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 March 31, 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 333-1173
          ============================================================

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

                               Colorado 84-0467907
=============================================== =============================

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

              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 March 31, 1999,  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>


                                                       8
                                        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                 9
                        Condition and Results of Operations

Part II        OTHER INFORMATION

               Item 1   Legal Proceedings                                                 15

               Item 5   Other Information                                                 15

               Item 6   Exhibits and Reports on Form 8-K                                  16

               Signatures                                                                 16



</TABLE>
















<PAGE>


PART I   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
(Dollars in Thousands)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                         Three Months Ended
                                                                             March 31,
                                                                     ---------------------------
                                                                         1999          1998
                                                                     ------------- -------------
REVENUES:
  Premiums                                                         $    317,754       188,210
  Fee income                                                            154,036       117,228
  Net investment income                                                 216,113       223,534
  Net realized gains (losses) on                                         (6,043)       13,973
investments
                                                                     ------------- -------------

                                                                        681,860       542,945
                                                                     ------------- -------------
BENEFITS AND EXPENSES:
  Life and other policy benefits                                        240,389       152,921
  Increase in reserves                                                   35,075        27,373
  Interest paid or credited to                                          109,965       124,788
contractholders
  Provision for policyholders' share
of
    earnings on participating business                                    1,452         1,969
  Dividends to policyholders                                             21,893        19,820
                                                                     ------------- -------------

                                                                        408,774       326,871
                                                                     ------------- -------------
                                                                     ------------- -------------

  Commissions                                                            45,034        27,482
  Operating expenses                                                    150,122       115,626
  Premium taxes                                                           7,138         5,539
                                                                     ------------- -------------

                                                                        611,068       475,518
                                                                     ------------- -------------

INCOME BEFORE INCOME TAXES                                               70,792        67,427

PROVISION FOR INCOME TAXES:
   Current                                                               15,854        11,940
   Deferred                                                               9,534         9,352
                                                                     ------------- -------------

                                                                         25,388        21,292
                                                                     ------------- -------------

NET INCOME                                                         $     45,404        46,135      
                                                                     ============= =============


</TABLE>





See notes to consolidated financial statements.


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>

<S>     <C>    <C>    <C>    <C>    <C>    <C>
-----------------------------------------------------------------------------------------------

                                                                  March 31,      December 31,
ASSETS                                                              1999             1998
------
                                                                --------------   --------------
                                                                 (Unaudited)
INVESTMENTS:
  Fixed Maturities:
    Held-to-maturity, at amortized cost
       (fair value $2,178,395 and $2,298,936)                 $    2,117,130   $    2,199,818
    Available-for-sale, at fair value
       (amortized cost $6,890,232 and $6,752,532)                  6,972,586        6,936,726
  Mortgage loans on real estate, net                               1,085,320        1,133,468
  Common stock                                                        49,472           48,640
  Real estate, net                                                    78,370           73,042
  Policy loans                                                     2,571,412        2,858,673
  Short-term investments, available-for-sale
       (cost approximates fair value)                                247,177          420,169
                                                                --------------   --------------

      Total Investments                                           13,121,467       13,670,536

Cash                                                                 242,325          176,119
Reinsurance receivable                                               180,034          192,958
Deferred policy acquisition costs                                    251,370          238,901
Investment income due and accrued                                    147,455          157,587
Other assets                                                         367,558          311,078
Premiums in course of collection                                      95,381           84,940
Deferred income taxes                                                201,157          191,483
Separate account assets                                           10,560,135       10,099,543
                                                                --------------   --------------






TOTAL ASSETS                                                 $    25,166,882   $   25,123,145
                                                                ==============   ==============
</TABLE>


See notes to consolidated financial statements.                 (Continued)


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
<TABLE>
(Dollars in Thousands)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
-----------------------------------------------------------------------------------------------

                                                                  March 31,      December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                1999             1998
------------------------------------
                                                                --------------   --------------
                                                                 (Unaudited)
POLICY BENEFIT LIABILITIES:

    Policy reserves                                           $   11,648,442   $   11,839,714
    Policy and contract claims                                       477,018          491,932
    Policyholders' funds                                             197,576          181,779
    Provision for policyholders' dividends                            70,640           69,530

GENERAL LIABILITIES:

