AGL SEPARATE ACCOUNT VL R, S-6/A, 2000-10-26

AGL SEPARATE ACCOUNT VL R
S-6/A, 2000-10-26

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<PAGE>

Registration No. 333-43264

As filed with the Securities and Exchange Commission on October 26, 2000

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
TO REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2

AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL-R
(Exact Name of Trust)

AMERICAN GENERAL LIFE INSURANCE COMPANY
(Exact Name of Depositor)
2727-A Allen Parkway
Houston, Texas 77019-2191
(Complete Address of Depositor's Principal Executive Offices)

Pauletta P. Cohn, Esq.
Deputy General Counsel
American General Life Companies
2929 Allen Parkway
Houston, Texas 77019-2191
(Name and Complete Address of Agent for Service)

Title and Amount of Securities Being Registered:
An Indefinite Amount of Units of Interest in
American General Life Insurance Company
Separate Account VL-R
Under Variable Life Insurance Policies

Securities Being Offered: Flexible Premium Variable Life Insurance Policies

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

The Registrant hereby amends this Registration Statement on such date or date as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL-R
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM
N-8B-2 AND THE PROSPECTUS
(PURSUANT TO INSTRUCTION 4 OF FORM S-6)

CROSS REFERENCE SHEET

ITEM NO. OF FORM N-8B-2* PROSPECTUS CAPTION
-------------------------------------------------------------------------
<S> <C>
1 Additional Information : Separate Account VL-R.
2 Additional Information: AGL.
3 Inapplicable.
4 Additional Information: Distribution of Policies.
5, 6 Additional Information: Separate Account VL-R.
7 Inapplicable.**
8 Inapplicable.**
9 Additional Information: Legal Matters.
10(a) Additional Information: Your Beneficiary, Assigning
Your Policy.
10(b) Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
10(c)(d) Basic Questions You May Have: How can I change
my Policy's insurance coverage? How can I access
my investment in a Policy? Can I choose the form
in which AGL pays out any proceeds from my
Policy? Additional Information: Payment of Policy
Proceeds.
10(e) Basic Questions You May Have: Must I invest any
minimum amount in a policy?
10(f) Additional Information: Voting Privileges.
10(g)(1), 10(g)(4), 10(h)(3), 10(h)(2) Basic Questions You May Have: To what extent will
AGL vary the terms and conditions of the Policies
in particular cases? Additional Information: Voting
Privileges; Additional Rights That We Have.
10(g)(3), 10(g)(4), 10(h)(3), 10(h)(4) Inapplicable.**
10(i) Additional Information: Separate Account VL-R; Tax
Effects.
11 Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
Additional Information: Separate Account VL-R.
12(a) Additional Information: Separate Account VL-R;
Front Cover.
12(b) Inapplicable.**
12(c), 12(d) Inapplicable.**
12(e) Inapplicable, because the Separate Account did not
commence operations until 1998.
13(a) Basic Questions You May Have: What charges will
AGL deduct from my investment in a Policy? What
charges and expenses will the Mutual Funds
deduct from the amounts I invest through my
Policy? Additional Information: More About
Policy Charges.
13(b) Illustrations of Hypothetical Policy Benefits.
13(c) Inapplicable.**
13(d) Basic Questions You May Have: To what extent will
AGL vary the terms and conditions of the Policy in
particular cases?
13(e), 13(f), 13(g) None.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
14 Basic Questions You May Have: How can I invest
money in a Policy?
15 Basic Questions You May Have: How can I invest
money in a Policy? How do I communicate with AGL?
16 Basic Questions You May Have: How will the value
of my investment in a Policy change over time?

ITEM NO. ADDITIONAL INFORMATION
-------------------------------------------------------------------
17(a), 17(b) Captions referenced under Items 10(c), 10(d), and
10(e).
17(c) Inapplicable.**
18(a) Captions referred to under Item 16.
18(b), 18(d) Inapplicable.**
18(c) Additional Information: Separate Account VL-R.
19 Additional Information: Separate Account VL-R;
Our Reports to Policy Owners.
20(a), 20(b), 20(c), 20(d), 20(e), 20(f) Inapplicable.**
21(a), 21(b) Basic Questions You May Have: How can I access
my investment in a Policy? Additional Information:
Payment of Policy Proceeds.
21(c) Inapplicable.**
22 Additional Information: Payment of Policy Proceeds-
Delay to Challenge Coverage.
23 Inapplicable.**
24 Basic Questions You May Have; Additional
Information.
25 Additional Information: AGL.
26 Inapplicable, because the Separate Account did
not commence operations until 1998.
27 Additional Information: AGL.
28 Additional Information: AGL's Management.
29 Additional Information: AGL.
30, 31, 32, 33, 34 Inapplicable, because the Separate Account did not
commence operations until 1998.
35 Inapplicable.**
36 Inapplicable.**
37 None.
38, 39 Additional Information: Distribution of the Policies.
40 Inapplicable, because the Separate Account did not
commence operations until 1998.
41(a) Additional Information: Distribution of the Policies.
41(b), 41(c) Inapplicable**
41, 43 Inapplicable, because the Separate Account did not
commence operations or issue any securities until
1998.
44(a)(1), 44(a)(2), 44(a)(3) Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
44(a)(4) Additional Information: Tax Effects--Our taxes.
44(a)(5), 44(a)(6) Basic Questions You May Have: What charges will
AGL deduct from my investment in a Policy?
44(b) Inapplicable.**
44(c) Caption referenced in 13(d) above.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
45 Inapplicable, because the Separate Account did not
commence operations until 1998.
46(a) Captions referenced in 44(a) above.
46(b) Inapplicable.**
47, 48, 49 None.
50 Inapplicable.**
51 Inapplicable.**
52(a), 52(c) Basic Questions You May Have: To what extent can
AGL vary the terms and conditions of the Policy in
particular cases? Additional Information:
Additional Rights That We Have.
52(b), 52(d) None.
53(a) Additional Information: Tax Effects--Our taxes.
53(b), 54 Inapplicable.**
55 Illustrations of Hypothetical Policy Benefits.
56-59 Inapplicable.**
</TABLE>

* Registrant includes this Reconciliation and Tie in its Registration
Statement in compliance with Instruction 4 as to the Prospectus as set out
in Form S-6. Separate Account VL-R (Account) has previously filed a notice
of registration as an investment company on Form N-8A under the Investment
Company Act of 1940 (Act), and a Form N-8B-2 Registration Statement.
Pursuant to Sections 8 and 30(b)(1) of the Act, Rule 30a-1 under the Act,
and Forms N-8B-2 and N-SAR under that Act, the Account will keep its
Form N-8B-2 Registration Statement current through the filing of periodic
reports required by the Securities and Exchange Commission (Commission).

** Not required pursuant to either Instruction 1(a) as to the Prospectus as
set out in Form S-6 or the administrative practice of the Commission and
its staff of adapting the disclosure requirements of the Commission's
registration statement forms in recognition of the differences between
variable life insurance policies and other periodic payment plan
certificates issued by investment companies and between separate accounts
organized as management companies and unit investment trusts.
<PAGE>

PLATINUM INVESTOR /(SM)/ III
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES (THE "POLICIES") ISSUED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL")

HOME OFFICE SPRINGFIELD SERVICE CENTER
<S> <C> <C> <C>
(Express Delivery) (US Mail) (Express Delivery) (US Mail)
2727-A Allen Parkway Variable Universal Life #1 Franklin Square Variable Universal Life
Houston, Texas 7019-2191 Administration Springfield, Illinois 62713-0001 Administration
PHONE: 1-888-325-9315 P.O. Box 4880 PHONE: 1-888-325-9315 P.O. Box 19520
or 1-713-831-3443 Houston, Texas 77210-4880 or 1-800-528-2011 Springfield, Illinois 62794-9520
HEARING HEARING
IMPAIRED 1-888-436-5258 IMPAIRED 1-217-528-3158
FAX: 1-877-445-3098 FAX: 1-217-528-2404
</TABLE>

This booklet is called the "prospectus."

Investment options. The AGL declared fixed interest account is the fixed
investment option for this Policy. You can also use AGL's Separate Account VL-R
("Separate Account") to invest in the following variable investment options.
You may change your selections from time to time:
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISER INVESTMENT OPTION
------------------------------------------ ----------------------------------- ----------------------------------
<S> <C> <C> <C>
. AIM Variable Insurance Funds.............. AIM Advisors, Inc.................. AIM V.I. International Equity Fund
AIM V.I. Value Fund
. American Century Variable Portfolios, Inc. American Century Investment........ VP Value Fund
Management, Inc.
. Ayco Series Trust......................... Ayco Asset Management.............. Ayco Large Cap Growth Fund I
. Dreyfus Investment Portfolios............. The Dreyfus Corporation............ MidCap Stock Portfolio
. Dreyfus Variable Investment Fund.......... The Dreyfus Corporation............ Quality Bond Portfolio
Small Cap Portfolio
. Fidelity Variable Insurance Products Fund. Fidelity Management & Research..... VIP Equity-Income Portfolio
Company VIP Growth Portfolio
VIP Asset Manager Portfolio
VIP Contrafund Portfolio
. Janus Aspen Series - Service Shares....... Janus Capital...................... International Growth Portfolio
Worldwide Growth Portfolio
Aggressive Growth Portfolio
. J. P. Morgan Series Trust II.............. J. P. Morgan Investment Management. J. P. Morgan Small Company
Inc. Portfolio
. MFS Variable Insurance Trust.............. Massachusetts Financial Services... MFS Emerging Growth Series
Company MFS Research Series
MFS Capital Opportunities Series
MFS New Discovery Series
. Neuberger Berman Advisers Management
Trust.................................... Neuberger Berman Management Inc. .. Mid-Cap Growth Portfolio
. North American Funds Variable Product
Series I................................. American General Advisers.......... International Equities Fund
MidCap Index Fund
Money Market Fund
Nasdaq-100 Index Fund
Stock Index Fund
Small Cap Index Fund
Science & Technology Fund
. PIMCO Variable Insurance Trust............ Pacific Investment Management...... PIMCO Short-Term Bond Portfolio
Company PIMCO Real Return Bond Portfolio
PIMCO Total Return Bond Portfolio
. Putnam Variable Trust - Class IB Shares... Putnam Investment Management, Inc.. Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT International Growth and
Income Fund
. SAFECO Resource Series Trust.............. SAFECO Asset Management............ Equity Portfolio
Company Growth Opportunities Portfolio
. The Universal Institutional Funds, Inc.... Morgan Stanley Asset Management.... Equity Growth Portfolio
Miller, Anderson & Sherrerd, LLP... High Yield Portfolio
. Vanguard Variable Insurance Fund.......... Wellington Management Company, LLP. High Yield Bond Portfolio
The Vanguard Group................. REIT Index Portfolio
. Van Kampen Life Investment Trust.......... Van Kampen Asset Management Inc.... Strategic Stock Portfolio
. Warburg Pincus Trust...................... Credit Suisse Asset Management, LLC Small Company Growth Portfolio
</TABLE>

<PAGE>

SEPARATE PROSPECTUSES CONTAIN MORE INFORMATION ABOUT THE MUTUAL FUNDS
("FUNDS" OR "MUTUAL FUNDS") IN WHICH WE INVEST THE AMOUNTS THAT YOU ALLOCATE TO
ANY OF THE ABOVE-LISTED INVESTMENT OPTIONS (OTHER THAN OUR DECLARED FIXED
INTEREST ACCOUNT OPTION). THE FORMAL NAME OF EACH SUCH FUND IS SET FORTH IN THE
CHART THAT APPEARS ON PAGE 1. YOUR INVESTMENT RESULTS IN ANY SUCH OPTION WILL
DEPEND ON THOSE OF THE RELATED FUND. YOU SHOULD BE SURE YOU ALSO READ THE
PROSPECTUS OF THE MUTUAL FUND FOR ANY SUCH INVESTMENT OPTION YOU MAY BE
INTERESTED IN. YOU CAN REQUEST FREE COPIES OF ANY OR ALL OF THE MUTUAL FUND
PROSPECTUSES FROM YOUR AGL REPRESENTATIVE OR FROM US AT EITHER OUR HOME OFFICE
OR SPRINGFIELD SERVICE CENTER LISTED ON PAGE 1.

Right to return. If for any reason you are not satisfied with your Policy,
you may return it to us and we will refund you the greater of (i) any premium
payments received by us or (ii) your accumulation value plus any charges that
have been deducted. To exercise your right to return your Policy, you must mail
it directly to the Home Office or Springfield Service Center address shown on
the first page of this prospectus or return it to the AGL representative through
whom you purchased the Policy within 10 days after you receive it. In a few
states, this period may be longer. Because you have this right, we will invest
your initial net premium payment in the money market investment option from the
date your investment performance begins until the first business day that is at
least 15 days later. Then we will automatically allocate your investment among
the available investment options in the ratios you have chosen. Any additional
premium we receive during the 15-day period will also be invested in the money
market investment option and allocated to the investment options at the same
time as your initial net premium.

Charges and expenses. We deduct charges and expenses, including charges
for any additional benefit riders you choose, from the amounts you invest in the
Policy. These are described beginning on page 7.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE POLICIES ARE NOT AVAILABLE IN ALL STATES.

THE POLICIES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE
SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.

THIS PROSPECTUS IS DATED NOVEMBER 1, 2000

2
<PAGE>

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you
purchase a Platinum Investor/(SM)/III variable life Policy ("Policy") or
exercise any of your rights or privileges under a Policy. Please read this
prospectus carefully and keep it for future reference.

Basic Information. Here are the page numbers in this prospectus where you
may find answers to most of your questions:

<TABLE>
<CAPTION>
PAGE TO SEE IN
BASIC QUESTIONS YOU MAY HAVE THIS PROSPECTUS
---------------------------- ---------------
<S> <C>
. What are the Policies?................................................. 4
. How can I invest money in a Policy?.................................... 5
. How will the value of my investment in a Policy change over time?...... 6
. What charges will AGL deduct from my investment in a Policy?........... 7
. What charges and expenses will the Mutual Funds deduct from
amounts I invest through my Policy?................................. 10
. What is the amount of insurance ("death benefit")
that AGL pays when the insured person dies?......................... 15
. Must I invest any minimum amount in a Policy?.......................... 17
. How can I change my Policy's investment options?....................... 19
. How can I change my Policy's insurance coverage?....................... 19
. What additional rider benefits might I select?......................... 21
. How can I access my investment in a Policy?............................ 23
. Can I choose the form in which AGL pays
out proceeds from my Policy?........................................ 25
. To what extent can AGL vary the terms and conditions of the Policy
in particular cases?................................................ 26
. How will my Policy be treated for income tax purposes?................. 27
. How do I communicate with AGL?......................................... 27
</TABLE>

Investment Option currently not available. The Ayco Large Cap Growth Fund
I, although we disclose certain information about this fund, is currently not
available as an investment option. This is a fund which is currently in
registration with the SEC. The fund's investment advisor anticipates that this
fund will be effective with the SEC and available for investment under the
Policy on or about November 15, 2000. We will give you written notice when this
fund becomes available.

Financial statements. We have included certain financial statements of AGL.
These begin on page Q-1.

Special words and phrases. The Index of Words and Phrases that appears at
the back of this prospectus will tell you on what page you can read more
information about many of the words and phrases that we use.

3
<PAGE>

BASIC QUESTIONS YOU MAY HAVE

WHAT ARE THE POLICIES?

Summary. This prospectus describes Platinum Investor III flexible premium
variable life insurance Policies issued by AGL. Platinum Investor III Policies
provide life insurance coverage with flexibility in death benefits, premium
payments and investment options. Platinum Investor III pays a death benefit to
a beneficiary you designate when the insured person dies. You choose one of two
death benefit options.

We apply your net premiums to your Policy. You may invest your premiums in
our declared fixed interest account or in one or more of the variable investment
options, or both. The value of your investment in a variable investment option
depends on the investment results of the related Mutual Fund. We do not
guarantee any minimum cash value for amounts allocated to the variable
investment options. If the Fund investments go down, the value of a Policy can
decline. The value of our declared fixed interest account will depend on the
interest rates that we declare.

Other choices you have. During the insured person's lifetime, you may,
within limits, (1) change the amount of insurance, (2) borrow or withdraw
amounts you have invested, (3) choose when and how much you invest, and (4)
choose whether your accumulation value under your Policy, upon the insured
person's death, will be added to the insurance proceeds we otherwise will pay to
the beneficiary.

Home Office and Springfield Service Center. The Home Office provides
service to applicants and Policy owners whose AGL representative is associated
with any broker-dealer except Franklin Financial Services Corporation ("FFSC").
The Springfield Service Center services the needs of applicants and Policy
owners whose AGL representative is associated with the FFSC broker-dealer. Your
AGL representative will tell you if you should use the Home Office or
Springfield Service Center addresses. All premium payments, requests,
directions and other communications should be directed to the appropriate
location. See "How do I communicate with AGL?" on page 27. Also see "Services
Agreements" on page 57. This booklet is called the "prospectus."

Illustrations of a hypothetical Policy. Starting on page 29, we have
included some examples of how the values of a sample Policy would change over
time, based on certain assumptions we have made. Because your circumstances may
vary considerably from our assumptions, your AGL representative will also
provide you with a similar sample illustration that is more tailored to your own
circumstances and wishes.

Additional information. You may find the answers to any other questions
you have under "Additional Information" beginning on page 33 or in the Policy.
A table of contents for the "Additional Information" portion of this prospectus
also appears on page 33. You can obtain copies of the Policy from (and direct
any other questions to) your AGL representative or our Home Office

4
<PAGE>

(shown on the first page of this prospectus). You should contact the Springfield
Service Center if we requested that you do so (also shown on the first page).

HOW CAN I INVEST MONEY IN A POLICY?

Premium payments. We call the payments you make "premiums" or "premium
payments." The amount we require as your initial premium varies depending on the
specifics of your Policy and the insured person. We can refuse to accept a
subsequent premium payment that is less than $50. Otherwise, with a few
exceptions mentioned below, you can make premium payments at any time and in any
amount. Premium payments we receive after your right to return expires, as
discussed on page 2, will be allocated upon receipt to the available investment
options you have chosen.

Limits on premium payments. Federal tax law may limit the amount of
premium payments you can make (relative to the amount of your Policy's insurance
coverage) and may impose penalties on amounts you take out of your Policy if you
do not observe certain additional requirements. These tax law requirements and
a discussion of modified endowment contracts are summarized further under "How
will my Policy be treated for income tax purposes?" beginning on page 27 and
"Tax Effects" beginning on page 34. We will monitor your premium payments,
however, to be sure that you do not exceed permitted amounts or inadvertently
incur any tax penalties. The tax law limits can vary as a result of changes you
make to your Policy. For example, a reduction in the specified amount of your
Policy can reduce the amount of premiums you can pay.

Also, in certain limited circumstances, additional premiums may cause the
death benefit to increase by more than they increase your accumulation value.
In such case, we may refuse to accept an additional premium if the insured
person does not provide us with adequate evidence that they continue to meet our
requirements for issuing insurance.

Checks and money orders. You may pay premiums by check or money order
drawn on a U.S. bank in U.S. dollars and made payable to "American General Life
Insurance Company," or "AGL." Premiums after the initial premium should be sent
directly to the appropriate address shown on your billing statement. If you do
not receive a billing statement, send your premium directly to our Home Address
or Springfield Service Center at the appropriate address shown on the front
cover of this prospectus. We also accept premium payments by bank draft, wire
or by exchange from another insurance company. Premium payments from salary
deduction plans may be made only if we agree. You may obtain further
information about how to make premium payments by any of these methods from your
AGL representative, from our Home Office or from our Springfield Service Center.

We have a premium financing program available for certain qualified
applicants. If you intend to make an initial premium payment of at least
$50,000 and you have a net worth of at least $3,000,000, you may qualify under
this program. For more information, you may contact your registered
representative or our Home Office at 1-800-677-3311.

5
<PAGE>

Dollar cost averaging. Dollar cost averaging is an investment strategy
designed to reduce the risks that result from market fluctuations. The strategy
spreads the allocation of your accumulation value among your chosen variable
investment options over a period of time. This allows you to reduce the risk of
investing most of your funds at a time when prices are high. The success of
this strategy depends on market trends and is not guaranteed.

Under dollar cost averaging, we automatically make transfers of your
accumulation value from the money market investment option to one or more of the
other variable investment options that you choose. You tell us whether you want
these transfers to be made monthly, quarterly, semi-annually or annually. We
make the transfers as of the end of the valuation period that contains the day
of the month that you select other than the 29th, 30th or 31st day of the month.
(The term "valuation period" is described on page 43.) You must have at least
$5,000 of accumulation value to start dollar cost averaging and each transfer
under the program must be at least $100. Dollar cost averaging ceases upon your
request, or if your accumulation value in the money market investment option
becomes exhausted. You cannot use dollar cost averaging at the same time you
are using automatic rebalancing. We do not charge you for using this service.

Automatic rebalancing. This feature automatically rebalances the
proportion of your accumulation value in each investment option under your
Policy to correspond to your then current premium allocation designation. You
tell us whether you want us to do the rebalancing quarterly, semi-annually or
annually. The date automatic rebalancing occurs will be based on the date of
issue of your Policy. For example, if your Policy is dated January 17, and you
have requested automatic rebalancing on a quarterly basis, automatic rebalancing
will start on April 17, and will occur quarterly thereafter. Automatic
rebalancing will occur as of the end of the valuation period that contains the
date of the month your Policy was issued. You must have a total accumulation
value of at least $5,000 to begin automatic rebalancing. Rebalancing ends upon
your request. You cannot use automatic rebalancing at the same time you are
using dollar cost averaging. We do not charge you for using this service.

HOW WILL THE VALUE OF MY INVESTMENT IN A POLICY CHANGE OVER TIME?

Your accumulation value. From each premium payment you make, we deduct the
charges that we describe on page 7 under "Premium tax charge" (or "Tax charge
back" if you are a resident of Oregon when you purchase your Policy) and "Other
deductions from each premium payment." We invest the rest in one or more of the
investment options listed in the chart on the first page of this prospectus. We
call the amount that is at any time invested under your Policy (including any
loan collateral we are holding for your Policy loans) your "accumulation value."

Your investment options. We invest the accumulation value that you have
allocated to any variable investment option in shares of a corresponding Mutual
Fund. Over time, your accumulation value in any such investment option will
increase or decrease by the same amount as if you had invested in the related
Fund's shares directly (and reinvested all dividends and distributions from the
Fund in additional Fund shares); except that your accumulation value will also
be reduced by certain

6
<PAGE>

charges that we deduct. We describe these charges beginning on page 7 under
"What charges will AGL deduct from my investment in a Policy?"

You can review other important information about the Mutual Funds that you
can choose in the separate prospectuses for those Funds. You can request
additional free copies of these prospectuses from your AGL representative, from
our Home Office or from the Springfield Service Center if such Center provides
your customer service (both locations are shown on the first page of this
prospectus).

We invest any accumulation value you have allocated to our declared fixed
interest account option as part of our general assets. We credit interest on
that accumulation value at a rate which we declare from time to time. We
guarantee that the interest will be credited at an effective annual rate of at
least 4%. Although this interest increases the amount of any accumulation value
that you have in our declared fixed interest account option, such accumulation
value will also be reduced by any charges that are allocated to this option
under the procedures described under "Allocation of charges" on page 10. The
"daily charge" described on page 8 and the charges and expenses of the Mutual
Funds discussed on pages 11 - 14 do not apply to our declared fixed interest
account option.

Policies are "non-participating." You will not be entitled to any
dividends from AGL.

WHAT CHARGES WILL AGL DEDUCT FROM MY INVESTMENT IN A POLICY?

Premium tax charge. Unless your Policy was issued in Oregon, we deduct
from each premium a charge for the tax that is then applicable to us in your
state or other jurisdiction. These taxes, if any, currently range from .75% to
3.5%. Please let us know if you move to another jurisdiction, so we can adjust
this charge if required. You are not permitted to deduct the amount of these
taxes on your income tax return.

Tax charge back. If you are a resident of Oregon at the time you purchase
a Policy, there is no premium tax charge. Instead, we will deduct from each
premium a tax charge back that is permissible under Oregon Law. If you later
move from Oregon to a state that has a premium tax, we will not charge you a
premium tax. We deduct the tax charge back from each premium you pay,
regardless of the state in which you reside at the time you pay the premium.
The current tax charge back is 2% of each premium. We may change the tax charge
back amount but any change will only apply to new Policies we issue. We use the
charge partly to offset our obligation to pay premium taxes on the same Policy
if you move to another state. We also use the charge to pay for the cost of
additional administrative services we provide under these Policies.

Other deductions from each premium payment. After we deduct premium tax
(or a tax charge back if we issued your Policy in Oregon) from your premium
payment, we will deduct 5.0% from the remainder of all premiums received. We
may increase this charge but it will never exceed

7
<PAGE>

7.5%. Your Policy refers to this deduction as a Premium Expense Charge. We use
this charge to cover sales expenses, including commission.

Daily charge. We will deduct a daily charge at an annual effective rate of
.70% of your accumulation value that is then being invested in any of the
variable investment options. After a Policy has been in effect for 10 years,
however, we will reduce this rate to an annual effective rate of .45%, and after
20 years, to an annual effective rate of .10%. We guarantee these rate
reductions. Since the Policies were first offered only in the year 2000, the
reduction has not yet taken effect under any outstanding Policies. We apply
this charge to pay for our mortality and expense risks.

Flat monthly charge. We will deduct $6 from your accumulation value each
month. We may lower this charge but it is guaranteed to never exceed $6. The
flat monthly charge is the Monthly Administration Fee shown on page 3A of your
Policy. We use this charge to pay for the cost of administrative services we
provide under the Policies.

Monthly charge per $1,000 of specified amount. We deduct a charge monthly
from your accumulation value for the first 7 Policy years. This monthly charge
also applies to the amount of any increase in base coverage during the 7 Policy
years following the increase. This charge varies according to the amount of
base coverage and the age, gender and premium class of the insured person. The
dollar amount of this charge changes with each change in your Policy's base
coverage. (We describe your specified amount under "Your specified amount of
insurance" on page 15.) This charge is a maximum of $1.46 for each $1000 of the
base coverage portion of the specified amount. The initial amount of this charge
is shown on page 3A of your Policy and is called "Monthly Expense Charge for
First Seven Years." Page 4 of your Policy contains a table of the guaranteed
rates for this charge. We use this charge to pay for underwriting costs and
other costs of issuing the Policies, and also to help pay for the administrative
services we provide under the Policies.

