FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


(Mark One)
|X|     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1999

                                              OR

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

                       For the transaction period from to

                        Commission file number 333-64473

                              GWL&A FINANCIAL INC.
             (Exact name of registrant as specified in its charter)

                               Delaware 84-1474245
         (State or other jurisdiction of incorporation or organization)
                     (I.R.S. Employer Identification Number)

             8515 East Orchard Road, Englewood, CO 80111 (Address of
                          principal executive offices)
                                   (Zip Code)

                                 [303] 689-4128
              (Registrant's telephone number, including area code)

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

As of June 30,  1999,  50,025  shares  of the  registrant's  common  stock  were
outstanding, all of which were owned by the registrant's parent company.





<PAGE>


                                            - 2 -
                                TABLE OF CONTENTS

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                                                         Page
                                                                                      -----------
Part I         FINANCIAL INFORMATION

               Item 1   Financial Statements

                        Consolidated Statements of Income                                 3

                        Consolidated Balance Sheets                                       4

                        Consolidated Statements of Cash Flows                             6

                        Notes to Consolidated Financial Statements                        8

               Item 2   Management's Discussion and Analysis of Financial                 10
                        Condition and Results of Operations

Part II        OTHER INFORMATION

               Item 1   Legal Proceedings                                                 19

               Item 2   Changes to Securities and Use of Proceeds                         19

               Item 6   Exhibits and Reports on Form 8-K                                  20

               Signatures                                                                 20

</TABLE>


















<PAGE>


PART I   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
<TABLE>
(Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                              Three Months Ended              Six Months Ended
                                                   June 30,                       June 30,
                                          ----------------------------   ---------------------------
                                              1999           1998           1999           1998
                                          -------------   ------------   ------------   ------------
REVENUES:
  Premiums                             $     293,721   $     162,678  $     611,476  $     350,887
  Fee income                                 150,270         127,461        304,306        244,690
  Net investment income                      215,984         223,891        432,102        447,425
  Net realized gains (losses) on               2,117           5,342         (3,926)        19,315
investments
                                          -------------   ------------   ------------   ------------

                                             662,092         519,372      1,343,958      1,062,317
                                          -------------   ------------   ------------   ------------
BENEFITS AND EXPENSES:
  Life and other policy benefits             272,040         139,547        512,429        292,468
  Increase in reserves                       (12,726)         20,790         22,349         48,163
  Interest paid or credited to               115,676         122,207        225,641        246,995
contractholders
  Provision for policyholders' share
of
    earnings on participating business         1,193           1,390          2,645          3,359
  Dividends to policyholders                  11,787          14,305         33,680         34,125
                                          -------------   ------------   ------------   ------------

                                             387,970         298,239        796,744        625,110
                                          -------------   ------------   ------------   ------------
                                                                         ------------   ------------

  Commissions                                 45,299          29,354         90,333         56,836
  Operating expenses                         144,053         116,197        294,175        231,823
  Premium taxes                               10,734           7,645         17,872         13,184
                                          -------------   ------------   ------------   ------------

                                             588,056         451,435      1,199,124        926,953
                                          -------------   ------------   ------------   ------------

INCOME BEFORE INCOME TAXES                    74,036          67,937        144,834        135,364

PROVISION FOR INCOME TAXES:
   Current                                    25,884          29,349         41,738         41,289
   Deferred                                      484          (5,606)        10,018          3,746
                                          -------------   ------------   ------------   ------------

                                              26,368          23,743         51,756         45,035
                                          -------------   ------------   ------------   ------------

NET INCOME                             $      47,668   $      44,194  $      93,078  $      90,329
                                          =============   ============   ============   ============
</TABLE>





See notes to consolidated financial statements.


<PAGE>


GWL&A FINANCIAL INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>

<S>                                                                    <C>                <C>
                                                                  June 30,       December 31,
ASSETS                                                              1999             1998
------
                                                                --------------   --------------
                                                                 (Unaudited)
INVESTMENTS:
  Fixed Maturities:
    Held-to-maturity, at amortized cost
       (fair value $2,243,060 and $2,298,936)                $     2,234,038  $     2,199,818
    Available-for-sale, at fair value
       (amortized cost $6,949,328 and $6,752,532)                  6,869,952        6,936,726
  Mortgage loans on real estate, net                               1,040,155        1,133,468
  Common stock                                                        48,144           48,640
  Real estate, net                                                    83,345           73,042
  Policy loans                                                     2,650,951        2,858,673
  Short-term investments, available-for-sale
       (cost approximates fair value)                                205,152          420,169
                                                                --------------   --------------

      Total Investments                                           13,131,737       13,670,536

Cash                                                                 149,214          176,369
Reinsurance receivable                                               179,909          192,958
Deferred policy acquisition costs                                    276,399          238,901
Investment income due and accrued                                    133,593          157,587
Other assets                                                         408,519          311,078
Premiums in course of collection                                     105,498           84,940
Deferred income taxes                                                231,269          191,483
Separate account assets                                           10,891,986       10,099,543
                                                                --------------   --------------




