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VARIABLE ANNUITY ACCOUNT SEVEN
ANCHOR NATIONAL LIFE INSURANCE COMPANY
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SUPPLEMENT TO THE PROSPECTUS DATED JANUARY 29, 1999
The following material complete replaces Appendix B of the prospectus located at
Page B-1.
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APPENDIX B -- MARKET VALUE ADJUSTMENT
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The market value adjustment reflects the impact that changing interest rate have
on the value of money invested at a fixed interest rate. The longer the period
of time remaining in the term you initially agreed to leave your money in the
fixed investment option, the greater the impact of changing interest rates. The
impact of the market value adjustment can be either positive or negative, and is
computed by multiplying the amount withdrawn, transferred, or annuitized by the
following formula:
(N-T)/12
[(1+I/(1+J+0.005)] - 1
where:
I = The Guarantee Period interest rate in effect for the Guarantee
Period on the Certificate
J = The Current Interest Rate available for the same Guarantee Period
n = The original term in number of full months rounded up to the nearest
integer for the Guarantee Period to the end of the Calendar Year
t = Time expired in months rounded up to the nearest integer for the
Guarantee Period to the end of the Calendar Year
(n-t) = The number of full months remaining in the Guarantee Period to
the end of the Calendar Year.
The market value adjustment is applied only if the absolute difference between
the Guarantee Period Interest Rate in effect for the Guarantee Period and the
Current Interest Rate for a new Purchase Payment is greater than 0.50%.
Additionally, if the market value adjustment is negative, it may not reduce the
Certificate Value below the sum of Purchase payments made less withdrawals,
accumulated at an effective annual rate of 3% from the date of receipt or
withdrawal to the date of surrender. If the market value adjustment is positive,
the amount added to the Certificate Value may not exceed the amount that if
negative, could be deducted.
EXAMPLES OF THE MARKET VALUE ADJUSTMENT
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 on October 1, 1998 and
allocated it to the 5-Year Fixed MVA account option. Thus, the original
term, in number of full months, for the Guarantee Period is 63 months
(n=63).
(2) The Guarantee Period Interest rate for the Guarantee Period is 6.00%
(I=0.0600). Therefore, the Certificate Value on the date of withdrawal
is $10,884.66 (assumes 531 days of interest).
(3) You make a partial withdrawal of $5,000 on March 15, 2000, after the
funds have been in the 5-Year Fixed MVA account option for 17 1/2
months. (t=18).
(4) You have not made any transfers, additional Purchase Payments, or
withdrawals with respect to the 5-Year Fixed MVA account.
The sum of purchase payments, less withdrawals, accumulated at an annual
effective rate of 3.00% from the date of deposit or withdrawal to the date of
surrender defines the minimum remaining Certificate Value after the application
of a negative market value adjustment and is calculated as follows ($10,439.40
assumes 531 days of interest at an annual effective rate of 3.00%):
10,439.40-5,000.00=$5,439.40
Therefore, if the market value adjustment is negative, the maximum amount by
which the Certificate Value can be reduced is the Certificate Value prior to the
application of the market value adjustment less the minimum remaining
Certificate Value. Similarly, if the market value adjustment is positive, the
maximum amount by which the Certificate Value is increased, is the Certificate
Value prior to the application of the market value adjustment less the minimum
remaining Certificate Value. In the examples that follow, the maximum market
value adjustment, either positive or negative, is:
5,884.66-5,439.40=$445.26
The market value adjustment is not applied to amounts withdrawn to pay fees or
charges.
B-1
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NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the Current Interest Rate for the same
Guarantee Period is 6.75% (J=0.0675). Because the absolute difference between
the Guarantee Period Interest Rate (6.00%) and the Current Interest Rate (6.75%)
is greater than 0.50%, the market value adjustment is applicable.
The market value adjustment (n-t)/12
factor equals: = [(1+I)/(1+J+0.0050)] - 1
(63-18)/12
= [(1.06)/(1.0675+0.0050)] - 1
45/12
= [(1.06)/(1.0725)] - 1
3.75
= (0.988345) - 1
= 0.95699 - 1
= -(0.043011)
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
-0.043011x5,000.00 = -215.05
Because the market value adjustment, in absolute value, is less than the maximum
market value adjustment ($445.26), the full market value adjustment is assessed.
The remaining Certificate Value is further reduced by withdrawal charges applied
only to the requested withdrawal amount of $5,000.00. The withdrawal charge is
not applied to the market value adjustment.
POSITIVE ADJUSTMENT
Assume that on the date of withdrawal, the Current Interest Rate for the same
Guarantee Period is 5.25% (J = 0.0525). Because the absolute difference between
the Guarantee Period Interest Rate (6.00%) and the Current Interest Rate (5.25%)
is greater than 0.50%, the market value adjustment is applicable.
The market value adjustment (n-t)/12
factor equals: = [(1+I)/(1+J+0.0050)] - 1
(63-18)/12
= [(1.06)/(1.0525+0.0050)] - 1
45/12
= [(1.06)/(1.0575)] - 1
3.75
= (1.002364) - 1
= (1.008894)-1
= (0.008894)
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
0.008894x5,000.00=44.47
Because the market value adjustment, in absolute value, is less than the maximum
market value adjustment ($445.26), the full market value adjustment is assessed.
The remaining Certificate Value is further reduced by withdrawal charges applied
only to the requested withdrawal amount of $5,000.00. The withdrawal charge is
not applied to the market value adjustment.
Dated September 16, 1999
Please keep this supplement with your prospectus
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