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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 333-69620

GE Life and Annuity Assurance Company

(Exact name of registrant as specified in its charter)

(804) 281-6000

(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  þ     No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes   ¨     No  þ

At August 1, 2003, 25,651 shares of common stock with a par value of $1,000.00 were outstanding. The common stock of GE Life and Annuity Assurance Company is not publicly traded.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed, Consolidated Financial Statements

GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Condensed, Consolidated Statements of Current and Retained Earnings

(Dollar amounts in millions)

(Unaudited)

See Notes to Condensed, Consolidated Financial Statements.

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GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Condensed, Consolidated Balance Sheets

(Dollar amounts in millions except per share amounts)

See Notes to Condensed, Consolidated Financial Statements.

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GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Condensed, Consolidated Statements of Cash Flows

(Dollar amounts in millions)

(Unaudited)

See Notes to Condensed, Consolidated Financial Statements.

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GE LIFE AND ANNUITY ASSURANCE COMPANY AND SUBSIDIARY

Notes to Condensed, Consolidated Financial Statements

(Dollar amounts in millions)

(Unaudited)

The condensed, consolidated quarterly financial statements are unaudited. These statements include all adjustments (consisting of normal recurring accruals) we considered necessary to present a fair statement of the results of operations, financial position and cash flows. The results reported in these condensed, consolidated quarterly financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The condensed, consolidated, quarterly financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes contained in our Current Report on Form 10-K, as of December 31, 2002.

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The Total Annuities segment provides investment products that include fixed and variable deferred annuities, fixed immediate annuities, guaranteed investment contracts and funding agreements. The Life segment includes universal, variable and interest sensitive life insurance. The All Other segment includes accident and health insurance, primarily Medicare supplemental insurance, that is not sufficiently material to warrant separate disclosure, as well as other corporate activities.

The following is a summary of operating segment activity:

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The following is a summary of assets by reporting segment:

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, at least annually.

Under SFAS 142, we were 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 no goodwill impairment charge. Goodwill is tested for impairment at least annually using a fair value approach, which requires the use of estimates and judgements. To the extent the carrying amount of a reporting unit’s goodwill exceeds its fair value, an impairment charge would be recorded.

Intangibles Subject to Amortization

Amortization expense related to intangible assets, excluding goodwill, for the second quarter of 2003 and 2002 was $9.0 million and $6.5 million, respectively and for the first six months of 2003 and 2002 was $16.2 million and

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$14.3 million, respectively. The estimated percentage of the December 31, 2002 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:

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.

In July 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, which we intend to adopt on January 1, 2004. Since this pronouncement has only recently been finalized, the impact on our consolidated financial statements is not known at this time.

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Ite m 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

THREE MONTHS ENDED JUNE 30, 2003 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 2002

Net earnings (loss) for the three month period ended June 30, 2003 was $9.7 million, a $10.1 million increase from the net loss of $(0.4) million in the three month period ended June 30, 2002. Included in the three month period ended June 30, 2002 net realized investment losses was an impairment loss of $29.5 million ($18.6 million, net of tax) recognized on securities issued by WorldCom, Inc. and its affiliates. Offsetting this decrease in net realized investment losses, the decline in the equity markets has adversely impacted our product fee revenues and resulted in an increased amortization expense of deferred acquisition costs on certain variable annuities products. Declining interest rates during the quarter have resulted in lower investment yields on our fixed maturity portfolio, partially offset by reduced interest crediting rates on certain of our contracts.

Operating Results

Net investment income decreased $13.3 million, or 8.8%, to $137.1 million for the three months ended June 30, 2003 from $150.4 million for the comparable 2002 period. This decrease is primarily a result of a decrease in weighted average investment yields to 4.58% for the three month period ended June 30, 2003 from 5.19% for the three month period ended June 30, 2002 due to the overall declining interest rate environment. This decrease was partially offset by higher levels of average invested assets ($12,030 million in the three months ended June 30, 2003 as compared to $11,657 million in the three months ended June 30, 2002).

