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                      June 30, 1998
ended

                                       OR

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

For the transaction period                          to
from

Commission file number

                         GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
                             (Exact name of registrant as specified in its
                                               charter)

              Colorado                                 84-0467907
   (State or other jurisdiction of           (I.R.S. Employer Identification
   incorporation or organization)                        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,  1998,  7,032,000  shares of the  registrant's  common stock were
outstanding, all of which were owned by the registrant's parent company.

NOTE:    This Form 10-Q is filed by the  registrant  only as a  consequence  of
         the sale by the registrant of a market value adjusted annuity product.


<PAGE>


                                TABLE OF CONTENTS



                                                                            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      9
                   Condition and Results of Operations

Part II    OTHER INFORMATION

           Item 1  Legal Proceeding                                       13

           Item 6  Exhibits and Reports on Form 8-K                       13

           Signatures                                                     14

















                                    - 2 -


<PAGE>


PART I   FINANCIAL INFORMATION
ITEM 1   FINANCIAL STATEMENTS

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
-------------------------------------------------------------------------------
(Unaudited)
                                   Three Months Ended       Six Months Ended
                                        June 30,                June 30,
                                  ----------------------  ----------------------
                                    1998        1997        1998        1997
                                  ----------  ----------  ----------  ----------
REVENUES:
  Premium and fee income           290,139  $  452,434  $  595,577  $  718,749 
  Net investment income            223,891     215,627     447,425     430,395
  Net realized gains (losses)        5,342      (2,216)     19,315      (7,160)
on investments
                                  ----------  ----------  ----------  ----------

                                   519,372     665,845    1,062,317   1,141,984
                                  ----------  ----------  ----------  ----------
BENEFITS AND EXPENSES:
  Life and other policy benefits   139,547     128,022     292,468     251,842
  Increase in reserves              20,790     167,545      48,163     183,374
  Interest paid or credited to     122,207     131,731     246,995     270,596
contractholders
  Provision for policyholders'
share of
    Earnings on participating        1,390       3,657       3,359       4,514
business
  Dividends to policyholders        14,305      14,552      34,125      34,013
                                  ----------  ----------  ----------  ----------

                                   298,239     445,507     625,110     744,339

  Commissions                       29,354      24,453      56,836      50,031
  Operating expenses               116,197     108,225     231,823     205,329
  Premium taxes                      7,645       5,506      13,184       9,297
                                  ----------  ----------  ----------  ----------

                                   451,435     583,691     926,953    1,008,996
                                  ----------  ----------  ----------  ----------

INCOME BEFORE INCOME TAXES          67,937      82,154     135,364     132,988

PROVISION FOR INCOME TAXES:
   Current                          29,349      18,736      41,289      32,105
   Deferred                         (5,606)     17,314       3,746      22,932
                                  ----------  ----------  ----------  ----------

                                    23,743      36,050      45,035      55,037
                                  ----------  ----------  ----------  ----------

NET INCOME                          44,194  $   46,104  $   90,329  $   77,951
                                  ==========  ==========  ==========  ==========







See notes to consolidated financial statements.

                                     -3-


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
-------------------------------------------------------------------------------

                                                      June 30,      December
                                                                       31,
ASSETS                                                  1998          1997
------
                                                     ------------  ------------
                                                     (Unaudited)
INVESTMENTS:
  Fixed Maturities:
    Held-to-maturity, at amortized cost            $  2,068,487  $  2,082,716
       (fair value $2,146,865 and $2,151,476)
    Available-for-sale, at fair value                 6,665,040     6,698,629
       (amortized cost $6,482,598 and $6,541,422)
  Mortgage loans on real estate, net                  1,135,750     1,235,594
  Common stock                                           42,401        39,021
  Real estate, net                                       72,700        93,775
  Policy loans                                        2,784,178     2,657,116
  Short-term investments, available-for-sale
       (cost approximates fair value)                   368,698       399,131
                                                     ------------  ------------

      Total Investments                              13,137,254    13,205,982

Cash                                                     89,507       126,278
Reinsurance receivable                                  104,425        84,364
Deferred policy acquisition costs                       238,390       255,442
Investment income due and accrued                       160,808       165,827
Other assets                                            156,695       121,543
Premiums in course of collection                         76,696        77,008
Deferred income taxes                                   179,420       193,820
Separate account assets                               9,087,909     7,847,451
                                                     ------------  ------------
















