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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





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FORM 10-Q





|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | -------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------




| |  | For the quarterly period ended September 28, 2002
| |  | -------------------------------------------------




OR





| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | --------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------




| |  | For the transition period from
to
| |  | ---------------------------------




Commission file number 0-23375





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GE Financial Assurance Holdings, Inc.


(Exact name of registrant as specified in
its charter)





Delaware

54-1829180(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification
No.)





6604 West Broad Street, Richmond, Virginia

23230(Address of principal executive offices)

(Zip Code)





(804) 281-6000


(Registrants telephone number, including area code)





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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.  Yesþ  No  ̈





At October 29, 2002 1,000 shares of common stock with a par value of $1.00 were outstanding. The common stock of GE Financial Assurance Holdings, Inc. is not publicly
traded.





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REGISTRANT
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.





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TABLE OF CONTENTS





PagePART IFINANCIAL INFORMATION.Item 1.

Financial Statements

1Item 2.

Managements Discussion and Analysis of Results of Operations and Financial Condition

8Item 4.

Controls and Procedures

12PART IIOTHER INFORMATION.Item 1.

Legal Proceedings

13Item 6.

Exhibits and Reports on Form 8-K

13Signatures

14Certifications

15




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PART IFINANCIAL INFORMATION





Item 1.Financial Statements.





GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES





CONDENSED, CONSOLIDATED STATEMENTS OF CURRENT AND RETAINED EARNINGS


(Dollar amounts in millions)


(Unaudited)





Three Months Ended


Nine Months EndedSept 28, 2002


Sept 29, 2001


Sept 28, 2002


Sept 29, 2001Revenues:Premiums

$
1,733


$
1,587


$
4,907


$
4,817Net investment income


1,053



1,049



3,201



3,101Surrender fee income


43



88



145



286Net realized investment gains


143



70



123



323Policy fees and other income


184



203



580



644Total revenues


3,156



2,997



8,956



9,171Benefits and expenses:Benefits and other changes in policy reserves


1,521



1,396



4,327



4,251General expenses


778



745



2,202



2,278Interest credited


436



433



1,286



1,244Amortization of intangibles


81



144



263



398Change in deferred acquisition costs, net


(204
)


(241
)


(592
)


(642
)Interest expense


37



41



104



119Total benefits and expenses


2,649



2,518



7,590



7,648Earnings before income taxes, minority interest and cumulative effect of change in accounting
principle


507



479



1,366



1,523Provision for income taxes


47



161



300



515Earnings before minority interest and cumulative effect of change in accounting principle


460



318



1,066



1,008Minority interest






1



3



4Earnings before cumulative effect of change in accounting principle


460



317



1,063



1,004Cumulative effect of change in accounting principle, net of tax










(380
)


(15
)Net earnings


460



317



683



989Retained earnings at beginning of period


6,518



5,692



6,295



5,020Retained earnings at end of period

$
6,978


$
6,009


$
6,978


$
6,009





See Notes to Condensed, Consolidated Financial Statements.




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Item 1.Financial Statements (Continued).





GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES





CONDENSED, CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


(Dollar amounts in
millions)





September 28, 2002


December 31, 2001(Unaudited)ASSETSInvestments:Fixed maturities available-for-sale, at fair value

$
72,889


$
60,968Equity securities available-for-sale, at fair value


955



1,078Mortgage and other loans, net of valuation allowance


6,962



6,055Policy loans


1,402



1,151Short-term investments


181



389Other invested assets


1,466



1,345Total investments


83,855



70,986Cash and cash equivalents


3,052



1,741Accrued investment income


1,502



1,384Deferred acquisition costs


4,616



4,265Goodwill


2,326



2,421Intangible assets


2,304



2,410Reinsurance recoverable


2,226



1,950Other assets


2,309



2,609Separate account assets


7,277



9,172Total assets

$
109,467


$
96,938LIABILITIES AND SHAREHOLDERS INTERESTLiabilities:Future annuity and contract benefits

$
72,273


$
62,247Liability for policy and contract claims


2,955



2,887Other policyholder liabilities


1,526



1,144Other liabilities


6,760



5,539Short-term borrowings


2,050



1,798Separate account liabilities


7,277



9,172Long-term debt


1,171



1,143Total liabilities


94,012



83,930Minority interest in and equity of consolidated subsidiaries


340



253Shareholders interest:Net unrealized investment gains (losses)


1,296



(297
)Derivatives qualifying as hedges


(91
)


(168
)Foreign currency translation adjustments


(21
)


(28
)Accumulated non-owner changes in equity


1,184



(493
)Common stock






Additional paid-in capital


6,953



6,953Retained earnings


6,978



6,295Total shareholders interest


15,115



12,755Total liabilities and shareholders interest

$
109,467


$
96,938





See Notes to Condensed, Consolidated Financial Statements.