Net realized investment gains (losses) increased $34.9 million to a loss of $(3.5) million for the three months ended June 30, 2003 from a loss of $(38.4) million for the comparable 2002 period. Net investment gains (losses) are comprised of gross investment gains and gross investment (losses), respectively, of $12.9 million and $(16.4) million for the three months ended June 30, 2003, and $26.7 million and $(65.1) million for the three months ended June 30, 2002. Impairment losses recognized for the three months ended June 30, 2003 were $(11.6) million. There were no securitizations during the three month period ending June 30, 2003. The realized losses in 2002 includes the Company’s losses on securities issued by WorldCom, Inc. and its affiliates of $29.5.

Cost of insurance increased $2.3 million, or 7.4%, to $33.5 million for the three months ended June 30, 2003 from $31.2 million in the comparable 2002 period. The increase was primarily due to premium refunds received from a terminated reinsurance treaty.

Variable product fees decreased $4.8 million, or 15.7%, to $25.8 million for the three months ended June 30, 2003 from $30.6 million in the comparable 2002 period. The decrease in variable product fees primarily resulted from a decline in the daily average separate account values as a result of the unfavorable conditions in the equity markets and higher lapses in variable annuity contracts.

Interest credited decreased $13.3 million, or 11.4%, to $103.1 million for the three months ended June 30, 2003 from $116.4 million in the comparable 2002 period. This decrease was primarily attributable to the decline in the institutional stable value product liabilities and crediting rates.

Benefits and other changes in policy reserves include both activity related to future policy benefits on long-duration life and health products as well as claim costs incurred during the year under these contracts. In addition, the bonus feature of our bonus variable annuity product is initially accounted for as a benefit. Benefits and other changes in policy reserves increased $1.7 million, or 3.3%, to $52.5 million for the three months ended June 30, 2003 from $50.8 million in the comparable 2002 period. The increase primarily relates to slightly higher sales of our bonus variable annuity product, coupled with an increase in the bonus rate from 4.0% to 5.0%.

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Commissions increased $15.8 million, or 53.9%, to $45.1 million for the three months ended June 30, 2003 from $29.3 million for the comparable 2002 period. In 2002, we launched a new variable annuity, GE Retirement Answer (“GERA”). The increase in commission expense was primarily attributable to the new sales of GERA and increased sales of our core variable annuity products.

General expenses were $28.5 million for the three months ended June 30, 2003, an increase of $8.7 million, or 43.9%, from the comparable 2002 period expense of $19.8 million. This increase is primarily the result of higher legal expenses and increased printing costs associated with annual product filings.

Change in deferred acquisition costs, net increased $16.7 million, or 256.9%, to $(23.2) million for the three months ended June 30, 2003 from $(6.5) million for the comparable 2002 period. Deferred acquisition costs include costs and expenses which vary with and are primarily related to the acquisition of insurance and investment contracts. These costs and expenses include commissions, printing, underwriting, policy issuance costs and a certain variable annuity product bonus feature. Under U.S. GAAP, these costs are deferred and recognized, over time, in relation to either premiums or gross profits underlying the contracts. The change is primarily a result of an increase in commission expense and other sales related expenses deferred for the new sales of GERA and increased sales of our core variable annuity product.

Provision (benefit) for income taxes increased $8.0 million to a net expense of $3.0 million for the three month period ended June 30, 2003 from a net benefit of $5.0 million for the comparable period ended June 30, 2002. The Company’s effective tax rate of 23.6% for the three month period ended June 30, 2003 was 69.0 percentage points lower than the effective tax rate of 92.6% for the comparable period ended June 30, 2002. The increase in the tax provision is attributable primarily to the impact of recurring permanent tax benefits on a net pre-tax loss in 2002 versus income in 2003.

SIX MONTHS ENDED JUNE 30, 2003 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2002

Net earnings for the first six months of 2003 were $34.6 million, a $2.3 million, or 7.1%, increase from the first six months of 2002. Included in the six month period ended June 30, 2002 net realized investment losses was an impairment loss of $29.5 million ($18.6 million, net of tax) recognized on securities issued by WorldCom, Inc. and its affiliates. Offsetting this decrease in net realized investment losses, the decline in the equity markets has adversely impacted our product fee revenues and resulted in an increased amortization expense of deferred acquisition costs on certain variable annuities products. Declining interest rates during the quarter have resulted in lower investment yields on our fixed maturity portfolio, partially offset by reduced interest crediting rates on certain of our contracts.