TOTAL ASSETS                                       $ 23,231,104  $ 22,077,715
                                                     ============  ============


See notes to consolidated financial statements.                    (Continued)

                                    - 4 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
-------------------------------------------------------------------------------

                                                      June 30,      December
                                                                       31,
LIABILITIES AND STOCKHOLDER'S EQUITY                    1998          1997
------------------------------------
                                                     ------------  ------------
                                                     (Unaudited)
POLICY BENEFIT LIABILITIES:
    Policy reserves                                $ 11,150,948  $ 11,102,719
    Policy and contract claims                          378,084       375,499
    Policyholders' funds                                184,887       165,106
    Experience refunds                                   67,228        84,935
    Provision for policyholders' dividends               64,007        62,937

GENERAL LIABILITIES:
    Due to Parent Corporation                           123,663       126,656
    Repurchase agreements                               189,245       325,538
    Commercial paper                                     59,654        54,058
    Other liabilities                                   534,699       605,032
    Undistributed earnings on
      participating business                            145,215       141,865
    Separate account liabilities                      9,087,909     7,847,451
                                                     ------------  ------------

      Total Liabilities                              21,985,539    20,891,796
                                                     ------------  ------------

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,
              600 shares issued and outstanding          60,000        60,000
            Series B, cumulative, 1,500 shares
authorized,
              liquidation value of $100,000 per
share,
              200 shares issued and outstanding          20,000        20,000
            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             41,800        41,800
value of $20.90
              per share, issued, and outstanding
    Common stock, $1 par value; 50,000,000 shares
authorized;
       7,032,000 shares issued and outstanding            7,032         7,032
    Additional paid-in capital                          690,748       690,748
    Accumulated other comprehensive income               58,899        52,807
    Retained earnings                                   367,086       313,532
                                                     ------------  ------------

      Total Stockholder's Equity                      1,245,565     1,185,919
                                                     ------------  ------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY         $ 23,231,104  $ 22,077,715
                                                     ============  ============


See notes to consolidated financial statements.

                                    - 5 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
-------------------------------------------------------------------------------
(Unaudited)
                                                          Six Months Ended
                                                              June 30,
                                                       ------------------------
                                                          1998         1997
                                                       -----------  -----------

OPERATING ACTIVITIES:
    Net income                                       $     90,329 $     77,951
    Adjustments to reconcile net income to
      net cash provided by operating activities:
       Gain allocated to participating                      3,359        7,268
policyholders
       Amortization of investments                         (3,001)       3,408
       Realized losses (gains) on disposal of
investments
           and write-downs of mortgage loans and          (19,315)       7,160
real estate
       Amortization                                        28,717       23,995
       Deferred income taxes                               11,125       25,810
    Changes in assets and liabilities:
        Policy benefit liabilities                        172,304      265,372
        Reinsurance receivable                            (20,061)     115,346
        Accrued interest and other receivables              5,331       31,057
        Other, net                                       (123,642)    (188,507)
                                                       -----------  -----------
                 Net cash provided by operating           145,146      368,860
activities
                                                       -----------  -----------

INVESTING ACTIVITIES:
    Proceeds from sales, maturities, and
        redemptions of investments:
        Fixed maturities
             Held-to-maturity
                Maturities and redemptions                214,104      197,412
             Available-for-sale
                Sales                                   4,197,431    1,181,648
                Maturities and redemptions                584,264      395,902
        Mortgage loans                                    117,099      100,311
        Real estate                                        16,456       11,366
        Common stock                                        1,983        2,365
    Purchases of investments:
        Fixed maturities
             Held-to-maturity                            (193,416)    (257,448)
             Available-for-sale                        (4,674,954)  (1,721,380)
        Mortgage loans                                    (11,100)      (1,033)
        Real estate                                        (2,323)      (2,675)
        Common stock                                       (3,126)     (27,688)
                                                       -----------  -----------
                 Net cash provided by (used in)           246,418     (121,220)
investing activities
                                                       -----------  -----------




                                                                     (Continued)

                                    - 6 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
-------------------------------------------------------------------------------
(Unaudited)
                                                           Six Months Ended
                                                               June 30,
                                                        ------------------------
                                                          1998          1997
                                                        ----------   -----------

