respect to that surrender or withdrawal. Transfer Charge: None* Annual Expenses (as a percentage of Account Value): Mortality and Expense Risk Charge 1.30% Administrative Expense Charge .25% ----- Total Annual Expenses 1.55% Other Annual Expenses: Annual Policy Maintenance Charge $25** Maximum Guaranteed Minimum Death Benefit Charge (as a percentage of average benefit amount) .35%*** *We reserve the right to impose a fee of $10 per transfer. **We do not assess this charge if your Account Value at the time the charge is due is at least $10,000. ***If applicable. Fund Annual Expenses Annual expenses of the portfolios of the Funds for the year ended December 31, 1997 (as a percentage of each portfolio's average net assets):
Management Fees Other Expenses (after fee (after waiver reimbursement- Total Annual Fund as applicable) as applicable) Expense - ---- -------------- -------------- ------- Balanced Janus Aspen Balanced Portfolio(1) 0.76% 0.07% 0.83% VIP II Asset Manager Portfolio*(3) 0.55% 0.10% 0.65% Salomon Brothers Total Return 0.75% 0.25% 1.00% Fund(6) GE Total Return Fund(7) 0.50% 0.15% 0.65% Oppenheimer Multiple Strategies 0.72% 0.03% 0.75% Fund Aggressive Growth Janus Aspen Aggressive Growth 0.73% 0.03% 0.76% Portfolio(1) Oppenheimer Aggressive Growth 0.71% 0.02% 0.73% Fund Alger American Small 0.85% 0.04% 0.89% Capitalization Portfolio Growth Janus Aspen Growth Portfolio(1) 0.65% 0.05% 0.70% Janus Aspen Capital Appreciation 0.23% 1.03% 1.26% Portfolio(1) Alger American Growth Portfolio 0.75% 0.04% 0.79% VIP II Contrafund Portfolio*(3) 0.60% 0.11% 0.71% VIP Growth Portfolio*(2) 0.60% 0.09% 0.69% Oppenheimer Growth Fund 0.73% 0.02% 0.75% VIP III Growth Opportunities 0.60% 0.14% 0.74% Portfolio*(4) Goldman Sachs Mid Cap Equity 0.80% 0.15% 0.95% Fund(5) GE Value Equity Fund(7) 0.37% 0.09% 0.46% Growth & Income Federated American Leaders Fund 0.66% 0.19% 0.85% II(8) GE US Equity Fund(7) 0.55% 0.25% 0.80% Goldman Sachs Growth & Income 0.75% 0.15% 0.90% Fund(5) Salomon Brothers Investors Fund(6) 0.75% 0.25% 1.00% VIP Equity-Income Portfolio*(1) 0.50% 0.08% 0.58% VIP III Growth & Income 0.49% 0.21% 0.70% Portfolio*(4) GE S&P 500 Index Fund(7) 0.34% 0.12% 0.46% International Stock Janus Aspen International Growth 0.67% 0.29% 0.96% Portfolio(1) VIP Overseas Portfolio*(2) 0.75% 0.17% 0.92% GE International Equity Fund(7) 0.98% 0.36% 1.34% Corporate Bond Oppenheimer Bond Fund 0.73% 0.05% 0.78% Salomon Brothers Strategic Bond 0.75% 0.25% 1.00% Fund(6) GE Income Fund(7) 0.42% 0.17% 0.59% High Yield Bond Oppenheimer High Income Fund 0.75% 0.07% 0.82% Federated High Income Bond Fund(8) 0.51% 0.29% 0.80% Specialty Federated Utility Fund II(8) 0.48% 0.37% 0.85% GE Real Estate Securities Fund(7) 0.83% 0.12% 0.95% Diversified Bond Janus Aspen Flexible Income 0.65% 0.10% 0.75% Portfolio(1) Global Stock Janus Aspen Worldwide Growth 0.66% 0.08% 0.74% Portfolio(1) Money Market GE Money Market Fund(7) 0.20% 0.12% 0.32%
* The fees and expenses for these portfolios are prior to any fee waiver and/or reimbursement as applicable. (1) Absent reimbursements, the total annual expenses of the portfolios of the Janus Aspen Series during 1997 would have been .78% for Growth Portfolio, .78% for Aggressive Growth Portfolio, 1.08% for International Growth Portfolio, .81% for Worldwide Growth Portfolio, .83% for Balanced Portfolio and 2.19% for Capital Appreciation Portfolio. (2) With reimbursements, the total annual expenses of the portfolios of the Variable Insurance Products Fund during 1997 would have been .57% for VIP Equity-Income Portfolio, .90% for VIP Overseas Portfolio and .67% for VIP Growth Portfolio. (3) With reimbursements, the total annual expenses of the portfolios of the Variable Insurance Products Fund II during 1997 would have been .64% for VIP II Asset Manager Portfolio and .68% for VIP II Contrafund Portfolio. (4) With reimbursements, the total annual expenses of the portfolios of the Variable Insurance Products Fund III during 1997 would have been .73% for VIP III Growth Opportunities Portfolio. (5) Absent certain fee waivers or reimbursements, the total annual expenses of the portfolios of Goldman Sachs Variable Insurance Trust would have been 1.51% for Growth and Income Fund and 1.33% for Mid Cap Equity Fund. (6) Absent certain fee waivers or reimbursements, the total annual expenses of the portfolios of Salomon Brothers Variable Series Fund would have been 2.61% for Investors Fund, 2.71% for Total Return Fund and 2.66% for Strategic Bond Fund. The Other Expenses listed for these Funds are estimates provided by the Fund as these portfolios were recently organized and have no operating history, and actual expenses may be greater or less than those shown. (7) GE Investment Management Incorporated currently serves as investment adviser to GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.). Prior to May 1, 1997, Aon Advisors, Inc. served as investment adviser to this Fund and had agreed to reimburse the Fund for certain expenses of each of the Fund's portfolios. Absent certain fee waivers or reimbursements, the total annual expenses of the portfolios of GE Investments Funds, Inc. during 1997 would have been .46% for S&P 500 Index Fund, .48% for Money Market Fund, .65% for Total Return Fund, 1.43% for International Equity, .96% for Real Estate Fund, .46% for Value Equity Fund, .76% for Income Fund and .86% for U.S. Equity Fund. (8) Absent certain fee waivers or reimbursements, the total annual expenses of the portfolios of the Federated Insurance Series during 1997 would have been .94% for Federated American Leaders Fund II, 1.12% for Federated Utility Fund II, and .89% for Federated High Income Bond Fund II. Examples These examples show what your costs would be under certain hypothetical situations. The examples do not represent past or future expenses. Your actual expenses may be more or less than those shown. The examples are based on the annual expenses of the portfolios for the Funds for the year ended December 31, 1997 (shown above in Fund Annual Expenses). The examples assume that a full 4% Bonus Credit applies (if a lower Bonus Credit applied, or if no Bonus Credit applied, the numbers shown would be lower). The examples also assume that the $25 policy maintenance charge is equivalent to 0.1% of Account Value attributable to the hypothetical investment (this charge will be waived if the Account Value is at least $10,000 at the time the charge is due). To the extent that the examples reflect a charge for the elective Guaranteed Minimum Death Benefit Rider, the examples assume that the maximum charge (.35% of the average benefit amount) applies. * * * EXAMPLES: A Policyowner would pay the following expense on a $1,000 investment, assuming a 5% annual return on assets and the charges and expenses reflected in the Fee Table above (including the guaranteed minimum death benefit rider): 1. If you surrender* your Policy at the end of the applicable period: Fund: 1 Year 3 Years Balanced Janus Aspen Balanced Portfolio 101.18 153.90 VIP II Asset Manager Portfolio 99.35 148.34 Salomon Brothers Total Return Fund 102.91 159.13 GE Investments Total Return Fund 99.35 148.34 Oppenheimer Multiple Strategies Fund 100.37 151.43 Aggressive Growth Janus Aspen Aggressive Growth Portfolio 100.47 151.74 Oppenheimer Aggressive Growth Fund 100.16 150.81 Alger American Small Capitalization 101.79 155.75 Portfolio Growth Janus Aspen Growth Portfolio 99.86 149.88 Janus Aspen Capital Appreciation 105.55 167.07 Portfolio Alger American Growth Portfolio 100.77 152.67 VIP II Contrafund Portfolio 99.96 150.19 VIP Growth Portfolio 99.75 149.58 Oppenheimer Growth Fund 100.37 151.43 VIP III Growth Opportunities Portfolio 100.26 151.12 Goldman Sachs Mid Cap Equity Fund 102.40 157.59 GE Investments Value Equity Fund 97.41 142.43 Growth & Income Federated American Leaders Fund II 101.38 154.52 GE Investments US Equity Fund 100.88 152.98 Goldman Sachs Growth & Income Fund 101.89 156.06 Salomon Brothers Investors Fund 102.91 159.13 VIP Equity-Income Portfolio 98.63 146.16 VIP III Growth & Income Portfolio 99.86 149.88 GE Investments S&P 500 Index Fund 97.41 142.43 International Stock Janus Aspen International Growth Portfolio 102.50 157.90 VIP Overseas Portfolio 102.10 156.67 GE Investments International Equity Fund 106.36 169.50 Corporate Bond Oppenheimer Bond Fund 100.67 152.36 Salomon Brothers Strategic Bond Fund 102.91 159.13 GE Investments Income Fund 98.73 146.47 High Yield Bond Oppenheimer High Income Fund 101.08 153.59 Federated High Income Bond Fund II 100.88 152.98 Specialty Federated Utility Fund II 101.38 154.52 GE Investments Real Estate Securities Fund 102.40 157.59 Diversified Bond Janus Aspen Flexible Income Portfolio 100.37 151.43 Global Stock Janus Aspen Worldwide Growth Portfolio 100.26 151.12 Money Market GE Investments Money Market Fund 95.92 137.59 * surrender includes annuitization over a period of less than 5 years. 2. If you annuitize at the end of the applicable period, or do not surrender*: Fund: 1 Year 3 Years Balanced Janus Aspen Balanced Portfolio 29.18 90.90 VIP II Asset Manager Portfolio 27.35 85.34 Salomon Brothers Total Return Fund 30.91 96.13 GE Investments Total Return Fund 27.35 85.34 Oppenheimer Multiple Strategies Fund 28.37 88.43 Aggressive Growth Janus Aspen Aggressive Growth Portfolio 28.47 88.74 Oppenheimer Aggressive Growth Fund 28.16 87.81 Alger American Small Capitalization 29.79 92.75 Portfolio Growth Janus Aspen Growth Portfolio 27.86 86.88 Janus Aspen Capital Appreciation Portfolio 33.55 104.07 Alger American Growth Portfolio 28.77 89.67 VIP II Contrafund Portfolio 27.96 87.19 VIP Growth Portfolio 27.75 86.58 Oppenheimer Growth Fund 28.37 88.43 VIP III Growth Opportunities Portfolio 28.26 88.12 Goldman Sachs Mid Cap Equity Fund 30.40 94.59 GE Investments Value Equity Fund 25.41 79.43 Growth & Income Federated American Leaders Fund II 29.38 91.52 GE Investments US Equity Fund 28.88 89.98 Goldman Sachs Growth & Income Fund 29.89 93.06 Salomon Brothers Investors Fund 30.91 96.13 VIP Equity Income Portfolio 26.63 83.16 VIP III Growth & Income Portfolio 27.86 86.88 GE Investments S&P 500 Index Fund 25.41 79.43 International Stock Janus Aspen International Growth Portfolio 30.50 94.90 VIP Overseas Portfolio 30.10 93.67 GE Investments International Equity Fund 34.36 106.50 Corporate Bond Oppenheimer Bond Fund 28.67 89.36 Salomon Brothers Strategic Bond Fund 30.91 96.13 GE Investments Income Fund 26.73 83.47 High Yield Bond Oppenheimer High Income Fund 29.08 90.59 Federated High Income Bond Fund II 28.88 89.98 Specialty Federated Utility Fund II 29.38 91.52 GE Investments Real Estate Securities Fund 30.40 94.59 Diversified Bond Janus Aspen Flexible Income Portfolio 28.37 88.43 Global Stock Janus Aspen Worldwide Growth Portfolio 28.26 88.12 Money Market GE Investments Money Market Fund 23.92 74.59 *Surrender includes annuitization over a period of less than 5 years. EXAMPLES: A Policyowner would pay the following expense on a $1,000 investment, assuming a 5% annual return on assets and the charges and expenses reflected in the Fee Table above (excluding the elective guaranteed minimum death benefit rider): 1. If you surrender* your Policy at the end of the applicable period: Fund: 1 Year 3 Years Balanced Janus Aspen Balanced Portfolio 97.62 142.85 VIP II Asset Manager Portfolio 95.78 137.25 Salomon Brothers Total Return Fund 99.35 148.10 GE Investments Total Return Fund 95.78 137.25 Oppenheimer Multiple Strategies Fund 96.80 140.36 Aggressive Growth Janus Aspen Aggressive Growth Portfolio 96.91 140.67 Oppenheimer Aggressive Growth Fund 96.60 139.74 Alger American Small Capitalization 98.23 144.70 Portfolio Growth Janus Aspen Growth Portfolio 96.29 138.81 Janus Aspen Capital Appreciation Portfolio 102.00 156.09 Alger American Growth Portfolio 97.21 141.61 VIP II Contrafund Portfolio 96.40 139.12 VIP Growth Portfolio 96.19 138.50 Oppenheimer Growth Fund 96.80 140.36 VIP III Growth Opportunities Portfolio 96.70 140.05 Goldman Sachs Mid Cap Equity Fund 98.84 146.56 GE Investments Value Equity Fund 93.84 131.31 Growth & Income Federated American Leaders Fund II 97.83 143.47 GE Investments US Equity Fund 97.31 141.92 Goldman Sachs Growth & Income Fund 98.33 145.01 Salomon Brothers Investors Fund 99.35 148.10 VIP Equity-Income Portfolio 95.07 135.07 VIP III Growth & Income Portfolio 96.29 138.81 GE Investments S&P 500 Index Fund 93.84 131.31 International Stock Janus Aspen International Growth Portfolio 98.95 146.87 VIP Overseas Portfolio 98.54 145.63 GE Investments International Equity 102.81 158.53 Corporate Bond Oppenheimer Bond Fund 97.11 141.29 Salomon Brothers Strategic Fund 99.35 148.10 GE Investments Income Fund 95.17 135.38 High Yield Bond Oppenheimer High Income Fund 97.52 142.54 Federated High Income Bond Fund II 97.31 141.92 Specialty Federated Utility Fund II 97.83 143.47 GE Investments Real Estate Securities Fund 98.84 146.56 Diversified Bond Janus Aspen Flexible Income Portfolio 96.80 140.36 Global Stock Janus Aspen Worldwide Growth Portfolio 96.70 140.05 Money Market GE Investments Money Market Fund 92.40 126.91 *surrender includes annuitization over a period of less than 5 years. 2. If you annuitize at the end of the applicable period, or do not surrender*: Fund: 1 Year 3 Years Balanced Janus Aspen Balanced Portfolio 25.62 79.85 VIP II Asset Manager Portfolio 23.78 74.25 Salomon Brothers Total Return Fund 27.35 85.10 GE Investments Total Return Fund 23.78 74.25 Oppenheimer Multiple Strategies Fund 24.80 77.36 Aggressive Growth Janus Aspen Aggressive Growth Porfolio 24.91 77.67 Oppenheimer Aggressive Growth Fund 24.60 76.74 Alger American Small Capitalization 26.23 81.70 Portfolio Growth Janus Aspen Growth Portfolio 24.29 75.81 Janus Aspen Capital Appreciation Portfolio 30.00 93.09 Alger American Growth Portfolio 25.21 78.61 VIP II Contrafund Portfolio 24.40 76.12 VIP Growth Portfolio 24.19 75.50 Oppenheimer Growth Fund 24.80 77.36 VIP III Growth Opportunities Portfolio 24.70 77.05 Goldman Sachs Mid Cap Equity Fund 26.84 83.56 GE Investments Value Equity Fund 21.84 68.31 Growth & Income Federated American Leaders Fund II 25.83 80.47 GE Investments US Equity Fund 25.31 78.92 Goldman Sachs Growth & Income Fund 26.33 82.01 Salomon Brothers Investors Fund 27.35 85.10 VIP Equity-Income Portfolio 23.07 72.07 VIP III Growth & Income Portfolio 24.29 75.81 GE Investments S&P 500 Index Fund 21.84 68.31 International Stock Janus Aspen International Growth Portfolio 26.95 83.87 VIP Overseas Portfolio 26.54 82.63 GE Investments International Equity Fund 30.81 95.53 Corporate Bond Oppenheimer Bond Fund 25.11 78.29 Salomon Brothers Strategic Bond Fund 27.35 85.10 GE Investments Income Fund 23.17 72.38 High Yield Bond Oppenheimer High Income Fund 25.52 79.54 Federated High Income Bond Fund II 25.31 78.92 Specialty Federated Utility Fund II 25.83 80.47 GE Investments Real Estate Securities Fund 26.84 83.56 Diversified Bond Janus Aspen Flexible Income Portfolio 24.80 77.36 Global Stock Janus Aspen Worldwide Growth Portfolio 24.70 77.05 Money Market GE Investments Money Market Fund 20.40 63.91 *Surrender includes annuitization over a period of less than 5 years. All of the figures provided under the subheading Fund Annual Expenses and part of the data used to produce the figures in the examples were supplied by the Funds. We have not independently verified this information. Other Policies We offer other variable annuity policies which also may invest in many of the same portfolios of the Funds offered under the Policy. These policies have different charges that could affect the value of the Investment Subdivisions, and they may offer different benefits more suitable to your needs. To obtain more information about these policies, contact your registered representative, or call (800) 352-9910. Synopsis What type of Policy am I buying? It is an individual flexible premium variable deferred annuity policy issued by us. We may issue it as a qualified Policy or as a non-qualified Policy. This Prospectus is intended to provide disclosure only about the Policy. See The Policy. How does the Policy work? Once we approve your application, we will issue the Policy to you. During the accumulation period, while you are paying in, you can use your net premium payments (i.e., your purchase payments minus any premium tax), along with the automatic bonus we provide you, to buy Accumulation Units under Account 4 or interests in the Guarantee Account. Should you decide to annuitize (that is, change your Policy to a payout mode rather than an accumulation mode), we will convert your Accumulation Units and Guarantee Account interests to Annuity Units. You can choose a fixed or variable income payment. If you choose a variable income payment, we will base your periodic income payment upon the number of Annuity Units to which you became entitled at the time you decided to annuitize and the value of each unit on that Valuation Day. See The Policy. What is a Bonus Credit? For qualifying Policies, it is an amount we will add to each premium payment we receive. If the Annuitant was age 80 or younger when we issued the Policy, we will add 4% of each premium payment to your Account Value. For Annuitants age 81 and older at the time we issued the Policy, we will not pay any Bonus Credits. Bonus Credits are not considered "premium payments" for purposes of the Policy. See Bonus Credits. What is Account 4? It is a segregated asset account established under Virginia insurance law, and registered with the SEC as a unit investment trust. We allocate the assets of Account 4 to one or more Investment Subdivisions, according to your investment choice. We do not charge those assets with liabilities arising out of any other business which we may conduct. See Account 4. What are my variable investment choices? Through its various Investment Subdivisions, Account 4 uses your net premium payments to purchase shares, at your direction, in one or more of the portfolios of the Funds. In turn, each portfolio holds securities consistent with its own particular investment policy. See Investments of Account 4. What is the Guarantee Account? We offer fixed investment choices through our Guarantee Account. The Guarantee Account is part of our General Account and pays interest at declared rates ("Guaranteed Interest Rates") guaranteed by us for selected periods of time ("Guarantee Periods"). The principal, after deductions, is also guaranteed. Since the Guarantee Account is part of the General Account, we assume the risk of investment gain or loss on this amount. All assets in the General Account are subject to our general liabilities from business operations. The Guarantee Account may not be available in all states. The Guarantee Account is not part of and does not depend on the investment performance of Account 4. You may allocate all or a portion of your net premium payments and Bonus Credits to the Guarantee Account (see The Guarantee Account), and you may transfer Account Value between the Guarantee Account and Account 4 subject to certain restrictions. See Transfers Before the Maturity Date. What charges are associated with this Policy? Should you decide to withdraw Account Value before your premium payments have been in your Policy for a certain minimum period, you will incur a surrender charge of anywhere from 0% to 8%, depending upon how many full years those payments have been in the Policy. (Note: We do not assess this surrender charge upon Account Value surrendered, partially surrendered or annuitized that represents gain. You may also partially surrender up to 10% of premium payments each Policy year without application of the surrender charge. We do not assess the surrender charge against any Account Value annuitized under an Optional Payment Plan with a life contingency or period certain guaranteeing payments for five years or more. We waive the surrender charge under certain other conditions). See Surrender Charge. If your state assesses a premium tax with respect to your Policy, then at the time we incur the tax (or at such other time as we may choose), we will deduct those amounts from premium payments or Account Value, as applicable. See Charges and Other Deductions and Deductions for Premium Taxes. We assess annual charges in the aggregate at an effective annual rate of 1.55% against the daily net asset value of Account 4, including that portion of the account attributable to your premium payments. These charges consist of .25% as an administrative expense charge and 1.30% as a mortality and expense risk charge. If the Guaranteed Minimum Death Benefit Rider (the "GMDB rider") is in effect, we will assess an annual charge for the benefit under the rider. The charge at full surrender for this benefit will be a pro-rata portion of the annual charge. We guarantee that the charge for this benefit will never exceed an annual rate of .35% of the prior year's average guaranteed minimum death benefit. There is also a $25 Annual Policy Maintenance Charge which we will waive if the Account Value is at least $10,000 at the time the charge is due. For a complete discussion of the charges associated with the Policy, see Charges and Other Deductions. There are expenses associated with the Funds. These include management fees and other expenses associated with the daily operation of each portfolio. See Investments of Account 4. These Fund expenses are more fully described in the Prospectus for each Fund. How much must I pay, and how often? Subject to certain minimum and maximum payments, the amount and frequency of your premium payments are completely flexible. See The Policies - Premium Payments. How will my income payments be calculated? We will pay you a monthly income beginning on the Maturity Date if the Annuitant is still living. You may also decide to annuitize under one of the Optional Payment Plans. Your initial payment will be based on Maturity Value and other factors. See Income Payments. What happens if I die before the Maturity Date? Prior to the Maturity Date, if an Owner, Joint Owner, or Annuitant dies while the Policy is in force, we will treat the Designated Beneficiary as the sole Owner of the Policy, subject to certain distribution rules. We may pay a Death Benefit to the Designated Beneficiary. See Death of the Owner, Joint Owner or Annuitant Before the Maturity Date. May I transfer Account Value among portfolios? Yes, but there may be limits on how often you may do so. The minimum transfer amount is currently $100 or the entire balance in the Investment Subdivision if the transfer will leave a balance of less than $100. Transfers from or to the Guarantee Account may be subject to restrictions described in the Guarantee Account rider. See The Policies - Transfers Before the Maturity Date, Income Payments - Transfers following the Maturity Date, and the Guarantee Account rider. May I surrender the Policy or make a partial surrender? Yes, subject to Policy requirements and to restrictions imposed under certain retirement plans. For example, Owners under a plan for a public school system or tax-exempt institution qualifying under Section 403(b) of the Code are subject to special restrictions upon surrender and partial surrender. If you surrender the Policy or make a partial surrender, we may assess certain charges, as discussed above and under Charges and Other Deductions. 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, a 10% premature withdrawal penalty tax. A surrender or a partial surrender may also be subject to withholding. See Federal Tax Matters. A partial surrender will reduce the Death Benefit by the proportion that the partial surrender (including any applicable surrender charge) reduces Account Value. Do I get a free look at this Policy? Yes. You have the right to return the Policy to us at our Home Office, and have us cancel the Policy within a certain number of days (usually 10 days from the date you receive the Policy, but some states require different periods). If you exercise this right, we will cancel the Policy as of the day we receive it and send you a refund equal to your Account Value less any bonus credits but plus any charges we have deducted on or before the date we received the returned Contract, or if greater and required by the law of your state, your premium payments (less any withdrawals previously taken). See Return Privilege. When are my allocations effective? In states that require us to return your premium payments upon exercise of your free look right, we will allocate any amounts you allocated to Account 4 to the Money Market Investment Subdivision until the free look period is deemed to expire. See Allocation of Premium Payments. Condensed Financial Information Because the Investment Subdivisions which are available under the Policy did not begin operation before the date of this Prospectus, we do not include financial information for the Investment Subdivisions in this Prospectus or in the SAI. Investment Results At times, Account 4 may compare its investment results to various unmanaged indices or other variable annuities in reports to shareholders, sales literature and advertisements. We will calculate the results on a total return basis for various periods, with or without surrender charges. Results calculated without surrender charges will be higher. Total returns include the reinvestment of all distributions of the portfolios, which are reflected in changes in unit value. See the SAI for further information. Financial Statements The financial statements for The Life Insurance Company of Virginia, now known as GE Life and Annuity Assurance Company, and Life of Virginia Separate Account 4, now known as GE Life & Annuity Separate Account 4, are located in the SAI. If you would like a free copy of the SAI, call 1-800-352-9910. Otherwise, the SAI is available on the SEC's website at http://www.sec.gov. GE Life and Annuity Assurance Company We are a stock life insurance company operating under a charter granted by the Commonwealth of Virginia on March 21, 1871. We principally offer life insurance and annuity policies. We are admitted to do business in 49 states and the District of Columbia. Our principal offices are at 6610 West Broad Street, Richmond, Virginia 23230. Prior to January 1, 1999, our company name was The Life Insurance Company of Virginia. Eighty percent of our capital stock is owned by General Electric Capital Assurance Company ("GE Capital Assurance"), which is an indirect wholly-owned subsidiary of GE Capital ("GE Capital"). The remaining 20% is owned by GE Financial Assurance Holdings Inc., a direct wholly-owned subsidiary of GE Capital. GE Capital, a New York corporation, is a diversified financial services company whose subsidiaries consist of specialty insurance, equipment management, and commercial and consumer financing businesses. GE Capital's indirect parent, General Electric Company, founded more than one hundred years ago by Thomas Edison, is the world's largest manufacturer of jet engines, engineering plastics, medical diagnostic equipment and large electric power generation equipment. GNA Corporation, a direct wholly-owned subsidiary of GE Financial Assurance Holdings, Inc., directly owns the stock of Capital Brokerage Corporation (the principal underwriter for the Policies and a broker/dealer registered with the U.S. Securities and Exchange Commission). We are a member of the Insurance Marketplace Standards Association ("IMSA"). We may use the IMSA membership logo and language in our advertisements, as outlined in IMSA's Marketing and Graphics Guidelines. Companies that belong to IMSA subscribe to a set of ethical standards covering the various aspects of sales and service for individually sold life insurance and annuities. Account 4 We established Account 4 as a separate investment account on August 19, 1987. Account 4 may invest in mutual funds, unit investment trusts, managed separate accounts, and other portfolios, and we use it to support the Policy as well as for other purposes permitted by law. Account 4 currently has 37 Investment Subdivisions available under the Policy, but that number may change in the future. Each Investment Subdivision invests exclusively in shares representing an interest in a separate corresponding portfolio of the Funds described below. We allocate net premium payments and Bonus Credits (see Bonus Credits), in accordance with your instructions among up to ten of the 37 Investment Subdivisions available under the Policy. The assets of Account 4 belong to us. Nonetheless, we do not charge the assets in Account 4 attributable to the Policies with liabilities arising out of any other business which we may conduct. The assets of Account 4 shall, however, be available to cover the liabilities of our General Account to the extent that the assets of Account 4 exceed its liabilities arising under the Policies supported by it. Income and both realized and unrealized gains or losses from the assets of Account 4 are credited to or charged against Account 4 without regard to the income, gains or losses arising out of any other business we may conduct. We registered Account 4 with the SEC as a unit investment trust under the 1940 Act. Account 4 meets the definition of a separate account under the federal securities laws. Registration with the SEC does not involve supervision of the management or investment practices or policies of Account 4 by the SEC. You assume the full investment risk for all amounts you allocate to Account 4. Investments of Account 4 You decide the Investment Subdivisions to which you allocate net premium payments and Bonus Credits. You may change your allocation without penalty or charges. There is a separate Investment Subdivision which corresponds to each portfolio of a Fund offered in this Policy. Each Fund is registered with the Securities and Exchange Commission as an open-end management investment company under the 1940 Act. The assets of each portfolio are separate from other portfolios of a Fund and each portfolio has separate investment objectives and policies. As a result, each portfolio operates as a separate portfolio and the investment performance of one portfolio has no effect on the investment performance of any other portfolio. Before choosing an Investment Subdivision to allocate your net premium payments, Bonus Credits, and Account Value, carefully read the prospectus for each Fund, along with this Prospectus. We summarize the investment objectives of each portfolio below. There is no assurance that any of the portfolios will meet these objectives. The investment objectives and policies of certain portfolios are similar to the investment objectives and policies of other portfolios that may be managed by the same investment adviser or manager. The investment results of the portfolios, however, may be higher or lower than the results of such other portfolios. There can be no assurance, and no representation is made, that the investment results of any of the portfolios will be comparable to the investment results of any other portfolio, even if the other portfolio has the same investment adviser or manager, or if the other portfolio has a similar name. Investment Subdivisions The Policy offers you a choice from among 37 Investment Subdivisions, each of which invests in an underlying portfolio of one of the Funds. You may invest in up to ten Investment Subdivisions at any one time.
- ------------------------------------------------------------------------------------------- Investment Subdivision Investment Objective Adviser (and Sub-Adviser, as applicable) - ------------------------------------------------------------------------------------------- Balanced Funds - ------------------------------------------------------------------------------------------- Janus Aspen Series Long term growth of capital, consistent Janus Capital Balanced Portfolio with the preservation of capital and Corporation balanced by current income. Normally invests 40-60% of its assets in securities selected primarily for their growth potential and 40-60% of its assets in securities selected primarily for their income potential. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable High total return with reduced risk over Fidelity Insurance Products the long-term by allocating assets among Management & Fund II VIP II domestic and foreign stocks, bonds and Research Company Asset Manager Portfolio short-term fixed income instruments. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Salomon Brothers Primarily invests in a broad variety of Salomon Brothers Variable Series Funds securities, including stocks, fixed-income Asset Management Inc Total Return Fund securities and short-term obligations (currently not available in California and may not be available in all markets) - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investments Funds Objective of providing highest total GE Investment Total Return Fund return, composed of current income and Management capital appreciation, as is consistent with Incorporated prudent investment risk by investing in common stock, bonds and money market instruments, the proportion of each being continuously determined by the investment adviser. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Oppenheimer Total investment return (which includes OppenheimerFunds, Variable Account current income and capital appreciation in Inc. Funds the values of its shares) from investments Multiple Strategies in common stocks and other equity Fund securities, bonds and other debt securities, and "money market" securities. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Aggressive Growth Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Janus Aspen Series Non-diversified portfolio achieving Janus Capital Aggressive Growth long-term growth of capital by normally Corporation Portfolio investing at least 50% of its equity assets in securities issued by medium- sized companies. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Oppenheimer Achieves capital appreciation by investing OppenheimerFunds, Variable Account Funds in "growth-type" companies. Prior to May Inc. 1, 1998 this fund was known as Capital Aggressive Growth Appreciation Fund. Fund - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- The Alger American Long-term capital appreciation. Except Fred Alger Fund during temporary defensive periods, the Management, Inc. Alger American portfolio invests at least 65% of its total Small Capitalization assets in equity securities of companies Portfolio that, at the time of purchase of the securities, have total market capitalization within the range of companies included in the Russell 2000 Growth Index or the S&P Small Cap 600 Index, updated quarterly. Both indexes are broad indexes of small capitalization stocks. The portfolio may invest up to 35% of its total assets in equity securities of companies that, at the time of purchase, have total market capitalization outside this combined range and in excess of that amount (up to 100% of its assets) during temporary defensive periods. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Growth Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Janus Aspen Series Long-term capital growth consistent with Janus Capital Growth Portfolio the preservation of capital and pursues its Corporation objective by investing in common stocks of companies of any size. Emphasizes larger, more established issuers. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Janus Aspen Series Long-term growth of capital by investing Janus Capital Capital Appreciation primarily in common stocks of companies of Corporation Portfolio any size. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- The Alger American Long-term capital appreciation. Except Fred Alger Fund during temporary defensive periods, this Management, Inc. Alger American portfolio invests at least 65% of its total Growth Portfolio assets in equity securities of companies that, at the time of purchase have a total market capitalization of $1 billion or greater - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable Capital appreciation by investing mainly in Fidelity Insurance Products equity securities of companies believed to Management & Fund II be undervalued or out-of-favor. Research Company VIP II Contrafund Portfolio - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable Capital appreciation by normally purchasing Fidelity Insurance Products common stocks, although its investments are Management & Fund not restricted to any one type of Research Company VIP Growth Portfolio security. Capital appreciation may also be found in other types of securities, including bonds and preferred stocks. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Oppenheimer Capital appreciation normally through OppenheimerFunds, Variable Account purchases in common stocks, although its Inc. Funds investments are not restricted to any one Growth Portfolio type of security. Capital appreciation may also be found in other types of securities including bonds and preferred stocks - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable Capital growth by investing primarily in Fidelity Insurance Products common stock and securities convertible to Management & Fund III common stock. Research Company VIP III Growth Opportunities Portfolio - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Goldman Sachs Long-term capital appreciation, primarily Goldman Sachs Variable Insurance through equity securities of companies with Asset Management Trust public stock market capitalization between Mid Cap Equity Fund $500 million and $10 billion at the time of investment. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investment Funds Provides long term growth of capital GE Investment Value Equity Fund appreciation by investing primarily in Management common stock and other equity Incorporated securities of companies undervalued by the (Subadvised by NWQ market and offer above-average growth Investment potential. Management Company) - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Growth and Income Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Federated Insurance Long-term growth of capital and a secondary Federated Series objective of providing income. Seeks to Advisors American Leaders achieve its objective by investing, under Fund II normal circumstances, at least 65% of its total assets in common stock of "blue chip" companies. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investment Funds Long-term growth of capital through GE Investment U.S. Equity Fund investments primarily in equity securities Management of U.S. companies. Incorporated - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Goldman Sachs Long-term capital growth and growth of Goldman Sachs Variable Insurance income, primarily through equity securities Asset Management Trust that, in the management team's view, offer Growth and Income favorable capital appreciation and/or Fund dividend-paying ability. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Salomon Brothers Long-term growth of capital with current Salomon Brothers Variable Series Funds income as a secondary objective, primarily Asset Management Investors Fund through investments in common stocks of Inc (currently not well-known companies. available in California and may not be available in all markets) - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable Reasonable income by investing primarily in Fidelity Insurance Products income-producing equity securities. In Management & Fund choosing these securities, the Portfolio Research Company VIP Equity-Income will also consider the potential for Portfolio capital appreciation. The portfolio's goal is to achieve a yield, which exceeds the composite yield on the securities comprising the Standard & Poor's Composite Index of 500 Stocks. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable High total return through a combination of Fidelity Insurance Products current income and capital appreciation by Management & Fund III investing mainly in equity securities. Research Company VIP III Growth & Income Portfolio - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investments Funds Provides capital appreciation and GE Investment S&P 500(1) Index Fund accumulation of income that corresponds to Management the investment return of the Standard & Incorporated Poor's 500 Composite Stock Price Index, (Subadvised by through investment in common stocks traded State Street on the New York Stock Exchange and the Global Advisors) American Stock Exchange, to a limited extent, in the over-the-counter markets. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- International Stock Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Janus Aspen Series Long-term growth of capital primarily Janus Capital International Growth through investments in common stocks of Corporation Portfolio issuers located outside the United States. The portfolio normally invests at least 65% of its total assets in securities of issuers from at least five different countries, excluding the United States. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Fidelity Variable Long-term growth of capital through Fidelity Insurance investments in foreign securities and Management & Products Fund provides a means for investors to diversify Research Company VIP Overseas their own portfolios by participating in Portfolio companies and economies outside of the United States. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investments Funds Long-term capital appreciation by investing GE Investment International Equity primarily in equity and equity-related Management Fund securities of companies that are organized Incorporated outside of the U.S. or whose securities are principally traded outside the U.S. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - -------- (1) "Standard & Poor's," "S&P," and "S&P 500" are trademarks of The Mc-Graw Hill Companies, Inc. and have been licensed for use by GE Investment Management Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no representation or warranty, express or implied, regarding the advisability of investing in this Fund or the Policy. Corporate Bond Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Oppenheimer High level of current income and capital OppenheimerFunds, Variable Account growth when consistent with its primary Inc. Funds objective. Under normal conditions this Bond Fund fund will invest at least 65% of its total assets in investment grade debt securities. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Salomon Brothers High level of current income with capital Salomon Brothers Variable Series Funds appreciation as a secondary objective, Asset Management Strategic Bond Fund through a globally diverse portfolio of Inc (currently not fixed-income investments, including available in lower-rated fixed income securities California and may commonly known as junk bonds. not be available in all markets) - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investments Funds Maximum income consistent with prudent GE Investment Income Fund investment management and preservation of Management capital by investing primarily in Incorporated income-bearing debt securities and other income bearing instruments. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- High Yield Bond Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Oppenheimer High current income from investments in OppenheimerFunds, Variable Account high yield fixed income securities, Inc. Funds including unrated securities or high risk High Income Fund securities in lower rating categories. These securities may be considered speculative. This Fund may have substantial holdings of lower-rated debt securities or "junk" bonds. The risks of investing in junk bonds are described in the prospectus for the Oppenheimer Variable Account Funds, which should be read carefully before investing. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Federated Insurance High current income by investing primarily Federated Series in a diversified portfolio of Advisers High Income Bond professionally managed fixed-income Fund II securities. The fixed income securities in which the Fund intends to invest are lower-rated corporate debt obligations, commonly referred to as "junk bonds". The risks of these securities are described in the prospectus for the Federated Insurance Series, which should be read careful before investing. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Specialty Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Federated Insurance High current income and moderate capital Federated Series appreciation by investing primarily in Advisers Utility Fund II equity and debt securities of utility companies. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investments Funds Maximum total return through current income GE Investment Real Estate and capital appreciation by investing Management Securities Fund primarily in securities of U.S. issuers Incorporated that are principally engaged in or related (Subadvised by to the real estate industry including those Seneca Capital that own significant real estate assets. Management, L.L.C.) The portfolio will not invest directly in real estate. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Diversified Bond Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Janus Aspen Series Maximum total return consistent with Janus Capital Flexible Income preservation of capital. Total return is Corporation Portfolio expected to result from a combination of income and capital appreciation. The portfolio pursues its objective primarily by investing in any type of income-producing securities. This portfolio may have substantial holdings of lower-rated debt securities or "junk" bonds. The risks of investing in junk bonds are described in the prospectus for Janus Aspen Series, which should be read carefully before investing. - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Global Stock Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Janus Aspen Series Long-term capital growth in a manner Janus Capital Worldwide Growth consistent with the preservation of capital Corporation Portfolio by investing in a diversified portfolio of common stocks of foreign and domestic issuers of all sizes. Normally invests in at least five different companies including the United States - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Money Market Funds - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- GE Investments Funds Highest level of current income as is GE Investment Money Market Fund consistent with high liquidity and safety Management of principal by investing in high quality Incorporated money market securities. - -------------------------------------------------------------------------------------------
We will purchase shares of the portfolios at net asset value and direct them to the appropriate Investment Subdivisions of Account 4. We will redeem sufficient shares of the appropriate portfolios at net asset value to pay Death Benefits and surrender/partial surrender proceeds, to make income payments, or for other purposes described in the Policy. We automatically reinvest all dividend and capital gain distributions of the portfolios in shares of the distributing portfolios at their net asset value on the date of distribution. In other words, we do not pay portfolio dividends or portfolio distributions out to Owners as additional units, but instead reflect them in unit values. Shares of the Funds are not sold directly to the general public. They are sold to the Company, and may be sold to other insurance companies, for investment of the assets of the investment subdivisions established by those insurance companies to fund variable annuity and variable life insurance policies, or to retirement plans. When a Fund sells shares in any of its portfolios both to variable annuity and to variable life insurance separate accounts, it is said to engage in mixed funding. When a Fund sells shares in any of its portfolios to separate accounts of unaffiliated life insurance companies, it is said to engage in shared funding. Each Fund may engage in mixed and shared funding. Therefore, due to differences in redemption rates or tax treatment, or other considerations, the interests of various shareholders participating in a Fund could conflict. A Fund's Board of Directors will monitor for the existence of any material conflicts, and determine what action, if any, should be taken. See the Prospectuses for the Funds. Changes to Account 4 and the Investment Subdivisions We reserve the right, within the law, to make additions, deletions and substitutions for the Funds and/or any portfolios within the Funds in which Account 4 participates. (We may substitute shares of other portfolios for shares already purchased, or to be purchased in the future, under the Policy. This substitution might occur if shares of a portfolio should no longer be available, or if investment in any portfolio's shares should become inappropriate, in the judgment of our management, for the purposes of the Policy.) No substitution of the shares attributable to your account may take place without notice to you and before approval of the SEC, in accordance with the 1940 Act. We also reserve the right to establish additional Investment Subdivisions, each of which would invest in a separate portfolio of a Fund, or in shares of another investment company, with a specified investment objective. We may also eliminate one or more Investment Subdivisions if, in our sole discretion, marketing, tax, or investment conditions warrant. If permitted by law, we may deregister Account 4 under the 1940 Act in the event such registration is no longer required; manage Account 4 under the direction of a committee; or combine Account 4 with other separate accounts of the Company. Further, to the extent permitted by applicable law, we may transfer the assets of Account 4 to another separate account. The Guarantee Account Due to certain exemptive and exclusionary provisions, we have not registered interests in the Guarantee Account under the Securities Act of 1933 (the "1933 Act"), and we have not registered either the Guarantee Account or our General Account as an investment company under the Investment Company Act of 1940 (the "1940 Act"). Accordingly, neither the interests in the Guarantee Account, nor our General Account are generally subject to regulation under the 1933 Act and the 1940 Act. Disclosures relating to the interests in the Guarantee Account, and the General Account, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy of statements made in a registration statement. You may allocate some or all of your net premium payments and Bonus Credits, and transfer some or all of your Account Value, to the Guarantee Account. We credit the portion of the Account Value allocated to the Guarantee Account with interest (as described below). Account Value in the Guarantee Account is subject to some, but not all, of the charges we assess in connection with the Policy. See Charges and Other Deductions. Each time you allocate net premium payments and Bonus Credits, or transfer Account Value to the Guarantee Account, we establish an interest rate Guarantee Period. Your net premium payment and its accompanying Bonus Credits will share the same Guarantee Period. We guarantee each Guarantee Period an interest rate for a specified period of time. At the end of the Guarantee Period, a new interest rate will become effective, and a one year Guarantee Period will commence for the remaining portion of that particular allocation. We determine interest rates in our sole discretion. The determination made will be influenced by, but not necessarily correspond to, interest rates available on fixed income investments which we may acquire with the amounts we receive as premium payments or transfers of Account Value under the Policies. You will have no direct or indirect interest in these investments. We also will consider other factors in determining interest rates for a Guarantee Period including, but not limited to, regulatory and tax requirements, sales commissions, and administrative expenses borne by us, general economic trends, and competitive factors. Amounts you allocate to the Guarantee Account will not share in the investment performance of our General Account, or any portion thereof. We cannot predict or guarantee the level of interest rates in future guarantee periods. However, the interest rates for any interest guarantee period will be at least the guaranteed interest rate shown in your policy. We will notify Owners in writing at least 10 days prior to the expiration date of any Guarantee Period about the then currently available Guarantee Periods and the Guaranteed Interest Rates applicable to such Guarantee Periods. A new one year Guarantee Period will commence automatically unless we receive written notice prior to the end of the 30 day period following the expiration of the Guarantee Period ("30 day window") of your election of a different Guarantee Period from among those being offered by us at that time, or instructions to transfer all or a portion of the remaining amount to one or more Investment Subdivisions subject to certain restrictions. (See Transfers Before the Maturity Date.) During the 30 day window, the allocation will accrue interest at the new Guarantee Period's interest rate. To the extent permitted by law, we reserve the right at any time to offer Guarantee Periods that differ from those available when we issued the Policy, and to credit bonus interest on premium payments allocated to a Guarantee Account participating in the Dollar-Cost Averaging Program. (This may not be available to all classes of Policies.) We also reserve the right, at any time, to stop accepting premium payments or transfers of Account Value to a particular Guarantee Period. Since the specific Guarantee Periods available may change periodically, please contact our Home Office to determine the Guarantee Periods currently being offered. Charges and Other Deductions All of the charges described in this section apply to Account Value allocated to Account 4. Account Value in the Guarantee Account is subject to all of the charges described in this section except for the mortality and expense risk charge and the administrative expense charge. We will deduct the charges described below to cover our costs and expenses, services provided and risks assumed under the Policies. We incur certain costs and expenses for the distribution and administration of the Policies and for providing the benefits payable thereunder. More particularly, our administrative services include: processing applications for and issuing the Policies, processing purchases and redemptions of portfolio shares as required, maintaining records, administering annuity payouts, furnishing accounting and valuation services (including the calculation and monitoring of daily Investment Subdivision values), reconciling and depositing cash receipts, providing Policy confirmations, providing toll-free inquiry services and furnishing telephone fund transfer services. The risks we assume include: the risk that the Death Benefit will be greater than the Surrender Value; the risk that the actual life-span of persons receiving income payments under Policy guarantees will exceed the assumptions reflected in our guaranteed rates (these rates are incorporated in the Policy and cannot be changed); the risk that more Owners than expected will qualify for waivers of the surrender charges; and the risk that our costs in providing the services will exceed our revenues from Policy charges (which cannot be changed by us). 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, the surrender charge collected may not fully cover all of the sales and distribution expenses actually incurred by us. Further, we may realize a profit on one or more of the charges. We may use any such profits for any corporate purpose, including the payment of sales expenses. Deductions from Account 4 We deduct from Account 4 an amount, computed daily, which is equal to an annual rate of 1.55% of the daily net asset value. The charge consists of an administrative expense charge at an effective annual rate of .25% and a mortality and expense risk charge at an effective annual rate of 1.30%. Guaranteed Minimum Death Benefit Charge We will assess an annual charge of not more than .35% of the prior year's average guaranteed minimum death benefit for expenses related to the Death Benefit available under the terms of the optional Guaranteed Minimum Death Benefit Rider ("GMDB Rider"). The current rate at the time your GMDB Rider becomes effective will apply until coverage under the Rider is terminated. We deduct this charge against the Account Value in Account 4 on each Policy anniversary and at surrender to compensate us for the increased risks associated with providing the enhanced Death Benefit. If the Guarantee Account is available under the Policy and the Account Value in Account 4 is not sufficient to cover the charge for the Guaranteed Minimum Death Benefit Rider, we will deduct the charge in Account 4 first from the available Account Value in Account 4, and then from the Guarantee Account. Charges from the Guarantee Account will be taken from the amounts that have been in the Guarantee Account for the longest period of time. The charge at full surrender will be a pro-rata portion of the annual charge. Policy Maintenance Charge We will deduct an annual charge of $25 annually from the Account Value of each Policy to compensate us for certain administrative expenses incurred in connection with the Policies. We will deduct the charge at each Policy anniversary and at full surrender. We will waive this charge if your Account Value at the time of deduction is at least $10,000. We will allocate the annual Policy Maintenance Charge among the Investment Subdivisions in the same proportion that the Policy's Account Value in each Investment Subdivision bears to the total Account Value in all Investment Subdivisions at the time the charge is made. If there is insufficient Account Value allocated to Account 4, we will deduct any remaining portion of the charge from the Guarantee Account from the amounts that have been in the Guarantee Account for the longest period of time. Other allocation methods may be available upon request. Surrender Charge We assess a surrender charge (except as described below) on partial and full surrenders of premium payments. You pay this charge to compensate us for the losses we experience on Policy distribution costs when Owners surrender or partially surrender. We calculate the surrender charge separately for each premium payment to which a charge applies. For purposes of calculating this charge, we assume that premium payments are withdrawn on a first in-first out basis. We deduct the surrender charge proportionately from the Investment Subdivisions. However, if there is no Account Value in Account 4, we will deduct the charge from the Guarantee Account. The surrender charge is as follows: Surrender charge as a percentage of the surrendered or partially surrendered premium payment Year Percentage Number of full and partially completed years since the premium 1 8% payment was received 2 8% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9 or more 0% We do not assess the surrender charge: o on amounts representing gain (as defined below); o on free withdrawal amounts (as defined below); o if the surrender is taken under optional payment plan 1, optional payment plan 2 (for a period of 5 or more years) , or optional payment plan 5; o if a waiver of surrender charge provision applies; or o upon the death of the Annuitant. You may withdraw your gain under your Policy free of any surrender charge. We calculate gain under the Policy as: (a) plus (b) minus (c) minus (d), but not less than zero where: (a) is the Account Value on the date we receive your surrender request; (b) is the total of any partial surrenders previously taken; (c) is the total of premium payments made; and (d) is the total of any gain previously surrendered. In addition to any gain, you may withdraw an amount equal to 10% of your total premium payments each Policy year without a surrender charge ("free withdrawal amount"). The free withdrawal amount is not cumulative from Policy year to Policy year. Further, we will waive the surrender charge if you annuitize under Optional Payment Plan 1 (Life Income with Period Certain), Optional Payment Plan 2 (Income for a Fixed Period), provided that you select a fixed period of 5 years or more, or Optional Payment Plan 5 (Joint Life and Survivor Income). See Optional Payment Plans. We also will waive surrender charges arising from a surrender occurring before income payments begin if, at the time we receive the surrender request, we have received due proof that the Annuitant has a qualifying terminal illness, or has a qualifying confinement to a state licensed or legally operated hospital or inpatient nursing facility for a minimum period as set forth in the Policy (provided the confinement began, or the illness was diagnosed, at least one year after the Policy Date). If you surrender the policy under the terminal illness waiver, please remember that you will be paid the Account Value, which could be less than the Death Benefit otherwise available. The terms and conditions of the waivers are set forth in your Policy. Deductions for Premium Taxes Any premium tax or other tax levied by any governmental entity as a result of the existence of the Policies or Account 4 will be deducted from Account Value when incurred, or at another time of our choosing. 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 generally depend upon the law of your state of residence. The tax generally ranges from 0.0% to 3.5%. Other Charges and Deductions There are deductions from and expenses paid out of the assets of each Fund that are more fully described in each Fund's Prospectus. Additional Information We may reduce or eliminate the administrative expense and surrender charges described previously for any particular Policy. However, we will reduce these charges only to the extent that we anticipate lower distribution and/or administrative expenses, or that we perform fewer sales or administrative services than those originally contemplated in establishing the level of those charges. Lower distribution and administrative expenses may be the result of economies associated with (1) the use of mass enrollment procedures, (2) the performance of administrative or sales functions by the employer, (3) the use by an employer of automated techniques in submitting deposits or information related to deposits on behalf of its employees or (4) any other circumstances which reduce distribution or administrative expenses. We will state the exact amount of administrative expense and surrender charges applicable to a particular Policy in that Policy. The Policy The Policy is an individual flexible deferred variable annuity Policy. Your rights and benefits are described below and in the Policy. There may be differences in your Policy because of requirements of the State where we issued your Policy. We will include any such differences in your Policy. Purchase of the Policy If you wish to purchase a Policy, you must apply for it through a sales representative authorized by us. The completed application is sent to us and we decide whether to accept or reject it. If we accept the application, our legally authorized officers prepare and execute a Policy. We then send the Policy to you through your sales representative. See Distribution of the Policies. If we receive a completed application and all other information necessary for processing a purchase order, we will apply an initial premium payment no later than two business days after we receive the order. While attempting to finish an incomplete application, we may hold the initial premium payment for no more than five business days. If the incomplete application cannot be completed within those five days, we will inform you of the reasons, and will return your premium payment immediately (unless you specifically authorize us to keep it until the application is complete). Once you complete your application, we must apply the initial premium payment within two business days. To apply for a Policy, you must be of legal age in a state where we may lawfully sell the Policies and also be eligible to participate in any of the qualified or non-qualified plans for which the Policies are designed. The Annuitant cannot be older than age 80, unless we approve a different age. Ownership As Owner, you have all rights under the Policy, subject to the rights of any irrevocable beneficiary. According to Virginia law, the assets of Account 4 are held for the exclusive benefit of all Owners and their Designated Beneficiaries. Qualified Policies may not be assigned or transferred except as permitted by the Employee Retirement Income Security Act (ERISA) of 1974 and upon written notification to us. We assume no responsibility for the validity or effect of any assignment. Consult your tax advisor about the tax consequences of an assignment. If you name a Joint Owner in the application, we will treat the Joint Owners as having equal undivided interests in the Policy. All Owners must together exercise any ownership rights in this Policy. Premium Payments You may make premium payments to us at a frequency and in the amount you selected. You must obtain our prior approval before you make total premium payments for an Annuitant age 79 or younger that exceed $2,000,000. If the Annuitant is age 80 or older at the time of payment, the total amount not subject to prior approval is $1,000,000. Payments may be made or, if stopped, resumed at any time until the Maturity Date, the surrender of the Policy, or the death of the Owner (or Joint Owner, if applicable), whichever comes first. We reserve the right to refuse to accept a premium payment for any lawful reason. The minimum initial premium payment is $10,000. We may accept a lower initial premium payment in the case of certain group sales. Each additional premium payment must be at least $1,000 for non-qualified Policies, $100 for qualified Policies, or $50 for IRA Policies. Valuation Day We will value Accumulation and Annuity Units once daily at the close of trading (currently 4:00 p.m., New York time) on each day the New York Stock Exchange is open except for days on which a fund does not value its shares (Valuation Day). On any date other than a Valuation Day, the Accumulation Unit value and the Annuity Unit value will not change. Allocation of Premium Payments We place net premium payments and Bonus Credits (described below) into Account 4's Investment Subdivisions, each of which invests in shares of a corresponding portfolio of the Funds, and/or the Guarantee Account, according to your instructions. However, in those states which require that premium payments be returned during the free look period (see Return Privilege), we will place your premium payments allocated to Account 4 in the Money Market Investment Subdivision (which is the Investment Subdivision that invests in the Money Market Fund of GE Investments Funds, Inc.). At the end of the free look period, if we allocated your initial premium payment to the Money Market Investment Subdivision, we will transfer the value of what is in the Money Market Investment Subdivision to the Investment Subdivisions you specified in your application. Solely for the purpose of processing transfers from the Money Market Investment Subdivision, we will deem the free look period to end 15 days after the Policy Date. This transfer from the Money Market Investment Subdivision to the other Investment Subdivisions upon the expiration of the free look period does not count as a transfer for any other purposes under the Policy. The percentage of any premium payment and Bonus Credit which you can put into any one Investment Subdivision or Guarantee Period must equal at least 1%. Upon allocation to the appropriate Investment Subdivision, we convert net premium payments into Accumulation Units. We determine the number of Accumulation Units credited by dividing the amount allocated to each Investment Subdivision by the value of an Accumulation Unit for that Investment Subdivision on the Valuation Day on which we receive the premium payment at our Home Office if received before 4:00 p.m., New York time. If we receive the premium payment at or after 4:00 p.m., New York time, we will use the Accumulation Unit value computed on the next Valuation Day. The number of Accumulation Units determined in this way is not changed by any subsequent change in the value of an Accumulation Unit. However, the dollar value of an Accumulation Unit will vary depending not only upon how well the portfolio's investments perform, but also upon the expenses of Account 4 and the portfolios. Bonus Credits For most Policies, we will add a Bonus Credit to each premium payment we receive. (The Bonus Credit is referred to as an "enhanced premium amount" in your Policy.) We fund this credit from our General Account. For each premium payment you make, we will add 4% of that premium payment to your Account Value, provided the Annuitant was age 80 or younger when we issued the Policy. For Annuitants age 81 or older at the time of issue, we will not pay any Bonus Credits. We apply the Bonus Credits when we apply your premium payment to your Account Value, and allocate the credits on a pro-rata basis to the investment options you select in the same ratio as the applicable premium payment. Bonus Credits are not considered "premium payments" for purposes of the Policy. Valuation of Accumulation Units Accumulation Units for each Investment Subdivision are valued separately. Initially, the value of each Accumulation Unit was set arbitrarily at $10.00. Thereafter, the value of an Accumulation Unit in any Investment Subdivision for a Valuation Period equals the value of an Accumulation Unit in that Investment Subdivision as of the preceding Valuation Period multiplied by the net investment factor of that Investment Subdivision for the current Valuation Period. The net investment factor is an index used to measure the investment performance of an Investment Subdivision from one Valuation Period to the next. The net investment factor for any Investment Subdivision for any Valuation Period reflects the change in the net asset value per share of the portfolio held in the Investment Subdivision from one Valuation Period to the next, adjusted for the daily deduction of the administrative expense and mortality and expense risk charges from assets in the Investment Subdivision. If any "ex-dividend" date occurs during the Valuation Period, we take into account the per share amount of any dividend or capital gain distribution so that the unit value is not impacted. Also, if any taxes need to be reserved, we take into account a per share charge or credit for any taxes reserved for, which we determine to have resulted from the operations of the Investment Subdivision. Transfers Before the Maturity Date Prior to the earlier of the surrender of the Policy, payment of any Death Benefit, or the Maturity Date, you may transfer all or a portion of your investment between and among the Investment Subdivisions of Account 4 and the Guarantee Account subject to certain conditions. Transfers among the Investment Subdivisions of Account 4 and from an Investment Subdivision to a Guarantee Account are made as of the end of the Valuation Period that we receive the transfer request at our Home Office. We may postpone transfers to, from, or among the Investment Subdivisions of Account 4 under certain circumstances. See Requesting Payments. We restrict transfers from any particular allocation of a Guarantee Account to an Investment Subdivision. You may make such transfers only during the 30 day period beginning with the end of the preceding Guarantee Period applicable to that particular allocation. We also may limit the amount which you may transfer to the Investment Subdivisions. However, for any particular allocation to an Investment Subdivision, the limited amount will not be less than any accrued interest on that allocation plus 25% of the original amount of that allocation. Further, we may restrict certain transfers from an Investment Subdivision. We reserve the right to limit the number of transfers from an Investment Subdivision to the Guarantee Account made during the six month period following the transfer of any amount from a Guarantee Account to any Investment Subdivision. Currently, there is no limit on the number of transfers between and among Investment Subdivisions of Account 4 and the Guarantee Account; however, we reserve the right to limit the number of transfers each calendar year to twelve, or if it is necessary for the Policy to continue to be treated as an annuity policy by the Internal Revenue Service, a lower number. Currently, all transfers under the Policy are free. However, we reserve the right to assess a fee of $10 per transfer. The minimum transfer amount is $100 or the entire balance in the Investment Subdivision or Guarantee Period if the transfer will leave a balance of less than $100. We may not honor a transfer request: (i) if any of the Investment Subdivisions that would be affected by the transfer is unable to purchase or redeem shares of the Fund in which the Investment Subdivision invests; (ii) if the transfer is a result of more than one trade involving the same Investment Subdivision within a 30 day period; or (iii) if the transfer would adversely affect accumulation unit values. We also may not honor transfers made by third parties holding multiple powers of attorney. (See Powers of Attorney.) When thinking about a transfer of Account Value, you should consider the inherent risk involved. Frequent transfers based on short-term expectations may increase the risk that you will make a transfer at an inopportune time. Telephone Transfers We permit telephone transfers. We may be liable for losses resulting from unauthorized or fraudulent telephone transfers if we fail to employ reasonable procedures to confirm that the telephone instructions that we receive are genuine. Therefore, we will employ means to prevent unauthorized or fraudulent telephone requests, such as sending written confirmation, recording telephone requests, and/or requesting other identifying information. In addition, we may require written authorization before allowing you to make telephone transfers. We reserve the right to limit telephone transfers. To request a telephone transfer, you should call our telephone transfer line. We will record all telephone transfer requests. We will execute transfer requests received prior to the close of the New York Stock Exchange that Valuation Day at that day's prices. We will execute requests received after that time on the next Valuation Day at that day's prices. Powers of Attorney As a general rule and as a convenience to you, we allow the use of powers of attorney