FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


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

For the quarterly period ended                          March 31, 1998
         ==============================================================

                                       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
          ============================================================

                   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 March 31, 1998,  7,032,000  shares of the  registrant's  common stock were
outstanding, all of which were owned by the registrant's parent company.

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


<PAGE>


                                TABLE OF CONTENTS



<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                 9
                       Condition and Results of Operations

Part II       OTHER INFORMATION

              Item 1   Legal Proceeding                                                  13

              Item 6   Exhibits and Reports on Form 8-K                                  13

              Signatures                                                                 14



</TABLE>














                                            - 2 -


<PAGE>


PART I   FINANCIAL INFORMATION
ITEM 1   FINANCIAL STATEMENTS

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                       Three Months Ended
                                                                           March 31,
                                                                  -----------------------------
                                                                      1998            1997
                                                                  -------------   -------------
REVENUES:
<S>                                                             <C>             <C>          
  Premium and fee income                                        $     305,438   $     266,315
  Net investment income                                               223,534         214,767
  Net realized gains (losses) on investments                           13,973          (4,943)
                                                                  -------------   -------------

                                                                      542,945         476,139
                                                                  -------------   -------------
BENEFITS AND EXPENSES:
  Life and other policy benefits                                      152,921         123,821
  Increase in reserves                                                 27,373          15,829
  Interest paid or credited to contractholders                        124,788         138,865
  Provision for policyholders' share of earnings
    on participating business                                           1,969             857
  Dividends to policyholders                                           19,820          19,460
                                                                  -------------   -------------

                                                                      326,871         298,832

  Commissions                                                          27,482          25,577
  Operating expenses                                                  115,626          97,105
  Premium taxes                                                         5,539           3,791
                                                                  -------------   -------------

                                                                      475,518         425,303
                                                                  -------------   -------------

INCOME BEFORE INCOME TAXES                                             67,427          50,836

PROVISION FOR INCOME TAXES:
   Current                                                             11,940          13,369
   Deferred                                                             9,352           5,618
                                                                  -------------   -------------

                                                                       21,292          18,987
                                                                  -------------   -------------

NET INCOME                                                      $      46,135   $      31,849
                                                                  =============   =============

</TABLE>






See notes to consolidated financial statements.

                                             -3-


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>

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

                                                                 March 31,       December 31,
ASSETS                                                              1998             1997
------
                                                               ---------------   --------------
                                                                (Unaudited)
INVESTMENTS:
  Fixed Maturities:
<S>                                                          <C>               <C>           
    Held-to-maturity, at amortized cost                      $    2,059,105    $    2,082,716
       (fair value $2,118,505 and $2,151,476)
    Available-for-sale, at fair value                             6,752,529         6,698,629
       (amortized cost $6,601,636 and $6,541,422)
  Mortgage loans on real estate, net                              1,189,642         1,235,594
  Common stock                                                       42,137            39,021
  Real estate, net                                                   83,348            93,775
  Policy loans                                                    2,673,130         2,657,116
  Short-term investments, available-for-sale
       (cost approximates fair value)                               280,074           399,131
                                                               ---------------   --------------

      Total Investments                                          13,079,965        13,205,982

Cash                                                                105,325           126,278
Reinsurance receivable                                               94,441            84,364
Deferred policy acquisition costs                                   250,190           255,442
Investment income due and accrued                                   171,718           165,827
Other assets                                                        131,601           121,543
Premiums in course of collection                                     72,874            77,008
Deferred income taxes                                               179,492           193,820
Separate account assets                                           8,627,253         7,847,451
                                                               ---------------   --------------


TOTAL ASSETS                                                 $   22,712,859    $   22,077,715
                                                               ===============   ==============


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

                                            - 4 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>

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

                                                                 March 31,       December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                1998             1997
------------------------------------
                                                               ---------------   --------------
                                                                (Unaudited)
POLICY BENEFIT LIABILITIES:
<S>                                                          <C>               <C>           
    Policy reserves                                          $   11,037,553    $   11,102,719
    Policy and contract claims                                      384,325           375,499
    Policyholders' funds                                            179,232           165,106
    Experience refunds                                               58,587            84,935
    Provision for policyholders' dividends                           63,485            62,937