TOTAL ASSETS                                                 $    25,508,124  $    25,123,395
                                                                ==============   ==============

</TABLE>



See notes to consolidated financial statements.          (Continued)


<PAGE>


GWL&A FINANCIAL INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>

<S>                                                                    <C>                <C>
                                                                  June 30,       December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                1999             1998
------------------------------------
                                                                --------------   --------------
                                                                 (Unaudited)
POLICY BENEFIT LIABILITIES:

    Policy reserves                                          $    11,616,522  $    11,839,714
    Policy and contract claims                                       472,542          491,932
    Policyholders' funds                                             199,932          181,779
    Provision for policyholders' dividends                            68,941           69,530

GENERAL LIABILITIES:

    Due to Parent Corporation                                         42,265           52,877
    Repurchase agreements                                             82,985          244,258
    Commercial paper                                                  29,844           39,731
    Other liabilities                                                629,059          761,505
    Undistributed earnings on
      participating business                                         138,488          143,717
    Separate account liabilities                                  10,891,986       10,099,543
                                                                --------------   --------------

      Total Liabilities                                           24,172,564       23,924,586
                                                                --------------   --------------

Guaranteed preferred beneficial interests in the Company's
junior
subordinated debentures                                              175,000

STOCKHOLDER'S EQUITY:
    Preferred stock, $1 par value,
       50,000,000 shares authorized:
            Series A, cumulative, 1,500 shares authorized;
liquidation
              value of $100,000 per share; none outstanding
            Series B, cumulative, 1,500 shares authorized;
liquidation
              value of $100,000 per share; none outstanding
            Series C, cumulative, 1,500 shares authorized;
              none outstanding
            Series D, cumulative, 1,500 shares authorized;
              none outstanding
            Series E, non-cumulative, 2,000,000 shares
authorized;
              liquidation value of $20.90; none outstanding
    Preferred stock, $0 par value; 500,000 shares
authorized;
       0 shares  issued and  outstanding  Common  stock,  $0 par value;  500,000
    shares authorized;
       50,025 shares issued and outstanding                              250              250
    Additional paid-in capital                                       706,588          706,588
    Accumulated other comprehensive income                           (28,200)          61,560
    Retained earnings                                                481,922          430,411
                                                                --------------   --------------

      Total Stockholder's Equity                                   1,160,560        1,198,809
                                                                --------------   --------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                   $    25,508,124  $    25,123,395
                                                                ==============   ==============
</TABLE>

See notes to consolidated financial statements.


<PAGE>


GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
(Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                        Six Months Ended
                                                                            June 30,
                                                                  -----------------------------
                                                                      1999            1998
                                                                  -------------   -------------

OPERATING ACTIVITIES:
    Net income                                                 $       93,078  $       90,329
    Adjustments to reconcile net income to
      net cash provided by operating activities:
       Gain allocated to participating policyholders                    2,642           3,359
       Amortization of investments                                     (6,703)         (3,001)
       Realized losses (gains) on disposal of investments
           and write-downs of mortgage loans and real estate            3,926         (19,315)
       Amortization                                                    17,752          28,717
       Deferred income taxes                                           10,018          11,125
    Changes in assets and liabilities:
        Policy benefit liabilities                                    409,073         172,304
        Reinsurance receivable                                         13,049         (20,061)
        Accrued interest and other receivables                          3,436           5,331
        Other, net                                                   (232,435)       (123,642)
                                                                  -------------   -------------
                 Net cash provided by operating activities            313,836         145,146
                                                                  -------------   -------------

INVESTING ACTIVITIES:
    Proceeds from sales, maturities, and
        redemptions of investments:
        Fixed maturities
             Held-to-maturity
                Maturities and redemptions                            325,750         214,104
             Available-for-sale
                Sales                                               2,009,783       4,197,431
                Maturities and redemptions                            434,630         584,264
        Mortgage loans                                                 94,307         117,099
        Real estate                                                     2,015          16,456
        Common stock                                                    6,842           1,983
    Purchases of investments:
        Fixed maturities
             Held-to-maturity                                        (352,190)       (193,416)
             Available-for-sale                                    (2,429,062)     (4,674,954)
        Mortgage loans                                                   (949)        (11,100)
        Real estate                                                   (14,351)         (2,323)
        Common stock                                                   (4,005)         (3,126)
                                                                  -------------   -------------
                 Net cash provided by investing activities             72,770         246,418
                                                                  -------------   -------------
</TABLE>






          (Continued)


<PAGE>


GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
(Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                         Six Months Ended
                                                                             June 30,
                                                                   -----------------------------
                                                                       1999            1998
                                                                   -------------   -------------

FINANCING ACTIVITIES:
   Contract withdrawals, net of deposits                        $     (365,423) $     (257,870)
   Net Parent Corporation borrowings (repayments)                      (10,612)         (2,993)
   Dividends paid                                                      (41,566)        (36,775)
   Net commercial paper borrowings (repayments)                         (9,887)          5,596
   Net repurchase agreements borrowings (repayments)                  (161,273)       (136,293)
   Issuance of junior subordinated debentures                          175,000
                                                                   -------------   -------------
              Net cash used in financing activities                   (413,761)       (428,335)
                                                                   -------------   -------------