whereby you give third parties the right to effect transfers on your behalf. However, when the same third party possesses powers of attorney executed by many Owners, the result can be simultaneous transfers involving large amounts of Account Value. Such transfers can disrupt the orderly management of the Funds underlying the Policy, can result in higher costs to Owners, and are generally not compatible with the long-range goals of Owners. We believe that such simultaneous transfers effected by such third parties are not in the best interests of all shareholders of the Funds underlying the Policies, and the management of the Funds share this position. Therefore, as described in your Policy, we may limit transfers made by a third party holding multiple powers of attorney. Dollar-Cost Averaging The dollar-cost averaging program permits you to systematically transfer on a monthly or quarterly basis a set dollar amount from the Money Market Investment Subdivision and/or the Guarantee Account to any combination of other Investment Subdivisions (as long as the total number of Investment Subdivisions used does not exceed the maximum number allowed under the Policy). The dollar-cost averaging method of investment is designed to reduce the risk of making purchases only when the price of units is high, but you should carefully consider your financial ability to continue the program over a long enough period of time to purchase Accumulation Units when their value is low as well as when it is high. Dollar-cost averaging does not assure a profit or protect against a loss. You may participate in the dollar-cost averaging program by selecting the program on the application, completing a dollar-cost averaging agreement , or calling our Home Office. To use the dollar-cost averaging program, you must transfer at least $100 from an Investment Subdivision or a Guarantee Period with each transfer. Once elected, dollar-cost averaging remains in effect from the date we receive your request until the value of the Investment Subdivision or the Guarantee Period from which transfers are being made is depleted, or until you cancel the program by written request or by telephone if we have your telephone authorization on file. With regard to dollar-cost averaging from the Guarantee Account, we reserve the right to determine the amount of each automatic transfer. We reserve the right to transfer any remaining portion of an allocation used for dollar-cost averaging to a Guarantee Account with a new Guarantee Period upon termination of the dollar-cost averaging program for that allocation. There is no additional charge for dollar-cost averaging. We reserve the right to discontinue offering or to modify the dollar-cost averaging program at any time and for any reason. Asset Allocation You may select from five asset allocation model portfolios offered by us, or you may use a model offered by us as a guide to help you develop your own asset allocation program. The models designed by us are as follows: Model Investment and Risk Profile 1 Income 2 Enhanced Income 3 Growth & Income 4 Growth 5 Aggressive Growth If you elect to participate in the asset allocation program, we will automatically allocate all premium payments among the Investment Subdivisions indicated by the model and the Funds within the model you select. The models do not include allocation to the Guarantee Account. Although you may use only one model at a time, you may elect to change your selection as your tolerance for risk, needs, and/or objectives change. You may use a questionnaire that we offer to determine the model that best meets your risk tolerance and time horizons. Asset allocation does not guarantee a profit or protect against a loss. Because each Investment Subdivision performs differently over time, your portfolio mix may vary from its initial allocations. You may elect to have the portfolios automatically rebalanced under our portfolio rebalancing program, described below. From time to time, we will review the models and may find that allocation percentages among the Investment Subdivisions or even some of the Investment Subdivisions within a particular model need to be changed. We will send you notice that such a change has been made. Unless you elect to participate in the new allocation model you will remain in your current designated allocation model. This change will not be made automatically. There is no additional charge for the asset allocation program. We reserve the right to discontinue offering this program at any time and for any reason. Portfolio Rebalancing Program Once your money has been allocated among the Investment Subdivisions, the performance of each Investment Subdivision may cause your allocation to shift. You may instruct us to automatically rebalance (on a quarterly, semi-annual or annual basis) your Account Value among the Investment Subdivisions to return to the percentages specified in your allocation instructions. The program does not include allocations to the Guarantee Account. You may elect to participate in the portfolio rebalancing program at any time by completing the portfolio rebalancing agreement. Your percentage allocations must be in whole percentages. Subsequent changes to your percentage allocations may be made at any time by written or telephone instructions to the Home Office. Once elected, portfolio rebalancing remains in effect from the date we receive your written request until you instruct us to discontinue portfolio rebalancing. There is no additional charge for using portfolio rebalancing, and we do not consider a portfolio rebalancing transfer a transfer for purposes of assessing a transfer processing fee or calculating the maximum number of transfers permitted in a calendar year. We reserve the right to discontinue offering the portfolio rebalancing program at any time and for any reason. Portfolio rebalancing does not guarantee a profit or protect against a loss. Surrenders and Partial Surrenders Subject to the rules discussed below, we will allow the surrender of the Policy or a withdrawal of the Account Value at any time before the Maturity Date upon your written request. Surrender or partial surrender rights after the Maturity Date depend upon the income payment Option you select. We will not permit a partial surrender that is less than $500 or that reduces Account Value to less than $10,000. If your partial surrender request would reduce Account Value to less than $10,000, we will surrender only that amount of Account Value that would reduce the remaining Account Value to $10,000 and deduct any surrender charge from the amount surrendered. The amount payable on full surrender of the Policy is the Surrender Value at the end of the Valuation Period during which we receive the request. The Surrender Value equals the Account Value on the date we receive a request for surrender less any applicable surrender charge and GMDB charge and less any applicable premium tax. We may pay the Surrender Value in a lump sum or under one of the optional payment plans specified in the Policy. You may indicate, in writing, from which Investment Subdivisions or Guarantee Periods we are to take your partial surrender. If you do not so specify, we will deduct the amount of the partial surrender first from the Investment Subdivisions of Account 4 on a pro-rata basis, in proportion to the Account Value in Account 4. We will deduct any remaining amount from the Guarantee Account. We will take deductions from the Guarantee Account from the amounts (including any interest credited to such amounts) which have been in the Guarantee Account for the longest period of time. Please remember that a partial surrender will reduce the Death Benefit by the proportion that the partial surrender (including any applicable surrender charge) reduced Account Value. Restrictions on Distributions from Certain Policies Section 830.105 of the Texas Government Code permits participants in the Texas Optional Retirement Program ("ORP") to withdraw their interest in a variable annuity contract issued under the ORP only upon (i) termination of employment in the Texas public institutions of higher education, (ii) retirement, (iii) death, or (iv) the participant's attainment of age 70 1/2. Accordingly, before we distribute any amounts from these Policies, you must furnish us proof that one of these four events has occurred. Systematic Withdrawals At any time after 30 days from the Policy Date, you may elect in writing on a form provided by us to take systematic withdrawals of a specified dollar amount (in equal installments of at least $100) on a monthly, quarterly, semi-annual or annual basis. Your systematic withdrawals in a Policy year may not exceed the amount which is not subject to a surrender charge. You may provide specific instructions as to how we are to take the systematic withdrawals. If you have not provided specific instructions, or if your specific instructions cannot be carried out, we will process the withdrawals by first taking on a pro-rata basis Accumulation Units from all of the Investment Subdivisions in which you have an interest. To the extent that your Account Value in Account 4 is not sufficient to accomplish the withdrawal, we will take any Account Value you have in the Guarantee Account to accomplish the withdrawal. After your systematic withdrawals begin, you may change the frequency and/or amount of your payments, subject to the following: o only one such change may be requested in a calendar quarter; and o the total amount to be withdrawn over the next 12 months is limited to the maximum amount at the time you elected to change your systematic withdrawals. A systematic withdrawal program will terminate automatically when a systematic withdrawal would cause the remaining Account Value to be less than $10,000. If a systematic withdrawal would cause the Account Value to be less than $10,000, then that systematic withdrawal transaction will not be processed. You may discontinue systematic withdrawals at any time by notifying us in writing at our Home Office. When you consider systematic withdrawals, please remember that each systematic withdrawal is subject to federal income taxes on the taxable portion. In addition, you may be assessed a 10% federal penalty tax on systematic withdrawals if you are under age 59 1/2 at the time of the withdrawal. Both partial surrenders at your specific request and withdrawals pursuant to a systematic withdrawal program will count toward the limit of the amount that you may withdraw in any Policy year free under the free withdrawal privilege. We reserve the right to prohibit simultaneous systematic withdrawals and dollar-cost averaging. The Beneficiary You may select one or more primary and contingent Beneficiaries during your lifetime upon application and by filing a written request with our Home Office. Each change of Beneficiary revokes any previous designation. Death Benefit at Death of Annuitant If the Annuitant dies before income payments begin, regardless of whether the Annuitant is also an Owner or Joint Owner of the Policy, the amount of proceeds available is the Death Benefit (which may be referred to in our marketing materials as the "Annual EstateProtector"). Upon receipt of due proof of the Annuitant's death, the Death Benefit will constitute the new Surrender Value and we will treat it in accordance with instructions provided by the Owner, subject to distribution rules and termination of contract provisions described elsewhere. The Death Benefit equals the sum of (a) and (b) where: (a) is the Account Value as of the date we receive due proof of death, and (b) is the excess, if any, of the unadjusted Death Benefit (as defined below) as of the date of the Annuitant's death over the Account Value as of the date of the Annuitant's death, with interest credited on that excess from the date of the Annuitant's death to the date of distribution. The rate credited may depend on applicable law or regulation. Otherwise, it will be set by us. The unadjusted Death Benefit varies based on the Annuitant's age at the time the Policy is issued and on the Annuitant's age at the time of death. For a Policy issued with an Annuitant who was age 80 or younger on the Policy Date: 1. If the Annuitant dies during the first Policy year, the unadjusted Death Benefit is the greater of: (i) Account Value determined as of the date of the Annuitant's death; or (ii) the total of premium payments made adjusted by the proportion that any partial surrender (including applicable surrender charge) reduced Account Value and less any applicable premium tax. 2. If the Annuitant dies after the first Policy year but prior to the Policy anniversary that the Annuitant reaches age 80, the unadjusted Death Benefit is the greater of: (i) Account Value determined as of the date of the Annuitant's death; or (ii) the Policy's unadjusted Death Benefit on the previous Policy anniversary plus the total premium payments made since that date, less the proportion that any partial surrender (including applicable surrender charge) reduced Account Value and less any applicable premium tax. 3. If the Annuitant dies on or after the Policy anniversary the Annuitant reaches age 80, the unadjusted Death Benefit is the greater of: (i) Account Value determined as of the date of the Annuitant's death; or (ii) the unadjusted Death Benefit as of the Policy anniversary the Annuitant reached age 80 plus any premium payments made since that date, less the proportion that any partial surrender (including applicable surrender charge) reduced Account Value and less any applicable premium tax. Example: Assuming an Owner: (i) purchases a Policy for $100,000; (ii) makes no additional premium payments and no partial surrenders; (iii) is not subject to premium taxes; and (iv) the Annuitant's age is 70 on the Policy date then: Unadjusted Annuitant's End of Account Death Age Year Value Benefit 71 1 $103,000 $103,000 72 2 $110,000 $110,000 73 3 $ 80,000 $110,000 74 4 $120,000 $120,000 75 5 $130,000 $130,000 76 6 $150,000 $150,000 77 7 $160,000 $160,000 78 8 $130,000 $160,000 79 9 $ 90,000 $160,000 80 10 $170,000 $170,000 81 11 $140,000 $170,000 82 12 $190,000 $190,000 83 13 $150,000 $170,000 The purpose of this example is to show how the unadjusted Death Benefit works based on purely hypothetical values and is not intended to imply performance. For a Policy issued with an Annuitant who was age 81 or older on the Policy Date: The unadjusted Death Benefit is the Account Value determined as of the date of the Annuitant's death. Death of an Owner, Joint Owner, or Annuitant Before the Maturity Date General: In certain circumstances, Federal tax law requires that distributions be made under this Policy upon the first death of: o an Owner or Joint Owner, or o the Annuitant if any Owner is a non-natural entity (such as a trust or corporation). The discussion below describes the methods available for distributing the value of the Policy upon death. Designated Beneficiary: At the death of any Owner (or Annuitant, if any Owner is a non-natural entity), the person or entity first listed below who is alive or in existence on the date of that death will become the Designated Beneficiary: (1) Owner or Joint Owners. (2) primary beneficiary. (3) contingent beneficiary. (4) Owner's estate. The Designated Beneficiary will then be treated as the sole Owner of the Policy. If there is more than one Designated Beneficiary, each one will be treated separately in applying the tax law's rules described below. Distribution rules: The distributions required by Federal tax law differ depending on whether the Designated Beneficiary is the spouse of the deceased Owner (or of the Annuitant, if the Policy is owned by an entity). o Spouses - If the Designated Beneficiary is the surviving spouse of the deceased person, we will continue the Policy in force with the surviving spouse as the new Owner. If the deceased person was the Annuitant and there was no surviving Contingent Annuitant, the surviving spouse will automatically become the new Annuitant. At the death of the surviving spouse, this provision may not be used again, even if the surviving spouse remarries. In that case, the rules for non-spouses will apply. o Non-Spouses - If the Designated Beneficiary is not the surviving spouse of the deceased person, this Policy cannot be continued in force indefinitely. Instead, upon the death of any Owner (or Annuitant, if any Owner is a non-natural entity), payments must be made to (or for the benefit of) the Designated Beneficiary under one of the following payment choices: (1) Receive the Surrender Value in one lump sum payment upon receipt of due proof of death. (2) Receive the Surrender Value at any time during the five year period following the date of death. At the end of the five year period, we will pay in a lump sum payment any Surrender Value still remaining. (3) Apply the Surrender Value to provide a Monthly Income Benefit under Optional Payment Plan 1 or 2. The first Monthly Income Benefit payment must be made no later than one year after the date of death. Also, the Monthly Income Benefit payment period must be either the lifetime of the Designated Beneficiary or a period not exceeding the Designated Beneficiary's life expectancy. If no choice is made by the Designated Beneficiary within 30 days following receipt of due proof of death, we will use payment choice 2 (payment of the entire value of the Policy within 5 years of the date of death). Due proof of death must be provided within 90 days of the date of death. No further premium payments will be accepted after the non-spouse's death. If the Designated Beneficiary dies before the entire Surrender Value has been distributed, we will pay in a lump sum payment any Surrender Value still remaining to the person named by the Designated Beneficiary. If no person is so named, payment will be made to the Designated Beneficiary's estate. Under payment choices 1 or 2, the Policy will terminate upon payment of the entire Surrender Value. Under payment choice 3, this Policy will terminate when the Surrender Value is applied to provide a Monthly Income Benefit. Amount of the proceeds: If an Owner or Joint Owner dies and that person is someone other than the Annuitant, the amount of the proceeds available is the Surrender Value. If the Annuitant dies (whether or not he or she is an Owner or Joint Owner), the amount of the proceeds available is the Death Benefit. Upon receipt of due proof of the Annuitant's death, the Death Benefit will constitute the new Surrender Value and will be treated in accordance with the instructions provided by the Owner, subject to the distribution rules described above. Guaranteed Minimum Death Benefit Rider If an Annuitant dies prior to the Maturity Date while the Guaranteed Minimum Death Benefit Rider (the "GMDB Rider") is in effect, the Designated Beneficiary may elect the Death Benefit, described below, in lieu of the Surrender Value. (The death benefit under the GMDB Rider may be referred to in our marketing materials as the "Six Percent EstateProtector".) The Guaranteed Minimum Death Benefit Rider may not be available in all states or markets. If the GMDB Rider applies, the Death Benefit will be the greater of: (1) the Death Benefit described above under "Death Benefit at Death of Annuitant," and (2) the Guaranteed Minimum Death Benefit on the date we receive due proof of the Annuitant's death, or, if later, the date of the request. The Guaranteed Minimum Death Benefit is, on the Policy Date, equal to the initial premium payment. At the end of each Valuation Period after such date, the Guaranteed Minimum Death Benefit is the lesser of: (1) the total of all premium payments received, multiplied by two, less the proportion by which any partial surrenders (including applicable surrender charges) made prior to or during that Valuation Period reduced Account Value; or (2) the Guaranteed Minimum Death Benefit at the end of the preceding Valuation Period, increased as specified below, plus any additional premium payments during the current Valuation Period and less the proportion by which any partial surrender including any applicable surrender charge reduced Account Value during the current Valuation Period. The amount of the increase for the Valuation Period will be calculated by applying a factor to the Guaranteed Minimum Death Benefit at the end of the preceding Valuation Period. Until the anniversary on which the Annuitant attains age 80, the factor is determined for each Valuation Period at an effective annual rate of 6%, except that with respect to amounts invested in certain Investment Subdivisions shown in the Policy, the increase factor will be calculated as the lesser of: (1) the Net Investment Factor for the Valuation Period, minus one, and (2) a factor for the Valuation Period equivalent to an effective annual rate of 6%. Currently, these subdivisions include only the Money Market Investment Subdivision. With respect to amounts allocated to the Guarantee Account, we replace Item (1) above with a factor for the Valuation Period equivalent to the credited rate(s) applicable to such amounts. You may only purchase the GMDB Rider at the time of application. The Rider is effective on the Policy Date and will remain in effect while the Policy is in force and before income payments begin, or until the Policy anniversary following the date of receipt of the Owner's request to terminate the rider. There will be a charge made each year for expenses related to the Death Benefit available under the terms of the Guaranteed Minimum Death Benefit Rider. This charge will not exceed .35% of the prior year's average guaranteed minimum death benefit. (See Guaranteed Minimum Death Benefit Charge.) Income Payments When you apply for a Policy, you may select any Maturity Date permitted by law; however, this date can not be any later than the Policy anniversary following the Annuitant's 90th birthday, unless we approve it. (Please note the following exception: Policies issued under qualified retirement plans provide for income payments to start at the date and under the option specified in the plan.) We will pay a Monthly Income Benefit to the Owner beginning on the Maturity Date if the Annuitant is still living. We will pay the Monthly Income Benefit in the form of variable income payments similar to those described in Optional Payment Plan 1, Life Income with 10 Years Certain (automatic payment plan), using the sex and settlement age of the Annuitant instead of the payee, unless another election is made by the Owner. You may also choose to receive the Maturity Value in one lump sum (in which case we will cancel the Policy). Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer than ten years, payments will continue for his or her life. If the Annuitant dies before the end of ten years, the remaining payments for the ten year period will be discounted at the same rate used to calculate the monthly income. If the remaining payments are variable income payments, the amount of each payment to be discounted will be assumed equal to the value of the payment amount on the date we receive due proof of death. We will pay this discounted amount in one sum. The Policy also provides optional forms of annuity payments, each of which is payable on a fixed basis. Optional Payment Plans 1 and 5 also are available on a variable basis. The Policy provides that all or part of the Account Value may be used to purchase an annuity. If you elect fixed income payments, the guaranteed amount payable will earn interest at 3% compounded yearly. We may increase the interest rate which will increase the amount paid to you or the payee. If you elect variable income payments, your income payments, after the first payment, will reflect the investment experience of the Investment Subdivisions to which you allocated Account Value. Annuity payments will be made monthly unless you elect quarterly, semi-annual or annual installments. Under the Monthly Income Benefit and all of the Optional Payment Plans, if any payment made more frequently than annually 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. If the annual payment payable at maturity is less than $20, we will pay the Maturity Value in a lump sum. Upon making such a payment, we will have no future obligation under the Policy. Following are explanations of the Optional Payment Plans available. Optional Payment Plans Plan 1 -- Life Income with Period Certain. This option guarantees periodic payments during a designated period. If the payee lives longer than the minimum period, payments will continue for his or her life. The minimum period can be 10, 15, or 20 years. 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 provides for periodic payments to be made for a fixed period not longer than 30 years. Payments can be annual, semi-annual, quarterly, or monthly. 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 of a definite amount to be paid. Payments can be annual, semi-annual, quarterly, or monthly. The amount paid each year must be at least $120 for each $1,000 of proceeds. Payments will continue until the proceeds are exhausted. The last payment will equal the amount of any unpaid proceeds. If the payee dies, we will pay the amount of the remaining proceeds with earned interest in one sum to the payee's estate unless otherwise provided. Plan 4 -- Interest Income. This option provides for periodic payments of interest earned from the proceeds left with us. Payments can be annual, semi-annual, quarterly, or monthly. 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. This plan is not available under Qualified Policies. Plan 5 -- Joint Life and Survivor Income. This option provides for monthly payments to be made to two payees for a guaranteed minimum of 10 years. Each payee must be at least 35 years old when payments begin. Payments will continue as long as either payee is living. If both payees die before the end of the minimum period, we will discount the amount of the remaining payments for the 10-year period at the same rate used in calculating income payments. We will pay the discounted amount in one sum to the survivor's estate unless otherwise provided. If the payee is not a natural person, our consent must be obtained prior to selecting an Optional Payment Plan. Prior to the Maturity Date, you may change your Maturity Date to any date at least ten years after the last premium payment. You also may change your Optional Payment Plan or change the allocation of your investment among the Investment Subdivisions before your Maturity Date. Further, during the Annuitant's lifetime and before the Maturity Date, you may change the Owner, Joint Owner, primary Beneficiary, contingent Beneficiary, and contingent Annuitant upon written notice to the Home Office if you reserved this right. We must receive this request for a change in a form satisfactory to us. The change will take effect as of the date you sign the request. The change will be subject to any payment made before we recorded the change. Fixed income payments will begin on the date we receive due proof of the Annuitant's death, on surrender, or on the Policy's Maturity Date. Variable income payments will begin within seven days after the date payments would begin under the corresponding fixed option. 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. Variable Income Payments Variable income payments will be determined using: 1. The maturity value (which is the surrender value of the Policy on the date immediately preceding the Maturity Date); 2. The annuity tables contained in the Policy; 3. The Optional Payment Option selected; and 4. The investment performance of the portfolios selected. To determine the amount of payment, we make this calculation: 1. Determine the dollar amount of the first income payment; then 2. Allocate that amount to the Investment Subdivisions according to your instructions; then 3. Determine the number of Annuity Units for each Investment Subdivision by dividing the amount allocated by the Annuity Unit Value on the Valuation Day; and then 4. Calculate the value of the Annuity Units for each Investment Subdivision on the Valuation Day for each income payment thereafter. We assume an investment return of 3% per year, as applied to the applicable mortality table. The amount of each income payment after the initial income payment will depend upon how the portfolios perform, relative to the 3% assumed rate. Transfers After the Maturity Date After income payments begin, if variable income payments are being made, the payee may change the Investment Subdivisions from which payments are being made once each calendar year by exchanging Annuity Units of one Investment Subdivision for an equivalent dollar amount of Annuity Units of another Investment Subdivision. We will not assess a charge on such transfers. The transfer will be effective as of the end of the Valuation Period during which we receive written request at our Home Office. However, we reserve the right to limit the number of transfers if necessary for the Policy to continue to be treated as an annuity under the Code. We also reserve the right to refuse to execute any transfer if any of the Investment Subdivisions that would be affected by the transfer is unable to purchase or redeem shares of the Fund in which the Investment Subdivision invests or if the transfer would adversely affect Account Value. If the number of annuity units remaining in an Investment Subdivision after a transfer is less than 1, we will transfer the remaining balance in addition to the amount requested for the transfer. We do not permit transfers between the Investment Subdivisions and the Guarantee Account after the Maturity Date. Federal Tax Matters Introduction This part of the Prospectus discusses the Federal income tax treatment of the Policy. The Federal income tax treatment of the Policy is complex and sometimes uncertain. The Federal income tax rules may vary with your particular circumstances. This discussion does not address all of the Federal income tax rules that may affect you and your Policy. This discussion also does not address other Federal tax consequences, or state or local tax consequences, associated with a Policy. As a result, you should always consult a tax adviser about the application of tax rules to your individual situation. Taxation of Non-Qualified Policies This part of the discussion describes some of the Federal income tax rules applicable to Non-Qualified Policies. A Non-Qualified Policy is a Policy 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 Account Value until there is a distribution from the Policy. However, certain requirements must be satisfied in order for this general rule to apply, including: o An individual must own the Policy (or the tax law must treat the Policy as owned by an individual); o The investments of Account 4 must be "adequately diversified" in accordance with Internal Revenue Service ("IRS") regulations; o The Owner's right to choose particular investments for a Policy must be limited; and o The Policy's Maturity Date must not occur near the end of the Annuitant's life expectancy. This part of the Prospectus discusses each of these requirements. Policies not owned by an individual -- no tax deferral and loss of interest deduction: As a general rule, the Code does not treat a Policy that is owned by an entity (rather than an individual) as an annuity contract for Federal income tax purposes. The entity owning the Policy pays tax currently on the excess of the Account Value over the premiums paid for the Policy. Policies issued to a corporation or a trust are examples of Policies where the Owner pays current tax on the Policy's earnings. There are several exceptions to this rule. For example, the Code treats a Policy as owned by an individual if the nominal owner is a trust or other entity that holds the Policy as an agent for an individual. However, this exception does not apply in the case of any employer that owns a Policy to provide deferred compensation for its employees. In the case of a Policy issued after June 8, 1997 to a taxpayer that is not an individual, or a Policy 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 Account Value. Entities that are considering purchasing the Policy, or entities that will benefit from someone else's ownership of a Policy, should consult a tax advisor. Investments in Account 4 must be diversified: For a Policy to be treated as an annuity contract for Federal income tax purposes, the investments of a separate account such as Account 4 must be "adequately diversified." The IRS has issued regulations that prescribe standards for determining whether the investments of Account 4 are adequately diversified. If Account 4 fails to comply with these diversification standards, the Owner could be required to pay tax currently on the excess of the Account Value over the premiums paid for the Policy. Although we do not control the investments of all of the Funds (the Company only indirectly controls those of GE Investments Funds, Inc., through an affiliated company), we expect that the Funds will comply with the IRS regulations so that Account 4 will be considered "adequately diversified." Restrictions on the extent to which an Owner can direct the investment of Account Values: Federal income tax law limits the Owner's right to choose particular investments for the Policy. The U.S. Treasury Department stated in 1986 that it expected to issue guidance clarifying those limits, but it has not yet done so. Thus, the nature of the limits is currently uncertain. As a result, an Owner's right to allocate Account Values among the portfolios may exceed those limits. If so, the Owner would be treated as the owner of the assets of Account 4 and thus subject to current taxation on the income and gains from those assets. The Company does not know what limits the Treasury Department may set forth in any guidance that the Treasury Department may issue or whether any such limits will apply to existing Policies. The Company therefore reserves the right to modify the Policy without the Owners' consent to attempt to prevent the tax law from considering the Owners as the owners of the assets of Account 4. 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 premiums paid and earnings. If annuity payouts under the Policy begin or are scheduled to begin on a date past the Annuitant's 85th birthday, it is possible that the tax law will not treat the Policy as an annuity contract for Federal income tax purposes. In that event, the Owner would be currently taxable on the excess of the Account Value over the premiums paid for the Policy. No Guarantees Regarding Tax Treatment: The Company makes no guarantees regarding the tax treatment of any Policy or of any transaction involving a Policy. However, the remainder of this discussion assumes that your Policy will be treated as an annuity contract for Federal income tax purposes and that the tax law will not impose tax on any increase in your Account Value until there is a distribution from your Policy. Withdrawals and Surrenders. A withdrawal occurs when you receive less than the total amount of the Policy's Surrender Value. In the case of a withdrawal, you will pay tax on the amount you receive to the extent your Account Value before the withdrawal exceeds your "investment in the contract." (This term is explained below.) This income (and all other income from your Policy) 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 Policy'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 premium payments under the Policy, reduced by any amounts you previously received from the Policy that you did not include in your income. Your Policy imposes mortality charges relating to the Death Benefit, including any GMDB Rider charges. It is possible that all or a portion of these charges could be treated as withdrawals from the Policy. Loans and Assignments. With the exception of certain Qualified Policies, the Code treats any amount received as a loan under a Policy, and any assignment or pledge (or agreement to assign or pledge) any portion of your Account Value, as a withdrawal of such amount or portion. Gifting a Policy. If you transfer ownership of your Policy - without receiving a payment equal to your Policy's value - to a person other than your spouse (or to your former spouse incident to divorce), you will pay tax on your Account 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. Systematic Withdrawals. In the case of systematic withdrawals, the amount of each withdrawal should be considered a distribution and taxed in the same manner as a withdrawal from the Policy. However, there is some uncertainty regarding the tax treatment of systematic withdrawals, and it is possible that additional amounts could be included in 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." The Company will notify you annually of the taxable amount of your annuity payout. Pursuant to IRS regulations, 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 the Company (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. The Company may distribute amounts from your Policy 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 Policy's Maturity Date. Prior to the Policy's Maturity Date: o If received under an annuity payout option, death benefits are taxed in the same manner as annuity payouts. o If not received under an annuity payout option, death benefits are taxed in the same manner as a withdrawal. After the Policy's Maturity Date: o 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. o 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 Withdrawals, Surrenders, or Annuity Payouts. The Code may impose a penalty tax equal to 10% of the amount of any payment from your Policy that is included in your gross income. The Code does not impose the 10% penalty tax if one of several exceptions applies. These exceptions include withdrawals, surrenders, or annuity payouts that: o you receive on or after you reach age 59 1/2, o you receive because you became disabled (as defined in the tax law), o a beneficiary receives on or after the death of the Owner, or o you receive as a series of substantially equal periodic payments for the life (or life expectancy) of the Owner. It is uncertain whether systematic withdrawals will qualify for this last exception. If they did, any modification of the systematic withdrawals could result in certain adverse tax consequences. In addition, a transfer between Investment Subdivisions may result in payments not qualifying for this exception. Special Rules If You Own More Than One Policy. In certain circumstances, you must combine some or all of the Non-Qualified Policies 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: o If you purchase a Policy 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. o 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: o the amount of a surrender, a withdrawal or an annuity payout that you must include in income, and o the amount that might be subject to the penalty tax described above. Qualified Retirement Plans The Company also designed the Policies for use in connection with certain types of retirement plans that receive favorable treatment under the Code. Policies issued to or in connection with a qualified retirement plan are called "Qualified Policies." The Company does not currently offer all of the types of Qualified Policies described, and may not offer them in the future. Prospective purchasers should contact the Company's Home Office to learn the availability of Qualified Policies 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 Policy with the various types of qualified plans. Persons intending to use the Policy in connection with a qualified plan should obtain advice from a competent advisor. Types of Qualified Policies. Some of the different types of Qualified Policies include: o Individual Retirement Accounts and Annuities ("Traditional IRAs") o Roth IRAs o Simplified Employee Pensions ("SEP's") o Savings Incentive Matched Plan for Employees ("SIMPLE plans") o Public school system and tax-exempt organization annuity plans ("403(b) plans") o Qualified corporate employee pension and profit-sharing plans ("401(a) plans") and qualified annuity plans ("403(a) plans") o Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans") o Deferred compensation plans of state and local governments and tax-exempt organizations ("457 plans") Terms of Qualified Plans and Qualified Policies. The terms of a qualified plan may affect your rights under a Qualified Policy. When issued in connection with a qualified plan, the Company will amend a Policy 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 Policy. In addition, the Company is not bound by the terms and conditions of qualified plans to the extent such terms and conditions contradict the Policy, unless we consent. The Death Benefit and Qualified Policies. Pursuant to IRS regulations, IRAs may not invest in life insurance contracts. We do not believe that these regulations prohibit the Death Benefit, including that provided by the GMDB Rider, from being provided under the Policies when the Company issues the Policies as Traditional IRAs or Roth IRAs. However, the law is unclear and it is possible that the presence of the Death Benefit under a Policy issued as a Traditional or Roth IRA could result in increased taxes to the Owner. It is also possible that the Death Benefit could be characterized as an incidental death benefit. If the Death Benefit were so characterized, this could result in currently taxable income to purchasers. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified plans, such as in connection with a 403(b) plan. Even if the Death Benefit under the Policy were characterized as an incidental death benefit, it is unlikely to violate those limits unless the purchaser also purchases a life insurance contract in connection with such plan. Treatment of Qualified Policies Compared with Non-Qualified Policies. Although some of the Federal income tax rules are the same for both Qualified and Non-Qualified Policies, many of the rules are different. For example: o The Code generally does not impose tax on the earnings under either Qualified or Non-Qualified Policies until received. o The Code does not limit the amount of premium payments and the time at which premium payments can be made under Non-Qualified Policies. However, the Code does limit both the amount and frequency of premium payments made to Qualified Policies. o The Code does not allow a deduction for premium payments made for Non-Qualified Policies, but sometimes allows a deduction or exclusion from income for premium payments made to a Qualified Policy. The Federal income tax rules applicable to qualified plans and Qualified Policies vary with the type of plan and Policy. For example: o Federal tax rules limit the amount of premium payments that can be made, and the tax deduction or exclusion that may be allowed for the premium payments. These limits vary depending on the type of qualified plan and the circumstances of the plan participant, e.g., the participant's compensation. o Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the Owner must begin receiving payments from the Policy 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. o Loans are allowed in connection with certain types of qualified plans, but Federal income tax rules prohibit loans under other types of qualified plans. For example, Federal income tax rules permit loans under some section 403(b) plans, but prohibit loans under Traditional and Roth IRAs. If allowed, loans are subject to a variety of limitations, including restrictions as to the amount of the loan, the duration of the loan, and the manner in which the loan must be repaid. Amounts Received Under Qualified Policies. Amounts are generally subject to income tax: Federal income tax rules generally include distributions from a Qualified Policy in your income as ordinary income. Premium payments that are deductible or excludible from income do not create "investment in the contract." Thus, under many Qualified Policies 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. Additional Federal taxes may be payable in connection with a Qualified Policy: 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 Policy 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 Policy 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: o received on or after the Owner reaches age 59 1/2, o received on or after the Owner's death or because of the Owner's disability (as defined in the tax law), o received as a series of substantially equal periodic payments for the life (or life expectancy) of the Owner, or o received as reimbursement for certain amounts paid for medical care. These exceptions, as well as certain others not described here, generally apply to taxable distributions from other qualified plans. However, the specific requirements of the exception may vary. Moving Money from One Qualified Policy or Qualified Plan to Another. Rollovers and Transfers: In many circumstances you may move money between Qualified Policies and qualified plans by means of a rollover or a transfer. Special rules apply to such rollovers and transfers. If you do not follow the applicable rules, you may suffer adverse Federal income tax consequences, including paying taxes which you might not otherwise have had to pay. You should always consult a qualified advisor before you move or attempt to move funds between any Qualified Policy or plan and another Qualified Policy 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, HR 10 plans, and Policies used in connection with these types of plans. (The direct rollover rules do not apply to distributions from IRAs or 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 Policies or plans. Prior to receiving an eligible rollover distribution from the Company, we will provide you with a notice explaining these requirements and how you can avoid 20% withholding by electing a direct rollover. Federal Income Tax Withholding The Company will withhold and remit to the IRS a part of the taxable portion of each distribution made under a Policy 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. Tax Status of the Company Under existing Federal income tax laws, the Company does not pay tax on investment income and realized capital gains of Account 4. The Company does not anticipate that it will incur any Federal income tax liability on the income and gains earned by Account 4. The Company, therefore, does not impose a charge for Federal income taxes. If Federal income tax law changes and the Company must pay tax on some or all of the income and gains earned by Account 4, the Company may impose a charge against Account 4 to pay the taxes. Changes in the Law This discussion is based on the Code, IRS regulations, and interpretations existing on the date of this Prospectus. Congress, the IRS, and the courts may modify these authorities, however, sometimes retroactively. Voting Rights As required by law, we will vote the portfolio shares held in Account 4 at meetings of the shareholders of the Funds. The voting will be done according to the instructions of Owners who have interests in any Investment Subdivisions which invest in the portfolios of the Funds. If the 1940 Act or any regulation under it should be amended, and if as a result we determine that we are permitted to vote the portfolios' shares in our own right, we may elect to do so. We will determine the number of votes which you have the right to cast by applying your percentage interest in an Investment Subdivision to the total number of votes attributable to the Investment Subdivision. In determining the number of votes, we will recognize fractional shares. We will vote portfolio shares of a class held in an Investment Subdivision for which we received no timely instructions in proportion to the voting instructions which we received for all Policies participating in that Investment Subdivision. We will apply voting instructions to abstain on any item to be voted on a pro-rata basis to reduce the number of votes eligible to be cast. Whenever a Fund calls a shareholders meeting, each person having a voting interest in an Investment Subdivision will receive proxy voting material, reports and other materials relating to the portfolio. Since each portfolio may engage in shared funding, other persons or entities besides the Company may vote portfolio shares. See Investments of Account 4. Requesting Payments To request a payment, you must provide us with notice in a form satisfactory to us. We will ordinarily pay any Death Benefit, partial surrenders, or surrender proceeds within seven days after receipt at our Home Office of all the requirements for such a payment. We will determine the amount as of the date our Home Office receives all such requirements. We may delay making a payment, applying Account Value to a payment plan, or processing a transfer request if: (1) the disposal or valuation of Account 4's assets is not reasonably practicable because the New York Stock Exchange is closed for other than a regular holiday or weekend, trading is restricted by the SEC, or the SEC declares that an emergency exists; or (2) the SEC, by order, permits postponement of payment to protect our Owners. We also may defer making payments attributable to a check that has not cleared (which may take up to 15 days), and we may defer payment of proceeds from the Guarantee Account for a withdrawal, surrender, or transfer request for up to six months from the date we receive the request. The amount deferred will earn interest at a rate and for a time period not less than the minimum required in the jurisdiction in which the Policy is delivered. Distribution of the Policies Distributor 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 Policies. Capital Brokerage, a Washington corporation and an affiliate of the Company, is located at 6630 W. Broad St., Richmond, Virginia 23230. Properly licensed registered representatives of independent broker-dealers will sell the Policies. These broker-dealers have selling agreements with Capital Brokerage and have been licensed by state insurance departments to represent us. Properly licensed registered representatives of Capital Brokerage will also sell the Policies. Capital Brokerage is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. (NASD). The Company will offer Policies in all states where it is licensed to do business. Commissions Writing agents of the Company will receive commissions based on a commission schedule and rules. The agents will receive a maximum commission of 2.5% of the initial premium payment and any additional premium payment. Agents may also be eligible to receive certain bonuses and allowances, as well as retirement plan credits, based on commissions earned. Field management of the Company receives compensation which we may base in part on the level of agent commissions in their management units. Broker-dealers and their registered agents will receive first-year and subsequent year commissions equivalent to the total commissions and benefits received by the field management and writing agents of the Company. We do not deduct these commissions from premium payments or Account Value; we pay these commissions. Owner Questions The obligations to Owners under the Policies are those of the Company. Please direct your questions and concerns to us at our Home Office. Return Privilege Within the free-look period after you receive the Policy, you may cancel it for any reason by delivering or mailing it postage prepaid, to our Home Office, Variable Products Department, 6610 W. Broad Street, Richmond, Virginia 23230. A Policy canceled under this provision will be void. Unless state law requires that premium payments be returned as the refund, the amount of the refund will equal the Account Value less the bonus credits but without reduction of any surrender charge. If state law requires that premium payments be returned, the amount of the refund will equal the greater of (1) the Account Value less the bonus credits but without reduction by any surrender charges, plus any amount deducted from the premium payments prior to allocation to Account 4 and (2) the premium payments made less any withdrawals previously taken. In certain states the Owner may have more than 10 days to return the Policy for a refund. State Regulation As a life insurance company organized and operated under the laws of the Commonwealth of Virginia, we are subject to provisions governing life insurers and to regulation by the Virginia Commissioner of Insurance. Our books and accounts are subject to review and examination by the State Corporation Commission of the Commonwealth of Virginia at all times. That Commission conducts a full examination of our operations at least every five years. Records and Reports As presently required by the 1940 Act and applicable regulations, we are responsible for maintaining all records and accounts relating to Account 4. At least once each year, we will send you a report showing information about your Policy for the period covered by the report. The report will show the Account Value in each Investment Subdivision. The report also will show premium payments and charges made during the statement period. We also will send you an annual and a semi-annual report for each portfolio underlying an Investment Subdivision to which you have allocated Account Value, as required by the 1940 Act. In addition, when you make premium payments, make transfers or make partial surrenders, you will receive a written confirmation of these transactions. Other Information A Registration Statement has been filed with the SEC, under the Securities Act of 1933 as amended, for the Policies being offered here. This Prospectus does not contain all the information in the Registration Statement, its amendments and exhibits. Please refer to the Registration Statement for further information about Account 4, the Company, and the Policies offered. Statements in this Prospectus about the content of Policies and other legal instruments are summaries. For the complete text of those Policies and instruments, please refer to those documents as filed with the SEC and available on the SEC's website at http://www.sec.gov. Year 2000 Readiness Disclosure Like all financial services providers, we utilize computer systems that may be affected by Year 2000 date data processing issues and we also rely on service providers, including banks, custodians, administrators, and investment managers that also may be affected. We are engaged in a process to evaluate and develop plans to have our computer systems and critical applications ready to process Year 2000 date data. We also are confirming that our service providers are also so engaged. The resources that are being devoted to this effort are substantial. Further, we anticipate that we will spend approximately $2 million to $5 million dollars on this conversion. Remedial actions include inventorying our computer systems, applications and interfaces, assessing the impact of Year 2000 date data on them, developing a range of solutions specific to particular situations and implementing appropriate solutions. Some systems, applications and interfaces will be replaced or upgraded to new software or new releases or existing software which are Year 2000 ready. It is difficult to predict with precision whether the amount of resources ultimately devoted, or the outcome of these efforts, will have any negative impact on us and Account 4. However, as of the date of this prospectus, we do not anticipate that Owners will experience negative effects on their investment, or on the services provided in connection therewith, as a result of Year 2000 transition implementation. Our target dates for completion of these activities depend upon the particular situation. Our goal is to be substantially Year 2000 ready for critical applications on or about mid-1999, but there can be no assurance that we will be successful, or that interaction with other service providers will not impair our services at that time. If we are not successful in our Year 2000 transition, or implementation, or if interaction with other service providers is impaired, it is possible that we could encounter difficulty and/or delays in calculating unit values, redeeming shares, delivering account statements and providing other information, communication and servicing to our policyowners. In light of our current efforts to address this issue, we do not consider the likelihood of such occurrences to be very high. Legal Matters The Company, like other life insurance companies, is involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurance companies, substantial damages have been sought and/or material settlement payments have been made. Although the Company cannot predict the outcome of any litigation with certainty, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse impact on it or Account 4. STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS Page The Policies Transfer of Annuity Units. Net Investment Factor. Termination of Participation Agreements. Calculation of Performance Data Money Market Investment Subdivisions Other Investment Subdivisions. Federal Tax Matters. Taxation of GE Life & Annuity IRS Required Distributions General Provisions Using the Policies as Collateral Non-Participating. Misstatement of Age or Sex Incontestability Statement of Values. Written Notice Distribution of the Policies Legal Developments Regarding Employment-Related Benefit Plans. Legal Matters. Experts. Change in Auditors Financial Statements PART B GE Life & Annuity Separate Account 4 Statement of Additional Information For the Flexible Premium Variable Deferred Annuity Policy Form P1152 1/99 Offered by GE Life and Annuity Assurance Company (A Virginia Stock Corporation) 6610 W. Broad Street Richmond, Virginia 23230 This Statement of Additional Information expands upon subjects discussed in the current Prospectus for the above-named Flexible Premium Variable Deferred Annuity Policy ("Policy") offered by GE Life and Annuity Assurance Company. You may obtain a copy of the Prospectus dated _________ by calling (800) 352-9910, or by writing to GE Life and Annuity Assurance Company, 6610 W. Broad Street, Richmond, Virginia 23230. Terms used in the current Prospectus for the Policy are incorporated in this Statement. This Statement of Additional Information is not a Prospectus and should be read only in conjunction with the Prospectuses for the Policy and the Funds. Dated ___________ Statement of Additional Information Table of Contents Page The Policies Transfer of Annuity Units. Net Investment Factor. Termination of Participation Agreements. Calculation of Performance Data Money Market Investment Subdivisions Other Investment Subdivisions. Federal Tax Matters. Taxation of GE Life & Annuity IRS Required Distributions General Provisions Using the Policies as Collateral Non-Participating. Misstatement of Age or Sex Incontestability Statement of Values. Written Notice Distribution of the Policies Legal Developments Regarding Employment-Related Benefit Plans. Legal Matters. Experts. Change in Auditors Financial Statements The Policies Transfer of Annuity Units At the Owner's request, Annuity Units may be transferred once per calendar year from the Investment Subdivisions in which they are currently held. However, where permitted by state law, we reserve the right to refuse to execute any transfer if any of the Investment Subdivisions that would be affected by the transfer are unable to purchase or redeem shares of the mutual funds in which the Investment Subdivisions invest. The number of Annuity Units to be transferred is (a) times (b) divided by (c) where: (a) is the number of Annuity Units in the current Investment Subdivision desired to be transferred; (b) is the Annuity Unit Value for the Investment Subdivision in which the Annuity Units are currently held; and (c) is the Annuity Unit Value for the Investment Subdivision to which the transfer is made. If the number of Annuity Units remaining in an Investment Subdivision after the transfer is less than 1, we will transfer the amount remaining in addition to the amount requested. We will not transfer into any Investment Subdivision unless the number of Annuity Units of that Investment Subdivision after the transfer is at least 1. The amount of the income payment as of the date of the transfer will not be affected by the transfer (however, subsequent variable income payments will reflect the investment experience of the selected Investment Subdivisions). Net Investment Factor The net investment factor measures investment performance of the Investment Subdivisions of Account 4 during a Valuation Period. Each Investment Subdivision has its own net investment factor for a Valuation Period. The net investment factor of an Investment Subdivision available under the Policies for a Valuation Period is (a) divided by (b) minus (c) where: (a) is (1) the value of the net assets of that Investment Subdivision at the end of the preceding Valuation Period, plus (2) the investment income and capital gains, realized or unrealized, credited to the net assets of that Investment Subdivision during the Valuation Period for which the net investment factor is being determined, minus (3) the capital losses, realized or unrealized, charged against those assets during the Valuation Period, minus (4) any amount charged against that Investment Subdivision for taxes, or any amount we set aside during the Valuation Period as a provision for taxes attributable to the operation or maintenance of that Investment Subdivision; and (b) is the value of the net assets of that Investment Subdivision at the end of the preceding Valuation Period; and (c) is a charge no greater than .004271% for each day in the Valuation Period. This corresponds to 1.30% and 0.25% per year of the net assets of that Investment Subdivision for mortality and expense risks, and for administrative expenses, respectively. The values of the assets in Account 4 will be taken at their fair market value in accordance with generally accepted accounting practices and applicable laws and regulations. Termination of Participation Agreements The participation agreements pursuant to which the Funds sell their shares to Account 4 contain varying provisions regarding termination. The following summarizes those provisions: Janus Aspen Series. This agreement may be terminated by the parties on six months' advance written notice. Variable Insurance Products Fund, Variable Insurance Products Fund II and Variable Insurance Products Fund III. ("the Fund") These agreements provide for termination (1) on one year's advance notice by either party, (2) at the Company's option if shares of the Fund are not reasonably available to meet requirements of the policies, (3) at the option of either party if certain enforcement proceedings are instituted against the other, (4) upon vote of the policyowners to substitute shares of another mutual fund, (5) at the Company's option if shares of the Fund are not registered, issued, or sold in accordance with applicable laws, or if the Fund ceases to qualify as a regulated investment company under the Code, (6) at the option of the Fund or its principal underwriter if it determines that the Company has suffered material adverse changes in its business or financial condition or is the subject of material adverse publicity, (7) at the option of the Company if the Fund has suffered material adverse changes in its business or financial condition or is the subject of material adverse publicity, or (8) at the option of the Fund or its principal underwriter if the Company decides to make another mutual fund available as a funding vehicle for its policies. GE Investments Funds, Inc. This agreement may be terminated at the option of any party upon six months' written notice to the other parties, unless a shorter time is agreed to by the parties. Oppenheimer Variable Account Funds. This agreement may be terminated by the parties on six months' advance written notice. Federated Insurance Series. This agreement may be terminated by any of the parties on 180 days written notice to the other parties. The Alger American Fund. This agreement may be terminated at the option of any party upon six months' written notice to the other parties, unless a shorter time is agreed to by the parties. Goldman Sachs Variable Insurance Trust. This agreement may be terminated at the option of any party upon six months' written notice to the other parties, unless a shorter time is agreed to by the parties. Salomon Brothers Variable Series Funds Inc. This agreement may be terminated at the option of any party upon six months' advance written notice to the other parties, unless a shorter time is agreed to by the parties. Calculation of Performance Data From time to time, we may disclose total return, yield, and other performance data for the Investment Subdivisions pertaining to the Policies. Such performance data will be computed, or accompanied by performance data computed, in accordance with the standards defined by the Securities and Exchange Commission. The calculations of yield, total return, and other performance data do not reflect the effect of any premium tax that may be applicable to a particular Policy. Premium taxes currently range generally from 0% to 3.5% of premium payments and are generally based on the rules of the state in which you reside. "Money Market" Investment Subdivisions From time to time, advertisements and sales literature may quote the yield of one or more of the "money market" Investment Subdivisions for a seven-day period, in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the corresponding money market investment portfolio or on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) at the end of the seven-day period in the value of a hypothetical account under a Policy having a balance of one unit in that "money market" Investment Subdivision at the beginning of the period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return, and annualizing the result on a 365-day basis. The net change in account value reflects: 1) net income from the investment portfolio attributable to the hypothetical account; and 2) charges and deductions imposed under the Policy which are attributable to the hypothetical account. The charges and deductions include the per unit charges for the policy maintenance charge, administrative expense charge, and the mortality and expense risk charge. For purposes of calculating current yields for a Policy, an average per unit policy maintenance charge is used. Current Yield will be calculated according to the following formula: Current Yield = ((NCP - ES)/UV) X (365/7) where: NCP = the net change in the value of the investment portfolio (exclusive of realized gains or losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the seven-day period attributable to a hypothetical account having a balance of one Investment Subdivision unit. ES = per unit expenses of the hypothetical account for the seven-day period. UV = the unit value on the first day of the seven-day period. The effective yield of a "money market" Investment Subdivision determined on a compounded basis for the same seven-day period may also be quoted. The effective yield is calculated by compounding the base period return according to the following formula: Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1 where: NCP = the net change in the value of the investment portfolio (exclusive of realized gains or losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the seven-day period attributable to a hypothetical account having a balance of one Investment Subdivision unit. ES = per unit expenses of the hypothetical account for the seven-day period. UV = the unit value for the first day of the seven-day period. The yield on amounts held in a "money market" Investment Subdivision normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. A "money market" Investment Subdivision's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the Investment Subdivision's corresponding money market investment portfolio, the types and quality of portfolio securities held by that investment portfolio, and that investment portfolio's operating expenses. Because of the charges and deductions imposed under the Policy, the yield for a "money market" Investment Subdivision will be lower than the yield for its corresponding "money market" investment portfolio. Yield calculations do not take into account the surrender charge under the Policy, a maximum of 8% of each premium payment made during the 8 years prior to a full or partial surrender, or charges for the GMDB rider. Yield calculations also do not reflect the Bonus Credit. As of the date of this SAI, the available Money Market Investment Subdivision had not yet commenced operations. However, yields calculated for the underlying GE Investments Money Market Fund as of December 31, 1997, less the Mortality and Expense Risk charge (1.30%), the Administrative Expense Charge (.25%), and the Policy Maintenance Charge (which, for these purposes, is assumed to be equivalent to .10% of Account Value) are as follows: Current 3.78% Effective 3.85% The above figures do not reflect the surrender charge, the GMDB charge, or the Bonus Credit. Past performance is not a guarantee of future results. Please note that the underlying Fund supplied information on which these yields were calculated. While we have no reason to doubt the accuracy of the information provided by the Fund, we have not independently verified this information. Other Investment Subdivisions Total Return. Sales literature or advertisements may quote total return, including average annual total return for one or more of the Investment Subdivisions for various periods of time including 1 year, 5 years and 10 years, or from inception if any of those periods are not available. Average annual total return for a period represents the average annual compounded rate of return that would equate an initial investment of $1,000 under a Policy to the redemption value of that investment as of the last day of the period. The ending date for each period for which total return quotations are provided will be for the most recent practicable, considering the type and media of the communication, and will be stated in the communication. For periods that begin before the Policy was available, performance data will be based on the performance of the underlying portfolios, with the level of Account 4 and policy charges currently in effect. Average annual total return will be calculated using Investment Subdivision unit values and deductions for the policy maintenance charge and the surrender charge as described below: 1. We calculate unit value for each Valuation Period based on the performance of the Investment Subdivision's underlying investment portfolio (after deductions for Fund expenses, the administrative expense charge, and the mortality and expense risk charge). 2. The policy maintenance charge is $25 per year, deducted at the beginning of each Policy Year after the first. For purposes of calculating average annual total return, an average policy maintenance charge (currently 0.1% of account value attributable to the hypothetical investment) is used. This charge will be waived if the Account Value is at least $10,000 at the time the charge is due. 3. The surrender charge will be determined by assuming a surrender of the Policy at the end of the period. Average annual total return for periods of eight years or less will therefore reflect the deduction of a surrender charge. 4. Total return does not consider the GMDB charges. 5. Total return assumes the payment of a 4% bonus credit. The total return figures would be lower if a reduced bonus credit applied, or if no bonus credit applied. 6. Total return will then be calculated according to the following formula: TR = (ERV/P)1/N - 1 where: TR = the average annual total return for the period. ERV = the ending redeemable value (reflecting deductions as described above) of the hypothetical investment at the end of the period. P = a hypothetical single investment of $1,000. N = the duration of the period (in years). The available Investment Subdivisions have not yet commenced operations; therefore, standard performance data for the available Investment Subdivisions is not available at this time. However, non-standard adjusted historical performance data (reflects all fees and charges including surrender charges, but not including charges for the optional GMDB) for the Funds underlying the available Investment Subdivisions is as follows: Total Return for the available Investment Subdivisions is as follows:
From the For the For the Date of For the For the 5-year 10-year Portfolio Date of 1-year 3-year period period Inception Portfolio period period ended ended to Inception ended ended 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97 Subdivision Balanced Janus Aspen Balanced 17.70 19.08 N/A N/A 14.76 09/13/93 Portfolio VIP II Asset Manager 16.21 15.41 11.39 N/A 11.40 09/06/89 Portfolio Salomon Brothers Total N/A N/A N/A N/A N/A N/A Return Fund GE Investments Total 13.48 16.72 12.71 12.22 10.73 07/01/85 Return Fund Oppenheimer Multiple 12.71 16.04 11.75 11.33 10.60 02/09/87 Strategies Fund Growth Janus Aspen Growth 18.36 21.86 N/A N/A 16.15 09/13/93 Portfolio Janus Aspen Capital N/A N/A N/A N/A 22.97 05/01/97 Appreciation Portfolio Alger American Growth 21.43 22.98 17.78 N/A 18.04 01/09/89 Portfolio VIP II Contrafund Portfolio 19.78 N/A N/A N/A 26.77 01/03/95 VIP Growth Portfolio 19.11 22.41 16.49 15.71 13.91 10/09/86 Oppenheimer Growth Fund 22.38 27.68 17.10 15.20 13.88 04/03/85 VIP III Growth 25.73 N/A N/A N/A 25.04 01/03/95 Opportunities Portfolio Goldman Sachs Mid Cap N/A N/A N/A N/A N/A N/A Equity Fund GE Investments Value N/A N/A N/A N/A 29.10 05/01/97 Equity Fund International Stock Janus Aspen International 14.02 23.47 N/A N/A 17.65 05/02/94 Growth Portfolio VIP Overseas Portfolio 6.91 9.35 12.55 8.24 6.82 01/28/87 GE Investments 5.50 N/A N/A N/A 7.99 05/01/95 International Equity Fund High Yield Bond Oppenheimer High Income 7.58 13.89 12.20 12.87 11.84 04/30/86 Fund Federated High Income Bond 9.24 14.14 N/A N/A 9.55 03/01/94 Fund II Diversified Bond Janus Aspen Flexible 7.12 12.73 N/A N/A 8.40 09/13/93 Income Portfolio Aggressive Growth Janus Aspen Aggressive 8.04 13.73 N/A N/A 17.71 09/13/93 Growth Portfolio Oppenheimer Aggressive 7.03 19.29 14.39 14.76 13.80 08/15/86 Growth Fund Alger American Small 6.74 16.81 11.08 N/A 17.76 09/21/88 Capitalization Portfolio Growth & Income Federated American Leaders 28.17 27.35 N/A N/A 19.94 02/10/94 Fund II GE Investments US Equity 27.94 N/A N/A N/A 28.01 01/02/95 Fund Goldman Sachs Growth & N/A N/A N/A N/A N/A N/A Income Fund Salomon Brothers Investors N/A N/A N/A N/A N/A N/A Fund VIP Equity-Income 23.84 23.73 18.65 15.25 13.02 10/09/86 Portfolio VIP III Growth & Income 25.87 N/A N/A N/A 25.87 12/31/96 Portfolio GE Investments S&P 500 26.08 28.51 18.91 16.27 14.38 04/14/85 Index Fund Corporate Bond Oppenheimer Bond Fund 4.55 8.08 6.60 8.12 8.40 04/03/85 Salomon Brothers Strategic N/A N/A N/A N/A N/A N/A Bond Fund GE Investments Income Fund 4.34 N/A N/A N/A 7.28 01/02/95 Specialty Federated Utility Fund II 22.33 18.71 N/A N/A 12.83 02/10/94 GE Investments Real Estate 15.05 N/A N/A N/A 25.42 05/01/95 Securities Fund Global Stock Janus Aspen Worldwide 17.75 24.36 N/A N/A 21.44 09/13/93 Growth Portfolio Money Market GE Investments Money 0.60 3.25 2.86 4.04 4.02 06/30/85 Market Fund