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Item 1.Financial Statements (Continued).





GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES





CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS


(Dollar amounts in millions)


(Unaudited)





Nine Months EndedSeptember 28, 2002


September 29, 2001Cash Flows From Operating ActivitiesNet earnings

$
683


$
989Adjustments to reconcile net earnings to net cash provided by operating activities:Change in reserves


1,927



2,755Cumulative effect of change in accounting principle, net of tax


380



15Other, net


564



174Net cash provided by operating activities


3,554



3,933Cash Flows From Investing ActivitiesShort term investment activity, net


208



641Proceeds from sales and maturities of investment securities and other invested assets


18,943



13,800Principal collected on and securitizations of mortgage and policy loans


801



2,220Purchases of investment securities and other invested assets


(26,839
)


(20,187
)Mortgage and policy loan originations


(889
)


(946
)Net cash used in investing activities


(7,776
)


(4,472
)Cash Flows From Financing ActivitiesProceeds from issuance of investment contracts


8,304



5,675Redemption and benefit payments on investment contracts


(5,176
)


(4,361
)Net commercial paper borrowings (repayments)


159



(570
)Proceeds from other short term borrowings


1,967



2,220Proceeds from subsidiary issuance of preferred stock






200Payments on other short term borrowings


(1,870
)


(1,485
)Cash received from acquisition of Saison Life Insurance Company


2,406



Net cash provided by financing activities


5,790



1,679Effect of Exchange Rate Changes on Cash


(257
)


(24
)Increase in Cash and Cash Equivalents


1,311



1,116Cash and Cash Equivalents at Beginning of Period


1,741



1,150Cash and Cash Equivalents at End of Period

$
3,052


$
2,266





See Notes to Condensed, Consolidated Financial Statements.







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Item 1.Financial Statements (Continued).





GE FINANCIAL ASSURANCE HOLDINGS, INC. AND SUBSIDIARIES





NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS


(Dollar amounts in
millions)


(Unaudited)





1.  The accompanying condensed, consolidated quarterly financial statements represent GE Financial Assurance Holdings, Inc. and its consolidated subsidiaries (collectively the Company). All significant
intercompany transactions have been eliminated.





2.  These financial statements have been prepared on
the basis of accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts and related disclosures. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation.





The condensed, consolidated quarterly financial statements are unaudited. These statements include all adjustments (consisting of normal recurring accruals) considered
necessary by management to present a fair statement of the current and retained earnings, financial position and cash flows. The results reported in these condensed, consolidated financial statements should not be regarded as necessarily indicative
of results that may be expected for the entire year. The condensed, consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes contained in the Companys
annual report on Form 10-K for the fiscal year ended December 31, 2001.





3.  A summary of changes in
shareholders interest that do not result directly from transactions with the shareholder follows:





Three Months EndedSeptember 28, 2002


September 29, 2001Net earnings

$
460


$
317Unrealized gains on investment securitiesnet


1,171



411Derivatives qualifying as hedges


(8
)


(195
)Foreign currency translation adjustments


23



44Total

$
1,646


$
577





Nine Months EndedSeptember 28, 2002

September 29, 2001Net earnings

$
683

$
989Unrealized gains on investment securitiesnet


1,593


570Derivatives qualifying as hedges


77


55Foreign currency translation adjustments


7


4Cumulative effect on shareholders interest of adopting SFAS 133





(351
)Total

$
2,360

$
1,267





4.  Effective January 1, 2002, the Company redefined its
operating segments. As a result, the Company now reports four operating segments: (1) Wealth Accumulation and Transfer, comprised of products intended to increase the policyholders wealth, transfer wealth to beneficiaries or provide a means
for replacing the income of the insured in the event of premature death, (2) Lifestyle Protection and Enhancement, comprised of products intended to protect accumulated wealth and income from the financial drain of unforeseen events and provide
income protection packages, (3) Mortgage Insurance, comprised of products intended to protect mortgage lenders against losses caused by mortgage defaults, and (4) Auto and Home Insurance, comprised of products intended to protect against damage to
property or injury to the insured or third parties.