NET INCREASE (DECREASE) IN CASH                                        (27,155)        (36,771)

CASH, BEGINNING OF YEAR                                                176,369         126,278
                                                                   -------------   -------------

CASH, END OF PERIOD                                             $      149,214  $       89,507
                                                                   =============   =============
</TABLE>



See notes to consolidated financial statements.             (Concluded)


<PAGE>


GWL&A FINANCIAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands)
(Unaudited)

1.      BASIS OF PRESENTATION

        The  consolidated  financial  statements  and  related  notes  of  GWL&A
        Financial  Inc. (the  "Company")  have been prepared in accordance  with
        generally accepted accounting principles applicable to interim financial
        reporting  and do not  include  all of  the  information  and  footnotes
        required for complete financial  statements.  However, in the opinion of
        management,  these statements  include all normal recurring  adjustments
        necessary  for a fair  presentation  of  the  results.  These  financial
        statements should be read in conjunction with the Company's registration
        statement on Form S-3 (File No.  333-64473),  effective  April 28, 1999,
        which registration statement includes the audited consolidated financial
        statements  and the  accompanying  notes for the year ended December 31,
        1998.

        Operating  results  for the six  months  ended  June  30,  1999  are not
        necessarily  indicative of the results that may be expected for the full
        year ending December 31, 1999.

2.      NEW ACCOUNTING PRONOUNCEMENTS

        In June 1998, the Financial  Accounting Standards Board issued Statement
        of Financial  Accounting  Standards No. 133,  "Accounting for Derivative
        Instruments  and for  Hedging  Activities".  This  Statement  provides a
        comprehensive   and  consistent   standard  for  the   recognition   and
        measurement of  derivatives  and hedging  activities.  During the second
        quarter,  the Financial Accounting Standards Board delayed the effective
        date of this  Statement  for one year, to fiscal years  beginning  after
        June 15,  2000.  Earlier  adoption  is  encouraged.  The Company has not
        adopted  this  Statement  as  of  June  30,  1999.  Management  has  not
        determined  the  impact  of the  Statement  on the  Company's  financial
        position or results of operations.

        In March 1998, the Accounting Standards Executive Committee of the AIPCA
        issued  Statement of Position (SOP) 98-1,  "Accounting  for the Costs of
        Computer  Software  Developed or Obtained for  Internal  Use".  The SOP,
        which was adopted as of January 1, 1999,  requires the capitalization of
        certain  costs  incurred in  connection  with  developing  or  obtaining
        internal use  software.  Prior to the adoption of SOP 98-1,  the Company
        expensed all internal use software related costs as incurred. During the
        quarter ended June 30, 1999, the Company  capitalized $8,068 in internal
        use software costs related to the adoption of SOP 98-1.

3.      OTHER

        Great-West Life & Annuity Insurance Company is involved in various legal
        proceedings  that arise in the ordinary  course of its business.  In the
        opinion of management,  after consultation with counsel,  the resolution
        of these  proceedings  should not have a material  adverse effect on its
        financial position or results of operations.



<PAGE>


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS
<TABLE>

<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                        Three Months Ended             Six Months
                                                                          Ended
                                             June 30,                   June 30,
                                      ------------------------   ------------------------
 Operating Summary (Millions)            1999         1998          1999         1998
                                      -----------   ----------   -----------   ----------

 Premiums                           $      294   $        163 $       612   $        351
 Fee income                                 150           127         304            245
 Net investment income                      216           224         432            447
 Realized investment gains
   (losses)                                   2             5          (4)            19
                                      -----------   ----------   -----------   ----------
      Total revenues                        662           519       1,344          1,062

 Total benefits and expenses                588           451       1,199            927
 Income tax expense                          26            24          52             45
                                      ===========   ==========   ===========   ==========
      Net income                    $       48   $         44 $        93   $         90
                                      ===========   ==========   ===========   ==========

 Deposits for investment-type
   contracts                        $      169   $        264 $       275   $        455
 Deposits to separate accounts              695           575       1,365          1,109
 Self-funded premium
   equivalents                              788           591       1,506          1,126


                                                       June 30,           December 31,
 Balance Sheet (Millions)                                1999                 1998
                                                   -----------------    -----------------

 Investment assets                              $         13,132    $         13,671
 Separate account assets                                  10,892              10,100
 Total assets                                             25,508              25,123
 Total policy benefit liabilities                         12,358              12,583
 Long-term debt - due to
      Parent Corporation                                      35                  35
 Total shareholder's equity                     $          1,161    $          1,199
</TABLE>

GENERAL

The following  discussion addresses the financial condition of the Company as of
June 30, 1999,  compared with  December 31, 1998,  and its results of operations
for the three and six months ended June 30, 1999, compared with the same periods
last year. The discussion  should be read in conjunction  with the  Management's
Discussion and Analysis section included in the Company's registration statement
on Form S-3 (File No. 333-64473),  effective April 28, 1999, to which the reader
is directed for additional information.

