UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the reduced disclosure
format.



         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934


                       Commission file number: 333-52806


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


         ARIZONA                                                35-1113325
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


                                3100 SANDERS ROAD
                           NORTHBROOK, ILLINOIS 60062
                              Attn: Anthony Poole
               (Address of Principal executive offices)(Zip Code)

                                  847/402-5000
              (Registrant's telephone number, including area code)

       Securities registered pursuant to Section 12(b) of the Act: None
       Securities registered pursuant to Section 12(g) of the Act: None

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                Yes      X                   No
                        ---                        ---

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     As of March 29, 2001, there were 5,000 shares of common capital stock
outstanding, par value $500 per share, all of which shares are held by Allstate
Life Insurance Company.




<PAGE>


                           TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----
                                     PART I

Item 1.     Business*.......................................................2
Item 2.     Properties*.....................................................3
Item 3.     Legal Proceedings...............................................3
Item 4.     Submission of Matters to a Vote of Security Holders*........... N/A

                                     PART II

Item 5.     Market for Registrant's Common Equity and
            Related Stockholder Matters.....................................3
Item 6.     Selected Financial Data**...................................... N/A
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations.......................................3
Item 7A.    Quantitative and Qualitative Disclosures About
            Market Risk.....................................................8
Item 8.     Financial Statements and Supplementary Data.....................8
Item 9.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure............................................8

                                    PART III

Item 10.    Directors and Executive Officers of the Registrant*............ N/A
Item 11.    Executive Compensation**........................................N/A
Item 12.    Security Ownership of Certain Beneficial Owners and
            Management**....................................................N/A
Item 13.    Certain Relationships and Related Transactions**................N/A

                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K.............................................9

Signatures..................................................................10
Index to Financial Statement Schedules......................................11

* Item prepared in accordance with General Instruction I(2) of Form 10-K.
**Omitted pursuant to General Instruction I(2) of Form 10-K.







<PAGE>



                                 PART I

Item 1.  Business

     Glenbrook Life and Annuity Company (hereinafter "Glenbrook Life" or the
"Company"), is a stock life insurance company which was organized under the laws
of the State of Illinois in 1992 and redomesticated to Arizona in December,
1998. The Company was originally organized under the laws of the State of
Indiana in 1965. From 1965 to 1983 the Comany was known as "United Standard Life
Assurance Company" and from 1983 to 1992 the Company was known as "William Penn
Life Assurance Company of America."

     Glenbrook Life is a wholly owned subsidiary of Allstate Life Insurance
Company ("ALIC"), a stock life insurance company incorporated under the laws of
Illinois. Allstate Life is a wholly owned subsidiary of Allstate Insurance
Company ("AIC"), a stock property-liability insurance company incorporated under
the laws of Illinois. All of the outstanding capital stock of AIC is owned by
The Allstate Corporation ("Corporation"), a Delaware company which has several
different classes of securities, including common stock, registered with the
Securities and Exchange Commission.

     Glenbrook Life, a single segment entity, markets life insurance and
investment products through registered broker-dealers that have relationships
with banks or other financial institutions, or by employees of such banks.
Glenbrook Life currently offers interest-sensitive life and single premium
variable life insurance. Glenbrook Life's annuity products include single
premium fixed annuities, flexible premium variable annuities, and flexible
premium market value adjusted annuities. ALFS, Inc. ("ALFS") is the principal
underwriter for the Glenbrook Life investment products, such as variable life
insurance, variable annuities and market value adjusted annuities. ALFS is a
wholly owned subsidiary of ALIC and is a registered broker-dealer under the
Securities Exchange Act of 1934.

     Glenbrook Life and ALIC entered into reinsurance agreements, effective June
5, 1992, under which Glenbrook Life reinsures substantially all of its business
with ALIC. Under the agreements, purchase payments under substantially all
general account contracts are transferred to ALIC and become invested with the
assets of ALIC, and ALIC is bound to stand behind the Company's contractual
obligations to its policyholders. However, the obligations of ALIC under the
reinsurance agreements are to the Company. In addition, assets of the Company
that relate to insurance in-force excluding Separate Account assets are
transferred to ALIC. Therefore, the funds necessary to support the operations of
the Company are provided by ALIC and the Company is not required to obtain
additional capital to support in-force or future business.

     Under the Company's reinsurance agreements with ALIC, the Company reinsures
substantially all reserve liabilities with ALIC except for variable contracts.
The Company's variable contract assets and liabilities are held in
legally-segregated, unitized Separate Accounts and are retained by the Company.
However, the transactions related to such variable contracts such as premiums,
expenses and benefits are transferred to ALIC.

     The assets and liabilities of the variable annuity and variable life
contracts are held in legally-segregated, unitized Separate Accounts and
retained by the Company. Contract charge revenue is reinsured to ALIC and
consists of charges assessed against the account values of the Separate
Accounts.

     Glenbrook Life's and ALIC's general account assets must be invested in
accordance with applicable state laws. These laws govern the nature and quality
of investments that may be made by life insurance companies and the percentage
of their assets that may be committed to any particular type of investment.

                                       2

<PAGE>



     Glenbrook Life is engaged in a business that is highly competitive  because
of the large  number of stock and  mutual  life  insurance  companies  and other
entities competing in the sale of insurance and annuities.  As of December 1999,
the  last  year  for  which  current   information  is  available,   there  were
approximately 1,400 stock, mutual and other types of insurers in business in the
United States.  Several  independent  rating  agencies  regularly  evaluate life
insurer's claims paying ability,  quality of investments and overall  stability.
A.M. Best Company assigns A+(Superior) to ALIC which automatically reinsures all
net business of Glenbrook  Life.  A.M. Best Company also assigns  Glenbrook Life
the rating of A+(r) because Glenbrook Life automatically  reinsures all business
with ALIC. Standard & Poor's Insurance Rating Services assigns AA+(Excellent) to
the Company's claims-paying ability and Moody's Investors Service assigns an Aa2
(excellent) financial strength rating to the Company.  Glenbrook Life shares the
same ratings of its parent, ALIC.

     Although the federal  government  generally does not directly  regulate the
business of insurance,  federal initiatives often have an impact on the business
in a variety of ways.  Current and  proposed  measures  which may  significantly
affect the  Company's  insurance  business  relate to the  taxation of insurance
companies,  the tax treatment of insurance  products and the removal of barriers
preventing banks from engaging in the insurance business.

     Glenbrook Life is registered  with the  Securities and Exchange  Commission
("SEC") as an issuer of  registered  products.  The SEC also  regulates  certain
Glenbrook  Life  Separate  Accounts  which issue  variable  life  contracts  or,
together with the Company, issue variable annuity contracts.

Item 2.  Properties

     Glenbrook  Life  occupies  office  space  provided by AIC,  in  Northbrook,
Illinois.  Expenses  associated  with these  offices are  allocated to Glenbrook
Life.

Item 3.  Legal Proceeding

     The  Company  and  its  Board  of  Directors  know  of  no  material  legal
proceedings  pending to which the Company is a party or which  would  materially
affect the Company. The Company is involved in pending and threatened litigation
in the normal  course of its business in which  claims for monetary  damages are
asserted. Management, after consultation with legal counsel, does not anticipate
the ultimate  liability  arising from such pending or  threatened  litigation to
have a material effect on the position or results of operations of the Company.

                                 PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

     All of the  Company's  outstanding  shares are owned by its  parent,  ALIC.
ALIC's outstanding shares are owned by AIC. All of the outstanding shares of AIC
are owned by The Corporation.


Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations


                       GLENBROOK LIFE AND ANNUITY COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     THE FOLLOWING DISCUSSION HIGHLIGHTS SIGNIFICANT FACTORS INFLUENCING RESULTS
OF OPERATIONS AND CHANGES IN FINANCIAL POSITION OF GLENBROOK LIFE AND ANNUITY
COMPANY (THE "COMPANY"). IT SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES.