Monthly insurance charge. Every month we will deduct from your
accumulation value a charge based on the cost of insurance rates applicable to
your Policy on the date of the deduction and our "amount at risk" on that date.
Our amount at risk is the difference between (a) the death benefit that would be
payable before reduction by policy loans if the insured person died on that date
and (b) the then total accumulation value under the Policy. For otherwise
identical Policies:

. greater amounts at risk result in a higher monthly insurance charge;
and

. higher cost of insurance rates also result in a higher monthly
insurance charge.

Our cost of insurance rates are guaranteed not to exceed those that will be
specified in your Policy. Our current rates are lower than the guaranteed
maximum rates for insured persons in most age and premium classes, although we
have the right at any time to raise these rates to not more than the guaranteed
maximum.

8
<PAGE>

In general the longer you own your Policy, the higher the cost of insurance
rate will be as the insured person grows older. Also our cost of insurance
rates will generally be lower if the insured person is a female than if a male.
Similarly, our current cost of insurance rates are generally lower for non-
tobacco users than tobacco users. On the other hand, insured persons who
present particular health, occupational or non-work related risks may require
higher cost of insurance rates and other additional charges based on the
specified amount of insurance coverage under their Policies.

Finally, our current cost of insurance rates for the same insured person
differ depending on the specified amount in force on the day the charge is
deducted. We have different rates we apply for specified amounts that range
from $50,000 to $99,999, $100,000 to $999,999 and $1,000,000 or more. Rates are
highest for the first range of $50,000 to $99,999, lower for the second range of
$100,000 to $999,999 and lower still for the third range of $1,000,000 or more.
This means, for instance, that if your specified amount for any reason increases
from the first range to the second or third range, or from the second range to
the third range, your subsequent cost of insurance rates will be lower under
your Policy than they would be before the increase. The reverse is also true.
Our cost of insurance rates are generally higher under a Policy that has been in
force for some period of time than they would be under an otherwise identical
Policy purchased more recently on the same insured person.

We use this charge to fund the death benefits we pay under the Policies.

Monthly charges for additional benefit riders. We will deduct charges
monthly from your accumulation value, if you select additional benefit riders.
The charges for any rider you select will vary by Policy within a range based on
either your personal characteristics or the specific coverage you choose under
the rider. The riders we offer are accidental death benefit rider, children's
insurance benefit rider, maturity extension rider, return of premium death
benefit rider, spouse term rider, terminal illness rider and waiver of monthly
deduction rider. The riders are described beginning on page 21, under "What
additional rider benefits might I select?" The specific charge for any riders
you choose is shown on page 3 of your Policy. We use these charges to pay for
the benefits under the riders and to help offset the risks we assume.

Surrender charge. The Policies have a surrender charge that applies for a
maximum of the first 10 Policy years (and for a maximum of the first 10 Policy
years after any increase in the Policy's base coverage). We will apply the
surrender charge only to the base coverage portion of the specified amount.

The amount of the surrender charge depends on the age and other insurance
characteristics of the insured person. Your Policy's surrender charge will be
found in the table beginning on page 27 of the Policy. It may initially be as
high as $49.00 per $1,000 of base coverage or as low as $3.00 per $1,000 of base
coverage (or any increase in the base amount).

We are permitted to not charge some or all of the surrender charges under
certain limited circumstances, according to the terms of a Policy endorsement.

9
<PAGE>

We will deduct the entire amount of any then applicable surrender charge
from the accumulation value at the time of a full surrender. Upon a requested
decrease in a Policy's base coverage portion of the specified amount, we will
deduct any remaining amount of the surrender charge that was associated with the
base coverage that is canceled. This includes any decrease that results from
any requested partial surrender. See "Partial surrender" beginning on page 23
and "Change of death benefit option" beginning on page 20. For those Policies
that lapse in the first 10 Policy years, we use this charge to help recover
sales expenses.

Partial surrender fee. We will charge a maximum fee equal to the lesser of
2% of the amount withdrawn or $25 for each partial surrender you make. This
charge is currently $10. We use this charge to help pay for the expense of
making a partial surrender.

Transfer fee. We may charge a $25 transfer fee for each transfer between
investment options that exceeds 12 each Policy Year. We do not currently assess
this charge but reserve the right to do so in the future. This charge will be
deducted from the investment options in the same ratio as the requested
transfer. We use this charge to help pay for the expense of making the
requested transfer.

Charge for taxes. We can adjust charges in the future on account of taxes
we incur or reserves we set aside for taxes in connection with the Policies.
This would reduce the investment experience of your accumulation value.

For a further discussion regarding the charges we will deduct from your
investment in a Policy, see "More About Policy Charges" on page 42.

Allocation of charges. You may choose the investment options from which we
deduct all monthly charges and any applicable surrender charges. If you do not
have enough accumulation value in those investment options, we will deduct these
charges in the same ratio the charges bear to the unloaned accumulation value
you then have in each investment option.

WHAT CHARGES AND EXPENSES WILL THE MUTUAL FUNDS DEDUCT FROM AMOUNTS I INVEST
THROUGH MY POLICY?

Each Mutual Fund pays its investment management fees and other operating
expenses. Because they reduce the investment return of a Fund, these fees and
expenses also will reduce indirectly the return you will earn on any
accumulation value that you have invested in that Fund. The charges and expenses
that we show in the following table are for each Fund's most recent fiscal year
ended, unless we indicate otherwise:

10
<PAGE>

THE MUTUAL FUNDS' ANNUAL EXPENSES/1/ (as a percentage of average net assets)

<TABLE>
<CAPTION>
FUND OTHER FUND TOTAL FUND
MANAGEMENT OPERATING OPERATING
FEES (AFTER EXPENSES (AFTER EXPENSES (AFTER
EXPENSE 12B-1 EXPENSE EXPENSE
NAME OF FUND REIMBURSEMENT)/3/ FEES REIMBURSEMENT)/3/ REIMBURSEMENT)/3/
-------------------------------------- ------------------ ------ ------------------ ------------------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:/1/

AIM V.I. International Equity Fund 0.75% 0.22% 0.97%

AIM V.I. Value Fund 0.61% 0.15% 0.76%

AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.:/1/

VP Value Fund 1.00% 0.00% 1.00%

AYCO SERIES TRUST:/1, 2/

Ayco Large Cap Growth Fund I 0.00% 1.00% 1.00%

DREYFUS INVESTMENT PORTFOLIOS:/1/

MidCap Stock Portfolio/3/ 0.75% 0.22% 0.97%

DREYFUS VARIABLE INVESTMENT
FUND:/1/

Quality Bond Portfolio 0.65% 0.09% 0.74%

Small Cap Portfolio 0.75% 0.03% 0.78%

FIDELITY VARIABLE INSURANCE
PRODUCTS FUND:/1, 4/

VIP Equity-Income Portfolio 0.48% 0.25% 0.10% 0.83%

VIP Growth Portfolio 0.58% 0.25% 0.10% 0.93%

VIP Asset Manager Portfolio 0.53% 0.25% 0.11% 0.89%

VIP Contrafund Portfolio 0.58% 0.25% 0.12% 0.95%

JANUS ASPEN SERIES - SERVICE
SHARES:/5/

International Growth Portfolio 0.65% 0.25% 0.11% 1.01%

Worldwide Growth Portfolio 0.65% 0.25% 0.05% 0.95%

Aggressive Growth Portfolio 0.65% 0.25% 0.02% 0.92%

J. P. MORGAN SERIES TRUST II:/1/

J. P. Morgan Small Company 0.60% 0.55% 1.15%
Portfolio/3/
</TABLE>

11
<PAGE>

MFS Emerging Growth Series /3/ 0.74% 0.09% 0.83%

MFS Research Series /3/ 0.74% 0.11% 0.85%

MFS Capital Opportunities Series/3/ 0.74% 0.16% 0.90%

MFS New Discovery Series/3/ 0.88% 0.17% 1.05%

NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST:/1/

Mid-Cap Growth Portfolio/3/ 0.85% 0.15% 1.00%

NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I:/1/

International Equities Fund 0.35% 0.08% 0.43%

MidCap Index Fund 0.31% 0.07% 0.38%

Money Market Fund 0.50% 0.07% 0.57%

Nasdaq-100 Index Fund /6/ 0.40% 0.10% 0.50%

Stock Index Fund 0.26% 0.06% 0.32%

Small Cap Index Fund 0.35% 0.04% 0.39%

Science & Technology Fund 0.90% 0.05% 0.95%

PIMCO VARIABLE INSURANCE
TRUST:/1/

PIMCO Short-Term Bond Portfolio/3/ 0.25% 0.35% 0.60%

PIMCO Real Return Bond Portfolio/3/ 0.25% 0.40% 0.65%

PIMCO Total Return Bond 0.25% 0.40% 0.65%
Portfolio/3/
</TABLE>

12
<PAGE>

Putnam VT Diversified Income Fund 0.68% 0.15% 0.10% 0.93%

Putnam VT Growth and Income 0.46% 0.15% 0.04% 0.65%
Fund

Putnam VT International Growth 0.80% 0.15% 0.18% 1.13%
and Income Fund

SAFECO RESOURCE SERIES TRUST:/1/

Equity Portfolio 0.74% 0.02% 0.76%

Growth Opportunities Portfolio 0.74% 0.04% 0.78%

THE UNIVERSAL INSTITUTIONAL FUNDS,
INC.:/1/

Equity Growth Portfolio/3/ 0.29% 0.56% 0.85%

High Yield Portfolio/3/ 0.19% 0.61% 0.80%

VANGUARD VARIABLE INSURANCE
FUND:

High Yield Bond Portfolio 0.26% 0.03% 0.29%

REIT Index Portfolio 0.15% 0.12% 0.27%

VAN KAMPEN LIFE INVESTMENT
TRUST:/1/

Strategic Stock Portfolio/3/ 0.24% 0.41% 0.65%

WARBURG PINCUS TRUST:/1/

Small Company Growth Portfolio 0.90% 0.24% 1.14%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/ Most of the Mutual Funds' advisers or administrators have entered into
arrangements under which they pay certain amounts to AGL for services such as
proxy mailing and tabulation, mailing of fund related information and responding
to Policy owners' inquiries about the Funds. PIMCO Variable Insurance Trust has
entered into such an arrangement directly with us. The fees shown above for
Total Fund Operating Expenses are unaffected by these arrangements. To the
extent we receive these fees, we do not lower the Policy fees we charge you. We
do not generate a profit from these fees, but only offset the cost of the
services. (See "Certain Arrangements" on page 43 and "Services Agreements" on
page 57.)
/2/Fees and charges for Ayco Series Trust are for fiscal year 2000 and are the
fees and charges that the trust anticipates it will charge when this fund
becomes available. We will give you written notice of any changes to this
footnote when this fund becomes available under the Policy.

(Footnotes continue on page 14)

13
<PAGE>

/3/For the Funds indicated, management fees and other expenses as shown for
fiscal year 1999 would have been the percentages shown below without certain
voluntary expense reimbursements from the investment adviser. Current and
future fees and expenses may vary from the fiscal year 1999 fees and expenses.

<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL
FEES EXPENSES ANNUAL EXPENSES
----------- --------- ----------------
<S> <C> <C> <C>
DREYFUS INVESTMENT PORTFOLIOS
MidCap Stock Portfolio 0.75% 0.71% 1.46%

J.P. MORGAN SERIES TRUST II
J.P. Morgan Small Company Portfolio 0.60% 1.97% 2.57%

MFS VARIABLE INSURANCE TRUST
MFS Emerging Growth Series 0.75% 0.09% 0.84%
MFS Research Series 0.75% 0.11% 0.86%
MFS Capital Opportunities Series 0.75% 0.27% 1.02%
MFS New Discovery Series 0.90% 1.59% 2.49%

NEUBERGER BERMAN ADVISERS MANAGEMENT
TRUST
Mid-Cap Growth Portfolio 0.85% 0.23% 1.08%

PIMCO VARIABLE INSURANCE TRUST
PIMCO Short-Term Bond Portfolio 0.25% 1.17% 1.42%
PIMCO Real Return Bond Portfolio 0.25% 0.67% 0.92%
PIMCO Total Return Bond Portfolio 0.25% 0.44% 0.69%

THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
Equity Growth Portfolio 0.55% 0.56% 1.11%
High Yield Portfolio 0.50% 0.61% 1.11%
VAN KAMPEN LIFE INVESTMENT TRUST
Strategic Stock Portfolio 0.50% 0.41% 0.91%
</TABLE>

No other Funds received any such reimbursements.
/4/The prospectuses for Fidelity Variable Insurance Products Fund under "Fund
Distribution" discuss this 12b-1 fee.
/5/Expenses are based on the estimated expenses that the new Service Shares
class of each Portfolio expects to incur in its initial fiscal year. The
prospectus for Janus Aspen Series under "Fees and Expenses" discusses the 12b-1
fee.
/6/Fees and charges for the Nasdaq-100 Index Fund are estimated for the current
fiscal year.
/7/The prospectus for Putnam Variable Trust - Class IB Shares under
"Distribution plan" discusses this 12b-1 fee.

14
<PAGE>

WHAT IS THE AMOUNT OF INSURANCE ("DEATH BENEFIT") THAT AGL PAYS WHEN THE INSURED
PERSON DIES?

Your specified amount of insurance. In your application to buy a Platinum
Investor III Policy, you tell us how much life insurance coverage you want. We
call this the "specified amount" of insurance. The specified amount consists of
what we refer to as "base coverage" plus any "supplemental coverage" you select.
Base coverage must be at least 10% of the specified amount. We also provide a
guarantee of a death benefit equal to the specified amount (less any
indebtedness) and any benefit riders. We refer to this guarantee in both your
Policy and this prospectus as the "guarantee period" benefit. We provide more
information about the specified amount and the guarantee period benefit
beginning on page 45 under "More About the Death Benefit" and under "Monthly
guarantee premiums," beginning on page 17. You should read these other
discussions carefully because they contain important information about how the
choices you make can affect your benefits and the amount of premiums and charges
you may have to pay.

Your death benefit. The death benefit we will pay is reduced by any
outstanding Policy loans and increased by any unearned loan interest we may have
already charged. You also choose whether the death benefit we will pay is

. Option 1--The specified amount on the date of the insured person's
death; or

. Option 2--The specified amount on the date of the insured person's death
plus the Policy's accumulation value as of the date of death.

Under Option 2, your death benefit will tend to be higher than under Option
1. However, the monthly insurance charge we deduct will also be higher to
compensate us for our additional risk. Because of this, your accumulation value
for the same amount of premium will tend to be higher under Option 1 than under
Option 2.

Any premiums we receive after the insured person's death will be returned
and not included in your accumulation value.

We may pay a larger death benefit depending on the amount of the
accumulation value on the date of death, as explained below.

Federal tax law requires a minimum death benefit in relation to
accumulation value for a Policy to qualify as life insurance. We will
automatically increase the death benefit of a Policy if necessary to ensure that
the Policy will continue to qualify as life insurance. One of two tests under
current federal tax law can be used: the "guideline premium test" or the "cash
value accumulation test." You must elect one of these tests at issue, and,
once elected, the choice may not be changed. Factors you should consider in
making this choice are discussed below.

15
<PAGE>

The "guideline premium test" limits the amount of premiums paid under a
Policy at any time to a certain amount which depends on the size of the Policy
and the age and gender of the insured person. Therefore, the maximum premiums
you can pay are generally more limited under this test than under the cash value
accumulation test.

The other major difference between the two tax tests involves the Policy's
"alternative death benefit." The alternative death benefit is calculated as
shown in the tables that follow. During any time when the alternative death
benefit works out to be more than the Option 1 or Option 2 death benefit you
have chosen, we would automatically deem the death benefit to be such higher
amount.

As illustrated in the tables below, choosing the cash value accumulation
test for tax law compliance generally makes it more likely that an alternative
minimum death benefit will apply. Therefore, if you anticipate that your Policy
may have a substantial accumulation value in relation to its death benefit, you
should be aware that the alternative death benefit may cause your Policy's death
benefit to be higher if you choose that test than if you choose the guideline
premium test. To the extent that the alternative death benefit does result in a
higher death benefit, the cost of insurance charges deducted from your Policy
will also tend to be higher. (This compensates us for the additional risk that
we might have to pay the higher alternative death benefit.)

If you have selected the guideline premium test, we calculate the
alternative death benefit by multiplying your Policy's accumulation value by the
following percentages:

SPECIMEN ALTERNATIVE DEATH BENEFITS AS A PERCENTAGE MULTIPLE
OF POLICY ACCUMULATION VALUE (ASSUMING YOU
SELECT THE GUIDELINE PREMIUM TEST)

INSURED
PERSON'S
AGE* 40 45 50 55 60 65 70 75 100
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

% 250% 215% 185% 150% 130% 120% 115% 105% 100%
</TABLE>

* Nearest birthday at the beginning of the Policy year in which the insured
person dies.

If you have selected the cash value accumulation test, we calculate the
alternative death benefit by multiplying your Policy's accumulation value by a
percentage that will be set forth on page 25 of your Policy. The percentage
varies based on the insurance characteristics of the insured person. Below is an
example of applicable alternative death benefit percentages for the cash value
accumulation test. The example is for a male non-tobacco user preferred premium
class and issue age 55.

16
<PAGE>

SPECIMEN ALTERNATIVE DEATH BENEFITS AS A PERCENTAGE MULTIPLE
OF POLICY ACCUMULATION VALUE (ASSUMING YOU
SELECT THE CASH VALUE ACCUMULATION TEST)

POLICY
YEAR 1 2 3 5 10 20 30 40 45
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

% 218% 212% 207% 196% 173% 142% 127% 112% 104%
</TABLE>

Your Policy calls the multipliers used for each test the "Death Benefit Corridor
Rate."

MUST I INVEST ANY MINIMUM AMOUNT IN A POLICY?

Planned periodic premiums. Page 3 of your Policy will specify a
"Planned Periodic Premium." This is the amount that you (within limits) choose
to pay. Our current practice is to bill quarterly, semi-annually or annually.
However, payment of these or any other specific amounts of premiums is not
mandatory. After payment of your initial premium, you need only invest enough
to ensure your Policy's cash surrender value stays above zero or that the
guarantee period benefit (described under "Monthly guarantee premiums" on page
17) remains in effect ("Cash surrender value" is explained under "Full
surrender" on page 23.) The less you invest, the more likely it is that your
Policy's cash surrender value could fall to zero, as a result of the deductions
we periodically make from your accumulation value.

Policy lapse and reinstatement. If your Policy's cash surrender value
(the Policy's accumulation value less Policy loans and loan interest during the
first 5 Policy years) falls to an amount insufficient to cover the monthly
charges, we will notify you and give you a grace period to pay at least the
amount we estimate is necessary to keep your Policy in force for a reasonable
time. If we do not receive your payment by the end of the grace period, your
Policy and all riders will end without value and all coverage under your Policy
will cease. Although you can apply to have your Policy "reinstated," you must
do this within 5 years (or, if earlier, before the Policy's maturity date), and
you must present evidence that the insured person still meets our requirements
for issuing coverage. Also, you will have to pay at least the amount of
premium that we estimate will keep your Policy in force for two months, as well
as pay or reinstate any indebtedness. You will find additional information in
the Policy about the values and terms of the Policy after it is reinstated.

Monthly guarantee premiums. Page 3 of your Policy will specify a
"Monthly Guarantee Premium." If you pay these guarantee premiums, we will
provide at least an Option 1 death benefit, even if your policy's cash surrender
value has declined to zero.

17
<PAGE>

We call this our "guarantee period" benefit and here are its terms and
conditions. On the first day of each Policy month that the cash surrender value
is not sufficient to pay the monthly deduction, we check to see if the
cumulative amount of premiums paid under the Policy, less any Policy loans, is
at least equal to the sum of the monthly guarantee premiums plus any partial
surrenders for all Policy months to date, including the Policy month then
starting. (Policy months are measured from the "Date of Issue" that will also
be shown on page 3 of your Policy.) So long as at least this amount of premium
payments has been paid by the beginning of that Policy month, the Policy will
not enter a grace period or terminate (i.e., lapse) because of insufficient cash
surrender value. The more supplemental coverage you choose the higher will be
your monthly guarantee premiums.

The length of time you are covered by the guarantee period benefit
varies on account of two things:

. the insured person's age at the Policy's
date of issue; and

. the amounts of base coverage and supplemental coverage you
have chosen.

The maximum duration for the guarantee period - 10 years - happens in
the event you have chosen 100% base coverage and the insured person is no older
than age 50 at the Policy's date of issue. We reduce the maximum time for the
guarantee period by one year for each year the insured person is older than age
50 at the date of issue. The reductions stop after the insured person is age 55
or older at the date of issue. This means, for instance, that you will have a
guarantee period of 5 years if you choose 100% base coverage and the insured
person is age 55 at the Policy's date of issue.

The least amount of time for the guarantee period to be in effect -
3 years - happens in the event you have chosen the maximum permitted 90% of
supplemental coverage and the insured person is older than age 50 at the date of
issue.

Your sales representative will help you determine the exact duration
of the guarantee period benefit when you apply for a Policy.

Also, whenever you increase or decrease your specified amount, we
calculate a new monthly guarantee premium, so the amount you must pay to keep
the guarantee period benefit in force will increase or decrease depending on
whether you increase or decrease your specified amount. If you add or increase
a benefit rider, your monthly guarantee premium will increase. If you remove or
decrease a benefit rider, your monthly guarantee premium will decrease.

18
<PAGE>

HOW CAN I CHANGE MY POLICY'S INVESTMENT OPTIONS?

Future premium payments. You may at any time change the investment
options in which future premiums you pay will be invested. Your allocation
must, however, be in whole percentages that total 100%.

Transfers of existing accumulation value. You may also transfer your
existing accumulation value from one investment option under the Policy to
another. The first 12 transfers in a year are free of charge. We may charge
you $25 for each additional transfer. We do not currently assess this charge
but reserve the right to do so in the future. You may make transfers from the
variable investment options at any time. You may make transfers from the
declared fixed interest account only during the 60-day period following each
Policy anniversary shown on page 3 of your Policy. The amount that you can
transfer each year from the declared fixed interest account is limited to the
greater of:

. 25% of the unloaned accumulation value you have in the
declared fixed interest account as of the Policy anniversary; or

. the sum of any amounts you transferred or surrendered from the
declared fixed interest account during the previous Policy year.

Unless you are transferring the entire amount you have in an
investment option, each transfer must be at least $500. See "Additional Rights
That We Have" on page 50.

Market Timing. The Policy is not designed for professional market
timing organizations or other entities using programmed and frequent transfers.
We may not unilaterally terminate or discontinue transfer privileges. However,
we reserve the right to suspend such privileges for a reasonable time.

HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?

Increase in coverage. At any time while the insured person is living,
you may request an increase in the specified amount of coverage under your
Policy. You must, however, provide us with satisfactory evidence that the
insured person continues to meet our requirements for issuing insurance
coverage.

We treat an increase in specified amount in many respects as if it
were the issuance of a new Policy. For example, the monthly insurance charge
for the increase will be based on the age and premium class of the insured
person at the time of the increase. Also, a new amount of surrender charge:

. applies to any amount of the increase that you request as
base coverage;

19
<PAGE>

. is the same as it would be if we were instead issuing the same
amount of base coverage as a new Platinum Investor III Policy;
and

. applies for the 10 Policy years following the increase.

You are not required to increase your specified amount in any specific
percentage or ratio that your base and supplemental coverage bear to your
specified amount before the increase, with one exception. Base coverage must be
at least 10% of the total specified amount after the increase.

Decrease in coverage. After the first Policy year, you may request a
reduction in the specified amount of coverage, but not below certain minimums.
After any decrease, the specified amount cannot be less than the greater of:

. $50,000; or

. any minimum amount which, in view of the amount of premiums
you have paid, is necessary for the Policy to continue to meet
the Federal tax law definition of life insurance.

We will apply a reduction in specified amount proportionately against
the specified amount provided under the original application and any specified
amount increases. The decrease in specified amount will decrease both your base
and supplemental coverage in the same ratio they bear to your specified amount
before the decrease. We will deduct from your accumulation value any remaining
surrender charge that is associated only with any amount of base coverage that
is canceled in this way. If there is not sufficient accumulation value to pay
the surrender charge at the time you request a reduction, the decrease will not
be allowed. A reduction in specified amount will not reduce the monthly charge
per $1,000 of specified amount or the amount of time we assess this charge.

Change of death benefit option. You may at any time request us to
change your coverage from death benefit Option 1 to 2 or vice-versa.

. If you change from Option 1 to 2, we also automatically reduce
your Policy's specified amount of insurance by the amount of your
Policy's accumulation value (but not below zero) at the time of
the change. The change will go into effect on the monthly
deduction day following the date we receive your request for
change. We will take the reduction proportionately from each
component of the Policy's specified amount. We will not charge a
surrender charge for this reduction in specified amount.

. If you change from Option 2 to 1, we automatically increase
your Policy's specified amount by the amount of your Policy's
accumulation value.

20
<PAGE>

Tax consequences of changes in insurance coverage. Please read "Tax
Effects" starting on page 34 of this prospectus to learn about possible tax
consequences of changing your insurance coverage under your Policy.

Effect of changes in insurance coverage on guarantee period. A change
in coverage does not result in termination of the guarantee period, so that if
you pay certain prescribed amounts of premiums, we will pay a death benefit even
if your policy's cash surrender value declines to zero. The details of this
guarantee are discussed under "Monthly guarantee premiums," beginning on
page 17.

WHAT ADDITIONAL RIDER BENEFITS MIGHT I SELECT?

You can request that your Policy include the additional rider benefits
described below. For most of the riders that you choose, a charge, which will
be shown on page 3 of your Policy, will be deducted from your accumulation value
on each monthly deduction date. Eligibility for and changes in these benefits
are subject to our rules and procedures as in effect from time to time. Not all
riders are available in all states. More details are included in the form of
each rider, which we suggest that you review if you choose any of these
benefits.