    Due to Parent Corporation                                         49,457           52,877
    Repurchase agreements                                             68,971          244,258
    Commercial paper                                                  39,703           39,731
    Other liabilities                                                722,081          761,505
    Undistributed earnings on
      participating business                                         144,529          143,717
    Separate account liabilities                                  10,560,135       10,099,543
                                                                --------------   --------------

      Total Liabilities                                           23,978,552       23,924,586
                                                                --------------   --------------


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
    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                                       699,556          699,556
    Accumulated other comprehensive income                            26,677           61,560
    Retained earnings                                                455,065          430,411
                                                                --------------   --------------

      Total Stockholder's Equity                                   1,188,330        1,198,559
                                                                --------------   --------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                    $   25,166,882   $   25,123,145
                                                                ==============   ==============
</TABLE>


See notes to consolidated financial statements.


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
(Dollars in Thousands)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                       Three Months Ended
                                                                           March 31,
                                                                  -----------------------------
                                                                      1999            1998
                                                                  -------------   -------------

OPERATING ACTIVITIES:
    Net income                                                  $      45,404   $      46,135
    Adjustments to reconcile net income to
      net cash provided by operating activities:
       Gain allocated to participating policyholders                    1,452           1,969
       Amortization of investments                                        820          (1,415)
       Realized losses (gains) on disposal of investments
           and write-downs of mortgage loans and real estate            6,043         (13,975)
       Amortization                                                     8,065          11,496
       Deferred income taxes                                            9,534          16,803
    Changes in assets and liabilities:
        Policy benefit liabilities                                    392,918         121,920
        Reinsurance receivable                                         12,924         (10,077)
        Accrued interest and other receivables                           (309)         (1,757)
        Other, net                                                    (86,024)         (1,099)
                                                                  -------------   -------------
                 Net cash provided by operating activities            390,827         170,000
                                                                  -------------   -------------

INVESTING ACTIVITIES:
    Proceeds from sales, maturities, and
        redemptions of investments:
        Fixed maturities
             Held-to-maturity
                Maturities and redemptions                            190,330          85,666
             Available-for-sale
                Sales                                               1,205,592       3,163,353
                Maturities and redemptions                            204,750         261,015
        Mortgage loans                                                 46,148          48,878
        Real estate                                                                    13,641
        Common stock                                                    3,842           1,409
    Purchases of investments:
        Fixed maturities
             Held-to-maturity                                        (104,092)        (58,626)
             Available-for-sale                                    (1,380,429)     (3,353,522)
        Mortgage loans                                                   (744)         (5,322)
        Real estate                                                    (6,399)         (1,480)
        Common stock                                                   (3,678)         (2,268)
                                                                  -------------   -------------
                 Net cash provided by investing activities            155,320         152,744
                                                                  -------------   -------------
</TABLE>



                                              (Continued)



<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
  (Dollars in Thousands)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                        Three Months Ended
                                                                            March 31,
                                                                   -----------------------------
                                                                       1999            1998
                                                                   -------------   -------------

FINANCING ACTIVITIES:
   Contract withdrawals, net of deposits                         $    (280,456)  $    (207,680)
   Net Parent Corporation borrowings (repayments)                       (3,420)          9,825
   Dividends paid                                                      (20,750)        (17,440)
   Net commercial paper borrowings (repayments)                            (28)          9,842
   Net repurchase agreements borrowings (repayments)                  (175,287)       (138,244)
                                                                   -------------   -------------
              Net cash used in financing activities                   (479,941)       (343,697)
                                                                   -------------   -------------

 NET INCREASE (DECREASE) IN CASH                                        66,206         (20,953)

CASH, BEGINNING OF YEAR                                                176,119         126,278
                                                                   -------------   -------------

CASH, END OF PERIOD                                              $     242,325   $     105,325
                                                                   =============   =============


</TABLE>






See notes to consolidated financial statements.              (Concluded)



<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands)

------------------------------------------------------------------------------
(Unaudited)

1.      BASIS OF PRESENTATION

        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.  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  audited
        consolidated  audited  financial  statements and the accompanying  notes
        included in the Company's latest annual report on Form 10-K, as amended,
        for the year ended December 31, 1998.

        Operating  results  for the three  months  ended  March 31, 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.  This Statement is
        effective  for the  Company  beginning  January  1,  2000,  and  earlier
        adoption is encouraged. The Company has not adopted this Statement as of
        March  31,  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 March 31, 1999, the Company capitalized $4,718 in internal
        use software costs related to the adoption of SOP 98-1.