OVERVIEW

     The Company, a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"), markets investment and life products through banks and
securities firms. Investment products include deferred annuities and immediate
annuities without life contingencies. Deferred annuities include fixed rate,
market value adjusted, indexed and variable annuities. Life insurance consists
of interest-sensitive life and variable life insurance.

     The Company has identified itself as a single segment entity.

     The assets and liabilities related to variable annuity and variable life
contracts are legally segregated and reflected as Separate Accounts. The assets
of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claim to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.

                                       3
<PAGE>
     Investment  income and  realized  capital  gains and losses of the Separate
Accounts accrue directly to the contractholders and therefore,  are not included
in the Company's statements of operations and comprehensive income.

RESULTS OF OPERATIONS

($ in thousands)

<TABLE>
<CAPTION>
                                         2000          1999          1998
                                         ----          ----          ----
<S>                                   <C>           <C>           <C>
Net investment income                 $  10,808     $   6,579     $   6,231
Realized capital gains and losses           419           312            (5)
Income tax expense                        3,925         2,382         2,182
                                      ---------     ---------     ---------

Net income                            $   7,302     $   4,509     $   4,044
                                      =========     =========     =========
</TABLE>

     The Company has a reinsurance agreement under which all contract and policy
related transactions are transferred to ALIC. The Company's results of
operations include only net investment income and realized capital gains and
losses earned on the assets of the Company that are not transferred under the
reinsurance agreements.

     Net income increased $2.8 million to $7.3 million in 2000 and increased
$465 thousand to $4.5 million in 1999 from $4.0 million in 1998 due to increases
in net investment income and realized capital gains. Net investment income
increased 64.3% to $10.8 million in 2000. The increase resulted from the
investment of the $49.6 million capital contribution in late 1999 and was
partially offset by lower investment yields. In 1999, pretax net investment
income increased 5.6% to $6.6 million as additional investment income was earned
on higher investment balances, partially offset by lower investment yields.
Investments, excluding Separate Accounts and unrealized gains and losses on
fixed income securities, decreased 2.9% in 2000 and increased 60.0% in 1999,
respectively. The Company expects to experience lower investment yields due, in
part, to the reinvestment of proceeds from calls and maturities and the
investment of positive cash flows from operations in securities yielding less
than the average portfolio rate. Realized capital gains, after-tax, were $272
thousand and $203 thousand in 2000 and 1999, respectively. In 2000, realized
capital gains resulted from the sale of fixed income securities. Year to year
fluctuations in realized capital gains and losses are largely the result of the
timing of sales decisions reflecting management's view of individual securities
and overall market conditions.

FINANCIAL POSITION

($ in thousands)

<TABLE>
<CAPTION>
                                                 2000             1999
                                             ------------     ------------
<S>                                          <C>              <C>
Fixed income securities (1)                  $    144,127     $     92,937
Short-term                                          3,085           53,063
                                             ------------     ------------
      Total investments                      $    147,212     $    146,000
                                             ============     ============
Reinsurance recoverable from ALIC            $  4,702,940     $  4,144,165
                                             ============     ============
Separate Accounts assets and liabilities     $  1,740,328     $  1,541,756
                                             ============     ============
Contractholder funds                         $  4,696,846     $  4,143,365
                                             ============     ============
</TABLE>

(1)   Fixed income securities are carried at fair value. Amortized cost for
      these securities was $139,819 and $94,173 at December 31, 2000 and 1999,
      respectively.

     Total investments increased $1.2 million from December 31, 1999 to $147.2
million at December 31, 2000. The increase was primarily due to unrealized gains
on fixed income securities.

FIXED INCOME SECURITIES

     The Company's fixed income securities portfolio consists of publicly traded
corporate bonds, U.S. government bonds, mortgage-backed securities and municipal
bonds. The Company generally holds its fixed income securities to maturity, but
has classified all of these securities as available for sale to allow maximum
flexibility in portfolio management. At December 31, 2000, unrealized net
capital gains on the fixed income securities portfolio totaled $4.3 million
compared to unrealized net capital losses of $1.2 million at December 31, 1999.
The change in the unrealized position is primarily attributable to a decrease in
interest rates. In addition, the capital

                                       4
<PAGE>
contribution of $49.6 million in December 1999 from ALIC was invested in the
fixed income securities portfolio in 2000.

     At December 31, 2000, substantially all of the Company's fixed income
securities portfolio was rated investment grade, which is defined by the Company
as a security having a National Association of Insurance Commissioners ("NAIC")
rating of 1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company
internal rating. The quality mix of the Company's fixed income securities
portfolio at December 31, 2000 is presented in the following table.

($ in thousands)

<TABLE>
<CAPTION>
   NAIC
  RATINGS     MOODY'S EQUIVALENT DESCRIPTION     FAIR VALUE     PERCENT TO TOTAL
  -------     ------------------------------     ----------     ----------------
<S>           <C>                                <C>            <C>
     1        Aaa/Aa/A                           $  118,698          82.4%
     2        Baa                                    24,805          17.2
     5        Caa and lower                             624           0.4
                                                 ----------         -----
                                                 $  144,127         100.0%
                                                 ==========         =====
</TABLE>
     At December 31, 2000 and 1999, $43.7 million and $18.6 million,
respectively, of the fixed income securities portfolio was invested in
mortgage-backed securities ("MBS"). The MBS portfolio consists primarily of
securities which were issued by or have underlying collateral that is guaranteed
by U.S. government agencies or sponsored entities, thus minimizing credit risk.

     The MBS portfolio is subject to interest rate risk since the price
volatility and ultimate realized yield are affected by the rate of repayment of
the underlying mortgages. The Company attempts to limit interest rate risk on
these securities by investing a portion of the portfolio in securities that
provide prepayment protection. At December 31, 2000, over 16.1% of the MBS
portfolio was invested in planned amortization class bonds.

     The Company closely monitors its fixed income securities portfolio for
declines in value that are other than temporary. Securities are placed on
non-accrual status when they are in default or when the receipt of interest
payments is in doubt.

SHORT-TERM INVESTMENTS

     The Company's short-term investment portfolio was $3.1 million and $53.1
million at December 31, 2000 and 1999, respectively. The significant decrease is
primarily due to a $49.6 million capital contribution from ALIC in December
1999, which was subsequently invested in the fixed income securities portfolio
in 2000. The Company invests available cash balances primarily in taxable
short-term securities having a final maturity date or redemption date of one
year or less.

CONTRACTHOLDER FUNDS AND REINSURANCE RECOVERABLE FROM ALIC

     During 2000, contractholder funds and amounts recoverable from ALIC under
the reinsurance agreement increased $553.5 million and $558.8 million,
respectively. The increases resulted primarily from sales of the Company's fixed
rate annuity contracts partially offset by fixed annuity surrenders and
withdrawals. Reinsurance recoverable from ALIC relates to contract benefit
obligations ceded to ALIC.

SEPARATE ACCOUNTS

     Separate Accounts assets and liabilities increased 12.9% to $1.74 billion
in 2000. The increases were primarily attributable to increased sales of
variable annuity contracts and transfers from the fixed account, which were
partially offset by unrealized losses in the Separate Accounts investment
portfolios and by surrenders and withdrawals.

MARKET RISK

     Market risk is the risk that the Company will incur losses due to adverse
changes in equity prices or interest rates. The Company's primary market risk
exposure is to changes in interest rates, although the Company also has certain
exposures to changes in equity prices.

CORPORATE OVERSIGHT

     The Company, administers and oversees investment risk management processes
primarily through its Board of Directors and the Credit and Risk Management
Committee ("CRMC"). The Board of Directors provide executive oversight of
investment activities. The CRMC is a senior management committee consisting of
the Chief Investment Officer, the Investment Risk Manager, and other investment
officers who are responsible for the day-to-day management of investment risk.
The CRMC meets at least monthly to provide detailed oversight of investment
risk, including market risk.

