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                        September 30, 1997
                                 ==============================================

                                       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     (I.R.S. Employer Identification Number)
     incorporation 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 September 30, 1997, 7,032,000 shares of the registrant's common stock were
outstanding, all of which were owned by the registrant's parent company.

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


<PAGE>



                                TABLE OF CONTENTS

<TABLE>


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


              Item 1   Financial Statements

<S>                                                                                      <C>
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                    11
         Condition and Results of Operations
</TABLE>

Part II       OTHER INFORMATION
<TABLE>

<S>                <C>                                                                   <C>
Item 1                               Legal Proceeding                         16

Item 6                               Exhibits and Reports on Form 8-K         16

Signatures                                                                    17
</TABLE>

















                                            - 2 -


<PAGE>

<TABLE>

PART I   FINANCIAL INFORMATION
ITEM 1   FINANCIAL STATEMENTS

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                      Three Months Ended                  Nine Months Ended
                                                                      September 30,                         September 30,
                                                                  -------------------------            -------------------------
                                                                 1997                1996                1997              1996
                                                             -----------          ------------        -----------       -----------
REVENUES: 

<S>                                         <C>         <C>           <C>           <C>      
  Annuity contract charges and premiums                       $  28,772         $    23,994         $    84,530         $    67,430
  Life, accident, and health premiums                           262,990             236,284             916,040             717,528
earned
  Net investment income                                         227,804             209,596             664,776             622,703
  Net realized gains (losses) on                                  5,332              (7,797)             (1,828)            (30,692)
investments
                                                              ---------         -----------         -----------         -----------

                                                                524,898             462,077           1,663,518           1,376,969
                                                              ---------         -----------         -----------         -----------
BENEFITS AND EXPENSES:
  Life and other policy benefits                                144,125             127,038             395,967             381,420
  Increase in reserves                                           37,389              27,763             220,763              63,056
  Interest paid or credited to                                  131,986             137,318             402,582             422,697
contractholders
  Provision for policyholders' share
of earnings
    on participating business                                       211               1,543               4,725               1,813
  Dividends to policyholders                                     10,967               9,315              44,980              32,081
                                                              ---------         -----------         -----------         -----------

                                                                324,678             302,977           1,069,017             901,067

  Commissions                                                    25,659              25,736              75,690              77,866
  Operating expenses                                            109,194              81,836             311,587             242,233
  Premium taxes                                                   6,109               6,067              14,978              17,526
                                                              ---------         -----------         -----------         -----------

                                                                465,640             416,616           1,471,272           1,238,692
                                                              ---------         -----------         -----------         -----------

INCOME BEFORE INCOME TAXES                                       59,258              45,461             192,246             138,277

PROVISION FOR INCOME TAXES:
   Current                                                       30,252              20,834              62,357              58,001
   Deferred                                                     (10,283)             (5,380)             12,649             (18,394)
                                                              ---------         -----------         -----------         -----------

                                                                 19,969              15,454              75,006              39,607
                                                              ---------         -----------         -----------         -----------

NET INCOME                                                    $  39,289         $    30,007         $   117,240         $    98,670
                                                              =========         ===========         ===========         ===========
</TABLE>







See notes to consolidated financial statements.

                                             -3-


<PAGE>

<TABLE>

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                               September 30,     December 31,
<S>                                                                 <C>              <C> 
ASSETS                                                              1997             1996
------
                                                               ---------------   --------------

INVESTMENTS:
  Fixed Maturities:
    Held-to-maturity, at amortized cost                      $    2,127,717    $    1,992,681
       (fair value $2,187,858 and $2,041,064)
    Available-for-sale, at fair value                             6,410,905         6,206,478
       (amortized cost $6,271,460 and $6,151,519)
  Mortgage loans on real estate, net                              1,307,599         1,487,575
  Common stock                                                       42,426            19,715
  Real estate, net                                                   54,758            67,967
  Policy loans                                                    2,647,353         2,523,477
  Short-term investments, available-for-sale
       (cost approximates fair value)                               460,225           419,008
                                                               ---------------   --------------

      Total Investments                                          13,050,983        12,716,901

Cash                                                                101,210           125,182
Reinsurance receivable                                               69,608           196,958
Deferred policy acquisition costs                                   257,942           282,780
Investment income due and accrued                                   172,775           198,441
Other assets                                                        164,082            57,244
Premiums in course of collection                                     71,173            74,693
Deferred income taxes                                               179,817           214,404
Separate account assets                                           7,572,001         5,484,631
                                                               ---------------   --------------
