CONSOLIDATED RESULTS

The Company's  consolidated net income increased $4 million or 9% and $3 million
or 3% for the second  quarter and first six months of 1999 when  compared to the
second quarter and first six months of 1998. The increases reflect a decrease of
$1 million  and $2  million in the  Financial  Services  segment  for the second
quarter and first six months of 1999, which resulted primarily from net realized
investment losses in 1999 as compared to net realized  investment gains in 1998.
The  Employee  Benefits  segment's  net income  increased $5 million in both the
second quarter and first six months of 1999, which reflected  improved morbidity
gains being partially offset by net realized investment losses.

Total  revenues  increased  $143  million or 28% and $282 million or 27% for the
second  quarter  and for the first six months of 1999 when  compared to the same
periods of 1998.  The growth in  revenues  for the second  quarter and first six
months of 1999 was  comprised  of increased  premium  income of $131 million and
$261 million, increased fee income of $23 million and $59 million, decreased net
investment income of $8 million and $15 million and decreased  realized gains on
investments of $3 million and $23 million.

The  increased  premium  income in 1999 was  comprised  of  growth  in  Employee
Benefits  premium income of $137 million and $270 million for the second quarter
and first six months of 1999, offset by a decrease in Financial Services premium
income of $6 million and $9 million for the second  quarter and first six months
of 1999. The growth in Employee  Benefits  primarily  reflects premium income of
$111  million and $222  million  for the second  quarter and first six months of
1999 derived from the  acquisition  of Anthem  Health & Life  Insurance  Company
("AH&L") in July 1998.

The growth in fee income is also  primarily  in the Employee  Benefits  segment,
where fee income  derived from the  acquisition  of AH&L was $14 million and $30
million  during the second  quarter and first six months of 1999.  The remaining
increase  was the  result of new  sales and  increased  fees on  variable  funds
related to growth in equity markets.

The  decrease  in net  investment  income  was the  result of a  combination  of
declining  interest rates and a reduction in general account assets.  The actual
earned rate at June 30, 1999 was 6.93% compared to 7.25% at June 30, 1998.

Realized investment gains decreased $3 million during the second quarter of 1999
compared to the same period last year.  Realized investment gains decreased from
a realized  investment  gain of $19 million in the first six months of 1998 to a
realized  investment  loss of $4 million in 1999.  The rise in interest rates in
1999 resulted in losses on sales of fixed maturities totaling $9 million,  while
lower interest rates contributed to $21 million of fixed maturity gains in 1998.
Increases  (decreases)  in the provision for asset losses of $(4.0)  million and
$.7  million  were  recognized  for the  first  six  months  of 1999  and  1998,
respectively.

Benefits and expenses  increased $137 million or 30% and $272 million or 29% for
the  second  quarter  and first six months of 1999 when  compared  to the second
quarter and first six months of 1998.  The growth in benefits  and  expenses was
primarily in the Employee  Benefits  segment,  which  increased $146 million and
$299 million  during the second  quarter and first six months of 1999,  of which
$125  million and $259 million  related to benefits  and  expenses  generated by
AH&L. The Financial  Services  segment was  essentially  flat with a decrease in
benefits and  expenses of $9 million and $27 million for the second  quarter and
first six months of 1999 when compared to the same periods last year.

Income  tax  expense  increased  $2  million or 8% and $7 million or 16% for the
second  quarter and first six months of 1999 when compared to the second quarter
and first six months of 1998. The increase  reflects higher pre-tax earnings for
the first six  months of 1999 and the use of net  operating  loss  carryforwards
related to the subsidiaries during 1998.

In evaluating its results of operations,  the Company also considers net changes
in  deposits  received  for  investment-type  contracts,  deposits  to  separate
accounts and self-funded  equivalents.  Self-funded  equivalents  represent paid
claims under minimum premium and administrative  services only contracts,  which
amounts  approximate  the additional  premiums that would have been earned under
such  contracts  if they  had  been  written  as  traditional  indemnity  or HMO
programs.

Deposits for  investment-type  contracts  decreased  $95 million or 36% and $180
million or 40% for the second quarter and first six months of 1999 when compared
to the second  quarter and first six months of 1998.  This decrease is primarily
attributable to the Financial  Services segment,  where decreases in deposits of
Corporate  Owned Life  Insurance  ("COLI")  totaled $0 and $56  million  for the
second  quarter and first six months of 1999 when  compared to the same  periods
last year. Additionally,  Bank Owned Life Insurance ("BOLI") deposits decreased,
from $165 million and $230  million for the second  quarter and first six months
of 1998 to $40  million  and $90  million  for the second  quarter and first six
months of 1999.