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For comparative purposes, the information presented below for the periods ended
September 29, 2001 has been reclassified to reflect the Companys redefined operating segments and adjusted to reflect the elimination of goodwill amortization as discussed in Note 5.





Three Months EndedSeptember 28, 2002

September 29, 2001RevenuesWealth Accumulation and Transfer

$
1,966

$
1,807Lifestyle Protection and Enhancement


862


834Mortgage Insurance


174


193Auto and Home Insurance


154


163Total revenues

$
3,156

$
2,997Earnings before income taxes, minority interest and cumulative effect of change in accounting
principleWealth Accumulation and Transfer

$
226

$
328Lifestyle Protection and Enhancement


100


67Mortgage Insurance


164


127Auto and Home Insurance


17


(7
)Total earnings before income taxes, minority interest and cumulative effect of change in accounting
principle

$
507

$
515





Nine Months EndedSeptember 28, 2002

September 29, 2001RevenuesWealth Accumulation and Transfer

$
5,410

$
5,620Lifestyle Protection and Enhancement


2,505


2,411Mortgage Insurance


574


643Auto and Home Insurance


467


497Total revenues

$
8,956

$
9,171Earnings before income taxes, minority interest and cumulative effect of change in accounting
principleWealth Accumulation and Transfer

$
569

$
923Lifestyle Protection and Enhancement


259


200Mortgage Insurance


484


462Auto and Home Insurance


54


30Total earnings before income taxes, minority interest and cumulative effect of change in accounting
principle

$
1,366

$
1,615





The following is a summary of assets by operating segment as of
September 28, 2002 and December 31, 2001:





September 28, 2002

December 31, 2001AssetsWealth Accumulation and Transfer

$
90,832

$
79,672Lifestyle Protection and Enhancement


11,597


10,305Mortgage Insurance


5,360


4,777Auto and Home Insurance


1,678


2,184Total assets

$
109,467

$
96,938




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5.  The Financial Accounting Standards Boards (FASB)
Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible Assets, generally became effective on January 1, 2002. Under SFAS 142, goodwill is no longer amortized but is tested for impairment using a
fair value methodology.





The Company ceased amortizing goodwill effective January 1, 2002. Simultaneously, to
maintain a consistent basis for its measurement of performance, management revised previously reported segment information to correspond to the earnings measurements by which businesses will be evaluated. Goodwill amortization expense for the
quarter and the first nine months ended September 29, 2001, was $36 million ($29 million after tax) and $92 million ($74 million after tax), respectively. The effect on earnings of excluding such goodwill amortization expense from the third quarter
and the first nine months of 2001 follows:





Three Months EndedSeptember 28, 2002

September 29, 2001Earnings before cumulative effect of change in accounting principle

$
460

$
317Earnings before cumulative effect of change in accounting principle excluding 2001 goodwill amortization

$
460

$
346Net earnings

$
460

$
317Net earnings, excluding 2001 goodwill amortization

$
460

$
346





Nine Months EndedSeptember 28, 2002

September 29, 2001Earnings before cumulative effect of change in accounting principle

$
1,063

$
1,004Earnings before cumulative effect of change in accounting principle excluding 2001 goodwill amortization

$
1,063

$
1,078Net earnings

$
683

$
989Net earnings, excluding 2001 goodwill amortization

$
683

$
1,063





Under SFAS 142, the Company was required to test all existing
goodwill for impairment as of January 1, 2002, on a reporting unit basis. A reporting unit is an operating segment unless, at businesses one level below that operating segment (the component level), discrete financial
information is prepared and regularly reviewed by management, in which case the component is the reporting unit.





A fair value approach is used to test goodwill for impairment. An impairment charge is recognized for the amount, if any, by which the carrying amount of goodwill exceeds its implied fair value. Fair values of reporting units and the
related implied fair values of their respective goodwill were established using discounted cash flows. When available and as appropriate, comparative market multiples were used to corroborate results of the discounted cash flows.





The result of testing goodwill of the Company for impairment in accordance with SFAS 142, as of January 1, 2002, was a non-cash
charge of $539 million ($380 million after tax), which is reported in the caption Cumulative effect of change in accounting principle, net of tax. All of the charges relate to the Auto and Home Insurance segment. The primary factor
resulting in the impairment charge was increased price competition in the private passenger




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automobile insurance industry. No impairment charge was appropriate under the FASBs previous
goodwill impairment standard, which was based on undiscounted cash flows.