                                       5
<PAGE>
     The Company has investment guidelines that define the overall framework for
managing market and other investment risks, including the accountabilities and
controls over these activities. In addition, the Company has specific Board of
Directors-approved investment policies that delineate the investment limits and
strategies that are appropriate given the liquidity, surplus, product and
regulatory requirements.

     The day-to-day management of market risk within defined tolerance ranges
occurs as portfolio managers buy and sell within their respective markets based
upon the acceptable boundaries established by the investment guidelines and
investment policies. The Company has implemented a comprehensive daily
measurement process, administered by the Investment Risk Manager, for monitoring
compliance to limits established by these governance documents.

INTEREST RATE RISK

     Interest rate risk is the risk that the Company will incur economic losses
due to adverse changes in interest rates, as the Company invests substantial
funds in interest-sensitive assets. One of the measures used to quantify this
exposure is duration. Duration measures the sensitivity of the fair value of
assets to changes in interest rates. For example, if interest rates increase 1%,
the fair value of an asset with a duration of 5 is expected to decrease in value
by approximately 5%. At December 31, 2000, the Company's asset duration was
approximately 4.2 versus 4.9 at December 31, 1999.

     To calculate duration, the reinsurer projects asset cash flows, and
discounts them to a net present value basis using a risk-free market rate
adjusted for credit quality, sector attributes, liquidity and other specific
risks. Duration is calculated by revaluing these cash flows at an alternative
level of interest rates, and determining the percentage change in fair value
from the base case. The projections include assumptions (based upon historical
market experience and Company specific experience) reflecting the impact of
changing interest rates on the prepayment and/or option features of instruments,
where applicable. Such assumptions relate primarily to mortgage-backed
securities, collateralized mortgage obligations, and municipal and corporate
obligations.

     Based upon the information and assumptions the Company uses in its duration
calculation and interest rates in effect at December 31, 2000, management
estimates that a 100 basis point immediate, parallel increase in interest rates
("rate shock") would decrease the net fair value of its assets identified above
by approximately $6.0 million, versus $4.5 million at December 31, 1999. The
selection of a 100 basis point immediate parallel increase in interest rates
should not be construed as a prediction by the Company's management of future
market events, but only as an illustration of the potential impact of such an
event.

     To the extent that actual results differ from the assumptions utilized, the
Company's duration and rate shock measures could be significantly impacted.
Additionally, the Company's calculation assumes that the current relationship
between short-term and long-term interest rates (the term structure of interest
rates) will remain constant over time. As a result, these calculations may not
fully capture the impact of non-parallel changes in the term structure of
interest rates and/or large changes in interest rates.

EQUITY PRICE RISK

     Equity price risk is the risk that the Company will incur economic losses
due to adverse changes in a particular stock, stock fund or stock index. At
December 31, 2000 the Company had Separate Accounts assets totaling $1.74
billion. This is an increase over the $1.54 billion of Separate Accounts assets
at December 31, 1999. The Company earns mortality and expense fees as a
percentage of the account value in the Separate Accounts. In the event of an
immediate decline of 10% in the account values due to equity market declines,
the Company would earn approximately $2.2 million less in annualized fee income
which would be ceded to ALIC. This is an increase over the $1.8 million amount
determined at December 31, 1999. The contractholder of a variable annuity
product may elect to purchase a minimum death benefit guarantee or a minimum
income benefit guarantee, generally at the time of purchase. Both guarantees may
subject the Company to additional equity price risk, as the beneficiary or
contractholder may receive their benefit for an amount greater than the fund
balance under contractually defined circumstances and terms. The Company
recorded actuarially determined reserves as of December 31, 2000 for these
exposures and has ceded them to ALIC. The Company expects growth in its variable
annuity products in the future, stemming from both new sales as well as market
value appreciation, which will increase its exposure to equity price risk.

                                       6
<PAGE>

CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

     Under the terms of reinsurance agreements, substantially all premiums and
deposits, excluding those relating to Separate Accounts, are transferred to
ALIC, which maintains the investment portfolios supporting the Company's
products. Substantially all payments of policyholder claims, benefits, contract
maturities, contract surrenders and withdrawals and certain operating costs are
also reimbursed by ALIC, under the terms of the reinsurance agreements. The
Company continues to have primary liability as a direct insurer for risks
reinsured. The Company's ability to meet liquidity demands is dependent on
ALIC's ability to meet those demands. ALIC's claims-paying ability was rated
Aa2, AA+ and A+ by Moody's, Standard and Poor's and A.M. Best, respectively, at
December 31, 2000.

     The primary sources for the remainder of the Company's funds are collection
of  principal   and  interest   from  the   investment   portfolio  and  capital
contributions  from ALIC.  The primary uses for the  remainder of the  Company's
funds are to purchase  investments and pay costs associated with the maintenance
of the Company's investment portfolio.

FINANCIAL RATINGS AND STRENGTH

     At December 31, 2000, the Moody's, Standard and Poor's and A.M. Best
claims-paying ratings for the Company were Aa2, AA+ and A+, respectively.
Additionally, A.M. Best affirmed its 12/31/00 rating in the first quarter of
2001.

LIQUIDITY

     The NAIC has a standard for assessing the solvency of insurance companies,
which is referred to as risk-based capital ("RBC"). The requirement consists of
a formula for determining each insurer's RBC and a model law specifying
regulatory actions if an insurer's RBC falls below specified levels. The RBC
formula for life insurance companies establishes capital requirements relating
to insurance, business, asset and interest rate risks. At December 31, 2000, RBC
for the Company was significantly above a level that would require regulatory
action.

OTHER DEVELOPMENTS

     The NAIC's codification initiative has produced a comprehensive guide of
statutory accounting principles, which the Company will implement effective
January 2001. The Company's state of domicile, Arizona, has passed legislation
revising various statutory accounting requirements to conform to codification.
These requirements will not have a material impact on the statutory surplus of
the Company.

FORWARD-LOOKING STATEMENTS

     This document contains "forward-looking statements" that anticipate results
based on management's plans that are subject to uncertainty. These statements
are made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995.

     Forward-looking statements do not relate strictly to historical or current
facts and may be identified by their use of words like "plans," "expects,"
"will," "anticipates," "estimates," "intends," "believes," "likely" and other
words with similar meanings. These statements may address, among other things,
our strategy for growth, product development, regulatory approvals, market
position, expenses, financial results and reserves. Forward-looking statements
are based on management's current expectations of future events. We cannot
guarantee that any forward-looking statement will be accurate. However, we
believe that our forward-looking statements are based on reasonable, current
expectations and assumptions. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments.

     If the expectations or assumptions underlying our forward-looking
statements prove inaccurate or if risks or uncertainties arise, actual results
could differ materially from those communicated in our forward-looking
statements. In addition to the normal risks of business, the Company is subject
to significant risk factors, including those listed below which apply to it as
an insurance business.

-    Changes in market interest rates can have adverse effects on the Company's
     investment portfolio and investment income. Increases in market interest
     rates have an adverse impact on the value of the investment portfolio by
     decreasing unrealized capital gains on fixed income securities. In
     addition, increases in market interest rates as compared to rates offered
     on some of the Company's products could make those products less attractive
     and lead to lower sales and/or increase the level of surrenders on these
     products. Declining market interest rates could have an adverse impact on
     the Company's investment income as the Company invests proceeds from
     positive cash flows from operations and reinvests proceeds from maturing
     and called investments into new investments that could be yielding less
     than the portfolio's average rate.

                                       7
<PAGE>
-    The impact of decreasing Separate Accounts balances as a result of
     fluctuating market conditions could cause contract charges ceded by the
     Company to decrease.

-    In order to manage interest rate risk, from time to time the effective
     duration of the assets and liabilities of the investment portfolio is
     adjusted. Those adjustments may have an impact on the value of the
     investment portfolio and on investment income.

