Análisis general de los resultados

Included in the consolidated balance sheets at December 31, 2010 and 2009 are the following related party amounts:

2010 2009

Reinsurance receivable $ 483,564 $ 452,510

Future policy benefits 2,183,167 2,293,712

December 31,

Included in the consolidated statements of income for the years ended December 31, 2010, 2009 and 2008 are the following related party amounts:

2010 2009 2008

Premium income, net of related party premiums ceded of $3,588, $3,411,

and $3,662 $ 131,037 $ 137,085 $ 155,752

Life and other policy benefits, net of reinsurance recoveries of $4,906,

$7,415 and $7,356 122,830 118,624 120,999

Increase (decrease) in future policy benefits (65,778) (45,960) (42,180) Year ended December 31,

The Company provides administrative and operational services for the United States operations of The Great-West Life Assurance Company (“GWL”) and the United States operations of The Canada Life Assurance Company (“CLAC”), wholly-owned subsidiaries of Lifeco. The Company also provides investment services for London Reinsurance Group, an indirect subsidiary of GWL. The following table presents revenue and expense reimbursement from related parties for services provided pursuant to these service agreements for the years ended December 31, 2010, 2009 and 2008. These amounts, in accordance with the terms of the various contracts, are based upon estimated costs incurred, including a profit charge, and resources expended based upon the number of policies, certificates in-force and/or administered assets.

2010 2009 2008

Investment management and administrative revenue included in fee income and net

investment income $ 7,505 $ 7,334 $ 7,856

Administrative and underwriting expense reimbursements included as a reduction

to general insurance expense 988 944 1,092

Total $ 8,493 $ 8,278 $ 8,948

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements Years Ended December 31, 2010, 2009 and 2008

(Dollars in Thousands)

The following table summarizes amounts due from parent and affiliates at December 31, 2010 and 2009:

Related party Indebtedness Due date 2010 2009

GWL&A Financial Inc. On account On demand $ 11,298 $ 17,248 Great-West Lifeco U.S. Inc. On account On demand 191,185 166,991 Great-West Lifeco Finance LP On account On demand - 598 Great-West Lifeco Finance LP II On account On demand 187 - Great-West Life & Annuity Insurance

Capital (Nova Scotia) Co. On account On demand - 142 Great-West Life & Annuity Insurance

Capital (Nova Scotia) Co. II On account On demand - 237 Putnam Investments LLC On account On demand 182 125 The Crown Life Insurance Company On account On demand 152 491 Other related party receivables On account On demand 227 140

Total $ 203,231 $ 185,972

December 31,

The following table summarizes amounts due to parent and affiliates at December 31, 2010 and 2009:

Related party Indebtedness Due date 2010 2009

GWL&A Financial Inc. (1) Surplus note November 2034 $ 194,231 $ 194,218 GWL&A Financial Inc. (2) Surplus note May 2046 333,400 333,400 GWL&A Financial Inc. Note interest May 2011 4,701 4,701 Great-West Life & Annuity Insurance

Capital (Nova Scotia) Co. II On account On demand 13 - Great-West Lifeco Finance LP II On account On demand - 2,223 The Great-West Life Assurance Company On account On demand 4,046 1,352 The Canada Life Assurance Company On account On demand 1,083 1,669

Total $ 537,474 $ 537,563

December 31,

(1)

A note payable to GWL&A Financial was issued as a surplus note on November 15, 2004, with a face amount of $195,000 and carrying amounts of $194,230 and $194,218 at December 31, 2010 and 2009, respectively. The surplus note bears interest at the rate of 6.675% per annum, payable in arrears on each May 14 and November 14. The note matures on November 14, 2034.

(2)

A note payable to GWL&A Financial was issued as a surplus note on May 19, 2006, with a face amount and carrying amount of $333,400. The surplus note bears interest initially at the rate of 7.203% per annum, payable in arrears on each May 16 and November 16 until May 16, 2016. After May 16, 2016, the surplus note bears an interest rate of 2.588% plus the then-current three-month London Interbank Offering Rate. The surplus note is redeemable by the Company at the principal amount plus any accrued and unpaid interest after May 16, 2016. The note matures on May 16, 2046.

Payments of principal and interest under the surplus notes shall be made only out of surplus funds of the Company and only with prior written approval of the Commissioner of Insurance of the State of Colorado when the Commissioner of Insurance is satisfied that the financial condition of the Company warrants such action pursuant to applicable Colorado law. Payments of principal and interest on the surplus notes are payable only if at the time of such payment and after giving effect to the making thereof, the Company’s surplus would not fall below two and one half times the authorized control level as required by the most recent risk-based capital calculations.

Interest expense attributable to these related party debt obligations was $37,042, for each of the three years ended December 31, 2010.

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements Years Ended December 31, 2010, 2009 and 2008

(Dollars in Thousands)

The Company’s wholly owned subsidiary, Great-West Life & Annuity Insurance Company of South Carolina (“GWSC”) and CLAC are parties to a reinsurance agreement pursuant to which GWSC assumes term life insurance from CLAC. GWL&A Financial obtained two letters of credit for the benefit of the Company as collateral under the GWSC and CLAC reinsurance agreement for policy liabilities and capital support. The first letter of credit is for $1,068,300 and renews annually until it expires on December 31, 2025. The second letter of credit is for $70,000 and renews annually for an indefinite period of time. At December 31, 2010 and 2009 there were no outstanding amounts related to the letters of credit.

Included within reinsurance receivable in the consolidated balance sheets are $436,661 and $407,154 of funds withheld assets as of December 31, 2010 and 2009, respectively. CLAC pays the Company on a quarterly basis, interest on the funds withheld balance at a rate of 4.55% per annum.

A subsidiary of the Company, GW Capital Management, LLC, serves as a Registered Investment Advisor to Maxim Series Fund, Inc. an affiliated open-end management investment company and to several affiliated insurance company separate accounts. Included in fee income on the consolidated statements of income is $59,320, $52,540 and $61,403 of advisory and management fee income from these affiliated entities for the years ended December 31, 2010, 2009 and 2008, respectively.

The Company’s separate accounts invest in shares of Maxim Series Fund, Inc. and Putnam Funds which are affiliates of the Company and shares of other non-affiliated mutual funds and government and corporate bonds. The Company’s separate accounts include mutual funds or other investment options that purchase guaranteed interest annuity contracts issued by the Company. During the years ended December 31, 2010, 2009 and 2008, these purchases totaled $162,504, $149,302 and $64,723, respectively. As the general account investment contracts are also included in the separate account balances in the accompanying consolidated balance sheets, the Company has reduced the separate account assets and liabilities by $269,495 and $364,233 at December 31, 2010 and 2009, respectively, to eliminate these amounts in its consolidated balance sheets at those dates.

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Consolidated Financial Statements Years Ended December 31, 2010, 2009 and 2008

(Dollars in Thousands)