Intangibles Subject to Amortization





At September 28, 2002


At December 31, 2001Gross Carrying Amount

Accumulated Amortization


Gross Carrying Amount

Accumulated AmortizationPresent Value of Future Profits (PVFP)

$
4,627

$
(2,590
)

$
4,388

$
(2,377
)Capitalized software


246


(96
)


217


(70
)All other


352


(235
)


463


(211
)Total

$
5,225

$
(2,921
)

$
5,068

$
(2,658
)





Amortization expense related to intangible assets, excluding
goodwill, for the third quarter of 2002 and 2001 was $81 million and $108 million, respectively, and for the first nine months of 2002 and 2001 was $263 million and $306 million, respectively. The estimated percentage of the December 31, 2001 net
PVFP balance before the effect of unrealized investment gains or losses, to be amortized over each of the next five years, is as follows:





2002

13.5
%2003

10.8
%2004

9.0
%2005

7.6
%2006

6.3
%





Amortization expense for PVFP in future periods will be affected by
acquisitions, realized capital gains/losses or other factors affecting the ultimate amount of gross profits realized from certain lines of business. Similarly, future amortization expense for other intangibles will depend on future acquisitions,
dispositions and other business transactions.








Goodwill





Wealth Accumulation and Transfer

Lifestyle Protection and Enhancement

Auto & Home Insurance


Mortgage Insurance

TotalBalance, December 31, 2001

$
1,169

$
690

$
539


$
23

$
2,421Acquisitions


336


20









356Transition Impaired (pre-tax)








(539
)





(539
)All other(a)


10


78









88Balance, September 28, 2002

$
1,515

$
788

$



$
23

$
2,326


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|(a) |  | Other adjustments include the reclassification of certain intangible assets into goodwill upon the adoption of SFAS 142 and the impact of foreign exchange
translation adjustments.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




6.  At January 1, 2001, the Company adopted SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, as amended. Under SFAS 133, all derivative instruments are recognized in the balance sheet at their fair values. The cumulative effect of adopting this standard was a one-time
reduction of net earnings and shareholders interest of $15 million and $351 million, respectively, in the first quarter of 2001, primarily attributable to marking to market options and currency contracts used for hedging.





7.  On April 1, 2002, a wholly owned subsidiary, GE Edison Life Insurance Company, acquired Saison Life Insurance
Company Limited (Saison Life) from Credit Saison Co., Ltd, Saison Group, Ltd. and its other shareholders for 12.8 billion yen, or approximately $100 million. On the date of acquisition, Saison Life had approximately $4.3 billion of
assets, including $2.4 billion of cash and $1.3 billion of investments, $0.2 billion of goodwill, $0.3 billion of other intangibles, and $4.3 billion of liabilities and equity, including $82 million of perpetual subordinated debt (included in
minority interest). The Company has reflected its initial allocation of purchase price based on the estimated fair values according to preliminary valuations. Such estimated values may change as additional information is obtained and the allocation
is finalized.




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Item 2.Managements Discussion and Analysis of Results of Operations and Financial Condition.





Three Months Ended September 28, 2002 Compared With the Three Months Ended September 29, 2001





Overview





Net earnings for the three month period ended September 28, 2002 were $460
million, a $143 million, or 45.1%, increase from the three month period ended September 29, 2001. The increase in net earnings primarily relates to a favorable settlement that the Company reached with the Internal Revenue Service during the quarter,
which had the effect of significantly reducing the effective tax rate for the quarter. Operating results in the third quarter of 2002 were $28 million higher than the results in the third quarter of 2001 primarily due to an increase net realized
gains and lower amortization of intangibles. These factors were partially offset by a decline in policy fees attributed primarily to a decrease in separate account assets, reflecting the performance of the equity markets, and lower surrender fee
income due to the declining level of policy surrenders in GE Edison Life Insurance Company.





Sales of the
Companys fixed annuity products and its life and long term care insurance policies increased during the quarter as compared to the same period in 2001. However, sales of structured settlement annuities declined compared to the same 2001 period
and sales of variable annuities continued to be adversely impacted by the performance of the equity markets. Sales continue to be strong for the Mortgage Insurance segment; however, revenue is down primarily due to lower persistency driven by the
higher level of refinancing and an increase in the level of business retained by mortgage originators through captive reinsurance.