FINANCING ACTIVITIES:
   Contract withdrawals, net of deposits              $  (257,870) $  (343,184)
   Net Parent Corporation borrowings (repayments)          (2,993)      (1,303)
   Dividends paid                                         (36,775)     (34,669)
   Net commercial paper borrowings (repayments)             5,596       (5,268)
   Net repurchase agreements borrowings (repayments)     (136,293)     103,335
   Capital contributions                                                26,483
                                                        ----------   -----------
              Net cash used in financing activities      (428,335)    (254,606)
                                                        ----------   -----------

NET DECREASE IN CASH                                      (36,771)      (6,966)

CASH, BEGINNING OF YEAR                                   126,278      125,182
                                                        ----------   -----------

CASH, END OF PERIOD                                   $    89,507  $   118,216
                                                        ==========   ===========



























See notes to consolidated financial statements.                      (Concluded)

                                    - 7 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

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

1.    GENERAL

      The consolidated financial statements and related notes of Great-West Life
      & Annuity Insurance Company (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.  In the opinion of
      management,  all  adjustments  (consisting of normal  recurring  accruals)
      considered  necessary for a fair  presentation  have been included.  These
      financial  statements  should  be read in  conjunction  with  the  audited
      consolidated  financial  statements  and notes  thereto for the year ended
      December 31, 1997. The results of operations  for the interim  periods are
      not  necessarily  indicative  of the results  that may be expected for the
      year ended December 31, 1998.

      Certain  reclassifications have been made to the 1997 financial statements
      to conform with the basis of presentation in 1998.

2.     NEW ACCOUNTING PRONOUNCEMENTS

      Effective  January 1, 1998,  the Company  adopted  Statement  of Financial
      Accounting  Standards (SFAS) No. 130,  "Reporting  Comprehensive  Income".
      This  Statement  establishes  new  rules  for  reporting  and  display  of
      comprehensive  income and its  components;  however,  the adoption of this
      Statement  had no  impact on the  Company's  net  income or  shareholders'
      equity.  This  Statement  requires  unrealized  gains  or  losses  on  the
      Company's  available-for-sale  securities,  which prior to  adoption  were
      reported  separately  in  shareholders'  equity,  to be  included in other
      comprehensive   income.   Prior  year  financial   statements   have  been
      reclassified to conform to the requirements of SFAS No. 130.

      In June 1998,  the  Financial  Accounting  Standards  Board (FASB)  issued
      Statement of Financial Accounting Standards (SFAS) 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. This Statement requires
      that all derivative financial instruments be recorded on the balance sheet
      at  fair  value.  If  the  derivative  is  not  designated  as  a  hedging
      instrument,  changes in fair value are to be recognized in earnings in the
      period of change.  If certain  conditions  are met,  a  derivative  may be
      designated as a hedge,  in which case the  accounting for a change in fair
      value will depend on the specific exposure being hedged. This Statement is
      effective for all fiscal quarters of fiscal years beginning after June 15,
      1999, and earlier adoption is encouraged. The company has not adopted this
      Statement  as of June 30,  1998.  Management  estimates  the effect of the
      change  will  not  have  a  material  affect  on the  Company's  financial
      statements.

      During the three and six months ended June 30, 1998 and 1997,  total other
      comprehensive  income  amounted  to $4,283 and $6,092 for 1998 and $29,712
      and $3,917 for 1997, respectively.

3.    OTHER

      The Company is involved in various  legal  proceedings  which 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.


                                    - 8 -


<PAGE>


    ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

                                 Three Months Ended      Six Months Ended June
                                      June 30,                    30,
                               ------------------------ ------------------------
    Operating Summary             1998        1997         1998         1997
    (Millions)
                               ----------- ------------ -----------  -----------

    Premiums and fee income  $     290    $    452     $    596    $     719
    Net investment income          224         216          447          430
    Realized investment              5          (2)          19           (7)
    gains (losses)
                               ----------- ------------ -----------  -----------
         Total revenues            519         666        1,062        1,142

    Total benefits and             451         584          927        1,009
    expenses
    Income tax expense              24          36           45           55
                               =========== ============ ===========  ===========
         Net income          $      44    $     46     $     90    $      78
                               =========== ============ ===========  ===========


                                June 30,    December
                                               31,
    Balance Sheet (Millions)      1998        1997
                               ----------- ------------

    Investment assets        $  13,137    $ 13,206
    Separate account assets      9,088       7,847
    Total assets                23,231      22,078
    Total policyholder          11,845      11,791
    liabilities
    Total shareholder's          1,246       1,186
    equity


      Introduction

      The following  discussion addresses the financial condition of the Company
      as of June 30, 1998,  compared with December 31, 1997,  and its results of
      operations  for the quarter and six months ended June 30,  1998,  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 report on Form 10-K for the year-ended  December 31, 1997
      to which the reader is directed for additional information.