GENERAL LIABILITIES:
    Due to Parent Corporation                                       136,481           126,656
    Repurchase agreements                                           187,294           325,538
    Commercial paper                                                 63,900            54,058
    Other liabilities                                               620,896           605,032
    Undistributed earnings on
      participating business                                        143,522           141,865
    Separate account liabilities                                  8,627,253         7,847,451
                                                               ---------------   --------------

      Total Liabilities                                          21,502,528        20,891,796
                                                               ---------------   --------------

STOCKHOLDER'S EQUITY:
    Preferred stock, $1 par value,
       50,000,000 shares authorized:
            Series A, cumulative, 1,500 shares authorized,
              liquidation value of $100,000 per share,
              600 shares issued and outstanding                      60,000            60,000
            Series B, cumulative, 1,500 shares authorized,
              liquidation value of $100,000 per share,
              200 shares issued and outstanding                      20,000            20,000
            Series C, cumulative, 1,500 shares authorized,
              none outstanding
            Series D, cumulative, 1,500 shares authorized,
              none outstanding
            Series E, non-cumulative, 2,000,000
              shares authorized, liquidation 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           690,748
    Accumulated other comprehensive income                           48,524            52,807
    Retained earnings                                               342,227           313,532
                                                               ---------------   --------------

      Total Stockholder's Equity                                  1,210,331         1,185,919
                                                               ---------------   --------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                   $   22,712,859    $   22,077,715
                                                               ===============   ==============

</TABLE>

See notes to consolidated financial statements.

                                            - 5 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                       Three Months Ended
                                                                           March 31,
                                                                  -----------------------------
                                                                      1998            1997
                                                                  -------------   -------------

OPERATING ACTIVITIES:
<S>                                                             <C>             <C>           
    Net income                                                  $       46,135  $       31,849
    Adjustments to reconcile net income to
      net cash provided by operating activities:
       Gain allocated to participating policyholders                     1,969           4,466
       Amortization of investments                                      (1,415)          2,165
       Realized losses (gains) on disposal of investments
           and write-downs of mortgage loans and real estate           (13,975)          4,943
       Amortization                                                     11,496           8,627
       Deferred income taxes                                            16,803           5,869
    Changes in assets and liabilities:
        Policy benefit liabilities                                     121,920         156,118
        Reinsurance receivable                                         (10,077)         (7,893)
        Accrued interest and other receivables                          (1,757)         28,857
        Other, net                                                      (1,099)       (129,792)
                                                                  -------------   -------------
                 Net cash provided by operating activities             170,000         105,209
                                                                  -------------   -------------

INVESTING ACTIVITIES:
    Proceeds from sales, maturities, and
        redemptions of investments:
        Fixed maturities
             Held-to-maturity
                Maturities and redemptions                              85,666          82,772
             Available-for-sale
                Sales                                                3,163,353         649,743
                Maturities and redemptions                             261,015         209,557
        Mortgage loans                                                  48,878          50,485
        Real estate                                                     13,641           3,898
        Common stock                                                     1,409             842
    Purchases of investments:
        Fixed maturities
             Held-to-maturity                                          (58,626)       (129,067)
             Available-for-sale                                     (3,353,522)       (712,737)
        Mortgage loans                                                  (5,322)
        Real estate                                                     (1,480)         (1,486)
        Common stock                                                    (2,268)        (26,961)
                                                                  -------------   -------------
                 Net cash provided by investing activities             152,744         127,046
                                                                  -------------   -------------




                                                                                  (Continued)
</TABLE>

                                            - 6 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
-----------------------------------------------------------------------------------------------
(Unaudited)
                                                                       Three Months Ended
                                                                           March 31,
                                                                  -----------------------------
                                                                      1998            1997
                                                                  -------------   -------------