Operating Results





Premiumsincreased $146 million, or 9.2%, to $1,733
million for the three month period ended September 28, 2002 from $1,587 million for three month period ended September 29, 2001. The increase is primarily related to Saison Life, acquired in April 2002, which contributed $94 million of premiums
during the third quarter of 2002. The increase is also the result of new sales of the Companys life contingent immediate annuity contracts and renewal premiums generated by the Companys growing block of long term care insurance. Growth
in premiums from these products was partially offset by a decline in the Companys sales of structured settlement contracts.





Net investment incomeincreased $4 million, or 0.4%, to $1,053 million for the three month period ended September 28, 2002 from $1,049 million for the three month period ended September 29, 2001. The increase was
primarily attributable to higher levels of average invested assets ($80.4 billion for the three month period ended September 28, 2002 vs. $70.0 billion for the three month period ended September 29, 2001). This increase was partially offset by a
decrease in weighted average yields to 5.29% for the three month period ended September 28, 2002 from 5.94% for the three month period ended September 29, 2001.





Surrender fee incomedecreased $45 million to $43 million for the three month period ended September 28, 2002 from $88 million for the period ended September 29,
2001. The decrease primarily resulted from a decline in the surrender rate for policies assumed as part of the comprehensive transfer of assets and liabilities of Toho Mutual Life Insurance Company to GE Edison Life Insurance Company (the Toho
Transfer).





Net realized investment gainsincreased $73 million to $143 million for the three
month period ended September 28, 2002. Investment gains are comprised of gross investment gains and gross investment (losses). For the three month period ended September 28, 2002, gross gains and (losses) were $556 million and $(413) million,
respectively. Included in these gains were $114 million related to a securitization transaction conducted by its parent (General Electric Capital Corporation). For the three month period ended September 29, 2001, gross gains and (losses) were $173
million and $(103) million, respectively. In the third quarter of 2001, realized gains included $86 million from the securitization of certain financial assets.





Policy fees and other incomedecreased $19 million, or 9.4%, to $184 million for the three month period ended September 28, 2002, from $203 million for the three
month period ended September 29, 2001. Other income is principally comprised of insurance charges made against universal life contracts, revenues from sales of income protection packages, fees assessed against policyholder account values on variable
annuities and managed assets, other fee income, and commission income. The decrease in the three month period ended September 28, 2002 was primarily attributable to lower fees earned on variable annuity and interest sensitive life products,
reflecting a decline in the market values of assets underlying the contracts, and a decline in sales of income protection packages. These decreases were partially offset by fees earned on managed assets that resulted from the December 2001
acquisition of GE Private Asset Management, formerly Centurion Capital Group, an asset management services company.




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Benefits and other changes in policy reservesincludes both activity
related to changes in reserves for future policy benefits on long-duration life and health insurance products as well as claims costs incurred during the year under these contracts and mortgage insurance and property and casualty products. These
amounts increased $125 million, or 9.0%, to $1,521 million for the three month period ended September 28, 2002 from $1,396 million for the three month period ended September 29, 2001. The increase is primarily related to Saison Life, which
contributed $69 million of benefits and other changes in reserves during the third quarter of 2002. The increase is also attributable to higher levels of reserves associated with the Companys life contingent immediate annuities and long term
care insurance products resulting from growth in these product lines. Offsetting these increases were declines in structured settlement reserves, resulting from a decline in new sales, and mortgage insurance policies, resulting from favorable
development on prior year loss reserves. In addition, the change in reserves for the 2001 period declined due to the run off of the block of business assumed in the Toho Transfer.





General expenses, including commission expense, increased $33 million, or 4.4%, to $778 million for the three months ended September 28, 2002 from $745 million for
the three months ended September 29, 2001. This increase is primarily related to increased commissions from volume increases in our life contingent immediate annuity contracts and long-term care businesses partially offset by volume decreases in our
variable annuity products and other decreases in general expenses related to digitization projects.





Amortization of intangiblesdecreased $63 million, or 43.7%, to $81 million for the three month period ended September 28, 2002 from $144 million for the three month period ended September 29, 2001. The Companys
intangible assets primarily consist of PVFP, representing the estimated future gross profit in acquired insurance and annuity contracts. During 2001, amortization of intangibles included goodwill amortization expense. With the adoption of SFAS 142
on January 1, 2002, goodwill is no longer amortized. The decrease also resulted from the run off of the block of business assumed in the Toho Transfer.





