AGL SEPARATE ACCOUNT VL R, 485BPOS, 2000-10-11

AGL SEPARATE ACCOUNT VL R
485BPOS, 2000-10-11

Previous: HORIZON OFFSHORE INC, S-3/A, 2000-10-11

Next: AGL SEPARATE ACCOUNT VL R, 485BPOS, EX-3.(A), 2000-10-11

<PAGE>

Registration No. 333-42567

As filed with the Securities and Exchange Commission on October 11, 2000

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-6
POST-EFFECTIVE AMENDMENT NO. 4
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
(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

Amount of Filing Fee: None required.

It is proposed that this filing will become effective on November 1, 2000
pursuant to paragraph (b) of Rule 485.

Registrant elects to be governed by Rule 63-e(T)(b)(13)(i)(A) under the
Investment Company Act of 1940, with respect to the Variable Life Insurance
Policies described in the Prospectus.

<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
<TABLE>
<CAPTION>

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?
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?
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.
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.
14 Basic Questions You May Have: How can I invest money in a Policy?
15 Basic Questions You May Have: How can I invest
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
<C> <S>
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?
Additional Information: Separate Account VL-R.

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 Additional Information: Additional Rights That We Have.
25 Additional Information: AGL.
26 Inapplicable, because the Separate Account has not yet commenced operations.
27 Additional Information: AGL.
28 Additional Information: AGL's Management.
29 Additional Information: AGL.
30, 31, 32, 33, 34 Inapplicable, because the Separate Account has not yet commenced operations.
35 Inapplicable.**
36 Inapplicable.**
37 None.
38, 39 Additional Information: Distribution of the Policies.
40 Inapplicable, because the Separate Account has not yet commenced operations.
41(a) Additional Information: Distribution of the Policies.
41(b), 41(c) Inapplicable.**
42, 43 Inapplicable, because the Separate Account has not yet commenced operations or issued any
securities.
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.
45 Inapplicable, because the Separate Account has not yet commenced operations.
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:
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
<C> <S>
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 Investment Company Act of 1940 ("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 I(SM) AND
PLATINUM INVESTOR II(SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES (THE "POLICIES") ISSUED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL")

<TABLE>
<S> <C>
HOME OFFICE SPRINGFIELD SERVICE CENTER
(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 these Policies. 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:

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 ABOVE.

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 in our investment options, (3) choose when and how much you
invest, and (4) choose whether the amounts you have in our investment options
will, upon the insured person's death, be added to the insurance proceeds we
otherwise will pay to the beneficiary.

Charges and expenses. We deduct charges and expenses from the amounts you
invest. These are described beginning on page 8.

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 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 division and allocated to your chosen investment options at the same time
as your initial premium.

We have designed this prospectus to provide you with information that you
should have before investing in the Policies. It also contains information that
will be helpful to you in exercising the various options you will have once you
own a Policy. Please read the prospectus carefully and keep it for future
reference.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") OR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF 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) variable life policy ("Policy") or exercise any
of your rights or privileges under a Policy.

This prospectus describes two versions of the Platinum Investor Policies:
the Platinum Investor I and the Platinum Investor II Policies. Your AGL
representative can advise you which version of the Policy he or she offers or
whether he or she offers both. You cannot change to a different version once
your coverage takes effect. The Platinum Investor I and Platinum Investor II
Policies are identical, except for the differences that are discussed beginning
on page 16 of this prospectus.

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

PAGES TO SEE
BASIC QUESTIONS YOU MAY HAVE IN THIS PROSPECTUS
---------------------------- ------------------
. What are the Policies 1-2
. How can I invest money in a Policy? 5-6
. How will the value of my investment in a Policy change
over time? 6-7
. What is the basic amount of insurance ("death benefit")
that AGL pays when the insured person dies? 7-8
. What charges will AGL deduct from my investment in a Policy? 8-10
. What charges and expenses will the Mutual Funds deduct from
amounts I invest through my Policy? 10-15
. Must I invest any minimum amount in a Policy? 15-16
. What are the differences between the Platinum Investor I
and the Platinum Investor II Policies? 16-17
. How can I change my Policy's investment options? 17
. How can I change my Policy's insurance coverage? 18
. What additional rider benefits might I select? 19-21
. How can I access my investment in my Policy? 21-23
. Can I choose the form in which AGL pays out the proceeds from
my Policy? 23-24
. To what extent can AGL vary the terms and conditions of the
Policies in particular cases? 24
. How will my Policy be treated for income tax purposes? 24-25
. How do I communicate with AGL? 25-26

3
<PAGE>

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.

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 25. Also see "Services Agreements" on
page 57. This booklet is called the "prospectus."

Illustrations of a hypothetical policy. Starting on page 26, 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 forms of our
Policy and riders. A table of contents for the "Additional Information" portion
of this prospectus also appears on page 33. You can obtain copies of our Policy
and rider forms from (and direct any other questions to) your AGL representative
or our Home Office (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).

AGL's financial statements. We have included certain financial statements
of AGL and Separate Account VL-R in this prospectus. These begin on page VL-R-1.

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 (page 60, which
follows 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.

4
<PAGE>

BASIC QUESTIONS YOU MAY HAVE

HOW CAN I INVEST MONEY IN A POLICY?

Premium payments. We call the investments you make in a Policy "premiums"
or "premium payments." The amount we require as your first 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. (Policies issued
in some states or automatic premium payment plans may have different minimums.)
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 limits your ability to make
certain very large amounts of premium payments (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 are summarized further under "Tax Effects" beginning on page
35. We will monitor your premium payments, however, to be sure that you do not
exceed permitted amounts or inadvertently incur any tax penalties. Also, in
certain circumstances, we may refuse to accept an additional premium if the
insured person does not provide us with adequate evidence that he/she continues
to meet our requirements for issuing insurance.

Checks and money orders. You must 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 first 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 Office
or Springfield Service Center at the appropriate address shown on the front
cover of this prospectus.

Other ways to pay premiums. We also accept premium payments by bank draft,
wire, or by exchange from another insurance company. You may obtain further
information about how to make premium payments by any of these methods from your
AGL representative or from our Home Office shown on the front cover of this
prospectus. Premium payments from salary deduction plans may be made only if we
agree.

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.

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 over a period of time. This
allows you to reduce the risk of investing most of

5
<PAGE>

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 investment options that you choose (but not to our declared fixed interest
account option). 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.
(The term "valuation period" is described on page 44.) 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. You cannot participate in dollar cost
averaging while also using automatic rebalancing (discussed below). Dollar cost
averaging ceases upon your request, or if your accumulation value in the money
market option becomes exhausted. We do not charge you for using this feature.

Automatic rebalancing. This feature automatically rebalances the proportion
of your accumulation value in each investment option under your Policy (other
than our declared fixed interest account option) 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. You cannot participate in this program while also
participating in dollar cost averaging (discussed above). Rebalancing ends upon
your request. We do not charge you for using this feature.

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 beginning on page 8, under "Deductions from each
premium payment." We invest the rest in one or more of the investment options
listed on the front cover of this prospectus. We call the amount that is at any
time invested under your Policy your "accumulation value."

Your investment options. We invest the accumulation value that you have
allocated to any investment option (except our declared fixed interest account
option) in shares of a Mutual Fund that follows investment practices, policies
and objectives that are appropriate to that option. Over time, your accumulation
value in any 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 be reduced by certain charges that we deduct.
We describe these charges beginning on page 8, 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. This includes
information about the investment

6
<PAGE>

performance that each Fund's investment manager has achieved. 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 and the telephone numbers 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 10-15 below 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 IS THE BASIC 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 Policy, you will tell us how much life insurance coverage you want on
the life of the insured person. We call this the "specified amount" of
insurance.

Your death benefit. The basic death benefit we will pay is reduced by any
outstanding loans and increased by any unearned loan interest we may have
already charged. You also choose whether the basic 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 plus the Policy's accumulation
value on 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
will tend to be higher under Option 1 than under Option 2.

We will automatically pay an alternative basic death benefit if it is
higher than the basic Option 1 or Option 2 death benefit (whichever you have
selected). The alternative basic death benefit is computed by multiplying your
Policy's accumulation value on the insured person's date of death by the
following percentages:

7
<PAGE>

TABLE OF ALTERNATIVE BASIC DEATH BENEFITS AS A PERCENTAGE
MULTIPLE OF POLICY ACCUMULATION VALUE

INSURED
PERSON'S 40 or 45 50 55 60 65 70 75 to 100
AGE under 95

% 250% 215% 185% 150% 130% 120% 115% 105% 100%
_____________

* Nearest birthday at the beginning of the Policy year in which the insured
person dies. The percentages are interpolated for ages that are not shown
here.

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

Deductions from each premium payment. We deduct from each premium a charge
for the tax that is then applicable to us in your state or other jurisdiction.
These taxes 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. We also
currently deduct an additional 2.5% from each after-tax premium payment. We have
the right at any time to increase this additional charge to not more than 5% on
all future premium payments.

Daily charge. We make a daily deduction at an annual effective rate of .75%
of your accumulation value that is then being invested in any of the investment
options (other than our declared fixed interest option). After a Policy has been
in effect for 10 years, we will reduce the rate of the charge to a maximum of
.50%, and after 20 years, we will further reduce the charge to a maximum of
.25%. The daily deduction charges, including the current charge of .75%, are the
maximums we may charge; we may charge less, but we can never charge more.

Flat monthly charge. We will deduct $6 per month from your accumulation
value. Also, we have the right to raise this charge at any time to not more than
$12 per month.

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 if
the insured person died on that date and (b) the then total accumulation value
under the Policy. For otherwise identical Policies, a greater amount at risk
results in a higher monthly insurance charge. The cost of insurance rates are
generally lower under the Platinum Investor II Policy than under the Platinum
Investor I Policy.

8
<PAGE>

For otherwise identical Policies, a higher cost of insurance rate also
results 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 for insured persons in most age and risk classes,
although we have the right at any time to raise these rates to not more than the
guaranteed maximum.

In general, our cost of insurance rates increase with the insured person's
age. The longer you own your Policy, the higher the cost of insurance rate will
be. Also our cost of insurance rates will generally be lower if the insured
person is a female than if a male (except in Montana where such costs cannot be
based on gender).

Similarly, our current cost of insurance rates are generally lower for non-
smokers than smokers, and lower for persons that have other highly favorable
health characteristics, as compared to those that do not. On the other hand,
insured persons who present particular health, occupational or non-work related
risks may be charged higher cost of insurance rates and other additional charges
based on the specified amount of insurance coverage under their Policy.

Finally, our current cost of insurance rates are lower for Policies having
a specified amount of at least $1,000,000 on the day the charge is deducted.
This means that if your specified amount for any reason decreases from
$1,000,000 or more to less than $1,000,000, your subsequent cost of insurance
rates will be higher under your Policy than they otherwise would be. The reverse
is also true. Our cost of insurance rates also 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.