      Comparison of Six Months Ended June 30, 1998 and 1997

      On June  30,  1997,  the  Company  recaptured  from  The  Great-West  Life
      Assurance Company (the "Parent  Corporation") an individual  participating
      insurance block of business previously ceded in December 1992. The Company
      recorded  various  assets  and  liabilities  related to the  recapture  as
      discussed  in Footnote 2 to the  Company's  December  31,  1997  financial
      statements.  In addition,  in the process of recording the recapture  both
      life  insurance  premiums and increases in reserves were  increased by the
      amount of the policy reserves recaptured ($156 million).

      Pursuant to a December 1993  agreement  between the Company and the Parent
      Corporation  whereby the  Company  assumed  responsibility  for the Parent
      Corporation's income tax liability for the fiscal years prior to 1994, the
      Company had previously recorded a contingent liability  provision.  During
      the second quarter of 1997, the Company's results of operations included a
      release of $48 million  from the  provision to reflect the  resolution  of
      certain tax matters with the Internal  Revenue Service related to the 1990
      and 1991 audit years.  Audits of tax years 1992 and 1993 are  currently in
      process. In the opinion of Company management, the amounts paid or accrued
      are adequate,  however,  it is possible that the Company's accrued amounts
      may change as a result of the completion of the IRS audits.

                                       - 9 -



<PAGE>



      Net income  increased 16% from $78 million in 1997 to $90 million in 1998.
      Net income for the second  quarter of 1998 decreased 4% from the same time
      period in 1997.  The  fluctuation  in the  in-quarter  amount  relates  to
      several  non-recurring  transactions  discussed  above.  The  $48  million
      liability  release in 1997 included $15 million which was  attributable to
      the  participating  policyholders  and is  reflected as a liability on the
      balance sheet,  thus, only $33 million of the release directly impacts net
      income. In addition to the contingent  liability release, the Company also
      in the normal  course of business  reviewed  its  deferred  tax assets and
      liabilities  and  increased  its  liability  by $21  million (of which $10
      million is attributable to participating  policyholders) which resulted in
      a $11 million  impact to net income during the second quarter of 1997. The
      net impact of these  transactions  is an increase in income of $22 million
      in the second quarter of 1997. Excluding the affect of these transactions,
      the growth in net income for the second  quarter and six months of 1998 is
      81% and 60% which reflects  realized capital gains on investments  (versus
      losses in 1997),  higher fee income from assets under  management,  higher
      margins on investment products, and better mortality.

      Premiums and other income decreased 36% and 17% for the second quarter and
      six  months  of 1998,  respectively.  These  decreases  also  reflect  the
      insurance  recapture and the contingent tax provision release discussed in
      the  preceding  two  paragraphs.  Excluding  these  items from  1997,  the
      increase would have been 17% and 16% for the second quarter and six months
      of 1998 which  primarily  reflects  higher fee income  from  assets  under
      management  and group health  premiums where case sales for the six months
      ended June 30, 1998 are 797 versus 656 for the same period in 1997.

      Net investment  income increased 4% during both the second quarter and six
      months  of 1998.  This  growth  in net  investment  income  is a result of
      improved performance on the mortgage portfolio. The actual earned rate for
      the second  quarter of 1998 was 7.21% versus 7.07% for the second  quarter
      of 1997.

      Realized  investment  gains (losses)  changed from a net realized  capital
      loss of $7 million in 1997 to a net  realized  capital gain of $19 million
      in 1998.  The  decrease  in interest  rates in the second  quarter of 1998
      resulted  in  realized  gains  totaling  $20  million on the sale of fixed
      maturities,  while  higher  interest  rates in the second  quarter of 1997
      contributed to $4 million of fixed maturity  losses.  Provisions for asset
      losses were $1 million in 1998 versus $4 million in 1997.

      Total  benefits and expenses  decreased 23% and 8% for the second  quarter
      and six  months  of 1998.  Excluding  the  insurance  recapture  discussed
      previously,  the  growth  for  these  periods  is 6% and 9%  respectively.
      Operating  expenses  increased  7% and 13% for the second  quarter and six
      months of 1998 as a result of costs  associated with systems  development,
      development  of  health   maintenance   organizations   (HMOs),   and  the
      internalization of managed care.