Deposits for separate accounts increased $120 million or 21% and $256 million or
23% for the second  quarter  and first six months of 1999 when  compared  to the
second quarter and first six months of 1998 in both segments due to a continuing
movement  toward  variable funds and away from fixed options.  During the second
quarter of 1999, the Company began distributing a BOLI separate account product,
resulting in $100 million in deposits during the second quarter.

Self-funded premium  equivalents  increased $197 million or 33% and $380 million
or 34% for the second  quarter and first six months of 1999 when compared to the
second  quarter  and  first  six  months of 1998.  The  increase  was due to the
acquisition  of AH&L ($129 million and $211 million for second quarter and first
six months of 1999),  with the  remainder  coming from the growth in business in
the remainder of the Employee Benefits segment.

Total  assets  increased  $385  million  or 2% when  compared  to the year ended
December 31, 1998.

SEGMENT RESULTS

Employee Benefits

The following is a summary of certain  financial  data of the Employee  Benefits
segment:
<TABLE>

<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                       Three Months Ended             Six Months
                                                                         Ended
                                            June 30,                   June 30,
                                     ------------------------   ------------------------
 Operating Summary (Millions)           1999         1998          1999         1998
                                     -----------   ----------   -----------   ----------

 Premiums                          $      247   $        110 $       512   $        242
 Fee income                                127           110         261            212
 Net investment income                      20            21          39             43
 Realized investment gains
   (losses)                                  1                        (2)             2
                                     -----------   ----------   -----------   ----------
      Total revenues                       395           241         810            499

 Total benefits and expenses               353           206         729            430
 Income tax expense                         14            12          28             21
                                     ===========   ==========   ===========   ==========
      Net income                   $       28   $         23 $        53   $         48
                                     ===========   ==========   ===========   ==========

 Deposits for investment-type
   contracts                       $       18   $         10 $        18   $         15
 Deposits to separate accounts             431           398         925            789
 Self-funded premium
   equivalents                             788           591       1,506          1,126
</TABLE>

Net income for Employee  Benefits  increased $5 million or 22% and $5 million or
10% for the second  quarter  and first six months of 1999 when  compared  to the
second  quarter and the first six months of 1998. The increase was primarily due
to improved morbidity experience.

401(k)  premiums and deposits  increased 10% (from $428 million to $472 million)
and 17% (from $842 million to $988 million) for the second quarter and first six
months  of  1999,  as a  result  of  higher  recurring  deposits  from  existing
customers. Assets under administration (including third-party administration) in
401(k) increased 10% over the first six months of 1998,  primarily due to strong
equity markets. The number of contributing  participants  increased from 477,000
at December 31, 1998 to 497,000 at June 30, 1999.

Equivalent  premium  revenue and fee income for group life and health  increased
44% (from $791 million to $1,140 million) and 45% (from $1,542 million to $2,234
million) from the second quarter and first six months of 1998,  primarily due to
the acquisition of AH&L.

Financial Services

The following is a summary of certain  financial data of the Financial  Services
segment:
<TABLE>

<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                       Three Months Ended             Six Months
                                                                         Ended
                                            June 30,                   June 30,
                                     ------------------------   ------------------------
 Operating Summary (Millions)           1999         1998          1999         1998
                                     -----------   ----------   -----------   ----------

 Premiums                          $       47   $         53 $       100   $        109
 Fee income                                 23            17          43             33
 Net investment income                     196           203         393            404
 Realized investment gains
   (losses)                                  1             5          (2)            17
                                     -----------   ----------   -----------   ----------
      Total revenues                       267           278         534            563

 Total benefits and expenses               235           245         470            497
 Income tax expense                         12            12          24             24
                                     ===========   ==========   ===========   ==========
      Net income                   $       20   $         21 $        40   $         42
                                     ===========   ==========   ===========   ==========

 Deposits for investment-type
   contracts                       $      151   $        254 $       257   $        440
 Deposits to separate accounts             264           177         440            320
</TABLE>

Net income for Financial  Services  decreased $1 million or 5% and $2 million or
5% for the  second  quarter  and first six months of 1999 when  compared  to the
second quarter and first six months of 1999.

Savings

Savings equivalent premiums and deposits increased 2% (from $252 million to $257
million) and 6% (from $476 million to $503  million) for the second  quarter and
first six months of 1999,  which reflects the continuing  trend of policyholders
selecting  variable annuity options  (separate  accounts) as opposed to the more
traditional fixed annuity products.

The   Financial   Services   segment's   core   savings   business   is  in  the
public/non-profit  pension market. The assets of the  public/non-profit  pension
business,  including  separate  accounts  but  excluding  Guaranteed  Investment
Contracts, decreased 1% from December 31, 1998.

Customer  demand for investment  diversification  continued to grow during 1999.
New  contributions  to variable  business  represented 59% of the total deposits
received  in the first  six  months  of 1999  compared  to 58% for the first six
months of 1998.

Customer  participation  in guaranteed  separate  accounts  increased and assets
under management for guaranteed separate account funds were $613 million at June
30, 1999 compared to $562 million at December 31, 1998.