++ Returns for periods of less than one year are not annualized. Past performance is not a guarantee of future results. The Funds have provided the price information used to calculate the total return of the Investment Subdivisions for periods prior to the inception of the Investment Subdivisions. While we have no reason to doubt the accuracy of the figures provided by the Funds, we have not independently verified such information. Other Performance Data We may disclose cumulative total return in conjunction with the standard format described above. The cumulative total return will be calculated using the following formula: CTR = (ERV/P) - 1 where: CTR = the cumulative total return for the period. ERV = the ending redeemable value (reflecting deductions as described above) of the hypothetical investment at the end of the period. P = a hypothetical single investment of $1,000. Sales literature may also quote cumulative and/or average annual total return that does not reflect the surrender charge. This is calculated in exactly the same way as average annual total return, except that the ending redeemable value of the hypothetical investment is replaced with an ending value for the period that does not take into account any charges on withdrawn amounts. Other non-standard quotations of Investment Subdivision performance may also be used in sales literature. Such quotations will be accompanied by a description of how they were calculated. Federal Tax Matters Taxation of GE Life & Annuity We do not expect to incur any federal income tax liability attributable to investment income or capital gains retained as part of the reserves under the Policies. (See Federal Tax Matters section of the Prospectus.) Based upon these expectations, no charge is being made currently to Account 4 for federal income taxes which may be attributable to the Account. We will periodically review the question of a charge to Account 4 for federal income taxes related to the Account. Such a charge may be made in future years if we believe that we may incur federal income taxes. This might become necessary if the tax treatment of the Company is ultimately determined to be other than what we currently believe it to be, if there are changes made in the federal income tax treatment of annuities at the corporate level, or if there is a change in our tax status. In the event that we should incur federal income taxes attributable to investment income or capital gains retained as part of the reserves under the Policies, the Account Value would be correspondingly adjusted by any provision or charge for such taxes. We may also incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes, with the exception of premium taxes, are not significant. If there is a material change in applicable state or local tax laws causing an increase in taxes other than premium taxes (for which we currently impose a charge), charges for such taxes attributable to Account 4 may be made. IRS Required Distributions In order to be treated as an annuity contract for federal income tax purposes, section 72(s) of the Code requires any Non-Qualified Policy to provide that (a) if any Owner dies on or after the Maturity Date but prior to the time the entire interest in the Policy has been distributed, the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used as of the date of that Owner's death; and (b) if any Owner dies prior to the Maturity Date, the entire interest in the Policy will be distributed (1) within five years after the date of that Owner's death, or (2) as income payments which will begin within one year of that Owner's death and which will be made over the life of the Owner's "designated beneficiary" or over a period not extending beyond the life expectancy of that beneficiary. The "designated beneficiary" generally is the person who will be treated as the sole owner of the Policy following the death of the Owner, Joint Owner or, in certain circumstances, the Annuitant. However, if the "designated beneficiary" is the surviving spouse of the decedent, these distribution rules will not apply until the surviving spouse's death (and this spousal exception will not again be available). If any Owner is not an individual, the death of the Annuitant will be treated as the death of an Owner for purposes of these rules. The Non-Qualified Policies contain provisions which are intended to comply with the requirements of section 72(s) of the Code, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the requirements of Code section 72(s) when clarified by regulation or otherwise. Other rules may apply to Qualified Policies. General Provisions Using the Policies as Collateral A Non-Qualified Policy can be assigned as collateral security. We must be notified in writing if a Policy is assigned. Any payment made before the assignment is recorded at our Home Office will not be affected. We are not responsible for the validity of an assignment. Your rights and the rights of a Beneficiary may be affected by an assignment. A Qualified Policy may not be sold, assigned, transferred, discounted, pledged or otherwise transferred except under such conditions as may be allowed under applicable law. The basic benefits of the Policy are assignable. Additional benefits added by rider may or may not be available/eligible for assignments. Non-Participating The Policy is non-participating. No dividends are payable. Misstatement of Age or Sex If an Annuitant's age or sex was misstated on the policy data page, any policy benefits or proceeds, or availability thereof, will be determined using the correct age and sex. Incontestability We will not contest the Policy. Statement of Values At least once each year, we will send you a statement of values within 30 days after each report date. The statement will show Account Value, premium payments and charges made during the report period. Written Notice Any written notice should be sent to us at our Home Office at 6610 West Broad Street, Richmond, Virginia 23230. The policy number and the Annuitant's full name must be included. We will send all notices to the Owner at the last known address on file with the company. Distribution of the Policies Capital Brokerage Corporation, the principal underwriter of the Policies, is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. The Policies are sold to the public through brokers licensed and registered under the federal securities laws and state insurance laws that have entered into agreements with Capital Brokerage Corporation. The Policy is also sold by properly licensed registered representatives of Capital Brokerage Corporation. The offering is continuous and we do not anticipate discontinuing the offering of the Policies. However, we do reserve the right to discontinue the offering of the Policies. Legal Developments Regarding Employment-Related Benefit Plans On July 6, 1983, the Supreme Court held in Arizona Governing Committee for Tax Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity benefits provided under an employee's deferred compensation plan could not, under Title VII of the Civil Rights Act of 1964, vary between men and women on the basis of sex. The Policy contains guaranteed annuity purchase rates for certain optional payment plans that distinguish between men and women. Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of Norris, and Title VII generally, on any employment-related insurance or benefit program for which a Policy may be purchased. In addition, we are subject to the insurance laws and regulations of other states within which we are licensed to operate. Generally, the Insurance Department of any other state applies the laws of the state of domicile in determining permissible investments. Presently, we are licensed to do business in the District of Columbia and all states, except New York. Legal Matters Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on certain legal matters relating to federal securities laws applicable to the issue and sale of the Policies described in this Prospectus. Patricia L. Dysart, Assistant Vice President and Associate General Counsel of the Company, has provided advice on certain legal matters pertaining to the Policy, including the validity of the Policy and the Company's right to issue the Policies under Virginia insurance law. Experts KPMG LLP. The consolidated balance sheets of The Life Insurance Company of Virginia, now known as GE Life and Annuity Assurance Company, and subsidiary as of December 31, 1997 and 1996, and the related consolidated statements of income, stockholder's equity and cash flows for the year ended December 31, 1997, the nine months ended December 31, 1996 and the preacquisition three months period ended March 31, 1996, and the statement of assets and liabilities of Life of Virginia Separate Account 4, now known as GE Life & Annuity Separate Account 4, as of December 31, 1997 and the related statements of operations and changes in net assets for each of the two years or lesser periods then ended have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent certified public accountants, appearing elsewhere herein and upon the authority of such firm as experts in accounting and auditing. The report of KPMG LLP with respect to the consolidated financial statements of The Life Insurance Company of Virginia, now known as GE Life and Annuity Assurance Company, and subsidiary contains an explanatory paragraph that states that effective April 1, 1996, General Electric Capital Corporation acquired all of the outstanding stock of The Life Insurance Company of Virginia, now known as GE Life and Annuity Assurance Company, in a business combination accounted for as a purchase. As a result of the acquisition, the consolidated financial information for the periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable. Ernst & Young LLP. Ernst & Young LLP, independent auditors, have audited the consolidated statements of income, stockholder's equity and cash flows of GE Life and Annuity Assurance Company and subsidiaries (formerly The Life Insurance Company of Virginia and subsidiaries) for the year ended December 31, 1995 and the statements of operations and changes in net assets of GE Life & Annuity Separate Account 4 (formerly Life of Virginia Separate Account 4) for the year or period ended December 31, 1995 as set forth in their report, which is included in this Statement of Additional Information and Registration Statement. The financial statements are included herein in reliance on their report, given on their authority as experts in accounting and auditing. Change in Auditors Subsequent to the acquisition of us by GNA Corporation on April 1, 1996, we selected KPMG LLP to be our auditor. Accordingly, our principal auditor changed for the year ending December 31, 1996, from Ernst & Young LLP, to KPMG LLP. The former auditors were dismissed and KPMG LLP was retained because KPMG LLP is the auditor for GE Capital, the indirect parent of GNA Corporation. This change was approved by the members of the Board of Directors of the Company. Neither KPMG LLP's nor Ernst & Young LLP's reports on the financial statements contain any adverse opinion or a disclaimer of opinion, or were qualified or modified as to uncertainty or audit scope. Furthermore, there were no disagreements with either on any matter of accounting principle or practice, financial statement disclosure or auditing scope or procedure which would have caused them to make reference to the subject matter of the disagreement in connection with their reports. Financial Statements This Statement of Additional Information contains financial statements for the Company and for Life of Virginia Separate Account 4, now known as GE Life & Annuity Separate Account 4, as of December 31, 1997, and for each of the three years in the period then ended. Unaudited interim financial statements for the Company through September 30, 1998 have also been included. The consolidated financial statements of The Life Insurance Company of Virginia, now known as GE Life and Annuity Assurance Company, and subsidiaries included herein should be distinguished from the financial statements of Account 4 and should be considered only as bearing on the ability of the Company to meet its obligations under the Policy. Such consolidated financial statements of The Life Insurance Company of Virginia, now known as GE Life and Annuity Assurance Company, and subsidiaries should not be considered as bearing on the investment performance of the assets held in Account 4. LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities Year ended December 31, 1997 (With Independent Auditors' Report Thereon) LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Table of Contents Year ended December 31, 1997 ============================================================================= Page Independent Auditors' Report................................................1 Financial Statements: Statements of Assets and Liabilities..................................3 Statements of Operations..............................................9 Statements of Changes in Net Assets..................................20 Notes to Financial Statements..............................................31 ============================================================================= 1 Report of Independent Auditors Contractholders Life of Virginia Separate Account 4 and Board of Directors The Life Insurance Company of Virginia We have audited the accompanying statements of assets and liabilities of Life of Virginia Separate Account 4 (the Account) (comprising the GE Investments Funds, Inc.--S&P 500 Index, Money Market, Total Return, International Equity, Real Estate Securities, Global Income, Value Equity and Income Funds; the Oppenheimer Variable Account Funds--Bond, Capital Appreciation, Growth, High Income and Multiple Strategies Funds; the Variable Insurance Products Fund--Equity-Income, Growth and Overseas Portfolios; the Variable Insurance Products Fund II--Asset Manager and Contrafund Portfolios; the Variable Insurance Products III--Growth & Income and Growth Opportunities Portfolios; the Federated Investors Insurance Series--American Leaders, High Income Bond and Utility Funds II; the Alger American--Small Cap and Growth Portfolios; the PBHG Insurance Series Fund--PBHG Large Cap Growth and PBHG Growth II Portfolios; and the Janus Aspen Series--Aggressive Growth, Growth, Worldwide Growth, Balanced, Flexible Income, International Growth and Capital Appreciation Portfolios) as of December 31, 1997 and the related statements of operations and changes in net assets for the aforementioned funds and the GE Investments Funds Inc. --Government Securities Fund; Oppenheimer Variable Account Funds--Money Fund; Variable Insurance Products Funds--Money Market and High Income Portfolios; and Neuberger & Berman Advisers Management Trust--Balanced, Bond and Growth Portfolios of Life of Virginia Separate Account 4 for each of the two years or lesser periods then ended. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. The accompanying statements of operations and changes in net assets of Life of Virginia Separate Account 4 for the year or period ended December 31, 1995, were audited by other auditors, whose report thereon dated February 8, 1996 expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1997, by correspondence with the underlying mutual funds or their transfer agent. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the 1997 and 1996 financial statements referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting Life of Virginia Separate Account 4 as of December 31, 1997 and the results of their operations and changes in their net assets for each of the two years or lesser periods then ended in conformity with generally accepted accounting principles. /s/ KPMG LLP ------------------------- KPMG LLP Richmond, Virginia February 13, 1998 REPORT OF INDEPENDENT AUDITORS Policyholders Life of Virginia Separate Account 4 and Board of Directors The Life Insurance Company of Virginia We have audited the accompanying statements of operations and changes in net assets for the year ended December 31, 1995 for the Life of Virginia Series Fund, Inc. Common Stock Index, Government Securities, Money Market and Total Return portfolios, the Oppenheimer Variable Account Funds portfolios, the Variable Insurance Products Fund portfolios, the Variable Insurance Products Fund II Asset Manager portfolio, the Advisers Management Trust portfolios, the Janus Aspen Aggressive Growth, Growth, and Worldwide Growth portfolios, and for the period from May 23, 1995 (date of inception) to December 31, 1995 for the Life of Virginia Series Fund, Inc. International Equity portfolio, for the period from May 2, 1995 (date of inception) to December 31, 1995 for the Life of Virginia Series Fund, Inc. Real Estate Securities portfolio, for the period from January 5, 1995 (date of inception) to December 31, 1995 for the Variable Insurance Products Fund II Contrafund portfolio, for the period from February 3, 1995 (date of inception) to December 31, 1995 for the Insurance Management Series Corporate Bond portfolio, for the period from January 27, 1995 (date of inception) to December 31, 1995 for the Insurance Management Series Utility portfolio, for the period from October 11, 1995 (date of inception) to December 31, 1995 for the Janus Aspen Balanced portfolio, for the period from October 13, 1995 (date of inception) to December 31, 1995 for the Janus Aspen Flexible Income portfolio, for the period from October 3, 1995 (date of inception) to December 31, 1995 for the Alger American Small Cap portfolio and for the period from October 4, 1995 (date of inception) to December 31, 1995 for the Alger American Growth portfolio. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that out audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and changes in net assets for the periods described in the first paragraph of each of the respective portfolios constituting Life of Virginia Separate Account 4, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Richmond, Virginia February 8, 1996 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities December 31, 1997 - -------------------------------------------------------------------------------
GE Investment Funds, Inc. (formerly Life Of Virginia Series Fund, Inc.) ------------------------------------------------ S&P 500 Money Total Index Market Return Fund Fund Fund - ---------------------------------------------------------------------------------------------------------------- Investment GE Investments Funds, Inc., at fair value (note 2): S&P 500 Index Fund (7,976,419 shares; cost - $145,723,059) $ 153,386,538 - - Money Market Fund (118,336,576 shares; cost - $117,791,205) - 118,336,576 - Total Return Fund (3,370,192 shares; cost - $48,733,062) - - 44,520,238 International Equity Fund (2,151,087 shares; cost - $24,524,231) - - - Real Estate Securities Fund (3,452,544 shares; cost - $48,950,718) - - - Global Income Fund (611,834 shares; cost - $6,150,915) - - - Value Equity Fund (1,199,676 shares; cost - $14,841,949) - - - Income Fund (1,845,624 shares; cost - $22,362,706) - - - Receivable from affiliate 131,054 - 34,825 Receivable for units sold 52,884 5,964,313 - - ---------------------------------------------------------------------------------------------------------------- $ 153,570,476 124,300,889 44,555,063 - ---------------------------------------------------------------------------------------------------------------- Liabilities - ---------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) $ 144,152 606,185 27,866 Payable for units withdrawn - - 80 - ---------------------------------------------------------------------------------------------------------------- Total liabilities 144,152 606,185 27,946 - ---------------------------------------------------------------------------------------------------------------- Net Assets $ 153,426,324 123,694,704 44,527,117 - ---------------------------------------------------------------------------------------------------------------- Analysis of net assets: Attributable to: Variable deferred annuity contractholders $ 153,426,324 123,694,704 44,527,117 The Life Insurance Company of Virginia - - - - ---------------------------------------------------------------------------------------------------------------- Net assets $ 153,426,324 123,694,704 44,527,117 - ---------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 918,847 3,512,260 631,828 - ---------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I $ 39.63 14.77 28.96 - ---------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 3,025,140 4,980,487 928,145 - ---------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II $ 38.68 14.42 28.26 - ----------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.)(continued) --------------------------------------------------------------------- International Real Estate Global Value Equity Securities Income Equity Income Fund Fund Fund Fund Fund - ----------------------------------------------------------------------------------------------------------------------------------- Investment GE Investments Funds, Inc., at fair value (note 2): S&P 500 Index Fund (7,976,419 shares; cost - $145,723,059) - - - - - Money Market Fund (118,336,576 shares; cost - $117,791,205) - - - - - Total Return Fund (3,370,192 shares; cost - $48,733,062) - - - - - International Equity Fund (2,151,087 shares; cost - $24,524,231) 22,973,610 - - - - Real Estate Securities Fund (3,452,544 shares; cost - $48,950,718) - 52,754,866 - - - Global Income Fund (611,834 shares; cost - $6,150,915) - - 6,026,567 - - Value Equity Fund (1,199,676 shares; cost - $14,841,949) - - - 15,727,748 - Income Fund (1,845,624 shares; cost - $22,362,706) - - - - 22,350,507 Receivable from affiliate 12,571 26,750 - 14,492 - Receivable for units sold - 27 89,788 166,328 - - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 22,986,181 52,781,643 6,116,355 15,908,568 22,350,507 - ---------------------------------------------------------------------------------------------------------------------------------- Liabilities - ---------------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 7,311 22,389 1,057 8,560 306,136 Payable for units withdrawn 102,337 75,457 - - 33,511 - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities 109,648 97,846 1,057 8,560 339,647 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets 22,876,533 52,683,797 6,115,298 15,900,008 22,010,860 - ---------------------------------------------------------------------------------------------------------------------------------- Analysis of net assets: Attributable to: Variable deferred annuity contractholders 9,954,696 33,635,732 944,793 11,923,320 22,010,860 The Life Insurance Company of Virginia 12,921,837 19,048,065 5,170,505 3,976,688 - - ---------------------------------------------------------------------------------------------------------------------------------- Net assets 22,876,533 52,683,797 6,115,298 15,900,008 22,010,860 - ---------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 1,212,802 1,385,306 516,898 479,621 1,295,638 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I 12.53 18.46 10.26 13.15 10.01 - ---------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 614,410 1,478,247 79,290 730,616 903,249 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II 12.50 18.34 10.24 13.13 10.01 - ----------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued - -------------------------------------------------------------------------------
Oppenheimer Variable Account Funds ----------------------------------------------------------------- Capital High Multiple Bond Appreciation Growth Income Strategies Assets Fund Fund Fund Fund Fund - ---------------------------------------------------------------------------------------------------------------------------------- Investment in Oppenheimer Variable Account Funds, at fair value (note 2): Bond Fund (3,338,044 shares; cost-$38,648,132) $39,756,108 - - - - Capital Appreciation Fund (5,085,365 shares; cost-$177,299,340) - 208,296,549 - - - Growth Fund (4,282,333 shares; cost-$115,624,020) - - 138,918,887 - - High Income Fund (12,856,952 shares; cost-$143,356,020) - - - 148,112,092 - Multiple Strategies Fund (4,239,791 shares; cost-$61,776,406) - - - - 72,118,841 Receivable from affiliate 3,463 56,595 - 89,573 13,227 Receivable for units sold 84,091 81,846 211,756 188,070 6,302 - ---------------------------------------------------------------------------------------------------------------------------------- Total assets $39,843,662 208,434,990 139,130,643 148,389,735 72,138,370 - ---------------------------------------------------------------------------------------------------------------------------------- Liabilities - ---------------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) $ 43,140 587,754 114,827 104,109 114,775 Payable for units withdrawn 54,839 - - - 42 - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities 97,979 587,754 114,827 104,109 114,817 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders $39,745,683 207,847,236 139,015,816 148,285,626 72,023,553 - ---------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 929,630 2,591,419 1,291,813 1,869,843 1,553,549 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I $ 20.92 36.52 37.62 31.32 26.43 - ---------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 994,017 3,176,448 2,462,359 2,934,974 1,200,126 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II $ 20.42 35.64 36.72 30.57 25.80 - ----------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued
- ----------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund ----------------------------------------- Equity- Income Growth Overseas Portfolio Portfolio Portfolio - ----------------------------------------------------------------------------------------------------------------------- Investment in Variable Insurance Products Fund, at fair value (note 2): Equity-Income Portfolio (25,284,474 shares; cost - $481,451,916) $ 613,907,020 - - Growth Portfolio (8,496,260 shares; cost - $238,768,154) - 315,211,237 - Overseas Portfolio (5,812,347 shares; cost - $99,900,187) - - 111,597,056 Receivable from affiliate 204,695 116,417 14,558 Receivable for units sold 118,450 58,665 - - ----------------------------------------------------------------------------------------------------------------------- Total assets $ 614,230,165 315,386,319 111,611,614 - ----------------------------------------------------------------------------------------------------------------------- Liabilities - ----------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note3) $ 437,839 312,937 172,653 Payable for units withdrawn 209,554 59,775 3,134,340 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 647,393 372,712 3,306,993 - ----------------------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders $ 613,582,772 315,013,607 108,304,621 - ----------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 6,589,338 4,467,825 3,398,260 - ----------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I $ 37.36 39.40 21.16 - ----------------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 10,074,173 3,614,598 1,762,588 - ----------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II $ 36.47 38.45 20.65 - -----------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued - -------------------------------------------------------------------------------
Variable Insurance Variable Insurance Products Fund II Products Fund III -------------------------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Portfolio Portfolio Portfolio Portfolio - --------------------------------------------------------------------------------------------------------------------------------- Investment in Variable Insurance Products Fund II, at fair value (note 2): Asset Manager Portfolio (26,932,347 shares; cost - $393,528,382) $ 485,051,564 - - - Contrafund Portfolio (12,134,794 shares; cost - $193,722,470) - 241,967,789 - - Investment in Variable Insurance Products Fund III, at fair value (note 2): Growth & Income Portfolio (1,247,313 shares; cost - $15,170,737) - - 15,628,837 - Growth Opportunities Portfolio (883,879 shares; cost - $15,976,584) - - - 17,032,342 Receivable from affiliate 5,351 176,780 25,307 3,157 Receivable for units sold 43,195 255,163 64,010 64,775 - --------------------------------------------------------------------------------------------------------------------------------- Total assets $ 485,100,110 242,399,732 15,718,154 17,100,274 - --------------------------------------------------------------------------------------------------------------------------------- Liabilities - --------------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) $ 1,187,116 176,209 9,932 12,499 Payable for units withdrawn 38,182 86,127 - - - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities 1,225,298 262,336 9,932 12,499 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders $ 483,874,812 242,137,396 15,708,222 17,087,775 - ---------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 17,101,510 3,296,201 294,329 341,417 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I $ 24.53 20.47 12.38 12.30 - ---------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 2,678,933 8,595,677 976,086 1,049,540 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II $ 24.03 20.32 12.36 12.28 - ----------------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued - --------------------------------------------------------------------------------
Federated Investors Insurance Series ----------------------------------------- American High Leaders Income Bond Utility Assets Fund II Fund II Fund II - ------------------------------------------------------------------------------------------------------------------------- Investments in Federated Investors Insurance Series, at fair value (note 2): American Leaders Fund II (1,767,003 shares; cost - $31,138,913) $ 34,686,268 - - High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - 35,218,348 - Utility Fund II (2,126,742 shares - cost - $24,061,328) - - 30,391,148 Investment in Alger American, at fair value (note 2): Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) - - - Growth Portfolio (1,691,682 shares; cost - $61,989,581) - - - PBHG Insurance Series Fund at fair value (note 2): PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) - - - PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - - - Receivable from affiliate 9,118 6,282 20,101 Receivable for units sold 223,715 12,611 12,121 - ------------------------------------------------------------------------------------------------------------------------- Total assets $ 34,919,101 35,237,241 30,423,370 - ------------------------------------------------------------------------------------------------------------------------- Liabilities - ------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) $ 25,357 26,612 22,088 Payable for units withdrawn 18 15,282 3,388 - ------------------------------------------------------------------------------------------------------------------------- Total liabilities 25,375 41,894 25,476 - ------------------------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders $ 34,893,726 35,195,347 30,397,894 - ------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 361,619 456,124 485,332 - ------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I $ 14.48 15.11 16.88 - ------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 2,056,691 1,886,887 1,325,701 - ------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II $ 14.42 15.00 16.75 - -------------------------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued - --------------------------------------------------------------------------------
Alger American --------------------------- Small Cap Growth Assets Portfolio Portfolio - ------------------------------------------------------------------------------------------------------------ Investments in Federated Investors Insurance Series, at fair value (note 2): American Leaders Fund II (1,767,003 shares; cost - $31,138,913) - - High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - - Utility Fund II (2,126,742 shares - cost - $24,061,328) - - Investment in Alger American, at fair value (note 2): Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) 73,961,717 - Growth Portfolio (1,691,682 shares; cost - $61,989,581) - 72,336,337 PBHG Insurance Series Fund at fair value (note 2): PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) - - PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - - Receivable from affiliate 23,461 28,703 Receivable for units sold - 7,598 - ----------------------------------------------------------------------------------------------------------- Total assets 73,985,178 72,372,638 - ----------------------------------------------------------------------------------------------------------- Liabilities - ----------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 56,893 156,426 Payable for units withdrawn 100,595 62,399 - ----------------------------------------------------------------------------------------------------------- Total liabilities 157,488 218,825 - ----------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders 73,827,690 72,153,813 - ----------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 1,325,070 1,022,514 - ----------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I 10.64 13.42 - ----------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 5,645,458 4,380,186 - ----------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II 10.58 13.34 - -----------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued - -------------------------------------------------------------------------------
PBHG Insurance Series Fund -------------------------- PBHG Large PBHG Cap Growth Growth II Assets Portfolio Portfolio - ------------------------------------------------------------------------------------------------------- Investments in Federated Investors Insurance Series, at fair value (note 2): American Leaders Fund II (1,767,003 shares; cost - $31,138,913) - - High Income Bond Fund II (3,216,287 shares; cost - $33,511,201) - - Utility Fund II (2,126,742 shares - cost - $24,061,328) - - Investment in Alger American, at fair value (note 2): Small Cap Portfolio (1,690,554 shares; cost - $70,050,792) - - Growth Portfolio (1,691,682 shares; cost - $61,989,581) - - PBHG Insurance Series Fund at fair value (note 2): PBHG Large Cap Growth Portfolio (401,761 shares; cost - $4,598,913) 4,748,811 - PBHG Growth II Portfolio (629,476 shares; cost - $6,856,693) - 6,766,864 Receivable from affiliate 19,040 423 Receivable for units sold 24,969 241,497 - ------------------------------------------------------------------------------------------------------- Total assets 4,792,820 7,008,784 - ------------------------------------------------------------------------------------------------------- Liabilities - ------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 21,750 5,127 Payable for units withdrawn 52,803 51,717 - ------------------------------------------------------------------------------------------------------- Total liabilities 74,553 56,844 - ------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders 4,718,267 6,951,940 - ------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 55,997 76,611 - ------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I 11.73 10.67 - ------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 346,833 576,010 - ------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II 11.71 10.65 - -------------------------------------------------------------------------------------------------------
Statements of Assets and Liabilities, Continued - -----------------------------------------------------------------------------
Janus Aspen Series ----------------------------------------------------------- Aggressive Worldwide Growth Growth Growth Balanced Assets Portfolio Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------------------------------------- Investment in Janus Aspen Series, at fair value (note 2): Aggressive Growth Portfolio (5,150,041 shares; cost - $90,470,714) 105,833,338 - - - Growth Portfolio (12,128,299 shares; cost - $177,459,821) - 224,130,972 - - Worldwide Growth Portfolio (14,763,565 shares; cost - $285,300,634) - - 345,319,777 - Balanced Portfolio (4,444,303 shares; cost - $72,670,094) - - - 77,641,966 Flexible Income Portfolio (1,218,449 shares; cost - $14,017,277) - - - - International Growth Portfolio (3,130,281 shares; cost - $56,025,325) - - - - Capital Appreciation Portfolio (214,897 shares; cost - $2,699,822) - - - - Receivable from affiliate 48,595 24,477 118,902 52,126 Receivable for units sold 10,900 166,892 194,595 5,036 - ------------------------------------------------------------------------------------------------------------------------------- Total assets 105,892,833 224,322,341 345,633,274 77,699,128 - ------------------------------------------------------------------------------------------------------------------------------- Liabilities - ------------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 77,711 253,424 249,062 52,851 Payable for units withdrawn - - 258,130 8,042 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities 77,711 253,424 507,192 60,893 - ------------------------------------------------------------------------------------------------------------------------------- Net assets attributable to variable deferred annuity contractholders $105,815,122 224,068,917 345,126,082 77,638,235 - ------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 1,817,576 4,505,765 4,938,272 2,481,552 - ------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type I 20.26 19.15 23.10 14.73 - ------------------------------------------------------------------------------------------------------------------------------- Outstanding units: Type II (note 2) 3,442,667 7,270,898 10,111,685 2,804,435 - ------------------------------------------------------------------------------------------------------------------------------- Net asset value per unit: Type II 20.04 18.95 22.85 14.65 - -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. Statements of Assets and Liabilities, Continued - ------------------------------------------------------------------------------
------------------------------------------- Flexible International Capital Income Growth Appreciation Assets Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------------------------ Investment in Janus Aspen Series, at fair value (note 2): Aggressive Growth Portfolio (5,150,041 shares; cost - $90,470,714) - - - Growth Portfolio (12,128,299 shares; cost - $177,459,821) - - - Worldwide Growth Portfolio (14,763,565 shares; cost - $285,300,634) - - - Balanced Portfolio (4,444,303 shares; cost - $72,670,094) - - - Flexible Income Portfolio (1,218,449 shares; cost - $14,017,277) 14,353,326 - - International Growth Portfolio (3,130,281 shares; cost - $56,025,325) - 57,847,585 - Capital Appreciation Portfolio (214,897 shares; cost - $2,699,822) - - 2,712,004 Receivable from affiliate 4,412 34,124 812 Receivable for units sold 42,930 - 1,500 - ------------------------------------------------------------------------------------------------------------------ Total assets 14,400,668 57,881,709 2,714,316 - ------------------------------------------------------------------------------------------------------------------ Liabilities - ------------------------------------------------------------------------------------------------------------------ Accrued expenses payable to affiliate (note 3) 10,126 40,026 39,487 Payable for units withdrawn 53,791 3,175,957 5,254 - ------------------------------------------------------------------------------------------------------------------ Total liabilities 63,917 3,215,983 44,741 - ------------------------------------------------------------------------------------------------------------------ Net assets attributable to variable deferred annuity contractholders 14,336,751 54,665,726 2,669,575 - ------------------------------------------------------------------------------------------------------------------ Outstanding units: Type I (note 2) 280,878 1,004,669 49,257 - ------------------------------------------------------------------------------------------------------------------ Net asset value per unit: Type I 12.52 13.69 12.56 - ------------------------------------------------------------------------------------------------------------------ Outstanding units: Type II (note 2) 869,089 3,001,600 163,550 - ------------------------------------------------------------------------------------------------------------------ Net asset value per unit: Type II 12.45 13.63 12.54 - ------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) - ------------------------------------------------------------------------------------------------- S&P 500 Government Index Securities Fund Fund -------------------------------- ------------------------------- Year ended December 31, Year ended December 31, 1997 1996 1995 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends 4,001,897 23,435,279 411,769 - 1,309,648 565,524 Expenses - Mortality and expense risk charges (note 3) 1,356,740 492,403 139,329 147,796 143,919 83,929 - ---------------------------------------------------------------------------------------------------------- Net investment income (expense) 2,645,157 22,942,876 272,440 (147,796) 1,165,729 481,595 - ---------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) (899,446) 1,510,464 345,068 (242,895) (68,248) (20,275) Unrealized appreciation (depreciation) on investments 21,611,136 (16,204,375) 2,539,788 987,049 (995,503) 567,616 - ---------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 20,711,690 (14,693,911) 2,884,856 744,154 (1,063,751) 547,341 - ---------------------------------------------------------------------------------------------------------- Increase in net assets from operations 23,356,847 8,248,965 3,157,296 596,358 101,978 1,028,936 - ----------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) ----------------------------------------------------------------- Money Market Total Return Fund Fund --------------------------------- ---------------------------------- Year ended December 31, Year ended December 31, 1997 1996 1995 1997 1996 1995 - -------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends 5,626,589 5,204,323 1,098,198 6,098,862 9,319,880 1,576,466 Expenses - Mortality and expense risk charges (note 3) 1,421,044 980,270 144,841 496,469 357,589 187,419 - -------------------------------------------------------------------------------------------------------- Net investment income (expense) 4,205,545 4,224,053 953,357 5,602,393 8,962,291 1,389,047 - -------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) (4,421,730) 1,686,452 312,501 (454,827) 614,446 308,073 Unrealized appreciation (depreciation) on investments 4,383,879 (2,984,484) (757,472) 657,828 (6,827,262) 1,987,241 - -------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (37,851) (1,298,032) (444,971) 203,001 (6,212,816) 2,295,314 - -------------------------------------------------------------------------------------------------------- Increase in net assets from operations 4,167,694 2,926,021 508,386 5,805,394 2,749,475 3,684,361 - --------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) ------------------------------------------------------------------------------- International Real Estate Equity Securities Fund Fund --------------------------------- ---------------------------------------- Period from Period from May 23, May 2, Year ended Year ended 1995 to Year ended Year ended 1995 to December 31 December 31 December 31, December 31, December 31, December 31 1997 1996 1995 1997 1996 1995 - ------------------------------------------------------- ----------------------- ----------------------------------------- Investment income: Income - Dividends 2,686,699 1,056,063 31,010 5,456,896 1,627,291 670,339 Expenses - Mortality and expense risk charges (note 3) 113,987 56,953 4,298 292,230 49,030 2,663 - ------------------------------------------------------- ----------------------- ----------------------------------------- Net investment income 2,572,712 999,110 26,712 5,164,666 1,578,261 667,676 - ------------------------------------------------------- ----------------------- ----------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 665,649 86,537 646 2,710,582 299,159 24,928 Unrealized appreciation (depreciation) on investments (1,565,382) (11,119) 25,880 (1,305,117) 4,059,521 1,049,744 - ------------------------------------------------------- ------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (899,733) 75,418 26,526 1,405,465 4,358,680 1,074,672 - ------------------------------------------------------- ------------------------------------------------------------------ Increase in net assets from operations 1,672,979 1,074,528 53,238 6,570,131 5,936,941 1,742,348 - ------------------------------------------------------- ------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) ------------------------------------------- Global Value Income Equity Income Fund Fund Fund ---------- ---------- ---------- Period from Period from Period from May 1, May 1, December 12, 1997 to 1997 to 1997 to December 31 December 31 December 31, 1997 1997 1997 - ------------------------------------------------------------------------------------ Investment income: Income - Dividends 300,672 142,788 58,034 Expenses - Mortality and expense risk charges (note 3) 2,982 38,307 14,197 - ------------------------------------------------------------------------------------ Net investment income 297,690 104,481 43,837 - ----------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 2,417 357,048 (6,710) Unrealized appreciation (depreciation) on investments (124,348) 885,799 (12,199) - ----------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (121,931) 1,242,847 (18,909) - ----------------------------------------------------------------------------------- Increase in net assets from operations 175,759 1,347,328 24,928 - -----------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued - -----------------------------------------------------------------
Oppenheimer Variable Account Funds ----------------------------------- Money Fund ---------------------------------- Year ended December 31, 1997 1996 1995 - -------------------------------------------------------------------- Investment income: Income - Dividends $ 110,711 175,537 303,556 Expenses - Mortality and expense risk charges (note 3) 25,908 40,663 64,415 - --------------------------------------------------------------------- Net investment income (expense) 84,803 134,874 239,141 - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain - - - Unrealized appreciation (depreciation) on investments - - - - -------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments - - - - -------------------------------------------------------------------- Increase in net assets from operations $ 84,803 134,874 239,141 - --------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued) --------------------------------------------- Bond Fund ----------------------------------- Year ended December 31, 1997 1996 1995 - --------------------------------------------------------------------- Investment income: Income - Dividends 2,260,511 1,774,226 1,222,079 Expenses - Mortality and expense risk charges (note 3) 437,693 336,825 220,766 - --------------------------------------------------------------------- Net investment income (expense) 1,822,818 1,437,401 1,001,313 - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 187,695 106,242 53,120 Unrealized appreciation (depreciation) on investments 663,371 (442,815) 1,654,610 - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 851,066 (336,573) 1,707,730 - --------------------------------------------------------------------- Increase in net assets from operations 2,673,884 1,100,828 2,709,043 - ---------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued) ----------------------------------------------- Capital Appreciation Fund ------------------------------------ Year ended December 31, 1997 1996 1995 - -------------------------------------------------------------------- Investment income: Income - Dividends 8,221,818 6,069,096 331,803 Expenses - Mortality and expense risk charges (note 3) 2,381,196 1,506,102 868,053 - --------------------------------------------------------------------- Net investment income (expense) 5,840,622 4,562,994 (536,250) - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 6,868,228 6,301,279 1,666,666 Unrealized appreciation (depreciation) on investments) 5,927,622 7,478,382 18,977,772 - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 12,795,850 13,779,661 20,644,438 - ---------------------------------------------------------------------- Increase in net assets from operations 18,636,472 18,342,655 20,108,188 - ----------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued) --------------------------------------------- Growth Fund --------------------------------- Year ended December 31, 1997 1996 1995 - ---------------------------------------------------------------------------- Investment income: Income - Dividends 4,911,400 3,110,376 393,011 Expenses - Mortality and expense risk charges (note 3) 1,372,378 599,846 265,718 - ---------------------------------------------------------------------------- Net investment income (expense) 3,539,022 2,510,530 127,293 - ---------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 5,826,603 1,959,742 739,151 Unrealized appreciation (depreciation) on investments) 11,621,155 5,568,726 5,287,316 - ---------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 17,447,758 7,528,468 6,026,467 - ---------------------------------------------------------------------------- Increase in net assets from operations 20,986,780 10,038,998 6,153,760 - ----------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds (continued) ---------------------------------------------------------------------- High Multiple Income Strategies Fund Fund -------------------------------- ------------------------------------- Year ended December 31, Year ended December 31, 1997 1996 1995 1997 1996 1995 - ------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $9,138,791 6,387,294 3,582,283 4,485,399 3,343,955 2,521,297 Expenses - Mortality and expense risk charges (note 3) 1,397,317 825,956 471,932 794,598 571,993 410,701 - ------------------------------------------------------------------------------------------------------ Net investment income 7,741,474 5,561,338 3,110,351 3,690,801 2,771,962 2,110,596 - ------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 1,298,149 763,575 (105,319) 1,435,981 701,256 353,442 Unrealized appreciation (depreciation) on investments) 2,089,422 2,079,281 2,497,291 4,025,778 2,786,345 3,750,075 - ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 3,387,571 2,842,856 2,391,972 5,461,759 3,487,601 4,103,517 - ----------------------------------------------------------------------------------------------------- Increase in net assets from operations $11,129,045 8,404,194 5,502,323 9,152,560 6,259,563 6,214,113 - -----------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ----------------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund -------------------------------------------------------------------------------------------------- High Equity- Money Market Income Income Portfolio Portfolio Portfolio -------------------------------- ----------------------------------------------------------------- Year ended December 31, Year ended December 31, Year ended December 31, 1997 1996 1995 1997 1996 1995 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $843,023 1,655,033 3,320,468 1,930,318 2,780,632 1,144,671 42,510,440 12,605,854 10,037,638 Expenses - Mortality and expense risk charges (note 3) 212,121 382,911 699,880 277,254 332,922 297,241 6,650,343 4,253,036 2,138,272 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) 630,902 1,272,122 2,620,588 1,653,064 2,447,710 847,430 35,860,097 8,352,818 7,899,366 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) - - - 4,673,705 479,085 425,760 15,417,526 9,394,625 4,284,587 Unrealized appreciation (depreciation) on investments - - - (2,814,608) 308,688 2,702,738 65,899,106 23,601,942 37,953,951 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments - - - 1,859,097 787,773 3,128,498 81,316,632 32,996,567 42,238,538 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $630,902 1,272,122 2,620,588 3,512,161 3,235,483 3,975,928 117,176,729 41,349,385 50,137,904 - -----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund ---------------------------------------- Growth Portfolio (continued) --------------------------------------- Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------- Investment income: Income - Dividends 9,229,913 13,903,188 567,790 Expenses - Mortality and expense risk charges (note 3) 3,552,903 2,834,086 1,696,933 - ---------------------------------------------------------------------- Net investment income (expense) 5,677,010 11,069,102 (1,129,143) - ---------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 14,576,544 9,229,819 7,510,176 Unrealized appreciation (depreciation) on investments) 34,536,532 6,990,625 29,804,134 - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 49,113,076 16,220,444 37,314,310 - --------------------------------------------------------------------- Increase in net assets from operations 54,790,086 27,289,546 36,185,167 - ---------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- --------------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund Variable Insurance Products Fund II -------------------------------- --------------------------------------------------- Asset Overseas Manager Contrafund Portfolio Portfolio Portfolio ------------------------------- ------------------------------- --------------------- Year ended Year ended Year ended December 31, Year ended December 31, December 31, December 31, 1997 1996 1995 1997 1996 1995 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income - Dividends $9,303,257 2,309,161 644,375 52,909,448 27,801,550 9,085,957 4,672,962 634,656 Expenses - Mortality and expense risk charges (note 3) 1,401,167 1,245,263 999,548 5,474,604 4,059,911 4,926,810 2,588,608 1,322,883 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) 7,902,090 1,063,898 (355,173) 47,434,844 23,741,639 4,159,147 2,084,354 (688,227) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments: Net realized gain 6,802,686 2,693,770 734,798 9,093,636 7,507,674 1,958,733 9,468,307 2,738,082 Unrealized appreciation (depreciation) on investments (3,387,543) 7,585,836 6,428,977 24,430,304 23,008,153 55,306,129 26,750,686 17,275,767 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 3,415,143 10,279,606 7,163,775 33,523,940 30,515,827 57,264,862 36,218,993 20,013,849 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations $ 11,317,233 11,343,504 6,808,602 80,958,784 54,257,466 61,424,009 38,303,347 19,325,622 - -----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Variable Insurance Products Fund II (continued) Fund III ----------------------------- -------------------------- Growth & Growth Contrafund Income Opportunities Portfolio Portfolio Portfolio ------------- --------- ---------- Period from Period from Period from January 5, May 1, May 1, 1995 to 1997 to 1997 to December 3 December 31, December 31, 1995 1997 1997 - ------------------------------------------------------- ------------------------- Investment income: Income - Dividends 784,088 - - Expenses - Mortality and expense risk charges (note 3) 323,922 53,296 69,440 - ----------------------------------------------------- ------------------------- Net investment income (expense) 460,166 (53,296) (69,440) - ----------------------------------------------------- ------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 905,255 103,153 67,071 Unrealized appreciation (depreciation) on investments 4,218,866 458,100 1,055,758 - ----------------------------------------------------- ----------------------- Net realized and unrealized gain on investments 5,124,121 561,253 1,122,829 - ----------------------------------------------------- ----------------------- Increase in net assets from operations 5,584,287 507,957 1,053,389 - ------------------------------------------------------- ----------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ------------------------------------------------------------------------------------------------------ Neuberger & Berman Advisers Management Trust --------------------------------------------------------------------- Balanced Bond Portfolio Portfolio -------------------------------- ------------------------------------ Year ended December 31, Year ended December 31, 1997 1996 1995 1997 1996 1995 - ------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $1,992,971 5,226,886 748,770 550,544 1,231,424 958,338 Expenses - Mortality and expense risk charges (note 3) 337,918 381,777 385,789 99,586 151,484 210,707 - ----------------------------------------------- ---------------------------------------------------- Net investment income 1,655,053 4,845,109 362,981 450,958 1,079,940 747,631 - ----------------------------------------------- ---------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 5,097,861 419,822 895,552 12,018 (136,701) 45,793 Unrealized appreciation (depreciation) on investments) (2,501,835) (3,501,201) 5,264,633 (23,525) (646,673) 816,276 - ------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 2,596,026 (3,081,379) 6,160,185 (11,507) (783,374) 862,069 - ------------------------------------------------------------------------------------------------------ Increase in net assets from operations $ 4,251,079 1,763,730 6,523,166 439,451 296,566 1,609,700 - ------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------- Neuberger & Berman Advisers Management Trust (continued) ----------------------------------- Growth Portfolio ----------------------------------- Year ended December 31, 1997 1996 1995 - -------------------------------------------------------------------- Investment income: Income - Dividends 903,849 1,152,528 246,676 Expenses - Mortality and expense risk charges (note 3) 132,989 146,484 127,144 - -------------------------------------------------------------------- Net investment income 770,860 1,006,044 119,532 - -------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 2,304,768 315,046 242,067 Unrealized appreciation (depreciation) on investments) (880,241) (363,320) 1,957,190 - -------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1,424,527 (48,274) 2,199,257 - -------------------------------------------------------------------- Increase in net assets from operations 2,195,387 957,770 2,318,789 - ---------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ----------------------------------------------------------------------------------------------------------------------- Federated Investors Insurance Series -------------------------------------------------------------------------------------- American High Income Leaders Bond Utility Fund II Fund II Fund II --------------------- ------------------------------- -------------------------------- Year ended Period from Year ended Year ended Period from Year ended Year ended Period from December 31, May 6, 1996 to December 31, December 31, February 3, December 31, December 31, January 27, 1997 December 31, 1997 1996 1995 to 1997 1996 1995 to 1996 December 31, December 31, 1995 1995 - ---------------------------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $228,362 15,977 1,129,533 579,337 45,272 1,046,132 766,616 223,744 Expenses - Mortality and expense risk charges (note 3) 228,448 12,003 302,211 87,381 6,392 326,253 243,314 61,497 - ---------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) (86) 3,974 827,322 491,956 38,880 719,879 523,302 162,247 - ---------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 544,140 29,680 630,351 31,769 3,368 731,431 336,527 90,613 Unrealized appreciation (depreciation) on investments 3,385,309 162,046 1,256,745 424,014 26,388 4,302,272 1,113,241 914,307 - ---------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) loss on investments 3,929,449 191,726 1,887,096 455,783 29,756 5,033,703 1,449,768 1,004,920 - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $3,929,363 195,700 2,714,418 947,739 68,636 5,753,582 1,973,070 1,167,167 - ----------------------------------------------------------------------------------------------------------------------------------
Alger American ---------------------------------------------------------------- Small Cap Growth Portfolio Portfolio -------------------------------- ------------------------------- Period from Period from October 3, October 4, Year ended Year ended 1995 to Year ended Year ended 1995 to December 31, December 31, December 31, December 31, December 31, December 31, 1997 1996 1995 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends 2,044,748 105,411 - 528,437 668,828 - Expenses - Mortality and expense risk charges (note 3) 799,242 414,206 9,745 811,338 358,846 6,776 - ---------------------------------------------------------------------------------------------------------- Net investment income (expense) 1,245,506 (308,795) (9,745) (282,901) 309,982 (6,776) - ----------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 411,624 (122,299) (20,417) 3,954,588 315,644 (2,380) Unrealized appreciation (depreciation) on investments) 4,016,910 (80,937) (25,048) 8,095,163 2,224,353 27,240 - ----------------------------------------------------------------------------------------------------------- Net realized and unrealized gain loss) on investments 4,428,534 (203,236) (45,465) 12,049,751 2,539,997 24,860 - ----------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 5,674,040 (512,031) (55,210) 11,766,850 2,849,979 18,084 - ------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ----------------------------------------------------------------- PBHG Insurance Series Fund --------------------- PBHG Large Cap PBHG Growth Growth II Portfolio Portfolio ---------- ---------- Period from Period from May 1, May 1, 1997 to 1997 to December 31, December 31, 1997 1997 - ------------------------------------------------------------------------- Investment income: Income - Dividends $ - - Expenses - Mortality and expense risk charges (note 3) 17,112 30,512 - --------------------------------------------------------------------- Net investment income (expense) (17,112) (30,512) - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 13,525 7,643 Unrealized appreciation (depreciation) on investments 149,898 (89,829) - --------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 163,423 (82,186) - --------------------------------------------------------------------- Increase (decrease) in net assets from operations $ 146,311 (112,698) - ---------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Series -------------------------------------------------------------------------- Aggressive Growth Growth Portfolio Portfolio ------------------------------------ ------------------------------------ Year ended Year ended December 31, December 31, 1997 1996 1995 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------ Investment income: Income - Dividends $ - 755,467 701,550 5,821,316 3,316,849 1,774,926 Expenses - Mortality and expense risk charges (note 3) 1,187,720 880,271 464,496 2,533,302 1,496,337 686,203 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) (1,187,720) (124,804) 237,054 3,288,014 1,820,512 1,088,723 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments: Net realized gain 6,675,700 3,422,984 1,735,504 9,346,395 4,286,543 1,220,855 Unrealized appreciation (depreciation) on investments 5,540,954 109,555 7,840,280 23,212,981 11,457,707 11,886,046 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 12,216,654 3,532,539 9,575,784 32,559,376 15,744,250 13,106,901 - ------------------------------------------------------------------------------------------------------------------------------ Increase in net assets from operations $ 11,028,934 3,407,735 9,812,838 35,847,390 17,564,762 14,195,624 - ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued) -------------------------------------- Worldwide Growth Portfolio ------------------------------------ Year ended December 31, 1997 1996 1995 - ---------------------------------------------------------------------------------------- Investment income: Income - Dividends 4,490,822 2,094,632 225,282 Expenses - Mortality and expense risk charges (note 3) 3,656,021 1,418,611 477,320 - ---------------------------------------------------------------------------------------- Net investment income (expense) 834,801 676,021 (252,038) - ---------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 11,585,008 5,069,677 439,501 Unrealized appreciation (depreciation) on investments 32,530,512 18,944,795 9,549,318 - ---------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 44,115,520 24,014,472 9,988,819 - ---------------------------------------------------------------------------------------- Increase in net assets from operations 44,950,321 24,690,493 9,736,781 - ----------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued
- ------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Series (continued) -------------------------------------------------------------------------- Flexible Balanced Income Portfolio Portfolio -------------------------------------- ------------------------------------ Period from Period from October 11, October 13, Year ended Year ended 1995 to Year ended 1995 to December 31,December 31, December 31, December 31, December 31, 1997 1996 1995 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------ Investment income: Income - Dividends $ 1,376,630 283,521 12,299 699,223 288,802 20,133 Expenses - Mortality and expense risk charges (note 3) 445,275 113,425 2,009 120,354 40,424 980 - ------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) 931,355 170,096 10,290 578,869 248,378 19,153 - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments: Net realized gain 1,239,519 122,576 9,364 86,470 4,524 29 Unrealized appreciation (depreciation) on investments 4,013,343 920,620 37,909 269,390 68,898 (2,240) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 5,252,862 1,043,196 47,273 355,860 73,422 (2,211) - ------------------------------------------------------------------------------------------------------------------------------ Increase in net assets from operations $ 6,184,217 1,213,292 57,563 934,729 321,800 16,942 - ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued) ----------------------------------------- International Capital Growth Appreciation Portfolio Portfolio ----------------------- -------------- Period from Period from May 3, 1996 May 2, 1997 Year ended to December 31, December 31, December 31, 1997 1996 1997 - ------------------------------------------------------------------------------------------- Investment income: Income - Dividends 348,585 54,433 8,437 Expenses - Mortality and expense risk charges (note 3) 516,236 45,378 9,981 - -------------------------------------------------------------------------------------------- Net investment income (expense) (167,651) 9,055 (1,544) - -------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 3,329,942 187,391 31,894 Unrealized appreciation (depreciation) on investments 1,235,644 586,615 12,182 - -------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 4,565,586 774,006 44,076 - -------------------------------------------------------------------------------------------- Increase in net assets from operations 4,397,935 783,061 42,532 - --------------------------------------------------------------------------------------------