Operating Results

Net investment income decreased $30.1 million, or 9.9%, to $275.0 million for the first six months of 2003 from $305.1 million in the prior year period. This decrease is primarily a result of a decrease in weighted average investment yields to 4.69% for the first six months of 2003 from 5.28% for the first six months of 2002 due to the overall declining interest rate environment. This decrease was partially offset by higher levels of average invested assets ($11,871 million in the first six months of 2003 as compared to $11,716 million in the first six months of 2002).

Net realized investment gains (losses) increased $40.5 million to a gain of $15.5 million for the first six months of 2003 from a loss of $(25.0) million for the first six months of 2002. Net investment gains/(losses) are comprised of gross investment gains and gross investment (losses), respectively, of $41.7 million and $(26.2) million for the first six months of 2003, and $55.5 million and $(80.5) million for the first six months of 2002. Impairment losses recognized for the six months ended June 30, 2003 were $(14.4) million. The realized losses in 2002 includes the Company’s losses on securities issued by WorldCom, Inc. and its affiliates of $29.5 million. There were no securitizations during the six month period ending June 30, 2003. Included in the gross realized investment gains in the first six months of 2002 was $5.8 million resulting from the securitization of certain financial assets.

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Cost of insurance increased $8.0 million, or 12.7%, to $70.8 million for the first six months of 2003 from $62.8 million for the first six months of 2002. The increase was primarily due to premium refunds received from a terminated reinsurance treaty.

Premiums, which include premium revenues from traditional life and life contingent annuity contracts, decreased $3.4 million or 6.6%, to $47.9 million for the first six month of 2003 from $51.3 million in the first six months of 2002. This decrease was primarily a result of lower levels of renewal premiums on whole life policies.

Variable product fees decreased $12.5 million or 20.1%, to $49.7 million for the first six months of 2003 from $62.2 million for the first six months of 2002. The decrease in variable product fees primarily resulted from a decline in the average separate account values as a result of the unfavorable conditions in the equity markets and higher lapses in variable annuity contracts.

Interest credited decreased $28.3 million, or 12.0%, to $206.6 million in the first six months of 2003 from $234.9 million in the first six months of 2002. This decrease was primarily attributable to the decline in the institutional stable value product liabilities and crediting rates.

Benefits and other changes in policy reserves include both activity related to future policy benefits on long-duration life and health products as well as claim costs incurred during the year under these contracts. In addition, the bonus feature of our bonus variable annuity product is initially accounted for as a benefit. Benefits and other changes in policy reserves increased $4.2 million, or 4.2%, to $104.9 million in the first six months of 2003 from $100.7 million in the first six months of 2002. The increase primarily relates to higher renewal premiums of Medicare supplemental products and slightly higher sales of our bonus variable annuity product, coupled with an increase in the bonus rate from 4.0% to 5.0%.

Commission expense increased $19.0 million, or 33.0%, to $76.5 million in the first six months of 2003 from $57.5 million in the first six months of 2002. In 2002, we launched a new variable annuity, GE Retirement Answer (“GERA”). The increase in commission expense was primarily attributable to the new sales of GERA and increased sales of our core variable annuity products.

General expenses were $54.3 million for the first six months of 2003, an increase of $12.6 million or 30.2% over the first six months of 2002 expense of $41.7 million. This increase is primarily the result of higher legal expenses.

Change in deferred acquisition costs, net changed $14.2 million, or 96.6%, to ($28.9) million for the first six months of 2003 from ($14.7) million for the first six months of 2002. Deferred acquisition costs include costs and expenses which vary with and are primarily related to the acquisition of insurance and investment contracts. These costs and expenses include commissions, printing, underwriting, policy issuance costs and a certain variable annuity product bonus feature. Under U.S. GAAP, these costs are deferred and recognized, over time, in relation to either premiums or gross profits underlying the contracts. The change is primarily a result of an additional $4.4 million of amortization expense resulting from adverse equity market performance offset by an increase in commission expense and other sales related expenses deferred for the new sales of GERA and increased sales of our core variable annuity product.