Monthly charges for additional benefit riders. We will deduct charges
monthly from your accumulation value, if you select certain additional benefit
riders. These are described beginning on page 19, under "What additional rider
benefits might I select?"

Additional monthly charge for Platinum Investor II Policies during the
first two years. This charge is described on page 16 under "What are the
differences between the Platinum Investor I and the Platinum Investor II
Policies?"

Surrender charge for Platinum Investor I Policies. The Platinum Investor I
Policies have a surrender charge that applies for the first 10 Policy years (and
the first 10 years after any increase in the Policy's specified amount). The
amount of the surrender charge depends on the age and other insurance
characteristics of the insured person. The maximum amount of the surrender
charge will be shown on pages 23 and 24 of the Policy. It may initially be as
high as $40 per $1,000 of specified amount or as low as $1.80 per $1,000 of
specified amount (or any increase in the specified amount). Any amount of
surrender charge decreases automatically by a constant amount each year
beginning in the fourth year of its 10 year period referred to above until, in
the eleventh year, it is zero.

9
<PAGE>

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.

We will deduct the entire amount of any then applicable surrender charge
from the accumulation value at the time of a full surrender of a Platinum
Investor I Policy. Upon a requested decrease in such a Policy's specified amount
of coverage, we will deduct any remaining amount of the surrender charge that
was associated with the specified amount that is canceled. This includes any
specified amount decrease that, as described under "Partial surrender" beginning
on page 21, results from any requested partial surrender. For this purpose, we
deem the most recent increases of specified amount to have been canceled first.

Partial surrender fee. We will charge a $25 fee for each partial surrender
you make.

Charge for taxes. We can adjust charges in the future on account of federal
or state 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.

Allocation of charges. You may choose from which of your investment options
we deduct all monthly charges. If you do not have enough accumulation value in
any investment option to comply with your selection, we will deduct these
charges in proportion to the amount of accumulation value you then have in each
investment option. Any surrender charge upon a decrease in specified amount that
is requested under a Platinum Investor I Policy will be allocated in the same
manner as if it were a monthly deduction.

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:

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

</TABLE>
(Footnotes begin on page 14)

10
<PAGE>

<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) FEES REIMBURSEMENT) REIMBURSEMENT)
------------ -------------- ----- --------------- ---------------
<S> <C> <C> <C> <C>
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%
</TABLE>
(Footnotes begin on page 14)

11
<PAGE>

<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) FEES REIMBURSEMENT) REIMBURSEMENT)
------------ -------------- ----- --------------- ---------------
<S> <C> <C> <C> <C>
J. P. MORGAN SERIES TRUST II:/1/
J. P. Morgan Small Company 0.60% 0.55% 1.15%
Portfolio/3/
MFS VARIABLE INSURANCE TRUST:/1/
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:/1,7/
PIMCO Short-Term Bond Portfolio/3/ 0.25% 0.35% 0.60%
PIMCO Real Return Bond Portfolio/3/ 0.25% 0.40% 0.65%
</TABLE>
(Footnotes begin on page 14)

12
<PAGE>

<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) FEES REIMBURSEMENT) REIMBURSEMENT)
------------ -------------- ----- --------------- ---------------
<S> <C> <C> <C> <C>
PIMCO Total Return Bond 0.25% 0.40% 0.65%
Portfolio/3/
PUTNAM VARIABLE TRUST - CLASS IB
SHARES:/8/
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>
-----------------------------
(Footnotes begin on page 14)

13
<PAGE>

/1/ The Mutual Funds' advisers or administrators have entered into arrangements
under which they pay certain amounts to AGL. The fees do not have a direct
relationship to the Mutual Funds' Annual Expenses, and do not increase the
amount of charges you pay under your Policy. (See "Certain arrangements"
under "More About Policy Charges" and "Service Agreements").

/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.

/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/ AGL has entered into a service agreement with PIMCO Variable Insurance Trust
under which a portion of the Other Fund Operating Expenses is paid to AGL to
reimburse AGL for services provided to the PIMCO Variable Insurance Trust.

(Footnotes continue on page 15)

14
<PAGE>

/8/ The prospectus for Putnam Variable Trust - Class IB Shares under
"Distribution Plan" discusses this 12b-1 fee.

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 have us
bill you. 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. You need to invest only enough to ensure either that your Policy's
cash surrender value stays above zero or, if you own a Platinum Investor I
Policy, that your 5 year no-lapse guarantee (discussed below) remains in effect.
("Cash surrender value" is explained under "Full surrender" on page 21.) 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 does
fall to zero, we will notify you and give you a grace period of 61 days 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. (The only exception is if the guarantee is in effect
that is described below under "Monthly guarantee premiums under Platinum
Investor I Policies.") 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 would have to pay enough premium to
keep your Policy in force for two months as well as pay or reinstate any
indebtedness. In the Policy form itself, you will find additional information
about the values and terms of a Policy after it is reinstated.

Monthly guarantee premiums under the Platinum Investor I Policies. Page 3
of a Platinum Investor I Policy will specify a "Monthly Guarantee Premium." 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 such a Policy is at least equal to the sum of the
monthly guarantee premiums 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 the Policy.) So long as at least this amount of
premium payments has been paid by the beginning of that Policy month, a Platinum
Investor I Policy will not enter a grace period or terminate (i.e., lapse)
because of insufficient cash surrender value during the first 5 Policy years.
If:

. this test is not met on the monthly deduction day at the beginning of
any Policy month, the Policy enters the grace period;

. a sufficient premium is not paid before the end of the grace period,
the Policy and the 5 year no-lapse guarantee terminate;

15
<PAGE>

. the Policy is later reinstated, the 5 year no-lapse guarantee may
also be reinstated if sufficient premiums are paid, although the
reinstated guarantee will in no case extend beyond the date that
originally marked the end of its maximum 5 year duration.

The amount of premiums that must be paid to maintain the 5 year no-lapse
guarantee will be increased by the cumulative amount of any loans (including any
loan increases to pay interest) and partial surrenders you have taken from your
Policy. Such monthly guarantee premiums also will be higher following any
requested increase in the specified amount of insurance coverage, or following a
requested addition of (or increase in) certain rider benefits. On the other
hand, the monthly guarantee premium will be lower following any requested
decrease in the specified amount of insurance coverage, or following a requested
cancellation of (or decrease in) certain riders. If your Policy is the Platinum
Investor I version, we will send you an endorsement to your Policy that will
tell you what your new monthly guarantee premium is. However, none of the
above-mentioned changes extends the no-lapse period beyond 5 years or
establishes a new no-lapse guarantee.

The 5 year no-lapse guarantee described in the two previous paragraphs is
not available in all states.

Although we will bill you for planned premiums, we will not send any
specific bills for the amount of any monthly guarantee premium that is due.

WHAT ARE THE DIFFERENCES BETWEEN THE PLATINUM INVESTOR I AND THE PLATINUM
INVESTOR II POLICIES?

Depending on your own financial circumstances and goals, and the uses to
which you intend to put a Platinum Investor Policy, either version of the Policy
may be appropriate for you. You should consult carefully with your AGL
representative about this. Important factors may include how much accumulation
value you intend to maintain in the Policy relative to the amount of the
Policy's death benefit and how likely it is that you may choose to surrender
your Policy or otherwise reduce your Policy's specified amount in the future.

The differences between the two versions of Platinum Investor are:

. Platinum Investor I is available for specified amounts of $100,000 or more. In
most cases, Platinum Investor II is available only for specified amounts of
$500,000 or more. You may not request a specified amount decrease (or a
partial surrender) under a Platinum Investor I that would reduce the specified
amount to less than $100,000 or under a Platinum Investor II Policy that would
reduce the specified amount to less than $500,000.

. Platinum Investor I is available for insured persons through age 80. Platinum
Investor II is available for insured persons who are age 18 through age 80.

16
<PAGE>

. The Platinum Investor II version of the Policy does not have a surrender
charge.

. The Platinum Investor II version of the Policy does not have a 5 year no-lapse
guarantee.

. The two versions of Platinum Investor have different current cost of insurance
rates. Since this difference results in differing accumulation values, you
should carefully review the Policy illustrations that are available to you.

. The Platinum Investor II version of the Policy has a flat monthly expense
charge during the first two Policy years (and the first two years after any
requested increase in the Policy's specified amount). The amount of this
charge depends on the age and other insurance characteristics of the insured
person. The amount of this charge will be shown on page 4 of a Platinum
Investor II Policy. It may initially be as much as $1.88 per $1,000 of
specified amount (or increase of specified amount), or as low as $0.0999 per
$1,000 of specified amount (or increase of specified amount). (After the two-
year periods mentioned above, this charge is zero.) This additional monthly
charge does not apply to the Platinum Investor I version of the Policies.

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. 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," beginning on page 50. Also, you may not in any one Policy year make
transfers out of our declared fixed interest account option that aggregate more
than 25% of the accumulation value you had invested in that option at the
beginning of that Policy year.

You may make transfers at any time, except that transfers out of our
declared fixed interest account option must be made within 60 days after a
Policy anniversary, as shown on page 3 of your Policy. We will not honor any
request received outside that period.

Market timing. The Policies are 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 period.

17
<PAGE>

HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?

Increase in coverage. You may at any time 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. The monthly insurance charge for the increase will be
based on the age and risk class of the insured person at the time of the
increase. Also, if:

. you have the Platinum Investor I version of the Policy, a new amount of
surrender charge and monthly guarantee premium apply to the specified amount
increase. These amounts are the same as they would be if we were instead
issuing the same amount of additional coverage as a new Platinum Investor I
Policy; or

. you have the Platinum Investor II version of the Policy, an additional monthly
expense charge applies for the first two years following the request for an
increase in specified amount. This amount is also the same as it would be if
we were instead issuing the same amount of additional coverage as a new
Platinum Investor II Policy.

Decrease in coverage. After the first Policy year, you may request a
reduction in the specified amount of coverage, but not below certain minimums.
The minimum is $100,000 for a Platinum Investor I Policy and $500,000 for a
Platinum Investor II Policy (or, if greater, the minimum amount that the tax law
requires relative to the amount of premium payments you have made). At the time
of a decrease under such a Policy, we will deduct from the Policy's accumulation
value an amount of any remaining surrender charge. 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. We compute the amount we deduct in
the manner described on page 44, under "Decreases in the specified amount of a
Platinum Investor I Policy."

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 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.

. 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.

Tax consequences of changes in insurance coverage. Please read "Tax
Effects" starting on page 35 of this prospectus to learn about possible tax
consequences of changing your insurance coverage under your Policy.

18
<PAGE>

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. 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, which pays an additional death benefit if the
insured person dies from certain accidental causes.