-    State insurance regulatory authorities require insurance companies to
     maintain specified levels of statutory capital and surplus. In addition,
     competitive pressures require the Company to maintain financial strength or
     claims-paying ability ratings. These restrictions affect the Company's
     ability to use its capital.

-    The Company distributes some of its products under agreements with other
     members of the financial services industry that are not affiliated with the
     Company. Termination of one or more of these agreements due to changes in
     control or other factors of any of these entities could have a detrimental
     effect on the segment's sales. This risk may be exacerbated by the
     enactment of the Gramm-Leach-Bliley Act of 1999, which eliminates many
     federal and state law barriers to affiliations among banks, securities
     firms, insurers and other financial service providers.

-    A number of enacted and pending legislative measures could lead to
     increased consolidation and increased competition for business and for
     capital in the financial services industry.

     -    At the federal level, these measures include the recently enacted
          Gramm-Leach-Bliley Act of 1999, which eliminates may federal and state
          law barriers to affiliations among banks, securities firms, insurers
          and other financials service providers.

     -    At the state level, these measures include legislation to permit
          mutual insurance companies to covert to a hybrid structure known as a
          mutual holding company, thereby allowing insurance companies owned by
          their policyholders to become stock insurance companies owned (through
          one or more intermediate holding companies) more than 50% by their
          policyholders and potentially up to 49% by stockholders. Also several
          large mutual life insurers have used or are expected to use existing
          state laws and regulations governing the conversion of mutual
          insurance companies into stock insurance companies (demutualization).

     -    In addition, state insurance regulators are reexamining the regulatory
          framework that currently governs the United States insurance business.
          They are engaged in an effort to determine the proper role of the
          state insurance regulation in the United States financial services
          industry following the enactment of the Graham-Leach-Bliley Act. The
          Company cannot predict whether any state or federal measures will be
          adopted to change the nature or scope of the regulation of the
          insurance business or what effect any such measures would have on the
          Company.

-    Deferred annuities and interest-sensitive life insurance products receive
     favorable policyholder taxation under current tax laws and regulations. Any
     legislative or regulatory changes that adversely alter this treatment are
     likely to negatively affect the demand for these products. Additionally,
     the demand for life insurance products which are used to address a
     customer's estate planning needs may be impacted to the extent any
     legislative changes to the current estate tax laws occur.

-    Financial strength ratings have become an increasingly important factor in
     establishing the competitive position of insurance companies and,
     generally, may be expected to have an effect on an insurance company's
     sales. On an ongoing basis, rating agencies review the financial
     performance and condition of insurers. A downgrade, while not expected,
     could have a material adverse effect on the Company's business, financial
     condition and results of operations.

-    Additional risk factors regarding market risk are incorporated by reference
     to the discussion of "Market Risk" beginning on page 5.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     The  pertinent  provisions  of  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations  are herein  incorporated  by
reference.

Item 8. Financial Statements and Supplementary Data

See Index to Financial Statements filed with this report.

Item 9. Changes in and Disagreements With Accountants On Accounting and
Financial Disclosure

No disclosure required by this Item.

                                      8
<PAGE>

                                         PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports On Form 8-K

         (a) Documents Filed as Part of This Report

         1. Financial Statements.  The Registrants financial statements, for the
year  ended  December  31,  2000,   together  with  the  Report  of  Independent
Accountants are set forth on pages F-1 to F-17  of this report.

         2. Financial Statement Schedules. The following are included in Part IV
of this report:

         Schedule IV - Reinsurance  page F-17

         All other  schedules have been omitted  because they are not applicable
or not required or because the required information is included in the financial
statements or notes thereto.

         3.  Exhibits.  The  exhibits  required  to be  filed  by  Item  601  of
Regulation S-K are listed under the caption "Exhibits" in Item 14(c).

         (b) Reports On Form 8-K

No reports on Form 8-K were filed for the quarter ended December 31, 2000.

         (c) Exhibits

Exhibit No.                Description

3(i)         Amended and  Restated  Articles of  Incorporation  and  Articles of
             Redomestication  of Glenbrook  Life and Annuity  Insurance  Company
             (previously file on Form 10-K, dated March 30, 1999)

3(ii)        Amended and Restated By-laws of Glenbrook Life and Annuity Company
             (previously filed on Form 10-K, dated March 30, 1999)




                                       9
<PAGE>




                                SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                       GLENBROOK LIFE AND ANNUITY COMPANY

                           By: /s/ THOMAS J. WILSON, II
                              -------------------------
                              Thomas J. Wilson, II
                              President, Chief Operating Officer and Director
                              (Principal Executive Officer)

                           Date:   March 26, 2001
                                  --------------------

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


By:   /s/THOMAS J. WILSON, II             President, Chief Operating Officer,
     -----------------------              and Director
     Thomas J. Wilson, II                (Principal Executive Officer)

Date: March 26, 2001
     ---------------

By:   /s/MICHAEL J. VELOTTA               Vice President, Secretary,
     ----------------------               General Counsel, and Director
     Michael J. Velotta

Date: March 26, 2001
     ---------------


By:   /s/STEVEN C. VERNEY                 Director and Vice President
     --------------------                 (Principal Financial Officer)
     Steven C. Verney

Date: March 26, 2001
     ---------------


By:   /s/SAMUEL H. PILCH                  Controller
     ------------------                   (Principal Accounting Officer)
     Samuel H. Pilch

Date: March 26, 2001
     ---------------


By:   /s/MARLA G. FRIEDMAN                Vice President and Director
    ----------------------
    Marla G. Friedman

Date: March 26, 2001
     ---------------

By:   /s/MARGARET G. DYER                 Director
    -------------------
    Margaret G. Dyer

Date: March 26, 2001
     ---------------

By:   /s/JOHN C. LOUNDS                   Director
    -------------------
    John C. Lounds

Date: March 26, 2001
     ---------------

By:   /s/J. KEVIN MCCARTHY                Director
    --------------------
    J. Kevin McCarthy

Date: March 26, 2001
     -----------------


                                       10
<PAGE>

                          Financial Statements

                               INDEX


                                                                            PAGE

Independent Auditors' Report................................................F-1

Financial Statements:


       Statements of Operations and Comprehensive Income for the Years Ended
          December 31, 2000, 1999 and 1998..................................F-2

       Statements of Financial Position
          December 31, 2000 and 1999........................................F-3

       Statements of Shareholder's Equity for the Years Ended
          December 31, 2000, 1999 and 1998..................................F-4

       Statements of Cash Flows for the Years Ended
          December 31, 2000, 1999 and 1998..................................F-5

       Notes to Financial Statements........................................F-6

       Schedule IV - Reinsurance for the Years Ended
          December 31, 2000, 1999 and 1998..................................F-17




                                       11

<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholder of
Glenbrook Life and Annuity Company:
--------------------------------------------------------------------------------

We have audited the accompanying Statements of Financial Position of Glenbrook
Life and Annuity Company (the "Company", an affiliate of The Allstate
Corporation) as of December 31, 2000 and 1999, and the related Statements of
Operations and Comprehensive Income, Shareholder's Equity and Cash Flows for
each of the three years in the period ended December 31, 2000. Our audits also
included Schedule IV--Reinsurance. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, Schedule IV--Reinsurance, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 23, 2001

                                      F-1
<PAGE>
                       GLENBROOK LIFE AND ANNUITY COMPANY
               STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
REVENUES
  Net investment income.....................................  $10,808    $ 6,579     $6,231
  Realized capital gains and losses.........................      419        312         (5)
                                                              -------    -------     ------
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE............   11,227      6,891      6,226
INCOME TAX EXPENSE..........................................    3,925      2,382      2,182
                                                              -------    -------     ------
NET INCOME..................................................    7,302      4,509      4,044
                                                              -------    -------     ------
OTHER COMPREHENSIVE INCOME (LOSS), AFTER-TAX
  Change in unrealized net capital gains and losses.........    3,603     (5,286)     1,315
                                                              -------    -------     ------
COMPREHENSIVE INCOME (LOSS).................................  $10,905    $  (777)    $5,359
                                                              =======    =======     ======
</TABLE>

                       See notes to financial statements.