FINANCING ACTIVITIES:
<S>                                                             <C>             <C>           
   Contract withdrawals, net of deposits                        $    (207,680)  $    (224,566)
   Net Parent Corporation borrowings (repayments)                       9,825         (25,277)
   Dividends paid                                                     (17,440)        (17,548)
   Net commercial paper borrowings                                      9,842           4,637
   Net repurchase agreements repayments                              (138,244)         (1,602)
   Capital contributions                                                               15,483
                                                                  -------------   -------------
              Net cash used in financing activities                  (343,697)       (248,873)
                                                                  -------------   -------------

NET DECREASE IN CASH                                                  (20,953)        (16,618)

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

CASH, END OF PERIOD                                             $     105,325   $     108,564
                                                                  =============   =============



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

                                            - 7 -


<PAGE>


GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

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

1.      GENERAL

        The  consolidated  financial  statements and related notes of Great-West
        Life & Annuity  Insurance  Company (the  Company)  have been prepared in
        accordance with generally accepted accounting  principles  applicable to
        interim  financial  reporting and do not include all of the  information
        and footnotes required for complete financial statements. In the opinion
        of management, all adjustments (consisting of normal recurring accruals)
        considered  necessary for a fair presentation have been included.  These
        financial  statements  should be read in  conjunction  with the  audited
        consolidated  financial  statements and notes thereto for the year ended
        December 31, 1997.  The results of operations  for the quarter ended are
        not  necessarily  indicative of the results that may be expected for the
        year ended December 31, 1998.

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

2.       NEW ACCOUNTING PRONOUNCEMENTS

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

        During the first  quarter of 1998 and 1997,  total  other  comprehensive
        loss amounted to $4,283 and $29,712, respectively.

3.      OTHER

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












                                            - 8 -


<PAGE>


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

                                                         Three Months Ended March 31,
                                                         -------------------------------
                 Operating Summary (Millions)                1998              1997
                                                         --------------    -------------

<S>                                                   <C>               <C>         
                 Premiums and fee income              $       305       $        266
                 Net investment income                        224                215
                 Realized investment gains (losses)            14                 (5)
                                                         --------------    -------------
                      Total revenues                          543                476

                 Total benefits and expenses                  476                425
                 Income tax expense                            21                 19
                                                         ==============    =============
                      Net income                      $        46       $         32
                                                         ==============    =============


                                                           March 31,       December 31,
                 Balance Sheet (Millions)                    1998              1997
                                                         --------------    -------------

                 Investment assets                    $    13,080       $     13,206
                 Separate account assets                    8,627              7,847
                 Total assets                              22,713             22,078
                 Total policyholder liabilities            11,723             11,791
                 Total shareholder's equity                 1,210              1,186
</TABLE>

        Comparison of Three Months Ended March 31, 1998 and 1997

        Net income increased 44% from $32 million in 1997 to $46 million in 1998
        primarily due to higher realized gains on investments, higher fee income
        from assets under management, and better mortality experience.

        Premiums  and other  income  increased  15% from $266 million in 1997 to
        $305  million in 1998.  The majority of the increase is related to group
        health ($20  million)  where case sales for the three months ended March
        31, 1998, are 433 versus 376 for the same period in 1997.

        Individual  insurance premiums have also grown $16 million over the same
        period in 1997  primarily due to current year activity  associated  with
        the  recapture in June 1997 of a block of business  that was  previously
        reinsured to the Parent Corporation.

        Net  investment  income  increased  from  $215  million  in 1997 to $224
        million in 1998.  This  growth in net  investment  income is a result of
        improved  performance on the mortgage portfolio.  The actual earned rate
        for the  first  quarter  of 1998 was  7.22%  versus  7.03% for the first
        quarter of 1997.

        Realized  investment  gains (losses) changed from a net realized capital
        loss of $5 million in 1997 to a net realized capital gain of $14 million
        in 1997.  The  decrease in interest  rates in the first  quarter of 1998
        resulted in  realized  gains  totaling  $14 million on the sale of fixed
        maturities,  while higher  interest  rates in the first  quarter of 1997
        contributed to $3 million of fixed maturity losses. Provisions for asset
        losses were $0.4 million in 1998 versus $2.3 million in 1997.