Change in deferred acquisition costs, netdecreased $37 million, to $204 million for the three months ended September 28, 2002 from $241 million for the three months ended September 29, 2001.
Deferred acquisition costs include costs and expenses which vary with and are primarily related to the acquisition of insurance and investment contracts, such as commissions, printing, underwriting, and policy issuance costs. Under U.S. GAAP, these
costs are deferred and recognized in relation to either premiums or gross profits underlying the contracts. The change in deferred acquisition costs is primarily the result of the decline in variable annuity sales, as well as additional amortization
of $15 million recognized in connection with the securitization transaction conducted by its parent, as discussed above.





Provisions for income taxesdecreased $114 million to $47 million for the three month period ended September 28, 2002 from $161 million for the comparable period ended September 29, 2001. The Companys effective tax rate
of 9.3% is 24.3 percentage points lower than the effective tax rate of 33.6% for the comparable period in 2001. As indicated above, the Company reached a favorable settlement with the Internal Revenue Service regarding the treatment of certain
reserves for obligations to policyholders on life insurance contracts. The benefits associated with the settlement are non-recurring and will be recognized in the third and fourth quarters of 2002. Discontinuing the amortization of goodwill also
contributed to the Companys lower effective tax rate.





Nine Months Ended September 28, 2002 Compared With the Nine Months
Ended September 29, 2001





Overview





Net earnings for the first nine months of 2002 were $683 million, a $306 million decrease from the first nine months of 2001. Contributing to this decrease were $380
million of charges related to the cumulative effect of change in accounting principle. Also contributing to the decrease were realized losses in the Companys investment portfolio (including an approximate $167 million ($110 million net of tax)
impairment on securities issued by WorldCom, Inc. and its affiliates). Moreover, the value of separate account assets have decreased causing a decline in the corresponding policy fees and, as anticipated by the Company, policy surrender fee income
continue to decline, as fewer policies assumed in the Toho Transfer are lapsing. These events were offset in part by a favorable tax settlement with the Internal Revenue Service and growth in the Companys invested asset base, resulting in
higher investment income levels. The Company also continued to benefit from its streamlining, cost reduction and digitization efforts resulting in lower general expenses in 2002.




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Operating Results





Premiumsincreased $90 million, or 1.9%, to $4,907 million for the first nine months of 2002 from $4,817 million for the first nine months of 2001. The increase
is primarily attributable to premiums from Saison Life, which contributed $173 million of premiums during the first nine months of 2002. In addition, new sales of the Companys life contingent immediate annuity contracts and higher renewal
premiums generated by the Companys growing block of long term care insurance partially offset the decline in the Companys sales of structured settlement contracts.





Net investment incomeincreased $100 million, or 3.2% to $3,201 million for the first nine months of 2002 from $3,101 million for the first nine months of 2001. The
increase was primarily attributable to higher levels of average invested assets ($77.3 billion in first nine months of 2002 vs. $68.4 billion in first nine months of 2001). This increase was partially offset by a decrease in weighted average yields
to 5.51% for the first nine months of 2002 from 6.03% for the first nine months of 2001.





Surrender fee
incomedecreased $141 million to $145 million for the first nine months of 2002 from $286 million in the first nine months of 2001. The decrease primarily resulted from lower surrender fee income from the continued decline in the surrender rate
for the policies assumed as part of the Toho Transfer.





Net realized investment gainsdecreased $200
million to $123 million for the first nine months of 2002. Investment gains are comprised of gross investment gains and gross investment (losses). For the first nine months of 2002, gross gains and (losses) were $1,073 million and $(950) million,
respectively. Included in these gains were $114 million related to a securitization transaction conducted by its parent. For the first nine months of 2001, gross gains and (losses) were $578 million and $(255) million, respectively. The realized
losses in 2002 include the Companys portfolio losses on securities issued by WorldCom, Inc. and its affiliates of $167 million ($110 million net of tax). The Companys remaining exposure to WorldCom, Inc. is $42 million. In 2002, realized
gains included $29 million from the securitization of certain financial assets (not including the gains associated with the securitization transaction conducted by its parent) compared to the realized gains of $145 million from the securitization of
certain financial assets in the comparable 2001 period.





Policy fees and other incomedecreased $64
million, or 9.9%, to $580 million in the first nine months of 2002 from $644 million in the first nine months of 2001. The decrease in the first nine months of 2002 was primarily attributable to a decline in sales of income protection packages and
lower fees earned on variable annuity contracts, reflecting a decline in the market value of the assets underlying the contracts. These decreases were partially offset by fees earned on managed assets that resulted from the December 2001 acquisition
of GE Private Asset Management.