. Automatic Increase Rider, which provides for automatic increases in your
Policy's specified amount of insurance at certain specified dates and based on
a specified index. After you have met our eligibility requirements for this
rider, these increases will not require that evidence be provided to us about
whether the insured person continues to meet our requirements for insurance
coverage. These automatic increases are on the same terms (including
additional charges) as any other specified amount increase you request (as
described under "Increase in coverage" on page 18). There is no additional
charge for the rider itself, although the automatic increases in the specified
amount will increase the monthly insurance charge deducted from your
accumulation value, to compensate us for the additional coverage.

. Children's Insurance Benefit Rider, which 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, which permits you to extend the Policy's maturity
date beyond what it otherwise would be, has two versions from which to choose.
Both versions may not be available in all states.

One version provides for a death benefit after the original maturity date that
is equal to the accumulation value on the date of death. The death benefit
payable will be reduced by any outstanding Policy loan amount. There is no
charge for this version.

The other version provides for a death benefit after the original maturity
date which is 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 by future changes in
the accumulation value. The death benefit will never be less than the
accumulation value. The death benefit payable will be reduced by any
outstanding Policy loan amount. There is a monthly charge of no more than $30
per thousand of net amount at risk for this version of the rider

19
<PAGE>

during the nine policy years immediately preceding the Policy's original
maturity date. Therefore, you must add this version of rider before that 9
year period begins.

In both versions, only the insurance coverage associated with the Policy will
be extended beyond the original maturity date. No additional premium payments,
new loans, monthly insurance charge, or changes in specified amount will be
allowed after the original maturity date. There is a flat monthly charge of no
more than $10 each month after the original maturity date. After this rider is
elected it may not be revoked. You can, however, surrender your Policy at any
time.

Extension of the maturity date beyond the insured person's age 100 may result
in the 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, which 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, which 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, which 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 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, under which we will waive all monthly
charges under 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).

20
<PAGE>

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.
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 35. You should consult a
qualified tax adviser.

HOW CAN I ACCESS MY INVESTMENT IN A POLICY?

Full surrender. You may at any time, without charge, surrender your Policy
in full. If you do, we will pay you the accumulation value, less any Policy
loans, and, if you have the Platinum Investor I version of the Policy, less any
surrender charge that then applies. We call this your "cash surrender value."
Because of the surrender charge, it is unlikely that a Platinum Investor I
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.

. If the Option 1 death benefit is then in effect, we will also automatically
reduce your Policy's specified amount of insurance by the amount of your
withdrawal and any related charges.

. If you have the Platinum Investor I version of the Policy, and we reduce your
Policy's specified amount because you have requested a partial withdrawal
while the Option 1 death benefit is in effect, we will deduct the same amount
of surrender charge, if any, that would have applied if you had requested such
face amount decrease directly. See "Decreases in the specified amount of a
Platinum Investor I Policy," on page 44.

. We will not permit a partial surrender if it would cause your Policy to fail
to qualify as life insurance under the tax laws or if it would cause your
specified amount to fall below the minimum allowed.

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

21
<PAGE>

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 equal to your
Policy's cash surrender value (less our estimate of three months' charges and
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 of
each loan is $500.

We remove from your investment options an amount equal to your loan and
hold that amount as additional collateral for the loan. We will credit your
Policy with interest on this collateral amount at a guaranteed effective annual
rate of at least 4% (rather than any amount you could otherwise earn in one of
our investment options). We can use interest rates greater than the guaranteed
rates used to calculate accumulation values of amounts allocated to the declared
fixed interest account. Interest which we apply to that portion of the declared
fixed interest account will be at an annual effective rate of not less than
4.0%. 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) of your loan at any time
before the death of the Insured 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.

Preferred loan interest rate. We will credit a higher interest rate on an
amount of the collateral securing Policy loans taken out 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 (including any loan collateral we are
holding for your Policy loans) at the beginning of the Policy year; or

22
<PAGE>

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

We intend to set the rate of interest we credit to your preferred loan
collateral amount equal to the loan interest rate you are paying, resulting in a
zero net cost (0.00%) of borrowing for that amount. We have full discretion to
vary the preferred rate, provided that it will always be greater than the rate
we are then crediting in connection with regular Policy loans, and will never be
less than an effective annual rate of 4.5%.

Maturity of your Policy. If the insured person is still living on the
"Maturity Date" shown on page 3 of your Policy, we will automatically pay you
the cash surrender value of the Policy, and the Policy will end. The maturity
date is the Policy anniversary nearest the insured person's 95/th/ birthday.

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

Choosing a payment option. You may choose to receive the full proceeds from
the Policy (and any riders) as a single sum. This includes proceeds that become
payable upon the death of the insured person, full surrender or the maturity
date. Alternatively, you may 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 specified amount until all
amounts are paid out.

. 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 with interest.

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.

Within 60 days after the insured person's death, any payee entitled to
receive proceeds as a single sum may elect one or more payment options.

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

23
<PAGE>

Change of payment option. You may 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 POLICIES IN
PARTICULAR CASES?

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

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

Policies purchased through term life conversions. We maintain rules about
how to convert term insurance to a Platinum Investor Policy. This is referred to
as a term conversion. Term conversions are available to owners of term life
insurance we have issued. Any right to a term conversion is stated in the term
life insurance policy. Again, our published rules about term conversions 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 Platinum Investor is sold. As a
result, various time periods and other terms and conditions described in this
prospectus may vary depending on where you reside. These variations will be
reflected in your Policy and riders, or related endorsements.

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

HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?

Generally, death benefits paid under a Policy are 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

24
<PAGE>

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 35.

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.

The following requests must be made in writing and signed by you:

. transfer of accumulation value;

. loan;

. full surrender;

. partial surrender;

. change of beneficiary or contingent beneficiary;

. change of allocation percentages for premium payments;

. loan repayments or charges;

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

. increase or decrease in specified amount;

. addition or cancellation of, or other action with respect to, any
rider benefits;

. election of a payment option for Policy proceeds;

. tax withholding elections; and

25
<PAGE>

. telephone transaction privileges.

You should mail or express these requests to our Home Office or Springfield
Service Center 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 or Springfield Service Center.

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 also 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 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 make a written request, if you cannot make a telephone
transaction. Also, if, due to malfunction or other circumstances, the recording
of 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 Policies work, we have prepared the following
tables:

26
<PAGE>

PAGES TO SEE IN THIS
PROSPECTUS
----------

Platinum Platinum
Investor I Investor II
---------- -----------
Death Benefit Option 1 - Current Charges 29 31
Guaranteed Maximum Charges 30 32

The tables show how death benefits, accumulation values, and cash surrender
values ("Policy benefits") under sample Platinum Investor Policies 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 45 year-old male non-tobacco user and who is a better-than-
average mortality risk in other respects as well. Planned premium payments of
$1,368 for an initial $100,000 of specified amount of coverage are assumed to be
paid at the beginning of each Policy year for the Platinum Investor I Policy.
Planned premium payments of $10,560 for an initial $500,000 of specified amount
coverage are assumed to be paid at the beginning of each Policy year for the
Platinum Investor II Policy. The samples 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 for the Platinum Investor I version are
that version's surrender charges.

Although the tables below do not include examples of a Policy with an
Option 2 death benefit, such a Policy would have higher death benefits, lower
cash values, and a greater risk of lapse.

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

. a daily charge at an annual effective rate of .75% for the first 10
Policy years (for both current and guaranteed maximum charges);

. a daily charge at an annual effective rate of .50% after 10 Policy years
(for both current and guaranteed maximum charges);

. a daily charge at an annual effective rate of .25% after 20 Policy
years (for both current and guaranteed maximum charges);

. a monthly charge for Platinum Investor II only, for the first two Policy
years (and first two years after any increase in the specified amount)
between $0.0999 and $1.88 for each $1,000 of specified amount, assumed to
be $0.2647 (for both current and guaranteed maximum charges);

27
<PAGE>

. a charge for state premium tax ranging from .75% to 3.5% of each premium
payment, depending on the state, assumed to be 2.0% (for both current and
guaranteed maximum charges);

. a charge of 2.5% and 5.0% from each after-tax premium payment for current
charges and guaranteed maximum charges, respectively;

. the current monthly insurance charges and guaranteed maximum monthly
insurance charges for current charges and guaranteed maximum charges,
respectively; and

. a flat monthly charge of $6 and $12 for current charges and guaranteed
maximum charges, respectively.

The charges assumed by both the current and guaranteed maximum charge
tables also include Mutual Fund expenses of .78% of aggregate Mutual Funds
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 10 - 15. 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 .92% of aggregate Mutual Fund assets. The total assumed tax charges for
all of the tables are 2.5% of premiums.

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.

28
<PAGE>

PLATINUM INVESTOR I

PLANNED PREMIUM $1,368 INITIAL SPECIFIED AMOUNT $100,000
DEATH BENEFIT OPTION 1

MALE AGE 45
NONSMOKER
ASSUMING CURRENT CHARGES

<TABLE>
<CAPTION>
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>

1 100,000 100,000 100,000 898 963 1,029 0 0 0
2 100,000 100,000 100,000 1,762 1,949 2,144 394 581 776
3 100,000 100,000 100,000 2,604 2,969 3,366 1,236 1,601 1,998
4 100,000 100,000 100,000 3,402 4,004 4,685 2,205 2,807 3,488
5 100,000 100,000 100,000 4,180 5,077 6,134 3,154 4,051 5,108
6 100,000 100,000 100,000 4,937 6,190 7,728 4,082 5,335 6,873
7 100,000 100,000 100,000 5,686 7,358 9,495 5,002 6,674 8,811
8 100,000 100,000 100,000 6,405 8,560 11,432 5,892 8,047 10,919
9 100,000 100,000 100,000 7,104 9,810 13,569 6,762 9,468 13,227
10 100,000 100,000 100,000 7,786 11,110 15,927 7,615 10,939 15,756

15 100,000 100,000 100,000 11,082 18,728 32,452 11,082 18,728 32,452

20 100,000 100,000 100,000 13,617 27,914 60,049 13,617 27,914 60,049
</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.

29
<PAGE>

PLATINUM INVESTOR I

PLANNED PREMIUM $1,368 INITIAL SPECIFIED AMOUNT $ 100,000
DEATH BENEFIT OPTION 1

MALE AGE 45
NONSMOKER
ASSUMING GUARANTEED CHARGES

1 100,000 100,000 100,000 664 720 778 0 0 0
2 100,000 100,000 100,000 1,285 1,440 1,603 0 72 235
3 100,000 100,000 100,000 1,865 2,159 2,481 497 791 1,113
4 100,000 100,000 100,000 2,393 2,866 3,406 1,196 1,669 2,209
5 100,000 100,000 100,000 2,869 3,562 4,386 1,843 2,536 3,360
6 100,000 100,000 100,000 3,295 4,246 5,425 2,440 3,391 4,570
7 100,000 100,000 100,000 3,661 4,907 6,521 2,977 4,223 5,837
8 100,000 100,000 100,000 3,955 5,532 7,670 3,442 5,019 7,157
9 100,000 100,000 100,000 4,178 6,121 8,878 3,836 5,779 8,536
10 100,000 100,000 100,000 4,321 6,662 10,144 4,150 6,491 9,973

15 100,000 100,000 100,000 3,646 8,419 17,650 3,646 8,419 17,650

20 0 100,000 100,000 0 7,106 27,354 0 7,106 27,354
</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.