TOTAL ASSETS                                                 $   21,639,591    $   19,351,234
                                                               ===============   ==============


See notes to consolidated financial statements.                                   (Continued)
</TABLE>

                                            - 4 -


<PAGE>

<TABLE>

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                               September 30,     December 31,
<S>                                                                 <C>              <C> 
LIABILITIES AND STOCKHOLDER'S EQUITY                                1997             1996
------------------------------------
                                                               ---------------   --------------

POLICY BENEFIT LIABILITIES:
    Policy reserves                                          $   11,078,130    $   11,022,595
    Policy and contract claims                                      386,765           372,327
    Policyholders' funds                                            158,021           153,867
    Experience refunds                                               75,165            87,399
    Provision for policyholders' dividends                           61,549            51,279

GENERAL LIABILITIES:
    Due to Parent Corporation                                       123,559           151,431
    Repurchase agreements                                           442,033           286,736
    Commercial paper                                                 74,517            84,682
    Other liabilities                                               367,743           488,818
    Undistributed earnings on
      participating business                                        142,960           133,255
    Separate account liabilities                                  7,572,001         5,484,631
                                                               ---------------   --------------

      Total Liabilities                                          20,482,443        18,317,020
                                                               ---------------   --------------

STOCKHOLDER'S EQUITY:
    Preferred stock, $1 par value,
       50,000,000 shares authorized:
            Series A, cumulative, 1500 shares authorized,
              liquidation value of $100,000 per share,
              600 shares issued and outstanding                      60,000            60,000
            Series B, cumulative, 1500 shares authorized,
              liquidation value of $100,000 per share,
              200 shares issued and outstanding                      20,000            20,000
            Series C, cumulative, 1500 shares authorized,
              none outstanding
            Series D, cumulative, 1500 shares authorized,
              none outstanding
            Series E, non-cumulative, 2,000,000
              shares authorized, liquidation value of                41,800            41,800
$20.90
              per share, issued, and outstanding
    Common stock, $1 par value; 50,000,000 shares
authorized;
       7,032,000 shares issued and outstanding                        7,032             7,032
    Additional paid-in capital                                      690,748           664,265
    Net unrealized gains on securities available-for-sale,           48,202            14,951
net
    Retained earnings                                               289,366           226,166
                                                               ---------------   --------------

      Total Stockholder's Equity                                  1,157,148         1,034,214
                                                               ---------------   --------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                   $   21,639,591    $   19,351,234
                                                               ===============   ==============


See notes to consolidated financial statements.
</TABLE>

                                            - 5 -


<PAGE>



GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
--------------------------------------------------------------------------------
(Unaudited)
<TABLE>
                                                                       Nine Months Ended
                                                                         September 30,
                                                                  -----------------------------
                                                                      1997            1996
                                                                  -------------   -------------

OPERATING ACTIVITIES:
<S>                                                             <C>             <C>           
    Net income                                                  $      117,240  $       98,670
    Adjustments to reconcile net income to
      net cash provided by operating activities:
       Gain allocated to participating policyholders                     7,479           1,814
       Amortization of investments                                       2,150          18,562
       Realized losses on disposal of investments and
          write-downs of mortgage loans and real estate                  1,828          30,692
       Amortization                                                     36,233          24,741
       Deferred income taxes                                            15,445         (18,676)
    Changes in assets and liabilities:
        Policy benefit liabilities                                     351,264         206,966
        Reinsurance receivable                                         127,350         (25,749)
        Accrued interest and other receivables                          29,186         (12,671)
        Other, net                                                    (216,353)         28,593
                                                                  -------------   -------------
                 Net cash provided by operating activities             471,822         352,942
                                                                  -------------   -------------

INVESTING ACTIVITIES:
    Proceeds from sales, maturities, and
        redemptions of investments:
        Fixed maturities
             Held-to-maturity
                Maturities and redemptions                             287,314         409,012
             Available-for-sale
                Sales                                                1,820,194       2,664,867
                Maturities and redemptions                             528,737         621,231
        Mortgage loans                                                 176,767         188,398
        Real estate                                                     13,809           2,111
        Common stock                                                    12,578           1,773
    Purchases of investments:
        Fixed maturities
             Held-to-maturity                                         (415,248)       (336,291)
             Available-for-sale                                     (2,518,279)     (3,590,988)
        Mortages                                                        (2,226)         (3,485)
        Real estate                                                     (5,144)         (5,923)
        Common stock                                                   (28,317)         (1,904)
                                                                  -------------   -------------
                 Net cash used in investing activities                (129,815)        (51,199)
                                                                  -------------   -------------