Provision for income taxes increased $3.0 million or 26.3% to $14.4 million for the six month period ended June 30, 2003 from $11.4 million for the comparable period ended June 30, 2002. The Company’s effective tax rate of 29.4% for the six month period ended June 30, 2003 was 3.3 percentage points higher than the effective tax rate of 26.1% for the comparable period ended June 30, 2002. This increase is attributable primarily to higher net pre-tax income in 2003 over 2002,which lowered the percentage impact of relatively stable permanent tax benefits in 2003 over 2002.

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Financial Condition

Total investments. Total investments increased $681.6 million, or 5.9%, at June 30, 2003 from December 31, 2002. This increase was primarily related to the market impact of investments securities as well as net purchases of securities funded by operating cash flows and cash received under securities lending programs.

Investment securities comprise mainly investment grade debt securities. Investment securities were $10,647.9 million, including gross unrealized gains and (losses) of $457.3 million and ($157.0) million, respectively at June 30, 2003 and $10,073.9 million, including gross unrealized gains and (losses) of $258.6 million and ($235.8) million, respectively, at December 31, 2002. Market value for these purposes is defined by relevant accounting standards and should not be viewed as a forecast of future gains or losses. We estimate that available gains, net of hedging positions and estimated impairment of intangibles and other insurance related assets, could be as much as $168.8 million.

We regularly review investment securities for impairment based on criteria that includes the extent to which cost exceeds market value, the duration of that market decline, and the financial health and specific prospects for the issuer. Of securities where carrying value exceeds fair value at June 30, 2003, approximately $40 million is at risk of being charged to earnings in the succeeding twelve months. Impairment losses recognized for the first six months of 2003 and 2002 were $(14.4) million and $(54.1), respectively.

Separate account assets and liabilities. Separate account assets and liabilities represent funds held for the exclusive benefit of variable annuity and variable life contract holders. As of June 30, 2003, we held $7,504.8 million of separate account assets. The increase of $322.0, or 4.5%, from $7,182.8 million at December 31, 2002 was related primarily to the favorable market performance of the underlying securities whose value increased 9.2% during the six months ended June 30, 2003.

Future annuity and contract benefits. Future annuity and contract benefits increased $80.4 million to $10,851.9 million at June 30, 2003 from $10,771.5 million at December 31, 2002. The increase is primarily attributable to an increase in liabilities for the variable annuity fixed account investment option resulting from changes in customer investment choices. This increase was partially offset by the institutional stable value liability decline.

Liability for policy and contract claims. Liability for policy and contract claims decreased $26.1 million, to $214.3 million at June 30, 2003 from $240.4 million at December 31, 2002. The decrease was primarily attributable to the institutional stable value maturities and interest payments.

Other Liabilities. Other liabilities increased $356.6 million, to $492.8 million at June 30, 2003 from $136.2 million at December 31, 2002. The increase is primarily attributable to the timing of settlement of trades related to investments resulting in increased balances payable to brokers.

Liquidity

For the six months ended June 30, 2003 and 2002 cash flows provided by (used in) operating and certain financing activities were $164.6 million and ($255.2) million, respectively. These amounts include net cash used in financing activities relating to investment contract issuances accounted for as deposit liabilities under U.S. GAAP and redemptions of $1,589.9 million and $1,681.5 million, respectively. We maintain a committed credit line with an indirect parent, GNA, of $500 million to provide liquidity to meet normal variation in cash. The amount outstanding as of June 30, 2003 was $14.0 million and is included in other liabilities in the Condensed, Consolidated Balance Sheets.

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Forward-Looking Statements

This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements which represent our belief regarding potential investments gains and losses. These statements are based on our current expectation and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market, and regulatory factors. We undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the six months ended June 30, 2003 to our exposure to market risk for changes in interest rates and foreign currency exchange rates.

Item 4. Controls and Procedures

As required by Rule 13a-15(b), management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company’s disclosure controls and procedures were effective as of the end of the period covered by this report. As required by Rule 13a-15(d), management, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the company’s internal control over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We, like other insurance companies, are 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, the ultimate outcome of which, and any effect on us, 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 our Consolidated Financial Statements.

On November 1, 2000, GE Life and Annuity Assurance Company (“GE Life”) 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, we 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 our motion for summary judgment. We have vigorously denied liability with respect to the plaintiff’s allegations and the ultimate outcome, and any effect on us, of the McBride litigation cannot be determined at this time.

Item 6. Exhibits and Reports on Form 8-K

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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.

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