30
<PAGE>

PLATINUM INVESTOR II

PLANNED PREMIUM $10,560 INITIAL SPECIFIED AMOUNT $500,000
DEATH BENEFIT OPTION 1

MALE AGE 45
NONSMOKER
ASSUMING CURRENT CHARGES

1 500,000 500,000 500,000 6,769 7,268 7,769 6,769 7,268 7,769
2 500,000 500,000 500,000 13,398 14,823 16,311 13,398 14,823 16,311
3 500,000 500,000 500,000 21,468 24,308 27,390 21,468 24,308 27,390
4 500,000 500,000 500,000 29,387 34,190 39,602 29,387 34,190 39,602
5 500,000 500,000 500,000 37,267 44,603 53,187 37,267 44,603 53,187
6 500,000 500,000 500,000 45,053 55,513 68,234 45,053 55,513 68,234
7 500,000 500,000 500,000 52,959 67,159 85,112 52,959 67,159 85,112
8 500,000 500,000 500,000 60,715 79,305 103,747 60,715 79,305 103,747
9 500,000 500,000 500,000 68,427 92,077 124,427 68,427 92,077 124,427
10 500,000 500,000 500,000 76,246 105,650 147,505 76,246 105,650 147,505

15 500,000 500,000 500,000 113,321 184,097 307,723 113,321 184,097 307,723

20 500,000 500,000 700,430 143,060 279,736 574,123 143,060 279,736 574,123
</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 II

PLANNED PREMIUM $10,560 INITIAL SPECIFIED AMOUNT $500,000
DEATH BENEFIT OPTION 1

MALE AGE 45
NONSMOKER
ASSUMING GUARANTEED CHARGES

1 500,000 500,000 500,000 5,738 6,197 6,658 5,738 6,197 6,658
2 500,000 500,000 500,000 11,240 12,519 13,857 11,240 12,519 13,857
3 500,000 500,000 500,000 18,093 20,607 23,342 18,093 20,607 23,342
4 500,000 500,000 500,000 24,652 28,867 33,631 24,652 28,867 33,631
5 500,000 500,000 500,000 30,924 37,315 44,822 30,924 37,315 44,822
6 500,000 500,000 500,000 36,920 45,970 57,028 36,920 45,970 57,028
7 500,000 500,000 500,000 42,593 54,795 70,319 42,593 54,795 70,319
8 500,000 500,000 500,000 47,899 63,757 84,779 47,899 63,757 84,779
9 500,000 500,000 500,000 52,847 72,877 100,564 52,847 72,877 100,564
10 500,000 500,000 500,000 57,395 82,123 117,797 57,395 82,123 117,797

15 500,000 500,000 500,000 74,213 131,619 235,502 74,213 131,619 235,502

20 500,000 500,000 531,300 76,417 184,411 435,491 76,417 184,411 435,491
</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 Policies appears at pages 1 through 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
---------------------------------- -----------
AGL............................................................. 34
Separate Account VL-R........................................... 34
Tax Effects..................................................... 35
Voting Privileges............................................... 41
Your Beneficiary................................................ 41
Assigning Your Policy........................................... 42
More About Policy Charges....................................... 42
Effective Date of Policy and Related Transactions............... 44
More About Our Declared Fixed Interest Account Option........... 46
Distribution of the Policies.................................... 47
Payment of Policy Proceeds...................................... 48
Adjustments to Death Benefit.................................... 50
Additional Rights That We Have.................................. 50
Performance Information......................................... 51
Our Reports to Policy Owners.................................... 52
AGL's Management................................................ 52
Principal Underwriter's Management.............................. 55
Legal Matters................................................... 57
Accounting and Auditing Experts................................. 57
Actuarial Expert................................................ 57
Services Agreements............................................. 57
Certain Potential Conflicts..................................... 58

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.
American General Financial Group is the marketing name for American General
Corporation and its subsidiaries. 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.

During 1999, AGL received $39,846,527 in total premium payments from Policy
holders. From such premium payments, AGL received the following fees and
charges:

. mortality and expense fees $ 150,974

. administrative fees $ 977,173

. cost of insurance charges $3,859,179

SEPARATE ACCOUNT VL-R

We hold the Mutual Fund shares in which any of your accumulation value is
invested in our Separate Account VL-R. Separate Account VL-R is a "separate
account," as defined by the SEC and is registered as a unit investment trust
with the SEC under the Investment Company Act of 1940, as amended. 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 one of the 40
available investment options (other than our declared fixed interest account
option). The remaining 24 divisions, and some of these 40 divisions, represent
investment options available under another 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 the separate account are our property. The assets in the
separate account would be available only to satisfy the claims of owners of the
Policies, to the extent they have allocated their accumulation value to the
separate account. Our other creditors could reach only those separate

34
<PAGE>

account assets (if any) that are in excess of the amount of our reserves and
liabilities under the Policies with respect to the separate account.

AGL also issues variable annuity contracts through its Separate Accounts A
and D, which also are registered investment companies.

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.

General. A Platinum Investor 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" (which is discussed below). In all cases, however, the character of
all income that is described below as taxable to the payee will be ordinary
income (as opposed to capital gain).

Testing for modified endowment contract status. 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 that exceeds the premiums
that would have been paid by that time under a similar fixed-benefit insurance
policy that was designed (based on certain assumptions mandated under the Code)
to provide for paid-up future benefits after the payment of seven level annual
premiums. This is called the "seven-pay" test.

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

35
<PAGE>

endowment contract if it failed to satisfy the new seven-pay limit. A material
change for these purposes could occur as a result of a change in death benefit
option or the selection of additional rider benefits. A material change will
occur as a result of an increase in your Policy's specified amount of coverage,
and certain other changes.

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
resulting from a partial surrender or termination of additional benefits under a
rider.) 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 benefits or a lapse or reinstatement of your Policy) 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, 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.

36
<PAGE>

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 accrued loan interest will be treated as a
distribution and 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 during the insured person's lifetime will be taxed on an "income-
first" basis. Distributions for this purpose include a loan (including any
increase in the loan amount to pay interest on an existing loan or an assignment
or a pledge to secure a loan) or a partial surrender. Any such distributions
will be considered taxable income to you to the extent your accumulation value
exceeds your basis in the Policy. For modified endowment contracts, your basis
is similar to the basis described above for other policies, except that your
basis would be increased by the amount of any prior loan under your Policy that
was considered taxable income to you. For purposes of determining the taxable
portion of any distribution, all modified endowment contracts issued by the same
insurer (or its affiliate) to the same owner (excluding certain qualified plans)
during any calendar year are aggregated. The Treasury Department has authority
to prescribe additional rules to prevent avoidance of "income-first" taxation on
distributions from modified endowment contracts.

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 distributions:

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

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

. 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 an exception applies, the 10% penalty tax.

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

37
<PAGE>

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. The Treasury Department has been authorized to prescribe rules which
would treat similarly other distributions made in anticipation of a policy
becoming 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.

Terminal illness rider. Amounts received under an insurance policy on the
life of an individual who is terminally ill, as defined by the tax law, are
generally excludable from the payee's gross income. We believe that the benefits
provided under our terminal illness rider meet the law's definition of
terminally ill and can qualify for this income tax exclusion. This exclusion
does not apply, however, to amounts paid to someone other than the insured
person, if the payee has an insurable interest in the insured person's life
because the insured is a director, officer or employee of the payee or by reason
of the insured person being financially interested in any trade or business
carried on by the payee.

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
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.

In connection with the issuance of then temporary diversification
regulations, the Treasury Department stated that it anticipated 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.

38
<PAGE>

Estate and generation skipping taxes. If the insured person is the Policy's
owner, the death benefit under a Platinum Investor 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 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 over the next seven years 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 Internal Revenue Service
("IRS") has released a technical advice memorandum ("TAM") on the taxability of
the 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 specific set of facts and a specific 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

39
<PAGE>

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, 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.

40
<PAGE>

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, nonresident 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.

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 insured person's lifetime. We also require the consent of any
irrevocably named beneficiary. A new beneficiary

41
<PAGE>

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.

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, if we agree. 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 taken before we receive complete notice of the assignment in
good order. We are not responsible for the validity of the assignment. An
absolute assignment is a change of ownership. All collateral assignees of record
must consent to any full surrender, partial surrender, loan or payment from a
Policy under a terminal illness rider. 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 Policies are designed to
cover, in total, our direct and indirect costs of selling, administering and
providing benefits under the Policies. They are also designed, in total, to
compensate us for the risks we assume and services that we provide under the
Policies. 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);

. investment risks (such as the risk that adverse investment performance
will make it more costly for us to provide the 5-year no-lapse
guarantee under the Platinum Investor I Policies or reduce the amount
of our daily charge fee revenues below what we anticipate);

. 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 Policies require us to provide will exceed what we
currently project).

42
<PAGE>

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

The current charges that we deduct from premiums have been designed to
compensate us for taxes we have to pay to the state where you live when we
receive a premium from you, as well as similar federal taxes we incur as a
result of premium payments. The current flat monthly charge that we deduct has
been designed primarily to compensate us for the continuing administrative
functions we perform in connection with the Policies. The current monthly
insurance charge has been designed primarily to provide funds out of which we
can make payments of death benefits under the Policies as insured persons die.

Any excess from the charges discussed in the preceding paragraph, as well
as revenues from the daily charge, are primarily intended to:

. offset other expenses in connection with the Policies (such as the
costs of processing applications for Policies and other unreimbursed
administrative expenses, costs of paying sales commissions and other
marketing expenses for the Policies, and costs of paying death claims
if the mortality experience of insured persons is worse than we
expect);

. compensate us for the risks we assume under the Policies; or

. otherwise to be retained by us as profit.

The surrender charge under the Platinum Investor I Policies and the additional
monthly charge during the first two years under a Platinum Investor II Policy
have also been designed primarily for these purposes.

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 or charge increase for any purpose.

Change of tobacco use. If the person insured under your Policy is a tobacco
user, you may apply to us for an improved risk class if the insured person meets
our then applicable requirements for demonstrating that he or she has stopped
tobacco use for a sufficient period.

Gender neutral Policies. Our cost of insurance charge rates in Montana will
not be greater than the comparable male rates illustrated in this prospectus.

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 of the same age, rating 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

43
<PAGE>

of life insurance policies (including Platinum Investor 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 sex.

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 first to the
oldest increments of specified amount to compute our net amount at risk at each
cost of insurance rate. See "Monthly Insurance Charge" beginning on page 8.