See accompanying notes to financial statements. LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) ---------------------------------------------------- S&P 500 Index Fund --------------------------------------------------- Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 2,645,157 22,942,876 272,440 Net realized gain (loss) (899,446) 1,510,464 345,068 Unrealized appreciation (depreciation) on investments 21,611,136 (16,204,375) 2,539,788 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 23,356,847 8,248,965 3,157,296 - ----------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 40,575,050 18,225,715 7,357,078 Transfers (to) from the general account of Life of Virginia: Death benefits (1,735,027) (77,864) (143,652) Surrenders (3,415,596) (1,079,082) (306,506) Administrative expense (note 3) (102,362) (45,091) (22,813) Transfer gain (loss) and transfer fees (4,503) 7,463 (8,822) Transfers (to) from the Guarantee Account (note 1) 14,747,561 3,139,208 695,771 Interfund transfers 24,135,903 5,665,381 5,341,899 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 74,201,026 25,835,730 12,912,955 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 97,557,873 34,084,695 16,070,251 Net assets at beginning of year 55,868,451 21,783,756 5,713,505 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ 153,426,324 55,868,451 21,783,756 - -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) -------------------------------------------------------------------------- Government Securities Fund ------------------------------------------------------ Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) (147,796) 1,165,729 481,595 Net realized gain (loss) (242,895) (68,248) (20,275) Unrealized appreciation (depreciation) on investments 987,049 (995,503) 567,616 - ------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 596,358 101,978 1,028,936 - ------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 1,053,538 3,734,757 1,619,783 Transfers (to) from the general account of Life of Virginia: Death benefits (64,230) (76,802) (44,216) Surrenders (666,510) (492,750) (500,706) Administrative expense (note 3) (18,501) (21,731) (17,040) Transfer gain (loss) and transfer fees (36,688) 8,420 (9,439) Transfers (to) from the Guarantee Account (note 1) 827,432 135,548 60,927 Interfund transfers (14,821,369) (65,339) 2,038,922 - ------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions (13,726,328) 3,222,103 3,148,231 - ------------------------------------------------------------------------------------------------------------- Increase in net assets (13,129,970) 3,324,081 4,177,167 Net assets at beginning of year 13,129,970 9,805,889 5,628,722 - ------------------------------------------------------------------------------------------------------------- Net assets at end of year - 13,129,970 9,805,889 - -------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) ---------------------------------------------------------- Money Market Fund ------------------------------------------------- Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets From operations: Net investment income (expense) 4,205,545 4,224,053 953,357 Net realized gain (loss) (4,421,730) 1,686,452 312,501 Unrealized appreciation (depreciation) on investments 4,383,879 (2,984,484) (757,472) - ------------------------------------------------------------------------------------------------------------ Increase in net assets from operations 4,167,694 2,926,021 508,386 - ------------------------------------------------------------------------------------------------------------ From capital transactions: Net premiums 107,140,555 153,728,177 52,511,585 Transfers (to) from the general account of Life of Virginia: Death benefits (1,753,311) (781,386) (4,954) Surrenders (18,383,973) (8,255,412) (2,099,100) Administrative expense (note 3) (134,339) (78,769) (17,072) Transfer gain (loss) and transfer fees (130,614) 28,173 52,426 Transfers (to) from the Guarantee Account (note 1) 10,195,112 4,298,099 4,957,966 Interfund transfers (67,593,593) (93,981,321) (30,878,764) - ------------------------------------------------------------------------------------------------------------ Increase in net assets from capital transactions 29,339,837 54,957,561 24,522,087 - ------------------------------------------------------------------------------------------------------------ Increase in net assets 33,507,531 57,883,582 25,030,473 Net assets at beginning of year 90,187,173 32,303,591 7,273,118 - ------------------------------------------------------------------------------------------------------------ Net assets at end of year 123,694,704 90,187,173 32,303,591 - ------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) - -------------------------------------------------------------------------------------------------------------- Total Return Fund - -------------------------------------------------------------------------------------------------------------- Year ended December 31, 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 5,602,393 8,962,291 1,389,047 Net realized gain (loss) (454,827) 614,446 308,073 Unrealized appreciation (depreciation) on investments 657,828 (6,827,262) 1,987,241 - ---------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 5,805,394 2,749,475 3,684,361 - ---------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 5,641,626 8,515,814 4,777,568 Transfers (to) from the general account of Life of Virginia: Death benefits (271,179) (153,153) (184,615) Surrenders (2,558,265) (946,894) (685,070) Administrative expense (note 3) (60,731) (51,588) (40,610) Transfer gain (loss) and transfer fees (15,082) (69,616) 5,627 Transfers (to) from the Guarantee Account (note 1) 2,622,768 919,901 401,449 Interfund transfers (231,875) 75,151 2,419,115 - ---------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 5,127,262 8,289,615 6,693,464 - ---------------------------------------------------------------------------------------------------------------- Increase in net assets 10,932,656 11,039,090 10,377,825 Net assets at beginning of year 33,594,461 22,555,371 12,177,546 - ---------------------------------------------------------------------------------------------------------------- Net assets at end of year 44,527,117 33,594,461 22,555,371 - ----------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ---------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) --------------------------------------------- International Equity Fund -------------------------------------------- Period from May 23, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets From operations: Net investment income $ 2,572,712 999,110 26,712 Net realized gain (loss) 665,649 86,537 646 Unrealized appreciation (depreciation) on investments (1,565,382) (11,119) 25,880 - ------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 1,672,979 1,074,528 53,238 - ------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 1,854,537 2,563,735 332,761 Transfers (to) from the general account of Life of Virginia: Death benefits (2,360) (3,522) (2,053) Surrenders (349,063) (103,501) (1,796) Administrative expense (note 3) (10,458) (6,060) (661) Transfer gain and transfer fees 49,348 (92,027) 1,565 Capital contribution - 10,925,561 - Transfers from the Guarantee Account (note 1) 1,095,648 557,466 101,612 Interfund transfers 664,758 1,263,184 1,237,114 - ------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 3,302,410 15,104,836 1,668,542 - ------------------------------------------------------------------------------------------------------------------- Increase in net assets 4,975,389 16,179,364 1,721,780 Net assets at beginning of period 17,901,144 1,721,780 - - ------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 22,876,533 17,901,144 1,721,780 - -------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) ------------------------------------------------------- Real Estate Securities Fund ------------------------------------------------------- Period from May 2, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income 5,164,666 1,578,261 667,676 Net realized gain (loss) 2,710,582 299,159 24,928 Unrealized appreciation (depreciation) on investments (1,305,117) 4,059,521 1,049,744 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 6,570,131 5,936,941 1,742,348 - ----------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 10,679,221 2,949,990 301,414 Transfers (to) from the general account of Life of Virginia: Death benefits (18,462) - (1,392) Surrenders (654,786) (41,760) (1,136) Administrative expense (note 3) (19,846) (3,136) (286) Transfer gain and transfer fees 122,915 (107,856) 1,212 Capital contribution - - 10,000,000 Transfers from the Guarantee Account (note 1) 4,443,497 539,647 70,614 Interfund transfers 5,849,780 4,063,439 261,308 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 20,402,319 7,400,324 10,631,734 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 26,972,450 13,337,265 12,374,082 Net assets at beginning of period 25,711,347 12,374,082 - - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period 52,683,797 25,711,347 12,374,082 - -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.) (continued) ---------------------------------------------------------------- Global Value Income Equity Income Fund Fund Fund ------------------ ----------------- ----------------- Period from Period from Period from May 1, May 1, December 12, 1997 to 1997 to 1997 to December 31, December 31, December 31, 1997 1997 1997 - -------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income 297,690 104,481 43,837 Net realized gain (loss) 2,417 357,048 (6,710) Unrealized appreciation (depreciation) on investments (124,348) 885,799 (12,199) - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 175,759 1,347,328 24,928 - -------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 198,123 3,244,942 19,521 Transfers (to) from the general account of Life of Virginia: Death benefits - (1,960) - Surrenders (5,701) (75,503) (59,137) Administrative expense (note 3) (209) (1,938) (2,414) Transfer gain and transfer fees (472) 15,109 (467) Capital contribution 5,000,000 3,000,000 - Transfers from the Guarantee Account (note 1) 234,749 2,034,025 52,096 Interfund transfers 513,049 6,338,005 21,976,333 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 5,939,539 14,552,680 21,985,932 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 6,115,298 15,900,008 22,010,860 Net assets at beginning of period - - - - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period 6,115,298 15,900,008 22,010,860 - --------------------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ----------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds -------------------------------------------------------- Money Fund ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 84,803 134,874 239,141 Net realized gain - - - Unrealized appreciation (depreciation) on investments - - - - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 84,803 134,874 239,141 - ----------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 440 1,000 1,236,189 Transfers (to) from the general account of Life of Virginia: Death benefits - (25,650) - Surrenders $ (84,605) (248,877) (534,163) Administrative expense (note 3) - (7,741) (12,911) Transfer gain (loss) and transfer fees (4,611) (6,711) (10,807) Transfers (to) from the Guarantee Account (note 1) (9,897) (72,686) (522,980) Interfund transfers (2,736,806) (1,858,335) (3,724,005) - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (2,835,479) (2,219,000) (3,568,677) - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (2,750,676) (2,084,126) (3,329,536) Net assets at beginning of year 2,750,676 4,834,802 8,164,338 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ - 2,750,676 4,834,802 - -----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds (continued) -------------------------------------------------------- Bond Fund ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 1,822,818 1,437,401 1,001,313 Net realized gain 187,695 106,242 53,120 Unrealized appreciation (depreciation) on investments 663,371 (442,815) 1,654,610 - -------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 2,673,884 1,100,828 2,709,043 - -------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 3,472,666 6,447,661 3,897,393 Transfers (to) from the general account of Life of Virginia: Death benefits (234,610) (255,232) (103,070) Surrenders (2,350,488) (1,174,644) (1,044,752) Administrative expense (note 3) (53,814) (47,633) (43,224) Transfer gain (loss) and transfer fees (12,509) 15,212 (70,035) Transfers (to) from the Guarantee Account (note 1) 3,535,189 1,424,034 277,812 Interfund transfers 1,076,424 1,248,636 1,434,738 - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 5,432,858 7,658,034 4,348,862 - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 8,106,742 8,758,862 7,057,905 Net assets at beginning of year 31,638,941 22,880,079 15,822,174 - -------------------------------------------------------------------------------------------------------------------------- Net assets at end of year 39,745,683 31,638,941 22,880,079 - --------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds (continued) -------------------------------------------------------- Capital Appreciation Fund ------------------------------------------------------ Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 5,840,622 4,562,994 (536,250) Net realized gain 6,868,228 6,301,279 1,666,666 Unrealized appreciation (depreciation) on investments 5,927,622 7,478,382 18,977,772 - ------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 18,636,472 18,342,655 20,108,188 - ------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 25,418,900 35,523,585 13,056,769 Transfers (to) from the general account of Life of Virginia: Death benefits (450,528) (577,949) (315,870) Surrenders (7,755,383) (5,679,609) (3,725,572) Administrative expense (note 3) (291,649) (237,053) (179,980) Transfer gain (loss) and transfer fees (53,714) (234,268) (110,449) Transfers (to) from the Guarantee Account (note 1) 13,461,161 5,093,547 910,511 Interfund transfers 37,796 16,982,928 899,125 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 30,366,583 50,871,181 10,534,534 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 49,003,055 69,213,836 30,642,722 Net assets at beginning of year 158,844,181 89,630,345 58,987,623 - ------------------------------------------------------------------------------------------------------------------------- Net assets at end of year 207,847,236 158,844,181 89,630,345 - -------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds (continued) ------------------------------------------------------ Growth Fund ------------------------------------------------------ Year ended December 31, 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 3,539,022 2,510,530 127,293 Net realized gain 5,826,603 1,959,742 739,151 Unrealized appreciation (depreciation) on investments 11,621,155 5,568,726 5,287,316 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 20,986,780 10,038,998 6,153,760 - ---------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 31,719,458 15,322,231 8,623,363 Transfers (to) from the general account of Life of Virginia: Death benefits (350,617) (246,052) (11,683) Surrenders (5,238,134) (1,802,707) (531,276) Administrative expense (note 3) (138,883) (79,593) (49,718) Transfer gain (loss) and transfer fees (28,403) (9,390) (2,381) Transfers (to) from the Guarantee Account (note 1) 12,928,357 2,323,647 807,793 Interfund transfers 11,277,889 8,265,699 5,644,624 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 50,169,667 23,773,835 14,480,722 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 71,156,447 33,812,833 20,634,482 Net assets at beginning of year 67,859,369 34,046,536 13,412,054 - ---------------------------------------------------------------------------------------------------------------------- Net assets at end of year 139,015,816 67,859,369 34,046,536 - ----------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ----------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds (continued) -------------------------------------------------------- High Income Fund ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income $ 7,741,474 5,561,338 3,110,351 Net realized gain (loss) 1,298,149 763,575 (105,319) Unrealized appreciation (depreciation) on investments 2,089,422 2,079,281 2,497,291 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 11,129,045 8,404,194 5,502,323 - ----------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 21,931,355 22,356,655 11,530,804 Transfers (to) from the general account of Life of Virginia: Death benefits (689,590) (693,092) (69,961) Surrenders (5,920,831) (2,655,530) (1,461,891) Administrative expense (note 3) (139,006) (100,320) (73,580) Transfer gain (loss) and transfer fees (112,330) (25,953) 144,255 Transfers (to) from the Guarantee Account (note 1) 12,750,648 3,777,050 1,497,477 Interfund transfers 23,573,698 9,730,803 2,860,809 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 51,393,944 32,389,613 14,427,913 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets 62,522,989 40,793,807 19,930,236 Net assets at beginning of year 85,762,637 44,968,830 25,038,594 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ 148,285,626 85,762,637 44,968,830 - -----------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds (continued) ------------------------------------------------------- Multiple Strategies Fund ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income 3,690,801 2,771,962 2,110,596 Net realized gain (loss) 1,435,981 701,256 353,442 Unrealized appreciation (depreciation) on investments 4,025,778 2,786,345 3,750,075 - ------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 9,152,560 6,259,563 6,214,113 - ------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 9,089,218 8,520,761 4,566,130 Transfers (to) from the general account of Life of Virginia: Death benefits (332,263) (389,751) (183,215) Surrenders (4,493,985) (2,097,537) (1,641,635) Administrative expense (note 3) (119,442) (104,392) (93,990) Transfer gain (loss) and transfer fees (8,995) (27,395) (65,699) Transfers (to) from the Guarantee Account (note 1) 4,101,390 1,507,791 282,847 Interfund transfers 516,158 198,943 787,704 - ------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 8,752,081 7,608,420 3,652,142 - ------------------------------------------------------------------------------------------------------------------------- Increase in net assets 17,904,641 13,867,983 9,866,255 Net assets at beginning of year 54,118,912 40,250,929 30,384,674 - ------------------------------------------------------------------------------------------------------------------------- Net assets at end of year 72,023,553 54,118,912 40,250,929 - -------------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ----------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund -------------------------------------------------------- Money Market Portfolio ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 630,902 1,272,122 2,620,588 Net realized gain - - - Unrealized appreciation (depreciation) on investments - - - - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 630,902 1,272,122 2,620,588 - ----------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums (28,472) 117,921 36,176,530 Transfers (to) from the general account of Life of Virginia: Death benefits (193,170) (458,667) 103,982 Surrenders (1,206,916) (2,213,343) (4,660,173) Administrative expense (note 3) (39,130) (65,257) (121,073) Transfer gain (loss) and transfer fees 86,971 (204,381) 49,754 Transfers (to) from the Guarantee Account (note 1) (27,901) (661,457) (141,309) Interfund transfers (21,205,932) (23,959,305) (47,938,008) - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (22,614,550) (27,444,489) (16,530,297) - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (21,983,648) (26,172,367) (13,909,709) Net assets at beginning of year 21,983,648 48,156,015 62,065,724 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ - 21,983,648 48,156,015 - -----------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund (continued) -------------------------------------------------------- High Income Portfolio ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 1,653,064 2,447,710 847,430 Net realized gain 4,673,705 479,085 425,760 Unrealized appreciation (depreciation) on investments (2,814,608) 308,688 2,702,738 - ------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 3,512,161 3,235,483 3,975,928 - ------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 8,207 (248,987) 7,262,170 Transfers (to) from the general account of Life of Virginia: Death benefits (66,792) (33,131) (117,911) Surrenders (2,281,288) (1,859,776) (953,927) Administrative expense (note 3) (46,012) (54,571) (51,018) Transfer gain (loss) and transfer fees (18,007) (14,545) (10,918) Transfers (to) from the Guarantee Account (note 1) (23,044) (109,624) 860,461 Interfund transfers (25,886,326) (7,008,575) 4,509,566 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (28,313,262) (9,329,209) 11,498,423 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (24,801,101) (6,093,726) 15,474,351 Net assets at beginning of year 24,801,101 30,894,827 15,420,476 - ------------------------------------------------------------------------------------------------------------------------- Net assets at end of year - 24,801,101 30,894,827 - -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund (continued) -------------------------------------------------------- Equity- Income Portfolio ------------------------------------------------------ Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 35,860,097 8,352,818 7,899,366 Net realized gain 15,417,526 9,394,625 4,284,587 Unrealized appreciation (depreciation) on investments 65,899,106 23,601,942 37,953,951 - ------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 117,176,729 41,349,385 50,137,904 - ------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 78,673,490 91,217,558 63,044,040 Transfers (to) from the general account of Life of Virginia: Death benefits (3,144,602) (2,317,929) (623,306) Surrenders (22,544,378) (12,923,609) (7,390,359) Administrative expense (note 3) (744,663) (565,181) (384,060) Transfer gain (loss) and transfer fees (156,609) (81,577) (128,097) Transfers (to) from the Guarantee Account (note 1) 34,236,802 14,669,920 8,592,478 Interfund transfers 4,787,401 12,688,430 43,164,815 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 91,107,441 102,687,612 106,275,511 - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 208,284,170 144,036,997 156,413,415 Net assets at beginning of year 405,298,602 261,261,605 104,848,190 - ------------------------------------------------------------------------------------------------------------------------- Net assets at end of year 613,582,772 405,298,602 261,261,605 - -------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund (continued) ----------------------------------------------------- Growth Portfolio ----------------------------------------------------- Year ended December 31, 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 5,677,010 11,069,102 (1,129,143) Net realized gain 14,576,544 9,229,819 7,510,176 Unrealized appreciation (depreciation) on investments 34,536,532 6,990,625 29,804,134 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 54,790,086 27,289,546 36,185,167 - ---------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 19,742,111 40,351,417 35,842,400 Transfers (to) from the general account of Life of Virginia: Death benefits (1,127,415) (1,395,457) (338,418) Surrenders (15,488,583) (8,362,725) (5,531,711) Administrative expense (note 3) (502,085) (441,506) (345,393) Transfer gain (loss) and transfer fees (84,076) (243,398) 13,309 Transfers (to) from the Guarantee Account (note 1) 9,277,787 7,334,280 3,842,828 Interfund transfers (3,139,585) (3,259,632) 18,922,427 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 8,678,154 33,982,979 52,405,442 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 63,468,240 61,272,525 88,590,609 Net assets at beginning of year 251,545,367 190,272,842 101,682,233 - ---------------------------------------------------------------------------------------------------------------------- Net assets at end of year 315,013,607 251,545,367 190,272,842 - ----------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ----------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund (continued) ------------------------------------------------------- Overseas Portfolio ------------------------------------------------------ Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 7,902,090 1,063,898 (355,173) Net realized gain 6,802,686 2,693,770 734,798 Unrealized appreciation (depreciation) on investments (3,387,543) 7,585,836 6,428,977 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 11,317,233 11,343,504 6,808,602 - ----------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 5,009,263 11,020,984 10,634,049 Transfers (to) from the general account of Life of Virginia: Death benefits (527,674) (528,522) (556,976) Surrenders (5,102,924) (3,972,175) (3,063,268) Administrative expense (note 3) (220,173) (214,759) (208,318) Transfer gain (loss) and transfer fees (38,435) (85,300) (53,050) Transfers (to) from Guarantee Account (note 1) 3,378,950 3,116,987 590,771 Interfund transfers (12,846,872) (4,620,473) (7,084,976) - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (10,347,865) 4,716,742 258,232 - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 969,368 16,060,246 7,066,834 Net assets at beginning of period 107,335,253 91,275,007 84,208,173 - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 108,304,621 107,335,253 91,275,007 - -----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund II --------------------------------------------------------- Asset Manager Portfolio -------------------------------------------------------- Year ended December 31, 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 47,434,844 23,741,639 4,159,147 Net realized gain 9,093,636 7,507,674 1,958,733 Unrealized appreciation (depreciation) on investments 24,430,304 23,008,153 55,306,129 - -------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 80,958,784 54,257,466 61,424,009 - -------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 12,956,133 15,580,792 21,217,331 Transfers (to) from the general account of Life of Virginia: Death benefits (2,389,147) (3,090,108) (2,849,779) Surrenders (26,860,066) (23,863,347) (23,760,769) Administrative expense (note 3) (1,170,300) (1,159,170) (1,245,010) Transfer gain (loss) and transfer fees (5,281,252) (2,150,299) (305,606) Transfers (to) from Guarantee Account (note 1) 4,580,560 2,112,849 (7,015,144) Interfund transfers (14,758,069) (31,512,425) (58,702,053) - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (32,922,141) (44,081,708) (72,661,030) - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 48,036,643 10,175,758 (11,237,021) Net assets at beginning of period 435,838,169 425,662,411 436,899,432 - -------------------------------------------------------------------------------------------------------------------------- Net assets at end of period 483,874,812 435,838,169 425,662,411 - --------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- Variable Insurance Products Fund II (continued) ------------------------------------------------------ Contrafund Portfolio ------------------------------------------------------ Period from January 5, Year ended Year ended 1995 December 31, December 31, December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 2,084,354 (688,227) 460,166 Net realized gain 9,468,307 2,738,082 905,255 Unrealized appreciation (depreciation) on investments 26,750,686 17,275,767 4,218,866 - ----------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 38,303,347 19,325,622 5,584,287 - ----------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 39,049,020 41,520,289 26,666,752 Transfers (to) from the general account of Life of Virginia: Death benefits (778,781) (569,391) (17,699) Surrenders (7,578,528) (3,409,236) (676,614) Administrative expense (note 3) (239,385) (139,550) (42,327) Transfer gain (loss) and transfer fees (1,813) (6,491) (28,134) Transfers (to) from Guarantee Account (note 1) 20,874,655 8,894,897 4,851,438 Interfund transfers 9,642,188 15,486,630 25,426,220 - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 60,967,356 61,777,148 56,179,636 - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 99,270,703 81,102,770 61,763,923 Net assets at beginning of period 142,866,693 61,763,923 - - ----------------------------------------------------------------------------------------------------------------------- Net assets at end of period 242,137,396 142,866,693 61,763,923 - -----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------- Variable Insurance Products Fund III ------------------------------------ Growth & Growth Income Opportunities Portfolio Portfolio ------------------------------------ Period from Period from May 1, May 1, 1997 to 1997 to December 31, December 31, 1997 1997 - ---------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) (53,296) (69,440) Net realized gain 103,153 67,071 Unrealized appreciation (depreciation) on investments 458,100 1,055,758 - ---------------------------------------------------------------------------------------------------- Increase in net assets from operations 507,957 1,053,389 - ---------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 5,782,503 6,759,512 Transfers (to) from the general account of Life of Virginia Death benefits (2,062) (11,218) Surrenders (116,741) (178,411) Administrative expense (note 3) (3,046) (4,370) Transfer gain (loss) and transfer fees 358,955 734 Transfers (to) from Guarantee Account (note 1) 2,665,501 2,684,605 Interfund transfers 6,515,155 6,783,534 - ---------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 15,200,265 16,034,386 - ---------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 15,708,222 17,087,775 Net assets at beginning of period - - - ---------------------------------------------------------------------------------------------------- Net assets at end of period 15,708,222 17,087,775 - ----------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ------------------------------------------------------------------------------------------------------------------------------ Neuberger & Berman Advisers Management Trust --------------------------------------------------------- Balanced Portfolio ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets From operations: Net investment income $ 1,655,053 4,845,109 362,981 Net realized gain (loss) 5,097,861 419,822 895,552 Unrealized appreciation (depreciation) on investments (2,501,835) (3,501,201) 5,264,633 - ------------------------------------------------------------------------------------------------------------------------------ Increase in net assets from operations 4,251,079 1,763,730 6,523,166 - ------------------------------------------------------------------------------------------------------------------------------ From capital transactions: Net premiums (6,001) - 2,535,815 Transfers (to) from the general account of Life of Virginia: Death benefits (126,435) (191,199) (153,937) Surrenders (2,675,228) (2,074,244) (1,503,514) Administrative expense (note 3) (71,576) (82,124) (88,114) Transfer gain (loss) and transfer fees (78,959) (12,205) 7,049 Capital contribution (629,209) - - Transfers (to) from the Guarantee Account (note 1) (185,078) (37,694) (134,229) Interfund transfers (31,241,057) (3,810,712) (2,179,193) - ------------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets from capital transactions (35,013,543) (6,208,178) (1,516,123) - ------------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets (30,762,464) (4,444,448) 5,007,043 Net assets at beginning of year 30,762,464 35,206,912 30,199,869 - ------------------------------------------------------------------------------------------------------------------------------ Net assets at end of year $ - 30,762,464 35,206,912 - ------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- Neuberger & Berman Advisers Management Trust (continued) -------------------------------------------------------- Bond Portfolio ------------------------------------------------------ Year ended December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income 450,958 1,079,940 747,631 Net realized gain (loss) 12,018 (136,701) 45,793 Unrealized appreciation (depreciation) on investments (23,525) (646,673) 816,276 - ----------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 439,451 296,566 1,609,700 - ----------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 1,800 - 4,761,820 Transfers (to) from the general account of Life of Virginia: Death benefits (196,037) (225,838) (7,505) Surrenders (508,821) (366,908) (522,591) Administrative expense (note 3) (15,911) (24,278) (37,167) Transfer gain (loss) and transfer fees (11,476) (9,665) (23,158) Capital contribution - - - Transfers (to) from the Guarantee Account (note 1) (86,454) (92,797) 798,511 Interfund transfers (9,344,589) (5,700,964) (9,447,152) - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (10,161,488) (6,420,450) (4,477,242) - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (9,722,037) (6,123,884) (2,867,542) Net assets at beginning of year 9,722,037 15,845,921 18,713,463 - ----------------------------------------------------------------------------------------------------------------------- Net assets at end of year - 9,722,037 15,845,921 - -----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ Neuberger & Berman Advisers Management Trust (continued) ------------------------------------------------------- Growth Portfolio ------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets From operations: Net investment income 770,860 1,006,044 119,532 Net realized gain (loss) 2,304,768 315,046 242,067 Unrealized appreciation (depreciation) on investments (880,241) (363,320) 1,957,190 - ------------------------------------------------------------------------------------------------------------------------ Increase in net assets from operations 2,195,387 957,770 2,318,789 - ------------------------------------------------------------------------------------------------------------------------ From capital transactions: Net premiums 6,456 4,370 2,833,430 Transfers (to) from the general account of Life of Virginia: Death benefits (58,098) (56,431) (78,819) Surrenders (247,815) (415,296) (251,354) Administrative expense (note 3) (22,353) (25,172) (23,723) Transfer gain (loss) and transfer fees (2,057) (10,420) (697) Capital contribution - - - Transfers (to) from the Guarantee Account (note 1) - (14,970) 36,976 Interfund transfers (12,373,616) (3,652,818) 1,961,133 - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets from capital transactions (12,697,483) (4,170,737) 4,476,946 - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets (10,502,096) (3,212,967) 6,795,735 Net assets at beginning of year 10,502,096 13,715,063 6,919,328 - ------------------------------------------------------------------------------------------------------------------------ Net assets at end of year - 10,502,096 13,715,063 - ------------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------------------------------- Federated Investors Insurance Series --------------------------------------- American Leaders Fund II --------------------------------------- Period from Year ended May 6, 1996 to December 31, December 31, 1997 1996 - --------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ (86) 3,974 Net realized gain 544,140 29,680 Unrealized appreciation (depreciation) on investments 3,385,309 162,046 - --------------------------------------------------------------------------------------------------------- Increase in net assets from operations 3,929,363 195,700 - --------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 13,540,849 2,249,062 Transfers (to) from the general account of Life of Virginia: Death benefits (91,917) - Surrenders (423,567) (28,376) Administrative expense (note 3) (11,789) (522) Transfer gain (loss) and transfer fees 791 4,221 Transfers from the Guarantee Account (note 1) 4,966,466 146,563 Interfund transfers 9,208,512 1,208,370 - --------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 27,189,345 3,579,318 - --------------------------------------------------------------------------------------------------------- Increase in net assets 31,118,708 3,775,018 Net assets at beginning of period 3,775,018 - - --------------------------------------------------------------------------------------------------------- Net assets at end of period $ 34,893,726 3,775,018 - ---------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------- Federated Investors Insurance Series (continued) ---------------------------------------------------------- High Income Bond Fund II ---------------------------------------------------------- Period from February 3, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 827,322 491,956 38,880 Net realized gain 630,351 31,769 3,368 Unrealized appreciation (depreciation) on investments 1,256,745 424,014 26,388 - --------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 2,714,418 947,739 68,636 - --------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 9,254,617 4,468,263 1,448,946 Transfers (to) from the general account of Life of Virginia: Death benefits (120,443) (42,084) - Surrenders (861,128) (428,701) (12,805) Administrative expense (note 3) (18,435) (5,233) (601) Transfer gain (loss) and transfer fees (2,424) (43) 5,535 Transfers from the Guarantee Account (note 1) 4,882,888 670,397 200,240 Interfund transfers 5,675,771 6,113,878 235,916 - --------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 18,810,846 10,776,477 1,877,231 - --------------------------------------------------------------------------------------------------------------------------- Increase in net assets 21,525,264 11,724,216 1,945,867 Net assets at beginning of period 13,670,083 1,945,867 - - --------------------------------------------------------------------------------------------------------------------------- Net assets at end of period 35,195,347 13,670,083 1,945,867 - ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Federated Investors Insurance Series (continued) ------------------------------------------------------ Utility Fund II ------------------------------------------------------ Period from January 27, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 719,879 523,302 162,247 Net realized gain 731,431 336,527 90,613 Unrealized appreciation (depreciation) on investments 4,302,272 1,113,241 914,307 - ----------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 5,753,582 1,973,070 1,167,167 - ----------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 3,510,754 7,032,730 4,723,697 Transfers (to) from the general account of Life of Virginia: Death benefits (63,646) (172,666) - Surrenders (1,420,075) (708,499) (150,715) Administrative expense (note 3) (32,050) (25,376) (7,470) Transfer gain (loss) and transfer fees (1,043) 11,752 (650) Transfers from the Guarantee Account (note 1) 1,540,929 1,313,211 982,260 Interfund transfers (1,399,267) 830,436 5,539,763 - ----------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 2,135,602 8,281,588 11,086,885 - ----------------------------------------------------------------------------------------------------------------------- Increase in net assets 7,889,184 10,254,658 12,254,052 Net assets at beginning of period 22,508,710 12,254,052 - - ----------------------------------------------------------------------------------------------------------------------- Net assets at end of period 30,397,894 22,508,710 12,254,052 - -----------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- -------------------------------------------------------------------------------------------------------------------------------- Alger American -------------------------------------------------------------- Small Cap Portfolio -------------------------------------------------------------- Period from October 3, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 ----------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 1,245,506 (308,795) (9,745) Net realized gain (loss) 411,624 (122,299) (20,417) Unrealized appreciation (depreciation) on investments 4,016,910 (80,937) (25,048) - -------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 5,674,040 (512,031) (55,210) - -------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 12,048,925 25,934,981 3,369,922 Transfers (to) from the general account of Life of Virginia: Death benefits (296,448) (167,439) - Surrenders (1,974,869) (837,016) (18,166) Administrative expense (note 3) (69,752) (32,819) (1,420) Transfer gain (loss) and transfer fees 20,656 (18,410) 7,625 Transfers from the Guarantee Account (note 1) 9,339,897 5,067,731 298,188 Interfund transfers 1,782,889 10,297,239 3,969,177 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 20,851,298 40,244,267 7,625,326 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 26,525,338 39,732,236 7,570,116 Net assets at beginning of period 47,302,352 7,570,116 - - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 73,827,690 47,302,352 7,570,116 - --------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- Alger American ---------------------------------------------------- Growth Portfolio ---------------------------------------------------- Period from October 4, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 ----------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) (282,901) 309,982 (6,776) Net realized gain (loss) 3,954,588 315,644 (2,380) Unrealized appreciation (depreciation) on investments 8,095,163 2,224,353 27,240 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 11,766,850 2,849,979 18,084 - ---------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 13,470,987 21,518,317 2,632,716 Transfers (to) from the general account of Life of Virginia: Death benefits (317,671) (22,815) - Surrenders (2,065,182) (539,265) (4,789) Administrative expense (note 3) (68,206) (26,996) (895) Transfer gain (loss) and transfer fees (390,379) (32,858) 1,883 Transfers from the Guarantee Account (note 1) 6,594,835 3,628,084 (47,006) Interfund transfers (1,557,814) 11,823,073 2,922,881 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 15,666,570 36,347,540 5,504,790 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets 27,433,420 39,197,519 5,522,874 Net assets at beginning of period 44,720,393 5,522,874 - - ---------------------------------------------------------------------------------------------------------------------- Net assets at end of period 72,153,813 44,720,393 5,522,874 - ----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------- PBHG Insurance Series Fund ------------------------------------ PBHG PBHG Large Cap Growth II Portfolio Portfolio ------------------------------------ Period from Period from May 1, May 1, 1997 to 1997 to December 31, December 31, 1997 1997 ------------------------------------ Increase (decrease) in net assets From operations: Net investment income (expense) (17,112) (30,512) Net realized gain (loss) 13,525 7,643 Unrealized appreciation (depreciation) on investments 149,898 (89,829) - -------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 146,311 (112,698) - -------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 1,239,113 3,502,382 Transfers (to) from the general account of Life of Virginia: Death benefits (715) - Surrenders (12,383) (53,142) Administrative expense (note 3) (684) (1,455) Transfer gain (loss) and transfer fees 865 787 Transfers from the Guarantee Account (note 1) 610,146 1,108,447 Interfund transfers 2,735,614 2,507,619 - -------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 4,571,956 7,064,638 - -------------------------------------------------------------------------------------------------- Increase in net assets 4,718,267 6,951,940 Net assets at beginning of period - - - -------------------------------------------------------------------------------------------------- Net assets at end of period 4,718,267 6,951,940 - --------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- -------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series ------------------------------------------------------- Aggressive Growth Portfolio ---------------------------------------------------- Year ended December 31, 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ (1,187,720) (124,804) 237,054 Net realized gain 6,675,700 3,422,984 1,735,504 Unrealized appreciation (depreciation) on investments 5,540,954 109,555 7,840,280 - ---------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 11,028,934 3,407,735 9,812,838 - ---------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 11,681,150 17,880,226 16,756,982 Transfers (to) from the general account of Life of Virginia: Death benefits (427,386) (394,284) (86,506) Surrenders (2,997,601) (2,851,517) (1,216,524) Administrative expense (note 3) (120,078) (112,813) (73,928) Transfer gain (loss) and transfer fees (19,458) (40,003) 38,529 Transfers (to) from the Guarantee Account (note 1) 4,987,441 3,328,781 2,434,875 Interfund transfers (2,281,417) 8,025,078 7,553,096 - ---------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 10,822,651 25,835,468 25,406,524 - ---------------------------------------------------------------------------------------------------------------------------- Increase in net assets 21,851,585 29,243,203 35,219,362 Net assets at beginning of year 83,963,537 54,720,334 19,500,972 - ---------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ 105,815,122 83,963,537 54,720,334 - ----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series (continued) ---------------------------------------------------------------- Growth Portfolio ---------------------------------------------------------------- Year ended December 31, 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 3,288,014 1,820,512 1,088,723 Net realized gain 9,346,395 4,286,543 1,220,855 Unrealized appreciation (depreciation) on investments 23,212,981 11,457,707 11,886,046 - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 35,847,390 17,564,762 14,195,624 - ---------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 30,338,859 35,456,497 20,907,687 Transfers (to) from the general account of Life of Virginia: Death benefits (1,849,634) (483,092) (292,563) Surrenders (9,041,380) (3,747,509) (1,304,563) Administrative expense (note 3) (280,500) (199,595) (125,440) Transfer gain (loss) and transfer fees (152,642) (208,664) (42,445) Transfers (to) from the Guarantee Account (note 1) 16,216,500 7,027,293 2,397,459 Interfund transfers 1,293,752 11,381,396 14,146,981 - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 36,524,955 49,226,326 35,687,116 - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 72,372,345 66,791,088 49,882,740 Net assets at beginning of year 151,696,572 84,905,484 35,022,744 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets at end of year 224,068,917 151,696,572 84,905,484 - ----------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series ----------------------------------------------------------------- Worldwide Growth Portfolio --------------------------------------------------------------- Year ended December 31, 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 834,801 676,021 (252,038) Net realized gain 11,585,008 5,069,677 439,501 Unrealized appreciation (depreciation) on investments 32,530,512 18,944,795 9,549,318 - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 44,950,321 24,690,493 9,736,781 - --------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 77,908,754 45,862,046 14,202,159 Transfers (to) from the general account of Life of Virginia: Death benefits (916,155) (407,146) (146,748) Surrenders (9,754,795) (2,394,900) (1,173,774) Administrative expense (note 3) (346,218) (172,873) (87,512) Transfer gain (loss) and transfer fees (116,774) (183,599) (23,608) Transfers (to) from the Guarantee Account (note 1) 30,845,279 8,313,366 1,874,804 Interfund transfers 25,144,972 42,049,450 7,110,222 - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 122,765,063 93,066,344 21,755,543 - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 167,715,384 117,756,837 31,492,324 Net assets at beginning of year 177,410,698 59,653,861 28,161,537 - --------------------------------------------------------------------------------------------------------------------------------- Net assets at end of year 345,126,082 177,410,698 59,653,861 - ---------------------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued
- ----------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series (continued) ----------------------------------------------------------------- Balanced Portfolio -------------------------------------------------------------- Period from October 11, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 931,355 170,096 10,290 Net realized gain 1,239,519 122,576 9,364 Unrealized appreciation (depreciation) on investments 4,013,343 920,620 37,909 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 6,184,217 1,213,292 57,563 - ----------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 15,654,806 8,643,527 619,039 Transfers (to) from the general account of Life of Virginia: Death benefits (98,529) (37,496) - Surrenders (1,560,191) (271,087) (61,992) Administrative expense (note 3) (34,113) (7,301) (379) Transfer gain (loss) and transfer fees (11,920) 5,413 (240) Transfer (to) from the Guarantee Account (note 1) 6,551,408 1,091,622 210,233 Interfund transfers 34,492,843 3,850,513 1,147,007 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 54,994,304 13,275,191 1,913,668 - ----------------------------------------------------------------------------------------------------------------------------- Increase in net assets 61,178,521 14,488,483 1,971,231 Net assets at beginning of period 16,459,714 1,971,231 - - ----------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 77,638,235 16,459,714 1,971,231 - -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series (continued) -------------------------------------------------------------- Flexible Income Portfolio -------------------------------------------------------------- Period from October 13, Year ended Year ended 1995 to December 31, December 31, December 31, 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) 578,869 248,378 19,153 Net realized gain 86,470 4,524 29 Unrealized appreciation (depreciation) on investments 269,390 68,898 (2,240) - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 934,729 321,800 16,942 - --------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 3,465,715 2,591,080 312,671 Transfers (to) from the general account of Life of Virginia: Death benefits (55,866) - - Surrenders (425,891) (29,518) (451) Administrative expense (note 3) (8,897) (2,717) (111) Transfer gain (loss) and transfer fees 1,786 (413) 179 Transfer (to) from the Guarantee Account (note 1) 3,010,637 345,536 41,646 Interfund transfers 2,406,219 992,086 419,589 - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 8,393,703 3,896,054 773,523 - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 9,328,432 4,217,854 790,465 Net assets at beginning of period 5,008,319 790,465 - - --------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period 14,336,751 5,008,319 790,465 - ---------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series (continued) ------------------------------------------------------------- International Capital Growth Appreciation Portfolio Portfolio --------------------------------------- ------------------- Period from Period from May 3, 1996 May 2, 1997 Year ended to to December 31, December 31, December 31, 1997 1996 1997 - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) (167,651) 9,055 (1,544) Net realized gain 3,329,942 187,391 31,894 Unrealized appreciation (depreciation) on investments 1,235,644 586,615 12,182 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations 4,397,935 783,061 42,532 - ----------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 19,031,016 4,654,797 720,613 Transfers (to) from the general account of Life of Virginia: Death benefits (197,552) - - Surrenders (1,293,141) (51,116) (37,177) Administrative expense (note 3) (39,068) (3,441) (826) Transfer gain (loss) and transfer fees 24,476 3,766 (33,752) Transfer (to) from the Guarantee Account (note 1) 8,279,728 935,954 446,414 Interfund transfers 10,950,154 7,189,157 1,531,771 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 36,755,613 12,729,117 2,627,043 - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets 41,153,548 13,512,178 2,669,575 Net assets at beginning of period 13,512,178 - - - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at end of period 54,665,726 13,512,178 2,669,575 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements December 31, 1997 ================================================================================ (1) Description of Entity Life of Virginia Separate Account 4 (the Account) is a separate investment account established in 1987 by The Life Insurance Company of Virginia (Life of Virginia) under the laws of the Commonwealth of Virginia. The Account operates as a unit investment trust under the Investment Company Act of 1940. The Account is used to fund certain benefits for flexible premium variable deferred annuity life insurance policies issued by Life of Virginia. The Life Insurance Company of Virginia is a stock life insurance company operating under a charter granted by the Commonwealth of Virginia on March 21, 1871. Eighty percent of the capital stock of Life of Virginia is owned by General Electric Capital Assurance Corporation. The remaining 20% is owned by GE Financial Assurance Holdings, Inc. General Electric Capital Assurance Corporation and GE Financial Assurance Holdings, Inc. are indirectly, wholly-owned subsidiaries of General Electric Capital ("GE Capital"). GE Capital, a diversified financial services company, is a wholly-owned subsidiary of General Electric Company (GE), a New York corporation. Prior to April 1, 1996, Life of Virginia was an indirect wholly-owned subsidiary of Aon Corporation (Aon). In May 1997, seven new investment subdivisions were added to the Account, for both Type I and II policies. The Growth & Income Portfolio and Growth Opportunities Portfolio each invest solely in a designated portfolio of the Variable Insurance Products Fund III. The Global Income Fund and the Value Equity Fund each invest solely in a designated portfolio of the GE Investments Funds, Inc. The Capital Appreciation Portfolio invests solely in a designated portfolio of the Janus Aspen Series. The Growth II Portfolio and the Large Cap Growth Portfolio each invest solely in a designated portfolio of the PBHG Insurance Series Fund. All designated portfolios described above are series type mutual funds. During 1997, the Life of Virginia Series Fund, Inc. changed its name to the GE Investments Funds, Inc. As a result the Life of Virginia Series Funds, Inc.--Common Stock Index, Government Securities, Money Market, Total Return, International Equity and Real Estate Securities Portfolios were renamed the GE Investments Funds, Inc.--S&P 500 Index, Government Securities, Money Market, Total Return, International Equity and Real Estate Securities Funds, respectively. On December 12, 1997, the Account added the GE Investments Funds, Inc.--Income Fund as a new investment subdivision and made the following substitutions of shares held by the investment subdivisions: LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements ================================================================ (1) Continued Before the Substitution After the Substitution Shares of Money Market Portfolio - Shares of Money Market Fund - Variable Insurance Products Fund GE Investments Funds, Inc. Shares of Money Fund - Shares of Money Market Fund - Oppenheimer Variable Account Funds GE Investments Funds, Inc. Shares of Bond Portfolio - Shares of Income Fund Neuberger & Berman - Advisers Management Trust GE Investments Funds, Inc. Shares of High Income Portfolio - Shares of High Income Fund - Variable Insurance Products Fund Oppenheimer Variable Account Funds Shares of Growth Portfolio - Shares of Growth Portfolio - Neuberger & Berman Advisers Management Trust Variable Insurance Products Fund Shares of Balanced Portfolio - Shares of Balanced Portfolio - Neuberger & Berman Advisers Management Trust Janus Aspen Series
The foregoing substitutions were carried out pursuant to an order of the Securities and Exchange Commission (Commission) issued on December 11, 1997, with the approval of any necessary department of insurance. The effect of such a share substitution was to replace certain portfolios of Variable Insurance Products Fund, Oppenheimer Variable Account Funds, GE Investments Funds, Inc., and Neuberger & Berman Advisers Management Trust with those of GE Investments Funds, Inc., Oppenheimer Variable Account Funds, Variable Insurance Products Fund, and Janus Aspen Series as investment options. (1) Continued In May 1996, two new investment subdivisions were added to the Account, for both Type I and II policies. One of these subdivisions, the International Growth Portfolio, invests solely in a designated portfolio of the Janus Aspen Series, a series type mutual fund. The other new subdivision, the American Leaders Fund II, invests solely in a designated portfolio of the Federated Investors Insurance Series, a series type mutual fund. During 1995, nine new investment subdivisions were added to the Account, for both Type I and Type II policies. The Utility Fund II and High Income Bond Fund II each invest solely in a designated portfolio of the Federated Investors Insurance Series, a series type mutual fund. The Contrafund Portfolio invests solely in a designated portfolio of the Variable Insurance Products Fund II, a series type mutual fund. The International Equity Portfolio and the Real Estate Securities Portfolio each invest solely in a designated portfolio of GE Investments Funds, Inc., a series type mutual fund. The Balanced Portfolio and Flexible Income Portfolio each invest solely in a designated portfolio of the Janus Aspen Series, a series type mutual fund. The Growth Portfolio and Small Cap Portfolio each invest solely in a designated portfolio of the Alger American Fund, a series type mutual fund. In November 1995, six subdivisions were closed to new money for both Type I and Type II policies. For each policy type, three of these subdivisions, the Balanced Portfolio, Bond Portfolio, and Growth Portfolio each invest solely in a designated portfolio of the Advisers Management Trust, a series type mutual fund. The fourth and fifth closed subdivisions, the Money Market Portfolio and High Income Portfolio, each invest solely in a designated portfolio of the Variable Insurance Products Fund, a series type mutual fund. The sixth closed subdivision, the Money Fund, invests solely in a designated portfolio of the Oppenheimer Variable Account Funds, a series type mutual fund. Policyowners may transfer cash values between the Account's portfolios and the Guarantee Account that is part of the general account of Life of Virginia. Amounts transferred to the Guarantee Account earn interest at the interest rate in effect at the time of such transfer and remain in effect for one year, after which a new rate may be declared. (2) Summary of Significant Accounting Policies Unit Classes There are two unit classes included in the Account. Type I units are sold under policy form P1140 and P1141. Type II units are sold under policy forms P1142, P1142N and P1143. Type II unit sales began in the third quarter of 1994. Investments Investments are stated at fair value which is based on the underlying net asset value per share of the respective portfolios or funds. Purchases and sales of investments are recorded on the trade date and income distributions are recorded on the ex-dividend date. Realized gains and losses on investments are determined on the average cost basis. The units and unit values are disclosed as of the last business day in the applicable year or period. (2) Continued The aggregate cost of investments acquired and the aggregate proceeds of investments sold, for the year or period ended December 31, 1997 were: Cost of Proceeds Shares from Fund/Portfolio Acquired Shares Sold - ---------------------------------------------------------------------------- GE Investments Funds, Inc.: S&P 500 Index $ 132,222,938 31,818,054 Government Securities 10,499,388 23,055,080 Money Market 887,060,254 868,724,486 Total Return 30,724,166 10,679,067 International Equity 18,393,561 11,389,194 Real Estate Securities 43,204,050 16,152,111 Global Income 6,336,231 187,733 Value Equity 17,622,017 3,137,116 Income 25,679,422 3,310,006 Oppenheimer Variable Account Funds: Money 314,112 3,030,625 Bond 16,807,159 9,544,382 Capital Appreciation 93,466,672 56,992,604 Growth 85,183,495 31,490,581 High Income 95,915,615 36,944,770 Multiple Strategies 23,819,771 11,316,157 Variable Insurance Products Fund: Money Market 1,556,148 23,557,498 High Income 3,620,650 30,349,068 Equity - Income 220,439,185 93,043,056 Growth 83,553,084 68,794,613 Overseas 72,741,759 71,928,713 Variable Insurance Products Fund II: Asset Manager 85,456,484 70,466,360 Contrafund 118,473,800 55,310,933 Variable Insurance Products Fund III: Growth & Income 18,484,934 3,417,350 Growth Opportunities 17,590,719 1,681,206 - ---------------------------------------------------------------------------- (2) Continued Cost of Proceeds Shares from Fund/Portfolio Acquired Shares Sold - ----------------------------------------------------------------------------- Neuberger & Berman Advisers Management Trust: Balanced $ 2,635,418 36,069,865 Bond 1,856,865 11,649,317 Growth 977,918 12,925,079 Federated Investors Insurance Series: American Leaders II 32,823,606 5,793,581 High Income Bond II 38,421,195 18,759,547 Utility 10,012,564 7,198,898 II Alger American: Small Cap 46,888,772 24,542,187 Growth 46,869,978 31,444,158 PBHG Insurance Series Fund: PBHG Large Cap Growth 6,296,317 1,710,929 PBHG Growth II 7,969,729 1,120,679 Janus Aspen Series: Aggressive Growth 99,975,217 90,226,548 Growth 86,207,354 46,144,088 Worldwide Growth 183,578,974 59,756,806 Balanced 67,917,334 11,980,846 Flexible Income 12,301,658 3,313,161 International Growth 94,751,055 54,755,744 Capital Appreciation 5,675,613 3,007,685 - ----------------------------------------------------------------------------- Capital Transactions The increase (decrease) in outstanding units for Type I and Type II from capital transactions for the years or periods ended December 31, 1997, 1996 and 1995 are as follows: LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements (2) Continued
GE Investments Funds, Inc. ----------------------------------------------------------------------------- S&P 500 Government Money Total International Real Estate Index Securities Market Return Equity Securities Type I Units Fund Fund Fund Fund Fund Fund - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 297,274 384,930 484,719 666,497 - - Net premiums 37,545 7,450 265,952 38,485 5,889 3,842 Transfers (to) from the general account of Life of Virginia: Death benefits (3,332) (2,593) (365) (8,225) (201) (130) Surrenders (11,616) (27,386) (138,205) (30,218) (166) (82) Administrative expenses (991) (994) (1,241) (1,911) (64) (27) Transfers (to)/from the Guarantee Account 17,804 (78) 347,444 6,958 8,347 6,278 Interfund transfers 142,337 67,621 (64,330) 73,915 101,757 13,762 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 181,747 44,020 409,255 79,004 115,562 23,643 - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 479,021 428,950 893,974 745,501 115,562 23,643 Net premiums 34,082 36,100 706,581 33,745 22,527 14,587 Transfers (to) from the general account of Life of Virginia: Death benefits (1,231) (163) (16,043) (6,096) - - Surrenders (22,370) (25,884) (412,885) (31,853) (5,008) (1,361) Administrative expenses (1,347) (1,204) (4,925) (2,175) (446) (192) Transfers (to)/from the Guarantee Account 37,400 4,534 358,505 1,905 22,249 21,124 Interfund transfers 54,702 62,264 1,023,952 (32,962) 52,528 147,118 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 101,236 75,647 1,655,185 (37,436) 91,850 181,276 - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 580,257 504,597 2,549,159 708,065 207,412 204,919 Net premiums 43,467 2,027 273,183 24,404 (153,291) 215,116 Transfers (to) from the general account of Life of Virginia: Death benefits (2,505) (3,654) (88,771) (5,480) - - Surrenders (34,875) (27,521) (773,658) (56,645) 494,961 (112,838) Administrative expenses (1,886) (938) (6,382) (1,805) 20,280 (5,712) Transfers (to)/from the Guarantee Account 41,669 9,540 304,035 5,882 (736,706) 208,742 Interfund transfers 292,720 (484,051) 1,254,694 (42,593) 1,380,146 875,079 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 338,590 (504,597) 963,101 (76,237) 1,005,390 1,180,387 - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 918,847 - 3,512,260 631,828 1,212,802 1,385,306 - ---------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. Oppenheimer Variable Account Funds ----------------------------------- ------------------------------------------- Global Capital Income Value Equity Income Money Bond Appreciation Growth Type I Units Fund Fund Fund Fund Fund Fund Fund - ---------------------------------------------------------------------------------- ------------------------------------------- Units outstanding at December 31, 1994 - - - 549,261 967,029 2,708,957 734,287 Net premiums - - - 36,722 (11,303) 222,696 (521,582) Transfers (to) from the general account of Life of Virginia: Death benefits - - - - 263 (31,865) 48,092 Surrenders - - - (38,250) 5,282 (311,147) 564,254 Administrative expenses - - - (910) 309 (13,475) 27,690 Transfers (to)/from the Guarantee Account - - - (33,828) (4,115) 27,379 (11,025) Interfund transfers - - - (230,533) (4,765) 45,448 144,969 - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions - - - (266,799) (14,329) (60,964) 252,398 - ---------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 - - - 282,462 952,700 2,647,993 986,685 Net premiums - - - - (4,744) (181,755) 267,359 Transfers (to) from the general account of Life of Virginia: Death benefits - - - (1,782) 2,016 44,441 (29,174) Surrenders - - - (16,283) 7,728 332,700 (364,042) Administrative expenses - - - (531) 407 14,718 (16,121) Transfers (to)/from the Guarantee Account - - - (4,896) (7,110) (185,173) 105,286 Interfund transfers - - - (96,465) (9,728) 53,131 240,629 - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions - - - (119,957) (11,431) 78,062 203,937 - ---------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 - - - 162,505 941,269 2,726,055 1,190,622 Net premiums 15,669 30,034 595 - 12,729 48,378 50,650 Transfers (to) from the general account of Life of Virginia: Death benefits - - - - (4,708) (2,476) (1,990) Surrenders (2,874) (1,979) (5,500) (5,366) (114,775) (146,760) (99,247) Administrative expenses (489) (345) (199) (298) (2,868) (6,721) (2,955) Transfers (to)/from the Guarantee Account 131,841 33,741 - - 30,993 33,837 40,477 Interfund transfers 372,751 418,170 1,300,742 (156,841) 66,990 (60,894) 114,256 - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 516,898 479,621 1,295,638 (162,505) (11,639) (134,636) 101,191 - ---------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 516,898 479,621 1,295,638 - 929,630 2,591,419 1,291,813 - ----------------------------------------------------------------------------------------------------------------------------------
(2) Continued
Oppenheimer Variable Account Funds Variable Insurance Products Fund ----------------------- ---------------------------------------------------------- High Multiple Money High Equity- Income Strategies Market Income Income Growth Overseas Type I Units Fund Fund Portfolio Portfolio Portfolio Portfolio Portfolio - ----------------------------------------------- --------------------------------------------------------------------------------- Units outstanding at December 31, 1994 1,125,497 1,797,950 4,123,571 804,420 5,088,608 4,641,036 5,128,595 Net premiums 44,999 65,632 730,434 85,480 485,381 247,726 200,203 Transfers (to) from the general account of Life of Virginia: Death benefits (296) (9,569) 8,759 (5,083) (26,937) (11,327) (22,477) Surrenders (12,636) (95,101) (323,643) (42,301) (295,625) (179,497) (183,059) Administrative expenses (1,249) (5,559) (8,471) (2,631) (16,777) (12,038) (12,905) Transfers (to)/from the Guarantee Account 10,579 (3,036) 36,658 35,020 214,956 67,303 (35,433) Interfund transfers 96,818 12,445 (2,144,243) 83,390 1,492,501 433,983 (566,178) - ----------------------------------------------- ---------- ---------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 138,215 (35,188) (1,700,506) 153,875 1,853,499 546,150 (619,849) - ----------------------------------------------- ---------- ---------------------------------------------------------------------- Units outstanding at December 31, 1995 1,263,712 1,762,762 2,423,065 958,295 6,942,107 5,187,186 4,508,746 Net premiums 15,693 26,028 8,114 (11,013) 209,607 133,676 102,472 Transfers (to) from the general account of Life of Virginia: Death benefits (411) (15,299) (26,867) - (39,084) (25,152) (17,537) Surrenders (23,047) (88,160) (136,342) (64,247) (314,228) (232,300) (188,428) Administrative expenses (1,163) (4,615) (4,247) (2,193) (16,695) (13,593) (11,116) Transfers (to)/from the Guarantee Account 13,792 26,304 (46,251) (1,584) 129,570 60,757 48,453 Interfund transfers 89,651 (66,358) (1,024,299) (147,328) (63,823) (278,909) (373,467) - ----------------------------------------------- ---------- ---------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 94,515 (122,100) (1,229,892) (226,365) (94,653) (355,521) (439,623) - ----------------------------------------------- ---------- ---------------------------------------------------------------------- Units outstanding at December 31, 1996 1,358,227 1,640,662 1,193,173 731,930 6,847,454 4,831,665 4,069,123 Net premiums 44,846 26,455 (2,769) - 132,909 46,481 33,637 Transfers (to) from the general account of Life of Virginia: Death benefits (6,846) (7,589) (3,458) (2,224) (25,251) (14,556) (15,035) Surrenders (87,976) (127,118) (72,594) (65,456) (376,813) (325,620) (189,716) Administrative expenses (3,299) (4,137) (2,380) (1,503) (17,119) (12,146) (9,227) Transfers (to)/from the Guarantee Account 54,141 17,555 (1,822) (257) 81,689 26,348 10,283 Interfund transfers 510,750 7,721 (1,110,150) (662,490) (53,531) (84,347) (500,805) - ----------------------------------------------- ---------- ---------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 511,616 (87,113) (1,193,173) (731,930) (258,116) (363,840) (670,863) - ----------------------------------------------- ---------- ---------------------------------------------------------------------- Units outstanding at December 31, 1997 1,869,843 1,553,549 - - 6,589,338 4,467,825 3,398,260 - ----------------------------------------------- ---------- ----------------------------------------------------------------------
(2) Continued
Variable Insurance Products Variable Insurance Products Fund II Fund III Advisers Management Trust ---------------------------- --------------------------- ------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Balanced Bond Growth Type I Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 27,382,848 - - - 2,303,795 1,644,509 619,834 Net premiums 387,499 582,483 - - 19,872 (319,688) (14,507) Transfers (to) from the general account of Life of Virginia: Death benefits (158,949) (1,220) - - (260) 29,267 4,454 Surrenders (1,411,202) (39,641) - - (16,268) 86,040 50,773 Administrative expenses (74,816) (3,373) - - (1,256) 8,665 2,990 Transfers (to)/from the Guarantee Account (514,204) 257,604 - - 22,814 19,812 13,112 Interfund transfers (3,617,814) 1,639,032 - - (302,761) (529,362) 79,845 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (5,389,486) 2,434,885 - - (277,859) (705,266) 136,667 - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 21,993,362 2,434,885 - - 2,025,936 939,243 756,501 Net premiums 164,394 191,853 - - - 692 - Transfers (to) from the general account of Life of Virginia: Death benefits (142,857) (14,740) - - (13,542) (625) (7,106) Surrenders (1,189,857) (156,723) - - (19,441) (46,729) (82,100) Administrative expenses (60,017) (7,215) - - (1,491) (2,782) (3,304) Transfers (to)/from the Guarantee Account (9,338) 168,994 - - (6,661) (1,863) (1,563) Interfund transfers (1,775,712) 480,447 - - (300,225) (348,334) (131,122) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (3,013,387) 662,616 - - (341,360) (399,641) (225,195) - -------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 18,979,975 3,097,501 - - 1,684,576 539,602 531,306 Net premiums 152,156 110,477 41,831 30,072 (343) 141 348 Transfers (to) from the general account of Life of Virginia: Death benefits (89,850) (9,932) - - (4,573) (13,722) (3,133) Surrenders (1,096,143) (211,184) (813) (5,989) (131,590) (27,704) (10,160) Administrative expenses (52,182) (7,854) (183) (318) (3,702) (1,043) (1,125) Transfers (to)/from the Guarantee Account 25,895 101,581 19,562 24,545 (9,256) (144) - Interfund transfers (818,341) 215,612 233,932 293,107 (1,535,112) (497,130) (517,236) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (1,878,465) 198,700 294,329 341,417 (1,684,576) (539,602) (531,306) - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 17,101,510 3,296,201 294,329 341,417 - - - - ---------------------------------------------------------------------------------------------------------------------------------
(2) Continued
Federated Investors Insurance PBHG Insurance Series Alger American Series Fund --------------------------------- --------------------- -------------------- American High Leaders Income Large Cap Portfolio Bonds Utility Small Cap Growth Growth Growth II Type I Units Fund II Fund II Fund II Portfolio Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1994 - - - - - - - Net premiums - 6,661 74,380 67,353 46,215 - - Transfers (to) from the general account of Life of Virginia: Death benefits - - - - - - - Surrenders - (60) (682) (606) (423) - - Administrative expenses - (15) (144) (147) (90) - - Transfers (to)/from the Guarantee Account - 1,534 126,922 8,574 4,799 - - Interfund transfers - 32,694 339,152 330,617 210,724 - - - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in units from capital transactions - 40,814 539,628 405,791 261,225 - - - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1995 - 40,814 539,628 405,791 261,225 - - Net premiums 6,132 11,997 34,892 260,309 140,387 - - Transfers (to) from the general account of Life of Virginia: Death benefits - (1,489) (13,689) (10,458) - - - Surrenders (234) (8,472) (35,752) (35,446) (31,027) - - Administrative expenses (47) (273) (1,868) (2,659) (2,129) - - Transfers (to)/from the Guarantee Account 1,547 23,451 31,866 150,713 122,150 - - Interfund transfers 68,264 145,478 (9,854) 571,403 700,068 - - - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in units from capital transactions 75,662 170,692 5,595 933,862 929,449 - - - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1996 75,662 211,506 545,223 1,339,653 1,190,674 - - Net premiums 35,396 49,848 7,670 694,521 66,490 1,019 17,111 Transfers (to) from the general account of Life of Virginia: Death benefits - (469) (853) (42,319) (2,907) - - Surrenders (1,961) (14,353) (38,555)(1,148,701) (80,029) (92) (49) Administrative expenses (502) (718) (1,375) (36,907) (3,546) (32) (101) Transfers (to)/from the Guarantee Account 24,074 50,940 9,699 749,029 2,066 2,432 1,623 Interfund transfers 228,950 159,370 (36,477) (230,206) (150,234) 52,670 58,027 - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in units from capital transactions 285,957 244,618 (59,891) (14,583) (168,160) 55,997 76,611 - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1997 361,619 456,124 485,332 1,325,070 1,022,514 55,997 76,611 - ------------------------------------------------------------------------------------------------------------------------------
(2) Continued
Janus Aspen Series ---------------------------------------------------------------------------------- Aggressive Flexible International Capital Growth Growth Worldwide Balanced Income Growth Appreciation Type I Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio - ---------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 1,272,142 3,183,404 2,247,224 - - - - Net premiums 41,540 495,631 154,654 47,108 369 - - Transfers (to) from the general account of Life of Virginia: Death benefits - (8,424) (9,493) (2,123) - - - Surrenders (37,096) (129,651) (38,101) (16,212) (8) - - Administrative expenses (196) (9,290) (4,194) (1,376) (11) - - Transfers (to)/from the Guarantee Account 90,712 109,046 25,268 9,645 2,769 - - Interfund transfers 598,635 792,010 381,858 74,930 35,960 - - - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 693,595 1,249,322 509,992 111,972 39,079 - - - ---------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 1,965,737 4,432,726 2,757,216 111,972 39,079 - - Net premiums 1,581 1,661,740 880,684 49,343 4,021 34,924 - Transfers (to) from the general account of Life of Virginia: Death benefits - (181,059) (51,566) (2,953) - - - Surrenders (429) (2,320,448) (739,842) (15,986) (1,075) (1,689) - Administrative expenses (22) (113,310) (48,025) (1,541) (194) (301) - Transfers (to)/from the Guarantee Account 1,256 1,066,999 455,640 26,519 11,223 37,626 - Interfund transfers 7,695 217,761 916,700 191,453 64,966 403,878 - - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 10,081 331,683 1,413,591 246,835 78,941 474,438 - - ---------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 1,975,818 4,764,409 4,170,807 358,807 118,020 474,438 - Net premiums 55,368 109,351 257,478 32,492 8,506 99,898 2,452 Transfers (to) from the general account of Life of Virginia: Death benefits (1,972) (66,404) (7,323) - - - - Surrenders (87,614) (321,901) (229,991) (34,024) (17,779) (40,170) (1,327) Administrative expenses (4,772) (11,195) (12,079) (1,430) (403) (2,200) (58) Transfers (to)/from the Guarantee Account 29,407 64,006 148,276 55,427 78,205 64,693 344 Interfund transfers (148,659) (32,501) 611,104 2,070,280 94,329 408,010 47,846 - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (158,242) (258,644) 767,465 2,122,745 162,858 530,231 49,257 - ---------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 1,817,576 4,505,765 4,938,272 2,481,552 280,878 1,004,669 49,257 - ----------------------------------------------------------------------------------------------------------------------------------
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements - ------------------------------------------------------------------------------ (2) Continued
GE Investments Funds, Inc. ----------------------------------------------------------------------------- S&P 500 Government Money Total International Real Estate Index Securities Market Return Equity Securities Type II Units Fund Fund Fund Fund Fund Fund - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1994 10,408 889 75,600 12,498 - - Net premiums 287,747 94,804 3,703,628 189,643 26,411 23,750 Transfers (to) from the general account of Life of Virginia: Death benefits (3,020) - - (523) - - Surrenders (1,937) (2,139) (17,008) (2,245) (10) (23) Administrative expenses (18) (6) (18) (12) (1) - Transfers (to)/from the Guarantee Account 12,961 3,954 18,590 12,174 1,577 324 Interfund transfers 93,868 56,254 (2,272,432) 41,049 19,067 10,426 - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in units from capital transactions 389,601 152,867 1,432,760 240,086 47,044 34,477 - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1995 400,009 153,756 1,508,360 252,584 47,044 34,477 Net premiums 647,438 194,563 10,719,294 345,169 204,787 214,051 Transfers (to) from the general account of Life of Virginia: Death benefits (1,638) (4,586) (41,657) (930) (313) - Surrenders (17,183) (4,362) (189,358) (11,361) (4,056) (1,826) Administrative expenses (290) (130) (792) (196) (80) (43) Transfers (to)/from the Guarantee Account 78,749 3,809 (49,295) 38,959 26,698 19,914 Interfund transfers 155,417 (66,854) (8,053,173) 35,026 58,323 162,396 - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in units from capital transactions 862,493 122,440 2,385,019 406,667 285,359 394,492 - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1996 1,262,502 276,196 3,893,379 659,251 332,403 428,969 Net premiums 1,106,640 58,332 7,321,970 188,455 143,803 604,427 Transfers (to) from the general account of Life of Virginia: Death benefits (46,669) - (31,824) (4,811) (188) (1,092) Surrenders (61,683) (10,472) (497,702) (40,510) (16,180) (24,343) Loans - - - - - - Administrative expenses (1,001) (115) (2,877) (508) (358) (445) Transfers (to)/from the Guarantee Account 376,140 37,807 406,500 93,000 69,865 236,279 Interfund transfers 389,211 (361,748) (6,108,959) 33,268 85,065 234,452 - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in units from capital transactions 1,762,638 (276,196) 1,087,108 268,894 282,007 1,049,278 - ------------------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1997 3,025,140 - 4,980,487 928,145 614,410 1,478,247 - ------------------------------------------------------------------------------------------------------------------------------