. Accidental Death Benefit Rider This rider pays an additional
death benefit if the insured person dies from certain accidental
causes.

. Children's Insurance Benefit Rider This rider provides term
life insurance coverage on the eligible children of the person
insured under the Policy. This rider is convertible into any
other insurance (except for term coverage) available for
conversions, under our published rules at the time of conversion.

. Maturity Extension Rider This rider permits you to extend the
Policy's maturity date beyond what it otherwise would be. You
have two versions from which to choose. Either or both versions
may not be available in all states.

The first version provides for a death benefit after the original
maturity date equal to the accumulation value on the date of
death. The death benefit will be reduced by any outstanding
Policy loan amount. There is no charge for this version until you
reach the original maturity date. Thereafter we will charge a
monthly fee of no more than $10.

The second version provides for a death benefit after the
original maturity date equal to the death benefit in effect on
the day prior to the original maturity date. If the death benefit
is based fully, or in part, on the accumulation value, we will
adjust the death benefit to reflect future changes in your
accumulation value. The death benefit will never be less than the
accumulation value. The death benefit will be reduced by any
outstanding Policy loan amount. There is a monthly charge of no
more than $30

21
<PAGE>

for each $1000 of the net amount at risk. If you wish to obtain
this rider, you must inform us in writing at least 9 years before
the original maturity date. When the 9-year period begins, each
month we will charge you up to the maximum $30 for each $1,000 of
the net amount at risk. After the original maturity date, we will
terminate this charge, and start charging you a monthly fee of no
more than $10.

There are features common to both riders in addition to the $10
maximum monthly fee. Only the insurance coverage associated with
the Policy will be extended beyond the original maturity date. We
do not allow additional premium payments, new loans, or changes
in specified amount after the original maturity date. The only
charge we continue to automatically deduct after the original
maturity date is the daily charge described on page 8. Once you
have exercised your right to extend the original maturity date,
you cannot revoke it. You can, however, surrender your Policy at
any time.

Extension of the maturity date beyond the insured person's age
100 may result in current taxation of increases in your Policy's
accumulation value as a result of interest or investment
experience after that time. You should consult a qualified tax
adviser before making such an extension.

. Return of Premium Death Benefit Rider This rider provides
additional term life insurance coverage on the person insured
under the Policy. The amount of additional insurance varies so
that it always equals the cumulative amount of premiums paid
under the Policy (subject to certain adjustments).

. Spouse Term Rider This rider provides term life insurance
on the life of the spouse of the Policy's insured person. This
rider terminates no later than the Policy anniversary nearest the
spouse's 75/th/ birthday. You can convert this rider into any
other insurance (except for term coverage) available for
conversions, under our published rules at the time of conversion.

. Terminal Illness Rider This rider provides for a benefit to
be requested if the Policy's insured person is diagnosed as
having a terminal illness (as defined in the rider) and less than
12 months to live. This rider is not available in all states. The
maximum amount you may receive under this rider before the
insured person's death is 50% of the death benefit payable under
the Policy (excluding any rider benefits) or, if less, $250,000.
The amount of benefits paid under the rider, plus an
administrative fee (not to exceed $250), plus interest on these
amounts to the next Policy anniversary becomes a "lien" against
all future Policy benefits. We will continue to charge interest
in advance on the total amount of the lien and will add any
unpaid interest to the total amount of the lien each year. Any
time the total lien, plus any other Policy loans, exceeds the
Policy's then current death benefit, the Policy

22
<PAGE>

will terminate without further value. The cash surrender value of
the Policy also will be reduced by the amount of the lien.

. Waiver of Monthly Deduction Rider This rider provides for a
waiver of all monthly charges assessed for both your Policy and
riders that we otherwise would deduct from your accumulation
value, so long as the insured person is totally disabled (as
defined in the rider). While we are paying benefits under this
rider we will not permit you to request any increase in the
specified amount of your Policy's coverage. When we "pay
benefits" under this rider, we pay all monthly charges (except
for loan interest) for your Policy when they become due, and then
deduct the same charges from your Policy. Therefore, your
Policy's accumulation value does not change. We perform these two
transactions at the same time. However, loan interest will not be
paid for you under this rider, and the Policy could, under
certain circumstances, lapse for nonpayment of loan interest. You
can purchase this rider on the life of an insured person who is
younger than age 55.

Tax consequences of additional rider benefits. Adding or deleting
riders, or increasing or decreasing coverage under existing riders can have tax
consequences. See "Tax Effects" starting on page 34. You should consult a
qualified tax adviser.

HOW CAN I ACCESS MY INVESTMENT IN A POLICY?

Full surrender. You may at any time surrender your Policy in full.
If you do, we will pay you the accumulation value, less any Policy loans, plus
any unearned interest, and less any surrender charge that then applies. We call
this amount your "cash surrender value." Because of the surrender charge, it is
unlikely that a Platinum Investor III Policy will have any cash surrender value
during at least the first year unless you pay significantly more than the
monthly guarantee premiums.

Partial surrender. You may, at any time after the first Policy year,
make a partial surrender of your Policy's cash surrender value. A partial
surrender must be at least $500. We will automatically reduce your Policy's
accumulation value by the amount of your withdrawal and any related charges. We
do not allow partial surrenders that would reduce the death benefit below
$50,000.

If the Option 1 death benefit is then in effect, we also will reduce
your Policy's specified amount by the amount of such withdrawal and charges, but
not below $0. We will take any such reduction proportionately from each
component of the Policy's specified amount and deduct any remaining surrender
charge that is associated with any portion of your Policy's base amount of
coverage that is canceled. If the Option 2 death benefit is then in effect, we
will automatically reduce your accumulation value.

You may choose the investment option or options from which money that
you withdraw will be taken. Otherwise, we will allocate the partial surrender
in the same proportions as then apply for

23
<PAGE>

deducting monthly charges under your Policy or, if that is not possible, in
proportion to the amount of accumulation value you then have in each investment
option.

There is a maximum partial surrender fee equal to the lesser of 2% of
the amount withdrawn or $25 for each partial surrender you make. This charge
currently is $10.

Exchange of Policy in certain states. Certain states require that a
policy owner be given the right to exchange the Policy for a fixed benefit life
insurance policy, within either 18 or 24 months from the date of issue. This
right is subject to various conditions imposed by the states and us. In such
states, this right has been more fully described in your Policy or related
endorsements to comply with the applicable state requirements.

Policy loans. You may at any time borrow from us an amount up to your
Policy's cash surrender value less the interest that will be payable on your
loan through your next Policy anniversary. This rule is not applicable in all
states. The minimum amount you can borrow is $500 or, if less, the entire
remaining loan value.

We remove from your investment options an amount equal to your loan
and hold that part of your accumulation value in the declared fixed interest
account as collateral for the loan. We will credit your Policy with interest on
this collateral amount at a guaranteed effective annual rate of 4.0% (rather
than any amount you could otherwise earn in one of our investment options), and
we will charge you interest on your loan at an effective annual rate of 4.75%.
Loan interest is payable annually, on the Policy anniversary, in advance, at a
rate of 4.54%. Any amount not paid by its due date will automatically be added
to the loan balance as an additional loan. Interest you pay on Policy loans
will not, in most cases, be deductible on your tax returns.

You may choose which of your investment options the loan will be taken
from. If you do not so specify, we will allocate the loan in the same way that
charges under your Policy are being allocated. If this is not possible, we will
make the loan pro-rata from each investment option that you then are using.

You may repay all or part (but not less than $100 unless it is the
final payment) of your loan at any time before the death of the insured person
while the Policy is in force. You must designate any loan repayment as such.
Otherwise, we will treat it as a premium payment instead. Any loan repayments
go first to repay all loans that were taken from our declared fixed interest
account option. We will invest any additional loan repayments you make in the
investment options you request. In the absence of such a request we will invest
the repayment in the same proportion as you then have selected for premium
payments that we receive from you. Any unpaid loan (increased by any unearned
loan interest we may have already charged) will be deducted from the proceeds we
pay following the insured person's death.

24
<PAGE>

Preferred loan interest rate. We will charge a lower interest rate on
preferred loans (available after the first 10 Policy years). The maximum amount
of new loans that will receive this preferred loan interest rate for any year
is:

. 10% of your Policy's accumulation value (which includes any loan
collateral we are holding for your Policy loans) at the beginning
of the Policy year; or

. if less, your Policy's maximum remaining loan value at that
anniversary.

We will always credit your preferred loan collateral amount at a
guaranteed effective annual rate of 4.0%. We intend to set the rate of interest
you are paying to the same 4.0% rate we credit to your preferred loan collateral
amount, resulting in a zero net cost (0.00%) of borrowing for that amount. We
have full discretion to vary the rate we charge you, provided that the rate:

. will always be greater than or equal to the guaranteed preferred
loan collateral rate of 4.0%, and

. will never exceed an effective annual rate of 4.25%.

Because we first began offering the Policies in the year 2000, we have
not yet declared a preferred loan interest rate we charge.

Maturity of your Policy. If the insured person is living on the
"Maturity Date" shown on page 3 of your Policy, we will pay you the cash
surrender value of the Policy, and the Policy will end. The maturity date can
be no later than the Policy anniversary nearest the insured person's 100/th/
birthday.

Tax considerations. Please refer to "How will my Policy be treated
for income tax purposes?" for information about the possible tax consequences to
you when you receive any loan, surrender or other funds from your Policy.

CAN I CHOOSE THE FORM IN WHICH AGL PAYS OUT THE PROCEEDS FROM MY POLICY?

Choosing a payment option. You will receive the full proceeds from
the Policy as a single sum, unless you elect another method of payment within 60
days of the insured person's death. This also includes proceeds that become
payable upon full surrender or the maturity date. You can elect that all or
part of such proceeds be applied to one or more of the following payment
options:

. Option 1--Equal monthly payments for a specified period of time.

. Option 2--Equal monthly payments of a selected amount of at
least $60 per year for each $1,000 of proceeds until all amounts
are paid out.

25
<PAGE>

. Option 3--Equal monthly payments for the payee's life, but with
payments guaranteed for a specified number of years. These
payments are based on annuity rates that are set forth in the
Policy or, at the payee's request, the annuity rates that we then
are using.

. Option 4--Proceeds left to accumulate at an interest rate of 3%
compounded annually for any period up to 30 years. At your
request we will make payments to you monthly, quarterly,
semiannually, or annually. You can also request a partial
withdrawal of any amount of $500 or more.

Additional payment options may also be available with our consent. We
have the right to reject any payment option, if the payee is a corporation or
other entity. You can read more about each of these options in the Policy and
in the separate form of payment contract that we issue when any such option
takes effect.

Interest rates that we credit under each option will be at least 3%.

Change of payment option. You may give us written instructions to
change any payment option you have elected at any time while the Policy is in
force and before the start date of the payment option.

Tax impact. If a payment option is chosen, you or your beneficiary
may have tax consequences. You should consult with a qualified tax adviser
before deciding whether to elect one or more payment options.

TO WHAT EXTENT CAN AGL VARY THE TERMS AND CONDITIONS OF THE POLICY IN PARTICULAR
CASES?

Here are some variations we may make in the terms and conditions of a
Policy. Any variations will be made only in accordance with uniform rules that
we establish.

Underwriting and premium classes. We have six premium classes, and
also combinations of the premium classes, we use to decide how much the monthly
insurance charges under any particular Policy will be: preferred, standard,
tobacco, non-tobacco, special and juvenile. They are each described in your
Policy.

Policies purchased through "internal rollovers." We maintain
published rules that describe the procedures necessary to replace another life
insurance policy we issued with a Policy. Not all types of other insurance we
issue are eligible to be replaced with a Policy. Our published rules may be
changed from time to time, but are evenly applied to all our customers.

State law requirements. AGL is subject to the insurance laws and
regulations in every jurisdiction in which the Policies are sold. As a result,
various time periods and other terms and

26
<PAGE>

conditions described in this prospectus may vary depending on where you reside.
These variations will be reflected in your Policy and related endorsements.

Variations in expenses or risks. AGL may vary the charges and other
terms within the limits of the Policy where special circumstances result in
sales, administrative or other expenses, mortality risks or other risks that are
different from those normally associated with the Policy.

HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?

Generally, the death benefit paid under a Policy is not subject to
income tax, and earnings on your accumulation value are not subject to income
tax as long as we do not pay them out to you. If we do pay any amount of your
Policy's accumulation value upon surrender, partial surrender, or maturity of
your Policy, all or part of that distribution may be treated as a return of the
premiums you paid, which is not subject to income tax.

Amounts you receive as Policy loans are not taxable to you, unless you
have paid such a large amount of premiums that your Policy becomes what the tax
law calls a "modified endowment contract." In that case, the loan will be taxed
as if it were a partial surrender. Furthermore, loans, partial surrenders and
other distributions from a modified endowment contract may require you to pay
additional taxes and penalties that otherwise would not apply. If your Policy
lapses, you may have to pay income tax on a portion of any outstanding loan.

For further information about the tax consequences of owning a Policy,
please read "Tax Effects" starting on page 34.

HOW DO I COMMUNICATE WITH AGL?

When we refer to "you," we mean the person who is authorized to take
any action with respect to a Policy. Generally, this is the owner named in the
Policy. Where a Policy has more than one owner, each owner generally must join
in any requested action, except for transfers and changes in the allocation of
future premiums or changes among the investment options.

General. You should mail or express checks and money orders for
premium payments and loan repayments directly to the appropriate address shown
on your billing statement. If you do not receive a billing statement, send your
premium directly to our Home Office or Springfield Service Center at the
appropriate address shown on the first page of this prospectus.

You must make the following requests in writing:

. transfer of accumulation value;

. loan;

27
<PAGE>

. full surrender;

. partial surrender;

. change of beneficiary or contingent beneficiary;

. change of allocation percentages for premium payments;

. loan repayments or loan interest payments;

. change of death benefit option or manner of death benefit
payment;

. change in specified amount;

. addition or cancellation of, or other action with respect to,
election of a payment option for Policy proceeds;

. tax withholding elections; and

. telephone transaction privileges.

You should mail or express these requests to our Home Office at the
appropriate address shown on the first page of this prospectus. You should also
communicate notice of the insured person's death, and related documentation, to
our Home Office.

We have special forms which should be used for loans, assignments,
partial and full surrenders, changes of owner or beneficiary, and all other
contractual changes. You will be asked to return your Policy when you request a
full surrender. You may obtain these forms from our Home Office or Springfield
Service Center or from your AGL representative. Each communication must include
your name, Policy number and, if you are not the insured person, that person's
name. We cannot process any requested action that does not include all required
information.

The Springfield Service Center is for the convenience of certain
Policy owners, who have been requested to use it as a primary contact location.
Other Policy owners have been asked to use our Home Office as a primary contact
location. If you make a mistake and contact the incorrect location, your
requests and premium payments will be treated in the same manner as if you had
contacted the correct location.

Telephone transactions. If you have a completed telephone
authorization form on file with us, you may make transfers, or change the
allocation of future premium payments or deduction of charges, by telephone,
subject to the terms of the form. We will honor telephone instructions from any
person who provides the correct information, so there is a risk of possible loss
to you if unauthorized persons use this service in your name. Our current
procedure is that only the owner

28
<PAGE>

or your AGL representative may make a transfer request by phone. We are not
liable for any acts or omissions based upon instructions that we reasonably
believe to be genuine. Our procedures include verification of the Policy number,
the identity of the caller, both the insured person's and owner's names, and a
form of personal identification from the caller. We will mail you a prompt
written confirmation of the transaction. If (a) many people seek to make
telephone requests at or about the same time, or (b) our recording equipment
malfunctions, it may be impossible for you to make a telephone request at the
time you wish. You should submit a written request if you cannot make a
telephone transfer. Also, if, due to malfunction or other circumstances, your
telephone request is incomplete or not fully comprehensible, we will not process
the transaction. The phone number for telephone requests is 1-888-325-9315.

ILLUSTRATIONS OF HYPOTHETICAL POLICY BENEFITS

To help explain how our Policy works, we have prepared the following
tables:

<TABLE>
<CAPTION>
PAGE TO
SEE IN THIS
PROSPECTUS
-----------
<S> <C>
Death Benefit Option 1--Current Charges.................. 31
Death Benefit Option 1--Guaranteed Maximum Charges....... 32
</TABLE>

The tables show how death benefits, accumulation values, and cash surrender
values ("Policy benefits") under a sample Policy would change over time if the
investment options had constant hypothetical gross annual investment returns of
0%, 6% or 12% over the years covered by each table. The tables are for a male
non-tobacco user preferred premium class and issue age 55. An annual premium
payment of $1,500 for an initial $100,000 of specified amount of coverage is
assumed to be paid. The illustrations assume no Policy loan has been taken.
The differences between the accumulation values and the cash surrender values
for the first 10 years in the tables are because of the Policy's surrender
charges. As illustrated, this Policy would not be classified as a modified
endowment contract (see "Tax Effects" beginning on page 34 for further
discussion).

The tables show a sample Policy with 100% base coverage only. A Policy
with supplemental coverage at current charges will over time have lower monthly
insurance charges and a higher accumulation value. Your AGL representative can
provide you with Policy illustrations specific to you, showing how your
selection of base and supplemental coverage, if any, can affect your Policy
values under different assumptions.

Although the tables that follow do not include an example of a Policy with
an Option 2 death benefit, such a Policy would have higher death benefits and
lower cash surrender values.

29
<PAGE>

Separate tables are included to show both current and guaranteed maximum
charges. The charges assumed in the following tables include:

. a charge for state premium tax (or a tax charge back if we issued the
Policy in Oregon) assumed to be 2.0% (for both current and guaranteed
maximum charges);

. after we deduct premium tax (or a tax charge back if we issued the
Policy in Oregon), a charge of 5.0% and 7.5% for current charges and
guaranteed maximum charges, respectively;

. a daily charge for the first 10 Policy years at an annual effective
rate of .70% (for both current and guaranteed maximum charges);

. a daily charge for Policy years 11 through 20 at an annual effective
rate of .45% (for both current and guaranteed maximum charges);

. a daily charge after 20 Policy years at an annual effective rate of
.10% (for both current and guaranteed maximum charges);

. a flat monthly charge of $6 (for both current and guaranteed maximum
charges);

. a monthly charge for the first 7 Policy years for each $1,000 of
specified amount of $0.39 (for both current and guaranteed maximum
charges); and

. the monthly insurance charge (for both current and guaranteed maximum
charges).

The charges assumed by both the current and guaranteed maximum charge
tables also include Mutual Fund expenses of 0.78% of aggregate Mutual Fund
assets. This percentage is the arithmetic average of the advisory fees payable
with respect to each Mutual Fund, after all reimbursements, plus the arithmetic
average of all other operating expenses of each such Fund after all
reimbursements, as reflected on pages 11 - 14 of this prospectus. We expect the
reimbursement arrangements to continue in the future. If the reimbursement
arrangements were not currently in effect, the arithmetic average of Mutual Fund
expenses would equal 0.92% of aggregate Mutual Fund assets.

Individual illustrations. On request, we will furnish you with a
comparable illustration based on your Policy's characteristics. If you request
illustrations more than once in any Policy year, we may charge $25 for the
illustration.

30
<PAGE>

PLATINUM INVESTOR III

ANNUAL PREMIUM $35,000 INITIAL SPECIFIED AMOUNT $1,000,000
DEATH BENEFIT OPTION 1

MALE, AGE 55
NON-TOBACCO USER, PREFERRED PREMIUM CLASS
ASSUMING CURRENT CHARGES

END OF DEATH BENEFIT ACCUMULATION VALUE CASH SURRENDER VALUE
POLICY ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
YEAR ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0.0% 6.0% 12.0% 0.0% 6.0% 12.0% 0.0% 6.0% 12.0%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000,000 1,000,000 1,000,000 24,894 26,604 28,318 0 0 0
2 1,000,000 1,000,000 1,000,000 49,484 54,473 59,675 10,484 15,473 20,675
3 1,000,000 1,000,000 1,000,000 73,776 83,668 94,396 34,776 44,668 55,396
4 1,000,000 1,000,000 1,000,000 97,721 114,200 132,790 63,721 80,200 98,790
5 1,000,000 1,000,000 1,000,000 121,375 146,185 175,306 92,375 117,185 146,306
6 1,000,000 1,000,000 1,000,000 144,354 179,306 222,005 120,354 155,306 198,005
7 1,000,000 1,000,000 1,000,000 166,876 213,835 273,562 146,876 193,835 253,562
8 1,000,000 1,000,000 1,000,000 193,331 254,392 335,228 178,331 239,392 320,228
9 1,000,000 1,000,000 1,000,000 219,054 296,515 403,227 209,054 286,515 393,227
10 1,000,000 1,000,000 1,000,000 243,910 340,175 478,201 238,910 335,175 473,201

15 1,000,000 1,000,000 1,163,833 358,369 592,024 1,003,305 358,369 592,024 1,003,305

20 1,000,000 1,000,000 2,009,514 451,407 914,389 1,878,050 451,407 914,389 1,878,050
</TABLE>

THE VALUES WILL CHANGE IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES.

THE INVESTMENT RESULTS ARE AN EXAMPLE ONLY AND ARE NOT A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE
OR LESS THAN THOSE SHOWN.

31
<PAGE>

PLATINUM INVESTOR III

ANNUAL PREMIUM $35,000 INITIAL SPECIFIED AMOUNT $1,000,000
DEATH BENEFIT OPTION 1

MALE, AGE 55
NON-TOBACCO USER, PREFERRED PREMIUM CLASS
ASSUMING GUARANTEED CHARGES

END OF DEATH BENEFIT ACCUMULATION VALUE CASH SURRENDER VALUE
POLICY ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
YEAR ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
0.0% 6.0% 12.0% 0.0% 6.0% 12.0% 0.0% 6.0% 12.0%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000,000 1,000,000 1,000,000 16,325 17,740 19,164 0 0 0
2 1,000,000 1,000,000 1,000,000 31,661 35,527 39,581 0 0 581
3 1,000,000 1,000,000 1,000,000 45,929 53,282 61,322 6,929 14,282 22,322
4 1,000,000 1,000,000 1,000,000 59,162 71,043 84,593 25,162 37,043 50,593
5 1,000,000 1,000,000 1,000,000 71,279 88,739 109,517 42,279 59,739 80,517
6 1,000,000 1,000,000 1,000,000 82,201 106,299 136,248 58,201 82,299 112,248
7 1,000,000 1,000,000 1,000,000 91,739 123,548 164,869 71,739 103,548 144,869
8 1,000,000 1,000,000 1,000,000 104,506 145,259 200,600 89,506 130,259 185,600
9 1,000,000 1,000,000 1,000,000 115,653 166,748 239,274 105,653 156,748 229,274
10 1,000,000 1,000,000 1,000,000 125,110 187,983 281,332 120,110 182,983 276,332

15 1,000,000 1,000,000 1,000,000 142,491 290,130 570,340 142,491 290,130 570,340

20 1,000,000 1,000,000 1,000,000 77,973 368,324 1,100,352 77,973 368,324 1,100,352
</TABLE>

THE VALUES WILL CHANGE IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES.

THE INVESTMENT RESULTS ARE AN EXAMPLE ONLY AND ARE NOT A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE
OR LESS THAN THOSE SHOWN.

32
<PAGE>

ADDITIONAL INFORMATION

A general overview of the Policy appears at pages 1 - 32. The additional
information that follows gives more details, but generally does not repeat what
is set forth above.

PAGE TO
SEE IN THIS
CONTENTS OF ADDITIONAL INFORMATION PROSPECTUS
------------------------------------------------------------------------
<S> <C>
AGL...................................................... 34
Separate Account VL-R.................................... 34
Tax Effects.............................................. 34
Voting Privileges........................................ 41
Your Beneficiary......................................... 41
Assigning Your Policy.................................... 42
More About Policy Charges................................ 42
Effective Date of Policy and Related Transactions........ 43
More About the Death Benefit............................. 45
More About Our Declared Fixed Interest Account Option.... 46
Distribution of the Policies............................. 46
Payment of Policy Proceeds............................... 48
Adjustments to Death Benefit............................. 49
Additional Rights That We Have........................... 50
Performance Information.................................. 51
Our Reports to Policy Owners............................. 51
AGL's Management......................................... 51
Principal Underwriter's Management....................... 54
Legal Matters............................................ 56
Accounting and Auditing Experts.......................... 56
Actuarial Expert......................................... 57
Services Agreements...................................... 57
Certain Potential Conflicts.............................. 57
</TABLE>

Special words and phrases. If you want more information about any words or
phrases that you read in this prospectus, you may wish to refer to the Index of
Words and Phrases that appears at the end of this prospectus (pages 59 and 60,
which follow all of the financial pages). That index will tell you on what page
you can read more about many of the words and phrases that we use.

33
<PAGE>

AGL

We are American General Life Insurance Company ("AGL"). AGL is a stock
life insurance company organized under the laws of Texas. AGL is a successor in
interest to a company originally organized under the laws of Delaware on January
10, 1917. AGL is an indirect, wholly-owned subsidiary of American General
Corporation (formerly American General Insurance Company), a diversified
financial services holding company engaged primarily in the insurance business.
The commitments under the Policies are AGL's, and American General Corporation
has no legal obligation to back those commitments.

AGL is a member of the Insurance Marketplace Standards Association
("IMSA"). IMSA is a voluntary membership organization created by the life
insurance industry to promote ethical market conduct for individual life
insurance and annuity products. AGL's membership in IMSA applies only to AGL and
not its products.

SEPARATE ACCOUNT VL-R

We hold the Mutual Fund shares in which any of your accumulation value is
invested in Separate Account VL-R. Separate Account VL-R is registered as a
unit investment trust with the SEC under the Investment Company Act of 1940. We
created the separate account on May 6, 1997 under Texas law.

For record keeping and financial reporting purposes, Separate Account VL-R
is divided into 64 separate "divisions," 40 of which correspond to the 40
variable "investment options" available since the inception of the Policy. The
remaining 24 divisions, and some of these 40 divisions, represent investment
options available under other variable life policies we offer. We hold the
Mutual Fund shares in which we invest your accumulation value for an investment
option in the division that corresponds to that investment option.

The assets in Separate Account VL-R are our property. The assets in
Separate Account VL-R would be available only to satisfy the claims of owners of
the Policies, to the extent they have allocated their accumulation value to
Separate Account VL-R. Our other creditors could reach only those Separate
Account VL-R assets (if any) that are in excess of the amount of our reserves
and other contract liabilities under the Policies with respect to Separate
Account VL-R.