Decreases in the specified amount of a Platinum Investor I Policy. An
amount of any remaining surrender charge will be deducted upon a decrease in
specified amount under a Platinum Investor I Policy. If:

. there have been no previous specified amount increases, the amount we
deduct will bear the same proportion to the total surrender charge
then applicable as the amount of the specified amount decrease bears
to the Policy's total specified amount. The remaining amount of
surrender charge that we could impose at a future time, however, will
also be reduced proportionally.

. there have been increases in specified amount, we decrease first those
portions of specified amount that were most recently established. We
also deduct any remaining amount of the surrender charge that was
established with that portion of specified amount (which we pro-rate
if less than that entire portion of specified amount is being
canceled).

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 Policies on
each day that the New York Stock Exchange is open for business. We call each
such day a "valuation date."

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."

44
<PAGE>

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 insurance rate 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 minimum first 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 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 appropriate 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 insurance rate
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:

45
<PAGE>

. Increases or decreases you request in the specified amount of
insurance, and reinstatements of Policies that have lapsed take effect
on the Policy's monthly deduction day on or next following our
approval of the transaction;

. We may return premium payments 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;

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

. 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 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. 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.

46
<PAGE>

DISTRIBUTION OF THE POLICIES

American General Distributors, Inc. ("AGDI") is the principal underwriter
and distributor of the Policies. Before November 1, 2000 American General
Securities Incorporated ("AGSI") served in this role. AGSI is our subsidiary
broker-dealer. For a period of time you may receive written information from us
that identifies AGSI as the 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.

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, for the Platinum Investor I Policies:

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

. 4% of the premiums not in excess of the target amount paid in each of
Policy years 2 through 10;

. 2.5% of all premiums in excess of the target amount received in any of
Policy years 1 through 10; and

. .25% annually of the Policy's accumulation value (reduced by any
outstanding loans) in the investment options after Policy year 1.

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.

47
<PAGE>

The compensation payable to the broker-dealers or banks for the Platinum
Investor II Policies may also vary with the sales agreement, but is generally
not expected to exceed:

. 20% of premiums paid in the first Policy year up to the target amount;

. 12% of the premiums not in excess of the target amount paid in each of
Policy years 2 through 7;

. 2.5% on all premiums in excess of the target amount received in any of
Policy years 1 through 7; and

. .25% of the Policy's accumulation value (reduced by any outstanding
loans) in the investment options after Policy year 1.

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.

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 on page 8. 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 AGSI 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 and 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 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.

48
<PAGE>

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 premium 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 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.

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 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 and 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.

49
<PAGE>

ADJUSTMENTS TO DEATH BENEFIT

Suicide. If the insured 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 is living at the time of the increase. In this case,
if the insured 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 differently these
periods for non-contestability 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.

Death during grace period. If the insured person dies during the Policy's
grace period, we will deduct any overdue monthly charges from the insurance
proceeds.

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 on a pro-rata basis 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 interest rates and charges as long as we stay within the
minimum and maximum charges permitted in your Policy;

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

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

50
<PAGE>

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

. operate the separate account, or one or more investment options, in
any other form the law allows, including a form that allows us to make
direct investments. Our separate account 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 applicable law in making any changes and, if necessary, we
will seek Policy owner approval.

PERFORMANCE INFORMATION

From time to time, we may quote performance information for the divisions
of the 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 Fund in which it invests. The performance information shown may reflect
the deduction of one or more charges, such as the premium charge or surrender
charge, and we generally expect to exclude cost 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 are not illustrative of how actual investment
performance would affect the benefits under your

51
<PAGE>

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.

NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ------------------------------------------
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).

52
<PAGE>

NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ------------------------------------------
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).

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).

53
<PAGE>

NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ------------------------------------------
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).

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.

54
<PAGE>

NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ------------------------------------------
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.

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 Mr. Guterding is 125
Maiden Lane, New York, New York.

PRINCIPAL UNDERWRITER'S MANAGEMENT

The directors and principal officers of the principal underwriter are:

POSITION AND OFFICES
WITH UNDERWRITER,
NAME AND PRINCIPAL AMERICAN GENERAL
BUSINESS ADDRESS DISTRIBUTORS, INC.
----------------- ---------------------
Robert P. Condon Director and Chairman,
The Variable Annuity Life Insurance Company Chief Executive Officer
2929 Allen Parkway and 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

55
<PAGE>

POSITION AND OFFICES
WITH UNDERWRITER,
NAME AND PRINCIPAL AMERICAN GENERAL
BUSINESS ADDRESS DISTRIBUTORS, INC.
------------------ --------------------------
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

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

56
<PAGE>

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.
Steven A. Glover, Esquire, Senior Counsel of American General Life Companies,
has opined as to the validity of the Policies.

ACCOUNTING AND AUDITING EXPERTS

The financial statements of Separate Account VL-R as of December 31, 1999
and 1998 and for the years ended December 31, 1999 and 1998 and 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.

ACTUARIAL EXPERT

Actuarial matters have been examined by Wayne A. Barnard, who is Senior
Vice President 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 Platinum Investor 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 administrative services agreements with the advisers
or administrators for the Mutual Funds. We receive fees for the administrative
services we perform. These fees do

57
<PAGE>

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,
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 appropriate action is taken to do so. 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
Platinum Investor Policies. They should not be considered as bearing upon the
investment experience of the separate account.

PAGE TO
SEE IN THIS
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT VL-R PROSPECTUS
--------------------------------------------- -----------
Report of Ernst & Young LLP, Independent Auditors............... VL-R-1
Statement of Net Assets as of December 31, 1999 and 1998........ VL-R-2
Statement of Operations for the twelve months
ended December 31, 1999 and 1998............................... VL-R-2
Statement of Changes in Net Assets for the twelve months
ended December 31, 1999 and 1998............................... VL-R-3
Notes to Financial Statements................................... VL-R-4

58
<PAGE>

PAGE TO
CONSOLIDATED FINANCIAL STATEMENTS OF SEE IN THIS
AMERICAN GENERAL LIFE INSURANCE COMPANY PROSPECTUS
--------------------------------------- -----------
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 Income Statements 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 Shareholders' 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

59
<PAGE>

[ERNST & YOUNG LETTERHEAD]

Report of Independent Auditors

Board of Directors
American General Life Insurance Company
and
Policy Owners
American General Life Insurance Company
Platinum Investor Divisions
of Separate Account VL-R

We have audited the accompanying statement of net assets of the Platinum
Investor Divisions of American General Life Insurance Company (the "Company")
Separate Account VL-R as of December 31, 1999, the related statement of
operations for the year then ended, and the statement of changes in net assets
for each of the two years in the period then ended. 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. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the transfer agents. 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 financial position of the Platinum Investor Divisions
of American General Life Insurance Company Separate Account VL-R at December 31,
1999, the results of its operations for the year then ended, and the changes in
its net assets for each of the two years in the period then ended, in conformity
with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

Houston, Texas
February 7, 2000
VL-R-1
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY

PLATINUM INVESTOR DIVISIONS

SEPARATE ACCOUNT VL-R

STATEMENT OF NET ASSETS
DECEMBER 31, 1999

ASSETS:
<S> <C>
Investment securities - at market (cost $48,514,863)... $ 53,122,940
Due from American General Life Insurance Company....... 4,155
-----------

NET ASSETS FOR VARIABLE LIFE INSURANCE POLICIES..... $ 53,127,095
===========

</TABLE>

STATEMENT OF OPERATIONS
Year Ended December 31, 1999
<TABLE>
<CAPTION>

INVESTMENT INCOME:
<S> <C>
Dividends from mutual funds........................... $ 548,707

EXPENSES:
Expense and mortality fees............................ (150,974)
----------
NET INVESTMENT INCOME.............................. 397,733
----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments...................... 319,326
Capital gain distributions from mutual funds.......... 968,029
Net unrealized gain on investments.................... 4,188,998
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.... 5,476,353
----------

INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 5,874,086
==========

</TABLE>

SEE ACCOMPANYING NOTES.

VL-R-2
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY

PLATINUM INVESTOR DIVISIONS

SEPARATE ACCOUNT VL-R

STATEMENT OF CHANGES IN NET ASSETS

YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment income (expense)................................... $ 397,733 $ (41,460)
Net realized gain (loss) on investments........................... 319,326 (23,757)
Capital gain distributions from mutual funds...................... 968,029 159,961
Net unrealized gain on investments................................ 4,188,998 419,080
----------- ----------
Increase in net assets resulting from operations............... 5,874,086 513,824
----------- ----------

PRINCIPAL TRANSACTIONS:
Net premiums...................................................... 39,086,929 8,694,541
Purchase payments from internal rollover transactions............. 6,371,853 1,099,589
Cost of insurance and administrative expenses..................... (4,836,352) (676,871)
Policy loans...................................................... (2,686,333) 0
Payments to contract owners:
Terminations and withdrawals................................... (290,342) (23,829)
----------- ----------
Increase in net assets resulting from principal transactions... 37,645,755 9,093,430
----------- ----------
TOTAL INCREASE IN NET ASSETS...................................... 43,519,841 9,607,254

NET ASSETS:
Beginning of period............................................... 9,607,254 0
----------- ----------
End of period..................................................... $53,127,095 $9,607,254
=========== ==========

</TABLE>

SEE ACCOMPANYING NOTES.

VL-R-3
<PAGE>

NOTES TO FINANCIAL STATEMENTS
PLATINUM INVESTOR DIVISIONS
SEPARATE ACCOUNT VL-R

Note A - Organization

The Platinum Investor Divisions (the "Divisions") of American General Life
Insurance Company Separate Account VL-R (the "Separate Account") received their
first deposits in May 1998. The Separate Account was established by resolution
of the Board of Directors of American General Life Insurance Company (the
"Company") on May 6, 1997. The Separate Account is registered under the
Investment Company Act of 1940 as a unit investment trust and consists of
nineteen investment divisions at December 31, 1999.

The seventeen Divisions, funded by series of independently managed mutual fund
portfolios ("Funds") which are available through Platinum Investor I and
Platinum Investor II Variable Life Insurance Policies offered by the Company,
are as follows:
<TABLE>
<CAPTION>
<S> <C>
AIM Variable Insurance Funds, Inc.: MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
AIM V.I. International Equity Fund ("MSDWUF"):
AIM V.I. Value Fund Equity Growth Portfolio
High Yield Portfolio
AMERICAN GENERAL SERIES PORTFOLIO COMPANY
(A RELATED PARTY): PUTNAM VARIABLE TRUST:
International Equities Fund Putnam VT Diversified Income Fund
MidCap Index Fund Putnam VT Growth and Income Fund
Money Market Fund Putnam VT International Growth and Income Fund
Stock Index Fund
SAFECO RESOURCE SERIES TRUST:
DREYFUS VARIABLE INVESTMENT FUND: Equity Portfolio
Quality Bond Portfolio Growth Portfolio
Small Cap Portfolio
VAN KAMPEN LIFE INVESTMENT TRUST:
MFS VARIABLE INSURANCE TRUST: Strategic Stock Portfolio
MFS Emerging Growth Series
</TABLE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

The accompanying financial statements of the Divisions of the Separate Account
have been prepared on the basis of generally accepted accounting principles
("GAAP"). The accounting principles followed by the Divisions and the methods
of applying those principles are presented below or in the footnotes which
follow.