(2) Continued
GE Investments Funds, Inc. --------------------------------------- Global Income Value Equity Income Type II Units Fund Fund Fund - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 - - - Net premiums - - - Transfers (to) from the general account of Life of Virginia: Death benefits - - - Surrenders - - - Administrative expenses - - - Transfers (to)/from the Guarantee Account - - - Interfund transfers - - - - ---------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions - - - - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 - - - Net premiums - - - Transfers (to) from the general account of Life of Virginia: Death benefits - - - Surrenders - - - Administrative expenses - - - Transfers (to)/from the Guarantee Account - - - Interfund transfers - - - - ---------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions - - - - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 - - - Net premiums 19,022 242,987 1,357 Transfers (to) from the general account of Life of Virginia: Death benefits - (153) - Surrenders (487) (5,196) (415) Loans - - - Administrative expenses (8) (28) (42) Transfers (to)/from the Guarantee Account 19,733 146,978 5,210 Interfund transfers 41,030 346,028 897,139 - ---------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 79,290 730,616 903,249 - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 79,290 730,616 903,249 - ----------------------------------------------------------------------------------------
(2) Continued
Oppenheimer Variable Account Funds ------------------------------------------------------------------------- Capital High Multiple Money Bond Appreciation Growth Income Strategies Type II Units Fund Fund Fund Fund Fund Fund - --------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 50,143 11,655 68,052 12,276 77,818 26,302 Net premiums 54,745 214,451 355,504 325,547 366,507 185,233 Transfers (to) from the general account of Life of Virginia: Death benefits - (219) (166) (229) - (1,207) Surrenders (652) (5,734) (5,891) (3,339) (1,757) (2,408) Administrative expenses (31) (49) (30) (68) (24) (36) Transfers (to)/from the Guarantee Account (4,360) 13,097 21,250 28,166 20,898 17,850 Interfund transfers (41,682) 42,279 143,860 61,411 97,702 30,947 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 8,020 263,825 514,527 411,488 483,326 230,379 - --------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 58,163 275,480 582,579 423,764 561,144 256,681 Net premiums 70 307,614 1,152,800 440,344 922,316 383,300 Transfers (to) from the general account of Life of Virginia: Death benefits - (3,625) (23,778) (2,446) (14,183) (3,190) Surrenders (1,020) (13,875) (34,224) (9,335) (24,799) (11,252) Administrative expenses (6) (160) (668) (213) (520) (329) Transfers (to)/from the Guarantee Account (156) 32,015 169,506 50,413 94,808 45,770 Interfund transfers (33,183) 109,648 275,079 189,075 176,989 77,022 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (34,295) 431,617 1,538,715 667,838 1,154,611 491,321 - --------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 23,868 707,097 2,121,294 1,091,602 1,715,755 748,002 Net premiums 30 167,289 713,649 880,279 703,696 349,189 Transfers (to) from the general account of Life of Virginia: Death benefits - (8,306) (10,958) (8,211) (16,328) (5,971) Surrenders (202) (30,599) (79,872) (48,836) (109,043) (55,647) Loans - - - - - - Administrative expenses (5) (513) (1,748) (951) (1,245) (701) Transfers (to)/from the Guarantee Account - 156,266 369,347 337,722 379,179 151,804 Interfund transfers (23,691) 2,783 64,736 210,754 262,960 13,450 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (23,868) 286,920 1,055,154 1,370,757 1,219,219 452,124 - --------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 - 994,017 3,176,448 2,462,359 2,934,974 1,200,126 - ---------------------------------------------------------------------------------------------------------------------------
(2) Continued
Variable Insurance Product Funds ------------------------------------------------------------- Money High Equity- Market Income Income Growth Overseas Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio - -------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 450,740 56,076 276,392 141,845 197,672 Net premiums 1,923,388 288,601 2,285,441 1,079,779 464,979 Transfers (to) from the general account of Life of Virginia: Death benefits (1,352) (1,092) (898) (663) (12,509) Surrenders (10,590) (7,686) (33,936) (16,831) (10,082) Administrative expenses (211) (53) (378) (170) (235) Transfers (to)/from the Guarantee Account (48,336) 9,984 165,649 72,558 71,820 Interfund transfers (1,333,295) 149,732 427,705 248,497 117,726 - -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 529,604 439,486 2,843,583 1,383,170 631,699 - -------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 980,344 495,562 3,119,975 1,525,015 829,371 Net premiums 138 - 3,158,538 1,222,269 521,600 Transfers (to) from the general account of Life of Virginia: Death benefits (5,285) (1,518) (43,181) (21,919) (11,961) Surrenders (18,734) (18,658) (134,965) (50,499) (31,329) Administrative expenses (323) (228) (2,658) (1,349) (733) Transfers (to)/from the Guarantee Account (31) (3,382) 402,673 186,018 127,385 Interfund transfers (659,500) (168,501) 541,485 167,039 123,110 - -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (683,735) (192,287) 3,921,892 1,501,559 728,072 - -------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 296,609 303,275 7,041,867 3,026,574 1,557,443 Net premiums 931 306 2,260,371 504,224 230,215 Transfers (to) from the general account of Life of Virginia: Death benefits (9,387) (206) (70,511) (17,520) (11,283) Surrenders (6,379) (17,828) (310,722) (121,652) (59,094) Loans - - - - - Administrative expenses (179) (172) (5,614) (2,437) (1,374) Transfers (to)/from the Guarantee Account - (595) 959,930 232,691 169,290 Interfund transfers (281,595) (284,780) 198,852 (7,282) (122,609) - -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions (296,609) (303,275) 3,032,306 588,024 205,145 - -------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 - - 10,074,173 3,614,598 1,762,588 - --------------------------------------------------------------------------------------------------------------
(2) Continued
Variable Insurance Variable Insurance Products Fund II Products Fund III Advisers Management Trust -------------------- ------------------------- -------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Balanced Bond Growth Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 450,885 - - - 22,065 83,962 13,906 Net premiums 902,148 1,499,030 - - 199,692 240,461 167,067 Transfers (to) from the general account of Life of Virginia: Death benefits (13,552) (200) - - - - (1,865) Surrenders (26,495) (14,316) - - (2,564) (2,394) (1,381) Administrative expenses (510) (43) - - (46) (47) (47) Transfers (to)/from the Guarantee Account 88,564 128,048 - - 6,725 11,012 19,747 Interfund transfers 68,627 395,429 - - (34,434) 65,282 12,482 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 1,018,782 2,007,948 - - 169,373 314,314 196,003 - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 1,469,667 2,007,948 - - 191,438 398,276 209,909 Net premiums 640,444 2,595,994 - - - (252) - Transfers (to) from the general account of Life of Virginia: Death benefits (19,704) (23,500) - - (1,089) (8,981) (1,419) Surrenders (67,829) (72,281) - - (2,814) (3,959) (6,733) Administrative expenses (1,135) (2,159) - - (103) (315) (174) Transfers (to)/from the Guarantee Account 117,636 428,333 - - - 120 - Interfund transfers 109,440 559,664 - - (44,480) (127,260) (46,447) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 778,852 3,486,051 - - (48,486) (140,647) (54,773) - --------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 2,248,519 5,493,999 - - 142,952 257,629 155,136 Net premiums 317,380 2,003,590 452,458 553,737 25 - - Transfers (to) from the general account of Life of Virginia: Death benefits (14,483) (32,105) (176) (968) (2,194) (1,620) - Surrenders (101,528) (196,054) (9,166) (9,539) (10,921) (12,250) (3,242) Loans - - - - - - - Administrative expenses (1,272) (4,990) (79) (66) (108) (204) (81) Transfers (to)/from the Guarantee Account 132,093 1,027,864 208,287 207,607 (601) (6,721) - Interfund transfers 98,224 303,373 324,762 298,769 (129,153) (236,834) (151,813) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 430,414 3,101,678 976,086 1,049,540 (142,952) (257,629) (155,136) - ----------------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 2,678,933 8,595,677 976,086 1,049,540 - - - - -----------------------------------------------------------------------------------------------------------------------------------
(2) Continued
Federated Investors Insurance Series ----------------------------------- American High Leaders Income Portfolio Bonds Utility Type II Units Fund II Fund II Fund II - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 - - - Net premiums - 112,682 377,786 Transfers (to) from the general account of Life of Virginia: Death benefits - - - Surrenders - (398) (2,336) Administrative expenses - - (32) Transfers (to)/from the Guarantee Account - 4,581 19,944 Interfund transfers - 6,287 68,114 - ---------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions - 123,152 463,476 - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 - 123,152 463,476 Net premiums 208,871 343,618 543,077 Transfers (to) from the general account of Life of Virginia: Death benefits - (1,859) (3,067) Surrenders (2,478) (25,640) (28,920) Administrative expenses (2) (143) (566) Transfers (to)/from the Guarantee Account 12,459 29,882 81,126 Interfund transfers 46,982 340,979 75,307 - ---------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 265,832 686,837 666,957 - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 265,832 809,989 1,130,433 Net premiums 998,765 599,938 229,931 Transfers (to) from the general account of Life of Virginia: Death benefits (7,020) (7,987) (3,557) Surrenders (30,390) (46,149) (62,619) Loans - - - Administrative expenses (399) (579) (981) Transfers (to)/from the Guarantee Account 355,249 292,000 95,492 Interfund transfers 474,654 239,675 (62,998) - ---------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 1,790,859 1,076,898 195,268 - ---------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 2,056,691 1,886,887 1,325,701 - ----------------------------------------------------------------------------------------
(2) Continued
PBHG Insurance Alger American Series Fund Janus Aspen Series ------------------------------------------- ---------------------- Large Cap Aggressive Small Cap Growth Growth Growth II Growth Growth Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio - -------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 - - - - 169,799 159,068 Net premiums 291,288 228,664 - - 781,202 1,408,112 Transfers (to) from the general account of Life of Virginia: Death benefits - - - - - (2,390) Surrenders (1,324) (74) - - (487) (24,299) Administrative expenses (2) (3) - - (77) (303) Transfers (to)/from the Guarantee Account 23,122 (9,752) - - 84,482 173,800 Interfund transfers 88,174 93,176 216,085 161,652 - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 401,258 312,011 - - 1,081,205 1,716,572 - -------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 401,258 312,011 - - 1,251,004 1,875,640 Net premiums 2,385,857 1,979,744 - - 1,109,539 1,939,884 Transfers (to) from the general account of Life of Virginia: Death benefits (6,505) (2,249) - - (5,075) (28,847) Surrenders (49,583) (21,913) - - (20,314) (111,109) Administrative expenses (658) (517) - - (141) (2,321) Transfers (to)/from the Guarantee Account 364,980 234,626 - - 99,771 288,072 Interfund transfers 472,803 460,475 - - 227,267 921,603 - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 3,166,894 2,650,166 - - 1,411,047 3,007,282 - -------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 3,568,152 2,962,177 - - 2,662,051 4,882,922 Net premiums 1,139,813 1,030,593 108,061 306,146 608,750 1,633,216 Transfers (to) from the general account of Life of Virginia: Death benefits (25,827) (23,277) (63) - (22,328) (36,365) Surrenders (95,915) (104,485) (998) (4,853) (80,725) (180,611) Loans - - - - - - Administrative expenses (3,710) (2,759) (28) (35) (1,935) (4,325) Transfers (to)/from the Guarantee Account 865,037 527,894 51,297 100,624 253,985 867,094 Interfund transfers 197,908 (9,957) 188,564 174,128 22,869 108,967 - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 2,077,306 1,418,009 346,833 576,010 780,616 2,387,976 - -------------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 5,645,458 4,380,186 346,833 576,010 3,442,667 7,270,898 - --------------------------------------------------------------------------------------------------------------------------
(2) Continued
Janus Aspen Series ------------------------------------------------------------------ Flexible International Capital Worldwide Balanced Income Growth Appreciation Type II Units Portfolio Portfolio Portfolio Portfolio Portfolio - ---------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1994 117,700 - - - - Net premiums 873,533 55,928 30,062 - - Transfers (to) from the general account of Life of Virginia: Death benefits (786) (74) - - - Surrenders (10,106) (831) (36) - - Administrative expenses (144) (10) - - - Transfers (to)/from the Guarantee Account 88,410 6,328 1,290 - - Interfund transfers 158,463 12,197 4,956 - - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 1,109,370 73,538 36,272 - - - --------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1995 1,227,070 73,538 36,272 - - Net premiums 2,853,570 547,525 240,317 388,753 - Transfers (to) from the general account of Life of Virginia: Death benefits (26,212) (1,525) - - - Surrenders (94,535) (10,808) (1,714) (2,959) - Administrative expenses (2,275) (267) (63) (11) - Transfers (to)/from the Guarantee Account 475,568 75,940 21,420 47,466 - Interfund transfers 713,001 308,093 28,937 249,356 - - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 3,919,117 918,958 288,897 682,605 - - --------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1996 5,146,187 992,496 325,169 682,605 - Net premiums 3,372,062 1,117,148 284,347 1,872,823 55,458 Transfers (to) from the general account of Life of Virginia: Death benefits (35,456) (7,246) (4,723) (15,267) - Surrenders (228,974) (78,945) (17,933) (60,571) (1,630) Loans - - - - - Administrative expenses (4,300) (1,005) (342) (863) (7) Transfers (to)/from the Guarantee Account 1,289,775 423,506 175,029 576,462 35,560 Interfund transfers 572,391 358,481 107,542 446,411 74,169 - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in units from capital transactions 4,965,498 1,811,939 543,920 2,818,995 163,550 - --------------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 10,111,685 2,804,435 869,089 3,501,600 163,550 - ---------------------------------------------------------------------------------------------------------------------
(2) Continued Federal Income Taxes The Account is not taxed separately because the operations of the Account are part of the total operations of Life of Virginia. Life of Virginia is taxed as a life insurance company under the Internal Revenue Code (the Code). Life of Virginia is included in the General Electric Capital Assurance Company consolidated federal income tax return. The Account will not be taxed as a regulated investment company under subchapter M of the Code. Under existing federal income tax law, no taxes are payable on the investment income or on the capital gains of the Account. Use of Estimates Financial statements prepared in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect amounts and disclosures reported therein. Actual results could differ from those estimates. (3) Related Party Transactions Net premiums transferred from Life of Virginia to the Account represent gross premiums recorded by Life of Virginia on its flexible premium variable deferred annuity products, less deductions retained as compensation for premium taxes. For policies issued on or after May 1, 1993, the deduction for premium taxes will be deferred until surrender. For Type I policies, during the first ten years following a premium payment, a charge of .20% of the premium payment is deducted monthly from the policy Account values to reimburse Life of Virginia for certain distribution expenses. In addition, a charge is imposed on full and certain partial surrenders that occur within six years of any premium payment (seven years for certain Type II policies) to cover certain expenses relating to the sale of a policy. Subject to certain limitations, the charge equals 6% (or less) of the premium surrendered, depending on the time between premium payment and surrender. Life of Virginia will deduct a charge of $30 per year and $25 plus .15% per year from the policy account values for certain administrative expenses incurred for policy Type I and Type II, respectively. For Type II policies, the $25 charge may be waived if the account value is greater than $75,000. In addition, Life of Virginia charges the Account 1.15% and 1.25% on policy Type I and Type II, respectively, for the mortality and expense risk (3) Continued that Life of Virginia assumes. Administrative expenses as well as mortality and risk charges are deducted daily and reflect the effective annual rates. GE Investments Funds, Inc. (the Fund) is an open-end diversified management investment company. Capital Brokerage Corporation, an affiliate of Life of Virginia, is a Washington Corporation registered with the Commission under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. Capital Brokerage Corporation also serves as principal underwriter for variable life insurance policies issued by Life of Virginia. GE Investment Management Incorporated (Investment Advisor), a wholly-owned subsidiary of GE, currently serves as investment advisor to GE Investments Funds, Inc. As compensation for its services, the Investment Advisor is paid an investment advisory fee by the Fund based on the average daily net assets at an effective annual rate of .35% for the S&P 500 Index Fund, .10% for the Government Securities Fund, .50% for the Money Market and Total Return Funds, 1.00% for the International Equity Fund and .85% for the Real Estate Securities Fund. Prior to May 1, 1997, Aon Advisors, Inc. served as investment advisor to the Fund and was subject to the same compensation arrangement as GE Investment Management Incorporated. Certain officers and directors of Life of Virginia are also officers and directors of Capital Brokerage Corporation. =============================================================================== Life of Virginia Separate Account 4 Financial Statements For the nine months ended September 30, 1998 (Unaudited) Life of Virginia Separate Account 4 Table of Contents For the nine months ended September 30, 1998 - -------------------------------------------------------------------------------- Page Financial Statements: (Unaudited) Statements of Assets and Liabilities..................................1 Statements of Operations..............................................6 Statements of Changes in Net Assets..................................11 Notes to Financial Statements............................................16 (Unaudited) - -------------------------------------------------------------------------------- LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities As of September 30, 1998 (Unaudited)
==================================================================================================================================== GE Investments Funds, Inc. ------------------------------------------------------------------------- S&P 500 Money Total International Real Estate Index Market Return Equity Securities Assets Fund Fund Fund Fund Fund - ------------------------------------------------------------------------------------------------------------------------------------ Investment in GE Investments Funds, Inc., at fair value (note 2): S&P 500 Index Fund (10,997,032 shares; cost - $216,414,448) $ 223,679,636 - - - - Money Market Fund (244,932,155 shares; cost - $244,932,150) - 244,932,155 - - - Total Return Portolio (3,973,919 shares; cost - $57,183,361) - - 54,999,039 - - International Equity Fund (2,152,831 shares; cost - $24,913,630) - - - 22,755,420 - Real Estate Securities Fund (3,718,509 shares; cost - $52,748,423) - - - - 48,266,241 Global Income Fund (797,674 shares; cost - $8,061,698) - - - - - Value Equity Fund (2,663,875 shares; cost - $35,774,318) - - - - - Income Fund (2,294,425 shares; cost $28,158,943) - - - - - U.S. Equity Fund (25,953 shares; cost $780,192) - - - - - Receivable from affiliate (note 3) 137,362 - 39,993 385,311 44,713 Receivable for units sold 56,001 1,520,795 19,241 10,273 9,163 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 223,872,999 246,452,950 55,058,273 23,151,004 48,320,117 ==================================================================================================================================== Liabilities - ------------------------------------------------------------------------------------------------------------------------------------ Accrued expenses payable to affiliate (note 3) 331,737 849,924 68,886 12,934 42,442 Payable for units withdrawn 20,428 - - 33 135 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 352,165 849,924 68,886 12,967 42,577 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets $ 223,520,834 245,603,026 54,989,387 23,138,037 48,277,540 ==================================================================================================================================== Analysis of net assets: Attributable to: Variable deferred annuity contractholders 223,520,834 245,603,026 54,989,387 9,974,218 32,071,725 The Life Insurance Company of Virginia - - - 13,163,819 16,205,815 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 223,520,834 245,603,026 54,989,387 23,138,037 48,277,540 ==================================================================================================================================== Outstanding units: Type I (note 2) 999,081 6,571,205 587,557 1,230,000 1,387,184 ==================================================================================================================================== Net asset value per unit: Type I 41.56 15.23 30.08 12.29 15.55 ==================================================================================================================================== Outstanding units: Type II (note 2) 4,496,023 9,806,170 1,273,572 655,338 1,731,960 ==================================================================================================================================== Net asset value per unit: Type II 40.48 14.84 29.30 12.24 15.42 ==================================================================================================================================== ============================================================================================================== GE Investments Funds, Inc. --------------------------------------------------- Global Value U.S. Income Equity Income Equity Assets Fund Fund Fund Fund - -------------------------------------------------------------------------------------------------------------- Investment in GE Investments Funds, Inc., at fair value (note 2): S&P 500 Index Fund (10,997,032 shares; cost - $216,414,448) - - - - Money Market Fund (244,932,155 shares; cost - $244,932,150) - - - - Total Return Portolio (3,973,919 shares; cost - $57,183,361) - - - - International Equity Fund (2,152,831 shares; cost - $24,913,630) - - - - Real Estate Securities Fund (3,718,509 shares; cost - $52,748,423) - - - - Global Income Fund (797,674 shares; cost - $8,061,698) 8,750,486 - - - Value Equity Fund (2,663,875 shares; cost - $35,774,318) - 32,685,741 - - Income Fund (2,294,425 shares; cost $28,158,943) - - 29,896,362 - U.S. Equity Fund (25,953 shares; cost $780,192) - - - 744,846 Receivable from affiliate (note 3) 17 48,932 - - Receivable for units sold 25,090 33,363 84,038 - - -------------------------------------------------------------------------------------------------------------- Total assets 8,775,593 32,768,036 29,980,400 744,846 ============================================================================================================== Liabilities - -------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 20,034 65,511 118,525 789 Payable for units withdrawn 1 - 6,221 - - -------------------------------------------------------------------------------------------------------------- Total liabilities 20,035 65,511 124,746 789 - -------------------------------------------------------------------------------------------------------------- Net assets 8,755,558 32,702,525 29,855,654 744,057 ============================================================================================================== Analysis of net assets: Attributable to: Variable deferred annuity contractholders 3,012,885 28,919,970 29,855,654 744,057 The Life Insurance Company of Virginia 5,742,673 3,782,555 - - - -------------------------------------------------------------------------------------------------------------- Net Assets 8,755,558 32,702,525 29,855,654 744,057 ============================================================================================================== Outstanding units: Type I (note 2) 553,920 713,964 1,344,334 18,198 ============================================================================================================== Net asset value per unit: Type I 11.33 12.20 10.68 8.93 ============================================================================================================== Outstanding units: Type II (note 2) 219,632 1,973,040 1,453,862 65,196 ============================================================================================================== Net asset value per unit: Type II 11.29 12.16 10.66 8.92 ==============================================================================================================
See accompanying notes to unaudited financial statements. 1 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities, Continued As of September 30, 1998 (Unaudited)
========================================================================================================================= Oppenheimer Variable Account Funds ------------------------------------------------------------------- Capital High Multiple Bond Appreciation Growth Income Strategies Assets Fund Fund Fund Fund Fund - ------------------------------------------------------------------------------------------------------------------------- Investment in Oppenheimer Variable Account Funds, at fair value (note 2): Bond Fund (4,418,090 shares; cost - $51,944,009) $ 54,475,048 - - - - Capital Appreciation Fund (5,030,878 shares; cost - $192,892,655) - 180,860,047 - - - Growth Fund (5,164,301 shares; cost - $166,150,140) - - 149,403,219 - - High Income Fund (15,056,038 shares; cost - $169,212,902) - - - 160,949,051 - Multiple Strategies Fund (4,780,091 shares; cost - $72,410,885) - - - - 73,278,788 Investment in Goldmans Sachs Variable Insurance Trust, at fair value (note 2): Growth & Income Fund (267,353 shares; cost - $2,792,027) - - - - - Mid Cap Equity Fund (285,461 shares; cost - $2,550,043) - - - - - Receivable from affiliate (note 3) - 22,832 - 58,573 7,840 Receivable for units sold 155,168 5,906 62,281 81,428 - - ------------------------------------------------------------------------------------------------------------------------- Total assets $ 54,630,216 180,888,785 149,465,500 161,089,052 73,286,628 ========================================================================================================================= Liabilities - ------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 92,336 664,413 259,478 205,539 167,665 Payable for units withdrawn 24,971 87,119 485 1,013 6,154 - ------------------------------------------------------------------------------------------------------------------------- Total liabilities 117,307 751,532 259,963 206,552 173,819 - ------------------------------------------------------------------------------------------------------------------------- Net assets $ 54,512,909 180,137,253 149,205,537 160,882,500 73,112,809 ========================================================================================================================= Outstanding units: Type I (note 2) 879,022 2,334,489 1,239,081 1,768,204 1,434,711 ========================================================================================================================= Net asset value per unit: Type I 22.17 32.62 36.49 30.21 25.13 ========================================================================================================================= Outstanding units: Type II (note 2) 1,621,528 3,272,065 2,926,040 3,651,548 1,513,828 ========================================================================================================================= Net asset value per unit: Type II 21.60 31.78 35.54 29.43 24.48 ========================================================================================================================= =========================================================================== Goldman Sachs Variable Insurance Trust ----------------------- Growth & Mid Cap Income Equity Assets Fund Fund - --------------------------------------------------------------------------- Investment in Oppenheimer Variable Account Funds, at fair value (note 2): Bond Fund (4,418,090 shares; cost - $51,944,009) - - Capital Appreciation Fund (5,030,878 shares; cost - $192,892,655) - - Growth Fund (5,164,301 shares; cost - $166,150,140) - - High Income Fund (15,056,038 shares; cost - $169,212,902) - - Multiple Strategies Fund (4,780,091 shares; cost - $72,410,885) - - Investment in Goldmans Sachs Variable Insurance Trust, at fair value (note 2): Growth & Income Fund (267,353 shares; cost - $2,792,027) 2,628,081 - Mid Cap Equity Fund (285,461 shares; cost - $2,550,043) - 2,232,304 Receivable from affiliate (note 3) - - Receivable for units sold 19,980 11,771 - --------------------------------------------------------------------------- Total assets 2,648,061 2,244,075 =========================================================================== Liabilities - --------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 2,330 2,699 Payable for units withdrawn - - - --------------------------------------------------------------------------- Total liabilities 2,330 2,699 - --------------------------------------------------------------------------- Net assets 2,645,731 2,241,376 =========================================================================== Outstanding units: Type I (note 2) 43,050 40,401 =========================================================================== Net asset value per unit: Type I 8.28 7.77 =========================================================================== Outstanding units: Type II (note 2) 276,817 248,065 =========================================================================== Net asset value per unit: Type II 8.27 7.77 ===========================================================================
See accompanying notes to unaudited financial statements. 2 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities, Continued As of September 30, 1998 (Unaudited)
====================================================================================================================== Variable Insurance Variable Insurance Products Fund Products Fund II ------------------------------------- ----------------------- Equity Asset Income Growth Overseas Manager Contrafund Assets Portfolio Portfolio Portfolio Portfolio Portfolio - ---------------------------------------------------------------------------------------------------------------------- Investment in Variable Insurance Products Fund, at fair value (note 2): Equity-Income Portfolio (27,771,370 shares; cost - $576,861,564) $ 611,525,562 - - - - Growth Portfolio (9,338,970 shares; cost - $278,909,811) - 337,136,826 - - - Overseas Portfolio (5,417,542 shares; cost - $102,708,584) - - 91,989,868 - - Investment in Variable Insurance Products Fund II, at fair value (note 2): Asset Manager Portfolio (28,551,256 shares; cost - $428,049,072) - - - 459,675,215 - Contrafund Portfolio (13,844,998 shares; cost - $240,108,231) - - - - 273,854,067 Investment in Variable Insurance Products Fund III, at fair value (note 2): Growth & Income Portfolio (2,698,871 shares; cost - $36,054,312) - - - - - Growth Opportunities Portfolio (1,988,973 shares; cost - $38,168,564) - - - - - Receivable from affiliate (note 3) - 48,318 - - 102,346 Receivable for units sold 158,620 - 3,807 32,596 47,317 - ---------------------------------------------------------------------------------------------------------------------- Total assets $ 611,684,182 337,185,144 91,993,675 459,707,811 274,003,730 ====================================================================================================================== Liabilities - ---------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 782,705 659,329 232,020 1,701,606 351,602 Payable for units withdrawn 36,029 448,459 74,174 231,493 28,926 - ---------------------------------------------------------------------------------------------------------------------- Total liabilities 818,734 1,107,788 306,194 1,933,099 380,528 - ---------------------------------------------------------------------------------------------------------------------- Net assets $ 610,865,448 336,077,356 91,687,481 457,774,712 273,623,202 - ---------------------------------------------------------------------------------------------------------------------- Outstanding units: Type I (note 2) 6,047,973 4,022,569 2,947,195 15,459,382 3,097,818 ====================================================================================================================== Net asset value per unit: Type I 35.82 43.83 20.03 24.80 21.35 ====================================================================================================================== Outstanding units: Type II (note 2) 11,299,142 3,741,643 1,673,765 3,067,300 9,810,156 ====================================================================================================================== Net asset value per unit: Type II 34.89 42.70 19.51 24.25 21.15 ====================================================================================================================== ============================================================================== Variable Insurance Product Fund III ------------------------ Growth & Growth Income Opportunities Assets Portfolio Portfolio - ------------------------------------------------------------------------------ Investment in Variable Insurance Products Fund, at fair value (note 2): Equity-Income Portfolio (27,771,370 shares; cost - $576,861,564) - - Growth Portfolio (9,338,970 shares; cost - $278,909,811) - - Overseas Portfolio (5,417,542 shares; cost - $102,708,584) - - Investment in Variable Insurance Products Fund II, at fair value (note 2): Asset Manager Portfolio (28,551,256 shares; cost - $428,049,072) - - Contrafund Portfolio (13,844,998 shares; cost - $240,108,231) - - Investment in Variable Insurance Products Fund III, at fair value (note 2): Growth & Income Portfolio (2,698,871 shares; cost - $36,054,312) 36,029,928 - Growth Opportunities Portfolio (1,988,973 shares; cost - $38,168,564) - 37,691,045 Receivable from affiliate (note 3) - 4,233 Receivable for units sold 31,972 20,506 - ------------------------------------------------------------------------------ Total assets 36,061,900 37,715,784 ============================================================================== Liabilities - ------------------------------------------------------------------------------ Accrued expenses payable to affiliate (note 3) 83,292 48,165 Payable for units withdrawn - 1,807 - ------------------------------------------------------------------------------ Total liabilities 83,292 49,972 - ------------------------------------------------------------------------------ Net assets 35,978,608 37,665,812 - ------------------------------------------------------------------------------ Outstanding units: Type I (note 2) 555,028 529,619 ============================================================================== Net asset value per unit: Type I 13.15 12.58 ============================================================================== Outstanding units: Type II (note 2) 2,189,312 2,472,345 ============================================================================== Net asset value per unit: Type II 13.10 12.54 ==============================================================================
See accompanying notes to unaudited financial statements. 3 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities, Continued As of September 30, 1998 (Unaudited)
============================================================================================================================= Federated Investors Insurance Series Alger American Fund --------------------------------------- ----------------------------- American High Small Leaders Income Bond Utility Capitalization Growth Assets Fund II Fund II Fund II Portfolio Portfolio - ----------------------------------------------------------------------------------------------------------------------------- Investments in Federated Investors Insurance Series, at fair value (note 2): American Leaders Fund II (3,107,096 shares; cost - $59,972,495) $ 57,978,412 - - - - High Income Bond Fund II (4,244,938 shares; cost - $45,751,122) - 44,996,345 - - - Utility Fund II (2,628,490 shares; cost - $32,346,450) - - 37,639,973 - - Investment in Alger American, at fair value (note 2): Small Capitalization Portfolio (1,989,833 shares; cost - $81,461,941) - - - 70,181,393 - Growth Portfolio (2,291,621 shares; cost - $91,405,218) - - - - 96,843,917 Investment in PBHG Insurance Series Fund Inc., at fair value (note 2): PBHG Large Cap Portfolio (725,044 shares; cost - $9,121,531) - - - - - PBHG Growth II Portfolio (897,847 shares; cost - $9,794,392) - - - - - Receivable from affiliate (note 3) 22,908 6,643 18,127 12,283 - Receivable for units sold 21,634 - 76,546 - 24,906 - ----------------------------------------------------------------------------------------------------------------------------- Total assets $ 58,022,954 45,002,988 37,734,646 70,193,676 96,868,823 ============================================================================================================================= Liabilities - ----------------------------------------------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 75,377 56,460 50,185 121,909 264,681 Payable for units withdrawn 47 16,598 12,702 66,406 13,850 - ----------------------------------------------------------------------------------------------------------------------------- Total liabilities 75,424 73,058 62,887 188,315 278,531 ============================================================================================================================= Net assets $ 57,947,530 44,929,930 37,671,759 70,005,361 96,590,292 ============================================================================================================================= Outstanding units: Type I (note 2) 456,645 562,002 404,957 1,271,687 1,077,251 ============================================================================================================================= Net asset value per unit: Type I 14.53 14.94 17.88 9.77 15.64 ============================================================================================================================= Outstanding units: Type II (note 2) 3,553,496 2,468,488 1,718,302 5,936,184 5,138,021 ============================================================================================================================= Net asset value per unit: Type II 14.44 14.80 17.71 9.70 15.52 ============================================================================================================================= ================================================================================ PBHG Insurance Series Fund ----------------------- PBHG PBHG Large Cap Growth II Assets Portfolio Portfolio - -------------------------------------------------------------------------------- Investments in Federated Investors Insurance Series, at fair value (note 2): American Leaders Fund II (3,107,096 shares; cost - $59,972,495) - - High Income Bond Fund II (4,244,938 shares; cost - $45,751,122) - - Utility Fund II (2,628,490 shares; cost - $32,346,450) - - Investment in Alger American, at fair value (note 2): Small Capitalization Portfolio (1,989,833 shares; cost - $81,461,941) - - Growth Portfolio (2,291,621 shares; cost - $91,405,218) - - Investment in PBHG Insurance Series Fund Inc., at fair value (note 2): PBHG Large Cap Portfolio (725,044 shares; cost - $9,121,531) 9,084,797 - PBHG Growth II Portfolio (897,847 shares; cost - $9,794,392) - 8,367,932 Receivable from affiliate (note 3) 19,881 120 Receivable for units sold - 37,546 - -------------------------------------------------------------------------------- Total assets 9,104,678 8,405,598 ================================================================================ Liabilities - -------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 32,442 11,736 Payable for units withdrawn 43,242 94,196 - -------------------------------------------------------------------------------- Total liabilities 75,684 105,932 ================================================================================ Net assets 9,028,994 8,299,666 ================================================================================ Outstanding units: Type I (note 2) 93,044 121,276 ================================================================================ Net asset value per unit: Type I 12.33 9.17 ================================================================================ Outstanding units: Type II (note 2) 641,387 786,386 ================================================================================ Net asset value per unit: Type II 12.28 9.14 ================================================================================
See accompanying notes to unaudited financial statements. 4 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Assets and Liabilities, Continued As of September 30, 1998 (Unaudited)
==================================================================================================================================== Janus Aspen Series ------------------------------------------------------------------------ Aggressive Worldwide Flexible Growth Growth Growth Balanced Income Portfolio Portfolio Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Investment in Janus Aspen Series, at fair value (note 2): Aggressive Growth Portfolio (4,811,044 shares; cost - $92,491,724) $ 98,578,298 - - - - Growth Portfolio (13,622,366 shares; cost - $217,283,170) - 251,196,420 - - - Worldwide Growth Portfolio (17,044,934 shares; cost - $390,790,569) - - 410,782,910 - - Balanced Portfolio (6,400,837 shares; cost - $112,608,063) - - - 121,039,822 - Flexible Income Portfolio (2,261,803 shares; cost - $26,773,371) - - - - 27,729,705 International Growth Portfolio (3,464,824 shares; cost - $71,978,767) - - - - - Capital Appreciation Portfolio (1,008,797 shares; cost - $15,421,408) - - - - - Receivable from affiliate (note 3) 39,531 - 124,855 13,635 1,508 Receivable for units sold 29,355 53,647 - 208,287 455,008 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 98,647,184 251,250,067 410,907,765 121,261,744 28,186,221 ==================================================================================================================================== Liabilities - ------------------------------------------------------------------------------------------------------------------------------------ Accrued expenses payable to affiliate (note 3) 146,129 477,383 567,092 159,277 37,432 Payable for units withdrawn 36,909 - 157,974 212,803 82 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 183,038 477,383 725,066 372,080 37,514 ==================================================================================================================================== Net assets $ 98,464,146 250,772,684 410,182,699 120,889,664 28,148,707 ==================================================================================================================================== Outstanding units: Type I (note 2) 1,589,195 4,308,965 4,870,129 2,621,386 504,304 ==================================================================================================================================== Net asset value per unit: Type I 20.03 20.17 24.43 16.30 13.43 ==================================================================================================================================== Outstanding units: Type II (note 2) 3,370,388 8,225,947 12,073,194 4,830,721 1,603,594 ==================================================================================================================================== Net asset value per unit: Type II 19.77 19.92 24.12 16.18 13.33 ==================================================================================================================================== ========================================================================================= Janus Aspen Series -------------------------------- International Capital Growth Appreciation Portfolio Portfolio - ----------------------------------------------------------------------------------------- Investment in Janus Aspen Series, at fair value (note 2): Aggressive Growth Portfolio (4,811,044 shares; cost - $92,491,724) - - Growth Portfolio (13,622,366 shares; cost - $217,283,170) - - Worldwide Growth Portfolio (17,044,934 shares; cost - $390,790,569) - - Balanced Portfolio (6,400,837 shares; cost - $112,608,063) - - Flexible Income Portfolio (2,261,803 shares; cost - $26,773,371) - - International Growth Portfolio (3,464,824 shares; cost - $71,978,767) 63,233,035 - Capital Appreciation Portfolio (1,008,797 shares; cost - $15,421,408) - 15,020,982 Receivable from affiliate (note 3) 28,564 3,627 Receivable for units sold 1,441 11,958 - ----------------------------------------------------------------------------------------- Total assets 63,263,040 15,036,567 ========================================================================================= Liabilities - ----------------------------------------------------------------------------------------- Accrued expenses payable to affiliate (note 3) 82,482 63,023 Payable for units withdrawn 18,625 184,089 - ----------------------------------------------------------------------------------------- Total liabilities 101,107 247,112 ========================================================================================= Net assets 63,161,933 14,789,455 ========================================================================================= Outstanding units: Type I (note 2) 1,102,660 248,936 ========================================================================================= Net asset value per unit: Type I 13.64 14.67 ========================================================================================= Outstanding units: Type II (note 2) 3,548,794 761,804 ========================================================================================= Net asset value per unit: Type II 13.56 14.62 =========================================================================================
See accompanying notes to unaudited financial statements. 5 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations For the period ended September 30, 1998 (Unaudited)
=========================================================================================================================== GE Investments Funds, Inc. ------------------------------------------------------------------------------ S&P 500 Money Total International Real Estate Index Market Return Equity Securities Fund Fund Fund Fund Fund ------------------------------------------------------------------------------ Nine Months Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - --------------------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $ - 6,381,187 - - - Expenses - Mortality and expense risk charges (note 3) 2,042,155 1,543,135 499,825 113,919 360,154 - --------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) (2,042,155) 4,838,052 (499,825) (113,919) (360,154) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 6,078,207 545,367 (117,395) 416,571 (387,143) Unrealized appreciation (depreciation) on investments (398,290) (545,367) 2,028,502 (607,588) (8,286,331) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 5,679,917 - 1,911,107 (191,017) (8,673,474) - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ 3,637,762 4,838,052 1,411,282 (304,936) (9,033,628) =========================================================================================================================== ========================================================================================================= GE Investments Funds, Inc. ------------------------------------------------------------ Global Value U.S. Income Equity Income Equity Fund Fund Fund Fund ------------------------------------------------------------ Nine Months Nine Months Nine Months Period from Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 5/04-9/30/98 - --------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends - - - - Expenses - Mortality and expense risk charges (note 3) 17,651 243,905 228,303 1,461 - --------------------------------------------------------------------------------------------------------- Net investment income (expense) (17,651) (243,905) (228,303) (1,461) - --------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 14,275 648,515 116,178 (3,880) Unrealized appreciation (depreciation) on investments 813,135 (3,974,376) 1,749,617 (35,346) - --------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 827,410 (3,325,861) 1,865,795 (39,226) - --------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 809,759 (3,569,766) 1,637,492 (40,687) =========================================================================================================
See accompanying notes to unaudited financial statements. 6
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued For the period ended September 30, 1998 (Unaudited) =================================================================================================================================== Oppenheimer Variable Account Funds ------------------------------------------------------------------------------ Capital High Bond Appreciation Growth Income Fund Fund Fund Fund ------------------------------------------------------------------------------ Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $ 1,310,262 5,903,722 14,489,848 7,439,338 Expenses - Mortality and expense risk charges (note 3) 425,072 2,051,663 1,563,085 1,566,708 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) 885,190 3,852,059 12,926,763 5,872,630 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 336,892 18,283,263 21,248,106 664,387 Unrealized appreciation (depreciation) on investments 1,423,063 (43,029,816) (40,041,789) (13,019,924) - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1,759,955 (24,746,553) (18,793,683) (12,355,537) - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ 2,645,145 (20,894,494) (5,866,920) (6,482,907) =================================================================================================================================== ========================================================== Goldman Sachs Variable Insurance Trust ----------------------------------------------------------- Multiple Growth & Mid Cap Strategies Income Equity Fund Fund Fund ---------------------------------------------------------- Nine Months Period from Period from Ended 9/30/98 05/12-9/30/98 05/08-9/30/98 ---------------------------------------------------------- Investment income: Income - Dividends $ 4,756,691 - - Expenses - Mortality and expense risk charges (note 3) 720,559 4,586 6,114 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) 4,036,132 (4,586) (6,114) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 1,378,355 (10,091) (14,458) Unrealized appreciation (depreciation) on investments (9,474,532) (163,946) (317,740) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (8,096,177) (174,037) (332,198) - -------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ (4,060,045) (178,623) (338,312) ==================================================================================================================================
See accompanying notes to unaudited financial statements. 7
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued For the period ended September 30, 1998 (Unaudited) ================================================================================================================ Variable Insurance Products Fund --------------------------------------------------------- Equity Income Growth Overseas Portfolio Portfolio Portfolio ----------------------------------------------------------- Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ---------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $ 40,199,361 43,602,357 8,392,807 Expenses - Mortality and expense risk charges (note 3) 6,405,043 3,185,697 1,028,976 - ---------------------------------------------------------------------------------------------------------------- Net investment income (expense) 33,794,318 40,416,660 7,363,831 - ---------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 35,421,326 12,576,239 11,370,984 Unrealized depreciation on investments (97,791,106) (18,216,069) (22,415,585) - ---------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (62,369,780) (5,639,830) (11,044,601) - ---------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ (28,575,462) 34,776,830 (3,680,770) ================================================================================================================ ============================================================================== Variable Insurance Products Fund II Variable Insurance Product Fund III ------------------------------------ ------------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Portfolio Portfolio Portfolio Portfolio ---------------------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 ---------------------------------------------------------------------------- Investment income: Income - Dividends $ 61,032,559 14,347,723 102,863 948,628 Expenses - Mortality and expense risk charges (note 3) 4,266,661 2,713,312 271,310 301,348 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) 56,765,898 11,634,411 (168,447) 647,280 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 9,798,800 11,603,223 834,037 208,599 Unrealized depreciation on investments (59,897,040) (14,499,482) (482,485) (1,533,277) - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (50,098,240) (2,896,259) 351,552 (1,324,678) - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ 6,667,658 8,738,152 183,105 (677,398) ===================================================================================================================================
See accompanying notes to unaudited financial statements. 8
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued For the period ended September 30, 1998 (Unaudited) =============================================================================================================== Federated Investors Insurance Series ---------------------------------------------------------- American High Leaders Income Bond Utility Fund II Fund II Fund II ------------------------------------------------------------ Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ----------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $ 2,907,843 1,241,858 2,141,701 Expenses - Mortality and expense risk charges (note 3) 530,349 428,014 343,071 - ----------------------------------------------------------------------------------------------------------------- Net investment income (expense) 2,377,494 813,844 1,798,630 - ----------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) 1,175,402 951,554 1,239,445 Unrealized depreciation on investments (5,541,438) (2,461,925) (1,036,297) - ----------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (4,366,036) (1,510,371) 203,148 - ----------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ (1,988,542) (696,527) 2,001,778 =================================================================================================================== ============================================================================= Alger American PBHG Insurance Series Fund -------------------------------- --------------------------------------- Small PBHG PBHG Capitalization Growth Large Cap Growth II Portfolio Portfolio Portfolio Portfolio -------------------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 -------------------------------------------------------------------------- Investment income: Income - Dividends $ 10,556,556 14,231,938 - - Expenses - Mortality and expense risk charges (note 3) 794,725 894,323 73,556 88,443 - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) 9,761,831 13,337,615 (73,556) (88,443) - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) (748,027) 3,239,141 255,122 (101,524) Unrealized depreciation on investments (15,191,474) (4,908,057) (186,631) (1,336,632) - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (15,939,501) (1,668,916) 68,491 (1,438,156) - --------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ (6,177,670) 11,668,699 (5,065) (1,526,599) ==================================================================================================================================
See accompanying notes to unaudited financial statements. 9
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Operations, Continued For the period ended September 30, 1998 (Unaudited) =================================================================================================================================== Janus Aspen Series ------------------------------------------------------------------------------ Aggressive Worldwide Growth Growth Growth Balanced Portfolio Portfolio Portfolio Portfolio ------------------------------------------------------------------------------ Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income - Dividends $ - 16,918,805 16,445,382 3,439,526 Expenses - Mortality and expense risk charges (note 3) 1,079,438 2,508,154 4,259,161 994,058 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) (1,079,438) 14,410,651 12,186,221 2,445,468 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 10,033,802 8,916,092 41,870,502 2,222,279 Unrealized appreciation (depreciation) on investments (9,276,050) (12,757,900) (40,026,802) 3,459,886 - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 757,752 (3,841,808) 1,843,700 5,682,165 - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ (321,686) 10,568,843 14,029,921 8,127,633 =================================================================================================================================== ========================================================== Janus Aspen Series ---------------------------------------------------------- Flexible International Capital Income Growth Appreciation Portfolio Portfolio Portfolio --------------------------------------------------------- Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 --------------------------------------------------------- Investment income: Income - Dividends $ 826,620 1,294,926 1,541 Expenses - Mortality and expense risk charges (note 3) 201,557 671,549 77,199 - -------------------------------------------------------------------------------------------------------------------- Net investment income (expense) 625,063 623,377 (75,658) - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments: Net realized gain 149,996 8,389,241 301,813 Unrealized appreciation (depreciation) on investments 620,285 (10,567,991) (412,608) - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 770,281 (2,178,750) (110,795) - -------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations $ 1,395,344 (1,555,373) (186,453) ====================================================================================================================
See accompanying notes to unaudited financial statements. 10
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets For the period ended September 30, 1998 (Unaudited) =================================================================================================================================== GE Investments Funds, Inc. =============================================== S&P 500 Money Total Index Market Return Fund Fund Fund ----------------------------------------------- Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ----------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ (2,042,155) 4,838,052 (499,825) Net realized gain (loss) 6,078,207 545,367 (117,395) Unrealized appreciation (depreciation) on investments (398,290) (545,367) 2,028,502 - ----------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 3,637,762 4,838,052 1,411,282 - ----------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 41,868,478 81,220,108 5,542,951 Loan interest - - - Transfers (to) from the general account of Life of Virginia: Death benefits (727,803) (3,758,912) (245,319) Surrenders (8,315,679) (30,860,131) (2,588,266) Loans - - - Cost of insurance and administrative expense (note 3) (130,302) (151,624) (46,242) Transfer gain (loss) and transfer fees 728,851 5,263,084 107,555 Transfers (to) from the Guarantee Account (note 1) 26,878,016 17,853,530 6,538,302 Interfund transfers 6,155,187 47,504,215 (257,993) - ----------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 66,456,748 117,070,270 9,050,988 - ----------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 70,094,510 121,908,322 10,462,270 Net assets at beginning of year 153,426,324 123,694,704 44,527,117 - ----------------------------------------------------------------------------------------------------------- Net assets at end of year $ 223,520,834 245,603,026 54,989,387 =========================================================================================================== =================================================================================================================================== GE Investments Funds, Inc. ==================================================================== International Real Estate Global Value Equity Securities Income Equity Fund Fund Fund Fund --------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 --------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ (113,919) (360,154) (17,651) (243,905) Net realized gain (loss) 416,571 (387,143) 14,275 648,515 Unrealized appreciation (depreciation) on investments (607,588) (8,286,331) 813,135 (3,974,376) - -------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations (304,936) (9,033,628) 809,759 (3,569,766) - -------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 849,665 4,681,713 292,948 8,994,031 Loan interest - - - - Transfers (to) from the general account of Life of Virginia Death benefits (49,268) (180,442) - (25,562) Surrenders (487,717) (938,719) (46,222) (1,221,314) Loans - - - - Cost of insurance and administrative expense (note 3) (9,864) (22,514) (800) (12,071) Transfer gain (loss) and transfer fees 121,629 (414,218) (14,506) 1,079,707 Transfers (to) from the Guarantee Account (note 1) 1,146,352 5,452,947 758,896 6,075,878 Interfund transfers (1,004,357) (3,951,396) 840,185 5,481,614 - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 566,440 4,627,371 1,830,501 20,372,283 - -------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 261,504 (4,406,257) 2,640,260 16,802,517 Net assets at beginning of year 22,876,533 52,683,797 6,115,298 15,900,008 - -------------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ 23,138,037 48,277,540 8,755,558 32,702,525 ================================================================================================================================ =================================================================================================================================== GE Investments Funds, Inc. =============================================== U.S. Income Equity Fund Fund ------------------------------- Nine Months Period from Ended 9/30/98 5/04-9/30/98 ------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ (228,303) (1,461) Net realized gain (loss) 116,178 (3,880) Unrealized appreciation (depreciation) on investments 1,749,617 (35,346) - --------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 1,637,492 (40,687) - --------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 1,092,477 378,981 Loan interest - - Transfers (to) from the general account of Life of Virginia Death benefits (145,003) - Surrenders (1,274,780) (228) Loans - - Cost of insurance and administrative expense (note 3) (23,374) (214) Transfer gain (loss) and transfer fees (187,915) 2,884 Transfers (to) from the Guarantee Account (note 1) 2,546,940 103,868 Interfund transfers 4,198,957 299,453 - --------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 6,207,302 784,744 - --------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 7,844,794 744,057 Net assets at beginning of year 22,010,860 - - --------------------------------------------------------------------------------------------------------- Net assets at end of year $ 29,855,654 744,057 =========================================================================================================
See accompanying notes to unaudited financial statements. 11
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued For the period ended September 30, 1998 (Unaudited) =========================================================================================================================== Oppenheimer Variable Account Funds --------------------------------------------------------------- Capital High Bond Appreciation Growth Income Fund Fund Fund Fund --------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 885,190 3,852,059 12,926,763 5,872,630 Net realized gain (loss) 336,892 18,283,263 21,248,106 664,387 Unrealized appreciation (depreciation) on investments 1,423,063 (43,029,816) (40,041,789) (13,019,924) - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 2,645,145 (20,894,494) (5,866,920) (6,482,907) - --------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 4,639,138 8,242,326 15,133,377 11,476,009 Loan interest - - - - Transfers (to) from the general account of Life of Virginia: Death benefits (397,156) (699,319) (603,324) (920,913) Surrenders (2,955,658) (8,422,572) (6,934,517) (7,702,207) Loans - - - - Cost of insurance and administrative expense (note 3) (38,312) (210,270) (132,678) (141,215) Transfer gain (loss) and transfer fees (223,763) (819,009) 197,923 (550,079) Transfers (to) from the Guarantee Account (note 1) 6,168,977 9,397,038 13,293,443 15,470,392 Interfund transfers 4,928,855 (14,303,683) (4,897,583) 1,447,794 - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 12,122,081 (6,815,489) 16,056,641 19,079,781 - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 14,767,226 (27,709,983) 10,189,721 12,596,874 Net assets at beginning of period 39,745,683 207,847,236 139,015,816 148,285,626 - --------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 54,512,909 180,137,253 149,205,537 160,882,500 ========================================================================================================================= ======================================================= Oppenheimer Variable Account Funds Goldman Sachs Variable Insurance Trust -------------- -------------------------------------- Multiple Growth & Mid Cap Strategies Income Equity Fund Fund Fund ----------------------------------------------- Nine Months Period from Period from Ended 9/30/98 05/12-9/30/98 05/08-9/30/98 ----------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 4,036,132 (4,586) (6,114) Net realized gain (loss) 1,378,355 (10,091) (14,458) Unrealized appreciation (depreciation) on investments (9,474,532) (163,946) (317,740) - ----------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations (4,060,045) (178,623) (338,312) - ----------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 5,130,694 1,330,177 976,430 Loan interest - - - Transfers (to) from the general account of Life of Virginia: Death benefits (496,830) - - Surrenders (4,874,689) (4,840) (1,559) Loans - - - Cost of insurance and administrative expense (note 3) (88,553) (196) (173) Transfer gain (loss) and transfer fees (257,688) 46,253 (2,401) Transfers (to) from the Guarantee Account (note 1) 6,524,137 508,431 855,508 Interfund transfers (787,770) 944,529 751,883 - ----------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 5,149,301 2,824,354 2,579,688 - ----------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 1,089,256 2,645,731 2,241,376 Net assets at beginning of period 72,023,553 - - - ----------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 73,112,809 2,645,731 2,241,376 =================================================================================================================
See accompanying notes to unaudited financial statements. 12
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued For the period ended September 30, 1998 (Unaudited) ============================================================================================================== Variable Insurance Products Fund --------------------------------------------- Equity Income Growth Overseas Portfolio Portfolio Portfolio ------------------------------------------------ Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets From operations: Net investment income (expense) $ 33,794,318 40,416,660 7,363,831 Net realized gain 35,421,326 12,576,239 11,370,984 Unrealized depreciation on investments (97,791,106) (18,216,069) (22,415,585) - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets from operations (28,575,462) 34,776,830 (3,680,770) - ------------------------------------------------------------------------------------------------------------ From capital transactions: Net premiums 41,951,405 12,126,353 1,664,234 Loan interest - - - Transfers (to) from the general account of Life of Virginia: Death benefits (3,036,850) (1,792,241) (285,475) Surrenders (28,603,108) (18,018,219) (4,789,369) Loans - - - Cost of insurance and administrative expense (note 3) (581,606) (363,831) (136,062) Transfer gain (loss) and transfer fees (3,491,155) (1,223,294) (1,101,872) Transfers (to) from the Guarantee Account (note 1) 38,693,709 6,434,962 1,936,228 Interfund transfers (19,074,257) (10,876,811) (10,224,054) - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets from capital transactions 25,858,138 (13,713,081) (12,936,370) - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets (2,717,324) 21,063,749 (16,617,140) Net assets at beginning of year 613,582,772 315,013,607 108,304,621 - ------------------------------------------------------------------------------------------------------------ Net assets at end of year $ 610,865,448 336,077,356 91,687,481 ============================================================================================================= ========================================================================= Variable Insurance Products Fund Variable Insurance Product Fund III ------------------------------------ ---------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Portfolio Portfolio Portfolio Portfolio -------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 -------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 56,765,898 11,634,411 (168,447) 647,280 Net realized gain 9,798,800 11,603,223 834,037 208,599 Unrealized depreciation on investments (59,897,040) (14,499,482) (482,485) (1,533,277) - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 6,667,658 8,738,152 183,105 (677,398) - ---------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 8,584,053 20,447,734 9,806,472 8,303,248 Loan interest - - - - Transfers (to) from the general account of Life of Virginia: Death benefits (2,335,486) (1,121,483) (603,412) (89,764) Surrenders (30,386,874) (9,720,387) (1,013,663) (880,185) Loans - - - - Cost of insurance and administrative expense (note 3) (814,836) (214,199) (17,547) (17,471) Transfer gain (loss) and transfer fees (4,879,348) (212) 743,536 452,660 Transfers (to) from the Guarantee Account (note 1) 6,804,884 19,181,695 6,626,435 7,369,824 Interfund transfers (9,740,151) (5,825,494) 4,545,460 6,117,123 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (32,767,758) 22,747,654 20,087,281 21,255,435 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (26,100,100) 31,485,806 20,270,386 20,578,037 Net assets at beginning of year 483,874,812 242,137,396 15,708,222 17,087,775 - ---------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ 457,774,712 273,623,202 35,978,608 37,665,812 ============================================================================================================================
See accompanying notes to unaudited financial statements. 13