TAX EFFECTS

This discussion is based on current federal income tax law and
interpretations. It assumes that the policy owner is a natural person who is a
U.S. citizen and resident. The tax effects on corporate taxpayers, non-U.S.
residents or non-U.S. citizens, may be different. This discussion is general in
nature, and should not be considered tax advice, for which you should consult a
qualified tax adviser.

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General. The Policy will be treated as "life insurance" for federal income
tax purposes (a) if it meets the definition of life insurance under Section 7702
of the Internal Revenue Code of 1986, as amended (the "Code") and (b) for as
long as the investments made by the underlying Mutual Funds satisfy certain
investment diversification requirements under Section 817(h) of the Code. We
believe that the Policy will meet these requirements and that:

. the death benefit received by the beneficiary under your Policy will
not be subject to federal income tax; and

. increases in your Policy's accumulation value as a result of interest
or investment experience will not be subject to federal income tax
unless and until there is a distribution from your Policy, such as a
surrender or a partial surrender.

The federal income tax consequences of a distribution from your Policy can
be affected by whether your Policy is determined to be a "modified endowment
contract,"as you can see from the following discussion. In all cases, however,
the character of all income that is described as taxable to the payee will be
ordinary income (as opposed to capital gain).

Testing for modified endowment contract status. The Code provides for a
"seven-pay test." This test determines if your Policy will be a "modified
endowment contract."

If, at any time during the first seven Policy years:

. you have paid a cumulative amount of premiums;

. the cumulative amount exceeds the premiums you would have paid by the
same time under a similar fixed-benefit insurance policy; and

. the fixed benefit policy was designed (based on certain assumptions
mandated under the Code) to provide for paid-up future benefits
("paid-up means no future premium payments are required) after the
payment of seven level annual premiums;

then your Policy will be a modified endowment contract.

Whenever there is a "material change" under a policy, the policy will
generally be (a) treated as a new contract for purposes of determining whether
the policy is a modified endowment contract and (b) subjected to a new seven-pay
period and a new seven-pay limit. The new seven-pay limit would be determined
taking into account, under a prescribed formula, the accumulation value of the
policy at the time of such change. A materially changed policy would be
considered a modified endowment contract if it failed to satisfy the new seven-
pay limit at any time during the new seven-pay period. A "material change" for
these purposes could occur as a result of a change in death benefit option. A
material change will occur as a result of an increase in your Policy's specified
amount of coverage, and certain other changes.

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If your Policy's benefits are reduced during the first seven Policy years
(or within seven years after a material change), the calculated seven-pay
premium limit will be redetermined based on the reduced level of benefits and
applied retroactively for purposes of the seven-pay test. (Such a reduction in
benefits could include, for example, a decrease in the specified amount that you
request or that results from a partial surrender). If the premiums previously
paid are greater than the recalculated seven-payment premium level limit, the
Policy will become a modified endowment contract.

A life insurance policy that is received in exchange for a modified
endowment contract will also be considered a modified endowment contract.

Other effects of Policy changes. Changes made to your Policy (for example,
a decrease in specified amount that you request or that results from a partial
surrender that you request) may also have other effects on your Policy. Such
effects may include impacting the maximum amount of premiums that can be paid
under your Policy, as well as the maximum amount of accumulation value that may
be maintained under your Policy.

Rider benefits. The premium payments and any death benefits to be paid
under any term insurance rider you may purchase under your Policy will not
disqualify your Policy as life insurance for tax purposes. However, a term
rider may be determined to constitute a "qualified additional benefit" as that
term is defined in Section 7702 of the Internal Revenue Code. The death benefit
to be paid under a rider that is a "qualified additional benefit" will not be
treated as a future benefit of the Policy for tax purposes. The premium
payments for the same rider, however, would be treated as future benefits for
purposes of compliance with Section 7702. You should consult a qualified tax
adviser regarding any term rider you may purchase.

Taxation of pre-death distributions if your Policy is not a modified
endowment contract. As long as your Policy remains in force during the insured
person's lifetime and not as a modified endowment contract, a Policy loan will
be treated as indebtedness, and no part of the loan proceeds will be subject to
current federal income tax. Interest on the Policy loan generally will not be
tax deductible.

After the first 15 Policy years, the proceeds from a partial surrender will
not be subject to federal income tax except to the extent such proceeds exceed
your "basis" in your Policy. (Your basis generally will equal the premiums you
have paid, less the amount of any previous distributions from your Policy that
were not taxable.) During the first 15 Policy years, however, the proceeds from
a partial surrender could be subject to federal income tax, under a complex
formula, to the extent that your accumulation value exceeds your basis in your
Policy.

On the maturity date or upon full surrender, any excess in the amount of
proceeds we pay (including amounts we use to discharge any Policy loan) over
your basis in the Policy, will be subject to federal income tax. In addition,
if a Policy ends after a grace period while there is a policy loan, the
cancellation of such loan and any accrued loan interest will be treated as a
distribution and

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could be subject to tax under the above rules. Finally, if you make an
assignment of rights or benefits under your Policy you may be deemed to have
received a distribution from your Policy, all or part of which may be taxable.

Taxation of pre-death distributions if your Policy is a modified endowment
contract. If your Policy is a modified endowment contract, any distribution
from your Policy while the insured person is still living will be taxed on an
"income-first" basis. Distributions:

. include loans (including any increase in the loan amount to pay
interest on an existing loan, or an assignment or pledge to secure a
loan) or partial surrenders;

. will be considered taxable income to you to the extent your
accumulation value exceeds your basis in the Policy; and

. have their taxability determined by aggregating all modified endowment
contracts issued by the same insurer (or its affiliates) to the same
owner (excluding certain qualified plans) during any calendar year.

For modified endowment contracts, your basis:

. is similar to the basis described above for other policies; and

. will be increased by the amount of any prior loan under your Policy
that was considered taxable income to you.

A 10% penalty tax also will apply to the taxable portion of most
distributions from a policy that is a modified endowment contract. The penalty
tax will not, however, apply:

. to taxpayers 59 1/2 years of age or older;

. in the case of a disability (as defined in the Code); or

. to distributions received as part of a series of substantially equal
periodic annuity payments for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her beneficiary.

If your Policy ends after a grace period while there is a Policy loan, the
cancellation of the loan will be treated as a distribution to the extent not
previously treated as such and could be subject to tax, including the 10%
penalty tax, as described above. In addition, on the maturity date or upon a
full surrender, any excess of the proceeds we pay (including any amounts we use
to discharge any Policy loan) over your basis in the Policy, will be subject to
federal income tax and, unless one of the above exceptions applies, the 10%
penalty tax.

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Distributions that occur during a Policy year in which your Policy becomes
a modified endowment contract, and during any subsequent Policy years, will be
taxed as described in the two preceding paragraphs. In addition, distributions
from a policy within two years before it becomes a modified endowment contract
also will be subject to tax in this manner. This means that a distribution made
from a policy that is not a modified endowment contract could later become
taxable as a distribution from a modified endowment contract.

Policy lapses and reinstatements. A Policy which has lapsed may have the
tax consequences described above, even though you may be able to reinstate that
Policy. For tax purposes, some reinstatements may be treated as the purchase of
a new insurance contract.

Taxation of Exchange Option. You can split the policy into two other
single life insurance policies under some circumstances. A policy split could
have adverse tax consequences if it is not treated as a nontaxable exchange
under Section 1035 of the Code. This could include, among other things,
recognition as taxable income an amount up to any gain in the Policy at the time
of the exchange.

Diversification. Under Section 817(h) of the Code, the Treasury Department
has issued regulations that implement investment diversification requirements.
Our failure to comply with these regulations would disqualify your Policy as a
life insurance policy under Section 7702 of the Code. If this were to occur,
you would be subject to federal income tax on the income under the Policy for
the period of the disqualification and for subsequent periods. Also, if the
insured person died during such period of disqualification or subsequent
periods, a portion of the death benefit proceeds would be taxable to the
beneficiary. Separate Account VL-R, through the Mutual Funds, intends to comply
with these requirements. Although we do not have direct control over the
investments or activities of the Mutual Funds, we will enter into agreements
with them requiring the Mutual Funds to comply with the diversification
requirements of the Section 817(h) Treasury Regulations.

The Treasury Department has stated that it anticipates the issuance of
guidelines prescribing the circumstances in which the ability of a policy owner
to direct his or her investment to particular Mutual Funds within Separate
Account VL-R may cause the policy owner, rather than the insurance company, to
be treated as the owner of the assets in the account. Due to the lack of
specific guidance on investor control, there is some uncertainty about when a
policy owner is considered the owner of the assets for tax purposes. If you
were considered the owner of the assets of Separate Account VL-R, income and
gains from the account would be included in your gross income for federal income
tax purposes. Under current law, however, we believe that AGL, and not the
owner of a Policy, would be considered the owner of the assets of Separate
Account VL-R.

Estate and generation skipping taxes. If the insured person is the
Policy's owner, the death benefit under the Policy will generally be includable
in the owner's estate for purposes of federal estate tax. If the owner is not
the insured person, under certain conditions, only an amount approximately equal
to the cash surrender value of the Policy would be includable. The federal

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estate tax is integrated with the federal gift tax under a unified rate schedule
and unified credit. The Taxpayer Relief Act of 1997 gradually raises the value
of the credit to $1,000,000. In addition, an unlimited marital deduction may be
available for federal estate tax purposes.

As a general rule, if a "transfer" is made to a person two or more
generations younger than the Policy's owner, a generation skipping tax may be
payable at rates similar to the maximum estate tax rate in effect at the time.
The generation skipping tax provisions generally apply to "transfers" that would
be subject to the gift and estate tax rules. Individuals are generally allowed
an aggregate generation skipping tax exemption of $1 million. Because these
rules are complex, you should consult with a qualified tax adviser for specific
information, especially where benefits are passing to younger generations.

The particular situation of each policy owner, insured person or
beneficiary will determine how ownership or receipt of Policy proceeds will be
treated for purposes of federal estate and generation skipping taxes, as well as
state and local estate, inheritance and other taxes.

Life insurance in split dollar arrangements. The IRS has released a
technical advice memorandum ("TAM") on the taxability of insurance policies used
in certain split dollar arrangements. A TAM provides advice as to the internal
revenue laws, regulations, and related statutes with respect to a specified set
of facts and a specified taxpayer. In the TAM, among other things, the IRS
concluded that an employee was subject to current taxation on the excess of the
cash surrender value of the policy over the premiums to be returned to the
employer. Purchasers of life insurance policies to be used in split dollar
arrangements are strongly advised to consult with a qualified tax adviser to
determine the tax treatment resulting from such an arrangement.

Pension and profit-sharing plans. If a life insurance policy is purchased
by a trust or other entity that forms part of a pension or profit-sharing plan
qualified under Section 401(a) of the Code for the benefit of participants
covered under the plan, the federal income tax treatment of such policies will
be somewhat different from that described above.

The reasonable net premium cost for such amount of insurance that is
purchased as part of a pension or profit-sharing plan is required to be included
annually in the plan participant's gross income. This cost (generally referred
to as the "P.S. 58" cost) is reported to the participant annually. If the plan
participant dies while covered by the plan and the policy proceeds are paid to
the participant's beneficiary, then the excess of the death benefit over the
policy's accumulation value will not be subject to federal income tax. However,
the policy's accumulation value will generally be taxable to the extent it
exceeds the participant's cost basis in the policy. The participant's cost
basis will generally include the costs of insurance previously reported as
income to the participant. Special rules may apply if the participant had
borrowed from the policy or was an owner-employee under the plan.

There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharing plan. Complex rules, in
addition to those discussed above,

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apply whenever life insurance is purchased by a tax qualified plan. You should
consult a qualified tax adviser.

Other employee benefit programs. Complex rules may also apply when a
policy is held by an employer or a trust, or acquired by an employee, in
connection with the provision of other employee benefits. These policy owners
must consider whether the policy was applied for by or issued to a person having
an insurable interest under applicable state law and with the insured person's
consent. The lack of an insurable interest or consent may, among other things,
affect the qualification of the policy as life insurance for federal income tax
purposes and the right of the beneficiary to receive a death benefit.

ERISA. Employers and employer-created trusts may be subject to reporting,
disclosure and fiduciary obligations under the Employee Retirement Income
Security Act of 1974, as amended. You should consult a qualified legal adviser.

Our taxes. We report the operations of Separate Account VL-R in our
federal income tax return, but we currently pay no income tax on Separate
Account VL-R's investment income and capital gains, because these items are, for
tax purposes, reflected in our variable life insurance policy reserves. We
currently make no charge to any Separate Account VL-R division for taxes. We
reserve the right to make a charge in the future for taxes incurred; for
example, a charge to Separate Account VL-R for income taxes we incur that are
allocable to the Policy.

We may have to pay state, local or other taxes in addition to applicable
taxes based on premiums. At present, these taxes are not substantial. If they
increase, we may make charges for such taxes when they are attributable to
Separate Account VL-R or allocable to the Policy.

Certain Mutual Funds in which your accumulation value is invested may elect
to pass through to AGL taxes withheld by foreign taxing jurisdictions on foreign
source income. Such an election will result in additional taxable income and
income tax to AGL. The amount of additional income tax, however, may be more
than offset by credits for the foreign taxes withheld which are also passed
through. These credits may provide a benefit to AGL.

When we withhold income taxes. Generally, unless you provide us with an
election to the contrary before we make the distribution, we are required to
withhold income tax from any proceeds we distribute as part of a taxable
transaction under your Policy. In some cases, where generation skipping taxes
may apply, we may also be required to withhold for such taxes unless we are
provided satisfactory written notification that no such taxes are due.

In the case of non-resident aliens who own a Policy, the withholding rules
may be different. With respect to distributions from modified endowment
contracts, non-resident aliens are generally subject to federal income tax
withholding at a statutory rate of 30% of the distributed amount. In some
cases, the non-resident alien may be subject to lower or even no withholding if
the United States has entered into a tax treaty with his or her country of
residence.

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Tax changes. The U.S. Congress frequently considers legislation that, if
enacted, could change the tax treatment of life insurance policies. In
addition, the Treasury Department may amend existing regulations, issue
regulations on the qualification of life insurance and modified endowment
contracts, or adopt new interpretations of existing law. State and local tax
law or, if you are not a U.S. citizen and resident, foreign tax law, may also
affect the tax consequences to you, the insured person or your beneficiary, and
are subject to change. Any changes in federal, state, local or foreign tax law
or interpretation could have a retroactive effect. We suggest you consult a
qualified tax adviser.

VOTING PRIVILEGES

We are the legal owner of the Funds' shares held in Separate Account VL-R.
However, you may be asked to instruct us how to vote the Fund shares held in the
various Mutual Funds that are attributable to your Policy at meetings of
shareholders of the Funds. The number of votes for which you may give
directions will be determined as of the record date for the meeting. The number
of votes that you may direct related to a particular Fund is equal to (a) your
accumulation value invested in that Fund divided by (b) the net asset value of
one share of that Fund. Fractional votes will be recognized.

We will vote all shares of each Fund that we hold of record, including any
shares we own on our own behalf, in the same proportions as those shares for
which we have received instructions from owners participating in that Fund
through Separate Account VL-R.

If you are asked to give us voting instructions, we will send you the proxy
material and a form for providing such instructions. Should we determine that
we are no longer required to send the owner such materials, we will vote the
shares as we determine in our sole discretion.

In certain cases, we may disregard instructions relating to changes in a
Fund's investment manager or its investment policies. We will advise you if we
do and explain the reasons in our next report to policy owners. AGL reserves
the right to modify these procedures in any manner that the laws in effect from
time to time allow.

YOUR BENEFICIARY

You name your beneficiary when you apply for a Policy. The beneficiary is
entitled to the insurance benefits of the Policy. You may change the
beneficiary during the lifetime of the insured person unless your previous
designation of beneficiary provides otherwise. In this case the previous
beneficiary must give us permission to change the beneficiary and then we will
accept your instructions. A new beneficiary designation is effective as of the
date you sign it, but will not affect any payments we may make before we receive
it. If no beneficiary is living when the insured person dies, we will pay the
insurance proceeds to the owner or the owner's estate.

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ASSIGNING YOUR POLICY

You may assign (transfer) your rights in a Policy to someone else as
collateral for a loan or for some other reason. We will not be bound by an
assignment unless it is received in writing. You must provide us with two
copies of the assignment. We are not responsible for any payment we make or any
action we take before we receive a complete notice of the assignment in good
order. We are also not responsible for the validity of the assignment. An
absolute assignment is a change of ownership. Because there may be unfavorable
tax consequences, including recognition of taxable income and the loss of income
tax-free treatment for any death benefit payable to the beneficiary, you should
consult a qualified tax adviser before making an assignment.

MORE ABOUT POLICY CHARGES

Purpose of our charges. The charges under the Policy are designed to
cover, in total, our direct and indirect costs of selling, administering and
providing benefits under the Policy. They are also designed, in total, to
compensate us for the risks we assume and services that we provide under the
Policy. These include:

. mortality risks (such as the risk that insured persons will, on
average, die before we expect, thereby increasing the amount of claims
we must pay);

. sales risks (such as the risk that the number of Policies we sell and
the premiums we receive net of withdrawals, are less than we expect,
thereby depriving us of expected economies of scale);

. regulatory risks (such as the risk that tax or other regulations may
be changed in ways adverse to issuers of variable life insurance
policies); and

. expense risks (such as the risk that the costs of administrative
services that the Policy requires us to provide will exceed what we
currently project).

The current monthly insurance charge has been designed primarily to provide
funds out of which we can make payments of death benefits under the Policy as
the insured person dies.

If the charges that we collect from the Policy exceed our total costs in
connection with the Policy, we will earn a profit. Otherwise we will incur a
loss.

Although the paragraphs above describe the primary purposes for which
charges under the Policies have been designed, these purposes are subject to
considerable change over the life of a Policy. We can retain or use the
revenues from any charge for any purpose.

Gender neutral policies. Congress and the legislatures of various states
have from time to time considered legislation that would require insurance rates
to be the same for males and females

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of the same age, premium class and tobacco user status. In addition, employers
and employee organizations should consider, in consultation with counsel, the
impact of Title VII of the Civil Rights Act of 1964 on the purchase of life
insurance policies in connection with an employment-related insurance or benefit
plan. In a 1983 decision, the United States Supreme Court held that, under Title
VII, optional annuity benefits under a deferred compensation plan could not vary
on the basis of gender. In general, we do not offer the Platinum Investor III
Policy for sale in situations which, under current law, require gender-neutral
premiums or benefits.

Cost of insurance rates. Because of specified amount increases, different
cost of insurance rates may apply to different increments of specified amount
under your Policy. If so, we attribute your accumulation value proportionately
to each increment of specified amount to compute our net amount at risk. See
"Monthly insurance charge" on page 8.

Certain arrangements. Most of the distributors or advisers of the Mutual
Funds listed on page 1 of this prospectus make certain payments to us, on a
quarterly basis, for certain administrative, Policy, and policy owner support
expenses. These amounts will be reasonable for the services performed and are
not designed to result in a profit. These amounts are paid by the distributors
or the advisers, and will not be paid by the Mutual Funds, the divisions or
Policy owners. No payments have yet been made under these arrangements, because
the number of Policies issued does not require a payment.

EFFECTIVE DATE OF POLICY AND RELATED TRANSACTIONS

Valuation dates, times, and periods. We compute values under a Policy on
each day that the New York Stock Exchange is open for business. We call each
such day a "valuation date" or a "business day."

We compute policy values as of 3:00 p.m., Central time, on each valuation
date. We call this our "close of business." We call the time from the close of
business on one valuation date to the close of business of the next valuation
date a "valuation period."

Date of receipt. Generally we consider that we have received a premium
payment or another communication from you on the day we actually receive it in
full and proper order at our Home Office or Springfield Service Center (both are
shown on the first page of this prospectus). If we receive it after the close
of business on any valuation date, however, we consider that we have received it
on the day following that valuation date.

Commencement of insurance coverage. After you apply for a Policy, it can
sometimes take up to several weeks for us to gather and evaluate all the
information we need to decide whether to issue a Policy to you and, if so, what
the insured person's premium class should be. We will not pay a death benefit
under a Policy unless (a) it has been delivered to and accepted by the owner and
at least the initial premium has been paid, and (b) at the time of such delivery
and payment, there have been no adverse developments in the insured person's
health or risk of death. However, if you pay

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at least the minimum first premium payment with your application for a Policy,
we will provide temporary coverage of up to $300,000 provided the insured person
meets certain medical and risk requirements. The terms and conditions of this
coverage are described in our "Limited Temporary Life Insurance Agreement." You
can obtain a copy from our Home Office or Springfield Service Center by writing
to the address shown on the first page of this prospectus or from your AGL
representative.

Date of issue; Policy months and years. We prepare the Policy only after
we approve an application for a Policy and assign an appropriate premium class.
The day we begin to deduct charges will appear on page 3 of your Policy and is
called the "Date of Issue." Policy months and years are measured from the date
of issue. To preserve a younger age at issue for the insured person, we may
assign a date of issue to a Policy that is up to 6 months earlier than otherwise
would apply.

Monthly deduction days. Each charge that we deduct monthly is assessed
against your accumulation value at the close of business on the date of issue
and at the end of each subsequent valuation period that includes the first day
of a Policy month. We call these "monthly deduction days."

Commencement of investment performance. We begin to credit an investment
return to the accumulation value resulting from your initial premium payment on
the later of (a) the date of issue, or (b) the date all requirements needed to
place the Policy in force have been satisfied, including underwriting approval
and receipt in the Home Office or Springfield Service Center, of the necessary
premium. In the case of a back-dated Policy, we do not credit an investment
return to the accumulation value resulting from your initial premium payment
until the date stated in (b) above.

Effective date of other premium payments and requests that you make.
Premium payments (after the first) and transactions made in response to your
requests and elections are generally effected at the end of the valuation period
in which we receive the payment, request or election and based on prices and
values computed as of that same time. Exceptions to this general rule are as
follows:

. Increases you request in the specified amount of insurance,
reinstatements of a Policy that has lapsed, and changes in death
benefit option take effect on the Policy's monthly deduction day on or
next following our approval of the transaction;

. We may return premium payments, make a partial surrender or reduce the
death benefit if we determine that such premiums would cause your
Policy to become a modified endowment contract or to cease to qualify
as life insurance under federal income tax law or exceed the maximum
net amount at risk;

. If you exercise the right to return your Policy described on the
second page of this prospectus, your coverage will end when you
deliver it to your AGL representative, or if you mailed it to us, the
day it is postmarked; and

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. If you pay a premium in connection with a request which requires our
approval, your payment will be applied when received rather than
following the effective date of the change requested so long as your
coverage is in force and the amount paid will not cause you to exceed
premium limitations under the Code. If we do not approve your
request, no premium will be refunded to you except to the extent
necessary to cure any violation of the maximum premium limitations
under the Code. We will not apply this procedure to premiums you pay
in connection with reinstatement requests.

MORE ABOUT THE DEATH BENEFIT

Base coverage and supplemental coverage. The amount of insurance coverage
you select at the time you apply to purchase a Policy is called the specified
amount. The specified amount is the total of two types of coverage: your "base
coverage" and "supplemental coverage," if any, that you select. The total of
the two coverages cannot be less than the minimum of $50,000 and at least 10% of
the total must be base coverage when you purchase the Policy. The percentage
that your base and supplemental coverages represent of your specified amount
will not change whenever you decrease the specified amount. A partial surrender
will reduce the specified amount. In this case, we will deduct any surrender
charge that applies to the decrease in base coverage, but not to the decrease in
supplemental coverage since supplemental coverage has no surrender charge.

You can change the percentage of base coverage when you increase the
specified amount, but at least 10% of the total specified amount after the
increase must be base coverage. You can use the mix of base and supplemental
coverage to emphasize your own objectives. Here are the features about
supplemental coverage that differ from base coverage:

. In general, the larger percentage of supplemental coverage you choose
when your Policy is issued, the shorter the time the guarantee period
benefit will be in force;

. Supplemental coverage has no surrender charges;

. The monthly insurance charge for supplemental coverage is always equal
to or less than the monthly insurance charge for an equivalent amount
of base coverage; and

. We do not collect the monthly charge for each $1,000 of specified
amount that is attributable to supplemental coverage.

Generally, if you choose supplemental coverage instead of base coverage,
you will reduce your total charges and increase your accumulation value on a
current charge basis. The more supplemental coverage you elect, the greater the
amount of the reduction in charges and increase in accumulation value will be,
on a current charge basis. Keep in mind, however, that our guarantee of a
minimum death benefit (through the guarantee period benefit) may be essential to
your planning. If this is the case, you may wish to maximize the percentage
amount of base coverage you purchase.

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Policy owner objectives differ. Therefore, before deciding how much, if any,
supplemental coverage you should have, you should discuss with your AGL
representative what you believe to be your own objectives. Your representative
can provide you with further information and Policy illustrations showing how
your selection of base and supplemental coverage can affect your Policy values
under different assumptions.

MORE ABOUT OUR DECLARED FIXED INTEREST ACCOUNT OPTION

Our general account. Our general account assets are all of our assets that
we do not hold in legally segregated separate accounts. Our general account
supports our obligations to you under your Policy's declared fixed interest
account option. Because of applicable exemptions, no interest in this option
has been registered under the Securities Act of 1933, as amended. Neither our
general account or our declared fixed interest account is an investment company
under the Investment Company Act of 1940. We have been advised that the staff
of the SEC has not reviewed the disclosures that are included in this prospectus
for your information about our general account or our declared fixed interest
account option. Those disclosures, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.

How we declare interest. Except for amounts held as collateral for loans,
we can at any time change the rate of interest we are paying on any accumulation
value allocated to our declared fixed interest account option, but it will
always be at an effective annual rate of at least 4%.

Under these procedures, it is likely that at any time different interest
rates will apply to different portions of your accumulation value, depending on
when each portion was allocated to our declared fixed interest account option.
Any charges, partial surrenders, or loans that we take from any accumulation
value that you have in our declared fixed interest account option will be taken
from each portion in reverse chronological order based on the date that
accumulation value was allocated to this option.