3.      OTHER

        The 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>
<TABLE>


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

                                                                    Three Months Ended March 31,
                                                                    -----------------------------
    Operating Summary (Millions)                                        1999           1998
                                                                    -------------  --------------

    Premiums                                                     $       318     $       188
    Fee income                                                           154             117
    Net investment income                                                216             224
    Realized investment gains                                             (6)             14
    (losses)
                                                                    -------------  --------------
         Total revenues                                                  682             543

    Total benefits and expenses                                          611             476
    Income tax expense                                                    26              21
                                                                    =============  ==============
         Net income                                              $        45     $        46
                                                                    =============  ==============


    Deposits for investment-type contracts                       $       106     $       191
    Deposits to separate accounts                                        670             535
    Self-funded premium equivalents                                      718             536


                                                                     March 31,     December 31,
    Balance Sheet (Millions)                                            1999           1998
                                                                    -------------  --------------

    Investment assets                                            $    13,121     $    13,671
    Separate account assets                                           10,560          10,100
    Total assets                                                      25,167          25,123
    Total policy benefit                                              12,394          12,583
    liabilities
    Long-term debt - due to
         Parent Corporation                                               36              35
    Total shareholder's equity                                         1,188           1,199

</TABLE>

        GENERAL

        The  following  discussion  addresses  the  financial  condition  of the
        Company as of March 31, 1999,  compared with December 31, 1998,  and its
        results of  operations  for the quarter  ended March 31, 1999,  compared
        with the  same  period  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, as amended,  for the year
        ended  December 31, 1998 to which the reader is directed for  additional
        information.

        CONSOLIDATED RESULTS

        The Company's consolidated net income decreased $1 million or 2% for the
        first three  months of 1999 when  compared to the first three  months of
        1998.  The decrease  reflects a decrease of $2 million in the  Financial
        Services segment,  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 $1 million in 1999,
        which reflected  improved  morbidity and mortality gains being partially
        offset by net realized investment losses.

        Total revenues  increased $139 million or 26% for the first three months
        of 1999 when  compared to the first three months of 1998.  The growth in
        revenues for the first three  months of 1999 was  comprised of increased
        premium  income of $130  million,  increased  fee income of $37 million,
        decreased net  investment  income of $8 million and  decreased  realized
        gains on investments of $20 million.

        The increased premium income in 1999 was comprised of growth in Employee
        Benefits  premium  income  of  $133  million  offset  by a  decrease  in
        Financial Services premium income of $3 million.  The growth in Employee
        Benefits  primarily reflects premium income of $110 million derived from
        the business  obtained  through 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 $16
        million during the first quarter 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 March 31,  1999 was 7.01%  compared  to 7.27% at
        March 31, 1998.

        Realized  investment gains decreased from a realized  investment gain of
        $14 million in the first three  months of 1998 to a realized  investment
        loss of $6  million  in the  first  three  months  of 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 $15
        million of fixed  maturity gains in 1998.  Increases  (decreases) in the
        provision  for  asset  losses  of  $(3)  million  and  $1  million  were
        recognized for the first three months of 1999 and 1998, respectively.

        The benefits and  expenses  increased  $135 million or 28% for the first
        three  months of 1999 when  compared to the first three  months of 1998.
        The growth in  benefits  and  expenses  was  primarily  in the  Employee
        Benefits  segment,  which increased $152 million,  of which $134 million
        related to  benefits  and  expenses  generated  by AH&L.  The  Financial
        Services  segment  reflected a decrease in benefits  and expenses of $17
        million.

        Income tax  expense  increased  $5  million  or 24% for the first  three
        months of 1999 when  compared  to the first  three  months of 1998.  The
        increase  reflects higher pre-tax earnings for the first three 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 $85 million or 44% for
        the first three  months of 1999 when  compared to the first three months
        of 1998.  This  decrease  is  primarily  attributable  to the  Financial
        Services  segment,  where  decreases in deposits of Corporate Owned Life
        Insurance  ("COLI") totaled $55 million.  Additionally,  Bank Owned Life
        Insurance ("BOLI") deposits decreased slightly, from $65 million for the
        first three  months of 1998 to $50 million for the first three months of
        1999.