SECURITY VALUATION - The investments in shares of the Funds listed above are
valued at the closing net asset value (market) per share as determined by the
fund on the day of measurement.

SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the date the order to buy or sell is executed (trade date).
Dividend income and distributions of capital gains are recorded on the ex-
dividend date and reinvested upon receipt. Realized gains and losses from
security transactions are determined on the basis of identified cost.

POLICY LOANS - When a policy loan is made, the loan amount is transferred to
the Company from the policyholder's selected investment Division(s), and held as
collateral. Interest on this collateral amount is credited to the policy at an
effective annual rate of 4%, and loan interest is charged to the policy at an
effective annual rate of 4.75%. Loan repayments are invested in the
policyholder's selected investment Division(s).

VL-R-4
<PAGE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION -
CONTINUED

CHARGES AND EXPENSES -

DEDUCTIONS FROM PREMIUM PAYMENTS. Certain jurisdictions require that a
deduction be made from each premium payment for taxes. The amount of such
deduction currently ranges from 0.75% to 3.5%. Prior to allocation to the
Separate Account, an additional 2.5% is deducted from each after-tax premium
payment.

SEPARATE ACCOUNT CHARGES. Currently, daily charges at an annual rate of 0.75%
on the daily net asset value of the Divisions are paid to the Company. These
charges are made in return for the Company's assumption of mortality and expense
risks associated with the policies issued.

For each policy, a reduction in the current daily charge by 0.25% will occur
after policy year 10, and a further reduction of 0.25% will occur after policy
year 20. Because the policies were first offered in 1998, no decreases in daily
charges have occurred for any outstanding policy.

Other charges paid to the Company include: deductions for monthly
administrative charges, the cost of insurance, additional benefit riders, and
withdrawal charges.

The monthly administrative charge deduction is $6 for each policy in force.
An additional monthly expense deduction for Platinum Investor II policies is
charged during the first two policy years, and for the first two years on any
increase in specified amount. The amount of this charge varies from $0.0999 per
$1,000 of specified amount to $1.88 per $1,000 of specified amount (or increase
in specified amount), depending upon the age and other characteristics of the
insured person. For the year ended December 31, 1999, monthly administrative
charges and expense deductions of $977,173 were collected.

Since determination of both the insurance rate and the Company's net amount at
risk depends upon several factors, the cost of insurance deduction may vary from
month to month. Policy accumulation value, specified amount of insurance and
certain characteristics of the insured person are among the variables included
in the calculation for the cost of insurance deduction. For the year ended
December 31, 1999, cost of insurance charges of $3,859,179 were collected.

Surrender charges are deducted for the Platinum Investor I policies if the
policy is surrendered during the policy's first 10 years. Beginning in the
fourth policy year, the amount of the surrender charge decreases by a constant
amount each policy year. In addition, a $25 transaction fee per policy is
charged for each partial surrender made. Total surrender charges collected for
the year ended December 31, 1999 were $5,924.

NOTE C - FEDERAL INCOME TAXES

The Company is taxed as a life insurance company under the Internal Revenue
Code and includes the operations of the Separate Account in determining its
federal income tax liability. Under existing federal income tax law, the
investment income and capital gains from sales of investments realized by the
Separate Account are not taxable. Therefore, no federal income tax provision
has been made.

VL-R-5
<PAGE>

SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE D - INVESTMENTS

Fund shares are purchased at net asset value with net policy transactions
(net premium payments less surrenders and amounts payable to the Company for
administrative, insurance and surrender charges) and reinvestment of
distributions made by the funds or portfolios. The following is a summary of
fund and portfolio shares owned as of December 31, 1999.
<TABLE>
<CAPTION>

Net Value of Unrealized
Asset Shares at Cost of Appreciation/
Fund Shares Value Market Shares Held (Depreciation)
<S> <C> <C> <C> <C> <C>

AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. International Equity Fund................ 74,944.664 $29.29 $ 2,195,129 $ 1,642,280 $ 552,849
AIM V.I. Value Fund............................... 216,450.034 33.50 7,251,076 6,344,915 906,161
----------- ----------- ----------
9,446,205 7,987,195 1,459,010
AMERICAN GENERAL SERIES PORTFOLIO COMPANY:
International Equities Fund....................... 30,458.780 13.80 420,331 376,986 43,345
MidCap Index Fund................................. 83,855.108 22.24 1,864,938 2,064,143 (199,205)
Money Market Fund................................. 7,283,481.710 1.00 7,283,482 7,283,482 0
Stock Index Fund.................................. 251,215.477 44.44 11,164,016 10,167,936 996,080
----------- ----------- ----------
20,732,767 19,892,547 840,220
DREYFUS VARIABLE INVESTMENT FUND:
Quality Bond Portfolio............................ 211,437.150 10.89 2,302,550 2,363,048 (60,498)
Small Cap Portfolio............................... 27,538.538 66.34 1,826,906 1,542,614 284,292
----------- ----------- ----------
4,129,456 3,905,662 223,794
MFS VARIABLE INSURANCE TRUST:
MFS Emerging Growth Series........................ 115,461.359 37.94 4,380,604 2,915,124 1,465,480
----------- ----------- ----------
4,380,604 2,915,124 1,465,480
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Equity Growth Portfolio........................... 142,901.903 20.31 2,902,338 2,376,046 526,292
High Yield Portfolio.............................. 95,495.451 10.24 977,873 1,003,951 (26,078)
----------- ----------- ----------
3,880,211 3,379,997 500,214
PUTNAM VARIABLE TRUST:
Putnam VT Diversified Income Fund................. 83,251.862 9.91 825,026 829,885 (4,859)
Putnam VT Growth and Income Fund.................. 97,965.587 26.75 2,620,580 2,749,062 (128,482)
Putnam VT International Growth and
Income Fund.................................... 68,345.970 15.22 1,040,226 949,406 90,820
----------- ----------- ----------
4,485,832 4,528,353 (42,521)
SAFECO RESOURCE SERIES TRUST:
Equity Portfolio.................................. 96,519.860 31.02 2,994,046 3,029,809 (35,763)
Growth Portfolio.................................. 117,217.380 22.50 2,637,391 2,423,625 213,766
----------- ----------- ----------
5,631,437 5,453,434 178,003
VAN KAMPEN LIFE INVESTMENT TRUST:
Strategic Stock Portfolio......................... 37,206.165 11.73 436,428 452,551 (16,123)
----------- ----------- ----------
436,428 452,551 (16,123)

Total $53,122,940 $48,514,863 $4,608,077
=========== =========== ==========

</TABLE>

The aggregate cost of purchases and proceeds from sales of investments for
the year ended December 31, 1999 were $64,835,554 and $25,827,394, respectively.
The cost of total investments owned at December 31, 1999 was the same for both
financial reporting and federal income tax purposes. Gross unrealized
appreciation and gross unrealized depreciation as of December 31, 1999 were
$5,079,085 and $471,008, respectively.

VL-R-6
<PAGE>

NOTE E - SUMMARY OF CHANGES IN UNITS

SUMMARY OF CHANGES IN UNITS FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>

AIM V.I. AIM V.I. AGSPC AGSPC AGSPC
International Value International MidCap Money
Equity Fund Fund Equities Fund Index Fund Market Fund
<S> <C> <C> <C> <C> <C>

Outstanding at beginning of period... 30,713.853 50,026.584 4,436.692 20,868.560 342,364.576
Net premiums......................... 26,281.858 79,981.983 6,511.514 23,631.577 3,526,814.165
Transfers between funds.............. 94,617.068 387,804.113 21,573.057 106,600.952 (2,831,055.718)
COI and administration charges....... (6,213.121) (23,602.280) (1,704.197) (5,725.508) (127,220.507)
Policy loans......................... (1,054.150) (8,851.066) (44.904) (200.958) (227,881.633)
Surrenders........................... 0.000 (1,431.173) 0.000 (75.503) 0.000
----------- ----------- ----------- ----------- --------------
Outstanding at end of period......... 144,345.508 483,928.161 30,772.162 145,099.120 683,020.883
=========== =========== =========== =========== ==============

AGSPC Dreyfus Dreyfus MFS MSDWUF
Stock Quality Bond Small Cap Emerging Equity Growth
Index Fund Portfolio Portfolio Growth Series Portfolio

Outstanding at beginning of period... 113,016.969 21,010.980 47,704.765 28,814.529 49,858.521
Net premiums......................... 154,767.505 32,591.377 36,492.578 40,779.820 36,430.256
Transfers between funds.............. 613,720.337 192,290.748 96,803.114 156,202.346 123,020.879
COI and administration charges....... (46,150.529) (8,891.227) (13,376.626) (8,549.785) (10,673.142)
Policy loans......................... (4,185.319) (6,200.774) (4,365.187) (6,656.161) (456.380)
Surrenders........................... (8,786.846) (58.738) (3,749.080) (37.069) (47.967)
----------- ----------- ----------- ----------- --------------
Outstanding at end of period......... 822,382.117 230,742.366 159,509.564 210,553.680 198,132.167
=========== =========== =========== =========== ==============

MSDWUF Putnam VT Putnam VT Putnam VT
High Diversified Growth and Int'l Growth SAFECO
Yield Income Income and Income Equity
Portfolio Fund Fund Fund Portfolio

Outstanding at beginning of period... 14,442.238 27,293.197 29,223.137 16,892.483 39,424.941
Net premiums......................... 27,417.644 22,313.263 43,462.179 9,712.196 42,619.416
Transfers between funds.............. 55,765.867 43,561.001 200,042.675 68,031.752 188,150.221
COI and administration charges....... (5,382.722) (6,966.779) (17,970.001) (4,746.687) (16,738.427)
Policy loans......................... (56.523) (130.380) (3,870.359) (51.391) (4,693.079)
Surrenders........................... 0.000 0.000 (54.588) 0.000 (1,123.580)
----------- ----------- ----------- ----------- --------------
Outstanding at end of period......... 92,186.504 86,070.302 250,833.043 89,838.353 247,639.492
=========== =========== =========== =========== ==============

SAFECO Van Kampen LIT
Growth Strategic Stock
Portfolio Portfolio

Outstanding at beginning of period... 87,429.519 5,939.258
Net premiums......................... 71,969.323 8,948.758
Transfers between funds.............. 162,763.979 28,894.161
COI and administration charges....... (26,490.215) (2,261.617)
Policy loans......................... (656.492) 30.965
Surrenders........................... (1,720.974) (99.462)
----------- -----------
Outstanding at end of period......... 293,295.140 41,452.063
=========== ===========
</TABLE>