DISTRIBUTION OF THE POLICIES

American General Distributors, Inc. ("AGDI") is the principal underwriter
and distributor of the Policies. AGDI is an affiliate of AGL. In the states of
Florida and Illinois, AGDI is known as American General Financial Distributors
of Florida, Inc. and American General Financial Distributors of Illinois, Inc.,
respectively. AGDI's principal office is at 2929 Allen Parkway, Houston, Texas
77019. AGDI was organized as a Delaware corporation on June 24, 1994 and is a
registered broker-dealer under the Securities Exchange Act of 1934, as amended
and a member of the National Association of Securities Dealers, Inc. ("NASD").
AGDI is also the principal underwriter for AGL's Separate Accounts A and D, as
well as the underwriter for various separate accounts of other AGL affiliates.
These separate accounts are registered investment companies. AGDI, as the
principal underwriter and distributor, is not paid any fees on the Policies.

46
<PAGE>

We and AGDI have sales agreements with various broker-dealers and banks
under which the Policies will be sold by registered representatives of the
broker-dealers or employees of the banks. These registered representatives and
employees are also required to be authorized under applicable state regulations
as life insurance agents to sell variable life insurance. The broker-dealers
are ordinarily required to be registered with the SEC and must be members of the
NASD. FFSC is one of the broker-dealers with a sales agreement. FFSC is
affiliated with AGL and with AGDI, but FFSC is treated the same as any other
broker-dealer is treated under its sales agreement.

We pay compensation directly to broker-dealers and banks for promotion and
sales of the Policies. The compensation may vary with the sales agreement, but
is generally not expected to exceed:

. 90% of the premiums paid in the first Policy year up to a "target"
amount;

. 3% of the premiums up to the target amount paid in each of Policy
years two through 10;

. 3% of the premiums in excess of the target amount paid in each of
Policy years one through 10;

. 0.25% of the Policy's accumulation value (reduced by any outstanding
loans) in the investment options in each of Policy years two through
20; and

. 0.15% of the Policy's accumulation value (reduced by any outstanding
loans) in the investment options in each Policy year after Policy year
20.

The target amount is an amount of level annual premium that would be
necessary to support the benefits under your Policy, based on certain
assumptions that we believe are reasonable. For this purpose, we exclude any
supplemental coverage and, therefore, the target premium is reduced
proportionately by the amount of supplemental coverage.

The maximum value of any alternative amounts we may pay for sales of the
Policies is expected to be equivalent over time to the amounts described above.
For example, we may pay a broker-dealer compensation in a lump sum which will
not exceed the aggregate compensation described above.

We pay a comparable amount of compensation to the broker-dealers or banks
with respect to any increase in the specified amount of coverage that you
request. In addition, we may pay broker-dealers or banks expense allowances,
bonuses, wholesaler fees and training allowances.

47
<PAGE>

We pay the compensation directly to any selling broker-dealer firm or bank.
We pay the compensation from our own resources which does not result in any
additional charge to you that is not described beginning on page 7. Each
broker-dealer firm or bank, in turn, may compensate its registered
representative or employee who acts as agent in selling you a Policy.

We sponsor a non-qualified deferred compensation plan ("Plan") for our
insurance agents. Some of our agents are registered representatives of our
subsidiary broker-dealer American General Securities Incorporated and sell the
Policies. These agents may, subject to regulatory approval, receive benefits
under the Plan when they sell the Policies. The benefits are deferred and the
Plan terms may result in the agent never receiving the benefits. The Plan
provides for a varying amount of benefits annually. We have the right to change
the Plan in ways that affect the amount of benefits earned each year.

PAYMENT OF POLICY PROCEEDS

General. We will pay any death benefit, maturity benefit, cash surrender
value or loan proceeds within seven days after we receive the last required form
or request (and any other documents that may be required for payment of a death
benefit). If we do not have information about the desired manner of payment
within 60 days after the date we receive notification of the insured person's
death, we will pay the proceeds as a single sum, normally within seven days
thereafter.

Delay of declared fixed interest account option proceeds. We have the
right, however, to defer payment or transfers of amounts out of our declared
fixed interest account option for up to six months. If we delay more than 30
days in paying you such amounts, we will pay interest of at least 3% a year from
the date we receive all items we require to make the payment.

Delay for check clearance. We reserve the right to defer payment of that
portion of your accumulation value that is attributable to a payment made by
check for a reasonable period of time (not to exceed 15 days) to allow the check
to clear the banking system.

Delay of Separate Account VL-R proceeds. We reserve the right to defer
payment of any death benefit, loan or other distribution that comes from that
portion of your accumulation value that is allocated to Separate Account VL-R,
if:

. the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is
restricted;

. an emergency exists, as a result of which disposal of securities is
not reasonably practicable or it is not reasonably practicable to
fairly determine the accumulation value; or

. the SEC by order permits the delay for the protection of owners.

48
<PAGE>

Transfers and allocations of accumulation value among the investment
options may also be postponed under these circumstances. If we need to defer
calculation of Separate Account VL-R values for any of the foregoing reasons,
all delayed transactions will be processed at the next values that we do
compute.

Delay to challenge coverage. We may challenge the validity of your
insurance Policy based on any material misstatements in your application or any
application for a change in coverage. However,

. We cannot challenge the Policy after it has been in effect, during the
insured person's lifetime, for two years from the date the Policy was
issued or restored after termination. (Some states may require that
we measure this time in some other way.)

. We cannot challenge any Policy change that requires evidence of
insurability (such as an increase in specified amount) after the
change has been in effect for two years during the insured person's
lifetime.

. We cannot challenge an additional benefit rider that provides benefits
if the insured person becomes totally disabled, after two years from
the later of the Policy's date of issue or the date the additional
benefit rider becomes effective.

ADJUSTMENTS TO DEATH BENEFIT

Suicide. If the insured person commits suicide during the first two Policy
years, we will limit the death benefit proceeds to the total of all premiums
that have been paid to the time of death minus any outstanding Policy loans
(plus credit for any unearned interest) and any partial surrenders.

A new two year period begins if you increase the specified amount. You can
increase the specified amount only if the insured person is living at the time
of the increase. In this case, if the insured person commits suicide during the
first two years following the increase, we will refund the monthly insurance
deductions attributable to the increase. The death benefit will then be based
on the specified amount in effect before the increase.

Some states require that we compute these periods for noncontestability
differently following a suicide.

Wrong age or gender. If the age or gender of the insured person was
misstated on your application for a Policy (or for any increase in benefits), we
will adjust any death benefit to be what the monthly insurance charge deducted
for the current month would have purchased based on the correct information.

49
<PAGE>

Death during grace period. We will deduct from the insurance proceeds any
monthly charges that remain unpaid because the insured person died during a
grace period.

ADDITIONAL RIGHTS THAT WE HAVE

We have the right at any time to:

. transfer the entire balance in an investment option in accordance with
any transfer request you make that would reduce your accumulation
value for that option to below $500;

. transfer the entire balance in proportion to any other investment
options you then are using, if the accumulation value in an investment
option is below $500 for any other reason;

. end the automatic rebalancing feature if your accumulation value falls
below $5,000;

. change the underlying Mutual Fund that any investment option uses;

. add, delete or limit investment options, combine two or more
investment options, or withdraw assets relating to the Policies from
one investment option and put them into another;

. operate Separate Account VL-R under the direction of a committee or
discharge such a committee at any time;

. change our underwriting and premium class guidelines;

. operate Separate Account VL-R, or one or more investment options, in
any other form the law allows, including a form that allows us to make
direct investments. Separate Account VL-R may be charged an advisory
fee if its investments are made directly rather than through another
investment company. In that case, we may make any legal investments we
wish; or

. make other changes in the Policy that in our judgment are necessary or
appropriate to ensure that the Policy continues to qualify for tax
treatment as life insurance, or that do not reduce any cash surrender
value, death benefit, accumulation value, or other accrued rights or
benefits.

You will be notified as required by law if there are any material changes
in the underlying investments of an investment option that you are using. We
intend to comply with all applicable laws in making any changes and, if
necessary, we will seek policy owner approval.

50
<PAGE>

PERFORMANCE INFORMATION

From time to time, we may quote performance information for the divisions
of Separate Account VL-R in advertisements, sales literature, or reports to
owners or prospective investors.

We may quote performance information in any manner permitted under
applicable law. We may, for example, present such information as a change in a
hypothetical owner's cash value or death benefit. We also may present the yield
or total return of the division based on a hypothetical investment in a Policy.
The performance information shown may cover various periods of time, including
periods beginning with the commencement of the operations of the division or the
Mutual Funds in which it invests. The performance information shown may reflect
the deduction of one or more charges, such as the premium charge, and we
generally expect to exclude costs of insurance charges because of the individual
nature of these charges.

We may compare a division's performance to that of other variable life
separate accounts or investment products, as well as to generally accepted
indices or analyses, such as those provided by research firms and rating
services. In addition, we may use performance ratings that may be reported
periodically in financial publications, such as Money Magazine, Forbes, Business
Week, Fortune, Financial Planning and The Wall Street Journal. We also may
advertise ratings of AGL's financial strength or claims-paying ability as
determined by firms that analyze and rate insurance companies and by nationally
recognized statistical rating organizations.

Performance information for any division reflects the performance of a
hypothetical Policy and is not illustrative of how actual investment performance
would affect the benefits under your Policy. You should not consider such
performance information to be an estimate or guarantee of future performance.

OUR REPORTS TO POLICY OWNERS

Shortly after the end of each Policy year, we will mail you a report that
includes information about your Policy's current death benefit, accumulation
value, cash surrender value and policy loans. We will send you notices to
confirm premium payments, transfers and certain other Policy transactions. We
will mail to you at your last known address of record, these and any other
reports and communications required by law. You should give us prompt written
notice of any address change.

AGL'S MANAGEMENT

The directors, executive officers, and (to the extent responsible for
variable life operations) the other principal officers of AGL are listed below.

51
<PAGE>

<TABLE>
<CAPTION>
NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---------------------------------------------------------------------------------------------
<S> <C>
Rodney O. Martin, Jr. Director of American General Life Insurance Company since
August 1996. Chairman of the Board and CEO of American
General Life Insurance Company since April 2000. President and
CEO (August 1996-July 1998). President of American General
Life Insurance Company of New York (November 1995-August
1996). Vice President Agencies, with Connecticut Mutual Life
Insurance Company, Hartford, Connecticut (1990-1995).

Donald W. Britton Director of the Board of American General Life Insurance
Company since April 1999. President of American General Life
Insurance Company since April 2000. President of First Colony
Life, Lynchburg, Virginia (1996 - April 1999) and Executive Vice
President of First Colony Life (1992 - 1996).

David A. Fravel Director of American General Life Insurance Company since
November 1996. Elected Executive Vice President in April 1998.
Previously held position of Senior Vice President of American
General Life Insurance Company since November 1996. Senior
Vice President of Massachusetts Mutual, Springfield, Missouri
(March 1996-June 1996); Vice President, New Business,
Connecticut Mutual Life Insurance Company, Hartford,
Connecticut (December 1978-March 1996).

David L. Herzog Director, Executive Vice President and Chief Financial Officer of
American General Life Insurance Company since March 2000.
Vice President of General American, St. Louis, Missouri (June
1991 - February 2000).

John V. LaGrasse Director of American General Life Insurance Company since
August 1996. Chief Technology Officer of American General
Life Insurance Company since April, 2000. Elected Executive
Vice President in July 1998. Previously held position of Senior
Vice President of American General Life Insurance Company
since August 1996. Director of Citicorp Insurance Services, Inc.,
Dover, Delaware (1986-1996).

Paul L. Mistretta Executive Vice President of American General Life Insurance
Company since July 1999. Senior Vice President of First Colony
Life Insurance, Lynchburg, Virginia (1992 - July 1999).
</TABLE>

52
<PAGE>

<TABLE>
<CAPTION>
NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---------------------------------------------------------------------------------------------
<S> <C>
Brian D. Murphy Executive Vice President of American General Life Insurance
Company since July 1999. Previously held position of Senior
Vice President-Insurance Operations of American General Life
Insurance Company since April 1998. Vice President-Sales,
Phoenix Home Life, Hartford, CT (January 1997-April 1998).
Vice President of Underwriting and Issue, Phoenix Home Life
(July 1994-January 1997). Various positions with Mutual of New
York, Syracuse, NY, including Agent, Agency Manager,
Marketing Life and Disability Income Underwriting Management,
(1978-July 1994).

Don M. Ward Executive Vice President of American General Life Insurance
Company since April 2000. Senior Vice President of American
General Life Insurance Company since February 1998. Vice
President of Pacific Life Insurance Company, Newport Beach, CA
(1991-February 1998).

Thomas M. Zurek Director and Executive Vice President of American General Life
Insurance Company since April 1999. Elected General Counsel
in December 1998. Previously held various positions with
American General Life Insurance Company including Senior Vice
President since December 1998 and Vice President since October
1998. In February 1998 named as Senior Vice President and
Deputy General Counsel of American General Corporation.
Attorney Shareholder with Nyemaster, Goode, Voigts, West,
Hansell & O'Brien, Des Moines, Iowa (June 1992 - February
1998).

Wayne A. Barnard Senior Vice President of American General Life Insurance
Company since November 1997. Previously held various
positions with American General Life Insurance Company
including Vice President since February 1991.

Robert M. Beuerlein Senior Vice President and Chief Actuary of American General
Life Insurance Company since September 1999. Previously held
position of Vice President of American General Life Insurance
Company since December 1998. Director, Senior Vice President
and Chief Actuary of The Franklin Life Insurance Company,
Springfield, Illinois (January 1991 - June 1999).
</TABLE>

53
<PAGE>

<TABLE>
<CAPTION>
NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---------------------------------------------------------------------------------------------
<S> <C>
David J. Dietz Senior Vice President - Corporate Markets Group of American
General Life Insurance Company since January 1999. President
and Chief Executive Officer - Individual Insurance Operations of
The United States Life Insurance Company in the City of New
York since September, 1997. President of Prudential Select Life,
Newark, New Jersey (August 1990 - September 1997).

William Guterding Senior Vice President of American General Life Insurance
Company since April 1999. Senior Vice President and Chief
Underwriting Officer of The United States Life Insurance
Company in the City of New York since October, 1980.

Robert F. Herbert, Jr. Senior Vice President and Treasurer of American General Life
Insurance Company since May 1996, and Controller since
February 1991.

Simon J. Leech Senior Vice President for American General Life Insurance
Company since July 1997. Previously held various positions with
American General Life Insurance Company since 1981, including
Director of Policy Owners' Service Department in 1993, and Vice
President-Policy Administration in 1995.

Royce G. Imhoff, II Director for American General Life Insurance Company since
November 1997. Previously held various positions with American
General Life Insurance Company including Vice President since
August 1996 and Regional Director since 1992.
</TABLE>

The principal business address of each person listed above is our Home
Office; except that the street number for Messrs. Fravel, LaGrasse, Martin,
Herzog, Britton, Mistretta, Barnard and Zurek is 2929 Allen Parkway, the street
number for Mr. Ward is 2727 Allen Parkway, the street number for Messrs. Dietz
and Guterding is 390 Park Avenue, New York, New York.

PRINCIPAL UNDERWRITER'S MANAGEMENT

The directors and principal officers of the principal underwriter are:

54
<PAGE>

<TABLE>
<CAPTION>
POSITION AND OFFICES
WITH UNDERWRITER,
NAME AND PRINCIPAL AMERICAN GENERAL
BUSINESS ADDRESS DISTRIBUTORS, INC.
---------------------------------------------------------------------------
<S> <C>
Robert P. Condon Director and Chairman,
The Variable Annuity Life Insurance Company Chief Executive Officer and
2929 Allen Parkway President
Houston, TX 77019

Mary L. Cavanaugh Director and Secretary
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, TX 77019

Thomas G. Norwood Director, Chief Financial
The Variable Annuity Life Insurance Company Officer and Treasurer
2929 Allen Parkway
Houston, TX 77019

Jane E. Bates Vice President and
The Variable Annuity Life Insurance Company Chief Compliance Officer
2929 Allen Parkway
Houston, Texas 77019

V. Keith Roberts Vice President - Operations
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019

D. Lynne Walters Tax Officer
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, TX 77019

Cheryl G. Hemley Assistant Secretary
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, TX 77019

Daniel R. Cricks Assistant Tax Officer
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, TX 77019
</TABLE>

55
<PAGE>

<TABLE>
<CAPTION>
POSITION AND OFFICES
WITH UNDERWRITER,
NAME AND PRINCIPAL AMERICAN GENERAL
BUSINESS ADDRESS DISTRIBUTORS, INC.
---------------------------------------------------------------------------
<S> <C>
Jim D. Bonsall Assistant Treasurer
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, TX 77019

Steven Rubinstein Assistant Treasurer
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019

Marylyn S. Zlotnick Assistant Treasurer
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, TX 77019
</TABLE>

LEGAL MATTERS

We are not involved in any legal proceedings that would be considered
material with respect to a policy owner's interest in Separate Account VL-R.
Pauletta P. Cohn, Esquire, Deputy General Counsel of the American General Life
Companies, an affiliate of AGL, has opined as to the validity of the Policies.

ACCOUNTING AND AUDITING EXPERTS

The consolidated balance sheets of AGL as of December 31, 1999 and 1998 and
the related consolidated statements of income, statements of comprehensive
income, statements of shareholders' equity, and statements of cash flows for the
years ended December 31, 1999, 1998 and 1997 included in this prospectus have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere in this prospectus, and are included in this
prospectus in reliance upon such report of Ernst & Young LLP given on the
authority of such firm as experts in accounting and auditing. The address of
Ernst & Young LLP is One Houston Center, 1221 McKinney, Suite 2400, Houston,
Texas 77010-2007.

56
<PAGE>

ACTUARIAL EXPERT

Actuarial matters have been examined by Robert M. Beuerlein who is Senior
Vice President and Chief Actuary of AGL. His opinion on actuarial matters is
filed as an exhibit to the registration statement we have filed with the SEC in
connection with the Policies.

SERVICES AGREEMENTS

American General Life Companies ("AGLC") is party to an existing general
services agreement with AGL. AGLC, an affiliate of AGL, is a corporation
incorporated in Delaware on November 24, 1997. Pursuant to this agreement, AGLC
provides services to AGL, including most of the administrative, data processing,
systems, customer services, product development, actuarial, auditing, accounting
and legal services for AGL and the Policies.

The Franklin Life Insurance Company ("FL") is also a party to the general
services agreement. FL is affiliated with AGL and is located at #1 Franklin
Square, Springfield, Illinois 62713-0001. FL provides most of the employees who
service our Policies at the Springfield Service Center. The Policy owners who
receive services thorough the Springfield Service Center purchase their Policies
with the assistance of an AGL representative who is associated with FFSC.
Pursuant to the general services agreement, the Springfield Service Center
processes applications and issues Policies, accepts premiums, and provides most
of the customer services and administrative services. AGL reimburses FL for the
cost of these services, and FL does not make a profit.

We have entered into various services agreements with most of the advisers
or administrators for the Mutual Funds. We receive fees for the administrative
services we perform. These fees do not result in any additional charges under
the Policies that are not described under "What charges will AGL deduct from my
investment in a Policy?"

We have entered into a services agreement with PIMCO Variable Insurance
Trust under which we receive fees paid directly by this Mutual Fund for services
we perform.

CERTAIN POTENTIAL CONFLICTS

The Mutual Funds sell shares to separate accounts of insurance companies
(and may sell in the future, certain qualified plans), both affiliated and not
affiliated with AGL. We currently do not foresee any disadvantages to you
arising out of such sales. Differences in treatment under tax and other laws,
as well as other considerations, could cause the interests of various owners to
conflict. For example, violation of the federal tax laws by one separate account
investing in the Funds could cause the contracts funded through another separate
account to lose their tax-deferred status, unless remedial action were taken.
However, each Mutual Fund has advised us that its board of trustees (or
directors) intends to monitor events to identify any material irreconcilable
conflicts that possibly may arise and to determine what action, if any, should
be taken in response. If we believe that a Fund's response to any such event
insufficiently protects our policy owners, we will see to it that

57
<PAGE>

appropriate action is taken to do so as well as report any material
irreconcilable conflicts that we know exist to each Mutual Fund as soon as a
conflict arises. If it becomes necessary for any separate account to replace
shares of any Mutual Fund in which it invests, that Fund may have to liquidate
securities in its portfolio on a disadvantageous basis.

FINANCIAL STATEMENTS

The financial statements of AGL contained in this prospectus should be
considered to bear only upon the ability of AGL to meet its obligations under
the Policies. They should not be considered as bearing upon the investment
experience of Separate Account VL-R. No financial statements of Separate
Account VL-R are included because, at the date of this prospectus, none of the
Divisions of Separate Account VL-R were available under the Policies.

<TABLE>
<CAPTION>
PAGE TO
CONSOLIDATED FINANCIAL STATEMENTS OF SEE IN THIS
AMERICAN GENERAL LIFE INSURANCE COMPANY PROSPECTUS
-------------------------------------------------------------------------------
<S> <C>
Unaudited Balance Sheet as of June 30, 2000...................... Q-1
Unaudited Income Statement for the six months
ended June 30, 2000............................................ Q-3
Report of Ernst & Young LLP Independent Auditors................. F-1
Consolidated Balance Sheets as of December 31, 1999 and 1998..... F-2
Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997............................... F-4
Consolidated Statements of Comprehensive Income
for the years ended December 31, 1999, 1998, and 1997.......... F-5
Consolidated Statements of Shareholder's Equity for the years
ended December 31, 1999, 1998 and 1997......................... F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1999, 1998 and 1997......................... F-7
Notes to Consolidated Financial Statements....................... F-8
</TABLE>

58
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheet

(Unaudited)

June 30
2000
----------------
(In Thousands)

ASSETS
Investments:
Fixed maturity securities, at fair value (amortized cost -
$27,397,632) $26,486,802
Equity securities, at fair value (cost - $269,013) 276,251
Mortgage loans on real estate 1,955,401
Policy loans 1,262,556
Investment real estate 129,185
Other long-term investments 202,551
Short-term investments 1,036,782
-----------
Total investments 31,349,528

Cash 62,715
Investment in Parent Company (cost - $7,958) 42,676
Indebtedness from affiliates 44,248
Accrued investment income 475,107
Accounts receivable 228,854
Deferred policy acquisition costs 2,120,995
Property and equipment 69,419
Other assets 251,246
Assets held in separate accounts 24,640,270
-----------
Total assets $59,285,058
===========

Q-1
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheet

(Unaudited)

June 30
2000
----------------
(In Thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Future policy benefits $29,527,010
Other policy claims and benefits payable 52,437
Other policyholders' funds 372,669
Federal income taxes 288,307
Indebtedness to affiliates 4,690
Other liabilities 1,473,684
Liabilities related to separate accounts 24,640,270
-----------
Total liabilities 56,359,067

Shareholders' equity:
Common stock, $10 par value, 600,000 shares
authorized, issued, and outstanding 6,000
Preferred stock, $100 par value, 8,500 shares
authorized, issued, and outstanding 850
Additional paid-in capital 1,372,378
Accumulated other comprehensive income/(loss) (428,386)
Retained earnings 1,975,149
-----------
Total shareholders' equity 2,925,991
-----------
Total liabilities and shareholders' equity $59,285,058
===========

Q-2
<PAGE>

American General Life Insurance Company

Consolidated Income Statement

(Unaudited)

Six months
ended June 30
2000
----------------
(In Thousands)

Revenues:
Premiums and other considerations $ 325,542
Net investment income 1,169,590
Net realized investment loss (62,863)
Other 65,461
----------
Total revenues 1,497,730

Benefits and expenses:
Benefits 884,923
Operating costs and expenses 284,589
----------
Total benefits and expenses 1,169,512
----------
Income before income tax expense 328,218

Income tax expense 110,407
----------
Net income $ 217,811
==========

Q-3

<PAGE>

[LETTERHEAD OF ERNST & YOUNG]

Report of Independent Auditors

Board of Directors and Stockholder
American General Life Insurance Company

We have audited the accompanying consolidated balance sheets of American General
Life Insurance Company (an indirectly wholly-owned subsidiary of American
General Corporation) and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, comprehensive income, shareholder's
equity, and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American General
Life Insurance Company and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.

/s/ Ernst & Young LLP
------------------------------
Ernst & Young LLP

March 1,2000

F-1
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheets

DECEMBER 31
1999 1998
-----------------------------
(In Thousands)

ASSETS
Investments:
Fixed maturity securities, at fair value
(amortized cost - $27,725,167 in 1999 and $27,029,409 $28,906,261
$27,425,605 in 1998)

Equity securities, at fair value (cost -
$198,640 in 1999 and $193,368 in 1998) 237,065 211,684

Mortgage loans on real estate 1,918,956 1,557,268
Policy loans 1,234,729 1,170,686
Investment real estate 125,563 119,520
Other long-term investments 129,155 86,194
Short-term investments 123,779 222,949
----------------------------
Total investments 30,798,656 32,274,562

Cash 45,983 117,675
Investment in Parent Company (cost - $8,597 in
1999 and 1998) 53,083 54,570

Indebtedness from affiliates 75,195 161,096
Accrued investment income 482,652 459,961
Accounts receivable 186,592 196,596
Deferred policy acquisition costs 1,956,653 1,087,718
Property and equipment 78,908 66,197
Other assets 250,299 206,318
Assets held in separate accounts 23,232,419 15,616,020
----------------------------
Total assets $57,160,440 $50,240,713
============================

See accompanying notes.

F-2
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheets

DECEMBER 31
1999 1998
-----------------------------
(In Thousands)

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Future policy benefits $29,901,842 $29,353,022
Other policy claims and benefits payable 53,326 54,278
Other policyholders' funds 371,632 398,587
Federal income taxes 375,332 677,315
Indebtedness to affiliates 7,086 18,173
Other liabilities 372,416 554,783
Liabilities related to separate accounts 23,232,419 15,616,020
----------------------------
Total liabilities 54,314,053 46,672,178

Shareholder's equity:
Common stock, $10 par value, 600,000 shares
authorized, issued, and outstanding 6,000 6,000

Preferred stock, $100 par value, 8,500 shares
authorized, issued, and outstanding 850 850
Additional paid-in capital 1,371,687 1,368,089
Accumulated other comprehensive (loss) income (356,865) 679,107
Retained earnings 1,824,715 1,514,489
----------------------------
Total shareholder's equity 2,846,387 3,568,535

----------------------------
Total liabilities and shareholder's equity $57,160,440 $50,240,713
============================

See accompanying notes.