                                                                                  (Continued)

</TABLE>

                                            - 6 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
-------------------------------------------------------------------------------
(Unaudited)
<TABLE>
                                                                       Nine Months Ended
                                                                         September 30,
                                                                  -----------------------------
                                                                      1997            1996
                                                                  -------------   -------------

FINANCING ACTIVITIES:
<S>                                                             <C>             <C>           
   Contract withdrawals, net of deposits                        $    (440,199)  $    (275,213)
   Net repayments to Parent Corporation                               (16,872)        (15,923)
   Dividends paid                                                     (54,040)        (42,159)
   Net commercial paper repayments                                    (10,165)           (366)
   Net repurchase agreements borrowings                               155,297          22,770
                                                                  -------------   -------------
              Net cash used in financing activities                  (365,979)       (310,891)
                                                                  -------------   -------------

NET DECREASE IN CASH                                                  (23,972)         (9,148)

CASH, BEGINNING OF YEAR                                               125,182          90,939
                                                                  -------------   -------------

CASH, END OF PERIOD                                             $     101,210   $      81,791
                                                                  =============   =============




























 See notes to consolidated financial statements.                                  (Concluded)
</TABLE>

                                            - 7 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

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

1.      GENERAL

        The  consolidated  financial  statements and related notes of Great-West
        Life & Annuity  Insurance  Company (the  Company)  have been prepared in
        accordance with generally accepted accounting  principles  applicable to
        interim  financial  reporting and do not include all of the  information
        and footnotes required for complete financial statements. In the opinion
        of management, all adjustments (consisting of normal recurring accruals)
        considered  necessary for a fair presentation have been included.  These
        financial  statements  should be read in  conjunction  with the  audited
        consolidated  financial  statements and notes thereto for the year ended
        December 31, 1996.  The results of operations  for the nine months ended
        September  30, 1997 are not  necessarily  indicative of the results that
        may be expected for the year ended December 31, 1997.

2.      TRANSFER OF EMPLOYEES

        Effective  January 1, 1997, all employees of the U.S.  Operations of the
        Company's   Parent,   The  Great-West  Life  Assurance   Company,   were
        transferred to the Company. All related employee benefit plan assets and
        liabilities  were also  transferred  from the Parent  Corporation to the
        Company.  The transfer did not have a material  effect on the  Company's
        operating  expenses  as the  costs  associated  with the  employees  and
        benefit  plans  were  charged   previously  to  the  Company  under  the
        administrative service agreements between the Company and its Parent.

3.      EMPLOYEE BENEFIT PLANS

        The  Company's  defined  benefit  pension  plan  (pension  plan)  covers
        substantially  all of its employees.  The benefits are based on years of
        service,  age at retirement,  and the compensation during the last seven
        years of  employment.  The  Company's  funding  policy is to  contribute
        annually the maximum  amount that can be deducted for federal income tax
        purposes.  Contributions  are  intended to provide not only for benefits
        attributed  to service to date but also for those  expected to be earned
        in the  future.  Investments  of the  pension  plan are  managed  by the
        Company and invested  primarily  in  investment  contracts  and separate
        accounts.

        The Company's Parent had previously accounted for the pension plan under
        the Canadian  Institute of Chartered  Accountants  (CICA) guidelines and
        had recorded a prepaid pension asset of $19,091.  As generally  accepted
        accounting  principles do not materially differ from CICA guidelines and
        the transfer is between related  parties,  the prepaid pension asset was
        transferred  at cost.  As a result,  the Company  recorded the following
        effective January 1, 1997:
<TABLE>

<S>                              <C>                                         <C>           
         Prepaid pension cost    $       19,091      Undistributed earnings  $        3,608
                                                     on participating business
                                                     Stockholder's Equity            15,483
                                     ==============                              ==============
                                 $       19,091                              $       19,091
                                     ==============                              ==============