      The  effective  income  tax  rate in 1998 is  lower  than  1997 due to the
      recognition of net operating loss  carryforwards  of  subsidiaries in 1998
      and the tax strengthening in 1997 previously discussed.

      Investment assets decreased $68 million to $13.1 billion from December 31,
      1997 to June 30, 1998. At the same time separate  account assets increased
      $1.3  billion  bringing  the  total to $9.1  billion.  This  reflects  the
      continued trend of  contractholders  moving away from the more traditional
      guaranteed products to variable options.

      Business Units Results from Operations

      The following  discussion of results from operations is presented in terms
      of the major business units of the company:




                                    - 10 -


<PAGE>


      Employee Benefits

      Total revenue premium (including  premium  equivalents) for group life and
      health increased 13% from 1997 levels.  As discussed above,  case sales in
      the Company's group life and health  business  increased 22% over the same
      period in 1997 resulting in a net case growth of 232 cases.

      Of the total 401(k) cash flow received  during 1998,  94% was allocated to
      variable funds. Total assets under administration  (including  third-party
      administration)  grew from  $5.4  billion  at  December  31,  1997 to $6.1
      billion  at  June  30,  1998.  The  number  of  participants  contributing
      increased  from  430,000 at December 31, 1997 to more than 458,000 at June
      30, 1998.

      Financial Services

      Savings

      Assets under  administration  in the public  non-profit  (P/NP)  business,
      including separate accounts, increased 2% during 1998 to $7.8 billion. New
      contributions to variable  business  represented 58% of the total deposits
      received in 1998  compared  to 70% for the six months of 1997.  The higher
      percentage in 1997 was due to a large rollover on one particular case.

      Insurance

      Excluding the effect of the insurance recapture, individual life insurance
      premiums  and  deposits of $424  million in 1998  increased  77% from 1997
      which is primarily due to sales of the Company's Bank-Owned Life Insurance
      (BOLI) product ($229 million in 1998 versus $64 million in 1997).

      General Account Investments

      The Company's  investment  strategies and portfolios are intended to match
      the duration of the related  liabilities and provide  sufficient cash flow
      to meet obligations  while  maintaining a competitive rate of return.  The
      duration of these investments is monitored,  and investment  purchases and
      sales are executed with the objective of having  adequate funds  available
      to satisfy the Company's maturing liabilities.

      It is management's philosophy that the portfolio of fixed maturities be of
      high  quality.  The  fixed  maturities  in  the  Company's  portfolio  are
      generally rated by external rating agencies,  and if not externally rated,
      are rated by the Company on a basis believed to be similar to that used by
      rating agencies.

      The  distribution  of the fixed  maturity  portfolio  by credit  rating is
      summarized as follows:

                                                June 30,         December 31,
                                                  1998               1997
                                             ----------------   ----------------

       AAA                                         44.8%             45.7%
       AA                                           9.4%              8.8%
       A                                           24.3%             23.8%
       BBB                                         21.0%             20.7%
       BB and Below (non-investment                  .5%              1.0%
       grade)
                                             ----------------   ----------------
                                                  100.0%            100.0%




                                    - 11 -


<PAGE>



      During the first six months of 1998,  net  unrealized  gains  (losses)  on
      fixed  maturities  included  in  stockholders'  equity,  which  is  net of
      policyholder-related  amounts and deferred income taxes, increased surplus
      by $6 million resulting in accumulated other  comprehensive  income of $59
      million.

      Liquidity and Capital Resources

      Liquidity for the Company has remained  strong as evidenced by significant
      amounts of short-term  investments  and cash in the aggregate.  Generally,
      the Company has met its operating requirements by maintaining  appropriate
      levels of liquidity in its investment portfolio and through utilization of
      overall positive cash flows.

      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.  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  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 continues to conduct strategic and financial reviews
      of its businesses to deploy its capital resources most efficiently.




























                                    - 12 -


<PAGE>


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 6      Exhibits and Reports on Form 8-K

            (a)   Index to Exhibits

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

                        27         Financial Data           15
                                    Schedule

            (b)   Reports on Form 8-K

                  No  reports  on Form 8-K have been  filed  during  the  second
            quarter of 1998.


































                                    - 13 -


<PAGE>


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.


                                       GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY



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






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