F-3
<PAGE>

American General Life Insurance Company

Consolidated Statements of Income

YEAR ENDED DECEMBER 31
1999 1998 1997
-------------------------------------------
(In Thousands)

Revenues:
Premiums and other considerations $ 540,029 $ 470,238 $ 428,721
Net investment income 2,348,196 2,316,933 2,198,623
Net realized investment gains 5,351 (33,785) 29,865
(losses)
Other 82,581 69,602 53,370
-----------------------------------------
Total revenues 2,976,157 2,822,988 2,710,579

Benefits and expenses:
Benefits 1,719,375 1,788,417 1,757,504
Operating costs and expenses 495,606 467,067 379,012
Interest expense 74 15 782
Litigation settlement - 97,096 -
-----------------------------------------
Total benefits and expenses 2,215,055 2,352,595 2,137,298
-----------------------------------------
Income before income tax expense 761,102 470,393 573,281

Income tax expense 263,196 153,719 198,724
------------------------------------------
Net income $ 497,906 $ 316,674 $ 374,557
==========================================

See accompanying notes.

F-4
<PAGE>

American General Life Insurance Company

Consolidated Statements of Comprehensive Income

YEAR ENDED DECEMBER 31
1999 1998 1997
----------------------------------------
(In Thousands)

Net income $ 497,906 $ 316,674 $ 374,557
Other comprehensive income:
Gross change in unrealized gains
(losses) on securities (pretax:
($1,581,500) $341,000; $318,700) (1,027,977) 222,245 207,124
Less: gains (losses) realized in 7,995 (29,336) (1,251)
net income
----------------------------------------
Change in net unrealized gains
(losses) on securities (pretax:
($1,593,800) $387,000; $320,600) (1,035,972) 251,581 208,375
----------------------------------------
Comprehensive (loss) income $ (538,066) $ 568,255 $ 582,932
========================================

See accompanying notes.

F-5
<PAGE>

American General Life Insurance Company

Consolidated Statements of Shareholder's Equity

YEAR ENDED DECEMBER 31
1999 1998 1997
-------------------------------------------
(In Thousands)

Common stock:
Balance at beginning of year $ 6,000 $ 6,000 $ 6,000
Change during year - - -
-------------------------------------------
Balance at end of year 6,000 6,000 6,000

Preferred stock:
Balance at beginning of year 850 850 850
Change during year - - -
-------------------------------------------
Balance at end of year 850 850 850

Additional paid-in capital:
Balance at beginning of year 1,368,089 1,184,743 933,342
Capital contribution from Parent
Company - 182,284 250,000
Other changes during year 3,598 1,062 1,401
-------------------------------------------
Balance at end of year 1,371,687 1,368,089 1,184,743

Accumulated other comprehensive
(loss) income:
Balance at beginning of year 679,107 427,526 219,151
Change in unrealized gains
(losses) on securities (1,035,972) 251,581 208,375
------------------------------------------
Balance at end of year (356,865) 679,107 427,526

Retained earnings:
Balance at beginning of year 1,514,489 1,442,495 1,469,618
Net income 497,906 316,674 374,557
Dividends paid (187,680) (244,680) (401,680)
------------------------------------------
Balance at end of year 1,824,715 1,514,489 1,442,495
-------------------------------------------
Total shareholder's equity $2,846,387 $3,568,535 $3,061,614
===========================================

See accompanying notes.

F-6
<PAGE>

American General Life Insurance Company

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
--------------------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
OPERATING ACTIVITIES
Net income $ 497,906 $ 316,674 $ 374,557
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Change in accounts receivable 10,004 11,613 (37,752)
Change in future policy benefits and other
policy claims (2,422,221) (866,428) (1,143,736)

Amortization of policy acquisition costs 101,066 125,062 115,467
Policy acquisition costs deferred (307,854) (244,196) (219,339)
Change in other policyholders' funds (26,955) 273 21,639
Provision for deferred income tax expense 85,257 15,872 13,264
Depreciation 24,066 19,418 16,893
Amortization (30,894) (26,775) (28,276)
Change in indebtedness to/from affiliates 74,814 (51,116) (8,695)
Change in amounts payable to brokers (43,321) (894) 31,769
Net loss (gain) on sale of investments 45,379 37,016 (29,865)
Other, net (170,413) 57,307 30,409
--------------------------------------------------------------------
Net cash used in operating activities (2,163,166) (606,174) (863,665)

INVESTING ACTIVITIES
Purchases of investments and loans made (44,508,908) (28,231,615) (29,638,861)
Sales or maturities of investments and
receipts from repayment of loans 43,879,377 26,656,897 28,300,238

Sales and purchases of property, equipment,
and software, net (87,656) (105,907) (9,230)
--------------------------------------------------------------------
Net cash used in investing activities (717,187) (1,680,625) (1,347,853)

FINANCING ACTIVITIES
Policyholder account deposits 5,747,658 4,688,831 4,187,191
Policyholder account withdrawals (2,754,915) (2,322,307) (1,759,660)
Dividends paid (187,680) (244,680) (401,680)
Capital contribution from Parent - 182,284 250,000
Other 3,598 1,062 1,401
--------------------------------------------------------------------
Net cash provided by financing activities 2,808,661 2,305,190 2,277,252
--------------------------------------------------------------------
(Decrease) increase in cash (71,692) 18,391 65,734
Cash at beginning of year 117,675 99,284 33,550
--------------------------------------------------------------------
Cash at end of year $ 45,983 $ 117,675 $ 99,284
====================================================================
</TABLE>

Interest paid amounted to approximately $2,026,000, $420,000, and $1,004,000, in
1999, 1998, and 1997, respectively.

See accompanying notes.

F-7
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 1999

NATURE OF OPERATIONS

American General Life Insurance Company (the "Company") is a wholly-owned
subsidiary of AGC Life Insurance Company, which is a wholly-owned subsidiary of
American General Corporation (the "Parent Company"). The Company's wholly-owned
life insurance subsidiaries are American General Life Insurance Company of New
York ("AGNY") and The Variable Annuity Life Insurance Company ("VALIC"). During
1998, the Company formed a new wholly-owned subsidiary, American General Life
Companies ("AGLC"), to provide management services to certain life insurance
subsidiaries of the Parent Company.

The Company offers a complete portfolio of the standard forms of universal life,
variable universal life, interest-sensitive whole life, term life, structured
settlements, and fixed and variable annuities throughout the United States. In
addition, a variety of equity products is sold through its wholly-owned
broker/dealer, American General Securities, Inc. The Company serves the estate
planning needs of middle- and upper-income households and the life insurance
needs of small- to medium-sized businesses. AGNY offers a broad array of
traditional and interest-sensitive insurance, in addition to individual annuity
products. VALIC provides tax-deferred retirement annuities and employer-
sponsored retirement plans to employees of health care, educational, public
sector, and other not-for-profit organizations throughout the United States.

1. ACCOUNTING POLICIES

1.1 PREPARATION OF FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") and include the accounts of
the Company and its wholly-owned subsidiaries. Transactions with the Parent
Company and other subsidiaries of the Parent Company are not eliminated from the
financial statements of the Company. All other material intercompany
transactions have been eliminated in consolidation.

The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
disclosures of contingent assets and liabilities. Ultimate results could differ
from those estimates.

F-8
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.2 STATUTORY ACCOUNTING

The Company and its wholly-owned life insurance subsidiaries are required to
file financial statements with state regulatory authorities. State insurance
laws and regulations prescribe accounting practices for calculating statutory
net income and equity. In addition, state regulators may permit statutory
accounting practices that differ from prescribed practices. The use of such
permitted practices by the Company and its wholly-owned life insurance
subsidiaries did not have a material effect on statutory equity at December 31,
1999.

Statutory financial statements differ from GAAP. Significant differences were as
follows (in thousands):

<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------
Net income:
<S> <C> <C> <C>
Statutory net income (1999 balance is
unaudited) $ 350,294 $ 259,903 $ 327,813
Deferred policy acquisition costs and cost
of insurance purchased 200,285 116,597 103,872
Deferred income taxes (86,456) (53,358) (13,264)
Adjustments to policy reserves 23,110 52,445 (30,162)
Goodwill amortization (2,437) (2,033) (2,067)
Net realized gain on investments 2,246 41,488 20,139
Litigation settlement - (63,112) -
Other, net 10,864 (35,256) (31,774)
--------------------------------------------------------
GAAP net income $ 497,906 $ 316,674 $ 374,557
========================================================
Shareholders' equity:
Statutory capital and surplus (1999 balance
is unaudited) $1,753,570 $1,670,412 $1,636,327

Deferred policy acquisition costs and cost
of insurance purchased 1,975,667 1,109,831 835,031
Deferred income taxes (350,258) (698,350) (535,703)
Adjustments to policy reserves (202,150) (274,532) (319,680)
Acquisition-related goodwill 52,317 54,754 51,424
Asset valuation reserve ("AVR") 351,904 310,564 255,975
Interest maintenance reserve ("IMR") 53,226 27,323 9,596
Investment valuation differences (683,500) 1,487,658 1,272,339
Surplus from separate accounts (180,362) (174,447) (150,928)
Other, net 75,973 55,322 7,233
--------------------------------------------------------
Total GAAP shareholders' equity $2,846,387 $3,568,535 $3,061,614
========================================================
</TABLE>

F-9
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.2 STATUTORY ACCOUNTING (CONTINUED)

The more significant differences between GAAP and statutory accounting
principles are that under GAAP: (a) acquisition costs related to acquiring new
business are deferred and amortized (generally in proportion to the present
value of expected gross profits from surrender charges and investment,
mortality, and expense margins), rather than being charged to operations as
incurred; (b) future policy benefits are based on estimates of mortality,
interest, and withdrawals generally representing the Company's experience, which
may differ from those based on statutory mortality and interest requirements
without consideration of withdrawals; (c) deferred tax assets and liabilities
are established for temporary differences between the financial reporting basis
and the tax basis of assets and liabilities, at the enacted tax rates expected
to be in effect when the temporary differences reverse; (d) certain assets
(principally furniture and equipment, agents' debit balances, computer software,
and certain other receivables) are reported as assets rather than being charged
to retained earnings; (e) acquisitions are accounted for using the purchase
method of accounting rather than being accounted for as equity investments; and
(f) fixed maturity investments are carried at fair value rather than amortized
cost. In addition, statutory accounting principles require life insurance
companies to establish an AVR and an IMR. The AVR is designed to address the
credit-related risk for bonds, preferred stocks, derivative instruments, and
mortgages and market risk for common stocks, real estate, and other invested
assets. The IMR is composed of investment- and liability-related realized gains
and losses that result from interest rate fluctuations. These realized gains and
losses, net of tax, are amortized into income over the expected remaining life
of the asset sold or the liability released.

1.3 INSURANCE CONTRACTS

The insurance contracts accounted for in these financial statements include
primarily long-duration contracts. Long-duration contracts include traditional
whole life, endowment, guaranteed renewable term life, universal life, limited
payment, and investment contracts. Long-duration contracts generally require the
performance of various functions and services over a period of more than one
year. The contract provisions generally cannot be changed or canceled by the
insurer during the contract period; however, most new contracts written by the
Company allow the insurer to revise certain elements used in determining premium
rates or policy benefits, subject to guarantees stated in the contracts. At
December 31, 1999 and 1998, insurance investment contracts of $25.9 million and
$24.1 million, respectively, were included in the Company's liabilities.

F-10
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.4 INVESTMENTS

FIXED MATURITY AND EQUITY SECURITIES

All fixed maturity and equity securities were classified as available-for-sale
and recorded at fair value at December 31, 1999 and 1998. After adjusting
related balance sheet accounts as if the unrealized gains (losses) had been
realized, the net adjustment is recorded in accumulated other comprehensive
income within shareholders' equity. If the fair value of a security classified
as available-for-sale declines below its cost and this decline is considered to
be other than temporary, the security is reduced to its fair value, and the
reduction is recorded as a realized loss.

During 1999, the Company maintained a trading portfolio of certain fixed
maturity securities. Trading securities are recorded at fair value. Unrealized
and realized gains (losses) are included in net investment income. The Company
held no trading securities at December 31, 1999, and trading securities did not
have a material effect on net investment income in 1999.

MORTGAGE LOANS

Mortgage loans are reported at amortized cost, net of an allowance for losses.
The allowance for losses covers all non-performing loans and loans for which
management has a concern based on its assessment of risk factors, such as
potential non-payment or non-monetary default. The allowance is based on a loan-
specific review and a formula that reflects past results and current trends.

Loans for which the Company determines that collection of all amounts due under
the contractual terms is not probable are considered to be impaired. The Company
generally looks to the underlying collateral for repayment of impaired loans.
Therefore, impaired loans are considered to be collateral dependent and are
reported at the lower of amortized cost or fair value of the underlying
collateral, less estimated cost to sell.

POLICY LOANS

Policy loans are reported at unpaid principal balance.

F-11
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.4 INVESTMENTS (CONTINUED)

INVESTMENT REAL ESTATE

Investment real estate is classified as held for investment or available for
sale, based on management's intent. Real estate held for investment is carried
at cost, less accumulated depreciation and impairment write-downs. Real estate
available for sale is carried at the lower of cost (less accumulated
depreciation, if applicable) or fair value less cost to sell.

INVESTMENT INCOME

Interest on fixed maturity securities and performing and restructured mortgage
loans is recorded as income when earned and is adjusted for any amortization of
premium or discount. Interest and any amortization of premium or discount on
delinquent mortgage loans is recorded as income only when actual interest
payments are received. Dividends are recorded as income on ex-dividend dates.

REALIZED INVESTMENT GAINS

Realized investment gains (losses) are recognized using the specific-
identification method.

1.5 SEPARATE ACCOUNTS

Separate Accounts are assets and liabilities associated with certain contracts,
principally annuities; for which the investment risk lies solely with the
contract holder. Therefore, the Company's liability for these accounts equals
the value of the account assets. Investment income, realized investment gains
(losses), and policyholder account deposits and withdrawals related to separate
accounts are excluded from the consolidated statements of income, comprehensive
income, and cash flows. Assets held in Separate Accounts are primarily shares in
mutual funds, which are carried at fair value based on the quoted net asset
value per share.

F-12
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.6 DEFERRED POLICY ACQUISITION COSTS ("DPAC") AND COST OF INSURANCE PURCHASED
("CIP")

Certain costs of writing an insurance policy, including commissions,
underwriting, and marketing expenses, are deferred and reported as DPAC.

CIP represents the cost assigned to insurance contracts in force that are
acquired through the purchase of a block of business. At December 31, 1999, CIP
of $19.0 million was reported within other assets.

DPAC and CIP associated with interest-sensitive life contracts, insurance
investment contracts, and participating life insurance contracts is charged to
expense in relation to the estimated gross profits of those contracts. DPAC and
CIP associated with all other insurance contracts is charged to expense over the
premium-paying period or as the premiums are earned over the life of the
contract.

DPAC and CIP are adjusted for the impact on estimated future gross profits as if
net unrealized gains (losses) on securities had been realized at the balance
sheet date. The impact of this adjustment is included in accumulated other
comprehensive income within shareholder's equity.

The Company reviews the carrying amount of DPAC and CIP on at least an annual
basis. Management considers estimated future gross profits or future premiums,
expected mortality, interest earned and credited rates, persistency, and
expenses in determining whether the carrying amount is recoverable.

1.7 PREMIUM RECOGNITION

Most receipts for annuities and interest-sensitive life insurance policies are
classified as deposits instead of revenue. Revenues for these contracts consist
of mortality, expense, and surrender charges. Policy charges that compensate the
Company for future services are deferred and recognized in income over the
period earned, using the same assumptions used to amortize DPAC (see Note 1.6).

For limited-payment contracts, net premiums are recorded as revenue, and the
difference between the gross premium received and the net premium is deferred
and recognized in a constant relationship to insurance in force. For all other
contracts, premiums are recognized when due.

F-13
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.8 OTHER ASSETS

Acquisition-related goodwill, which is included in other assets, is charged to
expense in equal amounts over 40 years. The carrying value of goodwill is
regularly reviewed by management for indicators of impairment in value. If facts
and circumstances suggest that goodwill is impaired, other than temporarily, the
Company assesses the fair value of the underlying assets and reduces goodwill
accordingly.

1.9 POLICY AND CONTRACT CLAIMS RESERVES

Substantially all of the Company's insurance and annuity liabilities relate to
long duration contracts. The contracts normally cannot be changed or canceled by
the Company during the contract period.

For interest-sensitive life insurance and investment contracts, reserves equal
the sum of the policy account balance and deferred revenue charges. Reserves for
other contracts are based on estimates of the cost of future policy benefits.
Reserves are determined using the net level premium method. Interest assumptions
used to compute reserves ranged from 2.5% to 13.5% at December 31, 1999.

1.10 REINSURANCE

The Company limits its exposure to loss on any single insured to $2.5 million by
ceding additional risks through reinsurance contracts with other insurers. The
Company diversifies its risk of reinsurance loss by using a number of reinsurers
that have strong claims-paying ability ratings. If the reinsurer could not meet
its obligations, the Company would reassume the liability. The likelihood of a
material reinsurance liability being reassumed by the Company is considered to
be remote.

A receivable is recorded for the portion of benefits paid and insurance
liabilities that have been reinsured. Reinsurance recoveries on ceded
reinsurance contracts were $28 million, $63 million, and $25 million, during
1999, 1998, and 1997, respectively. The cost of reinsurance is recognized over
the life of the reinsured policies using assumptions consistent with those used
to account for the underlying policies. Benefits paid and future policy benefits
related to ceded insurance contracts are recorded as reinsurance receivables.

F-14
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.11 PARTICIPATING POLICY CONTRACTS

Participating life insurance accounted for approximately 1% and 2% of life
insurance in force at December 31, 1999 and 1998, respectively.

The portion of earnings allocated to participating policyholders that cannot be
expected to inure to shareholders is excluded from net income and shareholder's
equity. Dividends to be paid on participating life insurance contracts are
determined annually based on estimates of the contracts' earnings. Policyholder
dividends were $4.6 million in 1999.

1.12 INCOME TAXES

The Company and its life insurance subsidiaries, together with certain other
life insurance subsidiaries of the Parent Company, are included in a life/non-
life consolidated tax return with the Parent Company and its noninsurance
subsidiaries. The Company participates in a tax sharing agreement with other
companies included in the consolidated tax return. Under this agreement, tax
payments are made to the Parent Company as if the companies filed separate tax
returns; and companies incurring operating and/or capital losses are reimbursed
for the use of these losses by the consolidated return group.

Deferred tax assets and liabilities are established for temporary differences
between the financial reporting basis and the tax basis of assets and
liabilities, at the enacted tax rates expected to be in effect when the
temporary differences reverse. The effect of a tax rate change is recognized in
income in the period of enactment. State income taxes are included in income tax
expense.

A valuation allowance for deferred tax assets is provided if it is more likely
than not that some portion of the deferred tax asset will not be realized. An
increase or decrease in a valuation allowance that results from a change in
circumstances that causes a change in judgment about the realizability of the
related deferred tax asset is included in income. Changes related to
fluctuations in fair value of available-for-sale securities are included in the
consolidated statements of comprehensive income and accumulated other
comprehensive income in shareholder's equity.

F-15
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.13 ACCOUNTING CHANGES

In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") 133, Accounting for Derivative
Instruments and Hedging Activities, which requires all derivative instruments to
be recognized at fair value in the balance sheet. Changes in the fair value of a
derivative instrument will be reported as earnings or other comprehensive
income, depending upon the intended use of the derivative instrument. The
Company will adopt SFAS 133 on January 1, 2001. The Company does not expect
adoption to have a material impact on the Company's results of operations and
financial position.

2. INVESTMENTS

2.1 INVESTMENT INCOME

Investment income by type of investment was as follows:

1999 1998 1997
-------------------------------------------
(In Thousands)

Investment income:
Fixed maturities $2,118,794 $2,101,730 $1,966,528
Equity securities 17,227 1,813 1,067
Mortgage loans on real estate 134,878 148,447 157,035
Investment real estate 20,553 23,139 22,157
Policy loans 69,684 66,573 62,939
Other long-term investments 7,539 3,837 3,135
Short-term investments 24,874 15,492 8,626
Investment income from affiliates 8,695 10,536 11,094
-------------------------------------------

Gross investment income 2,402,244 2,371,567 2,232,581
Investment expenses 54,048 54,634 33,958
-------------------------------------------
Net investment income $2,348,196 $2,316,933 $2,198,623
===========================================

The carrying value of investments that produced no investment income during 1999
was less than 0.2% of total invested assets. The ultimate disposition of these
investments is not expected to have a material effect on the Company's results
of operations and financial position.

F-16
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.2 NET REALIZED INVESTMENT GAINS (LOSSES)

Realized gains (losses) by type of investment were as follows:

1999 1998 1997
-------------------------------------------
(In Thousands)

Fixed maturities:
Gross gains $ 118,427 $ 20,109 $ 42,966
Gross losses (102,299) (62,657) (34,456)
-------------------------------------------
Total fixed maturities 16,128 (42,548) 8,510
Equity securities 793 645 1,971
Other investments (11,570) 8,118 19,384
-------------------------------------------
Net realized investment gains
(losses) 5,351 (33,785) 29,865
before tax
Income tax expense (benefit) 1,874 (11,826) 10,452
Net realized investment gains
(losses) $ 3,477 $(21,959) $ 19,413
after tax
===========================================

F-17
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES

All fixed maturity and equity securities are classified as available-for-sale
and reported at fair value (see Note 1.4). Amortized cost and fair value at
December 31, 1999 and 1998 were as follows:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
--------------------------------------------------
(In Thousands)
DECEMBER 31, 1999
Fixed maturity securities:
Corporate securities:
Investment-grade $19,455,518 $134,003 $(704,194) $18,885,326
Below investment-grade 1,368,494 11,863 (114,260) 1,266,098
Mortgage-backed securities* 6,195,003 45,022 (74,746) 6,165,279
U.S. government obligations 276,621 15,217 (2,376) 289,462
Foreign governments 245,782 5,774 (1,767) 249,789
State and political 154,034 499 (10,836) 143,697
subdivisions
Redeemable preferred stocks 29,715 43 - 29,758
-------------------------------------------------
Total fixed maturity $27,725,167 $212,421 $(908,179) $27,029,409
securities
==================================================
Equity securities $ 198,640 $ 39,381 $ (956) $ 237,065
==================================================
Investment in Parent Company $ 8,597 $ 44,486 $ - $ 53,083
==================================================

* Primarily include pass-through securities guaranteed by and mortgage
obligations ("CMOs") collateralized by the U.S. government and government
agencies.

F-18
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
-------------------------------------------------
(In Thousands)
DECEMBER 31, 1998
Fixed maturity securities:
Corporate securities:
Investment-grade $18,800,553 $1,129,504 $(26,353) $19,903,703
Below investment-grade 1,409,198 33,910 (45,789) 1,397,320
Mortgage-backed securities* 6,359,242 294,331 (870) 6,652,703
U.S. government obligations 417,822 69,321 (178) 486,965
Foreign governments 331,699 24,625 (2,437) 353,887
State and political 86,778 4,796 (187) 91,387
subdivisions
Redeemable preferred stocks 20,313 - (17) 20,296
-------------------------------------------------
Total fixed maturity $27,425,605 $1,556,487 $(75,831) $28,906,261
securities
=================================================
Equity securities $ 193,368 $ 19,426 $ (1,110) $ 211,684
=================================================
Investment in Parent Company $ 8,597 $ 45,973 $ - $ 54,570
=================================================

* Primarily include pass-through securities guaranteed by and mortgage
obligations ("CMOs") collateralized by the U.S. government and government
agencies.

F-19
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)

Net unrealized gains (losses) on securities included in accumulated
comprehensive income in shareholders' equity at December 31 were as follows:

1999 1998
-------------------------------
(In Thousands)
Gross unrealized gains $ 296,288 $1,621,883
Gross unrealized losses (909,135) (76,941)
DPAC and other fair value adjustments 200,353 (488,120)
Deferred federal income taxes 55,631 (377,718)
Net unrealized (losses) gains on securities $(356,863) $ 679,104
===============================

The contractual maturities of fixed maturity securities at December 31, 1999
were as follows:
1999 1998
--------------------------------------------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------------------------------------------------------
(In thousands) (In thousands)
Fixed maturity
securities, excluding
mortgage-backed
securities:
Due in one year or $ 810,124 $ 813,683 $ 531,496 $ 536,264
less
Due after one year
through five years 5,380,557 5,394,918 5,550,665 5,812,581

Due after five years
through ten years 8,350,207 8,080,065 9,229,980 9,747,761

Due after ten years 6,988,799 6,575,461 5,754,220 6,156,950
Mortgage-backed 6,195,480 6,165,282 6,359,244 6,652,705
securities
--------------------------------------------------------
Total fixed maturity $27,725,167 $27,029,409 $27,425,605 $28,906,261
securities
========================================================

Actual maturities may differ from contractual maturities, since borrowers may
have the right to call or prepay obligations. In addition, corporate
requirements and investment strategies may result in the sale of investments
before maturity. Proceeds from sales of fixed maturities were $12.3 billion,
$5.4 billion, and $14.8 billion during 1999, 1998, and 1997, respectively.