Life Insurance

Individual life insurance revenue premiums and deposits of $227 million and $337
million  for the  second  quarter  and first six  months of 1999  represented  a
decrease of $22 million or 9% and $90 million or 21% from the second quarter and
first six months of 1998,  which is primarily  due to a decrease in deposits for
COLI of $56  million for the first six months of 1999 and a decrease in deposits
for BOLI of $25 million  and $40  million  for the second  quarter and first six
months of 1999.

GENERAL ACCOUNT INVESTMENTS

The Company's primary investment  objective is to acquire assets whose durations
and cash flows reflect the characteristics of the Company's  liabilities,  while
meeting industry, size, issuer and geographic diversification standards.  Formal
liquidity and credit quality parameters have also been established.

The  Company  follows  rigorous  procedures  to control  interest  rate risk and
observes strict asset and liability  matching  guidelines.  These guidelines are
designed to ensure that even in changing market conditions, the Company's assets
will meet the cash flow and  income  requirements  of its  liabilities.  Through
dynamic modeling,  using  state-of-the-art  software to analyze the effects of a
wide  range  of  possible  market  changes  upon  investments  and  policyholder
benefits,  the Company  ensures that its investment  portfolio is  appropriately
structured to fulfill financial obligations to its policyholders.

Fixed Maturities

Fixed maturity  investments include public and privately placed corporate bonds,
public and privately placed  structured assets and government bonds. This latter
category contains both asset-backed and  mortgage-backed  securities,  including
collateralized  mortgage obligations ("CMOs"). The Company's strategy related to
structured  assets is to focus on those with lower volatility and minimal credit
risk. The Company does not invest in higher risk CMOs such as interest-only  and
principal-only strips, and currently has no plans to invest in such securities.

Private  placement  investments,  which are  primarily  in the  held-to-maturity
category,  are generally less marketable  than publicly traded assets,  yet they
typically offer covenant protection which allows the Company,  if necessary,  to
take appropriate action to protect its investment. The Company believes that the
cost of the additional monitoring and analysis required by private placements is
more than offset by their enhanced yield.

One of the Company's  primary  objectives  is to ensure that its fixed  maturity
portfolio is maintained at a high average  quality,  so as to limit credit risk.
If not  externally  rated,  the  securities  are rated by the Company on a basis
intended to be similar to that of rating agencies.

        The    distribution    of   the   fixed   maturity    portfolio    (both
available-for-sale  and  held-to-maturity)  by credit  rating is  summarized  as
follows:
<TABLE>

<S>                                                      <C>                     <C>
                                                    June 30,            December 31,
                                                      1999                  1998
                                               -------------------    ------------------

AAA                                                   48.8%                 45.6%
AA                                                     8.8%                  9.4%
A                                                     20.7%                 23.8%
BBB                                                   21.2%                 20.7%
BB and Below (non-investment grade)                     .5%                  0.5%
                                               -------------------    ------------------
                  TOTAL                              100.0%                100.0%
</TABLE>

        During the first six months of 1999,  net  unrealized  gains (losses) on
fixed   maturities   included  in   stockholders'   equity,   which  is  net  of
policyholder-related amounts and deferred income taxes, decreased surplus by $89
million.

LIQUIDITY AND CAPITAL RESOURCES

        The Company's operations have liquidity requirements that vary among the
principal  product lines. Life insurance and pension plan reserves are primarily
long-term  liabilities.   Accident  and  health  reserves,  including  long-term
disability, consist of both short-term and long-term liabilities. Life insurance
and pension plan reserve  requirements are usually stable and  predictable,  and
are supported  primarily by long-term,  fixed income  investments.  Accident and
health claim  demands are stable and  predictable  but  generally  shorter term,
requiring greater liquidity.

        Generally, the Company has met its operating requirements by maintaining
appropriate levels of liquidity in its investment  portfolio  utilizing positive
cash flows from operations.  Liquidity for the Company has remained  strong,  as
evidenced by  significant  amounts of  short-term  investments  and cash,  which
totaled $354 million and $596 million as of June 30, 1999 and December 31, 1998,
respectively.

        Funds provided from premiums and fees,  investment income and maturities
of investment  assets are reasonably  predictable and normally exceed  liquidity
requirements for payment of claims,  benefits and expenses.  However,  since the
timing of available  funds cannot  always be matched  precisely to  commitments,
imbalances may arise when demands for funds exceed those on hand. Also, a demand
for funds  may arise as a result of the  Company  taking  advantage  of  current
investment  opportunities.  The  Company's  capital  resources  represent  funds
available for long-term  business  commitments and primarily consist of retained
earnings  and  proceeds  from  the  issuance  of  commercial  paper  and  equity
securities.  Capital  resources  provide  protection for  policyholders  and the
financial strength to support the underwriting of insurance risks, and allow for
continued business growth. The amount of capital resources that may be needed is
determined by the Company's senior management and Board of Directors, as well as
by  regulatory  requirements.  The  allocation  of  resources  to new  long-term
business  commitments is designed to achieve an attractive  return,  tempered by
considerations of risk and the need to support the Company's existing business.