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued For the period ended September 30, 1998 (Unaudited) ============================================================================================================ Federated Investors Insurance Series ----------------------------------------------- American High Leaders Income Bond Utility Fund II Fund II Fund II ------------------------------------------------ Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets From operations: Net investment income (expense) $ 2,377,494 813,844 1,798,630 Net realized gain (loss) 1,175,402 951,554 1,239,445 Unrealized depreciation (5,541,438) (2,461,925) (1,036,297) - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets from operations (1,988,542) (696,527) 2,001,778 - ------------------------------------------------------------------------------------------------------------ From capital transactions: Net premiums 15,034,695 6,407,594 4,108,101 Loan interest - - - Transfers (to) from the general account of Life of Virginia: Death benefits (636,914) (206,312) (212,881) Surrenders (1,657,436) (1,903,747) (1,274,683) Loans - - - Cost of insurance and administrative expense (note 3) (31,960) (22,687) (24,937) Transfer gain (loss) and transfer fees (note 3) 409,078 702,366 (816,179) Transfers (to) from the Guarantee Account (note 1) 10,823,567 9,791,479 3,812,641 Interfund transfers 1,101,316 (4,337,583) (319,975) - ------------------------------------------------------------------------------------------------------------ Increase in net assets from capital transactions 25,042,346 10,431,110 5,272,087 - ------------------------------------------------------------------------------------------------------------ Increase (decrease) in net assets 23,053,804 9,734,583 7,273,865 Net assets at beginning of year 34,893,726 35,195,347 30,397,894 - ------------------------------------------------------------------------------------------------------------ Net assets at end of year $ 57,947,530 44,929,930 37,671,759 ============================================================================================================= ============================================================== Alger American PBHG Insurance Series Fund --------------------------- --------------------------------- Small PBHG PBHG Capitalization Growth Large Cap Growth II Portfolio Portfolio Portfolio Portfolio -------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 -------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 9,761,831 13,337,615 (73,556) (88,443) Net realized gain (loss) (748,027) 3,239,141 255,122 (101,524) Unrealized depreciation (15,191,474) (4,908,057) (186,631) (1,336,632) - --------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations (6,177,670) 11,668,699 (5,065) (1,526,599) - --------------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 5,471,855 8,329,851 1,937,231 1,708,773 Loan interest - - - - Transfers (to) from the general account of Life of Virginia: Death benefits (350,016) (599,493) (31,834) (109,053) Surrenders (2,435,841) (3,630,139) (316,976) (197,221) Loans - - - - Cost of insurance and administrative expense (note 3) (60,812) (61,586) (4,992) (6,137) Transfer gain (loss) and transfer fees (note 3) 122,825 222,102 50,532 (15,288) Transfers (to) from the Guarantee Account (note 1) 6,463,800 6,765,918 1,462,546 1,975,531 Interfund transfers (6,856,470) 1,741,127 1,219,285 (482,280) - --------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from capital transactions 2,355,341 12,767,780 4,315,792 2,874,325 - --------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (3,822,329) 24,436,479 4,310,727 1,347,726 Net assets at beginning of year 73,827,690 72,153,813 4,718,267 6,951,940 - --------------------------------------------------------------------------------------------------------------------------------- Net assets at end of year $ 70,005,361 96,590,292 9,028,994 8,299,666 =================================================================================================================================
See accompanying notes to unaudited financial statements. 14
LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Statements of Changes in Net Assets, Continued For the period ended September 30, 1998 (Unaudited) =================================================================================================================================== Janus Aspen Series ---------------------------------------------------------------- Aggressive Worldwide Growth Growth Growth Balanced Portfolio Portfolio Portfolio Portfolio ---------------------------------------------------------------- Nine Months Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ (1,079,438) 14,410,651 12,186,221 2,445,468 Net realized gain 10,033,802 8,916,092 41,870,502 2,222,279 Unrealized appreciation (depreciation) on investments (9,276,050) (12,757,900) (40,026,802) 3,459,886 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations (321,686) 10,568,843 14,029,921 8,127,633 - ---------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 4,077,619 16,599,531 34,573,904 16,992,550 Loan interest - - - - Transfers (to) from the general account of Life of Virginia: Death benefits (688,802) (1,046,847) (1,000,222) (675,395) Surrenders (4,633,044) (9,075,010) (14,197,210) (6,542,200) Loans - - - - Cost of insurance and administrative expense (note 3) (90,086) (225,531) (338,613) (97,503) Transfer gain (loss) and transfer fees (240,160) (457,004) 812,219 1,053,204 Transfers (to) from the Guarantee Account (note 1) 3,573,710 14,390,935 30,056,044 15,804,505 Interfund transfers (9,028,527) (4,051,150) 1,120,574 8,588,635 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions (7,029,290) 16,134,924 51,026,696 35,123,796 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets (7,350,976) 26,703,767 65,056,617 43,251,429 Net assets at beginning of period 105,815,122 224,068,917 345,126,082 77,638,235 - ---------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 98,464,146 250,772,684 410,182,699 120,889,664 =================================================================================================================================== =================================================================================================================================== Janus Aspen Series ---------------------------------------------- Flexible International Capital Income Growth Appreciation Portfolio Portfolio Portfolio ---------------------------------------------- Nine Months Nine Months Nine Months Ended 9/30/98 Ended 9/30/98 Ended 9/30/98 ---------------------------------------------- Increase (decrease) in net assets From operations: Net investment income (expense) $ 625,063 623,377 (75,658) Net realized gain 149,996 8,389,241 301,813 Unrealized appreciation (depreciation) on investments 620,285 (10,567,991) (412,608) - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 1,395,344 (1,555,373) (186,453) - ---------------------------------------------------------------------------------------------------------------------------- From capital transactions: Net premiums 2,959,627 6,482,753 4,120,274 Loan interest - - - Transfers (to) from the general account of Life of Virginia: Death benefits (36,188) (333,165) (10,982) Surrenders (580,263) (1,660,151) (459,389) Loans - - - Cost of insurance and administrative expense (note 3) (13,591) (49,966) (5,330) Transfer gain (loss) and transfer fees 462,970 110,518 298,931 Transfers (to) from the Guarantee Account (note 1) 4,858,530 7,551,205 2,045,400 Interfund transfers 4,765,527 (2,049,614) 6,317,429 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital transactions 12,416,612 10,051,580 12,306,333 - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets 13,811,956 8,496,207 12,119,880 Net assets at beginning of period 14,336,751 54,665,726 2,669,575 - ---------------------------------------------------------------------------------------------------------------------------- Net assets at end of period $ 28,148,707 63,161,933 14,789,455 ===================================================================================================================================
See accompanying notes to unaudited financial statements. 15 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements September 30, 1998 (Unaudited) - ------------------------------------------------------------------------------ (1) Description of Entity Life of Virginia Separate Account 4 (the Account) is a separate investment account established in 1987 by The Life Insurance Company of Virginia (Life of Virginia) under the laws of the Commonwealth of Virginia. The Account operates as a unit investment trust under the Investment Company Act of 1940. The Account is used to fund certain benefits for flexible premium variable deferred annuity life insurance policies issued by Life of Virginia. The Life Insurance Company of Virginia is a stock life insurance company operating under a charter granted by the Commonwealth of Virginia on March 21, 1871. Eighty percent of the capital stock of Life of Virginia is owned by General Electric Capital Assurance Corporation. The remaining 20% is owned by GE Financial Assurance Holdings, Inc. General Electric Capital Assurance Corporation and GE Financial Assurance Holdings, Inc. are indirectly, wholly-owned subsidiaries of General Electric Capital ("GE Capital"). GE Capital, a diversified financial services company, is a wholly-owned subsidiary of General Electric Company (GE), a New York corporation. Prior to April 1, 1996, Life of Virginia was an indirect wholly-owned subsidiary of Aon Corporation (Aon). In May 1998, three new investment subdivisions were added to the Account, for both Type I and Type II policies. The U.S. Equity Portfolio invests solely in a designated portfolio of the GE Investments Funds, Inc. The Mid Cap Equity Portfolio and Growth & Income Portfolio each invest solely in a designated portfolio of the Goldman Sachs Variable Insurance Trust. All designated portfolios described above are series type mutual funds. Policyowners may transfer cash values between the Account's portfolios and the Guarantee Account that is part of the general account of Life of Virginia. Amounts transferred to the Guarantee Account earn interest at the interest rate in effect at the time of such transfer and remain in effect for one year, after which a new rate may be declared. 16 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements September 30, 1998 (Unaudited) - ------------------------------------------------------------------------------ (2) Summary of Significant Accounting Policies Unit Classes There are two unit classes included in the Account. Type I units are sold under policy form P1140 and P1141. Type II units are sold under policy forms P1142, P1142N and P1143. Type II unit sales began in the third quarter of 1994. Type III units will be sold under policy form P1152 beginning on or about February 9, 1999. Investments Investments are stated at fair value which is based on the underlying net asset value per share of the respective portfolios or funds. Purchases and sales of investments are recorded on the trade date and income distributions are recorded on the ex-dividend date. Realized gains and losses on investments are determined on the average cost basis. The units and unit values are disclosed as of the last business day in the applicable year or period. The aggregate cost of investments acquired and the aggregate proceeds of investments sold, for the nine months ended September 30, 1998 were: Cost of Proceeds Shares from Fund/Portfolio Acquired Shares Sold - -------------------------------------------------------------------------- GE Investment Funds, Inc.: S&P 500 Index $ 121,940,139 $ 57,326,957 Money Market 1,266,907,775 1,140,312,196 Total Return 16,145,017 7,577,323 International Equity 12,010,941 12,038,113 Real Estate Securities 17,062,178 12,877,330 Global Income 2,535,486 638,978 Value Equity 30,780,625 10,496,771 Income 10,521,455 4,841,395 U.S. Equity 908,227 124,155 17 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements September 30, 1998 (Unaudited) - ------------------------------------------------------------------------------ (2) Continued Cost of Proceeds Shares from Fund/Portfolio Acquired Shares Sold - -------------------------------------------------------------------------- Oppenheimer Variable Account Funds: Bond 24,094,501 11,135,515 Capital Appreciation 134,271,418 136,961,367 Growth 164,544,524 135,266,510 High Income 68,561,669 43,369,173 Multiple Strategies 22,716,649 13,460,525 Variable Insurance Products Fund: Equity-Income 287,040,047 227,051,725 Growth 88,701,290 61,135,871 Overseas 308,039,574 316,602,161 Variable Insurance Products Fund II: Asset Manager 101,552,325 76,830,434 Contrafund 93,919,053 59,136,517 Variable Insurance Products Fund III: Growth & Income 34,432,519 14,382,980 Growth Opportunties 27,338,345 5,354,963 Goldman Sachs Variable Insurance Trust Growth & Income 2,945,048 142,929 Mid Cap Equity 2,735,548 171,046 18 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements September 30, 1998 (Unaudited) - ------------------------------------------------------------------------------ (2) Continued Cost of Proceeds Shares from Fund/Portfolio Acquired Shares Sold - -------------------------------------------------------------------------- Janus Aspen Series: Aggressive Growth 68,680,368 76,693,160 Growth 69,270,450 38,363,193 Worldwide Growth 240,371,237 176,751,804 Balanced 57,264,876 19,549,185 Flexible Income 18,022,658 5,416,559 International Growth 150,154,366 142,590,166 Capital Appreciation 19,305,319 6,885,545 Federated Insurance Series: Utility Fund II 15,635,597 8,589,920 High Income Bond Fund II 39,642,423 28,354,055 American Leaders Fund II 44,099,083 16,440,902 The Alger American Fund Small Capitalization 138,656,466 126,497,289 Growth 49,169,118 22,992,622 PBHG Insurance Series Fund, Inc. PBHG Large Cap Growth 7,380,770 3,113,274 PBHG Growth II 7,429,990 4,390,767 Capital Transactions The increase/(decrease) in outstanding units for Type I and Type II from capital transactions for the nine months ended September 30, 1998 is as follows: 19 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
GE Investments Funds, Inc. --------------------------------------------------------------------- S&P 500 Money Total International Real Estate Index Market Return Equity Securites Type I Units Fund Fund Fund Fund Fund - -------------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 918,847 3,512,260 631,828 1,212,802 1,385,306 From capital transactions: Net premiums 41,401 2,283,462 6,804 (45,181) 2,932 Loan Interest - - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (5,634) (23,698) (2,493) 542 (45) Surrenders (66,612) (1,413,223) (46,344) 27,673 (1,993) Loans - - - - - Cost of insurance (1,891) (7,998) (935) 642 (60) Fixed Transfers 42,819 146,201 22,016 (22,232) 2,410 Interfund transfers 70,151 2,074,201 (23,319) 55,754 (1,366) ------ --------- -------- -------- ------- Net increase (decrease) in units resulting from capital transactions 80,234 3,058,945 (44,271) 17,198 1,878 ------ --------- -------- ------- ------ Units outstanding at September 30, 1998 999,081 6,571,205 587,557 1,230,000 1,387,184 ============================================================================================================== GE Investments Funds, Inc. ------------------------------------------- Global Value U.S. Income Equity Income Equity Type I Units Fund Fund Fund Fund - ---------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 516,898 479,621 1,295,638 From capital transactions: Net premiums 3,257 64,967 19,466 1,408 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits - (258) (5,666) - Surrenders (3,101) (27,978) (59,737) - Loans - - - - Cost of insurance (46) (700) (1,275) (13) Fixed Transfers 8,140 53,914 31,816 - Interfund transfers 28,772 144,398 64,092 16,803 ------- ------- -------- ------- Net increase (decrease) in units resulting from capital transactions 37,022 234,343 48,696 18,198 ------- ------- --------- ------- Units outstanding at September 30, 1998 553,920 713,964 1,344,334 18,198 ====================================================================================================
20 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
Oppenheimer Variable Account Funds -------------------------------------------------------------------------- Capital High Multiple Bond Appreciation Growth Income Strategies Type I Units Fund Fund Fund Fund Fund - -------------------------------------------------- ------------------------------------------------------------ Units outstanding at December 31, 1997 929,630 2,591,419 1,291,813 1,869,843 1,553,549 From capital transactions: Net premiums 30,014 17,659 24,406 30,351 40,990 Loan Interest - - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (6,555) (4,934) (2,226) (11,064) (7,632) Surrenders (132,051) (132,795) (66,743) (134,409) (133,426) Loans - - - - - Cost of insurance (1,687) (4,148) (1,600) (3,506) (2,784) Fixed Transfers 38,623 15,695 14,131 50,265 18,020 Interfund transfers 21,048 (148,407) (20,700) (33,276) (34,006) ------- --------- --------- --------- ---------- Net increase (decrease) in units resulting from capital transactions (50,608) (256,930) (52,732) (101,639) (118,838) -------- ---------- ---------- ---------- ----------- Units outstanding at September 30, 1998 879,022 2,334,489 1,239,081 1,768,204 1,434,711 ================================================================================================================ Variable Insurance Products Fund --------------------------------------------- Equity Income Growth Overseas Type I Units Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 6,589,338 4,467,825 3,398,260 From capital transactions: Net premiums 87,650 22,362 20,308 Loan Interest - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (20,445) (19,448) (7,325) Surrenders (439,325) (310,402) (164,865) Loans - - - Cost of insurance (11,251) (6,955) (5,356) Fixed Transfers 48,633 7,425 16,754 Interfund transfers (206,627) (138,238) (310,581) --------- --------- ---------- Net increase (decrease) in units resulting from capital transactions (541,365) (445,256) (451,065) ---------- ---------- ---------- Units outstanding at September 30, 1998 6,047,973 4,022,569 2,947,195 ==================================================================================================
21 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
Variable Insurance Products Variable Insurance Products Fund II Fund III -------------------------------- ---------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Type I Units Portfolio Portfolio Portfolio Portfolio - ----------------------------------- ------------------------------------------------------------------- Units outstanding at December 31, 1997 17,101,510 3,296,201 294,329 341,417 From capital transactions: Net premiums 73,871 60,518 34,668 50,248 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (75,352) (2,971) - - Surrenders (1,112,564) (210,453) (29,998) (34,673) Loans - - - - Cost of insurance (31,674) (4,843) (933) (827) Fixed Transfers 17,816 39,965 43,495 35,026 Interfund transfers (514,225) (80,599) 213,467 138,428 ----------- --------- -------- -------- Net increase (decrease) in units resulting from capital transactions (1,642,128) (198,383) 260,699 188,202 ----------- --------- -------- -------- Units outstanding at September 30, 1998 15,459,382 3,097,818 555,028 529,619 ============================================================================================================= Federated Insurance Series Alger American ------------------------------------------- ------------------------------- American High Small Leaders Income Bond Utility Capitalization Growth Type I Units Fund II Fund II Fund II Portfolio Portfolio - ----------------------------------- --------------------------------------------------------------------------- Units outstanding at December 31, 1997 361,619 456,124 485,332 1,325,070 1,022,514 From capital transactions: Net premiums 48,191 65,921 21,895 (32,265) 28,417 Loan Interest - - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits - (5,919) (8,154) (384) (8,307) Surrenders (36,399) (31,570) (43,301) (28,813) (99,427) Loans - - - - - Cost of insurance (804) (1,361) (1,527) (1,249) (1,935) Fixed Transfers 22,943 101,416 27,757 27,106 17,748 Interfund transfers 61,095 (22,609) (77,045) (17,778) 118,241 -------- -------- --------- --------- --------- Net increase (decrease) in units resulting from capital transactions 95,026 105,878 (80,375) (53,383) 54,737 -------- -------- --------- ---------- --------- Units outstanding at September 30, 1998 456,645 562,002 404,957 1,271,687 1,077,251 =========================================================================================================================
22 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
======================================================================================================= Janus Aspen Series ----------------------------------------------------------------- Aggressive Worldwide Growth Growth Growth Balanced Type I Units Portfolio Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 1,817,576 4,505,765 4,938,272 2,481,552 From capital transactions: Net premiums 14,538 65,855 57,631 181,791 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (8,275) (12,043) (7,233) (24,761) Surrenders (113,442) (236,308) (167,715) (551,541) Loans - - - - Cost of insurance (2,632) (7,587) (5,262) (8,561) Fixed Transfers 11,095 47,960 38,844 147,934 Interfund transfers (129,665) (54,677) 15,592 394,972 ----------- ---------- ---------- ---------- Net increase (decrease) in units resulting from capital transactions (228,381) (196,800) (68,143) 139,834 ---------- --------- ---------- ---------- Units outstanding at September 30, 1998 1,589,195 4,308,965 4,870,129 2,621,386 ======================================================================================================= Janus Aspen Series ------------------------------------------------ Flexible International Capital Income Growth Appreciation Type I Units Portfolio Portfolio Portfolio - ------------------------------------------- ------------------------------------------------ Units outstanding at December 31, 1997 280,878 1,004,669 49,257 From capital transactions: Net premiums 37,976 48,545 17,666 Loan Interest - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (2,030) (2,665) - Surrenders (17,106) (44,411) (4,239) Loans - - - Cost of insurance (620) (1,510) (244) Fixed Transfers 57,499 26,630 10,466 Interfund transfers 147,707 71,402 176,030 --------- ---------- -------- Net increase (decrease) in units resulting from capital transactions 223,426 97,991 199,679 --------- ---------- -------- Units outstanding at September 30, 1998 504,304 1,102,660 248,936 ===================================================================================================
23 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
========================================================================== PBHG Insurance Series Fund, Inc. Goldman Sachs Variable Insurance Trust ----------------------------------- --------------------------------------- PBHG PBHG Growth & Mid Cap Large Cap Growth II Income Equity Type I Units Portfolio Portfolio Fund Fund - ------------------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1997 55,997 76,611 From capital transactions: Net premiums 8,042 39,330 7,806 - Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits - - - - Surrenders (6,362) (1,006) (114) - Loans - - - - Cost of insurance (131) (151) (15) (18) Fixed Transfers 7,061 5,049 12,712 1,432 Interfund transfers 28,437 1,443 22,661 38,987 ------- -------- ------- ------- Net increase (decrease) in units resulting from capital transactions 37,047 44,665 43,050 40,401 ------- -------- ------- -------- Units outstanding at September 30, 1998 93,044 121,276 43,050 40,401 ==================================================================================================================
24 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
=========================================================================================================== GE Investments Funds, Inc. ------------------------------------------------------------------- S&P 500 Money Total International Real Estate Index Market Return Equity Securites Type II Units Fund Fund Fund Fund Fund - ----------------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 3,025,140 4,980,487 928,145 614,410 1,478,247 From capital transactions: Net premiums 944,781 3,449,828 176,032 46,791 226,044 Loan Interest - - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (12,458) (234,079) (5,355) (3,549) (9,264) Surrenders (140,541) (815,512) (34,221) (26,159) (34,003) Loans - - - - - Cost of insurance (1,519) (3,049) (493) (496) (721) Fixed Transfers 593,411 1,081,254 192,092 78,707 271,359 Interfund transfers 87,209 1,347,241 17,372 (54,366) (199,702) --------- --------- --------- --------- ---------- Net increase (decrease) in units resulting from capital transactions 1,470,883 4,825,683 345,427 40,928 253,713 --------- --------- --------- --------- ---------- Units outstanding at September 30, 1998 4,496,023 9,806,170 1,273,572 655,338 1,731,960 =========================================================================================================== GE Investments Funds, Inc. -------------------------------------------- Global Value U.S. Income Equity Income Equity Type II Units Fund Fund Fund Fund - ------------------------------------------ -------------------------------------------- Units outstanding at December 31, 1997 79,290 730,616 903,249 From capital transactions: Net premiums 24,706 607,803 78,055 38,870 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits - (1,680) (5,935) - Surrenders (1,506) (70,164) (37,923) (24) Loans - - - - Cost of insurance (33) (420) (437) (10) Fixed Transfers 64,281 404,125 201,449 11,032 Interfund transfers 52,894 302,760 315,404 15,328 -------- --------- --------- ------- Net increase (decrease) in units resulting from capital transactions 140,342 1,242,424 550,613 65,196 -------- ----------- --------- ------- Units outstanding at September 30, 1998 219,632 1,973,040 1,453,862 65,196 ==============================================================================================
25 LIFE OF VIRGINIA SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
=============================================================================================================== Oppenheimer Variable Account Funds ---------------------------------------------------------------------- Capital High Multiple Bond Appreciation Growth Income Strategies Type II Units Fund Fund Fund Fund Fund - ---------------------------------------- ----------------------------------------------------------------------- Units outstanding at December 31, 1997 994,017 3,176,448 2,462,359 2,934,974 1,200,126 From capital transactions: Net premiums 197,316 208,888 348,817 340,747 153,705 Loan Interest - - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (13,764) (14,238) (12,336) (19,830) (11,455) Surrenders (37,084) (97,057) (90,203) (129,384) (57,568) Loans - - - - - Cost of insurance (500) (1,579) (1,321) (1,465) (708) Fixed Transfers 263,397 242,652 315,566 451,205 227,380 Interfund transfers 218,146 (243,049) (96,842) 75,301 2,348 --------- ---------- --------- --------- --------- Net increase (decrease) in units resulting from capital transactions 627,511 95,617 463,681 716,574 313,702 --------- ---------- --------- --------- --------- Units outstanding at September 30, 1998 1,621,528 3,272,065 2,926,040 3,651,548 1,513,828 ================================================================================================================ Variable Insurance Products Fund ------------------------------------------- Equity Income Growth Overseas Type II Units Portfolio Portfolio Portfolio - ------------------------------------------ ------------------------------------------- Units outstanding at December 31, 1997 10,074,173 3,614,598 1,762,588 From capital transactions: Net premiums 1,005,403 246,490 52,926 Loan Interest - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (60,578) (21,866) (5,476) Surrenders (357,009) (116,191) (52,523) Loans - - - Cost of insurance (5,253) (1,726) (862) Fixed Transfers 955,204 134,809 68,019 Interfund transfers (312,798) (114,471) (150,907) ------------ ----------- ----------- Net increase (decrease) in units resulting from capital transactions 1,224,969 127,045 (88,823) ------------ ----------- ----------- Units outstanding at September 30, 1998 11,299,142 3,741,643 1,673,765 ==============================================================================================
26 LIFE OF VIRGINIA SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
================================================================================================== Variable Insurance Products Variable Insurance Products Fund II Fund III ----------------------------- ---------------------------------- Asset Growth & Growth Manager Contrafund Income Opportunities Type II Units Portfolio Portfolio Portfolio Portfolio - ---------------------------------------------------------------------------------------------------- Units outstanding at December 31, 1997 2,678,933 8,595,677 976,086 1,049,540 From capital transactions: Net premiums 208,658 856,849 690,861 588,451 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (14,752) (47,338) (44,169) (6,810) Surrenders (91,427) (228,694) (50,874) (38,129) Loans - - - - Cost of insurance (1,053) (4,837) (559) (642) Fixed Transfers 196,394 820,319 451,224 530,211 Interfund transfers 90,547 (181,820) 166,743 349,724 --------- ---------- ---------- ---------- Net increase (decrease) in units resulting from capital transactions 388,367 1,214,479 1,213,226 1,422,805 --------- ---------- ---------- ---------- Units outstanding at September 30, 1998 3,067,300 9,810,156 2,189,312 2,472,345 ================================================================================================= Federated Insurance Series Alger American ----------------------------------- ------------------------------- American High Small Leaders Income Bond Utility Capitalization Growth Type II Units Fund II Fund II Fund II Portfolio Portfolio - ------------------------------------------- ------------------------------------------------------------------- Units outstanding at December 31, 1997 2,056,691 1,886,887 1,325,701 5,645,458 4,380,186 From capital transactions: Net premiums 920,998 385,138 231,698 432,641 509,715 Loan Interest - - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (40,564) (10,329) (8,944) (25,559) (31,517) Surrenders (77,958) (107,887) (55,965) (144,411) (150,306) Loans - - - - - Cost of insurance (1,426) (748) (798) (3,323) (2,345) Fixed Transfers 671,943 588,159 211,788 529,649 418,416 Interfund transfers 23,812 (272,732) 14,822 (498,271) 13,872 --------- --------- --------- --------- ---------- Net increase (decrease) in units resulting from capital transactions 1,496,805 581,601 392,601 290,726 757,835 --------- --------- --------- --------- --------- Units outstanding at September 30, 1998 3,553,496 2,468,488 1,718,302 5,936,184 5,138,021 =====================================================================================================================
27 LIFE OF VIRGINIA SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited)
====================================================================================================== Janus Aspen Series ------------------------------------------------------------------- Aggressive Worldwide Growth Growth Growth Balanced Type II Units Portfolio Portfolio Portfolio Portfolio - ------------------------------------------------------------------------------------------------------ Units outstanding at December 31, 1997 3,442,667 7,270,898 10,111,685 2,804,435 From capital transactions: Net premiums 138,987 726,756 1,207,618 956,133 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (18,942) (38,964) (27,328) (29,479) Surrenders (82,379) (222,946) (298,956) (134,028) Loans - - - - Cost of insurance (1,270) (4,048) (5,405) (1,832) Fixed Transfers 123,095 638,010 1,065,202 899,563 Interfund transfers (231,770) (143,759) 20,378 335,929 ---------- ---------- ----------- ----------- Net increase (decrease) in units resulting from capital transactions (72,279) 955,049 1,961,509 2,026,286 --------- --------- ---------- ------------ Units outstanding at September 30, 1998 3,370,388 8,225,947 12,073,194 4,830,721 ====================================================================================================== Janus Aspen Series ------------------------------------------ Flexible International Capital Income Growth Appreciation Type II Units Portfolio Portfolio Portfolio - ------------------------------------------ ------------------------------------------ Units outstanding at December 31, 1997 869,089 3,001,600 163,550 From capital transactions: Net premiums 196,500 372,778 251,629 Loan Interest - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (1,081) (18,981) (714) Surrenders (30,370) (62,263) (25,987) Loans - - - Cost of insurance (526) (1,694) (124) Fixed Transfers 326,663 465,277 123,369 Interfund transfers 243,319 (207,923) 250,081 --------- ----------- -------- Net increase (decrease) in units resulting from capital transactions 734,505 547,194 598,254 Units outstanding at September 30, 1998 1,603,594 3,548,794 761,804 =============================================================================================
28 LIFE OF VIRGINIA SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS September 30, 1998 (Unaudited) ===================================================================================================== PBHG Insurance Series Fund, Goldman Sachs Variable Insurance Inc. Trust ------------------------------- ---------------------------------- PBHG PBHG Growth & Mid Cap Large Cap Growth II Income Equity Type II Units Portfolio Portfolio Fund Fund - ---------------------------------- ------------------------------------------------------------------- Units outstanding at December 31, 1997 346,833 576,010 From capital transactions: Net premiums 141,349 110,218 144,911 109,649 Loan Interest - - - - Tranfers (to) from the general acct. of Life of Virginia: Death benefits (2,437) (9,791) - - Surrenders (18,782) (16,601) (445) (175) Loans - - - - Cost of insurance (269) (385) (8) (1) Fixed Transfers 105,862 171,820 45,994 94,584 Interfund transfers 68,831 (44,885) 86,365 44,008 -------- --------- --------- -------- Net increase (decrease) in units resulting from capital transactions 294,554 210,376 276,817 248,065 -------- --------- --------- -------- Units outstanding at September 30, 1998 641,387 786,386 276,817 248,065 ======================================================================================================
29 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements September 30, 1998 (Unaudited) - -------------------------------------------------------------------------------- (2) Continued Federal Income Taxes The Account is not taxed separately because the operations of the Account are part of the total operations of Life of Virginia. Life of Virginia is taxed as a life insurance company under the Internal Revenue Code (the Code). Life of Virginia is included in the General Electric Capital Assurance Company consolidated federal income tax return. The Account will not be taxed as a regulated investment company under subchapter M of the Code. Under existing federal income tax law, no taxes are payable on the investment income or on the capital gains of the Account. Use of Estimates Financial statements prepared in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect amounts and disclosures reported therein. Actual results could differ from those estimates. (3) Related Party Transactions Net premiums transferred from Life of Virginia to the Account represent gross premiums recorded by Life of Virginia on its flexible premium variable deferred annuity products, less deductions retained as compensation for premium taxes. For policies issued on or after May 1, 1993, the deduction for premium taxes will be deferred until surrender. For Type I policies, during the first ten years following a premium payment, a charge of .20% of the premium payment is deducted monthly from the policy Account values to reimburse Life of Virginia for certain distribution expenses. In addition, a charge is imposed on full and certain partial surrenders that occur within six years of any premium payment (seven years for certain Type II policies) to cover certain expenses relating to the sale of a policy. Subject to certain limitations, the charge equals 6% (or less) of the premium surrendered, depending on the time between premium payment and surrender. Life of Virginia will deduct a charge of $30 per year and $25 plus .15% per year from the policy account values for certain administrative expenses incurred for policy Type I and Type II, respectively. For Type II policies, the $25 charge may be waived if the account value is greater than $75,000. In addition, Life of Virginia charges the Account 1.15% and 1.25% on policy Type I and Type II, respectively, for the mortality and expense risk (Continued) 30 LIFE OF VIRGINIA SEPARATE ACCOUNT 4 Notes to Financial Statements September 30, 1998 (Unaudited) - ------------------------------------------------------------------------------- (3) Continued that Life of Virginia assumes. Administrative expenses as well as mortality and risk charges are deducted daily and reflect the effective annual rates. GE Investments Funds, Inc. (the Fund) is an open-end diversified management investment company. Capital Brokerage Corporation, an affiliate of Life of Virginia, is a Washington Corporation registered with the Commission under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. Capital Brokerage Corporation also serves as principal underwriter for variable life insurance policies issued by Life of Virginia. GE Investment Management Incorporated (Investment Advisor), a wholly-owned subsidiary of GE, currently serves as investment advisor to GE Investments Funds, Inc. As compensation for its services, the Investment Advisor is paid an investment advisory fee by the Fund based on the average daily net assets at an effective annual rate of .35% for the S&P 500 Index Fund, .50% for the Money Market, Income Fund and Total Return Funds, 1.00% for the International Equity Fund, .85% for the Real Estate Securities Fund, .60% for the Global Income Fund, .65% for the Value Equity Fund and .55% for the U.S. Equity Fund. Certain officers and directors of Life of Virginia are also officers and directors of Capital Brokerage Corporation. - -------------------------------------------------------------------------------- 31 THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Financial Statements December 31, 1997, 1996, and 1995 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Board of Directors The Life Insurance Company of Virginia: We have audited the accompanying consolidated balance sheets of The Life Insurance Company of Virginia (an indirect wholly-owned subsidiary of General Electric Capital Corporation) and subsidiary as of December 31, 1997 and 1996, and the related consolidated statements of income, stockholders' equity, and cash flows for the year ended December 31, 1997 and the nine months ended December 31, 1996. We have also audited the preacquisition statements of income, stockholders' equity and cash flows for the three months ended March 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The accompanying consolidated financial statements of The Life Insurance Company of Virginia for the year ended December 31, 1995, were audited by other auditors whose report, dated February 8, 1996 on those consolidated financial statements included an explanatory paragraph that described the change in the Company's method of accounting for certain investments. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Life Insurance Company of Virginia and subsidiary as of December 31, 1997 and 1996, and the results of their operations and their cash flows for the year ended December 31, 1997, the nine month period ended December 31, 1996 and the preacquisition three month period ended March 31, 1996, in conformity with generally accepted accounting principles. As discussed in Note 1 to the consolidated financial statements, effective April 1, 1996, General Electric Capital Corporation acquired all of the outstanding stock of The Life Insurance Company of Virginia in a business combination accounted for as a purchase. As a result of the acquisition, the consolidated financial information for the periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable. KPMG LLP Richmond, Virginia January 6, 1998 REPORT OF INDEPENDENT AUDITIORS Board of Directors The Life Insurance Company of Virginia We have audited the accompanying consolidated statements of income, stockholder's equity, and cash flows of The Life Insurance Company of Virginia and subsidiaries for the year ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of The Life Insurance Company of Virginia and subsidiaries for the year ended December 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Richmond, Virginia February 8, 1996 THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Balance Sheets December 31, 1997 and 1996 (in millions)
- ------------------------------------------------------------------------------------------------------------------ Assets 1997 1996 - ------------------------------------------------------------------------------------------------------------------ Investments: Fixed maturities: Available for sale - at fair value (amortized cost: December 31, 1997 - $5,468.1; 1996 - $5,102.2) $ 5,622.6 5,142.7 Equity securities - at fair value Common stocks (cost: December 31, 1997 - $43.1; 1996 - $31.6) 54.1 34.7 Preferred stocks (cost: December 31, 1997 - $87.6; 1996 - $123.5) 97.6 130.8 Mortgage loans on real estate (net of reserve for losses: December 31, 1997 - $17.2; 1996 - $20.8) 496.2 585.4 Real estate (net) 11.8 19.4 Policy loans 188.4 179.5 Short-term investments - 42.4 - ------------------------------------------------------------------------------------------------------------------ Total investments 6,470.7 6,134.9 - ------------------------------------------------------------------------------------------------------------------ Cash 0.2 6.4 Receivables: Premiums and other 6.6 7.9 Reinsurance recoverable 8.7 13.1 Accrued investment income 123.1 116.6 - ------------------------------------------------------------------------------------------------------------------ Total receivables 138.4 137.6 Deferred policy acquisition costs 165.0 70.3 Goodwill (net of accumulated amortization: December 31, 1997 - $11.3; 1996 - $5.0) 117.1 125.4 Present value of future profits (net) 332.6 419.2 Property and equipment at cost (net) 3.2 1.7 Deferred income taxes 57.4 72.9 Other assets 15.4 12.3 Assets held in separate accounts 4,066.4 2,762.7 - ------------------------------------------------------------------------------------------------------------------ Total assets $ 11,366.4 9,743.4 - ------------------------------------------------------------------------------------------------------------------
(continued) THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Balance Sheets, Continued December 31, 1997 and 1996 (in millions, except share data)
- ------------------------------------------------------------------------------------------------------------------ Liabilities and Stockholders' Equity 1997 1996 - ------------------------------------------------------------------------------------------------------------------ Policy liabilities: Future policy benefits $ 520.6 518.3 Policy and contract claims 83.0 69.1 Unearned and advance premiums 0.1 0.1 Other policyholder funds 5,369.2 5,094.4 - ------------------------------------------------------------------------------------------------------------------ Total policy liabilities 5,972.9 5,681.9 General liabilities: Payable to affiliate, net 9.4 8.8 Commissions and general expenses 51.1 46.8 Current income taxes 45.8 45.4 Other liabilities 71.5 192.2 Liabilities related to separate accounts 4,066.4 2,762.7 - ------------------------------------------------------------------------------------------------------------------ Total liabilities 10,217.1 8,737.8 - ------------------------------------------------------------------------------------------------------------------ Commitments and Contingent Liabilities - ------------------------------------------------------------------------------------------------------------------ Stockholders' equity: Common stock - $1,000 par value: Authorized, issued and outstanding: 4,000 shares 4.0 4.0 Additional paid-in capital 925.9 928.1 Net unrealized investment gains 74.3 19.4 Retained earnings 145.1 54.1 - ------------------------------------------------------------------------------------------------------------------ Total stockholders' equity 1,149.3 1,005.6 - ------------------------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $ 11,366.4 9,743.4 - ------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Statements of Income For the year ended December 31, 1997, the periods from April 1, 1996 to December 31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December 31, 1995 (in millions)
- ---------------------------------------------------------------------------------------------------------------------- Preacquisition -------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, 1997 1996 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Revenue Premiums and policy fees $ 273.2 154.7 92.4 179.3 Separate account fees 44.4 23.1 5.9 17.7 Net investment income (note 2) 472.5 334.4 112.0 402.1 Realized investment gains (losses) (note 2) 13.3 6.0 9.0 (76.5) Other income 2.5 0.6 1.0 2.8 - ---------------------------------------------------------------------------------------------------------------------- Total revenue earned 805.9 518.8 220.3 525.4 - ---------------------------------------------------------------------------------------------------------------------- Benefits and Expenses Benefits to policyholders 509.8 326.4 166.0 372.9 Commissions and general expenses 82.5 53.2 28.8 43.7 Amortization of intangibles 59.6 50.1 0.6 3.2 Amortization of deferred policy acquisition costs 10.8 3.2 6.0 39.3 - ---------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 662.7 432.9 201.4 459.1 Income Before Income Tax 143.2 85.9 18.9 66.3 Provision for income tax (note 3) Current expense (benefit) 64.8 39.7 (3.8) 37.9 Deferred expense (benefit) (12.6) (7.9) 10.8 (10.8) - ---------------------------------------------------------------------------------------------------------------------- 52.2 31.8 7.0 27.1 - ---------------------------------------------------------------------------------------------------------------------- Net income $ 91.0 54.1 11.9 39.2 - ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Statements of Stockholders' Equity For the year ended December 31, 1997, the periods from April 1, 1996 to December 31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December 31, 1995 (in millions)
- ------------------------------------------------------------------------------------------------------------------ Preacquisition --------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, 1997 1996 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Common stock $1,000 par value common stock, authorized, issued and outstanding 4,000 in 1997, 1996 and 1995) - ------------------------------------------------------------------------------------------------------------------ Balance at beginning and end of period $ 4.0 4.0 4.0 4.0 - ------------------------------------------------------------------------------------------------------------------ Additional Paid-in Capital Balance at beginning of period 928.1 818.4 749.1 704.1 Adjustment to reflect purchase method (note 1) (2.2) 109.7 - - Capital contribution from parent (notes 4, 7) - - 69.3 45.0 - ------------------------------------------------------------------------------------------------------------------ Balance at end of period 925.9 928.1 818.4 749.1 - ------------------------------------------------------------------------------------------------------------------ Net Unrealized Investment Gains (Losses) Balance at beginning of period 19.4 11.9 103.1 (97.5) Adjustment to reflect purchase method (note 1) - (11.9) - - Net unrealized investment gains (losses) 54.9 19.4 (91.2) 200.6 - ------------------------------------------------------------------------------------------------------------------ Balance at end of period 74.3 19.4 11.9 103.1 - ------------------------------------------------------------------------------------------------------------------ Net Foreign Exchange Gains (Losses) Balance at beginning of period - - - (3.0) Net foreign exchange gains (losses) - - - 3.0 - ------------------------------------------------------------------------------------------------------------------ Balance at end of period - - - - - ------------------------------------------------------------------------------------------------------------------ Retained Earnings (Deficit) Balance at beginning of period 54.1 (22.4) (34.3) 159.8 Adjustment to reflect purchase method (note 1) - 22.4 - - Net income 91.0 54.1 11.9 39.2 Dividends to stockholder - - - (40.0) Stock dividend to affiliate (note 7) - - - (193.3) - ------------------------------------------------------------------------------------------------------------------ Balance at end of period 145.1 54.1 (22.4) (34.3) - ------------------------------------------------------------------------------------------------------------------ Stockholders' equity at end of period $ 1,149.3 1,005.6 811.9 821.9 - ------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Statements of Cash Flows For the year ended December 31, 1997, the periods from April 1, 1996 to December 31, 1996 and from January 1, 1996 to March 31, 1996, and the year ended December 31, 1995 (in millions)
- --------------------------------------------------------------------------------------------------------------------------------- Preacquisition ---------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, 1997 1996 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 91.0 54.1 11.9 39.2 Adjustments to reconcile net income to cash provided by (used in) operating activities: Change in policy liabilities 239.0 53.5 (32.8) 114.2 Change in accrued investment income (6.5) (37.6) 4.1 (2.1) Deferred policy acquisition costs (112.3) (74.9) (22.2) (76.1) Amortization of deferred policy acquisition costs 10.8 3.2 6.0 39.3 Amortization of intangibles 59.6 50.1 0.6 3.2 Other amortization and depreciation 8.0 7.3 1.4 (1.2) Premiums and operating receivables, commissions and general expenses, income taxes and other (128.5) 77.8 22.9 (65.7) Realized investment (gains) losses (13.3) (6.0) (9.0) 76.5 - ------------------------------------------------------------------------------------------------------------------------------ Cash provided by (used in) operating activities 147.8 127.5 (17.1) 127.3 - ------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Sale (purchase) of short-term investments - net 42.4 49.4 (10.1) (18.8) Sale or maturity of investments Fixed maturities - held to maturity: Maturities - - - 3.9 Calls and prepayments - - - 60.9 Fixed maturities - available for sale Maturities - 201.5 46.1 35.0 Calls and prepayments - 353.5 101.0 58.6 Sales 739.1 452.0 115.8 1,700.3 All other investments 145.1 177.3 44.9 124.6 Purchase of investments: Fixed maturities - available for sale (1,104.1) (1,279.5) (144.1) (1,950.7) All other investments (30.8) (39.5) (65.5) (183.5) Purchase of property and equipment (2.4) - (0.2) (0.8) - ------------------------------------------------------------------------------------------------------------------------------ Cash provided by (used in) investing activities (210.7) (85.3) 87.9 (170.5) - ------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Capital contribution - - 2.8 - Cash dividends to stockholder - - (40.0) (6.0) Change in cash overdrafts 4.7 (12.7) 28.8 - Interest sensitive life, annuity and investment contract deposits 1,894.2 1,275.4 301.9 1,059.5 Interest sensitive life, annuity and investment contract withdrawals (1,842.2) (1,305.6) (358.8) (1,031.7) - ------------------------------------------------------------------------------------------------------------------------------ Cash provided by (used in) financing activities 56.7 (42.9) (65.3) 21.8 - ------------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in cash (6.2) (0.7) 5.5 (21.4) Cash at beginning of period 6.4 7.1 1.6 23.0 - ------------------------------------------------------------------------------------------------------------------------------ Cash at end of period $ 0.2 6.4 7.1 1.6 - ------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1997 =============================================================================== (1) Summary of Significant Accounting Principles and Practices Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) and include the accounts of The Life Insurance Company of Virginia ("Life of Virginia" or "Company") and its subsidiary, Assigned Settlements Inc. All material intercompany accounts and transactions have been eliminated. Prior to April 1, 1996, Combined Insurance Company of America ("CICA") owned 100% or 4,000 shares of Life of Virginia. CICA is a wholly-owned subsidiary of AON Corporation (AON). On April 1, 1996, CICA sold 100% of the issued and outstanding shares of Life of Virginia to General Electric Capital Corporation ("GE Capital"). Immediately thereafter, 80% was contributed to General Electric Capital Assurance Company (the "Parent"). On December 31, 1996, the remaining 20% was contributed to General Electric Financial Assurance Holdings, Inc. ("GEFAH"). Effective January 1, 1999, an affiliate, The Harvest Life Insurance Company (Harvest), was merged with and into the Company. The financial position and results of operation of Harvest will be included with the Company's beginning January 1, 1999, and, accordingly, are not reflected herein. Also, effective January 1, 1999, the Company changed its name to GE Life and Annuity Assurance Company. Life of Virginia primarily sells variable annuities and universal life insurance to customers throughout most of the United States. Life of Virginia distributes variable annuities primarily through stockbrokers and universal life insurance primarily through career agents and independent brokers. Life of Virginia is also engaged in the sale of traditional individual and group life products and guaranteed investment contracts. Approximately 23%, 34% and 43% of premium and annuity consideration collected, in 1997, 1996, and 1995, respectively, came from customers residing in the South Atlantic region of the United States. Although the Company markets its products through numerous distributors, approximately 22%, 21% and 14% of the Company's sales in 1997, 1996 and 1995, respectively, have been through two specific national stockbrokers. Loss of all or a substantial portion of the business provided by these stockbrokers could have a material adverse effect on the business and operations of the Company. The Company does not believe, however, that the loss of such business would have a long-term adverse effect because of the Company's competitive position in the marketplace and the availability of business from other distributors. THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARY Notes to Consolidated Financial Statements =============================================================================== (1) Continued Estimates Financial statements prepared in conformity with generally accepted accounting principles require management to make estimates and assumptions that could affect amounts and disclosures reported therein. Actual results could differ from those estimates. As further discussed in the accompanying notes to the consolidated financial statements, significant estimates and assumptions affect deferred acquisition costs, PVFP, future life policy benefits, provisions for real estate-related losses and related reserves, other-than-temporary declines in values for fixed maturities, the valuation allowance for deferred income taxes and the calculation of fair value disclosures for certain financial instruments. Certain 1996 and 1995 amounts have been reclassified to conform to 1997 presentation. Purchase Accounting Method Upon acquisition of Life of Virginia by GE Capital, Life of Virginia restated its financial statements in accordance with the purchase method of accounting. The net purchase price for Life of Virginia and its subsidiary of $929.9 million was allocated according to the fair values of the acquired assets and liabilities, including the estimated present value of future profits. These allocated values were dependent upon policies in force and market conditions at the time of closing. In addition to revaluing all material tangible assets and liabilities to their respective estimated fair values as of the closing date of the sale, Life of Virginia also recorded in its consolidated financial statements the excess of cost over fair value of net assets acquired (goodwill) as well as the present value of future profits to be derived from the purchased business. These amounts were determined in accordance with the purchase method of accounting. This new basis of accounting resulted in an increase in stockholders' equity of $118 million (net of purchase accounting adjustments of $2.2 million in 1997), reflecting the application of the purchase method of accounting. The Company's consolidated financial statements subsequent to April 1, 1996 reflect this new basis of accounting. (1) Continued All amounts for periods ended before April 1, 1996 are labeled "Preacquisition" and are based on the preacquisition historical costs in accordance with generally accepted accounting principles. The periods ending after such date are based on fair values at April 1, 1996 (which becomes the new cost basis) and subsequent costs in accordance with the purchase method of accounting. Present Value of Future Profits As of April 1, 1996, Life of Virginia established an intangible asset which represents the present value of future profits ("PVFP"). PVFP reflects the estimated fair value of the Company's life insurance business in-force and represents the portion of the cost to acquire the Company that is allocated to the value of the right to receive future cash flows from insurance contracts existing at the date of acquisition. Such value is the present value of the actuarially determined projected cash flows for the acquired policies discounted at an appropriate rate. PVFP is amortized over the estimated contract life of the business acquired in relation to the present value of estimated gross profits. The estimated gross profit streams are periodically reevaluated and the unamortized balance of PVFP adjusted to the amount that would have existed had the actual experience and revised estimates been known and applied since inception. The amortization period is the remaining life of the policies, which range from 10 to 30 years from the date of original policy issue. Based on current assumptions, net amortization of the PVFP asset, expressed as a percentage, is projected to be 12.4%, 11.6%, 10.8%, 9.5% and 8.1% for the years ended December 31, 1998 through 2002, respectively. Actual amortization incurred during these years may vary as assumptions are modified to incorporate actual results. Prior to April 1, 1996, Life of Virginia's PVFP was calculated in a similar manner as the PVFP discussed above and related to policies in-force on April 30, 1986, the date the Company was acquired by Aon. Under purchase accounting this PVFP was removed. (1) Continued The projected ending balance of PVFP will be further adjusted to reflect the impact of unrealized gains or losses on fixed maturities classified as available for sale in the investment portfolios. Such adjustments are not recorded in the Company's net income but rather as a credit or charge to stockholders' equity, net of applicable income tax. The components of PVFP are as follows:
Preacquisition ------------------------------ Nine months Three months Year ended ended ended Year ended, December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - --------------------------------------------------------------------------------------------------------------- PVFP - beginning of period $ 419.2 - 32.6 48.6 Adjustment related to the purchase method of accounting - 484.0 - - Interest accreted at 6.75% for 1997 and 6.25% for 1996 28.4 22.4 0.5 2.1 Gross amortization, excluding interest (81.6) (67.5) (1.1) (5.3) Dividend of Globe Life Insurance Company (note 7) - - - (12.8) Effect of net unrealized investment (gains) losses (33.4) (19.7) - - - --------------------------------------------------------------------------------------------------------------- PVFP - end of period $ 332.6 419.2 32.0 32.6 - ---------------------------------------------------------------------------------------------------------------
Goodwill Under the purchase method of accounting, Goodwill is the excess of the purchase price over the fair value of assets and liabilities acquired and PVFP. The Company has elected to amortize goodwill on the straight line basis over a 20 year period. The Company reviews goodwill to determine if events or changes in circumstances may have affected the recoverability of the outstanding goodwill as of each reporting period. In the event that the Company determined that goodwill was not recoverable it would amortize such amounts as additional goodwill expense in the accompanying consolidated financial statements. As of December 31, 1997, the Company believes that no such adjustment is necessary. (1) Continued Deferred Tax Assets and Liabilities Pursuant to the acquisition on April 1, 1996, GE Capital, and Aon Corporation, the Company's previous ultimate parent, agreed to file an election to treat the acquisition of Life of Virginia as an asset acquisition under the provisions of Internal Revenue Code Section 338(h)(10). As a result of that election, the tax basis of the Company's assets as of the date of acquisition were revalued based upon fair market values. The principal effect of the election was to establish a tax basis of intangibles for the value of the business acquired that is amortizable for tax purposes over 10-15 years. 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. Recognition of Premium Revenue and Related Expenses For universal life-type and investment products, generally there is no requirement for the payment of a premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life-type policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life-type policies and investment products consists of charges for the cost of insurance, policy administration, and surrenders assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances. In general, for accident and health products, premiums collected are reported as earned proportionately over the period covered by the policies. For all other life products, premiums are recognized as revenue when due. Benefits and related expenses associated with the premium revenues are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. (1) Continued Reinsurance Reinsurance premiums, commissions, and expense reimbursements on reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums and benefits ceded to other companies have been reported as a reduction of premium revenue and benefits. Expense reimbursements received in connection with reinsurance ceded have been accounted for as a reduction of the related policy acquisition costs or, to the extent such reimbursements exceed the related acquisition costs, as other revenue. All reinsurance receivables and prepaid reinsurance premium amounts are reported as assets. Investments Fixed maturities are classified as available for sale and carried at fair value. The amortized cost of fixed maturities is adjusted for amortization of premiums and accretion of discounts to maturity that are included in net investment income. Included in fixed maturities are investments in mortgage-backed securities. Investment income on mortgage-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. Short-term investments are carried at amortized cost which approximates fair value. Equity securities are valued at fair value. Mortgage loans are carried at their unpaid principal balance, net of allowances for estimated uncollectible amounts. Real estate is carried generally at cost less accumulated depreciation. Policy loans are carried at unpaid principal balance. Other long-term investments are carried generally at cost. Changes in the market values of investments available-for-sale, net of the effect on deferred policy acquisition costs, present value of future profits and deferred federal income taxes are reflected as unrealized investment gains or losses in a separate component of stockholders' interest and accordingly, have no effect on net income. (1) Continued Investments that have declines in fair value below cost, that are judged to be other than temporary, are written down to estimated fair value and reported as realized investment losses. Additionally, reserves for mortgage loans and certain other long-term investments are established based on an evaluation of the respective investment portfolio, past credit loss experience, and current economic conditions. Writedowns and the change in reserves are included in realized investment gains and losses in the consolidated statements of income. In general, the Company ceases to accrue investment income when interest or dividend payments are in arrears. Impaired loans are loans for which it is probable that the Company will be unable to collect all amounts due according to terms of the original contractual terms of the loan agreement. This definition includes, among other things, leases, or larger groups of small-homogenous loans, and therefore applies principally to the Company's commercial loans. Life of Virginia measures impaired loans at the present value of the loans discounted cash flow using the effective interest rate of the original loan as the discount rate. Deferred Policy Acquisition Costs Costs of acquiring new business, principally commissions, underwriting and sales expenses that vary with and are primarily related to the production of new business, are deferred. For non-universal life-type products, amortization of deferred policy acquisition costs is related to and based on the present value of expected premium revenues on the policies. Periodically amortization is adjusted to reflect current withdrawal experience. Expected premium revenues are estimated by using the same assumptions used in estimating future policy benefits. Deferred policy acquisition costs related to universal life-type policies and investment products are amortized in relation to the present value of expected gross profits on the policies. Such amortization is adjusted periodically to reflect differences in actual and assumed gross profits. (1) Continued To the extent that unrealized gains or losses on available for sale securities would result in an adjustment to deferred policy acquisition costs amortization, had those gains or losses actually been realized, the related deferred policy acquisition cost adjustments are recorded along with the unrealized gains or losses included in stockholders' equity with no effect on net income. The components of deferred policy acquisition costs are as follows:
Preacquisition ------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - ------------------------------------------------------------------------------------------------------------ Deferred policy acquisition costs - $ 70.3 - 363.9 388.1 beginning of period Commissions and expenses deferred 112.3 74.9 22.2 76.1 Amortization (10.8) (3.2) (6.0) (39.3) Dividend of Globe Life Insurance Company (note 7) - - - (22.8) Effect of net unrealized investment (gains) losses (6.8) (1.4) 17.9 (38.2) - ------------------------------------------------------------------------------------------------------------ Deferred policy acquisition costs - end of period $ 165.0 70.3 398.0 363.9 - ------------------------------------------------------------------------------------------------------------
Property and Equipment Property and equipment are generally depreciated using the straight-line method over their estimated useful lives. As a result of purchase accounting, fully depreciated property and equipment were removed. Fair Value of Financial Instruments The following methods and assumptions were used to estimate fair values for financial instruments. The carrying amounts in the consolidated statements of financial position for cash and short-term investments approximate their fair values. Fair values for fixed (1) Continued maturity securities and equity securities are based on quoted market prices or, if they are not actively traded, on estimated values obtained from independent pricing services or in the case of private placements, are estimated by discounted expected future cash flows using a current market rate applicable to the yield credit quality, call features and maturity of the investments, as applicable. The fair values for mortgage loans and policy loans are estimated using discounted cash flow analyses, using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Fair values of derivatives are based on quoted prices for exchange-traded instruments or the cost to terminate or offset with other contracts. Fair values for liabilities for investment-type contracts are estimated using discounted cash flow calculations based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. Separate Account Business The assets and liabilities of the separate accounts represent designated funds of group pension, variable life and annuity policyholders and are not guaranteed or supported by other general investments of the Company. The Company earns mortality and expense risk fees from the separate accounts and assesses withdrawal charges in the event of early withdrawals. The assets are carried at fair value and are offset by liabilities that represent such policyholders' equity in those assets. The net investment income generated from these assets is not included in the consolidated statements of income. The Company has periodically transferred capital to the separate accounts to provide for the initial purchase of investments in the new portfolios. As of December 31, 1997, approximately $44.6 million of the Company's common stock investment related to its capital investments in the separate accounts. Future Policy Benefit Liabilities and Unearned Premiums and Policy and Contract Claims Future policy benefit liabilities on non-universal life-type and accident and health products have been provided on the net level premium method. The liabilities are calculated based on assumptions as to investment yield, mortality, morbidity and (1) Continued withdrawal rates that were determined at the date of issue or acquisition of Life of Virginia by the Parent, and provide for possible adverse deviations. Interest assumptions are graded and range from 7.4% to 6.5%. Withdrawal assumptions are based principally on experience and vary by plan, year of issue, and duration. Policyholder liabilities on universal life-type and investment products are generally based on policy account values. Interest crediting rates for these products range from 8.6% to 4.5%. Unearned premiums generally are calculated using the pro rata method based on gross premiums. However, in the case of credit life and credit accident and health, the unearned premiums are calculated such that the premiums are earned over the period of risk in a reasonable relationship to anticipated claims. Policy and contract claim liabilities represent estimates for reported claims, as well as provisions for losses incurred, but not yet reported. These claim liabilities are based on historical experience and are estimates of the ultimate amount to be paid when the claims are settled. Changes in the estimated liability are reflected in income as the estimates are revised. Foreign Currency Translation Foreign revenues and expenses are translated at average exchange rates. Foreign assets and liabilities are translated at year-end exchange rates. Unrealized foreign exchange gains or losses on translation are generally reported in stockholders' equity. No tax effect was taken into consideration for unrealized losses. (2) Invested Assets and Related Income Under purchase accounting, the fair value of Life of Virginia's fixed maturity investments as of April 1, 1996, became Life of Virginia's new cost basis in such investments. The difference between the new cost basis and original par is then amortized against investment income over the remaining effective lives of the fixed maturity investments. (2) Continued The Company's investments in debt and equity securities are considered available for sale and are carried at estimated fair value, with the aggregate unrealized appreciation or depreciation being recorded as a separate component of stockholders' equity. The carrying value and amortized cost of investments at December 31, 1997 and 1996 were as follows:
December 31, 1997 ------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair (millions) Cost Gains Losses Value - ---------------------------------------------------------------------------------------------------------------- Available for sale: U.S. government and agencies $ 44.3 1.3 - 45.6 States and political subdivisions 1.8 0.3 - 2.1 Foreign governments 200.1 6.5 (0.3) 206.3 Corporate securities 3,362.1 120.6 (8.1) 3,474.6 Mortgage-backed securities 1,859.8 39.6 (5.4) 1,894.0 - ---------------------------------------------------------------------------------------------------------------- Total fixed maturities 5,468.1 168.3 (13.8) 5,622.6 Total equity securities 130.7 21.5 (0.5) 151.7 - ---------------------------------------------------------------------------------------------------------------- Total available for sale $ 5,598.8 189.8 (14.3) 5,774.3 - ----------------------------------------------------------------------------------------------------------------
December 31, 1996 -------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair (millions) Cost Gains Losses Value - ------------------------------------------------------------------------------------------------------------------ Available for sale: U.S. government and agencies $ 65.5 2.1 - 67.6 States and political subdivisions 2.1 - - 2.1 Foreign governments 178.2 5.6 - 183.8 Corporate securities 3,092.1 29.0 (19.6) 3,101.5 Mortgage-backed securities 1,764.3 29.7 (6.3) 1,787.7 - ----------------------------------------------------------------------------------------------------------------- Total fixed maturities 5,102.2 66.4 (25.9) 5,142.7 Total equity securities 155.1 11.2 (0.8) 165.5 - ----------------------------------------------------------------------------------------------------------------- Total available for sale $ 5,257.3 77.6 (26.7) 5,308.2 - -----------------------------------------------------------------------------------------------------------------
(2) Continued The scheduled maturity distribution of the fixed maturity portfolio at December 31 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.