F-20
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE

Diversification of the geographic location and type of property collateralizing
mortgage loans reduces the concentration of credit risk. For new loans, the
Company requires loan-to-value ratios of 75% or less, based on management's
credit assessment of the borrower. The mortgage loan portfolio was distributed
as follows at December 31, 1999 and 1998:

OUTSTANDING PERCENT OF PERCENT
AMOUNT TOTAL NONPERFORMING
----------------------------------------------
(In Millions)

DECEMBER 31, 1999
Geographic distribution:
South Atlantic $ 470 24.6% 0.2%
Pacific 363 18.9 7.8
West South Central 185 9.6 0.0
East South Central 144 7.5 0.0
East North Central 256 13.3 0.0
Mid-Atlantic 323 16.8 0.9
Mountain 107 5.6 13.8
West North Central 43 2.2 0.0
New England 44 2.3 0.0
Allowance for losses (16) (0.8) 0.0
-------------------------------
Total $1,919 100.0% 2.4%
===============================

Property type:
Retail $ 628 32.6% 2.5%
Office 746 38.9 4.2
Industrial 302 15.7 0.0
Apartments 189 9.9 0.0
Hotel/motel 46 2.4 0.0
Other 24 1.3 0.2
Allowance for losses (16) (0.8) 0.0
-------------------------------
Total $1,919 100.0% 2.4%
===============================

F-21
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE (CONTINUED)

OUTSTANDING PERCENT OF PERCENT
AMOUNT TOTAL NONPERFORMING
----------------------------------------------
(In Millions)
DECEMBER 31, 1998
Geographic distribution:
South Atlantic $ 429 27.6% 0.2%
Pacific 320 20.6 10.4
Mid-Atlantic 326 20.9 4.1
East North Central 178 11.4 -
Mountain 95 6.1 -
West South Central 118 7.5 -
East South Central 46 3.0 -
West North Central 33 2.1 -
New England 25 1.6 -
Allowance for losses (13) (0.8) -
-------------------------------
Total $1,557 100.00% 3.1%
===============================

Property type:
Office $ 593 38.1% 7.0%
Retail 423 27.1 0.2
Industrial 292 18.8 -
Apartments 178 11.4 2.9
Hotel/motel 38 2.4 -
Other 46 3.0 -
Allowance for losses (13) (0.8) -
-------------------------------
Total $1,557 100% 3.1%
===============================

Impaired mortgage loans on real estate and related interest income is not
material.

F-22
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.5 INVESTMENT SUMMARY

Investments of the Company were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
-----------------------------------------------------------------------------------------
CARRYING CARRYING
COST FAIR VALUE AMOUNT COST FAIR VALUE AMOUNT
-----------------------------------------------------------------------------------------
(In Thousands) (In Thousands)
Fixed maturities:
Bonds:
<S> <C> <C> <C> <C> <C> <C>
United States
government and
government agencies $ 276,621 $ 289,462 $ 289,462 $ 417,822 $ 486,965 $ 486,965
and authorities
States, municipalities,
and political 154,034 143,697 143,697 86,778 91,387 91,387
subdivisions
Foreign governments 245,782 249,789 249,789 331,699 353,887 353,887
Public utilities 1,468,758 1,465,129 1,465,129 1,777,172 1,895,326 1,895,326
Mortgage-backed 6,195,003 6,165,279 6,165,279 6,359,242 6,652,703 6,652,703
securities
All other corporate 19,355,254 18,686,295 18,686,295 18,432,579 19,405,697 19,405,697
bonds**
Redeemable preferred 29,715 29,758 29,758 20,313 20,296 20,296
stocks
---------------------------------------------------------------------------------------------
Total fixed maturities 27,725,167 27,029,409 27,029,409 27,425,605 28,906,261 28,906,261
Equity securities:
Common stocks:
Banks, trust, and
insurance companies - - - - - -

Industrial,
miscellaneous, and 180,849 219,089 219,089 176,321 211,684 211,684
other

Nonredeemable preferred
stocks 17,791 17,976 17,976 17,047 - -
---------------------------------------------------------------------------------------------

Total equity securities 198,640 237,065 237,065 193,368 211,684 211,684
Mortgage loans on real 1,918,956 1,829,212 1,918,956 1,557,268 1,607,599 1,557,268
estate*
Investment real estate 125,563 XXXXXXX 125,563 119,520 xxxxxxx 119,520
Policy loans 1,234,729 1,205,056 1,234,729 1,170,686 1,252,409 1,170,686
Other long-term investments 129,155 XXXXXXX 129,155 86,194 xxxxxxx 86,194
Short-term investments 123,779 XXXXXXX 123,779 222,949 xxxxxxx 222,949
---------------------------------------------------------------------------------------------
Total investments $31,455,989 $ XXXXXXX $ 30,798,656 $ 30,775,590 $ xxxxxxx $ 32,274,562
============================================================================================
</TABLE>

* Amount is net of allowance for losses of $16 million and $13 million at
December 31, 1999 and 1998, respectively.

** Includes derivative financial instruments with negative fair values of $4.7
million and $1.0 million and positive fair values of $2.3 million and $24.3
million at December 31, 1999 and 1998, respectively.

F-23
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

3. DEFERRED POLICY ACQUISITIONS COSTS

The balance of DPAC at December 31 and the components of the change reported in
operating costs and expenses for the years then ended were as follows:

1999 1998 1997
--------------------------------------
(In Thousands)
Balance at January 1 $1,087,718 $ 835,031 $1,042,783
Capitalization 307,854 244,196 219,339
Amortization (101,066) (125,062) (115,467)
Effect of realized and unrealized
gains (losses) on securities 662,147 133,553 (311,624)
--------------------------------------
Balance at December 31 $1,956,653 $1,087,718 $ 835,031
=======================================

4. OTHER ASSETS

Other assets consisted of the following:

DECEMBER 31
1999 1998
------------------------------
(In Thousands)

Goodwill $ 52,317 $ 54,754
American General Corporation CBO (Collateralized
Bond Obligation) 98-1 Ltd. - 9,740

Cost of insurance purchased ("CIP") 19,014 22,113
Computer software 117,571 78,775
Other 61,397 40,936
------------------------------
Total other assets $250,299 $206,318
==============================

F-24
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

4. OTHER ASSETS (CONTINUED)

A rollforward of CIP for the year ended December 31, 1999, was as follows:

1999
------------

(In
Thousands)

Balance at January 1 $ 22,113
Acquisition of business -
Accretion of interest at 5.02% 926
Amortization (4,025)
---------
Balance at December 31 $ 19,014
=========

5. FEDERAL INCOME TAXES

5.1 TAX LIABILITIES

Income tax liabilities were as follows:

DECEMBER 31
1999 1998
-----------------------------
(In Thousands)

Current tax (receivable) payable $ 25,074 $ (21,035)
Deferred tax liabilities, applicable to:
Net income 405,889 320,632
Net unrealized investment gains (55,631) 377,718
-----------------------------
Total deferred tax liabilities 350,258 698,350
-----------------------------
Total current and deferred tax liabilities $375,332 $677,315
=============================

F-25
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.1 TAX LIABILITIES (CONTINUED)

Components of deferred tax liabilities and assets at December 31 were as
follows:

1999 1998
--------------------------
(In Thousands)

Deferred tax liabilities applicable to:
Deferred policy acquisition costs $ 601,678 $ 307,025
Basis differential of investments - 590,661
Other 171,763 150,189
---------------------------

Total deferred tax liabilities 773,441 1,047,875

Deferred tax assets applicable to:
Policy reserves (215,465) (212,459)
Basis differential of investments (158,421) -
Other (141,236) (137,066)
--------------------------

Total deferred tax assets before valuation
allowance (515,122) (349,525)
Valuation allowance 91,939 -
--------------------------

Total deferred tax assets, net of valuation
allowance (423,183) (349,525)
--------------------------
Net deferred tax liabilities $ 350,258 $ 698,350
==========================

A portion of life insurance income earned prior to 1984 is not taxable unless it
exceeds certain statutory limitations, is distributed as dividends, or unless
the income tax deferred status of such amount is modified by future tax
legislation. Such income, accumulated in policyholders' surplus accounts,
totaled $88.2 million at December 31, 1999. At current corporate rates, the
maximum amount of tax on such income is approximately $30.9 million. Deferred
income taxes on these accumulations are not required because no distributions
are expected.

F-26
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.1 TAX LIABILITIES (CONTINUED)

Components of income tax expense for the years were as follows:

1999 1998 1997
-------------------------------------
(In Thousands)

Current expense $176,725 $134,344 $185,460
Deferred expense (benefit):
Deferred policy acquisition cost 65,377 33,230 27,644
Policy reserves (22,654) 2,189 (27,496)
Basis differential of investments (4,729) 11,969 3,769
Litigation settlement 22,641 (33,983) -
Year 2000 - (9,653) -
Internally developed software 18,654 - -
Other, net 7,182 15,623 9,347
-------------------------------------
Total deferred expense 86,471 19,375 13,264
-------------------------------------
Income tax expense $263,196 $153,719 $198,724
=====================================

5.2 TAX EXPENSE

A reconciliation between the income tax expense computed by applying the federal
income tax rate (35%) to income before taxes and the income tax expense reported
in the financial statement is presented below.

1999 1998 1997
-------------------------------------
(In Thousands)
Income tax at statutory percentage
of GAAP pretax income $266,386 $164,638 $200,649
Tax-exempt investment income (16,423) (11,278) (9,493)
Goodwill 853 712 723
Other 12,380 (353) 6,845
-------------------------------------
Income tax expense $263,196 $153,719 $198,724
=====================================

F-27
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.3 TAXES PAID

Income taxes paid amounted to approximately $126 million, $159 million, and $168
million in 1999, 1998, and 1997, respectively.

5.4 TAX RETURN EXAMINATIONS

The Parent Company and the majority of its subsidiaries file a consolidated
federal income tax return. The Internal Revenue Service ("IRS") has completed
examinations of the Parent Company's tax returns through 1992. The IRS is
currently examining tax returns for 1993 through 1996. In addition, the tax
returns of companies recently acquired are also being examined. Although the
final outcome of any issues raised in examination is uncertain, the Parent
Company believes that the ultimate liability, including interest, will not
materially exceed amounts recorded in the consolidated financial statements.

6. TRANSACTIONS WITH AFFILIATES

Affiliated notes and accounts receivable were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------------------------------------------------
PAR VALUE BOOK VALUE PAR VALUE BOOK VALUE
------------------------------------------------------------
<S> <C> <C> <C> <C>

(In Thousands)

American General
Corporation, 9 3/8%, $ 4,725 $ 3,410 $ 4,725 $ 3,345
due 2008
American General
Corporation, Promissory
notes, due 2004 12,232 12,232 14,679 14,679
American General
Corporation, Restricted
Subordinated Note,
13 1/2%, due 2002 27,378 27,378 29,435 29,435
------------------------------------------------------------
Total notes receivable
from affiliates 44,335 43,020 48,839 47,459
Accounts receivable from
affiliates - 32,175 - 113,637
------------------------------------------------------------
Indebtedness from $44,335 $75,195 $48,839 $161,096
affiliates
============================================================
</TABLE>

F-28
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

6. TRANSACTIONS WITH AFFILIATES (CONTINUED)

Various American General companies provide services to the Company, principally
mortgage servicing and investment management services, provided by American
General Investment Management Corporation on a fee basis. The Company paid
approximately $55,318,000, $46,921,000, and $33,916,000 for such services in
1999, 1998, and 1997, respectively. Accounts payable for such services at
December 31, 1999 and 1998 were not material. The Company rents facilities and
provides services on an allocated cost basis to various American General
companies. Beginning in 1998, amounts received by the Company from affiliates
include amounts received by its wholly-owned, non-life insurance subsidiary,
American General Life Companies ("AGLC"). AGLC provides shared services,
including technology, to a number of American General Corporation's life
insurance subsidiaries. The Company received approximately $138,885,000,
$66,550,000, and $6,455,000 for such services and rent in 1999, 1998, and 1997,
respectively. Accounts receivable for rent and services at December 31, 1999 and
1998 were not material.

The Company has 8,500 shares of $100 par value cumulative preferred stock
authorized and outstanding with an $80 dividend rate, redeemable at $1,000 per
share after December 31, 2000. The holder of this stock, The Franklin Life
Insurance Company ("Franklin"), an affiliated company, is entitled to one vote
per share, voting together with the holders of common stock.

7. STOCK-BASED COMPENSATION

Certain officers of the Company participate in American General Corporation's
stock and incentive plans which provide for the award of stock options,
restricted stock awards, performance awards, and incentive awards to key
employees. Stock options constitute the majority of such awards. American
General Corporation follows the intrinsic value method of accounting for stock
options as prescribed by Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees. Therefore, the expense related to stock options
is measured as the excess of the market price of the stock at the measurement
date over the exercise price. The measurement date is the first date on which
both the number of shares that the employee is entitled to receive and the
exercise price are known. Under the stock option plans, no expense is
recognized, since the market price equals the exercise price at the measurement
date.

F-29
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

7. STOCK-BASED COMPENSATION (CONTINUED)

Under an alternative accounting method of accounting under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation,
compensation expense arising from stock options would be measured at the
estimated fair value of the options at the date of grant. Had compensation
expense for the stock options been determined using this method, net income
would have been as follows:

<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Net income as reported $497,906 $316,674 $374,557
Net income pro forma $495,331 $315,078 $373,328
</TABLE>

The average fair values of the options granted during 1999, 1998, and 1997 were
$17.06, $15.38, and $10.33, respectively. The fair value of each option was
estimated at the date of grant using a Black-Scholes option pricing model. The
weighted average assumptions used to estimate the fair value of the stock
options were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
<S> <C> <C> <C>
Dividend yield 2.5% 2.5% 3.0%
Expected volatility 24.4% 23.0% 22.0%
Risk-free interest rate 4.95% 5.76% 6.4%
Expected life 6 years 6 years 6 years
</TABLE>

8. BENEFIT PLANS

8.1 PENSION PLANS

The Company has non-contributory defined benefit pension plans covering most
employees. Pension benefits are based on the participant's compensation and
length of credited service.

Equity and fixed maturity securities were 71% and 26%, respectively, of the
plans' assets at the plans' most recent balance sheet dates. Additionally, 1% of
plan assets were invested in general investment accounts of the Parent Company's
subsidiaries through deposit administration insurance contracts.

F-30
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.1 PENSION PLANS (CONTINUED)

The benefit plans have purchased annuity contracts from American General
Corporation's subsidiaries to provide benefits for certain retirees. These
contracts are expected to provide future annual benefits to certain retirees of
American General Corporation and its subsidiaries of approximately $59 million.

The components of pension expense and underlying assumptions were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
(In Thousands)

<S> <C> <C> <C>
Service cost $ 3,575 $ 3,693 $ 1,891
Interest cost 7,440 6,289 2,929
Expected return on plan assets (12,670) (9,322) (5,469)
Amortization (820) (557) 195
Pension (income) expense $ (2,475) $ 103 $ (454)
===============================================

Discount rate on benefit obligation 7.75% 7.00% 7.25%
Rate of increase in compensation levels 4.25% 4.25% 4.00%
Expected long-term rate of return on
plan assets 10.35% 10.25% 10.00%

</TABLE>

The Company's funding policy is to contribute annually no more than the maximum
deductible for federal income tax purposes. The funded status of the plans and
the prepaid pension expense included in other assets at December 31 were as
follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(In Thousands)

<S> <C> <C>
Projected benefit obligation (PBO) $100,600 $ 96,554
Plan assets at fair value 145,863 120,898
-------------------------------
Plan assets at fair value in excess of PBO 45,263 24,344
Other unrecognized items, net (26,076) (10,176)
-------------------------------
Prepaid pension expense $ 19,187 $ 14,168
===============================
</TABLE>

F-31
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.1 PENSION PLANS (CONTINUED)

The change in PBO was as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(In Thousands)

<S> <C> <C>
PBO at January 1 $ 96,554 $43,393
Service and interest costs 11,015 9,982
Benefits paid (4,919) (1,954)
Actuarial loss (12,036) 17,089
Amendments, transfers, and acquisitions 9,986 28,044
-------------------------------
PBO at December 31 $100,600 $96,554
===============================
</TABLE>

The change in the fair value of plan assets was as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(In Thousands)

<S> <C> <C>
Fair value of plan assets at January 1 $120,898 $ 80,102
Actual return on plan assets 17,934 12,269
Benefits paid (4,919) (1,954)
Acquisitions and other 11,950 30,481
-------------------------------
Fair value of plan assets at December 31 $145,863 $120,898
===============================
</TABLE>

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company has life, medical, supplemental major medical, and dental plans for
certain retired employees and agents. Most plans are contributory, with retiree
contributions adjusted annually to limit employer contributions to predetermined
amounts. The Company has reserved the right to change or eliminate these
benefits at any time.

F-32
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.2 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)

The life plans are insured through December 31, 1999. A portion of the retiree
medical and dental plans is funded through a voluntary employees' beneficiary
association ("VEBA"); the remainder is unfunded and self-insured. All of the
retiree medical and dental plans' assets held in the VEBA were invested in
readily marketable securities at its most recent balance sheet date.

Postretirement benefit expense in 1999, 1998, and 1997 was $254,000, $60,000,
and $601,000, respectively. The accrued liability for postretirement benefits
was $18.8 million and $19.2 million at December 31, 1999 and 1998, respectively.
These liabilities were discounted at the same rates used for the pension plans.

9. DERIVATIVE FINANCIAL INSTRUMENTS

9.1 USE OF DERIVATIVE FINANCIAL INSTRUMENTS

The Company's use of derivative financial instruments is generally limited to
reducing its exposure to interest rate and currency exchange risk by utilizing
interest rate and currency swap agreements, and options to enter into interest
rate swap agreements (called swaptions). The Company accounts for these
derivative and financial instruments as hedges. Hedge accounting requires a high
correlation between changes in fair values or cash flows of the derivative
financial instrument and the specific item being hedged, both at inception and
throughout the life of the hedge.

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS

Interest rate swap agreements are used to convert specific investment securities
from a floating to a fixed rate basis, or vice versa, and to hedge against the
risk of declining interest rates on anticipated security purchases. Interest
rate swap agreements are also used to convert a portion of floating -rate
borrowings to a fixed rate and to hedge against the risk of rising interest
rates on anticipated debt issuances.

Currency swap agreements are used to convert cash flows from specific investment
securities denominated in foreign currencies into U.S. dollars at specific
exchange rates and to hedge against currency rate fluctuation on anticipated
security purchases.

F-33
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS (CONTINUED)

The difference between amounts paid and received on swap agreements is recorded
on an accrual basis as an adjustment to net investment income or interest
expense, as appropriate, over the periods covered by the agreements. The related
amount payable to or receivable from counterparties is included in other
liabilities or assets.

The fair values of swap agreements are recognized in the consolidated balance
sheets if the hedge investments are carried at fair value or if they hedge
anticipated purchases of such investments. In this event, changes in the fair
value of a swap agreement are reported in net unrealized gains on securities
included in other accumulated comprehensive income in shareholders' equity,
consistent with the treatment of the related investment security. The fair
values of swap agreements hedging debt are not recognized in the consolidated
balance sheet.

For swap agreements hedging anticipated investment purchases or debt issuances,
the net swap settlement amount or unrealized gain or loss is deferred and
included in the measurement of the anticipated transaction when it occurs.

Swap agreements generally have terms of two to ten years. Any gain or loss from
early termination of a swap agreement is deferred and amortized into income over
the remaining term of the related investment or debt. If the underlying
investment or debt is extinguished or sold, any related gain or loss on swap
agreements is recognized in income.

F-34
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS (CONTINUED)

Interest rate and currency swap agreements related to investment securities at
December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(Dollars in Millions)
<S> <C> <C>
Interest rate swap agreements to receive fixed rate:
Notional amount $ 160 $ 369
Average receive rate 6.73% 6.06%
Average pay rate 6.55% 5.48%
Currency swap agreements (receive U.S.
dollars/pay Canadian dollars):
Notional amount (in U.S. dollars) $ 124 $ 124
Average exchange rate 1.50 1.50
Currency swap agreements (receive U.S. dollars/pay
Australian dollars):
Notional amount (in U.S. dollars) $ 23 $ -
Average exchange rate 0.65 -
</TABLE>

9.3 CALL SWAPTIONS

Options to enter into interest rate swap agreements are used to limit the
Company's exposure to reduced spreads between investment yields and interest
crediting rates should interest rates decline significantly over prolonged
periods. During such periods, the spread between investment yields and interest
crediting rates may be reduced as a result of certain limitations on the
Company's ability to manage interest crediting rates. Call swaptions allow the
Company to enter into interest rate swap agreements to receive fixed rates and
pay lower floating rates, effectively increasing the spread between investment
yields and interest crediting rates.

F-35
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.3 CALL SWAPTIONS (CONTINUED)

Premiums paid to purchase call swaptions are included in investments and are
amortized to net investment income over the exercise period of the swaptions. If
a call swaption is terminated, any gain is deferred and amortized to insurance
and annuity benefits over the expected life of the insurance and annuity
contracts and any unamortized premium is charged to income. If a call swaption
ceases to be an effective hedge, any related gain or loss is recognized in
income.

Swaptions at December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(Dollars in Billions)
<S> <C> <C>
Call swaptions:
Notional amount $3.78 $1.76
Average strike rate 4.52% 3.97%

Put swaptions:
Notional amount $2.14 $1.05
Average strike rate 8.60% 8.33%
</TABLE>

9.4 CREDIT AND MARKET RISK

Derivative financial instruments expose the Company to credit risk in the event
of non-performance by counterparties. The Company limits this exposure by
entering into agreements with counterparties having high credit ratings and by
regularly monitoring the ratings. The Company does not expect any counterparty
to fail to meet its obligation; however, non-performance would not have a
material impact on the Company's consolidated results of operations or financial
position.

The Company's exposure to market risk is mitigated by the offsetting effects of
changes in the value of the agreements and the related items being hedged.

F-36
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amounts and fair values for certain of the Company's financial
instruments at December 31 are presented below. Care should be exercised in
drawing conclusions based on fair value, since (1) the fair values presented do
not include the value associated with all the Company's assets and liabilities,
and (2) the reporting of investments at fair value without a corresponding
evaluation of related policyholders liabilities can be misinterpreted.

The following methods and assumptions were used to estimate the fair value of
financial instruments:

FIXED MATURITY AND EQUITY SECURITIES

Fair values of fixed maturity and equity securities were based on quoted
market prices, where available. For investments not actively traded, fair
values were estimated using values obtained from independent pricing
services or, in the case of some private placements, by discounting
expected future cash flows using a current market rate applicable to yield,
credit quality, and average life of investments.

MORTGAGE LOANS ON REAL ESTATE

Fair value of mortgage loans was estimated primarily using discounted cash
flows, based on contractual maturities and risk-adjusted discount rates.

POLICY LOANS

Fair value of policy loans was estimated using discounted cash flows and
actuarially determined assumptions, incorporating market rates.

INVESTMENT IN PARENT COMPANY

The fair value of the investment in Parent Company is based on quoted
market prices of American General Corporation common stock.

INSURANCE INVESTMENT CONTRACTS

Fair value of insurance investment contracts was estimated using cash flows
discounted at market interest rates.

F-37
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

INDEBTEDNESS FROM AFFILIATES

Indebtedness from affiliates is composed of accounts receivable and notes
receivable from affiliates. Due to the short-term nature of accounts
receivable, fair value is assumed to equal carrying value. Fair value of
notes receivable was estimated using discounted cash flows based on
contractual maturities and discount rates that were based on U.S. Treasury
rates for similar maturity ranges.

11. DIVIDENDS PAID

American General Life Insurance Company paid $187 million, $244 million, and
$401 million, in dividends on common stock to AGC Life Insurance Company in
1999, 1998, and 1997, respectively. The Company also paid $680 thousand per year
in dividends on preferred stock to an affiliate, The Franklin Life Insurance
Company, in 1999, 1998, and 1997.

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES

The Company and its insurance subsidiaries are restricted by state insurance
laws as to the amounts they may pay as dividends without prior approval from
their respective state insurance departments. At December 31, 1999,
approximately $2.6 billion of consolidated shareholder's equity represents net
assets of the Company, which cannot be transferred, in the form of dividends,
loans, or advances to the Parent Company. Approximately $1.9 billion of
consolidated shareholders' equity is similarly restricted as to transfer from
its subsidiaries to the Company.

Generally, the net assets of the Company's subsidiaries available for transfer
to the Parent are limited to the amounts that the subsidiaries' net assets, as
determined in accordance with statutory accounting practices, exceed minimum
statutory capital requirements. However, payments of such amounts as dividends
may be subject to approval by regulatory authorities and are generally limited
to the greater of 10% of policyholders' surplus or the previous year's statutory
net gain from operations.

The Company has various leases, substantially all of which are for office space
and facilities. Rentals under financing leases, contingent rentals, and future
minimum rental commitments and rental expense under operating leases are not
material.

F-38
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES (CONTINUED)

In recent years, various life insurance companies have been named as defendants
in class action lawsuits relating to life insurance pricing and sales practices,
and a number of these lawsuits have resulted in substantial settlements. On
December 16, 1998, American General Corporation announced that certain of its
life insurance subsidiaries had entered into agreements to resolve all pending
market conduct class action lawsuits.

In conjunction with the proposed settlements, the Company recorded a charge of
$97.1 million ($63.1 million after-tax) in the fourth quarter of 1998. The
charge covers the cost of policyholder benefits and other anticipated expenses
resulting from the proposed settlements, as well as other administrative and
legal costs.

On December 31, 1998, the Company entered into an agreement with the Parent
Company whereby the Company assigned, and the Parent Company assumed, $80.1
million of the liabilities of the Company related to the proposed resolution.
The liabilities of American General Life Insurance Company of New York, which
totaled $17.0 million, were not assumed by the Parent Company. As consideration
for the assumption of the liabilities, the Company paid the Parent Company an
amount equal to the liabilities recorded with respect to the proposed resolution
of the litigation. The litigation liabilities were reduced by payments of $2.7
million, and the remaining balance of $94.4 million was included in other
liabilities on the Company's balance sheet at December 31, 1998. All settlements
were finalized in 1999.

The Company is party to various other lawsuits and proceedings arising in the
ordinary course of business. Many of these lawsuits and proceedings, including
those filed by individuals who have excluded themselves from the market conduct
settlement, and lawsuits relating to policies not covered by the market conduct
settlements, arise in jurisdictions, such as Alabama and Mississippi, that
permit damage awards disproportionate to the actual economic damages incurred.
Based upon information presently available, the Company believes that the total
amounts that will ultimately be paid, if any, arising from these lawsuits and
proceedings will not have a material adverse effect on the Company's
consolidated results of operations and financial position. However, it should be
noted that the frequency of large damage awards, including large punitive damage
awards, that bear little or no relation to actual economic damages incurred by
plaintiffs in jurisdictions like Alabama and Mississippi continues to create the
potential for an unpredictable judgment in any given suit.