</TABLE>





                                            - 8 -


<PAGE>


        The Company adopted Statement of Financial  Accounting  Standards (SFAS)
        No. 87, "Employers  Accounting for Pensions"  effective January 1, 1997,
        immediately  following the transfer.  The following table sets forth the
        pension  plan's  funded  status and amounts  recognized in the Company's
        statement of financial  position at January 1, 1997, in accordance  with
        SFAS No. 87:
<TABLE>

   Actuarial present value of benefit obligations:
<S>                                                                   <C>       
       Accumulated benefit obligation, including vested benefits      $ (77,500)
    of $74,386
       Projected benefit obligation for service rendered to date        (95,175)
    Plan assets at fair value                                           139,690
                                                                      ---------
    Plan assets in excess of projected benefit obligation                44,515
    Unrecognized net obligation at January 1, 1997, being
    recognized over
       15 years                                                         (25,424)
                                                                      =========
    Prepaid pension cost included in other assets                     $  19,091
                                                                      =========
</TABLE>

        The  weighted-average  discount  rate and  rate of  increase  in  future
        compensation  levels used in determining the actuarial  present value of
        the projected benefit obligation were 7.5% and 5.0%, respectively.

        The Company also sponsors a post-retirement  medical plan (medical plan)
        which provides health benefits to employees who have worked for 15 years
        and attained age 65 while in service with the Company.  The medical plan
        is  contributory  and contains other cost sharing  features which may be
        adjusted annually for the expected general inflation rate. The Company's
        policy will be to fund the cost of the medical plan  benefits in amounts
        determined at the  discretion of  management.  The Plan as of January 1,
        1997 was not  funded.  The Parent  Company was not  required  under CICA
        guidelines to record any liability related to the Plan.

        Effective  January 1, 1997,  on the date of  transfer,  the  Company has
        adopted SFAS No. 106,  "Post-retirement  Benefits Other Than  Pensions."
        The Company has elected to delay recognition of the unfunded accumulated
        post-retirement   benefit   obligation  and  has  set  up  a  transition
        obligation to amortize over 20 years.

        The  following  table sets forth the  medical  plan status of January 1,
1997:
<TABLE>

          Accumulated post-retirement benefit obligation:
<S>                                                                      <C>
             Retirees                                                  $ (4,939)
             Fully eligible active plan participants                     (1,751)
             Other active plan participants                              (9,470)
                                                                       --------
                                                                        (16,160)
          Unrecognized net transition obligation at
          January 1, 1997, being recognized
             over 20 years                                               16,160
                                                                       ========
          Accrued post-retirement benefit cost                         $      0
                                                                       ========
</TABLE>

        For  measurement  purposes,  a 7.5%  annual  rate of increase in the per
        capita cost of covered health care benefits was assumed. The health care
        cost trend  rate  assumption  has a  significant  effect on the  amounts
        reported.  To illustrate,  increasing the assumed health care cost trend
        rates  by  1%  point  in  each  year  would  increase  the   accumulated
        post-retirement benefit obligation as of January 1, 1997, by $2,977.

        The weighted  average  discount rate used in determining the accumulated
        post-retirement benefit obligation was 7.5%.




                                            - 9 -


<PAGE>



4.      RELATED-PARTY TRANSACTIONS

        On June 30, 1997,  the Company  recaptured  all  remaining  pieces of an
        individual   participating   insurance  block  of  business   previously
        reinsured to the Parent  Corporation  on December 31, 1992.  The Company
        recorded at estimated  fair value,  the following at June 30, 1997, as a
        result of this transaction:

         Assets                                Liabilities and Stockholder's
                          Equity

         Cash      $    160,000     Policy reserves                $   155,798
         Bonds           17,975     Due to parent corporation            9,373
         Other               60     Deferred income taxes                2,719
                                    Undistributed earnings on
                                           participating business         (855)
                                    Stockholder's equity                11,000
                       -----------                                    ----------

                   $    178,035                                    $   178,035
                      ===========                                    ===========

5.      FEDERAL INCOME TAXES

        Pursuant to a December 31, 1993,  agreement  between the Company and its
        Parent  whereby  the  Company  assumed  responsibility  for  the  Parent
        Corporation's  income tax liability for fiscal years prior to 1994,  the
        Company had previously recorded a contingent  liability  provision.  The
        Company's  1997 results of operations  include a release of $47,750 from
        the provision to reflect the resolution of certain tax issues related to
        the 1990 and 1991 audit years with the Internal Revenue Service.  In the
        opinion  of  Company  management,  the  amounts  paid  and  accrued  are
        adequate; however, it is possible that the Company's accrued amounts may
        change as a result of the completion of the IRS audits.