        Deposits for  separate  accounts  increased  $135 million or 25% for the
        first three  months of 1999 when  compared to the first three  months of
        1998 in both segments due to a continuing movement toward variable funds
        and away from fixed options.

        Self-funded  premium  equivalents  increased $182 million or 34% for the
        first three  months of 1999 when  compared to the first three  months of
        1998.  The increase was due to the  acquisition  of AH&L ($82  million),
        with the  remainder  coming from the growth in business in the  Employee
        Benefits segment.

        Total assets  increased $43 million or 0.2% in the first three months of
        1999 when compared to the year ended December 31, 1998.



<PAGE>


        SEGMENT RESULTS

        Employee Benefits

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

<S>                                                                                         <C>
                                                                   Three Months Ended March 31,
                                                                   -----------------------------
           Operating Summary (Millions)                                1999           1998
                                                                   -------------  --------------

           Premiums                                              $      265     $       132
           Fee income                                                   134             101
           Net investment income                                         19              22
           Realized investment gains (losses)                            (3)              2
                                                                   -------------  --------------
                Total revenues                                          415             257

           Total benefits and expenses                                  376             224
           Income tax expense                                            14               9
                                                                   =============  ==============
                Net income                                       $       25     $        24
                                                                   =============  ==============


           Deposits for investment-type contracts                $        -     $         5
           Deposits to separate accounts                                494             392
           Self-funded premium equivalents                              718             536

</TABLE>

        Net  income for  Employee  Benefits  increased  $1 million or 4% for the
        first three  months of 1999 when  compared to the first three  months of
        1998.

        401(k) premiums and deposits increased 25% for the first three months of
        1999, as a result of higher recurring deposits from existing  customers.
        Assets under administration  (including  third-party  administration) in
        401(k)  increased 3% for the first three months of 1999 when compared to
        the first three months of 1998,  primarily due to strong equity markets.
        The  number of  contributing  participants  increased  from  477,000  at
        December 31, 1998 to 493,000 at March 31, 1999.

        Equivalent  premium  revenue  and fee  income  for group life and health
        increased  46% for the first three  months of 1999 when  compared to the
        first three months of 1998, primarily due to the acquisition of AH&L.


<PAGE>


        Financial Services

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

<S>                                                                                         <C>
                                                                   Three Months Ended March 31,
                                                                   -----------------------------
           Operating Summary (Millions)                                1999           1998
                                                                   -------------  --------------

           Premiums                                              $       53     $        56
           Fee income                                                    20              16
           Net investment income                                        197             202
           Realized investment gains (losses)                            (3)             12
                                                                   -------------  --------------
                Total revenues                                          267             286

           Total benefits and expenses                                  235             252
           Income tax expense                                            12              12
                                                                   =============  ==============
                Net income                                       $       20     $        22
                                                                   =============  ==============


           Deposits for investment-type contracts                $      106     $       186
           Deposits to separate accounts                                176             143

</TABLE>

        Net income for  Financial  Services  decreased  $2 million or 9% for the
        first three  months of 1999 when  compared to the first three  months of
        1998.

           Savings

        Savings  equivalent  premiums and deposits  increased $21 million or 10%
        for the first  three  months of 1999 when  compared  to the first  three
        months of 1998,  which  reflects a 23% growth in  deposits  to  separate
        accounts  offset by a decrease  in premium and  deposits to  traditional
        annuity  products.  This 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,  increased 2% from December 31, 1998. The increase
        was due growth in the separate accounts.

        Customer demand for investment  diversification continued to grow during
        1999. New  contributions  to variable  business  represented  64% of the
        total  deposits  received in the first three months of 1999  compared to
        54% for the first three months of 1998.

        Customer  participation in guaranteed  separate  accounts  increased and
        assets under management for guaranteed  separate account funds were $622
        million at March 31, 1999 compared to $562 at December 31, 1998.

           Life Insurance

        The Company  continued its conservative  approach of the manufacture and
        distribution of traditional life insurance  products,  while focusing on
        customer retention and expense management.