                                      F-2
<PAGE>
                       GLENBROOK LIFE AND ANNUITY COMPANY
                        STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              ---------------------------
                                                                  2000           1999
                                                              ------------   ------------
                                                              ($ IN THOUSANDS, EXCEPT PAR
                                                                      VALUE DATA)
<S>                                                           <C>            <C>
ASSETS
Investments
  Fixed income securities, at fair value (amortized cost
   $139,819 and $94,173)....................................   $  144,127     $   92,937
  Short-term................................................        3,085         53,063
                                                               ----------     ----------
  Total investments.........................................      147,212        146,000
Cash........................................................       13,500              9
Reinsurance recoverable from Allstate Life Insurance
  Company, net..............................................    4,702,940      4,144,165
Deferred income taxes.......................................           --            293
Other assets................................................        3,391          2,706
Separate Accounts...........................................    1,740,328      1,541,756
                                                               ----------     ----------
      TOTAL ASSETS..........................................   $6,607,371     $5,834,929
                                                               ==========     ==========
LIABILITIES
Reserve for life-contingent contract benefits...............   $    6,094     $      800
Contractholder funds........................................    4,696,846      4,143,365
Current income taxes payable................................        3,729          2,360
Deferred income taxes.......................................        1,842             --
Payable to affiliates, net..................................        5,101          4,122
Separate Accounts...........................................    1,740,328      1,541,756
                                                               ----------     ----------
      TOTAL LIABILITIES.....................................    6,453,940      5,692,403
                                                               ----------     ----------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 7)

SHAREHOLDER'S EQUITY
Common stock, $500 par value, 10,000 shares authorized,
  5,000 shares issued and outstanding.......................        2,500          2,500
Additional capital paid-in..................................      119,241        119,241
Retained income.............................................       28,890         21,588
Accumulated other comprehensive income (loss):
  Unrealized net capital gains (losses).....................        2,800           (803)
                                                               ----------     ----------
      Total accumulated other comprehensive income (loss)...        2,800           (803)
                                                               ----------     ----------
      TOTAL SHAREHOLDER'S EQUITY............................      153,431        142,526
                                                               ----------     ----------
      TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY............   $6,607,371     $5,834,929
                                                               ==========     ==========
</TABLE>

                       See notes to financial statements.

                                      F-3

<PAGE>

                       GLENBROOK LIFE AND ANNUITY COMPANY
                       STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
COMMON STOCK
Balance, beginning of year..................................  $  2,500   $  2,100   $ 2,100
Issuance of new shares of stock.............................        --        400        --
                                                              --------   --------   -------
Balance, end of year........................................     2,500      2,500     2,100
                                                              --------   --------   -------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of year..................................  $119,241   $ 69,641   $69,641
Capital contribution........................................        --     49,600        --
                                                              --------   --------   -------
Balance, end of year........................................   119,241    119,241    69,641
                                                              --------   --------   -------
RETAINED INCOME
Balance, beginning of year..................................  $ 21,588   $ 17,079   $13,035
Net income..................................................     7,302      4,509     4,044
                                                              --------   --------   -------
Balance, end of year........................................    28,890     21,588    17,079
                                                              --------   --------   -------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year..................................  $   (803)  $  4,483   $ 3,168
Change in unrealized net capital gains and losses...........     3,603     (5,286)    1,315
                                                              --------   --------   -------
Balance, end of year........................................     2,800       (803)    4,483
                                                              --------   --------   -------
    Total shareholder's equity..............................  $153,431   $142,526   $93,303
                                                              ========   ========   =======
</TABLE>

                       See notes to financial statements.

                                      F-4
<PAGE>
                       GLENBROOK LIFE AND ANNUITY COMPANY
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................................  $  7,302   $  4,509   $  4,044
Adjustments to reconcile net income to net cash provided by
 operating activities
    Amortization and other non-cash items...................      (468)       (65)       (24)
    Realized capital gains and losses.......................      (419)      (312)         5
    Changes in:
      Income taxes payable..................................     1,563        235      1,590
      Other operating assets and liabilities................       254        264        915
                                                              --------   --------   --------
    Net cash provided by operating activities...............     8,232      4,631      6,530
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
  Proceeds from sales.......................................    20,682      9,049      1,966
  Investment collections....................................     3,163      4,945      7,123
  Investment purchases......................................   (68,967)   (20,328)   (15,250)
Change in short-term investments, net.......................    50,381    (48,288)      (369)
                                                              --------   --------   --------
    Net cash provided by (used in) investing activities.....     5,259    (54,622)    (6,530)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock......................        --        400         --
Capital contribution........................................        --     49,600         --
                                                              --------   --------   --------
    Net cash provided by financing activities...............        --     50,000         --
                                                              --------   --------   --------
NET INCREASE IN CASH........................................    13,491          9         --
CASH AT BEGINNING OF YEAR...................................         9         --         --
                                                              --------   --------   --------
CASH AT END OF YEAR.........................................  $ 13,500   $      9   $     --
                                                              ========   ========   ========
</TABLE>

                       See notes to financial statements.

                                      F-5
<PAGE>
GLENBROOK LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
-------------------------------------------------------------------

1.  GENERAL

BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Glenbrook Life and
Annuity Company (the "Company"), a wholly owned subsidiary of Allstate Life
Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"). These financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America.

NATURE OF OPERATIONS
The Company markets investment and life insurance products through banks and
securities firms. Investment products include deferred annuities and immediate
annuities without life contingencies. Deferred annuities include fixed rate,
market value adjusted, indexed and variable annuities. Life insurance consists
of interest-sensitive life and variable life insurance. In 2000, substantially
all of the Company's statutory premiums and deposits were from annuities.

Annuity contracts and life insurance policies issued by the Company are subject
to discretionary surrender or withdrawal by customers, subject to applicable
surrender charges. These policies and contracts are reinsured with ALIC (see
Note 3), which invests premiums and deposits to provide cash flows that will be
used to fund future benefits and expenses.

The Company monitors economic and regulatory developments that have the
potential to impact its business. Federal legislation has allowed for banks and
other financial organizations to have greater participation in the securities
and insurance businesses. This legislation presents an increased level of
competition for sales of the Company's products. Furthermore, the market for
deferred annuities and interest-sensitive life insurance is enhanced by the tax
incentives available under current law. Any legislative changes which lessen
these incentives are likely to negatively impact the demand for these products.
The demand for life insurance products, that are used to address a customer's
estate planning needs, may be impacted to the extent any legislative changes
occur to the current estate tax laws.

Additionally, traditional demutualizations of mutual insurance companies and
enacted and pending state legislation to permit mutual insurance companies to
convert to a hybrid structure known as a mutual holding company could have a
number of significant effects on the Company by: (1) increasing industry
competition through consolidation caused by mergers and acquisitions related to
the new corporate form of business; and (2) increasing competition in the
capital markets.

Although the Company currently benefits from agreements with financial services
entities who market and distribute its products, change in control or other
factors of these non-affiliated entities with which the Company has alliances
could negatively impact the Company's sales.

The Company is authorized to sell investment and life products in all states
except New York, as well as in the District of Columbia. The top geographic
locations for statutory premiums and deposits for the Company were California,
Pennsylvania, Florida, New Jersey, Illinois, Texas and Michigan for the year
ended December 31, 2000. No other jurisdiction accounted for more than 5% of
statutory premiums and deposits. All premiums and deposits are ceded to ALIC
under reinsurance agreements.

                                      F-6
<PAGE>

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. All fixed
income securities are carried at fair value and may be sold prior to their
contractual maturity ("available for sale"). The difference between amortized
cost and fair value, net of deferred income taxes, is reflected as a component
of shareholder's equity. Provisions are recognized for declines in the value of
fixed income securities that are other than temporary. Such writedowns are
included in Realized capital gains and losses. Short-term investments are
carried at cost or amortized cost, which approximates fair value.