6.      OTHER

        The Company is involved in various legal  proceedings which arise in the
        ordinary  course of its business.  In the opinion of  management,  after
        consultation with counsel,  the resolution of these  proceedings  should
        not have a material adverse effect on its financial  position or results
        of operations.



















                                            - 10 -


<PAGE>


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

                                      Three Months Ended       Nine Months Ended
                                        September 30,              September 30,
                                   -----------------------    ------------------

<S>                                   <C>          <C>           <C>           <C> 
Operating Summary (Millions)              1997     1996        1997        1996
                                          ----    -----     -------     -------

Premiums and other income                 $292    $ 260     $ 1,000     $   785
Net investment income                      228      210         665         623
Realized gains (losses) on
   on investments                            5       (8)         (2)        (31)
                                          ----    -----     -------     -------
     Total Revenues                        525      462       1,663       1,377

Total benefits and expenses                466      417       1,471       1,239
Income tax expense                          20       15          75          39
                                          ====    =====     =======     =======
     Net income                           $ 39    $  30     $   117     $    99
                                          ====    =====     =======     =======
</TABLE>



                                   Sept. 30,      Dec 31,
  Balance Sheet (Millions)            1997         1996
                                   -----------  ------------

  Investment assets             $    13,051   $    12,717
  Separate account assets             7,572         5,485
  Total assets                       21,640        19,351
  Total policyholder                 11,760        11,687
  liabilities
  Total shareholder's equity          1,157         1,034



        Introduction

        The  following  discussion  addresses  the  financial  condition  of the
        Company as of September 30, 1997,  compared with December 31, 1996,  and
        its  results  of  operations  for the  quarter  and  nine  months  ended
        September  30,  1997,  compared  with the same  periods  last year.  The
        consolidated  balance  sheet as of  September  30,  1997 and the related
        consolidated  statements of income and cash flows for the three and nine
        month periods ended  September 30, 1997 and 1996 are  unaudited,  but in
        management's  opinion,  include  all  adjustments  necessary  for a fair
        presentation of such financial statements. Such adjustments consist only
        of  normal  recurring   items.   Interim  results  are  not  necessarily
        indicative of results for a full year. The discussion  should be read in
        conjunction  with  the  Management's  Discussion  and  Analysis  section
        included  in the  Company's  report  on Form  10-K  for  the  year-ended
        December  31,  1996,  to which the  reader is  directed  for  additional
        information.

        Comparison of Nine Months Ended September 30, 1997 and 1996

        On June 30,  1997,  the  Company  recaptured  from The  Great-West  Life
        Assurance Company (the "Parent Corporation") an individual participating
        insurance  block of  business  previously  ceded in December  1992.  The
        Company recorded various assets and liabilities related to the recapture
        as  discussed  in  Footnote  4 to  the  quarterly  financial  statements
        included herein. In addition,  in the process of recording the recapture
        both life insurance premiums and increases in reserves were increased by
        the amount of the policy reserves recaptured ($156 million)

                                            - 11 -


<PAGE>



        Pursuant to a December 1993 agreement between the Company and the Parent
        Corporation  whereby the Company assumed  responsibility  for the Parent
        Corporation's  income tax liability for fiscal years prior to 1994,  the
        Company had previously recorded a contingent liability provision. During
        the second quarter of 1997, the Company's results of operations included
        a release of $48 million from the provision to reflect the resolution of
        certain tax matters with the  Internal  Revenue  Service  related to the
        1990 and 1991 audit years.  The Company's  first quarter 1996 results of
        operations  include a  release  of $26  million  from the  provision  to
        reflect the resolution of 1988 and 1989 tax issues.  Audits of tax years
        1992 and 1993 are  currently  in  process.  It is the opinion of Company
        management  that the amounts paid and accrued for the remaining open tax
        years are  adequate,  however,  it is  possible  the  Company's  accrued
        amounts may change as a result of the completion of the IRS audits.