The Company's financial strength provides the capacity and flexibility to enable
it to raise funds in the capital  markets  through  the  issuance of  commercial
paper. The Company continues to be well capitalized,  with sufficient  borrowing
capacity  to meet the  anticipated  needs of its  business.  The Company had $30
million and $40 million of  commercial  paper  outstanding  at June 30, 1999 and
December  31,  1998.  The  commercial  paper has been  given a rating of A-1+ by
Standard & Poor's  Corporation and a rating of P-1 by Moody's Investors Service,
each being the highest rating available.

YEAR 2000 ISSUE

The Year 2000  ("Y2K")  problem  arises  when a computer  performing  date-based
computations  or operations  produces  erroneous  results due to the  historical
practice of using two digit years within  computer  hardware and software.  This
causes  errors  or  misinterpretations  of the  century  in  date  calculations.
Virtually all businesses,  including the Company,  are required to determine the
extent of their Y2K  problems.  Systems  that  have a Y2K  problem  must then be
converted or replaced by systems that will operate correctly with respect to the
year 2000 and beyond.

Great-West   Life  &  Annuity   Insurance   Company   ("GWL&A")   provides   all
administrative   services  to  the  Company.  GWL&A  has  a  written  plan  that
encompasses all computer  hardware,  software,  networks,  facilities  (embedded
systems),   and  telephone  systems.  The  plan  also  includes  provisions  for
identifying  and  verifying  that major  vendors and  business  partners are Y2K
compliant.  GWL&A is developing  contingency plans to address the possibility of
both  internal  and  external  failures  as well.  The plan  calls  for full Y2K
compliance  for core  systems by June 30, 1999 and full Y2K  compliance  for all
GWL&A systems by October 31, 1999.

GWL&A's plan  establishes  five phases for becoming  Y2K  compliant.  Phase 1 is
"impact analysis" which includes initial inventory and preliminary assessment of
Y2K impact.  Phase 2 is  "solution  planning"  which  includes  system by system
planning to outline the approach and timing for reaching compliance.  Phase 3 is
"conversion/renovation" which means the actual process of replacing or repairing
non-compliant  systems. Phase 4 is "testing" to ensure that the systems function
correctly under a variety of different date scenarios  including  current dates,
year 2000 and leap year dates. Phase 5 is  "implementation"  which means putting
Y2K compliant systems back into production.

As of June 30,  1999,  GWL&A is  essentially  Y2K ready  (99%  complete  for all
phases).  Only five minor systems require additional work, and that work will be
completed by October 1, 1999.

In addition to ensuring  that GWL&A's own systems are Y2K  compliant,  GWL&A has
identified third parties with which GWL&A has significant business relationships
in order to assess  the  potential  impact on GWL&A of the  third  parties'  Y2K
issues  and  plans.  As of June  30,  1999,  GWL&A  had  completed  most of this
assessment process. GWL&A will continue to investigate third party readiness and
will conduct system testing with third parties  throughout  1999. GWL&A does not
have control over these third parties and cannot make any  representations as to
what extent GWL&A's and the Company's future operating  results may be adversely
affected by the failure of any third party to address  successfully  its own Y2K
issues.

On the basis of currently available information,  the expense incurred by GWL&A,
including  anticipated future expenses,  related to the Y2K issue has not and is
not  expected  to be  material  to  GWL&A's  financial  condition  or results of
operations.  GWL&A has spent  approximately  $12.5  million  on its Y2K  project
through the end of June 30, 1999 and expects to spend up to approximately  $15.3
million on its Y2K project.  All of these funds will come from GWL&A's cash flow
from operations. GWL&A has continued other scheduled non-Y2K information systems
changes and  upgrades.  Although  work on Y2K issues may have  resulted in minor
delays on the other  projects,  the delays are not  expected  to have a material
adverse  effect on GWL&A's or the  Company's  financial  condition or results of
operations.

The most reasonably likely worst case Y2K scenario is that GWL&A will experience
isolated  internal  or third party  computer  failures  and will be  temporarily
unable to process insurance and annuity benefit transactions. All of GWL&A's Y2K
efforts have been  designed to prevent  such an  occurrence.  However,  if GWL&A
identifies  internal or third party Y2K issues which cannot be timely corrected,
there can be no assurance  that GWL&A can avoid Y2K problems or that the cost of
curing the problem will not be material.

In an effort to mitigate  risks  associated  with Y2K failures,  GWL&A is in the
process of developing  contingency  plans to address core  functions,  including
relations with third parties.  It is GWL&A's  expectation that contingency plans
will address  possible  failures  generated  internally,  by vendors or business
partners,   and  by  customers.   Possible  general  approaches  include  manual
processing,  payments  on an  estimated  basis  and  use  of  disaster  recovery
facilities.

PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

There are no material  pending legal  proceedings to which the Company or any of
its subsidiaries is a party or of which any of their property is the subject.