Investment income consists primarily of interest. Interest is recognized on an
accrual basis. Interest income on mortgage-backed securities is determined on
the effective yield method, based on the estimated principal repayments. Accrual
of income is suspended for fixed income securities that are in default or when
the receipt of interest payments is in doubt. Realized capital gains and losses
are determined on a specific identification basis.

REINSURANCE RECOVERABLE
The Company has reinsurance agreements whereby all contract charges, credited
interest, policy benefits and certain expenses are ceded to ALIC (see Note 3).
Such amounts are reflected net of such reinsurance in the statements of
operations and comprehensive income. Reinsurance recoverable and the related
reserve for life-contingent contract benefits and contractholder funds are
reported separately in the statements of financial position. The Company
continues to have primary liability as the direct insurer for risks reinsured.

Investment income earned on the assets which support contractholder funds and
the reserve for life-contingent contract benefits is not included in the
Company's financial statements as those assets are owned and managed under terms
of reinsurance agreements.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED
Interest-sensitive life contracts are insurance contracts whose terms are not
fixed and guaranteed. The terms that may be changed include premiums paid by the
contractholder, interest credited to the contractholder account balance and one
or more amounts assessed against the contractholder. Premiums from these
contracts are reported as deposits to contractholder funds. Contract charge
revenue consists of fees assessed against the contractholder account balance for
cost of insurance (mortality risk), contract administration and surrender
charges. Contract benefits include interest credited to contracts and claims
incurred in excess of the related contractholder account balance.

Contracts that do not subject the Company to significant risk arising from
mortality or morbidity are referred to as investment contracts. Fixed rate
annuities, market value adjusted annuities, indexed annuities and immediate
annuities without life contingencies are considered investment contracts.
Deposits received for such contracts are reported as deposits to contractholder
funds. Contract charge revenue for investment contracts consists of charges
assessed against the contractholder account balance for contract administration
and surrenders. Contract benefits include interest credited and claims incurred
in excess of the related contractholder account balance.

                                      F-7
<PAGE>

Crediting rates for fixed rate and interest-sensitive life contracts are
adjusted periodically by the Company to reflect current market conditions.
Crediting rates for indexed annuities are based on an interest rate index, such
as LIBOR or an equity index, such as the S&P 500.

Variable annuity and variable life contracts are sold as Separate Accounts
products. The assets supporting these products are legally segregated and
available only to settle Separate Accounts contract obligations. Deposits
received are reported as Separate Accounts liabilities. The Company's contract
charge revenue for these contracts consists of charges assessed against the
Separate Accounts fund balances for contract maintenance, administration,
mortality, expense and surrenders.

All premiums, contract charges, contract benefits and interest credited are
reinsured.

INCOME TAXES
The income tax provision is calculated under the liability method and presented
net of reinsurance. Deferred tax assets and liabilities are recorded based on
the difference between the financial statement and tax bases of assets and
liabilities at the enacted tax rates. Deferred income taxes arise primarily from
unrealized capital gains and losses on fixed income securities carried at fair
value and differences in the tax bases of investments.

SEPARATE ACCOUNTS
The Company issues deferred variable annuities and variable life contracts, the
assets and liabilities of which are legally segregated and recorded as assets
and liabilities of the Separate Accounts. Absent any contract provision wherein
the Company guarantees either a minimum return or account value upon death or
annuitization, variable annuity and variable life contractholders bear the
investment risk that the Separate Accounts' funds may not meet their stated
investment objectives.

The assets of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claims to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations and comprehensive income. As described
earlier, revenues to the Company from the Separate Accounts are recorded as
contract charges.

RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to certain
variable annuity contract guarantees, is computed on the basis of assumptions as
to future investment yields, mortality, terminations and expenses. These
assumptions include provisions for adverse deviation and generally vary by such
characteristics as type of coverage, year of issue and policy duration. Detailed
reserve assumptions and reserve interest rates are outlined in Note 6.

CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of contracts that include an
investment component, including interest-sensitive life policies and certain
other investment contracts. Deposits received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received and interest
credited to the benefit of the contractholder less withdrawals, mortality
charges, and administrative expenses. Detailed information on crediting rates
and surrender and withdrawal protection on contractholder funds are outlined in
Note 6.

                                      F-8
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

3.  RELATED PARTY TRANSACTIONS

REINSURANCE
The Company has reinsurance agreements whereby all contract charges, credited
interest, policy benefits and certain expenses are ceded to ALIC and reflected
net of such reinsurance in the statements of operations and comprehensive
income. Reinsurance recoverable and the related reserve for life-contingent
contract benefits and contractholder funds are reported separately in the
statements of financial position. The Company continues to have primary
liability as the direct insurer for risks reinsured.

Investment income earned on the assets which support contractholder funds and
the reserve for life-contingent contract benefits is not included in the
Company's financial statements as those assets are owned and managed under terms
of reinsurance agreements.

The following table summarizes amounts that were ceded to ALIC under reinsurance
agreements.

<TABLE>
<CAPTION>
                                   Year Ended December 31,
                                  2000       1999       1998
                                --------   --------   --------
<S>                             <C>        <C>        <C>
Contract charges                $ 37,965   $ 27,175   $ 19,009
Credited interest, policy
 benefits, and certain
 expenses                        331,220    253,945    218,008
</TABLE>

BUSINESS OPERATIONS
The Company utilizes services performed by AIC and ALIC and business facilities
owned or leased, and operated by AIC in conducting its business activities. The
Company reimburses AIC and ALIC for the operating expenses incurred on behalf of
the Company. The Company is charged for the cost of these operating expenses
based on the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $48,553, $26,555 and $15,949 in 2000, 1999 and 1998, respectively. Of these
costs, the Company retains investment related expenses. All other costs are
ceded to ALIC under reinsurance agreements.

                                      F-9
<PAGE>

4.  INVESTMENTS
FAIR VALUES
The amortized cost, gross unrealized gains and losses, and fair value for fixed
income securities are as follows:

<TABLE>
<CAPTION>
                                           Gross
                                        Unrealized
                        Amortized   -------------------     Fair
 At December 31, 2000     Cost       Gains      Losses     Value
----------------------  ---------   --------   --------   --------
<S>                     <C>         <C>        <C>        <C>
U.S. government and
  agencies              $ 13,210     $2,376    $    --    $ 15,586
Municipal                  1,656         24        (38)      1,642
Corporate                 82,269      2,092     (1,167)     83,194
Mortgage-backed
  securities              42,684      1,081        (60)     43,705
                        --------     ------    -------    --------
  Total fixed income
   securities           $139,819     $5,573    $(1,265)   $144,127
                        ========     ======    =======    ========
At December 31, 1999
U.S. government and
  agencies              $ 24,274     $1,260    $    --    $ 25,534
Municipal                  1,656         --       (112)      1,544
Corporate                 49,255          9     (2,022)     47,242
Mortgage-backed
  securities              18,988         96       (467)     18,617
                        --------     ------    -------    --------
  Total fixed income
   securities           $ 94,173     $1,365    $(2,601)   $ 92,937
                        ========     ======    =======    ========
</TABLE>

SCHEDULED MATURITIES
The scheduled maturities for fixed income securities are as follows at
December 31, 2000:

<TABLE>
<CAPTION>
                                          Amortized     Fair
                                            Cost       Value
                                          ---------   --------
<S>                                       <C>         <C>
Due after one year through five years     $ 41,889    $ 42,368
Due after five years through ten years      43,676      44,318
Due after ten years                         11,570      13,736
                                          --------    --------
                                            97,135     100,422
Mortgage-backed securities                  42,684      43,705
                                          --------    --------
  Total                                   $139,819    $144,127
                                          ========    ========
</TABLE>

Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.