1997 --------------------------- Amortized Fair (millions) Cost Value - ---------------------------------------------------------------------------------------------------------- Due in one year or less $ 105.8 106.7 Due after one year through five years 1,196.8 1,224.3 Due after five years through ten years 1,654.9 1,705.3 Due after ten years 650.8 692.3 - ----------------------------------------------------------------------------------------------------------- Subtotals 3,608.3 3,728.6 Mortgage-backed securities 1,859.8 1,894.0 - ----------------------------------------------------------------------------------------------------------- Totals $ 5,468.1 5,622.6 - -----------------------------------------------------------------------------------------------------------
As required by law, the Company has investments on deposit with governmental authorities and banks for the protection of policyholders of $4.7 million and $4.5 million at December 31, 1997 and 1996, respectively. At December 31, 1997, approximately 24.8% and 15.9% of the Company's investment portfolio is comprised of securities issued by the manufacturing and financial industries, respectively, the vast majority of which are rated investment grade, and which are senior secured bonds. No other industry group comprises more than 10% of the Company's investment portfolio. This portfolio is widely diversified among various geographic regions in the United States, and is not dependent on the economic stability of one particular region. At December 31, 1997, the Company did not hold any fixed maturity securities, other than securities issued or guaranteed by the U.S. government, which exceeded 10% of shareholders interest. (2) Continued The credit quality of the fixed maturity portfolio at December 31, follows. The categories are based on the higher of the ratings published by Standard & Poors or Moody's.
1997 1996 ------------------------- ------------------------- Fair Fair value Percent value Percent - ------------------------------------------------------------------------------------------------------ Agencies and treasuries $ 308 5.5% $ 317 6.2% AAA/Aaa 1,465 26.0 1,437 27.9 AA/Aa 320 5.7 247 4.8 A/A 1,101 19.6 988 19.2 BBB/Baa 1,862 33.1 1,864 36.3 BB/Ba 307 5.5 207 4.0 B/B 77 1.4 13 0.3 Not rated 182 3.2 69 1.3 - ----------------------------------------------------------------------------------------------------- Totals $ 5,622 100.0% $ 5,142. 100.0% - -----------------------------------------------------------------------------------------------------
Bonds with earnings 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. (2) Continued The Company had $6.4 million and $12.6 million of non-income producing investments on December 31, 1997 and December 31, 1996, respectively. "Impaired" loans are defined under generally accepted accounting principles as loans for which it is probable that the lender will be unable to collect all amounts due according to the original contractual terms of the loan agreement. That definition excludes, among other things, leases or large groups of smaller-balance homogenous loans, and therefore applies principally to the Company's commercial loans. Under these principles, the Company has two types of "impaired" loans as of December 31, 1997 and 1996: loans requiring allowances for losses and loans expected to be fully recoverable because the carrying amount has been reduced previously through charge-offs or deferral at income recognition ($23.0 million and $-, respectively). There was no allowance for losses on these loans as of December 31, 1997 and 1996. Average investment in impaired loans during 1997 was $23.0 million and interest income earned on these loans while they were considered impaired was $2.0 million. There were no impaired loans nor related interest income earned on such loans in 1996. The Company's mortgage and real estate portfolio is distributed by geographic location and type. However, the Company has concentration exposures in certain regions and in certain types as shown in the following two tables. Geographic distribution as of December 31, 1997:
Mortgage Real estate - ----------------------------------------------------------------------------------------------------------- South Atlantic 47.0% 60.3% East North Central 14.8 2.3 Mountain 14.1 - West South Central 12.0 37.4 Pacific 6.6 - Middle Atlantic 3.9 - East South Central 1.6 - - ------------------------------------------------------------------------------------------------------------ Total 100.0% 100.0% - ------------------------------------------------------------------------------------------------------------
(2) Continued Type distribution as of December 31, 1997:
Mortgage Real estate - -------------------------------------------------------------------------------------------------------- Office building 19.8% 51.1% Retail 23.7 21.3 Industrial 21.2 - Apartments 21.8 25.3 Other 13.5 2.3 - -------------------------------------------------------------------------------------------------------- Total 100.0% 100.0% - --------------------------------------------------------------------------------------------------------
Net unrealized gains and losses on investment securities classified as available-for-sale are reduced by deferred income taxes and adjustments to the present value of future profits and deferred policy acquisition costs that would have resulted had such gains and losses been realized. Net unrealized gains and losses on available-for-sale investment securities reflected as a separate component of stockholders' equity are summarized as follows:
Preacquisition ------------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - -------------------------------------------------------------------------------------------------------------------- Net unrealized gains on available-for-sale investment securities before adjustments: Fixed maturities $ 154.5 40.5 2.8 143.8 Equity securities 21.0 10.4 5.8 23.2 - -------------------------------------------------------------------------------------------------------------------- Subtotal 175.5 50.9 8.6 167.0 Adjustments to the present value of future profits and deferred policy acquisition costs (61.2) (21.1) 9.9 (8.0) Deferred income taxes (40.0) (10.4) (6.6) (55.9) - -------------------------------------------------------------------------------------------------------------------- Net unrealized gains on available-for-sale investment securities 74.3 19.4 11.9 103.1 - --------------------------------------------------------------------------------------------------------------------
(2) Continued The source of investment income of the Company is as follows:
Preacquisition ---------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - -------------------------------------------------------------------------------------------------------------- Fixed maturities $ 398.5 274.4 93.1 332.8 Equity securities 7.3 8.7 4.2 10.8 Mortgage loans on real estate 48.3 41.3 13.5 49.8 Short-term investments 1.0 2.5 0.5 3.5 Other investments 22.3 12.9 3.0 13.2 - -------------------------------------------------------------------------------------------------------------- Gross investment income 477.4 339.8 114.3 410.1 Investment expenses (4.9) (5.4) (2.3) (8.0) - -------------------------------------------------------------------------------------------------------------- Net investment income $ 472.5 334.4 112.0 402.1 - --------------------------------------------------------------------------------------------------------------
Gross realized investment gains and losses resulting from the sales of investment securities were as follows:
Preacquisition --------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - ------------------------------------------------------------------------------------------------------ Fixed maturities available for sale: Gross gains $ 8.3 0.6 0.5 12.9 Gross losses - (0.7) (1.4) (90.2) Fixed maturities held to maturity: Gross gains - - - 1.1 Gross losses - - - (13.8) Equity securities 3.4 6.0 10.3 5.6 Mortgage loans on real estate (0.8) - (0.4) 2.3 Other 2.4 0.1 - 5.6 - --------------------------------------------------------------------------------------------------- Total before tax 13.3 6.0 9.0 (76.5) Less applicable tax (4.7) (2.3) (1.9) 26.8 - ---------------------------------------------------------------------------------------------------- Total $ 8.6 3.7 7.1 (49.7) - ----------------------------------------------------------------------------------------------------
(2) Continued The changes in net unrealized gains (losses) on fixed maturities and equity security investments are as follows:
Preacquisition ----------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - -------------------------------------------------------------------------------------------------------------- Fixed maturities: Available for sale $ 114.0 40.5 (141.0) 298.7 Held to maturity - - - 233.7 Equity securities 10.6 10.4 (17.4) 26.1 - -------------------------------------------------------------------------------------------------------------- Net unrealized investment gains (losses) $ 124.6 50.9 (158.4) 558.5 - --------------------------------------------------------------------------------------------------------------
(3) Income Tax Beginning April 1, 1996, Life of Virginia and its subsidiary have been included in the life insurance company consolidated federal income tax return of GE Capital Assurance and are also subject to a separate tax-sharing agreement, as approved by state insurance regulators, the provisions of which are substantially the same as the tax-sharing agreement with GE Capital. Prior to April 1, 1996, Life of Virginia was included in the consolidated federal income tax return of Aon and its principal domestic subsidiaries and in accordance with intercompany policy, provided taxes on income based on a separate company basis. Amounts payable or recoverable related to periods before April 1, 1996, are subject to an indemnification agreement with Aon. As such the Company is not at risk for any income taxes nor entitled to recoveries related to those periods. (3) Continued Income taxes are recorded in the statements of income and directly in stockholders' equity accounts. Income taxes for the years ending December 31 was allocated as follows:
Preacquisition ----------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - --------------------------------------------------------------------------------------------------------- Statement of income: Operating income (excluding realized investment gains and losses) $ 47.5 29.5 5.1 53.9 Realized investment gains/losses 4.7 2.3 1.9 (26.8) - -------------------------------------------------------------------------------------------------------- Income tax expense included in the statement of income 52.2 31.8 7.0 27.1 Stockholders' equity: Unrealized gains/(losses) on securities available for sale 29.6 10.4 (49.3) 86.0 - -------------------------------------------------------------------------------------------------------- Total $ 81.8 42.2 (42.3) 113.1 - --------------------------------------------------------------------------------------------------------
The actual federal income tax expense differed from the expected tax expense computed by applying the U.S. federal statutory rate to income before income tax expense. A reconciliation of the income tax provisions based on the statutory corporate tax rate to the provisions reflected in the consolidated financial statements is as follows:
Preacquisition ------------------------------------------ Nine months Three months Year ended ended ended Year ended December 31, December 31, December 31, December 31, 1997 1996 1996 1995 --------------------- --------------------- -------------------- --------------------- Statutory tax rate ..................... $ 50.1 35.0% $ 30.1 35.0% $ 6.6 35.0% $ 23.2 35.0% Tax-exempt investment income deductions ............................ ( 0.9) (0.7) ( 1.0) (1.2) -- (0.1) ( 0.1) (0.1) Adjustment of prior year taxes ......... -- -- -- -- -- -- 3.5 5.3 Other-net .............................. 3.0 2.2 2.7 3.2 0.4 2.1 0.5 0.7 ------- ---- ------- ---- ------ ---- ------- ---- Effective tax rate ..................... $ 52.2 36.5% $ 31.8 37.0% $ 7.0 37.0% $ 27.1 40.9% ======= ==== ======= ==== ====== ==== ======= ====
Significant compnents of Life of Virginia's deffered tax liabilities and assets are as follows (in millions):
December 31, December 31, 1997 1996 -------------- ------------- Deferred tax liabilities: Present value of future profits ......... $ 79.1 89.9 Unrealized investment gains ............. 40.0 10.4 Other ................................... 2.7 6.5 ------ ----- Total deferred tax liabilities ........... 121.8 106.7 ------ ----- Deferred tax assets: Insurance reserve amounts ............... 142.9 120.4 Policy acquisition costs ................ 11.8 34.3 Guaranty fund amounts ................... 9.4 10.8 Other ................................... 15.1 14.1 ------ ----- Total deferred tax assets ................ 179.2 179.6 ------ ----- Net deferred tax assets .................. $ 57.4 72.9 ====== =====
Deferred taxes are allocated to individual subsidiaries by applying the asset and liability method of accounting for deferred income taxes. Intercompany balances are settled annually. (3) Continued A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. Management believes the deferred tax assets will be fully realized in the future based on the expectation of the reversal of existing temporary differences, anticipated future earnings, and consideration of all other available evidence. Accordingly, no valuation allowance is established. The amount of income taxes paid (refunded) for the year ended December 31, 1997, the nine months ended December 31, 1996, three months ended March 31, 1996, and the year ended December 31, 1995 was $64.4 million, $38.6 million, $(2.4) million and $44.9 million, respectively. (4) Reinsurance and Claim Reserves Life of Virginia is involved in both the cession and assumption of reinsurance with other companies. Life of Virginia's reinsurance consists primarily of long-duration contracts that are entered into with financial institutions and related party reinsurance. Although these reinsurance agreements contractually obligate the reinsurers to reimburse the Company, they do not discharge the Company from its primary liabilities and the Company remains liable to the extent that the reinsuring companies are unable to meet their obligations. A summary of reinsurance activity is as follows:
Preacquisition --------------------------------- Nine months Three months Year ended ended ended Year ended December 31, December 31, March 31, December 31, 1997 1996 1996 1995 --------------- --------------- --------------- --------------- Earned Earned Earned Earned --------------- --------------- --------------- --------------- Direct $ 337.3 210.5 77.2 261.5 Assumed 20.7 6.6 35.0 4.3 Ceded 84.8 62.4 19.8 86.5 - ------------------------------------------------------------------------------------------------------- Net premiums 273.2 154.7 92.4 179.3 - -------------------------------------------------------------------------------------------------------
(4) Continued Due to the nature of the Company's reinsurance contracts, premiums earned approximate premiums written. A significant portion of Life of Virginia's ceded premiums relates to group life and health premiums. Life of Virginia is the primary carrier for the State of Virginia employees group life and health plan. By statute, Life of Virginia must reinsure these risks with other Virginia domiciled companies who wish to participate. Incurred losses and loss adjustment expenses are net of reinsurance of $72.7 million, $60.5 million, $17.2 million and $63.1 million for the year ended December 31, 1997, the nine months ended December 31, 1996, three months ended March 31, 1996 and the year ended December 31, 1995, respectively. In December 1994, Life of Virginia ceded to CICA $406.6 million of its guaranteed investment contract liabilities. In conjunction with the liability cession, Life of Virginia transferred to CICA available for sale fixed maturities with a fair value of $278.1 million and a cost of $287.2 million and preferred stock with a fair value of $110.5 million and a cost of $119.7 million. In January 1995, Life of Virginia ceded to CICA $600 million of its single premium deferred annuity liabilities. In conjunction with the liability cession, Life of Virginia transferred to CICA available for sale fixed maturities with a fair value of $436.1 million and book value of $501.4 million and held to maturity fixed maturities with a fair value of $81.4 million and a book value of $95.1 million. In addition, $5.5 million of accrued income related to the assets above was transferred to CICA. This transaction resulted in a deferred reinsurance gain of $77.0 million, $24 million of which was recognized in 1995. Additionally, Life of Virginia recognized a $79.0 million realized investment loss. (4) Continued In connection with the sale of the Company, the following transactions occurred effective January 1, 1996: single premium deferred annuity liabilities reinsured with CICA in 1995 were recaptured, guaranteed investment contract liabilities reinsured with CICA in 1994 were recaptured, other lines of CICA insurance business inforce were assumed, and other related liabilities of CICA were assumed. In conjunction with the recapture and assumption, CICA transferred to Life of Virginia assets with a fair value totaling $842.6 million. For the three months ended March 31, 1996, premiums of $33.9 million, benefits of $46.7 million, commission expense of $10.2 million and a capital contribution of $69.3 million as a result of various reinsurance transactions. The $53 million deferred reinsurance gain remaining at December 31, 1995 from the January 1995 single premium deferred annuity cession to CICA was recognized as a capital contribution. The tables below summarize the assets and liabilities transferred from CICA to the Company.
Millions Fair Value - ----------------------------------------------------------------------------- Assets transferred: Fixed maturity $ 727.4 Preferred stock 88.2 Policy loans 14.2 Accrued investment income 10.0 Cash 2.8 - ----------------------------------------------------------------------------- Total 842.6 - ----------------------------------------------------------------------------- Liabilities recaptured and assumed: Single premium deferred annuity 410.5 Guaranteed investment contracts 212.6 Universal life contracts 156.6 Individual traditional contracts 33.2 Other lines of business inforce 19.9 Other liabilities 16.5 - ----------------------------------------------------------------------------- Total $ 849.3 - -----------------------------------------------------------------------------
(5) Employee Benefits Savings Plan Beginning April 1, 1996, Life of Virginia's salaried and commissioned employees participated in a General Electric contributory savings plan. Provisions made for the savings plan were $.9 million and $.6 million for the year ended December 31, 1997 and the nine months ended December 31, 1996. Prior to the acquisition on April 1, 1996, Life of Virginia participated in Aon's contributory savings plan for the benefit of salaried and commissioned employees. Provisions made for the savings plan were $.3 million and $.8 million for the three months ended March 31, 1996, and the year ended December 31, 1995, respectively. This plan terminated upon the acquisition of Life of Virginia by GE Capital. Employee Stock Ownership Plan Prior to the acquisition on April 1, 1996, Life of Virginia participated in Aon's leveraged ESOP for the benefit of salaried and certain commissioned employees. Contributions to the ESOP for the three months ended March 31, 1996 and the year ended December 31, 1995 charged to Life of Virginia's operations amounted to $.1 million and $.5 million, respectively. This plan terminated upon the acquisition of Life of Virginia by GE Capital. Pension Plan Beginning April 1, 1996, Life of Virginia's salaried and commissioned employees participated in a General Electric contributory defined benefit pension plan. Generally, benefits are based on the greater of a formula recognizing career earnings or a formula recognizing length of service and final average earnings. Benefit provisions are subject to collective bargaining. General Electric's funding policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts as determined appropriate. The components of net periodic pension cost and benefit obligations of the General Electric defined benefit plan are not separately available for Life of Virginia. In connection with Life of Virginia's participation in the General Electric contributory defined benefit pension plan a $.6 million and $.4 million expense were incurred for the year ended December 31, 1997 and the nine months ended December 31, 1996. (5) Continued Prior to the acquisition on April 1, 1996, Life of Virginia participated in Aon's non-contributory defined benefit pension plan providing retirement benefits for salaried employees and certain commissioned employees based on years of service and salary. Aon's funding policy was to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, plus such additional amounts as Aon determined to be appropriate from time to time. The components of net periodic pension cost and benefit obligations of the Aon defined benefit plan were not separately available for Life of Virginia. In connection with Life of Virginia's participation in the Aon defined benefit plan, the Company had net pension credits of $1.2 million and $3.8 million in the three months ended March 31, 1996 and the year ended December 31, 1995. This plan terminated upon the acquisition of Life of Virginia by GE Capital. Postretirement Benefits Other Than Pensions Beginning April 1, 1996, Life of Virginia's salaried and commissioned employees participated in a General Electric retiree health and life insurance benefit plan. The plans principally provides health and life insurance benefits to employees who retire under the General Electric pension plan with 10 or more years of service. Retirees share in the cost of their health care benefits. The funding policy for retiree health benefits is generally to pay covered expenses as they are incurred. Expenses incurred by Life of Virginia for the year ended December 31, 1997 and the nine months ended December 31, 1996 for the retiree health and life insurance benefit plan were $1.9 million and $1.3 million, respectively. Prior to the acquisition on April 1, 1996, Aon sponsored two defined benefit postretirement health and welfare plans in which Life of Virginia participated that cover both salaried and nonsalaried employees. One plan provided medical benefits, prior to and subsequent to Medicare eligibility, and the other provided life insurance benefits. The postretirement health care plan was contributory, with retiree contributions adjusted annually; the life insurance plan was noncontributory. Both plans were funded on a pay-as-you-go basis. These plans terminated upon the acquisition of Life of Virginia by GE Capital. (6) Lease Commitments Life of Virginia has noncancelable operating leases for certain office space, equipment and automobiles. Future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year at December 31, 1997 are as follows:
(millions) Minimum lease payments - ------------------------------------------------------------------------ 1998 $ 1.1 1999 0.8 2000 0.5 2001 0.3 2002 - Later years - - ------------------------------------------------------------------------ Total minimum payments required $ 2.7 - ------------------------------------------------------------------------
Rental expense for all operating leases for the year ended December 31, 1997, for the nine months ended December 31, 1996, the three months ended March 31, 1996 and the year ended December 31, 1995 amounted to $1.3 million, $2.5 million, $.8 million and $3.6 million, respectively. (7) Related Party Transactions Life of Virginia pays investment advisory fees and other fees to affiliates. Amounts incurred for these items aggregated $7.6 million, $3.2 million, $3.5 million and $5.8 million for the year ended December 31, 1997, the nine months ended December 31, 1996, the three months ended March 31, 1996 and the year ended December 31, 1995, respectively. Life of Virginia charges affiliates for certain services and for the use of facilities and equipment which aggregated $4.6 million, $2.0 million, $1.0 million, and $10.0 million for the year ended December 31, 1997, the nine months ended December 31, 1996, the three months ended March 31, 1996, and the year ended December 31, 1995, respectively. (7) Continued At December 31, 1997 and 1996, Life of Virginia held investments in securities of certain affiliates amounting to $2.6 million. Amounts included in net investment income related to these holdings totaled $0.1 million, $0.1 million, $0.2 million and $1.0 million for the year ended December 31, 1997, for the nine months ended December 31, 1996, the three months ended March 31, 1996 and the year ended December 31, 1995, respectively. In January 1995, Life of Virginia dividend 100% of its Globe Life Insurance Company ("Globe") common stock to CICA, a subsidiary of Aon. At December 31, 1994, Globe had assets of $954.9 million, liabilities of $765.7 million and stockholders' equity of $189.2 million. The fair value of this dividend was $193.3 million. In 1995, Life of Virginia received from CICA, in the form of a capital contribution, fixed maturities with a fair value of $45.0 million. In January 1995, Life of Virginia transferred limited partnership investments with a fair value of $8.0 million and book value of $7.5 million, common stocks with a fair value of $5.6 million and book value of $3.4 million, and cash of $6.4 million to pay a $20.0 million dividend declared but not paid in 1994. A $2.7 million realized investment gain was recorded on this transfer. (8) Litigation Life of Virginia is subject to numerous claims and lawsuits that arise in the ordinary course of business. In some of these cases the remedies that may be sought or damages claimed are substantial, including cases that seek punitive or extraordinary damages. Accruals for these lawsuits have been provided to the extent that losses are deemed probable and are estimable. Although the ultimate outcome of these suits cannot be ascertained and liabilities in indeterminate amounts may be imposed on Life of Virginia, on the basis of present information, availability of insurance coverage, and advice received from counsel, it is the opinion of management that the disposition or ultimate determination of such claims and lawsuits will not have a material adverse effect on the consolidated financial position or results of operations of Life of Virginia. (9) Financial Instruments Interest Rate Risk Management Life of Virginia used interest rate swap agreements to manage asset and liability durations relating to its capital accumulation annuity business. As of December 31, 1995, these swap agreements had the net effect of lengthening liability durations. Variable rates received on interest rate swap agreements correlate with crediting rates paid on outstanding liabilities. The net effect of swap payments is settled periodically and reported in income. There was no settlement of underlying notional amounts. Life of Virginia performed frequent analyses to measure the degree of correlation associated with its derivative program. Life of Virginia assessed the adequacy of the correlation analyses results in determining whether the derivatives qualify for hedge accounting. Realized gains and losses on derivatives that qualify as hedges were deferred and reported as an adjustment of the cost basis of the hedged item. Deferred gains and losses were amortized into income over the life of the hedged item. The fair value of swap agreements hedging liabilities were not recognized in the consolidated statements of financial position. These interest rate swaps gave rise to credit risks due to possible non-performance by counterparties. The credit risk was generally limited to the fair value of those contracts that were favorable to Life of Virginia. Life of Virginia limited its credit risk by restricting investments in derivative contracts to a diverse group of highly rated major financial institutions. Life of Virginia closely monitored the credit worthiness of, and exposure to, its counterparties and considered its credit risk to be minimal. Life of Virginia had no interest rate swaps outstanding at December 31, 1997 and 1996. During the three months ended March 31, 1996 and the year ended December 31, 1995 Life of Virginia amortized $.6 million and $1.4 million, respectively, of net deferred losses relating to interest rate swaps into income. As of December 31, 1995, the principal swaps have maturities ranging from September 1999 to October 2000 and variable rates based on five year treasury rates. These swaps were terminated prior to March 31, 1996 resulting in a $1.1 million gain which was deferred. (9) Continued Other Financial Instruments Life of Virginia has certain investment commitments to provide fixed-rate loans. The investment commitments, which would be collateralized by related properties of the underlying investments, involve varying elements of credit and market risk. Investment commitments outstanding at December 31, 1997 and December 31, 1996, totaled $16.7 million and $1.7 million, respectively. Fair Value of Financial Instruments Accounting standards require the disclosure of fair values for certain financial instruments. The fair value disclosures are not intended to encompass the majority of policy liabilities, various other non-financial instruments, or other intangible items related to Life of Virginia's business. Accordingly, care should be exercised in deriving conclusions about Life of Virginia's business or financial condition based on the fair value disclosures. The Company has no derivative financial instruments as defined by SFAS No. 119 at December 31, 1997, other than mortgage loan commitments of $67.7 million. (9) Continued The carrying amount and fair value of certain of Life of Virginia's financial instruments are as follows:
December 31, 1997 December 31, 1996 ------------------------------------------------ Carrying Fair Carrying Fair (millions) Amount Value Amount Value - --------------------------------------------------------------------------------------------------------------- Assets: Fixed maturities and equity securities (note 2) $ 5,774.3 5,774.3 5,308.2 5,308.2 Mortgage loans on real estate 496.2 532.2 585.4 622.6 Policy loans 188.4 188.4 179.5 179.5 Cash, short-term investments and receivables 138.6 138.6 186.4 186.4 Assets held in separate accounts 4,066.4 4,066.4 2,762.7 2,762.7 - ------------------------------------------------------------------------------------------------------------ Liabilities: Investment type insurance contracts 3,113.8 3,100.7 3,055.0 3,027.6 Commissions and general expenses 51.1 51.1 46.8 46.8 Liabilities related to separate accounts 4,066.4 4,066.4 2,762.7 2,762.7 - ------------------------------------------------------------------------------------------------------------
See Note 1 regarding the method used to estimate fair values. 1 (10) Stockholders' Equity Generally, the capital and surplus of Life of Virginia available for transfer to the Parent are limited to the amounts that the statutory capital and surplus exceed minimum statutory capital requirements; however, payments of the amounts as dividends may be subject to approval by regulatory authorities. The maximum amount of dividends which can be paid by the Company without prior approval at December 31, 1997, is $51.8 million. Statutory net income (loss) and stockholders' equity is summarized below:
Preacquisition ------------------------------ Nine months Three months Year ended ended ended December 31, December 31, March 31, December 31, (millions) 1997 1996 1996 1995 - ---------------------------------------------------------------------------------------------------------- Statutory net income $ 73.9 69.7 (8.3) 53.9 Statutory stockholders' equity 522.5 419.1 360.5 364.2 - ----------------------------------------------------------------------------------------------------------
The National Association of Insurance Commissioners has developed certain Risk Based Capital (RBC) requirements to help regulators identify life insurers that may be inadequately capitalized. If prescribed levels of RBC are not maintained, certain actions may be required on the part of the Company or its regulators. At December 31, 1997 the Company's Total Adjusted Capital and Authorized Control Level - RBC were above the calculated minimum regulatory thresholds. THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Balance Sheets (Unaudited) September 30, 1998 (in millions) ================================================================================================= Assets ================================================================================================ Investments: Fixed maturities: Available for sale - at fair value (amortized cost: September 30, 1998 - $5,588.3) $ 5,797.1 Equity securities - at fair value Common stocks (cost: September 30, 1998 - $101.5) 105.5 Preferred stocks (cost: September 30, 1998 - $65.8) 77.5 Mortgage loans on real estate (net of reserve for losses: September 30, 1998 - $17.9) 522.8 Real estate (net) 8.5 Policy loans 194.3 Short-term investments 30.0 ================================================================================================ Total investments 6,735.7 ================================================================================================ Cash 6.0 Receivables: Premiums and other 14.1 Reinsurance recoverable 20.2 Accrued investment income 124.1 ================================================================================================ Total receivables 158.4 ================================================================================================ Deferred policy acquisition costs 217.4 Goodwill (net of accumulated amortization: September 30, 1998 - $15.8) 110.3 Present value of future profits (net) 291.3 Property and equipment at cost (net) 3.2 Deferred income taxes 55.3 Other assets 5.4 Assets held in separate accounts 4,618.1 ================================================================================================ Total assets $ 12,201.1 ================================================================================================
1
THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Balance Sheets, Continued (Unaudited) September 30, 1998 (in millions, except share data) ================================================================================================ Liabilities and Stockholders' Equity ================================================================================================= Policy liabilities: Future policy benefits $ 526.6 Policy and contract claims 116.1 Unearned and advance premiums 0.1 Other policyholder funds 5,418.0 ================================================================================================ Total policy liabilities 6,060.8 ================================================================================================ General liabilities: Payable to affiliate, net 17.1 Commissions and general expenses 61.0 Current income taxes 59.6 Other liabilities 147.7 Liabilities related to separate accounts 4,618.1 ================================================================================================= Total liabilities 10,964.3 ================================================================================================= Commitments and Contingent Liabilities ================================================================================================ Stockholders' equity: Common stock - $1,000 par value: Authorized, issued and outstanding: 4,000 shares 4.0 Additional paid-in capital 925.9 Net unrealized investment gains 99.2 Retained earnings 207.7 ================================================================================================= Total stockholders' equity 1,236.8 ================================================================================================= Total liabilities and stockholders' equity $ 12,201.1 =================================================================================================
See accompanying notes to consolidated financial statements. 2 THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Statements of Income (Unaudited) For the nine months ended September 30, 1998 (in millions) ===============================================================================- Nine Months Ended September 30, 1998 ================================================================================ Revenue Premiums and policy fees $ 193.5 Separate account fees 44.4 Net investment income 360.1 Realized investment gains (losses) 4.1 Other income 1.5 ================================================================================ Total revenue earned 603.6 ================================================================================ Benefits and Expenses Benefits to policyholders 380.4 Commissions and general expenses 69.2 Interest expense 1.7 Amortization of intangibles 40.4 Amortization of deferred policy acquisition costs 13.0 ================================================================================ Total benefits and expenses 504.7 Income Before Income Tax 98.9 Provision for income tax Current expense (benefit) 46.7 Deferred expense (benefit) (10.4) ===============================================================================- 36.3 ================================================================================ Net income $ 62.6 ================================================================================ See accompanying notes to consolidated financial statements. 3 THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Statements of Stockholders' Equity (Unaudited) For the nine months ended September 30, 1998 (in millions) ================================================================================ Nine Months Ended September 30, 1998 ================================================================================ Common stock $1,000 par value common stock, authorized, issued and outstanding 4,000 in 1998 ================================================================================ Balance at beginning and end of period $ 4.0 ================================================================================ Additional Paid-in Capital Balance at beginning and end of period 925.9 ================================================================================ Accumulated Non-Owner Changes in Equity Balance at beginning of period 74.3 Net unrealized investment gains (losses) 24.9 ================================================================================ Balance at end of period 99.2 ================================================================================ Retained Earnings (Deficit) Balance at beginning of period 145.1 Net income 62.6 Balance at end of period 207.7 ================================================================================ Stockholders' equity at end of period $ 1,236.8 ================================================================================ See accompanying notes to consolidated financial statements. 4 THE LIFE INSURANCE COMPANY OF VIRGINIA AND SUBSIDIARY Consolidated Statements of Cash Flows (Unaudited) For the nine months ended September 30, 1998 (in millions) ================================================================================ Nine Months Ended September 30, 1998 ================================================================================ Cash flows from operating activities: Net income $ 62.6 Adjustments to reconcile net income to cash provided by (used in) operating activities: Change in policy liabilities 217.2 Change in accrued investment income (1.0) Deferred policy acquisition costs (78.0) Amortization of deferred policy acquisition costs 23.0 Amortization of intangibles 40.4 Other amortization and depreciation 1.3 Premiums and operating receivables, commissions and general expenses, income taxes and other 27.7 Realized investment (gains) losses (4.0) ===================================================================================== Cash provided by (used in) operating activities 289.2 ===================================================================================== Cash flows from investing activities: Sale or maturity of investments Fixed maturities - available for sale Sales 618.8 All other investments 131.4 Purchase of investments: Fixed maturities - available for sale (768.5) All other investments (134.5) Purchase of property and equipment (0.3) ===================================================================================== Cash provided by (used in) investing activities (153.1) ===================================================================================== Cash flows from financing activities: Change in cash overdrafts (0.9) Interest sensitive life, annuity and investment contract deposits 1,347.0 Interest sensitive life, annuity and investment contract withdrawals (1,476.4) ===================================================================================== Cash provided by (used in) financing activities (130.3) ===================================================================================== Increase (decrease) in cash 5.8 Cash at beginning of period 0.2 ===================================================================================== Cash at end of period $ 6.0 =====================================================================================
See accompanying notes to consolidated financial statements. 5 THE LIFE INSURANCE COMPANY OF VIRGINIA & SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements (1) Summary of Significant Accounting Principles and Practices The financial results included in this report are stated in conformity with generally accepted accounting principles and are unaudited but include normal recurring adjustments considered necessary for a fair presentation of the results for such periods. These interim figures are not necessarily indicative of results for a full year. Statement of Financial Accounting Standards No. 130, REPORTING COMPREHENSIVE INCOME, was adopted as of January 1, 1998. This Statement requires reporting of changes in shareholder's interest that do not result directly from transactions with shareholders. An analysis of these changes follows: Nine Months Ended (in millions) September 30, 1998 ------------------ Net income 62.6 Unrealized gains on investments securities - net 24.9 ---- Total 87.5 ==== In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (the "Statement"). The Statement requires that, upon adoption, all derivative instruments (including certain derivative instruments embedded in other contracts) be recognized in the balance sheet at fair value, and that changes in such fair values be recognized in earnings unless specific hedging criteria will ultimately offset related earnings effects of the hedged items; effects of certain changes in fair value are recorded in other comprehensive income pending recognition in earnings. The Company will not adopt the Statement until required to do so on January 1, 2000. Refer to the consolidated financial statements and notes in the audited financial statements for the year ended December 31, 1997 for additional details of Life of Virginia's financial position, as well as a description of the accounting policies which have continued without change. The details included in notes have not changed except as a result of normal transactions in the interim. 6 PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements All required financial statements are included in Part B of this Registration Statement. (b) Exhibits (1)(a) Resolution of Board of Directors of Life of Virginia authorizing the establishment of Separate Account 4. 12/ (1)(b) Resolution of Board of Directors of Life of Virginia authorizing the establishment of additional investment subdivisions of Separate Account 4, investing in shares of the Asset Manager Portfolio of the Fidelity Variable Insurance Products Fund II and the Balanced Portfolio of the Advisers Management Trust. 12/ (1)(c) Resolution of Board of Directors of Life of Virginia authorizing the establishment of additional investment subdivisions of Separate Account 4, investing in shares of the Growth Portfolio, the Aggressive Growth Portfolio, and the Worldwide Growth Portfolio of the Janus Aspen Series. 12/ (1)(d) Resolution of Board of Directors of Life of Virginia authorizing the establishment of twenty-two (22) additional subdivisions of Separate Account 4, investing in shares of Money Market Portfolio, High Income Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas Portfolio of the Fidelity Variable Insurance Products Fund; Asset Manager Portfolio of the Fidelity Variable Insurance Products Fund II; Money Market Portfolio, Government Securities Portfolio, Common Stock Index Portfolio, Total Return Portfolio of the Life of Virginia Series Fund, Inc.; Limited Maturity Bond Portfolio, Growth Portfolio and Balanced Portfolio of the Neuberger & Berman Advisers Management Trust; Growth Portfolio, Aggressive Growth Portfolio, and Worldwide Growth Portfolio of the Janus Aspen Series; Money Fund, High Income Fund, Bond Fund, Capital Appreciation Fund, Growth Fund, Multiple Strategies Fund of the Oppenheimer Variable Account Funds. 12/ (1)(e) Resolution of Board of Directors of Life of Virginia authorizing the establishment of three additional investment subdivisions of Separate Account 4, investing in shares of the Utility Fund and Corporate Bond Fund of the Insurance Management Series, and the Contrafund Portfolio of the Variable Insurance Products Fund II. 12/ (1)(f) Resolution of Board of Directors of Life of Virginia authorizing the establishment of two additional investment subdivisions of Separate Account 4, investing in shares of the International Equity Portfolio and the Real Estate Securities Portfolio of Life of Virginia Series Fund. 12/ (1)(g) Resolution of Board of Directors of Life of Virginia authorizing the establishment of four additional investment subdivisions of Separate Account 4, investing in shares of the American Growth Portfolio and the American Small Capitalization Portfolio of The Alger American Fund, and the Growth Portfolio and Flexible Income Portfolio of the Janus Aspen Series. 8/ (1)(h) Resolution of Board of Directors of Life of Virginia authorizing the establishment of two additional investment subdivisions of Separate Account 4, investing in shares of the Federated American Leaders Fund II of the Federated Insurance Series, and the International Growth Portfolio of the Janus Aspen Series. 9/ (1)(i) Resolution of Board of Directors of Life of Virginia authorizing the establishment of twelve additional investment subdivisions of Separate Account 4, investing in shares of the Growth & Income Portfolio and Growth opportunities Portfolio of Variable Insurance Products Fund III; Growth II Portfolio and Large Cap Growth Portfolio of the PBHG Insurance Series Fund, Inc.; Global Income Fund and Value Equity Fund of GE Investments Funds, Inc.11/ (1)(j) Resolution of Board of Directors of Life of Virginia authorizing the establishment of two additional investment subdivisions of Separate Account 4, investing in shares of the Capital Appreciation Portfolio of the Janus Aspen Series. 11/ (1)(k) Resolution of Board of Directors of Life of Virginia authorizing the establishment of six additional investment subdivisions of Separate Account 4, investing in shares of the U.S. Equity Fund of the GE Investments Funds, Inc., Growth and Income Fund of the Goldman Sachs Variable Insurance Trust Fund and Mid Cap Equity Fund of Goldman Sachs Variable Insurance Trust. Further a name change for Oppenheimer Variable Account Fund Capital Appreciation fund to Oppenheimer Variable Account Fund Aggressive Growth Fund. 12/ (1)(l) Resolution of Board of Directors of Life of Virginia authorizing the establishment of Investment Subdivisions investing in shares of the Salomon Brothers Variable Series Funds, Inc.14/ (l)(m) Resolution of Board of Directors of GE Life & Annuity authorizing the establishment of ninety-six additional investment subdivisions of Separate Account 4. 15/ (2) Not applicable. (3)(a) Underwriting Agreement dated December 12, 1997 between The Life Insurance Company of Virginia and Capital Brokerage Corporation.12/ (b) Dealer Sales Agreement dated December 13, 1997.12/ (4)(a) Form of Policy. 15/ (b) Endorsements to Policy. (i) IRA Endorsement 12/ (ii) Pension Endorsement 12/ (iii) Section 403(b) Endorsement 12/ (iv) Guaranteed Minimum Death Benefit Rider 13/ (v) Optional Death Benefit at Death of Annuitant Endorsement 12/ (vi) Endorsement for Waiver of Surrender Charges 13/ (vii) Optional Death Benefit Rider 15/ (5)(a) Form of Application. 12/ (6)(a) Certificate of Incorporation of The Life Insurance Company of Virginia. 12/ (b) By-Laws of The Life Insurance Company of Virginia. 12/ (7) Not Applicable. (8)(a) Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation, and The Life Insurance Company of Virginia. 12/ (b) (i)Amendment to Participation Agreement Referencing Policy Form Numbers. 12/ (b) (ii)Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation, and The Life Insurance Company of Virginia. 9/ (b) (iii) Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation, and The Life Insurance Company of Virginia. 9/ (c) Agreement between Oppenheimer Variable Account Funds, Oppenheimer Management Corporation, and The Life Insurance Company of Virginia. 12/ (c)(i) Amendment to Agreement between Oppenheimer Variable Account Funds, Oppenheimer Management Corporation, and The Life Insurance Company of Virginia. 12/ (d) Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and The Life Insurance Company of Virginia. 12/ (e) Participation Agreement between Janus Capital Corporation and The Life Insurance Company of Virginia. 12/ (f) Participation Agreement between Insurance Management Series, Federated Securities Corp., and The Life Insurance Company of Virginia. 12/ (g) Participation Agreement between The Alger American Fund, Fred Alger and Company, Inc., and The Life Insurance Company of Virginia. 8/ (h) Participation Agreement between Variable Insurance Products Fund III and The Life Insurance Company of Virginia. 11/ (i) Participation Agreement between Goldman Sachs Variable Insurance Trust and The Life Insurance Company of Virginia.11/ (j) Participation Agreement between Salomon Brothers Variable Series Funds and The Life Insurance Company of Virginia.14/ (k) Participation Agreement between GE Investments Funds, Inc. and The Life Insurance Company of Virginia. 14/ (9) Opinion and Consent of Counsel.15/ (10)(a) Consent of Counsel.15/ (b) Consent of Independent Auditors.15/ (11) Not Applicable. (12) Not Applicable. (13) Not Applicable. (14) Power of Attorney dated April 16, 1997.11/
8/Incorporated herein by reference to post-effective amendment number 3 to the Registrant's registration statement on Form N-4, File No. 33-76334, filed with the Securities and Exchange Commission on September 28, 1995. 9/Incorporated herein by reference to post-effective amendment number 4 to the Registrant's registration statement on Form N-4, File No. 33-76334, filed with the Securities and Exchange Commission on April 30, 1996. 10/Incorporated herein by reference to post-effective amendment number 6 to the Registrant's registration statement on Form N-4, File No. 33-76334, filed with the Securities and Exchange Commission on March 24, 1997. 11/Incorporated herein by reference to post-effective amendment number 7 to the Registrant's registration statement on Form N-4, File No. 33-76334 filed with the Securities and Exchange Commission on May 1, 1997. 12/Incorporated herein by reference to post-effective amendment number 9 to the Registrant's registration statement on Form N-4, File No. 33-76334 filed with the Securities and Exchange Commission on May 1, 1998. 13/Incorporated herein by reference to post-effective amendment number 11 to the Registrant's registration statement on Form N-4, File No. 33-76334 filed with the Securities and Exchange Commission on July 17, 1998. 14/Incorporated herein by reference to pre-effective amendment number 1 to the Registrant's registration statement on Form N-4, File No. 333-62695 filed with the Securities and Exchange Commission on December 18, 1998. 15/Incorporated herein Item 25. Directors and Officers of GE Life & Annuity
Positions and Offices with Name Address Depositor Ronald V. Dolan First Colony Life Director and Chairman of the 700 Main Street Board Lynchburg, VA 24505 Pamela S. Schutz GE Life & Annuity Director and President 6610 W. Broad Street Richmond, VA 23230 Selwyn L. Flournoy, Jr GE Life & Annuity Director and Senior Vice 6610 W. Broad Street President Richmond, VA 23230 Robert D. Chinn GE Life & Annuity Director and Senior Vice 6610 W. Broad Street President - Agency Richmond, VA 23230 Elliot Rosenthal GE Life & Annuity Senior Vice President - 6610 W. Broad Street Investment Products Richmond, VA 23230 Victor C. Moses GE Financial Assurance Director 601 Union Street, Ste. 5600 Seattle, WA 98101 Geoffrey S. Stiff GE Life & Annuity Director 6610 W. Broad Street Richmond, VA 23230
Item 26. Persons Controlled by or Under Common Control With the Depositor or Registrant ORGANIZATIONAL CHART ---- GENERAL ELECTRIC | COMPANY Other Subsidiaries (100%) | GENERAL ELECTRIC CAPITAL SERVICES, INC. | (100%) | GENERAL ELECTRIC CAPITAL CORPORATION | (100%) | ----- GE FINANCIAL ASSURANCE | HOLDINGS, INC. | | | (100%) | | | GNA CORPORATION | | | 20% (100%) | | | GENERAL ELECTRIC | CAPITAL ASSURANCE COMPANY | | | (80%) | | | GE LIFE AND ANNUITY ----- ASSURANCE COMPANY Item 27. Number of Policyowners Not applicable. Item 28. Indemnification Section 13.1-698 and 13.1-702 of the Code of Virginia, in brief, allow a corporation to indemnify any person made party to a proceeding because such person is or was a director, officer, employee, or agent of the corporation, against liability incurred in the proceeding if: (1) he conducted himself in good faith; and (2) he believed that (a) in the case of conduct in his official capacity with the corporation, his conduct was in its best interests; and (b) in all other cases, his conduct was at least not opposed to the corporation's best interests and (3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. The termination of a proceeding by judgment, order, settlement or conviction is not, of itself, determinative that the director, officer, employee, or agent of the corporation did not meet the standard of conduct described. A corporation may not indemnify a director, officer, employee, or agent of the corporation in connection with a proceeding by or in the right of the corporation, in which such person was adjudged liable to the corporation, or in connection with any other proceeding charging improper personal benefit to such person, whether or not involving action in his official capacity, in which such person was adjudged liable on the basis that personal benefit was improperly received by him. Indemnification permitted under these sections of the Code of Virginia in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding. Section 5 of the By-Laws of The Life Insurance Company of Virginia further provides that: (a) The Corporation shall indemnify each director, officer and employee of this Company who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative, or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgements [sic], fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation, and with respect to any criminal action, had no cause to believe his conduct unlawful. The termination of any action, suit or proceeding by judgement [sic], order, settlement, conviction, or upon a plea of nolo contendere, shall not of itself create a presumption that the person did not act in good faith, or in a manner opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, believed his conduct unlawful. (b) The Corporation shall indemnify each director, officer or employee of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgement [sic] in its favor by reason of the fact that he is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. (c) Any indemnification under subsections (a) and (b) (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer or employee is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b). Such determination shall be made (1) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of the directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders of the Corporation. (d) Expenses (including attorneys' fees) incurred in defending an action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in subsection (c) upon receipt of an undertaking by or on behalf of the director, officer or employee to repay such amount to the Corporation unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. (e) The Corporation shall have the power to make any other or further indemnity to any person referred to in this section except an indemnity against gross negligence or willful misconduct. (f) Every reference herein to director, officer or employee shall include every director, officer or employee, or former director, officer or employee of the Corporation and its subsidiaries and shall enure to the benefit of the heirs, executors and administrators of such person. (g) The foregoing rights and indemnification shall not be exclusive of any other rights and indemnification to which the directors, officers and employees of the Corporation may be entitled according to law. * * * Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the depositor pursuant to the foregoing provisions, or otherwise, the depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the depositor of expenses incurred or paid by a director, officer or controlling person of the depositor in successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the depositor will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriters (a) Capital Brokerage Corporation is the principal underwriter of the Policies as defined in the Investment Company Act of 1940, and is also the principal underwriter for flexible premium variable life insurance policies issued through GE Life & Annuity Separate Accounts I, II, III and V. (b)
Positions and Offices Name Address with Underwriter Scott A. Curtis GE Financial Assurance President and Chief 6610 W. Broad St. Executive Officer Richmond, VA 23230 Charles A. Kaminski GE Financial Assurance Senior Vice President 601 Union St., Ste. 5600 Seattle, WA 98101 Victor C. Moses GE Financial Assurance Senior Vice President 601 Union St., Ste. 5600 Seattle, WA 98101 Geoffrey S. Stiff GE Financial Assurance Senior Vice President 6610 W. Broad St. Richmond, VA 23230 Mary Catherine Yeagley GE Financial Assurance Senior Vice President 601 Union St., Ste. 5600 Seattle, WA 98101 Jeffrey I. Hugunin GE Financial Assurance Treasurer 6604 W. Broad St. Richmond, VA 23230 John W. Attey GE Financial Assurance Vice President, 7125 W. Jefferson Ave., Counsel Ste. 200 & Assistant Secretary Lakewood, CO 80235 Thomas W. Casey GE Financial Assurance Vice President & Chief 6604 W. Broad St. Financial Officer Richmond, VA 23230 Stephen N. DeVos GE Financial Assurance Vice President & 6604 W. Broad St. Controller Richmond, VA 23230 Scott A. Reeks GE Financial Assurance Vice President & 6610 W. Broad St. Assistant Treasurer Richmond, VA 23230 Edward J. Wiles, Jr. GE Financial Assurance Vice President, 777 Long Ridge Rd., Bldg. "B" Counsel & Secretary Stamford, CT 06927
Item 30. Location of Accounts and Records All accounts and records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules under it are maintained by GE Life & Annuity at its executive offices. Item 31. Management Services All management contracts are discussed in Part A or Part B of this Registration Statement. Item 32. Undertakings (a) Registrant undertakes that it will file a post-effective amendment to this Registration Statement as frequently as necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes that it will include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. (c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request to GE Life & Annuity at the address or phone number listed in the Prospectus. STATEMENT PURSUANT TO RULE 6c-7 GE Life & Annuity offers and will offer Policies to participants in the Texas Optional Retirement Program. In connection therewith, GE Life & Annuity and Account 4 rely on 17 C.F.R. Section 270.6c-7 and represent that the provisions of paragraphs (a)-(d) of the Rule have been or will be complied with. SECTION 403(b) REPRESENTATIONS GE Life & Annuity represents that in connection with its offering of Policies as funding vehicles for retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code of 1986, it is relying on a no-action letter dated November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, and that paragraphs numbered (1) through (4) of that letter will be complied with. SECTION 26(e)(2)(A) REPRESENTATION GE Life & Annuity hereby represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by GE Life & Annuity . SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the registrant, GE Life & Annuity Separate Account 4, has duly caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized, and its seal to be hereunto affixed and attested, in the County of Henrico in the Commonwealth of Virginia, on the 25th of January, 1999. GE Life & Annuity Separate Account 4 (Registrant) By: /s/SELWYN L. FLOURNOY, JR. --------------------------- Selwyn L. Flournoy, Jr. Senior Vice President GE Life and Annuity Assurance Company (Depositor) By: /s/SELWYN L. FLOURNOY, JR. --------------------------- Selwyn L. Flournoy, Jr. Senior Vice President As required by the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ RONALD V. DOLAN Director, Chairman of the Board 01/22/99 - ------------------- Ronald V. Dolan /s/PAMELA S. SCHUTZ Director and President 01/22/99 - ------------------- Pamela S. Schutz /s/SELWYN L. FLOURNOY, JR. Director, Senior Vice President 01/22/99 - -------------------------- Selwyn L. Flournoy, Jr. /s/ROBERT D. CHINN Director, Senior Vice President 01/22/99 - ------------------- Robert D. Chinn /s/VICTOR C. MOSES Director 01/22/99 - ----------------- Victor C. Moses /s/GEOFFREY S. STIFF Director 01/22/99 - -------------------- Geoffrey S. Stiff By /s/SELWYN L. FLOURNOY, JR, pursuant to Power of Attorney executed on April 16, 1997. LIST OF EXHIBITS (1)(m) Resolution of Board of Directors of GE Life & Annuity authorizing the establishment of ninety-six additional investment subdivisions of Separate Account 4. (4)(a) Form of Policy (4)(b)(vii) Optional Death Benefit Rider (9) Opinion and Consent of Counsel (10)(a) Consent of Counsel (10)(b) Consent of Auditors EX-1 2 EXHIBIT 1(M) UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF GE LIFE AND ANNUITY ASSURANCE COMPANY The undersigned, being all of the members of the Board of Directors of GE Life and Annuity Assurance Company, a Virginia corporation, in lieu of a meeting held for the purpose and pursuant to the provisions of Section 13.1-685 of the Code of Virginia do hereby approve the following resolutions: WHEREAS, The Board of Directors of the Company, pursuant to the Provisions of Section 38.2-3113 of the Code of Virginia, adopted resolutions establishing Life of Virginia Separate Account 4 ("Separate Account 4") on August 19, 1987; and WHEREAS, The Board of Directors of the Company adopted resolutions changing the name of the company to GE Life and Annuity Assurance Company and the name of the separate account to GE Life & Annuity Separate Account 4 on January 1, 1999; and WHEREAS, The Company wishes to establish ninety-six additional investment subdivisions of Separate Account 4 which will invest in the shares of Alger American Small Capitalization Portfolio and American Growth Portfolio of the Alger American Fund; Equity-Income Portfolio, Growth Portfolio and Overseas Portfolio of Fidelity Variable Insurance Products Fund; Asset Manager Portfolio and Contrafund Portfolio of Fidelity Variable Insurance Products Fund II; Growth & Income Portfolio and Growth Opportunities Portfolio of Fidelity Variable Insurance Products Fund III; Federated Utility Fund II, Federated High Income Bond Fund II and Federated American Leaders Fund II of Federated Insurance Series; Balanced Portfolio, Flexible Income Portfolio, Growth Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio, International Growth Portfolio and Capital Appreciation Portfolio of Janus Aspen Series; Money Market Fund, Income Fund, S&P 500 Index Fund, Total Return Fund, International Equity Fund, Real Estate Securities Fund, Value Equity Fund and U.S. Equity Fund of GE Investments Funds, Inc.; Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund, and Oppenheimer Multiple Strategies Fund of Oppenheimer Variable Account Funds; Goldman Sachs Growth and Income Fund and Goldman Sachs Mid Cap Equity Fund of Goldman Sachs Assets Management, Inc. NOW, THEREFORE, BE IT RESOLVED, That the Executive Committee of the Board of Directors of the Company does hereby establish and create ninety-six additional investment subdivisions of Separate Account 4. Each of the new subdivisions shall invest in shares of a single mutual fund portfolio as set forth below:
INVESTMENT SUBDIVISIONS: TO BE INVESTED IN: THE ALGER AMERICAN FUND AAF Small Capitalization - C Alger American Small Capitalization Portfolio AAF Small Capitalization - D Alger American Small Capitalization Portfolio AAF Small Capitalization - E Alger American Small Capitalization Portfolio AAF Growth - C Alger American Growth Portfolio AAF Growth - D Alger American Growth Portfolio AAF Growth E Alger American Growth Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND FID Equity-Income - C Equity-Income Portfolio FID Equity-Income - D Equity-Income Portfolio FID Equity-Income - E Equity-Income Portfolio
FID Growth - C Growth Portfolio FID Growth - D Growth Portfolio FID Growth - E Growth Portfolio FID Overseas - C Overseas Portfolio FID Overseas - D Overseas Portfolio FID Overseas - E Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II FID Asset Manager - C Asset Manager Portfolio FID Asset Manager - D Asset Manager Portfolio FID Asset Manager - E Asset Manager Portfolio FID Contrafund - C Contrafund Portfolio FID Contrafund - D Contrafund Portfolio FID Contrafund - E Contrafund Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND III FID Growth and Income - C Growth & Income Portfolio FID Growth and Income - D Growth & Income Portfolio FID Growth and Income - E Growth & Income Portfolio FID Growth Opportunities - C Growth Opportunities Portfolio FID Growth Opportunities - D Growth Opportunities Portfolio FID Growth Opportunities - E Growth Opportunities Portfolio FEDERATED INSURANCE SERIES FED Utility II - C Federated Utility Fund II FED Utility II - D Federated Utility Fund II FED Utility II - E Federated Utility Fund II FED High Income Bond II - C Federated High Income Bond Fund II FED High Income Bond II - D Federated High Income Bond Fund II FED High Income Bond II - E Federated High Income Bond Fund II FED American Leaders II - C Federated American Leaders Fund II FED American Leaders II - D Federated American Leaders Fund II FED American Leaders II - E Federated American Leaders Fund II JANUS ASPEN SERIES JAN Balanced - C Balanced Portfolio JAN Balanced - D Balanced Portfolio JAN Balanced - E Balanced Portfolio JAN Flexible Income - C Flexible Income Portfolio JAN Flexible Income - D Flexible Income Portfolio JAN Flexible Income - E Flexible Income Portfolio JAN Growth - C Growth Portfolio JAN Growth - D Growth Portfolio JAN Growth - E Growth Portfolio JAN Aggressive Growth - C Aggressive Growth Portfolio JAN Aggressive Growth - D Aggressive Growth Portfolio JAN Aggressive Growth - E Aggressive Growth Portfolio JAN Worldwide Growth - C Worldwide Growth Portfolio JAN Worldwide Growth - D Worldwide Growth Portfolio JAN Worldwide Growth - E Worldwide Growth Portfolio JAN International Growth - C International Growth Portfolio JAN International Growth - D International Growth Portfolio JAN International Growth - E International Growth Portfolio
JAN Capital Appreciation - C Capital Appreciation Portfolio JAN Capital Appreciation - D Capital Appreciation Portfolio JAN Capital Appreciation - E Capital Appreciation Portfolio GE INVESTMENTS FUNDS, INC. GEI Money Market - C Money Market Fund GEI Money Market - D Money Market Fund GEI Money Market - E Money Market Fund GEI Income Fund - C Income Fund GEI Income Fund - D Income Fund GEI Income Fund - E Income Fund GEI S&P 500 Index - C S&P 500 Index Fund GEI S&P 500 Index - D S&P 500 Index Fund GEI S&P 500 Index - E S&P 500 Index Fund GEI Total Return - C Total Return Fund GEI Total Return - D Total Return Fund GEI Total Return - E Total Return Fund GEI International Equity - C International Equity Fund GEI International Equity - D International Equity Fund GEI International Equity - E International Equity Fund G GEI Real Estate Securities - C Real Estate Securities Fund GEI Real Estate Securities - D Real Estate Securities Fund GEI Real Estate Securities - E Real Estate Securities Fund GEI Value Equity - C Value Equity Fund GEI Value Equity - D Value Equity Fund GEI Value Equity - E Value Equity Fund GEI U.S. Equity - C U.S. Equity Fund GEI U.S. Equity - D U.S. Equity Fund GEI U.S. Equity - E U.S. Equity Fund OPPENHEIMER VARIABLE ACCOUNT FUNDS OPP High Income - C Oppenheimer High Income Fund OPP High Income - D Oppenheimer High Income Fund OPP High Income - E Oppenheimer High Income Fund OPP Bond - C Oppenheimer Bond Fund OPP Bond - D Oppenheimer Bond Fund OPP Bond - E Oppenheimer Bond Fund OPP Aggressive Growth - C Oppenheimer Aggressive Growth Fund OPP Aggressive Growth - D Oppenheimer Aggressive Growth Fund OPP Aggressive Growth - E Oppenheimer Aggressive Growth Fund OPP Growth - C Oppenheimer Growth Fund OPP Growth - D Oppenheimer Growth Fund OPP Growth - E Oppenheimer Growth Fund