                                            - 9 -


<PAGE>


        Total benefits and expenses increased 12% in 1998. Policyholder benefits
        increased 9% due to the growth in group life and health business and the
        increased activity on the individual  insurance block of business due to
        the  recapture of  previously  reinsured  business.  Operating  expenses
        increased 19% as a result of costs associated with systems  development,
        development  of  health  maintenance   organizations   (HMOs),  and  the
        internalization of managed care.

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

        Investment  assets decreased $126 million to $13.1 billion from December
        31, 1997 to March 31, 1998.  At the same time  separate  account  assets
        increased $780 million bringing the total to $8.6 billion. This reflects
        the  continued  trend  of  contractholders  moving  away  from  the more
        traditional guaranteed products to variable options.

        Business Units Results from Operations

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

        Employee Benefits

        Total revenue premium (including premium equivalents) for group life and
        health increased 13% from 1997 levels. As discussed above, case sales in
        the Company's group life and health business increased 15% over the same
        period in 1997 and persistency improved.

        The  Company has  continued  to  emphasize  the  development  of its HMO
        subsidiaries  during the first three months of 1998. The Company now has
        licensed HMOs in eleven states.

        Of the total 401(k) cash flow received during the first quarter of 1998,
        92% was allocated to variable funds.  Total assets under  administration
        (including  third-party   administration)  grew  from  $5.4  billion  at
        December  31,  1997 to $5.8  billion  at March 31,  1998.  The number of
        participants contributing increased from 430,000 at December 31, 1997 to
        more than 447,000 at March 31, 1998.

        Financial Services

        Savings

        Assets under  administration  in the public  non-profit (P/NP) business,
        including  separate  accounts  increased 2% during the first  quarter of
        1998 to $7.8 billion. New contributions to variable business represented
        54% of the total deposits received in 1998 compared to 77% for the first
        three months of 1997. The higher percentage in 1997 was due to one large
        rollover case.












                                            - 10 -


<PAGE>


        Insurance

        Individual  life insurance  premiums and deposits of $177 million in the
        first quarter of 1998 increased  significantly  from 1997.  Sales of the
        Company's  Bank-Owned  Life  Insurance  (BOLI)  product during the first
        quarter of 1998 were $65  million  versus $24  million in 1997.  Renewal
        premiums on  Corporate-Owned  Life  Insurance  (COLI)  products were $56
        million in 1998 versus $6 million in 1997. The renewal  premiums in 1998
        are  attributable  to one large policy.  New sales of COLI products have
        been   discontinued  due  to  legislation   which  phases  out  the  tax
        deductibility of interest on policy loans on COLI products.  The Company
        continues to work closely with existing  customers to determine  options
        available  to them.  The  Company  does not  expect  the effect of these
        legislative changes to be material to the Company's operations.

        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:
<TABLE>

                                                           March 31,           December 31,
                                                             1998                  1997
                                                       ------------------    ------------------

<S>                                                           <C>                  <C>  
          AAA                                                 45.2%                45.7%
          AA                                                   9.3%                 8.8%
          A                                                   23.9%                23.8%
          BBB                                                 20.6%                20.7%
          BB and Below (non-investment grade)                  1.0%                 1.0%
                                                       ------------------    ------------------
                                                             100.0%               100.0%
</TABLE>

        During the first three months of 1998, net unrealized  gains (losses) on
        fixed  maturities  included  in  stockholders'  equity,  which is net of
        policyholder-related   amounts  and  deferred  income  taxes,  decreased
        surplus by $4  million  resulting  in  accumulated  other  comprehensive
        income of $48 million.

        Liquidity and Capital Resources

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








                                            - 11 -


<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.








































                                            - 12 -


<PAGE>


Part II OTHER INFORMATION

        Item 1 Legal Proceedings

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

        Item 6 Exhibits and Reports on Form 8-K

               (a)    Index to Exhibits

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

                             27            Financial Data                15
                                    Schedule

               (b)    Reports on Form 8-K

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


































                                            - 13 -


<PAGE>


SIGNATURES

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


                                    GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY



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