Benefits and other changes in policy reserves increased $76
million, or 1.8%, to $4,327 million for the first nine months ended September 28, 2002 from $4,251 million for the first nine months ended September 29, 2001. The increase is primarily related to Saison Life, which added $137 million of benefits and
other changes in reserves during the third quarter of 2002. Excluding Saison Life, benefits and other changes in policy reserves decreased as a result of lower levels of reserves associated with the Companys structured settlement contracts,
resulting from a decline in new sales, and mortgage insurance policies, resulting from favorable development on prior year loss reserves offset in part by increased reserves associated with growth in fixed annuity and long term care products.





General expenses,including commission expense, decreased $76 million, or 3.3%, to $2,202 million for the
first nine months of 2002 from $2,278 million for the first nine months of 2001. This decrease is primarily the result of reduced compensation and other cost savings initiatives.





Interest creditedincreased $42 million, or 3.4%, to $1,286 million in the first nine months of 2002 from $1,244 million in the first nine months of 2001. This
increase is a result of an increase in underlying reserves arising primarily from sales of fixed annuities and universal life products offset in part by a decline in interest crediting rates on Institutional Stable Value products (Guaranteed
Investment Contracts and funding agreements).





Amortization of intangiblesdecreased $135 million,
or 33.9%, to $263 million for the first nine months of 2002 from $398 million for the first nine months of 2001. Amortization of intangibles decreased primarily from the cessation of amortization expense related to goodwill, in accordance with SFAS
142 adopted January 1, 2002. The decrease also resulted from the run off of the block of business assumed in the Toho Transfer.





Change in deferred acquisition costs, netdecreased $50 million, to $592 million for the first nine months of 2002 from $642 million for the first nine months of 2001. The change in deferred acquisition costs is
primarily the result of the decline in




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variable annuity sales, as well as additional amortization of $15 million recognized in connection with the securitization transaction conducted
by its parent, as discussed above.





Interest expensedecreased $15 million, or 12.6%, to $104 million for
the first nine months of 2002 from $119 million for the first nine months of 2001. The decrease is a result of lower interest rates on borrowings partially offset by an increase in average debt outstanding.





Provisions for income taxesdecreased $215 million to $300 million for the first nine months of 2002 from $515 million for the
comparable period in 2001. The Companys effective tax rate of 22.0% is 11.8 percentage points lower than the effective tax rate of 33.8% for the comparable period in 2001. As indicated above, the Company reached a favorable settlement with the
Internal Revenue Service regarding the treatment of certain reserves for obligations to policyholders on life insurance contracts. The benefits associated with the settlement are non-recurring and will be recognized in the third and fourth quarters
of 2002. Discontinuing the amortization of goodwill also contributed to the Companys lower effective tax rate and the reduction of certain deferred tax liabilities also contributed to this decrease.





Financial Condition





Total assets increased $12.5 billion, or 12.9%, at September 28, 2002 from December 31, 2001. Total investments increased $12.9 billion or 18.1%. The change in investments primarily relates to net purchases of securities
funded by operating cash flows and net investment income. All other assets increased $0.3 billion which is primarily the result of cash received from the acquisition of Saison Life, offset by the reduction in separate account assets, resulting from
the overall decreased market value of the underlying investment funds.





Total liabilities increased $10.1 billion,
or 12.0%, at September 28, 2002 from December 31, 2001. Future annuity and contract benefits increased approximately $10.0 billion, or 16.1%. This increase resulted primarily from the acquisition of Saison Life and the growth in the Companys
long term care and fixed annuity products.





Portfolio Quality





The Company principally invests in investment grade debt and equity securities. The aggregate value of the Companys investments was
$73.8 billion, including gross unrealized gains and (losses) of $3.9 billion and $(1.6) billion, respectively, at September 28, 2002 as compared to $62.0 billion, including gross unrealized gains and (losses) of $1.4 billion and $(1.8) billion,
respectively, as of December 31, 2001. The Company regularly reviews the investment securities in its portfolio for impairment based on criteria that include the extent to which carrying value exceeds market value, the duration of that market
decline and the financial health and specific prospects for the issuer. Of those securities whose carrying amount exceeds fair value at September 28, 2002, and based upon application of the Companys accounting policy for impairment,
approximately $550 million of portfolio value is at risk of being charged to earnings over the next 12 months. Impairment losses recognized for the first nine months of 2002 were $400 million, including $218 million ($144 million net of tax) from
the telecommunications and cable industries, of which $167 million ($110 million net of tax) was recognized in 2002 related to WorldCom, Inc.





