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 333-1173

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

     Colorado  84-0467907  (State  or other  jurisdiction  of  incorporation  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,  7,032,000  shares of the  registrant's  common stock were
outstanding, all of which were owned by the registrant's parent company.

NOTE:  The  registrant  meets the  conditions  set forth in General  Instruction
H(1)(a) and (b) of Form 10-Q and is therefore  filing this form with the reduced
disclosure  format.  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>


                                                    - 20 -
                                  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    10
                        Condition and Results of Operations

Part II        OTHER INFORMATION

               Item 1   Legal Proceedings                                     18

               Item 6   Exhibits and Reports on Form 8-K                      19

               Signatures                                                     19



















<PAGE>


PART I   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Unaudited)
<TABLE>
<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                      215,946       223,891        432,058       447,425
  Net realized gains (losses) on               2,117         5,342        (3,926)        19,315
investments
                                         ------------   -----------   ------------   -----------

                                             662,054       519,372      1,343,914     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               115,674       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
                                         ------------   -----------   ------------   -----------

                                             387,968       298,239        796,744       625,110
                                         ------------   -----------   ------------   -----------
                                                                      ------------   -----------

  Commissions                                 45,300        29,354         90,333        56,836
  Operating expenses                         144,054       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                    73,998        67,937        144,790       135,364

PROVISION FOR INCOME TAXES:
   Current                                    23,809        29,349         39,663        41,289
   Deferred                                      484       (5,606)         10,018         3,746
                                         ------------   -----------   ------------   -----------

                                              24,293        23,743         49,681        45,035
                                         ------------   -----------   ------------   -----------

NET INCOME                             $      49,705 $      44,194 $       95,109 $      90,329
                                         ============   ===========   ============   ===========

</TABLE>




See notes to consolidated financial statements.


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)


                                                      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)                     204,894       420,169
                                                    --------------  ------------

      Total Investments                                13,131,479    13,670,536

Cash                                                      149,214       176,119
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                                              408,518       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                                         25,507,865 $     25,123,145
                                                   ==============   ============




See notes to consolidated financial statements.          (Continued)


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<S>     <C>    <C>    <C>    <C>    <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                                         217,300           52,877
    Repurchase agreements                                              82,985          244,258
    Commercial paper                                                   29,844           39,731
    Other liabilities                                                 626,984          761,505
    Undistributed earnings on
      participating business                                          138,488          143,717
    Separate account liabilities                                   10,891,986       10,099,543
                                                                --------------   --------------

      Total Liabilities                                            24,345,524       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                           (28,200)           61,560
    Retained earnings                                                 483,953          430,411
                                                                --------------   --------------

      Total Stockholder's Equity                                    1,162,341        1,198,559
                                                                --------------   --------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                   $     25,507,865 $     25,123,145
                                                                ==============   ==============
</TABLE>

See notes to consolidated financial statements.


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

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

OPERATING ACTIVITIES:
    Net income                                                 $  95,109       $  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                                                (234,509)       (123,642)
                                                                  -------------   -------------
                 Net cash provided by operating activities        313,793         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                                   (2,428,804)     (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        73,028          246,418
                                                                  -------------   -------------

</TABLE>





                      (Continued)


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<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)                       164,423         (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)
                                                                   -------------   -------------
              Net cash used in financing activities                   (413,726)       (428,335)
                                                                   -------------   -------------

NET INCREASE (DECREASE) IN CASH                                        (26,905)        (36,771)

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

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



<PAGE>


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>


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                          24            24           50           45
                                             ==========   ===========   ==========   ==========
             Net income                   $         50 $          44 $         95 $         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                                     $       13,131 $          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                                          210                35
        Total shareholder's equity                            $        1,162 $           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 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 increased $6 million or 14% and $5 million
or 6% 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
$2 million in the Financial  Services  segment for the 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 $6 million and $7 million in 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 $147 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 $10 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 $5 million or 11% for the first six months of 1999
when  compared to the 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.


<PAGE>


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                          13            12           27           22
                                             ==========   ===========   ==========   ==========
             Net income                   $         29 $          23 $         54 $         47
                                             ==========   ===========   ==========   ==========

        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 $6 million or 26% and $7 million or
15% 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.


<PAGE>


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                          11            12           23           23
                                             ==========   ===========   ==========  ===========
             Net income                   $         21 $          21 $         41 $         43
                                             ==========   ===========   ==========  ===========

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

Net income for Financial  Services  decreased $2 million or 5% for the first six
months of 1999 when compared to the 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>    <C>    <C>    <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.

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 June 30, 1999, the Company 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 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 June 30, 1999,  the Company had
completed  most  of  this   assessment   process.   The  Company  will  continue
investigating  third party  readiness and will conduct system testing with 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 $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 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 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Index to Exhibits

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

        27                  Financial Data Schedule       20

(b)     Reports on Form 8-K

The  Company  filed a Form 8-K on April  27,  1999,  disclosing  second  quarter
results of the Company.

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