VL-R-7
<PAGE>

SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE E - SUMMARY OF CHANGES IN UNITS - CONTINUED

SUMMARY OF CHANGES IN UNITS FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>

AIM V.I. AIM V.I. AGSPC AGSPC AGSPC
International Value International MidCap Money
Equity Fund Fund Equities Fund Index Fund Market Fund
<S> <C> <C> <C> <C> <C>

Outstanding at beginning of period... 0.000 0.000 0.000 0.000 0.000
Net premiums......................... 3,926.271 5,028.181 1,251.880 2,203.174 887,232.172
Transfers between funds.............. 27,288.385 47,610.818 3,442.353 19,353.676 (515,790.168)
COI and administration charges....... (508.526) (2,555.107) (264.382) (688.290) (27,327.516)
Surrenders........................... 7.723 (57.308) 6.841 0.000 (1,749.912)
----------- ---------- ---------- ---------- ------------
Outstanding at end of period......... 30,713.853 50,026.584 4,436.692 20,868.560 342,364.576
=========== ========== ========== ========== ============

AGSPC Dreyfus Dreyfus MFS MSDWUF
Stock Quality Bond Small Cap Emerging Equity Growth
Index Fund Portfolio Portfolio Growth Series Portfolio

Outstanding at beginning of period... 0.000 0.000 0.000 0.000 0.000
Net premiums......................... 8,615.333 2,899.836 2,877.991 2,165.052 3,375.968
Transfers between funds.............. 107,442.283 18,269.597 47,736.008 27,489.472 48,846.035
COI and administration charges....... (3,054.075) (158.453) (2,885.870) (789.766) (2,332.117)
Surrenders........................... 13.428 0.000 (23.364) (50.229) (31.365)
----------- ---------- ---------- ---------- ------------
Outstanding at end of period......... 113,016.969 21,010.980 47,704.765 28,814.529 49,858.521
=========== ========== ========== ========== ============

MSDWUF Putnam VT Putnam VT Putnam VT
High Diversified Growth and Int'l Growth SAFECO
Yield Income Income and Income Equity
Portfolio Fund Fund Fund Portfolio

Outstanding at beginning of period... 0.000 0.000 0.000 0.000 0.000
Net premiums......................... 1,078.715 2,735.696 2,895.013 1,472.301 1,832.023
Transfers between funds.............. 13,535.025 25,670.109 27,336.414 15,779.278 38,805.245
COI and administration charges....... (172.575) (1,113.705) (915.004) (368.239) (1,228.964)
Surrenders........................... 1.073 1.097 (93.286) 9.143 16.637
----------- ---------- ---------- ---------- ------------
Outstanding at end of period......... 14,442.238 27,293.197 29,223.137 16,892.483 39,424.941
=========== ========== ========== ========== ============

SAFECO Van Kampen LIT
Growth Strategic Stock
Portfolio Portfolio

Outstanding at beginning of period... 0.000 0.000
Net premiums......................... 11,571.367 1,026.844
Transfers between funds.............. 78,917.682 5,152.249
COI and administration charges....... (3,046.234) (190.338)
Surrenders........................... (13.296) (49.497)
----------- ----------
Outstanding at end of period......... 87,429.519 5,939.258
=========== ==========
</TABLE>

VL-R-8
<PAGE>

NOTES F - NET ASSETS REPRESENTED BY:
<TABLE>
<CAPTION>

DECEMBER 31, 1999
<S> <C> <C> <C>

UNITS OUTSTANDING: UNITS UNIT VALUE AMOUNT

AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. International Equity Fund................ 144,345.508 $15.208402 $ 2,195,265
AIM V.I. Value Fund............................... 483,928.161 14.984710 7,251,523
-----------
9,446,788
-----------
AMERICAN GENERAL SERIES PORTFOLIO COMPANY:
International Equities Fund....................... 30,772.162 13.663545 420,457
MidCap Index Fund................................. 145,099.120 12.853645 1,865,052
Money Market Fund................................. 683,020.883 10.664287 7,283,931
Stock Index Fund.................................. 822,382.117 13.576054 11,164,704
-----------
20,734,144
-----------
DREYFUS VARIABLE INVESTMENT FUND:
Quality Bond Portfolio............................ 230,742.366 9.979496 2,302,693
Small Cap Portfolio............................... 159,509.564 11.453979 1,827,019
-----------
4,129,712
-----------
MFS VARIABLE INSURANCE TRUST:
MFS Emerging Growth Series........................ 210,553.680 20.806447 4,380,874
-----------
4,380,874
-----------
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Equity Growth Portfolio........................... 198,132.167 14.649396 2,902,516
High Yield Portfolio.............................. 92,186.504 10.608209 977,934
-----------
3,880,450
-----------
PUTNAM VARIABLE TRUST:
Putnam VT Diversified Income Fund................. 86,070.302 9.587642 825,211
Putnam VT Growth and Income Fund.................. 250,833.043 10.448149 2,620,741
Putnam VT International Growth and Income Fund.... 89,838.353 11.584388 1,040,723
-----------
4,486,675
-----------
SAFECO RESOURCE SERIES TRUST:
Equity Portfolio.................................. 247,639.492 12.091087 2,994,231
Growth Portfolio.................................. 293,295.140 8.992831 2,637,553
-----------
5,631,784
-----------

VAN KAMPEN LIFE INVESTMENT TRUST:
Strategic Stock Portfolio......................... 41,452.063 10.534296 436,668
-----------

VALUE OF UNITS OUTSTANDING AT DECEMBER 31, 1999 $53,127,095
===========
</TABLE>

VL-R-9
<PAGE>

SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTES F - NET ASSETS REPRESENTED BY: - CONTINUED
<TABLE>
<CAPTION>

DECEMBER 31, 1998
<S> <C> <C> <C>

UNITS OUTSTANDING: UNITS UNIT VALUE AMOUNT

AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. International Equity Fund................ 30,713.853 $ 9.883756 $ 303,568
AIM V.I. Value Fund............................... 50,026.584 11.623823 581,500
----------
885,068
----------
AMERICAN GENERAL SERIES PORTFOLIO COMPANY:
International Equities Fund....................... 4,436.692 10.657122 47,282
MidCap Index Fund................................. 20,868.560 11.270655 235,202
Money Market Fund................................. 342,364.576 10.258008 3,511,979
Stock Index Fund.................................. 113,016.969 11.345869 1,282,276
----------
5,076,739
----------
DREYFUS VARIABLE INVESTMENT FUND:
Quality Bond Portfolio............................ 21,010.980 10.037989 210,908
Small Cap Portfolio............................... 47,704.765 9.371844 447,082
----------
657,990
----------
MFS VARIABLE INSURANCE TRUST:
MFS Emerging Growth Series........................ 28,814.529 11.863805 341,850
----------

MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Equity Growth Portfolio........................... 49,858.521 10.585368 527,771
High Yield Portfolio.............................. 14,442.238 9.980132 144,136
----------
671,907
----------
PUTNAM VARIABLE TRUST:
Putnam VT Diversified Income Fund................. 27,293.197 9.494863 259,145
Putnam VT Growth and Income Fund.................. 29,223.137 10.376073 303,221
Putnam VT International Growth and Income Fund.... 16,892.483 9.387222 158,574
----------
720,940
----------
SAFECO RESOURCE SERIES TRUST:
Equity Portfolio.................................. 39,424.941 11.146147 439,436
Growth Portfolio.................................. 87,429.519 8.578159 749,984
----------
1,189,420
----------

VAN KAMPEN LIFE INVESTMENT TRUST:
Strategic Stock Portfolio......................... 5,939.258 10.664649 63,340
----------

VALUE OF UNITS OUTSTANDING AT DECEMBER 31, 1998 $9,607,254
==========
</TABLE>

VL-R-10
<PAGE>

NOTE G - YEAR 2000 CONTINGENCY (UNAUDITED)

Internal Systems. The Company's ultimate parent, American General Corporation
("AGC"), has numerous technology and non-technology systems that are managed on
a decentralized basis. AGC's Year 2000 readiness efforts have been performed by
its key business units with centralized oversight. Each business unit,
including the Company, executed a plan to minimize the risk of a significant
negative impact on its operations.

While the specifics of the plans varied, the plans included the following
activities: (1) perform an inventory of the Company's information technology and
non-information technology systems; (2) assess which items in the inventory may
expose the Company to business interruptions due to Year 2000 issues; (3)
reprogram or replace systems that are not Year 2000 ready; (4) test systems to
prove that they will function into the next century; and (5) return the systems
to operations. As of December 31, 1999, these activities have been completed,
making the Company's critical systems Year 2000 ready.

The Company continued to test its systems throughout 1999 to maintain Year
2000 readiness. In addition, the Company implemented plans for the century
transition. These plans included a freeze on system modifications from November
1999 through January 2000, the creation of rapid response teams to address
problems and limiting vacations for certain business and technical personnel and
establishing Y2K Command Centers. In addition, AGC established Y2K Command
Centers in Houston and each of its locations across the country. Each Command
Center monitored all major business processing activities during the century
transition and reported progress to the Houston Command Center which coordinated
the company's nationwide Year 2000 effort. The Command Centers continued to
operate 24 hours a day until January 7, 2000.

On January 1, 2000, AGC announced that its Y2K Command Centers reported that
all major technology systems, programs, and applications were operating smoothly
following the transition into the 21st century. As of February 7, 2000, the
Company has experienced no interruptions to normal business operations,
including the processing of customer account data and transactions. The
Company will continue to monitor our technology systems and maintain quality
customer service throughout the transition period.

Third Party Relationships. The Company has relationships with various third
parties who must also be Year 2000 ready. These third parties provide (or
receive) resources and services to (or from) the Company and include
organizations with which the Company exchanges information. Third parties
include vendors of hardware, software, and information services; providers of
infrastructure services such as voice and data communications and utilities for
office facilities; investors; customers; distribution channels; and joint
venture partners. Third parties differ from internal systems in that the
Company exercises less, or no, control over such parties' Year 2000 readiness.

The Company developed plans to assess and mitigate the risks associated with
the potential failure of third parties to achieve Year 2000 readiness. These
plans included the following activities: (1) identify and classify third party
dependencies; (2) research, analyze, and document Year 2000 readiness for
critical third parties; and (3) test critical hardware and software products and
electronic interfaces, and, where feasible, the Company has taken reasonable
precautions to protect against the receipt of non-Year 2000 ready data. Where
necessary, critical third party dependencies have been included in The Company's
contingency plans.