        Net income  increased  31% and 19% for the third quarter and nine months
        of 1997,  respectively.  There are  several  non-recurring  transactions
        which have impacted 1997.  The  contingent tax liability  release in the
        second   quarter  of  1997  and  the  first  quarter  of  1996  produced
        fluctuations  in these  periods  of $23  million in 1997,  as  discussed
        below, and $26 million in 1996. The $48 million liability release in the
        second  quarter of 1997 included $15 million which was  attributable  to
        participating  policyholders  and is  reflected  as a  liability  on the
        balance sheet,  thus, only $23 million of the release actually  directly
        impacts net income. In addition to the contingent liability release, the
        Company also in the normal course of business  reviewed its deferred tax
        assets and  liabilities  and  increased its liability by $21 million (of
        which $10 million is attributable to participating  policyholders) which
        resulted in a $11 million impact to net income during the second quarter
        of 1997.  Excluding the affect of these transactions,  the growth in net
        income  for the nine  months of 1997 is 32% which  reflects  higher  fee
        income  from  assets  under  management,  higher  margins on  investment
        products,  and better  mortality  and  morbidity.  Also during the first
        quarter of 1996,  the Company  strengthened  reserves in the  individual
        annuity  product  line  which  negatively  impacted  net  income in that
        period.

        Premiums and other income  increased  12% and 27% for the third  quarter
        and nine months of 1997, respectively.  The increase for the nine months
        of  1997  reflects  the  insurance  recapture  and  the  contingent  tax
        provision release discussed in the preceding three paragraphs. Excluding
        these items from the related periods in both 1997 and 1996, the increase
        would have been 5% for the nine months of 1997 which primarily  reflects
        higher fee income from assets under management.

        Net investment income increased 9% and 7% for the third quarter and nine
        months of 1997, respectively.  This growth in net investment income is a
        direct result of the growth in investment  assets and less interest lost
        on problem  accounts.  The actual  earned rate for the nine months ended
        1997 and 1996 was 7.26% and 7.12%, respectively.

        Realized  investment losses decreased from a $31 million loss in 1996 to
        a $2  million  loss in 1997.  Losses  on sales of  investments  were $20
        million  in 1996  versus a gain of $4 million  in 1997.  Provisions  for
        asset losses were $10 million in 1996 versus $6 million in 1997.

        Total benefits and expenses  increased 12% and 19% for the third quarter
        and nine months of 1997.  Excluding  the insurance  recapture  discussed
        previously,  the  growth  for the  nine  months  of 1997 is 6%  which is
        composed  primarily  of increased  operating  expenses  associated  with
        increased  systems  and  managed  care  development  costs.  The Company
        continues to expand its managed care business by the further development
        of new and existing health maintenance organizations (HMOs). See further
        discussion  included in the Employee Benefits section of this management
        discussion and analysis.





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<PAGE>


        The  effective   income  tax  rate   increased  from  1996  due  to  the
        strengthening of the deferred tax liability in the second quarter.

        Investment  assets  increased  from  December 31, 1996, to September 30,
        1997,  by  $334  million.  At the  same  time  separate  account  assets
        increased   $2  billion.   This   reflects   the   continued   trend  of
        contractholders  moving  to  variable  products  and away  from the more
        traditional guaranteed products.

        Business Units Results from Operations

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

        Employee Benefits

        Total revenue premium (including premium equivalents) for group life and
        health  increased 2% from 1996 levels.  Sales in the Company's  life and
        health business have slowed as a result of heightened price  sensitivity
        and competition from managed care companies,  however, new case sales in
        1997 totaled 1,031  compared to 790 in 1996 and  termination  rates have
        decreased significantly.

        The  Company has  continued  to  emphasize  the  development  of its HMO
        subsidiaries  during the third quarter of 1997 and  capitalized two HMOs
        (Florida  and  Indiana) in addition  to the six  capitalized  during the
        first half of 1997 (Oregon, Ohio, Tennessee,  Massachusetts,  Washington
        and North Carolina). Of the 8 HMO's capitalized in 1997, 4 have received
        their licenses to commence operations while the other 4 are pending.
        This brings the total number of HMOs capitalized to 13.

        Of the total  401(k) cash flow  received  during the first half of 1997,
        93% was allocated to variable funds.  Total assets under  administration
        (including  third-party   administration)  grew  from  $3.9  billion  at
        December 31, 1996 to $5.4 billion at September  30, 1997.  The number of
        401(k) participants  increased from 350,000 at December 31 1996, to more
        than 430,000 at September 30, 1997.