OPP Multi Strategies - C Oppenheimer Multiple Strategies Fund OPP Multi Strategies - D Oppenheimer Multiple Strategies Fund OPP Multi Strategies - E Oppenheimer Multiple Strategies Fund GOLDMAN SACHS ASSET MANAGEMENT, INC. GSF Growth and Income - C Goldman Sachs Growth and Income Fund GSF Growth and Income - D Goldman Sachs Growth and Income Fund GSF Growth and Income - E Goldman Sachs Growth and Income Fund GSF Mid Cap Equity - C Goldman Sachs Mid Cap Equity Fund GSF Mid Cap Equity - D Goldman Sachs Mid Cap Equity Fund GSF Mid Cap Equity - E Goldman Sachs Mid Cap Equity Fund
FURTHER RESOLVED, That the President, or any Senior Vice President, and each of them, with full power to act without the others, are hereby severally authorized to execute whatever agreement or agreements may be necessary or appropriate to enable such investments to be made, and the Board of Directors hereby ratifies of any such officer in executing any such agreement prior to the date of these resolutions; and FURTHER RESOLVED, That the President or any Senior Vice President, and each of them, with full power to act without the others, are hereby severally authorized to execute and deliver such other documents and do such acts and things as each or any of them may deem necessary or desirable to carry out the foregoing resolutions and the intent and purposes thereof. FURTHER RESOLVED, That these resolutions shall take effect as of January ____, 1999. - ------------------------- ---------------------------- Robert D. Chinn Ronald V. Dolan - ------------------------- ---------------------------- Selwyn L. Flournoy, Jr. Victor C. Moses - ------------------------- ---------------------------- Pamela S. Schutz Geoffrey S. Stiff EX-4 3 EXHIBIT 4(A) Exhibit 4(a) Form of Policy FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY [LIFE OF VIRGINIA LOGO] To the policyowner: Please read your policy carefully. This policy is a legal contract between you and the Company. You, the owner, have benefits and rights described in this policy. The annuitant is named in the policy. We will make income payments beginning on the Maturity Date, if the annuitant is still living on that date. THIS POLICY'S INCOME PAYMENTS DEPEND ON THE ACCOUNT VALUE. ACCOUNT VALUE MAY BE ALLOCATED TO THE SEPARATE ACCOUNT, AND THE GUARANTEE ACCOUNT, IF AVAILABLE. THE ACCOUNT VALUE IN THE SEPARATE ACCOUNT IS BASED ON THE INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND MAY INCREASE OR DECREASE DAILY. IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT. ACCOUNT VALUE IN THE GUARANTEE ACCOUNT, IF AVAILABLE, IS GUARANTEED BY THE COMPANY AS TO DOLLAR AMOUNT. RIGHT TO CANCEL. You may return this policy to our home office within 10 days after its delivery for a refund. The amount of the refund will equal the account value with any adjustments required by applicable law or regulation. For The Life Insurance Company of Virginia /s/ Ronald U. Dolan /s/ Pamela S. Schutz -------------------------- --------------------------- CHAIRMAN PRESIDENT o Flexible Premium Variable Deferred Annuity o Income payments beginning at maturity o No Dividends o Some benefits reflect investment results THE LIFE INSURANCE COMPANY OF VIRGINIA 6610 West Broad Street, Richmond, Virginia 23230 A Stock Company P0LICY DATA SCHEDULE OF BENEFITS SCHEDULE OF PURCHASE PAYMENTS AMOUNT PAYABLE ANNUITY $70,000.00 INITIAL PURCHASE PAYMENT INITIAL PURCHASE PAYMENT: $70,000.00 MINIMUM ADDITIONAL PURCHASE PAYMENT: $1,000.00 MINIMUM PARTIAL SURRENDER: $500.00 WITH AN ACCOUNT VALUE AFTER THE SURRENDER OF NO LESS THAN $10,000.00 MINIMUM ACCOUNT VALUE ALLOWED TO REMAIN IN AN INVESTMENT OPTION AFTER A TRANSFER FROM THAT INVESTMENT OPTION IS $100.00. ENHANCED PREMIUM RATE: 3% DEATH BENEFIT PERIOD: INITIAL: FIRST POLICY YEAR SUBSEQUENT: EACH SUCCESSIVE POLICY YEAR PERIOD FOLLOWING THE INITIAL PERIOD GUARANTEED MINUMUM DEATH BENEFIT (RIDER FORM P5103) ANNUAL RATE: 6% ANNUAL OPTIONAL DEATH BENEFIT CHARGE: 0.25% CHARGES: PREMIUM TAX RATE: 0.00% MORTALITY AND EXPENSE CHARGE: 1.30% ANNUALLY (.003585% DAILY) ADMINISTRATIVE EXPENSE CHARGE: 0.25% ANNUALLY (.000686% DAILY) ANNUAL POLICY MAINTENANCE CHARGE: $25.00 WAIVED IF TOTAL PURCHASE PAYMENTS EXCEED $10,000 OR GREATER AT TIME THE CHARGE IS DUE. TRANSFER CHARGE: $10.00 FOR BASE POLICY EXCLUDING ANY RIDERS OWNER THE ANNUITANT ANNUITANT JANE DOE FEMALE 78 AGE LAST BIRTHDAY POLICY NUMBER 000000000 POLICY DATE NOVEMBER 1, 1998 NOVEMBER 1, 2053 MATURITY DATE PLAN FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY NUMBER [0000000] SEPARATE ACCOUNT 4 INVESTMENT OPTIONS INVESTMENT SUBDIVISIONS ARE INVESTED IN AAF SMALL CAPITALIZATION-C THE ALGER AMERICAN FUND ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO AAF GROWTH-C ALGER AMERICAN GROWTH PORTFOLIO [FIDELITY VARIABLE INSURANCE PRODUCTS FUND FID EQUITY-INCOME-C EQUITY-INCOME PORTFOLIO FID GROWTH-C GROWTH PORTFOLIO FID OVERSEAS-C OVERSEAS PORTFOLIO FIDELITY VARIABLE INSURANCE PRODUCTS FUND II FID ASSET MANAGER-C ASSET MANAGER PORTFOLIO FID CONTRAFUND-C CONTRAFUND PORTFOLIO FIDELITY VARIABLE INSURANCE PRODUCTS FUND III FID GROWTH AND INCOME-C GROWTH & INCOME PORTFOLIO FID GROWTH OPPORTUNITIES-C GROWTH OPPORTUNITIES PORTFOLIO FEDERATED INSURANCE SERIES FED UTILITY II-C FEDERATED UTILITY FUND II FED HIGH INCOME BOND II-C FEDERATED HIGH INCOME BOND FUND II FED AMERICAN LEADERS II-C FEDERATED AMERICAN LEADERS FUND II JANUS ASPEN SERIES JAN BALANCED-C BALANCED PORTFOLIO JAN FLEXIBLE INCOME-C FLEXIBLE INCOME PORTFOLIO JAN GROWTH-C GROWTH PORTFOLIO JAN AGGRESSIVE GROWTH-C AGGRESSIVE GROWTH PORTFOLIO JAN WORLDWIDE GROWTH-C WORLDWIDE GROWTH PORTFOLIO JAN INTERNATIONAL GROWTH-C INTERNATIONAL GROWTH PORTFOLIO JAN CAPITAL APPRECIATION-C CAPITAL APPRECIATION PORTFOLIO GE INVESTMENTS FUNDS, INC. GEI MONEY MARKET-C MONEY MARKET FUND GEI INCOME FUND-C INCOME FUND GEI S&P 500 INDEX-C* S&P 500 INDEX FUND GEI TOTAL RETURN-C TOTAL RETURN FUND GEI INTERNATIONAL EQUITY-C INTERNATIONAL EQUITY FUND GEI REAL ESTATE SECURITIES-C REAL ESTATE SECURITIES FUND GEI VALUE EQUITY-C VALUE EQUITY FUND GEI U.S. EQUITY-C U.S. EQUITY FUND OPPENHEIMER VARIABLE ACCOUNT FUNDS OPP HIGH INCOME-C OPPENHEIMER HIGH INCOME FUND OPP BOND-C OPPENHEIMER BOND FUND OPP AGGRESSIVE GROWTH-C OPPENHEIMER AGGRESSIVE GROWTH FUND OPP GROWTH-C OPPENHEIMER GROWTH FUND OPP MULTI STRATEGIES-C OPPENHEIMER MULTIPLE STRATEGIES FUND GOLDMAN SACHS ASSET MANAGEMENT, INC. GSF GROWTH AND INCOME-C GOLDMAN SACHS GROWTH AND INCOME FUND GSF MID CAP EQUITY-C GOLDMAN SACHS MID CAP EQUITY FUND INVESTMENT SUBDIVISIONS ARE INVESTED IN SALOMON BROTHERS FUND SAL INVESTORS-C SALOMON BROTHERS VARIABLE INVESTORS FUND SAL TOTAL RETURN-C SALOMON BROTHERS VARIABLE TOTAL RETURN FUND SAL STRATEGIC BOND-C SALOMON BROTHERS VARIABLE STRATEGIC BOND FUND] GUARANTEE ACCOUNT: MINIMUM GUARANTEED INTEREST RATE: [3%] THE PORTION OF EACH PURCHASE PAYMENT AND EACH ENHANCED PREMIUM AMOUNT ALLOCATED TO ANY PARTICULAR INVESTMENT OPTION MUST BE AT LEAST [1%]. YOU MAY ALLOCATED YOUR ACCOUNT VALUE TO AS MANY AS [TEN] INVESTMENT SUBDIVISIONS. CONSULT THE PROSPECTUS FOR INVESTMENT DETAILS. * "STANDARD & POOR'S," "S&P," "S&P 500," "STANDARD & POOR'S 500," AND "500" ARE TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY GE INVESTMENT MANAGEMENT INCORPORATED. THE S&P 500 INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE FUND. POLICY NUMBER: [0000000] TABLE OF SURRENDER CHARGES YEARS SURRENDER CHARGE PERCENTAGE 1 [8] 2 [8] 3 [7] 4 [6] 5 [5] 6 [4] 7 [3] 8 [2] YEARS 9 AND LATER [0] [THE UNADJUSTED DEATH BENEFIT WILL BE ADJUSTED FOR PARTIAL SURRENDERS PROPORTIONALLY BY THE SAME PERCENTAGE THAT THE SURRENDER REDUCED THE ACCOUNT VALUE.] TABLE OF CONTENTS Policy Date.................................................. Definitions.................................................. Introduction................................................. Owner, Annuitant and Beneficiary Provisions.................. Death Provisions............................................. Purchase Payments............................................ Monthly Income Benefit....................................... Separate Account............................................. Account Value Benefits....................................... General Information.......................................... Optional Payment Plans....................................... Copies of any application, riders and endorsements follow page. DEFINITIONS ACCOUNT VALUE - The sum of the values allocated to each Investment Option. ACCUMULATION UNIT - Unit of measure used in calculating the Account Value in the Separate Account prior to the Maturity Date. AGE - The Age of the Annuitant as of the Policy Date as shown on the policy data pages. ANNUITANT - The person named on the policy data pages whose Age and, where appropriate, sex are used in determining the amount of the monthly income benefits. ANNUITY UNIT - Unit of measure used in determining the amount of the second and each subsequent Variable income payment. ASSUMED INTEREST RATE - Interest rate used in calculating the Variable Income Payment amounts. BENEFICIARY - The person(s) or entity named in any application. THE COMPANY - The Life Insurance Commpany of Virginia. "We", "us" or "our" refers to the Company. CONTINGENT ANNUITANT - The person named by the Owner who at the death of the Annuitant prior to the Maturity Date may become the Annuitant in certain circumstances. (See Death Provisions.) DEATH BENEFIT - The benefit provided under the Policy upon the death of an Annuitant prior to the Maturity Date. DESIGNATED BENEFICIARY - The person or entity designated in the Policy who on the date of an Owner's, Joint Owner's or Annuitant's death will be thereafter as the sole Owner of the Policy. (See Death Benefits section.) ENHANCED PREMIUM AMOUNT - An amount equal to the enhanced premium rate as shown on the policy data pages applied to any Purchase Payment. FIXED INCOME PAYMENTS - Income payments that are supported by the General Account and which do not vary in amount based on the investment experience of the Separate Account. FUND - Any open-end management investment company or investment portfolio thereof, or unit investment trust or series thereof, in which an Investment Subdivision invests. GENERAL ACCOUNT - Assets of the Company other than those allocated to the Separate Account or any other separate account of the Company. GUARANTEE ACCOUNT - If available by rider, amounts allocated under this Policy to be held in our General Account. HOME OFFICE - The Company's 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. INVESTMENT OPTIONS - Any available Guarantee Account and the Separate Account Investment Subdivision(s) shown on the policy data pages. INVESTMENT SUBDIVISION - A subdivision of the Separate Account, the assets of which are invested exclusively in a corresponding Fund. MATURITY DATE - The date stated on the policy data pages, unless changed after issue, on which income payments are scheduled to commence, if the Annuitant is living on that date. MATURITY VALUE - The Surrender Value on the day immediately preceding the Maturity Date. OPTIONAL PAYMENT PLAN - A plan whereby any part of a Death Benefit, Surrender Value or Maturity Value can be left with us to provide income payments to a Payee. OWNER/JOINT OWNERS - The person(s) or entity entitled to receive income payments after the Maturity Date. The Owner or Joint Owners are also entitled to the ownership rights stated in the Policy during the lifetime of the Annuitant and are shown on the policy data pages and in any application. "You" or "your" refers to the Owner or Joint Owners. PAYEE - Person or entity entitled to receive income payments under an Optional Payment Plan. POLICY - This contract with any attached application and any riders and endorsements. POLICY DATE - Date the Policy is issued and becomes effective. The Policy Date is shown on the policy data pages and is used to determine policy years and anniversaries. PURCHASE PAYMENT - A payment received by the Company and applied to this Policy. When used in connection with this Policy, the term "Purchase Payment" means the same as the term "premium payment". SEPARATE ACCOUNT - The segregated asset account of the Company shown on the policy data pages. SURRENDER VALUE - The Account Value on the date we receive written request for surrender in our Home Office less any surrender charge and any applicable premium tax. VALUATION DAY - For each Investment Subdivision, each day on which the New York Stock Exchange is open for business except for days that the Investment Subdivision's corresponding Fund does not value its shares. VALUATION PERIOD - Period that starts at the close of regular trading on the New York Stock Exchange on any Valuation Day and ends at the close of regular trading on the next succeeding Valuation Day. VARIABLE INCOME PAYMENTS - Income payments that vary in amount from one income payment to the next based on the investment experience of one or more Investment Subdivisions. INTRODUCTION This is a flexible premium variable deferred annuity policy. The initial Purchase Payment is due on the Policy Date. Additional Purchase Payments may be paid at any time before the Maturity Date. In return for these Purchase Payments and any application, we provide certain benefits. The Policy provides a monthly income beginning on the Maturity Date. The amount of monthly income will depend on: o the Maturity Value; o the amount of any applicable premium tax; o the Annuitant's sex, where appropriate, and settlement age on the Maturity Date; and o the payment plan chosen. See Optional Payment Plans section for the payout plans available. See conditions described in the Death Provisions section for details regaring payment or the continuation of the Policy at the death of the Owner, Joint Owner or Annuitant prior to the Maturity Date. The Policy and Its Parts This Policy is a legal contract. It is the entire contract between you and us. An agent cannot change this contract. Any change to it must be in writing and approved by us. Only an authorized officer can give our approval. READ THIS POLICY CAREFULLY. All statements in any application are considered representations and not warranties. We reserve the right to amend this Policy as needed to maintain its status as an annuity under the Internal Revenue Code. If the Policy is amended, we will send you a copy of the amendment complying with the requirements imposed by the Internal Revenue Service ("IRS"). This Policy is intended to constitute an annuity within the meaning of the Internal Revenue Code, and its provisions should be interpreted consistently with this intent. OWNER, ANNUITANT AND BENEFICIARY PROVISIONS - -------------------------------------------------------------------------------- The Owner You have rights while this Policy is in force, subject to the rights of any Beneficiary named irrevocably, and any assignee under an assignment filed with us. Joint Owners own the Policy equally with the right of survivorship. Right of survivorship means that if a Joint Owner dies, his or her interest in the Policy will pass to the surviving Joint Owner. Disposition of the Policy upon death of an Owner is subject to the Death Provisions. The Annuitant The Policy names you or someone else as the Annuitant. The Contingent Annuitant can be named in the application, if any, for this Policy or by sending a written request to our Home Office. At the death of the Annuitant prior to the Maturity Date, the Contingent Annuitant, if any, may become the Annuitant in certain circumstances. (See Death Provisions). If no Contingent Annuitant is alive, the Owner (if a natural person, otherwise, the Joint Owner, if a natural person) will be the Contingent Annuitant. The Beneficiary The primary beneficiary and any contingent beneficiary can be named in the application, if any, for this Policy or by sending a written request to our Home Office. Changing the Owner, Contingent Annuitant or Beneficiary During the Annuitant's life, you can change the Owner, the Contingent Annuitant and any Beneficiary if you reserved this right. A person named irrevocably may be changed only with that person's written consent. To make a change, send a written request to our Home Office. The request and the change must be in a form satisfactory to us. The change will take effect as of the date you sign the request. The change will be subject to any transaction we execute before we record the change. Except as described above, the Annuitant cannot be changed. Using the Policy as Collateral for a Loan This Policy may be assigned as collateral security for a loan. We must be notified in writing if you assign the Policy. Any payment we make before we record the assignment at our Home Office will not be affected. We are not responsible for the validity of an assignment. Your rights and the rights of a Beneficiary may be affected by an assignment. The basic benefits of the Policy are assignable. Additional benefits added by any rider may or may not be available/eligible for assignment. Trustee If a trustee is named as the Owner or Beneficiary of this Policy and subsequently exercises ownership rights or claims benefits hereunder, we will have no obligation to verify that a trust is in effect or that the trustee is acting within the scope of his/her authority. Payment of policy benefits to the trustee will release us from all obligations under the Policy to the extent of the payment. When we make a payment to the trustee, we will have no obligation to ensure that such payment is applied according to the terms of the trust agreement. 6 DEATH PROVISIONS - -------------------------------------------------------------------------------- When a Distribution Is Required In certain circumstances, federal tax law requires that distributions be made under this Policy. Except as described below, a distribution is required at the first death of: (a) an Owner or Joint Owner; or (b) the Annuitant if any Owner is a non-natural entity. The amount of proceeds available upon death and the methods available for distributing such proceeds are also described in this section. Designated Beneficiary At the first death of a) an Owner or Joint Owner, or b) the Annuitant if any Owner is a non-natural entity, the person or entity first listed below who is alive or in existence on the date of that death will become the Designated Beneficiary: (1) Owner or Joint Owners (2) primary beneficiary (3) contingent beneficiary (4) Owner's estate The Designated Beneficiary will be treated thereafter as the sole Owner of the Policy and may choose one of the Payment Choices below, subject to the distribution rules stated below. For purposes of this section, if there is more than one Designated Beneficiary, each one will be treated separately with respect to their portion of the Policy. Distribution Rules When Death Occurs Before Income Payments Begin If the Designated Beneficiary is the surviving spouse of the deceased person, we will continue the Policy in force with the surviving spouse as the new Owner. If the deceased person was the Annuitant and there was no surviving Contingent Annuitant, the surviving spouse will automatically become the new Annuitant. At the death of the surviving spouse, this provision may not be used again. The provision below regarding If the Designated Beneficiary is not the surviving spouse must be used instead. If the Designated Beneficiary is not the surviving spouse of the deceased person, this Policy cannot be continued in force indefinitely. Instead, after the date of death: o No further Purchase Payments will be accepted. o Payments must be made to, or for the benefit of, the Designated Beneficiary under one of the Payment Choices listed below. o If no choice is made by the Designated Beneficiary within 30 days following receipt of due proof of death, we will use Payment Choice 2. o If the Designated Beneficiary dies before the entire Surrender Value has been distributed, we will pay in a lump sum payment any Surrender Value still remaining to the person named by the Designated Beneficiary or, if no person is so named, to the Designated Beneficiary's estate. Payment Choices: (1) Receive the Surrender Value in one lump sum payment upon receipt of due proof of death; (2) Receive the Surrender Value at any time during the five year period following the date of death by partially or totally surrendering the Policy. At the end of that five year period, we will pay in a lump sum payment any Surrender Value still remaining; (3) Apply the Surrender Value to provide an income under Optional Payment Plan 1 or 2. The first income payment must be made no later than one year after the date of death. The income payment period must be either (1) the lifetime of the Designated Beneficiary, or (2) a period not exceeding the Designated Beneficiary's life expectancy. Under Payment Choices (1) and (2), this Policy will terminate upon payment of the entire Surrender Value. Under Payment Choice (3), this Policy will terminate when the Surrender Value is applied to the Optional Payment Plan. Due proof of death must be provided within 90 days of death. 7 Proceeds When Death Occurs Before Income Payments Begin If an Owner or Joint Owner dies and that person is someone other than the Annuitant, the amount of proceeds available is the Surrender Value. We will distribute the Surrender Value to, or for the benefit of, the Designated Beneficiary as described previously in this section. If the Annuitant dies, regardless of whether he/she is also an Owner or Joint Owner of the Policy, the amount of proceeds available is the Death Benefit. Upon receipt of due proof of the Annuitant's death, the Death Benefit will constitute the new Surrender Value and will be treated in accordance with instructions provided by the Owner, subject to distribution rules and termination of contract provisions described above. Death Benefit Available at Death of Annuitant The Death Benefit will equal the amount of proceeds available as calculated below. Actual Amount of Proceeds Payable. The actual amount of proceeds payable will equal the Death Benefit. The Death Benefit is calculated as of the date we receive a request for distribution by adding (a) and (b) where: (a) is the Account Value as of the date we receive the request for distribution of proceeds or the date we receive due proof of death, if later; and (b) is the excess, if any, of the Unadjusted Death Benefit as of the date of the Annuitant's death over the Account Value as of the date of the Annuitant's death, with interest credited on that excess from the date of the Annuitant's death to the date of distribution. Unadjusted Death Benefit Calculation If the death occurs prior to the policy anniversary the Annuitant reaches age 81, o During the initial death benefit period, as shown on the policy data pages, the Unadjusted Death Benefit will be the greater of items (1) and (2) defined below. o During any subsequent death benefit period, as shown on the policy data pages, the Unadjusted Death Benefit will be the greatest of items (1), (2) and (3) defined below. If the death occurs on or after the policy anniversary the Annuitant reaches age 81, o the Unadjusted Death Benefit will be the Account Value as of the Annuitant's date of death. As used in calculating the Unadjusted Death Benefit described above, items (1), (2) and (3) are defined as: (1) The Account Value of the Policy as of the Annuitant's date of death. (2) The total of Purchase Payments paid adjusted for any applicable premium tax and any partial surrenders. (3) The Unadjusted Death Benefit on the last day of the preceding death benefit period, plus any Purchase Payments paid since then, adjusted for any applicable premium tax and any partial surrenders. As used in this provision, the death benefit period is defined as the period of time commencing with the Policy Date through the end of the initial death benefit period and every subsequent death benefit period thereafter. The adjustment for partial surrenders is described on the policy data pages. Distribution Rules When Death Occurs After Income Payments Begin If an Owner, Joint Owner, Annuitant, or Payee dies after income payments have begun, the entire interest remaining in the Policy will be distributed at least as rapidly as under the method of distribution being used on the date of death. Under this scenario, "entire interest" means any guaranteed payments remaining under the payment plan in effect on the date of death. PURCHASE PAYMENTS - -------------------------------------------------------------------------------- The initial Purchase Payment is due on the Policy Date. Additional Purchase Payments You may make additional Purchase Payments at any time before the Maturity Date. The minimum 8 amount allowed as an additional Purchase Payment is defined on the policy data pages. When and Where to Send Purchase Payments Each Purchase Payment is payable in advance. Send each Purchase Payment to our Home Office. Make any checks or money orders payable to The Life Insurance Company of Virginia. Allocations You may allocate Purchase Payments and your Enhanced Premium Amount to one or more Investment Options. The maximum number of Investment Option allocations allowed is shown on the policy data pages. The minimum percentage of each Purchase Payment and each Enhanced Premium Amount that may be allocated to any particular Investment Option is also provided on the policy data pages. Allocations will be made in accordance with your instructions we have on file. You may change the allocation of later Purchase Payments and Enhanced Premium Amounts at any time, without charge, by sending a notice to us at our Home Office. The notice must be in writing or in any form acceptable to us. The allocation will apply to Purchase Payments received and Enhanced Premium Amounts credited after we receive the change. We add an Enhanced Premium Amount to each Purchase Payment we receive. This amount is funded from our General Account and is provided at no cost to you. For each Purchase Payment you make, we will add a percentage (shown on the policy data pages) of that Purchase Payment to your Account Value. The Enhanced Premium Amount is applied when your Purchase Payment is applied to your Account Value, and is allocated on a prorata basis to the Investment Options you selected in the same ratio as the applicable Purchase Payment. MONTHLY INCOME BENEFIT - -------------------------------------------------------------------------------- We will pay you a monthly income for a guaranteed minimum period beginning on the Maturity Date if the Annuitant is still living. The monthly income will be a Variable income payment similar to that described in the provision titled "Variable Income Options" under the Optional Payment Plans section. Payments will be made automatically under a Life Income with 10 Years Certain plan, unless you choose otherwise. Under the Life Income 10 Years Certain plan, if the Annuitant lives longer than 10 years, payments will continue for his or her life. If the Annuitant dies before the end of ten years, the remaining payments for the ten year period will be discounted at the same rate used to calculate the monthly income. The discounted amount will be paid in one sum to you. At any time, while the Annuitant is living, and before the Maturity Date, you may choose to change the payment plan by written request. If you do choose a different plan, the monthly income will reflect the plan chosen. Payment plans which base payment on the life or lives of one or more individuals will base such payment on the life of the Annuitant or the Annuitant and an additional individual. You may elect to receive the Maturity Value in a lump sum instead of receiving a monthly income. If we pay the Maturity Value, in a lump sum, we will have no further obligation under the Policy. The initial income payment under the automatic payment plan, payable monthly, is calculated by multiplying (a) times (b), divided by (c) where: (a) is the monthly payment rate per $1000, shown under the Optional Payment Plans for Life Income 10 years Certain, using the sex, if appropriate, and settlement age of the Annuitant, instead of the Payee, on the Maturity Date; (b) is the Maturity Value; and (c) is $1000. Income payments will be made monthly unless quarterly, semi-annual or annual payments are chosen by written request. However, if any payment made more frequently than annually 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. If the annual payment payable at maturity is less than $20, we will pay the Maturity Value and the Policy will terminate effective as of the Maturity Date. 9 Maturity Date The Maturity Date is provided on the policy data pages, unless changed after issue. You may change the Maturity Date to any date at least ten years after the date of the last Purchase Payment. The Maturity Date cannot be a date later than the policy anniversary on which the Annuitant reaches age 90, unless a later date is approved by the Company. To make a change, send us written notice before the Maturity Date then in effect. If you change the Maturity Date, Maturity Date will then mean the new Maturity Date you selected. SEPARATE ACCOUNT - -------------------------------------------------------------------------------- The Separate Account named on the policy data pages supports the operation of this Policy and certain other variable annuity policies we may offer. We will not allocate assets to the Separate Account to support the operation of any contracts or policies that are not variable annuities. We own the assets in the Separate Account. These assets are held separately from our other assets and are not part of our General Account. The Separate Account is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company Act of 1940. The Separate Account is also subject to laws of the Commonwealth of Virginia which regulate the operations of insurance companies incorporated in Virginia. The investment policies of the Separate Account will not be changed without the approval of the Insurance Commissioner of the Commonwealth of Virginia. Insulation of Assets The portion of the assets of the Separate Account which equals the reserves and other policy liabilities of the policies which are supported by the Separate Account will not be charged with liabilities arising from any other business we conduct. We have the right to transfer to our General Account any assets of the Separate Account which are in excess of such reserves and other policy liabilities. Investment Subdivisions The Separate Account is divided into Investment Subdivisions. The income, gains and losses, realized or unrealized, from the assets allocated to an Investment Subdivision are credited to or charged against such Investment Subdivision, without regard to other income, gains or losses of the Company or any other Investment Subdivision. The Investment Subdivisions available under this Policy are shown on the policy data pages. Each Investment Subdivision invests exclusively in shares of a corresponding Fund. Shares of a Fund are purchased and redeemed for an Investment Subdivision at their net asset value per share. Any amounts of income, dividends and gains distributed from the shares of a Fund are reinvested in additional shares of that Fund at its net asset value. Changes To The Separate Account And Investment Subdivisions Where permitted by applicable law, the Company may: o create new separate accounts; o combine separate accounts, including the Separate Account; o transfer assets of the Separate Account, which we determine to be associated with the class of policies to which this Policy belongs, to another separate account; o add new Investment Subdivisions to or remove existing Investment Subdivisions from the Separate Account or combine Investment Subdivisions; o make Investment Subdivisions (including new Investment Subdivisions) available to such classes of policies as we may determine; o add new Funds or remove existing Funds; o substitute new Funds for any existing Fund whose shares are no longer available for investment; o substitute new Funds for any existing Fund which we determine is no longer appropriate in 10 light of the purposes of the Separate Account; o deregister the Separate Account under the Investment Company Act of 1940; and o operate the Separate Account under the direction of a committee or in any other form permitted by law. In the event of any substitution or change, we may, by appropriate endorsement, make such changes in this and other policies as may be necessary or appropriate to reflect the substitution or change. Valuation of Separate Account Assets We will value the assets of the Separate Account each Valuation Day at their fair market value in accordance with accepted accounting practices and applicable laws and regulations. Accumulation Units Purchase payment(s) allocated to an Investment Subdivision or amounts transferred to an Investment Subdivision are converted into Accumulation Units. The number of Accumulation Units is determined by dividing the dollar amount allocated to each Investment Subdivision by the value of the Accumulation Unit for that Investment Subdivision for the Valuation Day on which the Purchase Payment(s) or transferred amount is invested in the Investment Subdivision. Therefore, Purchase Payment(s) allocated to or amounts transferred to an Investment Subdivision increase the number of Accumulation Units of that Investment Subdivision. The events which will reduce the number of Accumulation Units of an Investment Subdivision are as follows: (1) surrenders or transfers of Account Value from an Investment Subdivision; (2) surrender of the Policy; (3) payment of a Death Benefit; (4) application of Account Value to an income payment option; and (5) applicable Policy and/or rider fees and charges. Accumulation Units are canceled as of the end of the Valuation Period in which the Company receives notice regarding the event. Accumulation Unit Value The value of an Accumulation Unit for each Investment Subdivision was arbitrarily set when the Investment Subdivision began operations. Thereafter, the value of an Accumulation Unit at the end of every Valuation Day is the value of the Accumulation Unit at the end of the previous Valuation Day multiplied by the net investment factor, as described below. On any day that is a Valuation Day, the Account Value in an Investment Subdivision is determined by multiplying the number of Accumulation Units attributable to the Policy in that Investment Subdivision by the value of the Accumulation Unit for that Investment Subdivision. Net Investment Factor The net investment factor is used to measure the investment performance of an Investment Subdivision. The net investment factor for any Investment Subdivision for any Valuation Period is determined by (a) divided by (b), minus (c), where: (a) is the result of: (1) the value of the assets in the Investment Subdivision at the end of the preceding Valuation Period; plus (2) the investment income and capital gains, realized or unrealized, credited to those assets at the end of the Valuation Period for which the net investment factor is being determined; minus (3) the capital losses, realized or unrealized, charged against those assets during the Valuation Period; minus (4) any amount charged against the Separate Account for taxes, or any amount we set aside during the Valuation Period as a provision for taxes attributable to the operation or maintenance of the Separate Account; and (b) is the value of the assets in the Investment Subdivision at the end of the preceding Valuation Period; and 11 (c) is a factor for the Valuation Period representing the charge for mortality and expense risks we assume and for administrative expenses deducted from the Investment Subdivision. The annual rate for these charges is shown on the policy data pages. Transfers Before Income Payments Begin You may transfer amounts among the Investment Options by sending a request to us at our Home Office. Transfers involving the Guarantee Account, if available, are subject to limitations defined in the Guarantee Account rider. Transfer requests must be in writing or in any form acceptable to us. Transfers will be made without a transfer charge; however, we reserve the right to impose a transfer charge. The amount of any transfer charge, if applicable, is provided on the policy data pages. When we perform transfers, the Account Value on the date of the transfer will not be affected by the transfer except to the extent of any transfer charge. Any transfer charge will be taken from the amount transferred. We reserve the right to limit, upon written notice, the number of transfers each calendar year to twelve or, if it is necessary for the Policy to continue to be treated as an annuity policy by the IRS, a lower number. Also, we reserve the right to refuse to execute any transfer: (1) if any of the Investment Subdivisions that would be affected by the transfer is unable to purchase or redeem shares of the Fund in which the Investment Subdivision invests; or (2) if the transfer is a result of more than one trade involving the same Investment Subdivision within a 30 day period; or (3) if the transfer would adversely affect accumulation unit values (which may occur if the transfer would affect one percent or more of the relevant Fund's total assets). Transfers will be effective as of the end of the Valuation Period during which we receive your request at our Home Office. If the amount of your Account Value remaining in an Investment Option after the transfer is less than the minimum balance stated on the policy data pages, we will transfer the remaining balance in addition to the amount requested for transfer. We will not allow a transfer into any Investment Option unless the Account Value of that Investment Option after the transfer is at least equal to the amount stated on the policy data pages. Where permitted by law, we may accept your authorization of third party transfers on your behalf. We may restrict the Investment Subdivisions that will be available to you for transfers of Purchase Payments during any period in which you authorize such third party to act on your behalf. We will give you prior notice of any such restrictions. However, we will not enforce such restrictions if you provide us with satisfactory evidence that (1) such third party has been appointed by a court of competent jurisdiction to act on your behalf, or (2) such third party has been appointed by you to act on your behalf for all your financial affairs. Transfers After Variable Income Payments Begin If Variable Income Payments are being made, you may transfer Annuity Units among the Investment Subdivisions of the Separate Account by sending a request to us at our Home Office. This request must be in writing or in any form acceptable to us. You may make one transfer in each calendar year. We reserve the right to limit the number of transfers if necessary for the Policy to continue to be treated as an annuity policy by the IRS. Also, we reserve the right to refuse to execute any transfer if any of the Investment Subdivisions that would be affected by the transfer is unable to purchase or redeem shares of the Fund in which the Investment Subdivision invests. If the number of Annuity Units remaining in an Investment Subdivision after a transfer is less than 1, we will transfer the remaining balance in addition to the amount requested for transfer. We will not allow a transfer into any Investment Subdivision unless the number of Annuity Units of that Investment Subdivision after the transfer is at least 1. No transfer charge is imposed for transfers of Annuity Units. The amount of the income payment as of the date of the transfer will not be affected by the transfer. ACCOUNT VALUE BENEFITS - -------------------------------------------------------------------------------- On the date the initial Purchase Payment is received and accepted, the Account Value equals the initial Purchase Payment and the initial Enhanced Premium Amount. At the end of each Valuation Period after such date, the Account Value 12 allocated to each Investment Subdivision of the Separate Account is (a) plus (b) plus (c) minus (d) minus (e) minus (f), where: (a) is the Account Value allocated to the Investment Subdivision at the end of the preceding Valuation Period, multiplied by the Investment Subdivision's net investment factor for the current Valuation Period; (b) is Purchase Payments and the Enhanced Premium Amounts allocated to the Investment Subdivision during the current Valuation Period; (c) is any other amounts transferred out of the Investment Subdivision during the current Valuation Period; (d) is Account Value transferred out of the Investment Subdivision during the current Valuation Period; (e) is any surrender made from the Investment Subdivision during the current Valuation Period; and (f) is any premium tax deductions. Annual Policy Maintenance Charge There will be a charge made each year for maintenance of the Policy. This charge is made once for each policy year against the Account Value allocated to the Separate Account. The charge for a policy year will be deducted at the earlier of the next policy anniversary or the date the Policy is surrendered. The amount of this charge is shown on the policy data pages. We will waive this charge if the total Purchase Payments at the time the charge is due exceeds the amount shown on the policy data pages. Annual Death Benefit Charge There may be a charge made each year for the Death Benefit of the Policy. Any charge is made in arrears at the beginning of each policy year after the first, and at surrender, against the Account Value in the Separate Account. The maximum charge will be the rate shown on the policy data pages times the Account Value at the time of deduction. The actual charge will never be greater than the maximum annual charge. The charge at surrender will be a prorata portion of the annual charge. Surrender You can fully or partially surrender this Policy by sending a written request to our Home Office. We must receive the request before income payments begin. You may be required to pay a surrender charge and any applicable premium tax. (see Premium Tax). These charges will be deducted from the amount surrendered. Full Surrender. You must send us your Policy with your request for full surrender. The amount payable is the Surrender Value. The Surrender Value of this Policy is the Account Value on the date we receive your written request for surrender in our Home Office, less any surrender charge and applicable premium tax. See Deferred Premium TAx. Partial Surrender. You may make a partial surrender from the Account Value of this Policy at any time. The allowable partial surrender amount is subject to limitations as defined on the policy data pages. The amount payable will be the amount of the partial surrender, less any surrender charge and any applicable premium tax. See Deferred Premium Tax. You may tell us how to deduct the partial surrender from the Investment Options. If you do not, the partial surrender will be deducted first from each Investment Subdivision in the same proportion that the Policy's Account Value in that Investment Subdivision bears to the total Account Value in all Investment Subdivisions on the date we receive the request in our Home Office. If this amount of the partial surrender exceeds the Account Value in the Investment Subdivision(s), any remaining deductions will be made from the available Guarantee Account Investment Options. The amounts deducted from the Guarantee Account Investment Options will be taken on a first-in, first-out basis. "First-in, first-out" means the order in which Purchase Payments and transferred amounts were allocated to that Guarantee Account Investment Option. Deferred Premium Tax. If we paid a tax on a Purchase Payment and we did not previously deduct the tax, then we may deduct it at the time of surrender. See Premium Tax. 13 Surrender Charge All or part of the amount surrendered may be subject to a surrender charge. The surrender charge is a percentage of each Purchase Payment. The applicable percentage for each Purchase Payment is shown in the Table of Surrender Charges on the policy data pages. The number of years shown in the table represents the number of full and partially completed years since the Purchase Payment was received. Order of withdrawal. Amounts surrendered will be deducted first from any gain in the Policy. Surrender charges are not assessed on amounts surrendered which represent gain. For purposes of this section, "gain" is calculated as (a) plus (b) minus (c) minus (d), but not less than zero where: (a) is the Account Value on the date we receive your surrender request; (b) is the total of any partial surrenders previously taken; (c) is the total of Purchase Payments made; and (d) is the total of any gain previously surrendered. In addition to any gain, an amount equal to 10% of the total Purchase Payments made through the date of surrender can also be withdrawn during each policy year without a surrender charge (the "10% free withdrawal amount"). The 10% free withdrawal amount is not cumulative from policy year to policy year. Any amount surrendered in excess of (1) the gain on the date of surrender, plus (2) 10% of the total Purchase Payments, will be the amount subject to a surrender charge. For purposes of determining the applicable surrender charge, the amount subject to a surrender charge will be deducted from Purchase Payments on a first-in, first-out basis. Amounts surrendered which are not subject to surrender charge may be taken as a series of periodic payments instead of a lump sum. There will be no surrender charge if you choose one of the following Optional Payment Plans: o Plan 1; o Plan 2 for a period of 5 or more years; o Plan 5. Postponement of Payments We will usually pay any amounts payable as a result of full or partial surrenders within seven days after we receive a request in our Home Office. The request must be in writing or in a form satisfactory to us. We will usually pay any proceeds payable as a result of death within seven days after we receive due proof of death. Payment of any amount payable on surrender, partial surrender or death may be postponed whenever: o the New York Stock Exchange is closed other than customary weekend and holiday closings, or trading on the New York Stock Exchange is restricted as determined by the SEC; or o the SEC by order permits postponement for the protection of policyowners; or o an emergency exists, as determined by the SEC, as a result of which disposal of securities is not reasonably practical or it is not reasonably practical to determine the value of net assets of the Separate Account. We have the right to defer payment which is derived from any amount recently paid to us by check or draft, until we are satisfied the check or draft has been paid by the bank on which it is drawn. GENERAL INFORMATION - -------------------------------------------------------------------------------- Statement of Values At least once each year, we will send you a Policy statement. The statement will be mailed within 30 days of the statement date. The statement date will be on at least one of the following dates: March 31st, June 30th, September 30th and December 31st. The statement will show the Account Value, Purchase Payments made, number of Accumulation Units, accumulation unit values, and charges deducted during the statement period. Evidence of Death, Age, Sex or Survival We will require proof of death before we act on policy provisions relating to death of any person or persons. We may also require proof of the Age, sex, where appropriate, or survival of any person or persons before we act on any policy provision dependent upon Age, sex or survival. 14 Incontestability We will not contest this Policy. Misstatement of Age or Sex If the Annuitant's Age or sex, where appropriate, is misstated on the policy data page, any Policy benefits or proceeds, or the availability thereof, will be determined using the correct Age and sex. Premium Tax Premium tax rules vary by state and change from time to time. Some states assess a tax against us upon receipt of Purchase Payments and some states upon annuitization of proceeds. Tax assessed upon receipt of Purchase Payments: The premium tax rate shown on the policy data pages is the rate that was in effect in your state at Policy issue. To calculate any applicable premium tax in effect on the date we receive the Purchase Payment, multiply the Purchase Payment by the premium tax rate. This is the amount of any state and/or local premium tax charged to us for this Policy. We reserve the right to deduct any such tax either from your Purchase Payment(s) when received, or from proceeds later when paid. (Proceeds includes benefits from surrender, maturity and death.) Tax assessed upon annuitization of proceeds: Since some states assess a premium tax on proceeds used to purchase income payments, we reserve the right to deduct from such proceeds any premium tax paid by us. Because state premium tax rules change from time to time, the tax rate, if any, applicable to proceeds used to purchase income payments is now shown in your Policy. You may request notification of the amount of this tax before income payments begin. Nonparticipating This Policy is nonparticipating. No dividends are payable. Written Notice Any written notice to us should be sent to our Home Office. Please include the Policy number and the Annuitant's full name. Any notice we send you will be sent to the last known address on file with us. You should request an address change form if you move. OPTIONAL PAYMENT PLANS - -------------------------------------------------------------------------------- Death Benefit and Surrender Value proceeds will be paid in one lump sum, and Maturity Value will be paid as described in the Monthly Income Benefit section. Subject to the rules stated below, however, any part of the Death Benefit or Surrender Value proceeds can be left with us and paid under an Optional Payment Plan. If you choose to leave the proceeds with us and receive payments under an Optional Payment Plan, the proceeds less any applicable premium tax will be applied to calculate your income payment. During the Annuitant's life you (or the Designated Beneficiary at your death) can choose a plan. If a plan has not been chosen at the death of the Annuitant, the Designated Beneficiary can choose a plan if the Death Benefit is to be paid. There are several important Optional Payment Plan rules: o Our consent must be obtained prior to selecting an Optional Payment Plan if the Payee is not a natural person. o Payment made under an Optional Payment Plan at the death of the Owner, Joint Owner or Annuitant must conform with the rules in the Death Provisions section. o If you change a Beneficiary, your plan selection will no longer be in effect unless you request that it continue. o Any choice or change of a plan must be sent in writing to our Home Office. o The amount of each payment under a plan must be at least $100. 15 o Fixed income payments will begin on the date we receive proof of the Annuitant's death, on surrender, or on the Policy's Maturity Date. o Variable income payments will begin within seven days after the date payments would begin under the corresponding fixed option. o Payments under Plan 4 will begin at the end of the first interest period after the date proceeds are otherwise payable. Fixed Income Options Optional Payment Plans 1 through 5 are available as fixed income options. Any amount left with us under a fixed income option will be transferred to our General Account. Payments made will equal or exceed those required by the state where this Policy is delivered. Variable Income Options Optional Payment Plans 1 and 5 are available as variable income options. This means that income payments, after the first, will reflect the investment experience of the Investment Subdivisions of the Separate Account. Proceeds may be allocated to one or more Investment Subdivisions of the Separate Account. The first income payment is determined based upon the plan chosen and the amount of proceeds applied to the plan. The dollar amount of subsequent income payments is determined by means of Annuity Units. The number of Annuity Units will be determined at the time income payments begin and will remain fixed unless transferred (as described below). The number of Annuity Units for an Investment Subdivision is (a) divided by (b), where: (a) is the portion of the first income payment attributable to that Investment Subdivision; and (b) is the Annuity Unit value for that Investment Subdivision seven days before that income payment is due. After the first income payment, each subsequent income payment is a dollar amount equal to the sum of the income payment amounts for each Investment Subdivision. The income payment amount for an Investment Subdivision is the number of Annuity Units for that Investment Subdivision times the Annuity Unit value for that Investment Subdivision seven days before the payment is due. Annuity Unit Value: The Annuity Unit value of each Investment Subdivision for any Valuation Period is equal to (a) multiplied by (b) divided by (c) where: (a) is the net investment factor for the Valuation Period for which the Annuity Unit value is being calculated; (b) is the Annuity Unit value for the preceding Valuation Period; and (c) is a daily Assumed Interest Rate factor adjusted for the number of days in the Valuation Period. The Assumed Interest Rate factor is equal to one plus the Assumed Interest Rate. The Assumed Interest Rate is the interest rate used to calculate the initial variable payment. Plan 1 and Plan 5 tables shown under the Payment Plans section use an Assumed Interest Rate of 3%. Annuity Units may be transferred upon request. The number of Annuity Units for the new Investment Subdivision is (a) times (b), divided by (c), where: (a) is the number of Annuity Units for the current Investment Subdivision; (b) is the value of the Annuity Unit for the current Investment Subdivision; and (c) is the value of the Annuity Unit for the new Investment Subdivision. Payment Plans The fixed income options are shown below. Variable income options, with an Assumed Interest Rate of 3%, have the same monthly payment rate per $1000 as the fixed income options shown in the Plan 1 and Plan 5 Tables. The monthly payment rate is based on the 1983 Table `a', using 3% interest. Other plans may be available upon request. Plan 1. Life Income with Period Certain. We will make monthly payments for a guaranteed minimum period. If the Payee lives longer than the minimum period, payments will continue for his or her life. The minimum period can be 10, 15 or 20 years. Payments will be according to the table below. 16 Guaranteed amounts payable under this plan will earn interest at 3% compounded yearly. We may increase the interest rate and the amount of any payment. If the Payee dies before the end of the guaranteed period, the amount of remaining payments for the minimum period will be discounted at the same rate used in calculating income payments. Discounted means we will deduct the amount of interest each remaining payment would have earned had it not been paid out early. The discounted amounts will be paid in one sum to the Payee's estate unless otherwise provided.
Plan 1 Table Monthly payment rates for each $1,000 of proceeds under Plan 1. - ---------------------------------------------------------------------------------------------------------------------------------- Settlement Male Payee Female Payee Settlement Male Payee Female Payee ---------------------------- ------------------------ -------------------------- -------------------------- Age 10 Years 15 Years 20 Years 10 Years 15 Years 20 Years Age 10 Years 15 Years 20 Years 10 Years 15 Years 20 Years Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain Certain - ---------------------------------------------------------------------------------------------------------------------------------- 20 $2.90 $2.90 $2.89 $2.81 $2.81 $2.81 65 $5.51 $5.22 $4.86 $4.91 $4.77 $4.58 25 3.00 2.99 2.99 2.88 2.88 2.88 66 5.66 5.33 4.92 5.03 4.88 4.65 30 3.11 3.11 3.10 2.97 2.97 2.97 67 5.81 5.43 4.99 5.17 4.99 4.73 35 3.26 3.25 3.24 3.09 3.08 3.08 68 5.97 5.54 5.05 5.31 5.10 4.80 40 3.45 3.43 3.41 3.23 3.23 3.22 69 6.13 5.65 5.10 5.46 5.21 4.88 45 3.68 3.66 3.62 3.42 3.41 3.39 70 6.30 5.75 5.16 5.62 5.33 4.95 50 3.98 3.94 3.88 3.65 3.64 3.61 71 6.48 5.85 5.21 5.79 5.45 5.02 51 4.05 4.00 3.93 3.71 3.69 3.66 72 6.66 5.95 5.25 5.97 5.57 5.08 52 4.12 4.07 3.99 3.77 3.74 3.71 73 6.84 6.05 5.29 6.15 5.69 5.14 53 4.20 4.14 4.05 3.83 3.80 3.76 74 7.02 6.14 5.33 6.34 5.81 5.20 54 4.28 4.21 4.11 3.89 3.86 3.82 75 7.20 6.23 5.36 6.54 5.92 5.25 55 4.36 4.29 4.18 3.96 3.93 3.88 76 7.39 6.31 5.39 6.74 6.03 5.29 56 4.45 4.37 4.24 4.03 3.99 3.94 77 7.57 6.39 5.41 6.95 6.13 5.33 57 4.55 4.45 4.31 4.11 4.07 4.00 78 7.75 6.46 5.43 7.15 6.23 5.36 58 4.65 4.53 4.38 4.19 4.14 4.07 79 7.93 6.52 5.45 7.36 6.32 5.39 59 4.75 4.62 4.45 4.28 4.22 4.13 80 8.09 6.58 5.47 7.57 6.41 5.42 60 4.86 4.72 4.52 4.37 4.30 4.20 81 8.26 6.63 5.48 7.78 6.48 5.44 61 4.98 4.81 4.59 4.46 4.39 4.27 82 8.41 6.67 5.49 7.97 6.55 5.46 62 5.10 4.91 4.65 4.56 4.48 4.35 83 8.56 6.71 5.49 8.16 6.60 5.47 63 5.23 5.01 4.72 4.67 4.57 4.42 84 8.69 6.74 5.50 8.34 6.65 5.48 64 5.37 5.11 4.79 4.79 4.67 4.50 85&over 8.81 6.77 5.50 8.50 6.70 5.49 - ----------------------------------------------------------------------------------------------------------------------------------
Values for ages not shown will be furnished upon request. Plan 2. Income for a Fixed Period. We will make periodic payments for a fixed period, not longer than 30 years. Payments can be annual, semi-annual, quarterly or monthly. Payments will be made according to the table below. Guaranteed amounts payable under this plan will earn interest at 3% compounded yearly. We may increase the interest and the amount of any payment. If the Payee dies, the amount of the remaining guaranteed payments will be discounted to the date of the Payee's death at the same rate used in calculating income payments. The discounted amount will be paid in one sum to the Payee's estate unless otherwise provided.
Plan 2 Table Monthly payment rates for each $1,000 of proceeds under Plan 2. - ------------------------------------------------------------------------------------------------------------------------------------ Years Payable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 - ------------------------------------------------------------------------------------------------------------------------------------ Monthly Payment $84.47 $42.86 $28.99 $22.06 $17.91 $15.14 $13.16 $11.68 $10.53 $9.61 $8.86 $8.24 $7.71 $7.26 $6.87 ==================================================================================================================================== Years Payable 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 - ------------------------------------------------------------------------------------------------------------------------------------ Monthly Payment $6.53 $6.23 $5.96 $5.73 $5.51 $5.32 $5.15 $4.99 $4.84 $4.71 $4.59 $4.47 $4.37 $4.27 $4.18 - ------------------------------------------------------------------------------------------------------------------------------------
Annual, semi-annual or quarterly payments are determined by multiplying the monthly payment by 11.838, 5.963 or 2.992, respectively. Plan 3. Income of a Definite Amount. We will make periodic payments of a definite amount. Payments can be annual, semi-annual, quarterly or monthly. The amount paid each year must be at least $120 for each $1,000 of proceeds. Payments will continue until the proceeds are exhausted. The last payment will equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at 17 3% compounded yearly. We may increase the interest rate. If we do, the payment period will be extended. If the Payee dies, the amount of the remaining proceeds with earned interest will be paid in one sum to his or her estate unless otherwise provided. Plan 4. Interest Income. We will make periodic payments of interest earned from the proceeds left with us. Payments can be annual, semi-annual, quarterly or monthly, and will begin at the end of the first period chosen. Proceeds left under this plan will earn interest at 3% compounded yearly. We may increase the interest rate and the amount of any payment. If the Payee dies, the amount of remaining proceeds and any earned but unpaid interest will be paid in one sum to his or her estate unless otherwise provided. Plan 5. Joint Life and Survivor Income. We will make monthly payments to two Payees for a guaranteed minimum of 10 years. Each Payee must be at least 35 years old when payments begin. The guaranteed amount payable under this plan will earn interest at 3% compounded yearly. We may increase the interest 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, the amount of the remaining payments for the 10 year period will be discounted at the same rate used in calculating the monthly income. The discounted amount will be paid in one sum to the survivor's estate unless otherwise provided.
Plan 5 Table Monthly payment rates for each $1000 of proceeds under Plan 5. - ------------------------------------------------------------------------------------------------------ Male Settlement Female Settlement Age --------------------------------------------------------------------------------------- Age 35 40 45 50 55 60 65 70 75 80 85&over - ------------------------------------------------------------------------------------------------------ 35 $2.95 $3.02 $3.07 $3.12 $3.16 $3.19 $3.21 $3.23 $3.24 $3.25 $3.26 40 2.99 3.07 3.15 3.22 3.28 3.33 3.37 3.40 3.42 3.43 3.44 45 3.02 3.11 3.21 3.31 3.41 3.49 3.55 3.60 3.64 3.66 3.68 50 3.04 3.15 3.27 3.40 3.53 3.65 3.76 3.84 3.90 3.94 3.97 55 3.05 3.18 3.32 3.48 3.65 3.82 3.98 4.12 4.22 4.29 4.33 60 3.07 3.20 3.35 3.54 3.75 3.97 4.21 4.42 4.60 4.73 4.80 65 3.07 3.21 3.38 3.58 3.82 4.11 4.42 4.74 5.03 5.25 5.39 70 3.08 3.22 3.39 3.61 3.88 4.21 4.60 5.04 5.47 5.84 6.09 75 3.08 3.22 3.40 3.63 3.92 4.28 4.74 5.28 5.87 6.42 6.82 80 3.09 3.23 3.41 3.64 3.94 4.33 4.82 5.45 6.18 6.91 7.50 85&over 3.09 3.23 3.41 3.65 3.95 4.35 4.87 5.55 6.37 7.26 8.00 - ------------------------------------------------------------------------------------------------------
Figures for intermediate ages, for two males or two females will be furnished upon request. Settlement Age: The settlement age is the Payee's age last birthday on the date payments begin, minus an age adjustment from the table below. The age adjustment cannot exceed the age of the Payee. --------------------------------------------------------------------- Year Payments Begin Age After Prior To Adjustment --------------------------------------------------------------------- ---- 2001 0 2000 2026 3 2025 2051 7 2050 ---- 10 --------------------------------------------------------------------- 18 EX-4 4 EXHIBIT 4(B)(VII) THE LIFE INSURANCE COMPANY OF VIRGINIA OPTIONAL DEATH BENEFIT RIDER This rider provides for an Optional Death Benefit which is coordinated with the Optional Death Benefit at Death of Annuitant provision in the policy. While this Rider is in effect, the amount payable at the death of the Annuitant will be the greater of: o The Death Benefit provided for under the Death Provisions section in the policy; or o The minimum death benefit described below. Minimum Death Benefit During the first policy year, the minimum death benefit is the total premiums paid, less adjustments for any partial surrenders. After the first policy year and until the policy anniversary that the Annuitant reaches age 81, the minimum death benefit is the policy's greatest Death Benefit on any previous policy anniversary, plus the total premiums paid since then, less adjustments for any partial surrenders since that date. Beginning on the policy anniversary that the Annuitant reaches age 81, the minimum death benefit is the policy's minimum Death Benefit on the policy anniversary that the annuitant reaches age 80, plus the total premiums paid since then, less adjustments for any partial surrenders since that date. Annual Death Benefit Charge This provision is added to the Account Value Benefits section of the policy. There will be a charge made for this rider for each period it is in effect. This charge is made in arrears at the beginning of each policy year after the first, and at surrender, against the Account Value in the Separate Account. The Maximum Charge will be the rate shown on page 3 times the Account Value at the time of deduction. The actual charge will never be greater than the Maximum Annual Charge. The charge at surrender will be a pro rata portion of the annual charge. If the Guarantee Account applies and if the account value in the Separate Account is insufficient to cover the Annual Death Benefit Charge, then the deduction will be made first from the account value in the Separate Account. The excess of the charges over the account value in the Separate Account will then be deducted from the account value in the Guarantee Account. Deductions from the Guarantee Account will be taken from the amounts which have been in the Guarantee Account for the longest period of time. When this Rider is Effective This rider becomes effective on the policy date unless another effective date is shown on the policy data pages. It will remain in effect while this policy is in force and before income payments begin, or until the policy anniversary following the date of receipt of your request to terminate the rider. If your request is received within 30 days of any policy anniversary, you may request that the rider terminate as of that anniversary. For The Life Insurance Company of Virginia, /s/ Paul E. Rutledge III -------------------------------- President EX-9 5 EXHIBIT 9 Exhibit 9 Opinion and Consent of Counsel January 22, 1999 GE Life and Annuity Assurance Company 6610 West Broad Street Richmond, VA 23230 Gentlemen: With reference to Pre-Effective Amendment No. 2 to Form N-4 (File Number 333-62696) filed by GE Life and Annuity Assurance Company and GE Life & Annuity Separate Account 4 with the Securities and Exchange Commission covering flexible premium variable deferred annuity policies, I have examined such documents and such law as I considered necessary and appropriate, and on the basis of such examination, it is my opinion that: 1. GE Life and Annuity Assurance Company is duly organized and validly existing under the laws of the Commonwealth of Virginia and has been duly authorized to issue individual flexible premium variable deferred annuity policies by the Bureau of Insurance of the State Corporation Commission of the Commonwealth of Virginia. 2. GE Life & Annuity Separate Account 4 is a duly authorized and existing separate account established pursuant to the provisions of Section 38.2-3113 of the Code of Virginia. 3. The flexible premium variable deferred annuity policies, when issued as contemplated by said Form N-4 Registration Statement, will constitute legal, validly issued and binding obligations of GE Life and Annuity Assurance Company. I hereby consent to the use of this letter, or copy thereof, as an exhibit to Pre-Effective Effective Amendment No. 2 to the Registration Statement on Form N-4 (File Number 333-62695) and the reference to me under the caption "Legal Matters" in the Statement of Additional Information contained in said Pre-Effective Amendment. Sincerely, /s/PATRICIA L. DYSART - ---------------------- Patricia L. Dysart Assistant Vice President and Associate General Counsel Law Department EX-10 6 EXHIBIT 10(A) [Sutherland Asbill & Brennan LLP Letterhead] STEPHEN E. ROTH DIRECT LINE: (202) 383-0158 Internet: sroth@sablaw.com January 22, 1998 The Life Insurance Company of Virginia 6610 West Broad Street Richmond, VA 23230 Re GE Life & Annuity Separate Account 4 Gentlemen: We hereby consent to the reference to our name under the caption "Legal Matters" in the Statement of Additional Information filed as part of the Pre-Effective Amendment No. 2 to the Registration Statement on Form N-4 filed by GE Life & Annuity Separate Account 4 for certain variable annuity policies (File No. 333-62695). In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933. Very truly yours, SUTHERLAND, ASBILL & BRENNAN LLP By: /s/ Stephen E. Roth -------------------------------- Stephen E. Roth EX-10 7 EXHIBIT 10(B) Consent of Ernst & Young LLP, Independent Auditors We consent to the reference to our firm under the caption "Experts" and "Change in Auditors" and to the use of our reports dated February 8, 1996, with respect to the consolidated financial statements and the related financial statement schedules of GE Life and Annuity Assurance Company (formerly The Life Insurance Company of Virginia and subsidiaries) and GE Life & Annuity Separate Account 4 (formerly Life of Virginia Separate Account 4), in the Pre-Effective Amendment No. 2 to the Registration Statement (Form N-4 No. 333-62695) and related Statement of Additional Information of GE Life & Annuity Separate Account 4 for the registration of an indefinite amount of securities. /s/ Ernst & Young LLP Richmond, Virginia January 22, 1999 Independent Auditors' Consent The Board of Directors GE Life and Annuity Assurance Company (formerly The Life Insurance Company of Virginia) GE Life & Annuity Separate Account 4 (formerly Life of Virginia Separate Account 4): We consent to the use of our reports included herein and to the reference to our firm under the heading "Experts" in the Statement of Additional Information. Our report dated January 6, 1998 contains an explanatory paragraph that states that effective April 1, 1996, General Electric Capital Corporation acquired all of the outstanding stock of The Life Insurance Company of Virginia in a business combination accounted for as a purchase. As a result of the acquisition, the consolidated financial information for the periods after acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable. /s/ KPMG LLP Richmond, VA January 22, 1999 -----END PRIVACY-ENHANCED MESSAGE-----