F-39
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES (CONTINUED)

The increase in the number of insurance companies that are under regulatory
supervision has resulted, and is expected to continue to result, in increased
assessments by state guaranty funds to cover losses to policyholders of
insolvent or rehabilitated insurance companies. Those mandatory assessments may
be partially recovered through a reduction in future premium taxes in certain
states. At December 31, 1999 and 1998, the Company has accrued $8.6 million and
$6.0 million, respectively, for guaranty fund assessments, net of $3.4 million
and $3.7 million, respectively, of premium tax deductions. The Company has
recorded receivables of $4.4 million and $6.2 million at December 31, 1999 and
1998, respectively, for expected recoveries against the payment of future
premium taxes. Expenses incurred for guaranty fund assessments were $2.1
million, $3.6 million, and $2.1 million in 1999, 1998, and 1997, respectively.

F-40
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

13. REINSURANCE

Reinsurance transactions for the years ended December 31, 1999, 1998, and 1997
were as follows:

<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER ASSUMED TO
AMOUNT COMPANIES COMPANIES NET AMOUNT NET
---------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1999
Life insurance in force $50,060,334 $17,056,734 $524,062 $33,527,662 1.56%
==============================================================
Premiums:
Life insurance and annuities $ 101,900 $ 49,530 $ 252 $ 52,622 0.48%
Accident and health insurance 977 84 - 893 0.00%
--------------------------------------------------------------
Total premiums $ 102,877 $ 49,614 $ 252 $ 53,515 0.47%
===============================================================

DECEMBER 31, 1998
Life insurance in force $46,057,031 $13,288,183 $629,791 $33,398,639 1.89%
=============================================================
Premiums:
Life insurance and annuities $ 90,298 $ 42,235 $ 117 $ 48,180 0.24%
Accident and health insurance 1,134 87 - 1,047 0.00%
------------------------------------------------------------
Total premiums $ 91,432 $ 42,322 $ 117 $ 49,227 0.24%
============================================================
DECEMBER 31, 1997
Life insurance in force $45,963,710 $10,926,255 $ 4,997 $35,042,452 0.01%
============================================================
Premiums:
Life insurance and annuities $ 100,357 $ 37,294 $ 75 $ 63,138 0.12%
Accident and health insurance 1,208 172 - 1,036 0.00%
------------------------------------------------------------
Total premiums $ 101,565 $ 37,466 $ 75 $ 64,174 0.12%
============================================================
</TABLE>

Reinsurance recoverable on paid losses was approximately $8.0 million, $7.7
million, and $2.3 million at December 31, 1999, 1998, and 1997, respectively.
Reinsurance recoverable on unpaid losses was approximately $10.5 million, $2.5
million, and $3.2 million at December 31, 1999, 1998, and 1997, respectively.

F-41
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

14. YEAR 2000 CONTINGENCY (UNAUDITED)

Currently, all of our major technology systems, programs, and applications,
including those which rely on third parties, are operating smoothly following
our transition into 2000. We have experienced no interruptions to normal
business operations, including the processing of customer account data and
transactions. We will continue to monitor our technology systems, including
critical third-party dependencies, as necessary to maintain our Year 2000
readiness. We do not expect any future disruptions, if they occur, to have a
material effect on the Company's results of operations, liquidity, or financial
condition.

15. DIVISION OPERATIONS

15.1 NATURE OF OPERATIONS

The Company manages its business operation through two divisions, which are
based on products and services offered.

RETIREMENT SERVICES

The Retirement Services Division provides tax-deferred retirement annuities and
employer-sponsored retirement plans to employees of educational, health care,
public sector, and other not-for-profit organizations marketed nationwide
through exclusive sales representatives.

LIFE INSURANCE

The Life Insurance division provides traditional, interest-sensitive, and
variable life insurance and annuities to a broad spectrum of customers through
multiple distribution channels focused on specific market segments.

F-42
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

15. DIVISION OPERATIONS

15.2 DIVISION RESULTS

Results of each division exclude goodwill amortization, net realized investment
gains, and non-recurring items.

Division earnings information was as follows:

<TABLE>
<CAPTION>
REVENUES INCOME BEFORE TAXES EARNINGS
----------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
----------------------------------------------------------------------------------------

In Millions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retirement Services $2,088 $1,987 $1,859 $ 567 $ 469 $ 398 $ 374 $ 315 $ 261
Life Insurance 883 870 822 191 162 147 123 107 97
---------------------------------------------------------------------------------------
Total divisions 2,971 2,857 2,681 758 631 545 497 422 358
Goodwill
amortization - - - (2) (2) (2) (2) (2) (2)
RG (L) 5 (34) 30 5 (34) 30 3 (22) 19
Nonrecurring items - - - - (125)(a) - - (81)(a) -
----------------------------------------------------------------------------------------
Total consolidated $2,976 $2,823 $2,711 $ 761 $ 470 $ 573 $ 498 $ 317 $ 375
=======================================================================================
</TABLE>

(a) Includes $97 million pretax ($63 million after-tax) in litigation
settlements and $28 million pretax ($18 million after-tax) in Year 2000
costs.

Division balance sheet information was as follows:

<TABLE>
<CAPTION>
ASSETS LIABILITIES
--------------------------------------------------------
December 31
--------------------------------------------------------
In millions 1999 1998 1999 1998
--------------------------------------------------------

<S> <C> <C> <C> <C>
Retirement Services $47,323 $41,347 $45,359 $38,841
Life Insurance 9,837 8,894 8,955 7,831
--------------------------------------------------------
Total consolidated $57,160 $50,241 $54,314 $46,672
========================================================
</TABLE>

F-43

<PAGE>

INDEX OF WORDS AND PHRASES

This index should help you to locate more information about some of the
terms and phrases used in this prospectus.

<TABLE>
<CAPTION>
PAGE TO
SEE IN THIS
DEFINED TERM PROSPECTUS
-------------------------------------------------------------------------
<S> <C>
accumulation value..................................... 6
AGLC................................................... 57
AGL.................................................... 34
amount at risk......................................... 8
automatic rebalancing.................................. 6
base coverage.......................................... 15
basis.................................................. 36
beneficiary............................................ 41
cash surrender value................................... 23
cash value accumulation test........................... 15
close of business...................................... 43
Code................................................... 35
cost of insurance rates................................ 8, 43
daily charge........................................... 8
date of issue.......................................... 44
death benefit.......................................... 15
declared fixed interest account option................. 1
dollar cost averaging.................................. 6
full surrender......................................... 23
Fund, Funds............................................ 2
grace period........................................... 17
guarantee period, guarantee period benefit............. 18
guideline premium test................................. 15
insured person......................................... 4, 15
investment option...................................... 1
lapse.................................................. 17
loan, loan interest.................................... 24
maturity, maturity date................................ 25
modified endowment contract............................ 27, 35
monthly deduction day.................................. 44
monthly guarantee premium.............................. 17
monthly insurance charge............................... 8
Mutual Fund............................................ 2
option 1, 2............................................ 15
</TABLE>

59
<PAGE>

<TABLE>
<CAPTION>
PAGE TO
SEE IN THIS
DEFINED TERM PROSPECTUS
-------------------------------------------------------------------------
<S> <C>
partial surrender...................................... 23
payment option......................................... 25
planned periodic premium............................... 17
Policy, Policies....................................... 1
Policy loans........................................... 24
Policy month, year..................................... 44
premium classes........................................ 26
premium payments....................................... 5
reinstate, reinstatement............................... 17
SEC.................................................... 2
separate account....................................... 1, 34
Separate Account VL-R.................................. 34
seven-pay test......................................... 35
specified amount....................................... 15
Springfield Service Center............................. 4
supplemental coverage.................................. 15
surrender, full surrender.............................. 23
telephone transactions................................. 28
transfers.............................................. 19
valuation date, period................................. 43
variable investment option............................. 1
</TABLE>

We have filed a registration statement relating to Separate Account VL-R
and the Policy with the SEC. The registration statement, which is required by
the Securities Act of 1933, includes additional information that is not required
in this prospectus. If you would like the additional information, you may
obtain it from the SEC's Website at http://www.sec.gov or main office in
Washington, D.C. You will have to pay a fee for the material.

You should rely only on the information contained in this prospectus or
sales materials we have approved. We have not authorized anyone to provide you
with information that is different. The policies are not available in all
states. This prospectus is not an offer in any state to any person if the offer
would be unlawful.

60
<PAGE>

PART II

(OTHER INFORMATION)

UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.

RULE 484 UNDERTAKING

American General Life Insurance Company's Bylaws provide in Article VII,
Section 1 for indemnification of directors, officers and employees of the
Company.

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT COMPANY ACT OF
1940

American General Life Insurance Company hereby represents that the fees and
charges deducted under the Policy, in the aggregate, are reasonable in relation
to the services rendered, the expenses expected to be incurred, and risks
assumed by American General Life Insurance Company.

II-1
<PAGE>

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following papers and documents:

The facing sheet.
Cross-Reference Table.
Prospectus, consisting of 60 pages of text, plus 46 financial pages of
American General Life Insurance Company.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written Consents of the following persons:
Independent Auditors

The following exhibits:

1. Exhibits required by Article IX, paragraph A of Form N-8B-2:

(1)(a) Resolutions of Board of Directors of American General Life
Insurance Company authorizing the establishment of Separate
Account VL-R. (1)

(1)(b) Resolutions of Board of Directors of American General Life
Insurance Company authorizing the establishment of variable
life insurance standards of suitability and conduct. (1)

(2) Not applicable.

(3)(a) Distribution Agreement between American General Life Insurance
Company and American General Distributors, Inc. effective
November 1, 2000. (17)

(3)(b) Form of Selling Group Agreement effective November 1, 2000.
(17)

(3)(c) Schedule of Commissions (incorporated by reference from the
text included under the heading "Distribution of the Policies"
in the prospectus that is filed as part of this amended
Registration Statement).

(4) Not applicable.

(5) Specimen form of "Platinum Investor III" Variable Universal
Life Insurance Policy (Policy Form No. 00600). (Filed herewith)

II-2
<PAGE>

(6)(a) Amended and Restated Articles of Incorporation of
American General Life Insurance Company, effective
December 31, 1991. (2)

(6)(b) Bylaws of American General Life Insurance Company,
adopted January 22, 1992. (3)

(6)(c) Amendment to the Amended and Restated Articles of
Incorporation of American General Life Insurance Company,
effective July 13, 1995. (5)

(7) Not applicable.

(8)(a)(i) Form of Participation Agreement by and Among AIM Variable
Insurance Funds, Inc., A I M Distributors, Inc., American
General Life Insurance Company, on Behalf of Itself and
its Separate Accounts, and American General Securities
Incorporated. (6)

(8)(a)(ii) Form of Amendment Four to Participation Agreement by and
among AIM Variable Insurance Funds, Inc., A I M
Distributors, Inc., American General Life Insurance
Company, on Behalf of Itself and its Separate Accounts,
and American General Securities Incorporated. (17)

(8)(b)(i) Form of Participation Agreement by and between The
Variable Annuity Life Insurance Company, American General
Series Portfolio Company, American General Securities
Incorporated and American General Life Insurance Company.
(10)

(8)(b)(ii) Amendment One to Participation Agreement by and between
The Variable Annuity Life Insurance Company, American
General Series Portfolio Company, American General
Securities Incorporated and American General Life
Insurance Company dated as of July 21, 1998. (8)

(8)(b)(iii) Form of Amendment Two to Participation Agreement by and
between The Variable Annuity Life Insurance Company,
American General Series Portfolio Company, American
General Securities Incorporated and American General Life
Insurance Company. (19)

(8)(b)(iv) Form of Amendment Three to Participation Agreement by and
between The Variable Annuity Life Insurance Company,
American General Series Portfolio Company, American
General Securities Incorporated and American General Life
Insurance Company. (17)

II-3
<PAGE>

(8)(c)(i) Form of Participation Agreement Between American General
Life Insurance Company, Dreyfus Variable Investment Fund,
The Dreyfus Socially Responsible Growth Fund, Inc. and
Dreyfus Life and Annuity Index Fund, Inc. (6)

(8)(c)(ii) Amendment One to Participation Agreement by and among
American General Life Insurance Company, Dreyfus Variable
Investment Fund, The Dreyfus Socially Responsible Growth
Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc.
dated December 1, 1998. (8)

(8)(c)(iii) Form of Amendment Two to Participation Agreement by and
among American General Life Insurance Company, Dreyfus
Variable Investment Fund, The Dreyfus Socially
Responsible Growth Fund, Inc. and Dreyfus Life and
Annuity Index Fund, Inc. (16)

(8)(d)(i) Form of Participation Agreement Among MFS Variable
Insurance Trust, American General Life Insurance Company
and Massachusetts Financial Services Company. (6)

(8)(d)(ii) Form of Amendment Five to Participation Agreement by and
among MFS Variable Insurance Trust, American General Life
Insurance Company and Massachusetts Financial Services
Company. (19)

(8)(e)(i) Participation Agreement by and among Morgan Stanley
Universal Funds, Inc., Morgan Stanley Asset Management
Inc., Miller Anderson & Sherrerd LLP., Van Kampen
American Capital Distributors, Inc., American General
Life Insurance Company and American General Securities
Incorporated (9)

(8)(e)(ii) Amendment Number 1 to Participation Agreement by and
among Morgan Stanley Universal Funds, Inc., Morgan
Stanley Asset Management Inc., Miller Anderson & Sherrerd
LLP, Van Kampen American Capital Distributors, Inc.,
American General Life Insurance Company and American
General Securities Incorporated. (11)

(8)(e)(iii) Form of Amendment Seven to Participation Agreement among
Morgan Stanley Universal Funds, Inc., Van Kampen American
Capital Distributors, Inc., Morgan Stanley Asset
Management Inc., Miller Anderson & Sherrerd LLP, American
General Life Insurance Company and American General
Securities Incorporated. (17)

(8)(f) Form of Participation Agreement Among Putnam Variable
Trust, Putnam Mutual Funds Corp., and American General
Life Insurance Company. (6)

II-4
<PAGE>

(8)(g)(i) Form of Participation Agreement Among American General
Life Insurance Company, American General Securities
Incorporated, SAFECO Resources Series Trust, and SAFECO
Securities, Inc. (6)

(8)(g)(ii) Form of Amendment Four to Participation Agreement Among
American General Life Insurance Company, American General
Securities Incorporated, SAFECO Resources Series Trust,
and SAFECO Securities, Inc. (17)

(8)(h)(i) Amended and Restated Participation Agreement by and among
American General Life Insurance Company, American General
Securities Incorporated, Van Kampen American Capital Life
Investment Trust, Van Kampen American Capital Asset
Management, Inc., and Van Kampen American Capital
Distributors, Inc. (9)

(8)(h)(ii) Amendment One to Amended and Restated Participation
Agreement by and among American General Life Insurance
Company, American General Securities Incorporated, Van
Kampen American Capital Life Investment Trust, Van Kampen
American Capital Asset Management, Inc., and Van Kampen
American Capital Distributors, Inc. (8)

(8)(h)(iii) Form of Amendment Six to Amended and Restated
Participation Agreement among Van Kampen Life Investment
Trust, Van Kampen Funds Inc., Van Kampen Asset
Management, Inc., American General Life Insurance Company
and American General Securities Incorporated (17)

(8)(i) Form of Shareholder Services Agreement by and between
American General Life Insurance Company and American
Century Investment Management, Inc. (15)

(8)(j)(i) Sales Agreement by and between American General Life
Insurance Company, Neuberger & Berman Advisors Management
Trust and Neuberger & Berman Management Incorporated.
(15)

(8)(j)(ii) Form of Assignment and Modification Agreement by and
between Neuberger & Berman Management Incorporated and
American General Life Insurance Company. (15)

(8)(k) Form of Participation Agreement by and between American
General Life Insurance Company, Ayco Asset Management and
Ayco Series Trust. (19)

(8)(l) Form of Fund Participation Agreement by and between
American General Life Insurance Company and Janus Aspen
Series. (19)

II-5
<PAGE>

(8)(m) Form of Participation Agreement by and between American
General Life Insurance Company and J.P. Morgan Series
Trust II. (19)

(8)(n) Form of Participation Agreement by and between American
General Life Insurance Company, PIMCO Variable Insurance
Trust and PIMCO Funds Distributor LLC. (19)

(8)(o) Form of Participation Agreement by and between Vanguard
Variable Insurance Funds, The Vanguard Group, Inc.,
Vanguard Marketing Corporation and American General Life
Insurance Company. (19)

(8)(p) Form of Participation Agreement by and between American
General Life Insurance Company, Warburg Pincus Trust,
Credit Suisse Asset Management, LLC and Credit Suisse
Asset Management Securities, Inc. (19)

(8)(q) Form of Participation Agreement by and between Variable
Insurance Products Fund II, Fidelity Distributors
Corporation and American General Life Insurance Company.
(19)

(8)(r) Form of Administrative Services Agreement between
American General Life Insurance Company and fund
distributor. (5)

(8)(s) Form of Administrative Services Agreement between
American General Life Insurance Company, Miller Anderson
& Sherrard LLP and Morgan Stanley Dean Witter Investment
Management Inc. (14)

(8)(t) Form of Administrative Services Agreement between
American General Life Insurance Company and SAFECO Asset
Management Company dated February 1, 2000. (20)

(8)(u) Administrative Services Agreement between American
General Life Insurance Company and Van Kampen Asset
Management Inc. (14)

(8)(v) Form of services agreement dated July 31, 1975, (limited
to introduction and first two recitals, and sections 1-3)
among various affiliates of American General Corporation,
including American General Life Insurance Company and
American General Life Companies. (7)

(8)(w) Administrative Services Agreement dated as of June 1,
1998, between American General Life Insurance Company and
AIM Advisors, Inc. (4)

II-6
<PAGE>

(8)(x) Administrative Services Agreement dated as of August 11,
1998, between American General Life Insurance Company and
The Dreyfus Corporation. (4)

(8)(y) Amendment to Administrative Services Agreement dated as
of August 11, 1998, between American General Life
Insurance Company and The Dreyfus Corporation effective
as of December 1, 1998. (4)

(8)(z) Form of Administrative Services Agreement by and between
Ayco Asset Management and American General Life Insurance
Company. (19)

(8)(aa) Form of Administrative Services Agreement by and between
American General Life Insurance Company and Morgan
Guaranty Trust Company of New York. (19)

(8)(bb) Form of Administrative Services Agreement by and between
American General Life Insurance Company and Neuberger &
Berman Management Incorporated. (15)

(8)(cc) Form of Services Agreement by and between American
General Life Insurance Company and Pacific Investment
Management, LLC. (19)

(8)(dd) Form of Administrative Services Agreement by and between
American General Life Insurance Company and Credit Suisse
Asset Management, LLC. (19)

(9) Not applicable.

(10)(a) Single Insured Life Insurance Application - Part A. (13)

(10)(b) Single Insured Life Insurance Application - Part B. (13)

(10)(c) Medical Exam Form Life Insurance Application. (13)

(10)(d) Specimen form of supplemental application for variable
life insurance issued by AGL on Policy Form No. 00600.
(Filed herewith)

(10)(e) Specimen form of Service Request Form for Home Office.
(Filed herewith)

(10)(f) Service Request Form for Springfield Service Center. (12)

II-7
<PAGE>

Other Exhibits

2(a) Opinion and Consent of Pauletta P. Cohn, Deputy General Counsel
of American General Life Companies. (Filed herewith)

2(b) Opinion and Consent of American General Life Insurance Company's
actuary. (Filed herewith)

3 Not applicable.

4 Not applicable.

6 Consent of Independent Auditors. (Filed herewith)

7 Powers of Attorney. (Filed herewith on Signature Pages)

27 Financial Data Schedule. (Not applicable)

/1/ Incorporated herein by reference to the initial filing of the Form S-6
Registration Statement (File No. 333-42567) of American General Life Insurance
Company Separate Account VL-R filed on December 18, 1997.

/2/ Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 33-43390) of Separate Account D of American
General Life Insurance Company filed on October 16, 1991.

/3/ Incorporated herein by reference to the filing of Post-Effective Amendment
No. 1 of the Form N-4 Registration Statement (File No. 33-43390) of Separate
Account D of American General Life Insurance Company filed on April 30, 1992.

/4/ Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 333-70667) of American General Life Insurance
Company Separate Account D filed on January 15, 1999.

/5/ Incorporated by reference to the filing of Pre-Effective Amendment No. 3 of
the Form S-6 Registration Statement (File No. 333-53909) of American General
Life Insurance Company Separate Account VL-R filed on August 19, 1998.

/6/ Incorporated by reference to the filing of Pre-Effective Amendment No. 1 of
the Form S-6 Registration Statement (File No. 333-42567) of American General
Life Insurance Company Separate Account VL-R filed on March 23, 1998.

II-8
<PAGE>

/7/ Incorporated by reference to the filing of Pre-Effective Amendment No. 23
to the Form N-4 Registration Statement of American General Life Insurance
Company's Separate Account A (File No. 33-44745) filed on April 24, 1998.

/8/ Incorporated by reference to the filing of the Pre-Effective Amendment No. 1
to Form N-4 Registration Statement (File No. 333-70667) of American General Life
Insurance Company Separate Account D, filed on March 18, 1999.

/9/ Incorporated by reference to Post-Effective Amendment No. 12 to Registrant's
Form N-4 Registration Statement (File No. 33-43390) filed on April 30, 1997.

/10/ Incorporated by reference to Pre-Effective Amendment No. 1 of the Form N-4
Registration Statement (File No. 333-40637) of Separate Account D of American
General Life Insurance Company filed on February 12, 1998.

/11/ Incorporated by reference to Pre-Effective Amendment No. 1 of the Form S-6
Registration Statement (File No. 333-80191) of Separate Account VL-R of American
General Life Insurance Company filed on August 25, 1999.

/12/ Incorporated herein by reference to Post-Effective Amendment No. 2 of the
Form S-6 Registration Statement (File No. 333-42567) of American General Life
Insurance Company Separate Account VL-R filed on April 21, 1999.

/13/ Incorporated herein by reference to the initial filing of the Form S-6
Registration Statement (File No. 333-89897) of American General Life Insurance
Company Separate Account VL-R filed on October 29, 1999.

/14/ Incorporated by reference to Post-Effective Amendment No. 18 of the Form N-
4 Registration Statement (File No. 33-43390) of Separate Account D of American
General Life Insurance Company filed on April 12, 2000.

/15/ Incorporated by reference to Pre-Effective Amendment No. 1 of the Form S-6
Registration Statement (File No. 333-89897) of American General Life Insurance
Company Separate Account VL-R filed on January 21, 2000.

/16/ To be filed by amendment.

/17/ Incorporated by reference to Post-Effective Amendment No. 4 to Form S-6
Registration Statement (File No. 333-42567) of American General Life Insurance
Company Separate Account VL-R filed on October 11, 2000.

/18/ Incorporated by reference to the initial filing of Form S-6 Registration
Statement (File No. 333-43264) of American General Life Insurance Company
Separate Account VL-R filed on August 8, 2000.

II-9
<PAGE>

/19/ Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6
Registration Statement (File No. 333-80191) of American General Life Insurance
Company Separate Account VL-R filed on September 20, 2000.

/20/ Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6
Registration Statement (File No. 333-90787) of American General Life Insurance
Company Separate Account VL-R filed on February 4, 2000.

II-10
<PAGE>

POWERS OF ATTORNEY

Each person whose signature appears below hereby appoints Thomas M. Zurek,
Robert F. Herbert, Jr. and Pauletta P. Cohn and each of them, any one of whom
may act without the joinder of the others, as his/her attorney-in-fact to sign
on his/her behalf and in the capacity stated below and to file all amendments to
this Registration Statement, which amendment or amendments may make such changes
and additions to this Registration Statement as such attorney-in-fact may deem
necessary or appropriate.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant,
American General Life Insurance Company Separate Account VL-R, has duly caused
this amended registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Houston, and State of Texas, on the 25/th/ day of
October, 2000.

AMERICAN GENERAL LIFE INSURANCE
COMPANY
SEPARATE ACCOUNT VL-R
(Registrant)

BY: AMERICAN GENERAL LIFE INSURANCE
COMPANY
(On behalf of the Registrant and itself)

BY: /s/ ROBERT F. HERBERT, JR.
-----------------------------------------
Robert F. Herbert, Jr.
Senior Vice President, Treasurer and
Controller

[SEAL]

ATTEST: /s/ LAUREN W. JONES
---------------------------
Lauren W. Jones
Assistant Secretary
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following officers and directors
of American General Life Insurance Comany in the capacities and on the dates
indicated.

Signature Title Date
--------- ----- ----

/s/ RODNEY O. MARTIN, JR. Director, Chairman and October 25, 2000
------------------------- Chief Executive Officer
Rodney O. Martin, Jr.

/s/ DONALD W. BRITTON Director and President October 25, 2000
-------------------------
Donald W. Britton

/s/ DAVID L. HERZOG Director, Executive Vice President October 25, 2000
------------------------- and Chief Financial Officer
David L. Herzog

/s/ DAVID A. FRAVEL Director October 25, 2000
-------------------------
David A. Fravel

/s/ ROYCE G. IMHOFF, II Director October 25, 2000
-------------------------
Royce G. Imhoff, II

/s/ JOHN V. LAGRASSE Director October 25, 2000
-------------------------
John V. LaGrasse

/s/ THOMAS M. ZUREK Director October 25, 2000
-------------------------
Thomas M. Zurek
<PAGE>

EXHIBIT INDEX

The following exhibits:

1. Exhibits required by Article IX, paragraph A of Form N-8B-2:

(5) Specimen form of "Platinum Investor III" Variable Universal Life
Insurance Policy (Policy Form No. 00600). (Filed herewith)

(10)(d) Specimen form of supplemental application for variable life
insurance issued by AGL on Policy Form No. 00600. (Filed
herewith)

(10)(e) Specimen form of Service Request Form for Home Office. (Filed
herewith)

Other Exhibits

2(a) Opinion and Consent of Pauletta P. Cohn, Deputy General Counsel
of American General Life Companies. (Filed herewith)

2(b) Opinion and Consent of American General Life Insurance Company's
actuary. (Filed herewith)

6 Consent of Independent Auditors. (Filed herewith)

7 Powers of Attorney. (Filed herewith on Signature Pages)