NET INVESTMENT INCOME

<TABLE>
<CAPTION>
      Year Ended December 31,          2000       1999       1998
      -----------------------        --------   --------   --------
<S>                                  <C>        <C>        <C>
Fixed income securities              $10,317     $6,458     $6,151
Short-term investments                   587        230        183
                                     -------     ------     ------
  Investment income, before expense   10,904      6,688      6,334
  Investment expense                      96        109        103
                                     -------     ------     ------
  Net investment income              $10,808     $6,579     $6,231
                                     =======     ======     ======
</TABLE>

REALIZED CAPITAL GAINS AND LOSSES, AFTER TAX

<TABLE>
<CAPTION>
        Year Ended December 31,             2000       1999       1998
        -----------------------           --------   --------   --------
<S>                                       <C>        <C>        <C>
Fixed income securities                    $ 419      $ 312       $(5)
                                           -----      -----       ---
  Realized capital gains and losses          419        312        (5)
  Income taxes                              (147)      (109)        2
                                           -----      -----       ---
  Realized capital gains and losses,
   after tax                               $ 272      $ 203       $(3)
                                           =====      =====       ===
</TABLE>

                                      F-10
<PAGE>
Excluding calls and prepayments, gross gains of $807 and $370 were realized on
sales of fixed income securities during 2000 and 1999, and gross losses of $388,
$58 and $5 were realized on sales of fixed income securities during 2000, 1999
and 1998, respectively. There were no gross gains realized on sales of fixed
income securities during 1998.

UNREALIZED NET CAPITAL GAINS
Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                     Gross
                                                  Unrealized
                       Amortized     Fair     -------------------   Unrealized
                         Cost       Value      Gains      Losses    Net Gains
                       ---------   --------   --------   --------   ----------
<S>                    <C>         <C>        <C>        <C>        <C>
Fixed income
 securities            $139,819    $144,127    $5,573    $(1,265)    $ 4,308
                       ========    ========    ======    =======
Deferred income taxes                                                 (1,508)
                                                                     -------
Unrealized net
 capital gains                                                       $ 2,800
                                                                     =======
</TABLE>

CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES

<TABLE>
<CAPTION>
      Year Ended December 31,          2000       1999       1998
      -----------------------        --------   --------   --------
<S>                                  <C>        <C>        <C>
Fixed income securities              $ 5,544    $(8,134)    $2,024
Deferred income taxes                 (1,941)     2,848       (709)
                                     -------    -------     ------
Increase (decrease) in unrealized
 net capital gains (losses)          $ 3,603    $(5,286)    $1,315
                                     =======    =======     ======
</TABLE>

SECURITIES ON DEPOSIT
At December 31, 2000, fixed income securities with a carrying value of $11,044
were on deposit with regulatory authorities as required by law.

5.  FINANCIAL INSTRUMENTS
In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments presented below are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions.
Potential taxes and other transaction costs have not been considered in
estimating fair value. The disclosures that follow do not reflect the fair value
of the Company as a whole since a number of the Company's significant assets
(including reinsurance recoverable and deferred income taxes) and liabilities
(including interest-sensitive life insurance reserves and deferred income taxes)
are not considered financial instruments and are not carried at fair value.
Other assets and liabilities considered financial instruments, such as accrued
investment income and cash, are generally of a short-term nature. Their carrying
values are deemed to approximate fair value.

                                      F-11
<PAGE>

FINANCIAL ASSETS
The carrying value and fair value of financial assets at December 31, are as
follows:

<TABLE>
<CAPTION>
                                2000                      1999
                       -----------------------   -----------------------
                        Carrying       Fair       Carrying       Fair
                         Value        Value        Value        Value
                       ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>
Fixed income
 securities            $  144,127   $  144,127   $   92,937   $   92,937
Short-term
 investments                3,085        3,085       53,063       53,063
Separate Accounts       1,740,328    1,740,328    1,541,756    1,541,756
</TABLE>

Fair values for fixed income securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar securities. Short-term investments are highly
liquid investments with maturities of less than one year whose carrying value
are deemed to approximate fair value. Separate Accounts assets are carried in
the statements of financial position at fair value based on quoted market
prices.

FINANCIAL LIABILITIES
The carrying value and fair value of financial liabilities at December 31, are
as follows:

<TABLE>
<CAPTION>
                                2000                      1999
                       -----------------------   -----------------------
                        Carrying       Fair       Carrying       Fair
                         Value        Value        Value        Value
                       ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>
Contractholder funds
 on investment
 contracts             $4,694,695   $4,467,866   $4,156,964   $3,924,117
Separate Accounts       1,740,328    1,740,328    1,541,756    1,541,756
</TABLE>

The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Investment contracts with no stated
maturities (single premium and flexible premium deferred annuities) are valued
at the account balance less surrender charges. The fair value of immediate
annuities and annuities without life contingencies with fixed terms is estimated
using discounted cash flow calculations based on interest rates currently
offered for contracts with similar terms and durations. Separate Accounts
liabilities are carried at the fair value of the underlying assets.

6.  RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS
Reserves for life-contingent contract benefits represent death-benefit
guarantees which exist on variable annuity products. The reserves are calculated
assuming the expected payout in any year approximates the average payout over
time.

                                      F-12
<PAGE>
At December 31, Contractholder funds consists of the following:


<TABLE>
<CAPTION>
                                           2000         1999
                                        ----------   ----------
<S>                                     <C>          <C>
Interest-sensitive life                 $   27,997   $    9,503
Fixed annuities:
  Immediate annuities                       20,577       17,856
  Deferred annuities                     4,648,272    4,116,006
                                        ----------   ----------
  Total Contractholder funds            $4,696,846   $4,143,365
                                        ==========   ==========
</TABLE>


Contractholder funds are equal to deposits received and interest credited to the
benefit of the contractholder less withdrawals, mortality charges and
administrative expenses. Interest rates credited range from 4.2% to 7.1% for
interest-sensitive life contracts; 3.5% to 7.3% for immediate annuities and 0.0%
to 12.0% for deferred annuities. Withdrawal and surrender charge protection
includes: i) for interest-sensitive life, either a percentage of account balance
or dollar amount grading off generally over 20 years; and, ii) for deferred
annuities not subject to a market value adjustment, either a declining or a
level percentage charge generally over nine years or less. Approximately 2% of
deferred annuities are subject to a market value adjustment.

7.  COMMITMENTS AND CONTINGENT LIABILITIES

REGULATION AND LEGAL PROCEEDINGS
The Company's business is subject to the effects of a changing social, economic
and regulatory environment. Public and regulatory initiatives have varied and
have included employee benefit regulations, removal of barriers preventing banks
from engaging in the securities and insurance business, tax law changes
affecting the taxation of insurance companies, the tax treatment of insurance
products and its impact on the relative desirability of various personal
investment vehicles, and proposed legislation to prohibit the use of gender in
determining insurance rates and benefits. The ultimate changes and eventual
effects, if any, of these initiatives are uncertain.

In the normal course of its business, the Company is involved in pending or
threatened litigation and regulatory actions in which claims for monetary
damages are asserted. At this time, based on their present status, it is the
opinion of management, that the ultimate liability, if any, in one or more of
these actions in excess of amounts currently reserved is not expected to have a
material effect on the results of operations, liquidity or financial position of
the Company.

GUARANTY FUNDS
Under state insurance guaranty fund laws, insurers doing business in a state can
be assessed, up to prescribed limits, for certain obligations of insolvent
insurance companies to policyholders and claimants. The Company's expenses
related to these funds are immaterial and are ceded to ALIC under reinsurance
agreements.

MARKETING AND COMPLIANCE ISSUES
Companies operating in the insurance and financial services markets have come
under the scrutiny of regulators with respect to market conduct and compliance
issues. Under certain circumstances, companies have been held responsible for
providing incomplete or misleading sales materials and for replacing existing
policies with policies that were less advantageous to the policyholder. The
Company monitors its sales materials and enforces compliance procedures to
mitigate exposure to potential litigation. The Company is a member of the
Insurance Marketplace Standards Association, an organization which advocates
ethical market conduct.