Contingency Plans. The Company's contingency planning process was designed to
reduce the risk of Year 2000-related business failures related to both internal
systems and third party relationships. The contingency plans included the
following activities: (1) evaluate the consequences of failure of critical
business processes with significant exposure to Year 2000 risk; (2) determine
the probability of a Year 2000-related failure for those critical processes that
have a high consequence of failure; (3) develop an action plan to complete
contingency plans for critical processes that rank high in consequence and
probability of failure; and (4) complete the applicable contingency plans. The
contingency plans were tested and updated throughout 1999.

VL-R-11
<PAGE>

SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE G - YEAR 2000 CONTINGENCY (UNAUDITED)- CONTINUED

Risks and Uncertainties. Based on the Year 2000 readiness of internal
systems, century transition plans, plans to deal with third party relationships,
contingency plans and the reports from the AGC Y2K Command Centers described
above, the Company believes that it will experience at most isolated and minor
disruptions of business processes due to the Year 2000 transition. Such
disruptions are not expected to have a material effect on our future results of
operations, liquidity, or financial condition. However, due to the magnitude
and complexity of this project, risks and uncertainties exist and the Company is
not able to predict a most reasonably likely worst case scenario. If Year 2000
readiness is not achieved due to the Company's failure to maintain critical
systems as Year 2000 ready, failure of critical third parties to achieve Year
2000 readiness on a timely basis, failure of contingency plans to reduce Year
2000-related business failures, or other unforeseen circumstances in completing
its plans, the Year 2000 issues could have a material adverse impact on the
Company's operations following the turn of the century.

Costs. Through December 31, 1999, the Company has incurred, and anticipates
that the Company will continue to incur, costs relative to achieving and
maintaining Year 2000 readiness. The cost of activities related to Year 2000
readiness has not had a material adverse effect on the Company's results of
operations or financial condition. In addition, the Company has elected to
accelerate the planned replacement of certain systems as part of the Year 2000
plans. Costs of the replacement systems are being capitalized and amortized
over their useful lives, in accordance with the Company's normal accounting
policies. None of the costs associated with Year 2000 readiness are passed to
divisions of the Separate Account.

VL-R-12
<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.

PAGE TO
SEE IN THIS
DEFINED TERM PROSPECTUS
------------ -----------
accumulation value................................................ 6
AGL............................................................... 34
amount at risk.................................................... 8
automatic rebalancing............................................. 6
basis............................................................. 36
beneficiary....................................................... 41
cash surrender value.............................................. 21
close of business................................................. 44
Code.............................................................. 35
cost of insurance rates........................................... 44
daily charge...................................................... 8
date of issue..................................................... 45
death benefit..................................................... 7
declared fixed interest account option............................ 1
division.......................................................... 34
dollar cost averaging............................................. 5
Five year no-lapse guarantee...................................... 15
Fund.............................................................. 2
full surrender.................................................... 21
grace period...................................................... 15
guarantee premiums................................................ 15
Home Office....................................................... 1
investment option................................................. 1
lapse............................................................. 15
loan, loan interest............................................... 22
maturity, maturity date........................................... 23
modified endowment contract....................................... 35
monthly deduction day............................................. 45
monthly guarantee premiums........................................ 15
Monthly insurance charge.......................................... 8
Mutual Fund....................................................... 2
Option 1, 2....................................................... 7
partial surrender................................................. 21
payment option.................................................... 23
planned periodic premium.......................................... 15
Platinum Investor I and II........................................ 1
Policy............................................................ 1
Policy loan....................................................... 22
Policy month, year................................................ 45
preferred loan interest........................................... 22
premiums.......................................................... 5
premium payments.................................................. 5
prospectus........................................................ 1

60
<PAGE>

PAGE TO
SEE IN THIS
DEFINED TERM PROSPECTUS
------------ -----------
reinstate, reinstatement.......................................... 15
rider............................................................. 19
SEC............................................................... 2
separate account.................................................. 1
Separate Account VL-R............................................. 34
seven-pay test.................................................... 36
specified amount.................................................. 7
Springfield Service Center........................................ 1
surrender......................................................... 21
surrender charge.................................................. 9
target............................................................ 47
telephone transactions............................................ 26
transfers......................................................... 17
valuation date, period............................................ 44
you, your......................................................... 25

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.

61
<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 61 pages of text, plus 12 financial pages of Separate
Account VL-R, 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

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) Form of Distribution Agreement between American General Life
Insurance Company and American General Distributors, Inc. (Filed
herewith)

(3)(b) Form of Selling Group Agreement. (Filed herewith)

(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)(a)(i) Specimen form of the "Platinum Investor I" Variable Universal
Life Insurance Policy (Policy Form No. 97600). (1)

II-2
<PAGE>

(5)(a)(ii) Specimen form of the "Platinum Investor II" Variable Universal
Life Insurance Policy (Policy Form No. 97610). (1)

(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. (Filed herewith)

(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. (15)

II-3
<PAGE>

(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. (Filed
herewith)

(8)(c)(i) Form of Participation Agreement Between American General Life
Insurance Company and 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)(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. (15)

(8)(e)(i) Participation Agreement 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 among American
General Life Insurance Company, American General Securities
Incorporated, 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) Amended Number 2 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. (6)

II-4
<PAGE>

(8)(e)(iv) 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. (Filed
herewith)

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

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

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

(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 Two to Amended and Restated Participation
Agreement among American General Life Insurance Company, American
General Securities Incorporated, Van Kampen American Capital Life
Investment Trust, Van Kampen American Capital Distributors, Inc.
and Van Kampen American Capital Asset Management, Inc. (6)

(8)(h)(iv) 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. (Filed herewith)

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

II-5
<PAGE>

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

(8)(k) Form of Administrative Services Agreement between American
General Life Insurance Company and SAFECO Asset Management
Company. (11)

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

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

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

(8)(o) Form of Administrative Service Agreement between Van Kampen Asset
Management Inc. and American General Life Insurance Company. (14)

(8)(p) Form of Participation Agreement by and between American General
Life Insurance Company, Ayco Asset Management and Ayco Series
Trust. (15)

(8)(q) Form of Participation Agreement by and between Variable Insurance
Products Fund, Fidelity Distributors Corporation and American
General Life Insurance Company. (15)

(8)(r) Form of Participation Agreement by and between Variable Insurance
Products Fund II, Fidelity Distributors Corporation and American
General Life Insurance Company. (15)

(8)(s) Form of Participation Agreement by and between American General
Life Insurance Company and J. P. Morgan Series Trust II. (15)

(8)(t) Form of Fund Participation Agreement by and between American
General Life Insurance Company and Janus Aspen Series. (15)

II-6
<PAGE>

(8)(u) Form of Participation Agreement by and between American General
Life Insurance Company, PIMCO Variable Insurance Trust and PIMCO
Funds Distributor LLC. (15)

(8)(v) Form of Participation Agreement by and between Vanguard Variable
Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing
Corporation and American General Life Insurance Company. (15)

(8)(w) 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. (15)

(8)(x) Form of Administrative Services Agreement by and between Ayco
Asset Management and American General Life Insurance Company.
(15)

(8)(y) Form of Service Contract by and between Fidelity Distributors
Corporation and American General Life Insurance Company. (15)

(8)(z) Form of Service Agreement by and between Fidelity Investments
Institutional Operations Company, Inc. and American General Life
Insurance Company. (15)

(8)(aa) Form of Administrative Services Agreement by and between American
General Life Insurance Company and Morgan Guaranty Trust Company
of New York. (15)

(8)(bb) Form of Distribution and Shareholder Services Agreement by and
between Janus Distributors, Inc. and American General Life
Insurance Company. (15)

(8)(cc) Form of Services Agreement by and between American General Life
Insurance Company and Pacific Investment Management, LLC. (15)

(8)(dd) Form of PIMCO Variable Insurance Trust Series Agreement by and
between American General Life Insurance Company and PIMCO
Variable Insurance Trust. (15)

(8)(ee) Form of Administrative Services Agreement by and between American
General Life Insurance Company and Credit Suisse Asset
Management, LLC. (15)

(9) Not applicable.

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

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

II-7
<PAGE>

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

(10)(d) Specimen form of amended supplemental application for variable
life insurance issued by AGL on Policy Form No. 97600 and Policy
Form No. 97610. (Filed herewith)

(10)(e) Amended Service Request Form for Home Office. (Filed herewith)

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

Other Exhibits

2(a) Opinion and Consent of Steven A. Glover, Senior Counsel of
American General Life Companies. (6)

2(b) Opinion and Consent of American General Life Insurance Company's
actuary. (6)

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

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

/4/ Incorporated by reference to initial filing of 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 Pre-Effective Amendment No. 3 to Form S-6
Registration Statement (File No. 333-53909) of American General Life
Insurance Company Separate Account VL-R filed on August 19, 1998.

II-8
<PAGE>

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

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

/8/ Incorporated by reference to 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 Form N-4
Registration Statement (File No. 33-43390) of American General Life
Insurance Company Separate Account D filed on April 30, 1997.

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

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

/12/ Incorporated by reference to Post-Effective Amendment No. 2 to 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 by reference to initial filing of 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 to Form N-4
Registration Statement (File No. 33-43390) of American General Life
Insurance Company Separate Account D filed on April 12, 2000.

/15/ 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.

II-9
<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, certifies that it
meets all of the requirements for effectiveness of this amended registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 10th 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 Company in the capacities and on the dates
indicated.

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

/s/ RODNEY O. MARTIN, JR. Director, Chairman and October 10, 2000
--------------------------- Chief Executive Officer
Rodney O. Martin, Jr.

/s/ DONALD W. BRITTON Director and President October 10, 2000
---------------------------
Donald W. Britton

/s/ DAVID L. HERZOG Director, Executive Vice October 10, 2000
--------------------------- President and Chief Financial
David L. Herzog Officer

/s/ DAVID A. FRAVEL Director October 10, 2000
---------------------------
David A. Fravel

/s/ ROYCE G. IMHOFF, II Director October 10, 2000
---------------------------
Royce G. Imhoff, II

/s/ JOHN V. LAGRASSE Director October 10, 2000
---------------------------
John V. LaGrasse

/s/ THOMAS M. ZUREK Director October 10, 2000
---------------------------
Thomas M. Zurek

<PAGE>

EXHIBIT INDEX:

The following exhibits:

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

(3)(a) Form of Distribution Agreement between American General Life
Insurance Company and American General Distributors, Inc.
(Filed herewith)

(3)(b) Form of Selling Group Agreement. (Filed herewith)

(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. (Filed herewith)

(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. (Filed herewith)

(8)(e)(iv) 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. (Filed herewith)

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

(8)(h)(iv) 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. (Filed herewith)

(10)(d) Specimen form of amended supplemental application for
variable life insurance issued by AGL on Policy Form No.
97600 and Policy Form No. 97610. (Filed herewith)

(10)(e) Amended Service Request Form for Home Office. (Filed
herewith)

E-1
<PAGE>

Other Exhibits

6 Consent of Independent Auditors. (Filed herewith)

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

E-2