In recent periods the telecommunications and cable industries have experienced significant volatility. The Company holds aggregate investments of $2.9 billion in these industries as of September 28,
2002. These investments are subject to the Companys policies for other than temporary impairment. Any future losses on the Companys investments in these industries will depend upon the associated business and economic conditions.





Forward Looking Statements





This document may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are
based on managements current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global, political, economic, business, competitive market and
regulatory factors.







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Item 4.Controls and Procedures.





(a)  Evaluation of disclosure controls
and procedures.





The management of the Company, including the Chief Executive Officer and the Chief Financial
Officer, have conducted an evaluation of the effectiveness of the Companys disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 as of a date (the Evaluation Date) within 90 days prior
to the filing date of this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures were effective in ensuring that
all material information relating to the Company, including our consolidated subsidiaries, required to be filed in this quarterly report has been made known to them in a timely manner.





(b)  Changes in internal controls.





There have been no significant changes made in the Companys internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date.







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PART IIOTHER INFORMATION





Item 1.Legal Proceedings.





The Company, like other groups of insurance companies, is
involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurance companies, substantial damages have been sought and/or material settlement payments have been made. Except for the McBride case
described below, which is still in its preliminary stages, and its ultimate outcome, and any effect on the Company, cannot be determined at this time, management believes that at the present time there are no pending or threatened lawsuits that are
reasonably likely to have a material adverse impact on the Companys Consolidated Financial Statements.





On
November 1, 2000, GE Life and Annuity Assurance Company (GE Life), a subsidiary of GE Financial Assurance Holdings, Inc., was named as a defendant in a lawsuit filed in Georgia state court related to the sale of universal life insurance
policies (McBride v. Life Insurance Co. of Virginia dba GE Life and Annuity Assurance Co.). On December 1, 2000, GE Life successfully removed the case to the United States District Court for the Middle District of Georgia. The complaint is
brought as a class action on behalf of all persons who purchased certain universal life insurance policies from GE Life and alleges improper sales practices in connection with the sale of universal life policies. No class has been certified. On
February 27, 2002, the Court denied GE Lifes motion for summary judgment. The McBride litigation is still in its preliminary stages, and its ultimate outcome, and any effect on the Company, cannot be determined at this time. GE Life
intends to defend this lawsuit, including plaintiffs efforts to certify a nationwide class action, vigorously.





Item
6.Exhibits and Reports on Form 8-K.





a.  Exhibits.





Exhibit 12

Computation of ratio of earnings to fixed charges.Exhibit 99.1.

Section 906 Certification of Chief Executive OfficerExhibit 99.2.

Section 906 Certification of Chief Financial Officer





b.  Reports on Form 8-K.





None.




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SIGNATURES





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





GE FINANCIAL ASSURANCE HOLDINGS,
INC. (Registrant)By:

/s/    THOMAS W. CASEYTHOMAS W. CASEY, Chief Financial Officer (Principal Financial Officer)





Date: October 29, 2002





By:

/s/    RICHARD G. FUCCIRICHARD G. FUCCI, Vice President and Controller (Principal Accounting Officer)





Date: October 29, 2002




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CERTIFICATIONS





I, Michael D. Fraizer, certify that:





1.  I have reviewed this quarterly report on Form 10-Q of GE Financial Assurance Holdings, Inc.





2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;





3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;





4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:





a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;





b)  evaluated the
effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and





c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;





5.  The registrants other certifying officers and I
have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):





a)  all significant deficiencies in the design or operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and





b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal
controls; and





6.  The registrants other certifying officers and I have indicated
in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.





By:

/s/    MICHAEL D.
FRAIZERMichael D. Fraizer, Chief
Executive Officer





Date: October 29, 2002




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I, Thomas W. Casey, certify that:





1.  I have reviewed this quarterly report on Form 10-Q of GE Financial Assurance
Holdings, Inc.





2.  Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly
report;





3.  Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;





4.  The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:





a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this quarterly report is being prepared;





b)  evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and





c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date;





5.  The
registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
functions):





a)  all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and





b)  any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal controls; and





6.  The
registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.





/s/    THOMAS W. CASEYThomas W. Casey Chief
Financial Officer





Date: October 29, 2002




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