                                      F-13
<PAGE>

8.  INCOME TAXES
For 1996, the Company filed a separate federal income tax return. Beginning in
1997, the Company joined the Corporation and its other eligible domestic
subsidiaries (the "Allstate Group") in the filing of a consolidated federal
income tax return and is party to a federal income tax allocation agreement (the
"Allstate Tax Sharing Agreement"). Under the Allstate Tax Sharing Agreement, the
Company pays to or receives from the Corporation the amount, if any, by which
the Allstate Group's federal income tax liability is affected by virtue of
inclusion of the Company in the consolidated federal income tax return. The
Company has also entered into a supplemental tax sharing agreement with respect
to reinsurance ceded to ALIC to allocate the tax benefits and detriments related
to such reinsurance. Effectively, these agreements result in the Company's
annual income tax provision being computed as if the Company filed a separate
return, adjusted for the reinsurance ceded to ALIC.

Prior to June 30, 1995, the Corporation was a subsidiary of Sears Roebuck & Co.
("Sears") and , with its eligible domestic subsidiaries, was included in the
Sears consolidated federal income tax return and federal income tax allocation
agreement. Effective June 30, 1995, the Corporation and Sears entered into a new
tax sharing agreement, which governs their respective rights and obligations
with respect to federal income taxes for all periods during which the
Corporation was a subsidiary of Sears, including the treatment of audits of tax
returns for such periods.

The Internal Revenue Service ("IRS") has completed its review of the Allstate
Group's federal income tax returns through the 1993 tax year. Any adjustment
that may result from IRS examinations of tax returns are not expected to have a
material impact on the financial position, liquidity or results of operations of
the Company.

The components of the deferred income tax assets and liabilities at
December 31, are as follows:

<TABLE>
<CAPTION>
                                                 2000       1999
                                               --------   --------
<S>                                            <C>        <C>
Deferred assets
Unrealized net capital losses                  $    --     $ 433
                                               -------     -----
  Total deferred assets                             --       433

Deferred liabilities
Unrealized net capital gains                    (1,508)       --
Difference in tax bases of investments            (334)     (140)
                                               -------     -----
  Total deferred liabilities                    (1,842)     (140)
                                               -------     -----
  Net deferred (liability) asset               $(1,842)    $ 293
                                               =======     =====
</TABLE>

Although realization is not assured, management believes it is more likely than
not that the deferred tax asset will be realized based on the assumptions that
certain levels of income will be achieved.

                                      F-14
<PAGE>

The components of income tax expense for the year ended December 31, are as
follows:

<TABLE>
<CAPTION>
                                        2000       1999       1998
                                      --------   --------   --------
<S>                                   <C>        <C>        <C>
Current                                $3,730     $2,326     $2,164
Deferred                                  195         56         18
                                       ------     ------     ------
  Total income tax expense             $3,925     $2,382     $2,182
                                       ======     ======     ======
</TABLE>

The Company paid income taxes of $2,361, $2,148 and $592 in 2000, 1999 and 1998,
respectively.

A reconciliation of the statutory federal income tax rate to the effective
income tax rate on income from operations for the year ended December 31, is as
follows:

<TABLE>
<CAPTION>
                                         2000       1999       1998
                                       --------   --------   --------
<S>                                    <C>        <C>        <C>
Statutory federal income tax rate       35.0%      35.0%      35.0%
Other                                     --       (0.4)        --
                                        ----       ----       ----
Effective income tax rate               35.0%      34.6%      35.0%
                                        ====       ====       ====
</TABLE>

9.  STATUTORY FINANCIAL INFORMATION
The Company's statutory capital and surplus was $147,081 and $141,362 at
December 31, 2000 and 1999, respectively. The Company's statutory net income was
$6,597, $4,179 and $4,698 for the years ended December 31, 2000, 1999 and 1998,
respectively.

PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the Arizona Department of
Insurance. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a significant impact on statutory surplus or statutory net
income.

The NAIC has approved a January 1, 2001 implementation date for newly developed
statutory accounting principles ("codification"). The Company's state of
domicile, Arizona, has passed legislation revising various statutory accounting
requirements to conform to codification. These requirements will not have a
material impact on the statutory surplus of the Company. The NAIC has installed
a formal maintenance process to develop and propose new guidance, as well as on-
going clarification and interpretation of issues. The impact of any future
changes will be recorded as they are approved by the NAIC.

                                      F-15
<PAGE>

DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. The payment
of shareholder dividends by the Company without the prior approval of the state
insurance regulator is limited to formula amounts based on net income and
capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 2001 without prior approval of the Arizona Department of Insurance is
$6,597.

RISK-BASED CAPITAL

The NAIC has a standard for assessing the solvency of insurance companies, which
is referred to as risk-based capital ("RBC"). The standard is based on a formula
for determining each insurer's RBC and a model law specifying regulatory actions
if an insurer's RBC falls below specified levels. The RBC formula for life
insurance companies establishes capital requirements relating to insurance,
business, asset and interest rate risks. At December 31, 2000, RBC for the
Company was significantly above levels that would require regulatory action.

10.  OTHER COMPREHENSIVE INCOME
The components of other comprehensive income on a pretax and after-tax basis for
the year ended December 31, are as follows:

<TABLE>
<CAPTION>
                                           2000                              1999                              1998
                              -------------------------------   -------------------------------   -------------------------------
                               PRETAX      TAX      AFTER-TAX    PRETAX      TAX      AFTER-TAX    PRETAX      TAX      AFTER-TAX
                              --------   --------   ---------   --------   --------   ---------   --------   --------   ---------
<S>                           <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>        <C>
Unrealized capital gains and
  losses:
----------------------------
Unrealized holding gains
  (losses) arising during
  the period                   $5,752    $(2,014)    $3,738     $(7,822)    $2,739     $(5,083)    $2,019     $(707)     $1,312
Less: reclassification
  adjustments                     208        (73)       135         312       (109)        203         (5)        2          (3)
                               ------    -------     ------     -------     ------     -------     ------     -----      ------
Unrealized net capital gains
  (losses)                      5,544     (1,941)     3,603      (8,134)     2,848      (5,286)     2,024      (709)      1,315
                               ------    -------     ------     -------     ------     -------     ------     -----      ------
Other comprehensive income
  (loss)                       $5,544    $(1,941)    $3,603     $(8,134)    $2,848     $(5,286)    $2,024     $(709)     $1,315
                               ======    =======     ======     =======     ======     =======     ======     =====      ======
</TABLE>

                                      F-16
<PAGE>
                       GLENBROOK LIFE AND ANNUITY COMPANY
                            SCHEDULE IV--REINSURANCE
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               GROSS                  NET
                                                               AMOUNT     CEDED      AMOUNT
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
YEAR ENDED DECEMBER 31, 2000
Life insurance in force.....................................  $65,852    $65,852    $    --
                                                              =======    =======    =======
Premiums and contract charges:
  Life and annuities........................................  $37,965    $37,965    $    --
                                                              =======    =======    =======

<CAPTION>
                                                               GROSS                  NET
                                                               AMOUNT     CEDED      AMOUNT
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
YEAR ENDED DECEMBER 31, 1999
Life insurance in force.....................................  $23,586    $23,586    $    --
                                                              =======    =======    =======
Premiums and contract charges:
  Life and annuities........................................  $27,175    $27,175    $    --
                                                              =======    =======    =======

<CAPTION>
                                                               GROSS                  NET
                                                               AMOUNT     CEDED      AMOUNT
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
YEAR ENDED DECEMBER 31, 1998
Life insurance in force.....................................  $12,056    $12,056    $    --
                                                              =======    =======    =======
Premiums and contract charges:
  Life and annuities........................................  $19,009    $19,009    $    --
                                                              =======    =======    =======
</TABLE>

                                      F-17