ITEM 2.  CHANGES TO SECURITIES AND USE OF PROCEEDS

(d)     Use of Proceeds

Pursuant  to  a  registration  statement  on  Form  S-3  (File  Nos.  333-64473,
333-64473-01)  and a  registration  statement  on Form S-3 (Nos.  333-77405  and
333-77405-01)  (the  "Registration  Statements")  filed  by  the  Company  and a
subsidiary  trust,  Great-West Life & Annuity Insurance Capital I (the "Trust"),
which were declared effective by the Securities and Exchange Commission on April
28, 1999 and April 29, 1999, respectively,  the Company and the Trust registered
for sale (i) $175 million in aggregate  liquidation  amount of the Trust's 7.25%
Subordinated  Capital Income  Securities  (the "Capital  Securities"),  (ii) the
Company's 7.25% Junior  Subordinated  Debentures due 2029 (the "Debentures") and
(iii) the guarantee of the Capital  Securities by the Company for the benefit of
the holders from time to time of the Capital Securities.

Lehman  Brothers Inc. and Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated
acted as the  managing  underwriters  in  connection  with the  offering  of the
Capital Securities (the "Offering").  The Capital Securities were offered at the
aggregate  price of $175 million.  The Offering  commenced on April 29, 1999 and
was  completed on May 4, 1999.  All of the Capital  Securities  were sold in the
Offering.

The expenses  incurred by the Trust in connection with the Offering were paid by
the  Company.  The  Company  estimates  that,  from  the  effective  date of the
Registration Statements to June 30, 1999, it incurred an aggregate of $6,316,803
in fees and expenses in connection with the Offering, as follows: (i) $5,397,500
in underwriters' compensation and (ii) $919,303 of miscellaneous other expenses.

The proceeds of $175 million from the Offering were invested by the Trust in the
Debentures.  The Company's net proceeds from the sale of the  Debentures,  after
deducting the above-listed  expenses of the Offering,  were $168,683,197.  These
net proceeds  were  invested by the Company in a surplus note of GWL&A.  The net
proceeds  will be used by GWL&A for  general  corporate  purposes  and have been
invested in bonds with  maturities  equal to the  maturity  of the  Subordinated
Capital Income Securities.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Index to Exhibits

            Exhibit Number
                                             Title                     Page
            ----------------     -------------------------------   -------------

                  27             Financial Data Schedule                21

(b)     Reports on Form 8-K

GWL&A filed a Form 8-K on April 27, 1999, disclosing its second quarter results.

SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned  thereunto
duly authorized.


                                    GWL&A FINANCIAL INC.



DATE: August 12, 1999    BY: /s/     Glen R. Derback
                           -----------------------------------------------------
                         Glen R. Derback, Vice President and Controller
                         (Duly authorized officer and chief accounting officer)






<PAGE>


Exhibit 27                                     Financial Data Schedule

<TABLE>

GWL&A Financial Inc. as of and for the period ended June 30, 1999 (000s)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
------------------------------------------------------------------------------------------------

Fixed Maturities Available-for-Sale                                                  6,869,952
Fixed Maturities Held-to-Maturity - Carrying Value                                   2,234,038
Fixed Maturities Held-to-Maturity - Market Value                                     2,243,060
Investment in Equity Securities                                                         48,144
Mortgage Loans on Real Estate
                                                                                    ------------
Total Investments                                                                   13,131,737

Cash and Cash Equivalents                                                              149,214
Reinsurance Recoverable on Paid Losses                                                 179,909
Deferred Policy Acquisition Costs                                                      276,399
                                                                                    ------------
Total Assets                                                                        25,508,124

Policy Liabilities - Future Benefits, Losses, Claims                                12,089,064
Policy Liabilities - Unearned Premiums
Policy Liabilities - Other Claims and Benefits
Other Policyholder Funds                                                               268,873
Notes Payable, Bonds, Mortgages, and Similar Debt                                       29,844
Preferred Stocks Mandatory Redemption
Preferred Stocks - Not Mandatory
Common Stock                                                                               250
Other Stockholder's Equity                                                           1,160,310
                                                                                    ------------
Total Liabilities and Stockholder's Equity                                          25,508,124

Premiums and Fee Income                                                                915,782
Net Investment Income                                                                  432,102
Realized Investment Gains and Losses                                                    (3,926)
Other Income
Benefits, Claims, Losses, and Settlement Expenses                                      796,744
Underwriting Acquisition and Insurance Expenses - Amortization of Deferred              15,839
Policy Acq. Costs
Underwriting Acquisition and Insurance Expense - Other                                 386,541
Income or Loss Before Income Taxes                                                     144,834
Income Tax Expense                                                                      51,756
Income/Loss Continuing Operations                                                       93,078
Discontinued Operations
Extraordinary Items
Cumulative Effect - Changes in Accounting Principles
Net Income or Loss                                                                      93,078
Earnings Per Share - Primary                                                            N/A
Earnings Per Share - Fully Diluted                                                      N/A


</TABLE>