        Individual life insurance  revenue  premiums and deposits  decreased $68
        million or 38% for the first three  months of 1999 when  compared to the
        first  three  months of 1998,  which is  primarily  due to a decrease in
        deposits  of COLI of $55  million  and a decrease in deposits of BOLI of
        $15 million for the first three 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>
                                                           March 31,           December 31,
                                                             1999                  1998
                                                       ------------------    ------------------

        AAA                                                   46.8%                45.6%
        AA                                                     9.4%                 9.4%
        A                                                     22.2%                23.8%
        BBB                                                   21.2%                20.7%
        BB and below (non-investment grade)                    0.4%                 0.5%
                                                       ------------------    ------------------
                          TOTAL                              100.0%               100.0%
</TABLE>

        During the first three 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 $35 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 $490 million and $596 million as of
        March 31, 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 $40 million of commercial paper outstanding at
        March 31, 1999 and  December  31, 1998.  The  commercial  paper has been
        given a rating  of A-1+ by  Standard  & Poor's  Ratings  Services  and a
        rating of P-1 by Moody's Investors Service, Inc., 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.

        The Company 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.  The Company 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
        Company systems by October 31, 1999.

        The Company'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 March 31, 1999, the Company had completed  impact  analysis (phase
        1) and solution  planning  (phase 2) for all of its core systems and was
        99%  complete for phases 1 and 2 with respect to its systems as a whole.
        In addition,  the Company was approximately 95% complete with respect to
        conversion  and  renovation  (phase 3),  88%  complete  with  respect to
        testing  (phase  4), and 86%  complete  with  respect to  implementation
        (phase 5).

        In  addition  to  ensuring  that  the  Company's  own  systems  are  Y2K
        compliant,  the  Company has  identified  third  parties  with which the
        Company has significant  business  relationships  in order to assess the
        potential  impact on the  Company of the third  parties'  Y2K issues and
        plans.  As of March 31,  1999,  the Company had  completed  most of this
        assessment process. The Company will continue  investigating third party
        readiness and will conduct  system  testing with selected  third parties
        throughout  1999.  The Company  does not have  control  over these third
        parties  and  cannot  make any  representations  as to what  extent  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
        the Company,  including anticipated future expenses,  related to the Y2K
        issue  has not  and is not  expected  to be  material  to the  Company's
        financial  condition  or results of  operations.  The  Company has spent
        approximately  $11.3 million on its Y2K project through the end of March
        1999 and expects to spend up to  approximately  $15.3 million on its Y2K
        project.  All of these funds will come from the Company's cash flow from
        operations.   The  Company  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  the  Company's
        consolidated financial condition or results of operations.

        The most  reasonably  likely worst case Y2K scenario is that the Company
        will experience  isolated  internal or third party computer failures and
        will be  temporarily  unable to process  insurance  and annuity  benefit
        transactions.  All of the  Company's  Y2K efforts have been  designed to
        prevent such an occurrence.  However, if the Company identifies internal
        or third party Y2K issues which cannot be timely corrected, there can be
        no assurance that the Company 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, the Company
        is in the  process  of  developing  contingency  plans to  address  core
        functions,  including  relations with third parties. It is the Company'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 5. OTHER INFORMATION

               On May 4, 1999, the Company's parent corporation, GWL&A Financial
               Inc.,  a  Delaware  corporation  ("GWL&A  Financial"),  through a
               Delaware  business trust (the "Trust"),  completed an offering to
               the public of 7,000,000 shares of the Trust's 7.25%  Subordinated
               Capital Income Securities with an aggregate liquidation amount of
               $175,000,000  (the "Capital  Securities").  The proceeds from the
               offering of the Capital Securities were subsequently  transferred
               to the Company for general corporate purposes,  in exchange for a
               surplus  note.  The  issuance  of  the  Capital   Securities  was
               registered  by  the  Trust  and  GWL&A  Financial  pursuant  to a
               registration   statement   on  Form  S-3  (Nos.   333-64473   and
               333-64473-01),  filed with the Securities and Exchange Commission
               on September 28, 1998, which, as amended,  was declared effective
               on April 28, 1999.



<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
                 
            (a)    Index to Exhibits

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

                         27             Financial Data                17
                                        Schedule

            (b)    Reports on Form 8-K

                   No reports on 8K were  filed  during the first  quarter of
1999.



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


<TABLE>

<S>            <C> <C>                                            
DATE:      May 14, 1999                    BY:     Glen R. Derback
                                           /s/
           -------------------------------         -------------------------------------------
                                                   Glen R. Derback, Vice President &
                                                   Controller
                                                   (Duly authorized officer and chief
                                                   accounting officer)

</TABLE>