        Financial Services

        Savings

        Assets under  administration  in the public  non-profit (P/NP) business,
        including  separate accounts  increased $329 million during 1997 to $7.5
        billion.  New contributions to variable P/NP business represented 66% of
        the  total  deposits  received  in 1997  compared  to 54% in  1996.  The
        increase was primarily the result of a large rollover from one case.

        The Company also provides  third-party  administration  of  policyholder
        accounts.  The number of participant  accounts under administration grew
        from 117,000 at December 31, 1996 to 241,000 at September 30, 1997.  The
        third-party administration of accounts continues to be a strategic focus
        for  this  business  unit  and with the  acquisition  of  several  large
        institutional  clients  during  1997,  the  participant  accounts  under
        administration should continue to grow.

        Individual  fixed  and  variable  deferred   annuities  sold  through  a
        marketing  agreement  with  Charles  Schwab & Co.  totaled  $193 million
        during  1997.  This  product was first  introduced  to the market in the
        fourth quarter of 1996.





                                            - 13 -


<PAGE>


        Insurance

        Individual  life  insurance   premiums  and  deposits  of  $389  million
        (excluding  the insurance  recapture and tax provision  release)  during
        1997 decreased 7% from 1996. Premiums are down due to legislation put in
        place in 1996 which  phases out the tax  deductibility  of  interest  on
        policy loans on  Corporate-Owned  Life Insurance  (COLI) products during
        1997 and 1998.  Although  sales were  discontinued  in 1996, the Company
        continues to receive  renewal  premiums and deposits at a reduced  level
        and the Company is working  closely  with  existing  COLI  customers  to
        determine the options available to them. The Company does not expect the
        effect of these  legislative  changes to be  material  to the  Company's
        operations.

        The Company began  focusing on sales of its  Bank-Owned  Life  Insurance
        (BOLI)  product during the second quarter of 1996 which was not affected
        by the  change  in  legislation  discussed  above.  Deposits  from  BOLI
        business through  September 30, 1997 were $64 million versus $77 million
        in 1996.

        General Account Investments

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

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

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

                                   September 30,         December 31,
                                       1997                  1996
                                 ------------------    ------------------

  AAA                                   46.8%                45.9%
  AA                                     7.8%                 8.1%
  A                                     23.7%                23.7%
  BBB                                   20.6%                20.9%
  BB and Below 
(non-investment grade)                   1.1%                 1.4%
                                 ------------------    ------------------
                                       100.0%               100.0%

        During the nine months of 1997, net  unrealized  gains (losses) on fixed
        maturities   included  in   stockholders'   equity,   which  is  net  of
        policyholder-related   amounts  and  deferred  income  taxes,  increased
        surplus by $33 million  compared  with a decrease of $61 million for the
        same period last year.

        Liquidity and Capital Resources

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





                                            - 14 -


<PAGE>



        The Company's capital resources  represent funds available for long-term
        business  commitments  and  primarily  consist of retained  earnings and
        proceeds  from the  issuance  of  commercial  paper.  Capital  resources
        provide  protection  for  policyholders  and the  financial  strength to
        support the  underwriting  of insurance  risks,  and allow for continued
        business growth.  The amount of capital  resources that may be needed is
        determined by the Company's senior management and Board of Directors, as
        well as by regulatory  requirements.  The allocation of resources to new
        long-term  business  commitments  is designed  to achieve an  attractive
        return,  tempered by  considerations of risk and the need to support the
        Company's existing business.

        The Company financial  strength provides the capacity and flexibility to
        enable it to raise funds in the capital  markets through the issuance of
        commercial  paper. The Company  continues to be well  capitalized,  with
        sufficient  borrowing  capacity  to meet  the  anticipated  needs of its
        business.  The Company  continues  to conduct  strategic  and  financial
        reviews  of  its  businesses  to  deploy  its  capital   resources  most
        efficiently.







































                                            - 15 -


<PAGE>


PART II OTHER INFORMATION

               ITEM 1 LEGAL PROCEEDINGS

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

               ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

                      (a)    Index to Exhibits

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

                                     27           Financial Data      18
                                                  Schedule

                      (b)    Reports on Form 8-K

                             No reports  on Form 8-K have been filed  during the
                             third quarter of 1997.


































                                            - 16 -


<PAGE>


SIGNATURES

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


                                    GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY



DATE:       November 12, 1997                 BY: /s/_Glen R. Derback
            --------------------------------          ---------------
        Glen R. Derback, Vice President and Controller
        (Duly authorized officer and chief accounting
        officer)








































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