SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 33-47472
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ANCHOR NATIONAL LIFE INSURANCE COMPANY
--------------------------------------
(Exact name of registrant as specified in its charter)
Incorporated in California 86-0198983
-------------------------- ----------
(IRS Employer
Identification No.)
1 SunAmerica Center, Los Angeles, California 90067-6022
Registrant's telephone number, including area code: (310) 772-6000
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS Yes x No
--- ---
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANTS COMMON STOCK ON May 14,
1996 WAS AS FOLLOWS:
Common Stock (par value $1,000 per share) 3,511 shares
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
INDEX
Page
Number(s)
Part I - Financial Information
Consolidated Balance Sheet -
March 31, 1996 and September 30, 1995 3 - 4
Consolidated Income Statement -
Three Months and Six Months Ended March 31, 1996 and 1995 5
Consolidated Statement of Cash Flows -
Six Months Ended March 31, 1996 and 1995 6 - 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 21
Part II - Other Information 22
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31, September 30,
1996 1995
-------------- --------------
ASSETS
Investments:
Cash and short-term investments $ 317,691,000 $ 249,209,000
Bonds, notes and redeemable
preferred stocks:
Available for sale, at fair value
(amortized cost: March 1996,
$1,805,333,000; September 1995,
$1,500,062,000) 1,795,516,000 1,489,213,000
Held for investment, at amortized cost
(fair value: September 1995,
$165,004,000) --- 157,901,000
Mortgage loans 92,599,000 94,260,000
Common stocks, at fair value (cost:
March 1996, $5,172,000; September 1995,
$6,576,000) 3,209,000 4,097,000
Real estate 40,899,000 55,798,000
Other invested assets 50,286,000 64,430,000
-------------- --------------
Total investments 2,300,200,000 2,114,908,000
Variable annuity assets 5,734,585,000 5,230,246,000
Accrued investment income 16,062,000 14,192,000
Deferred acquisition costs 411,208,000 383,069,000
Other assets 48,326,000 41,282,000
-------------- --------------
TOTAL ASSETS $8,510,381,000 $7,783,697,000
============== ==============
3
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ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET (Continued)
(Unaudited)
March 31, September 30,
1996 1995
-------------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Reserves, payables and accrued liabilities:
Reserves for fixed annuity contracts $1,672,576,000 $1,497,052,000
Reserves for guaranteed investment
contracts 363,663,000 277,095,000
Payable to brokers for purchases of
securities 66,916,000 155,861,000
Income taxes currently payable 29,244,000 15,720,000
Other liabilities 65,848,000 58,204,000
-------------- --------------
Total reserves, payables
and accrued liabilities 2,198,247,000 2,003,932,000
-------------- --------------
Variable annuity liabilities 5,734,585,000 5,230,246,000
-------------- --------------
Reverse repurchase agreements 19,866,000 ---
-------------- --------------
Subordinated notes payable to Parent 34,000,000 34,000,000
-------------- --------------
Deferred income taxes 62,452,000 73,459,000
-------------- --------------
Shareholder's equity:
Common Stock 3,511,000 3,511,000
Additional paid-in capital 280,263,000 252,876,000
Retained earnings 182,514,000 191,346,000
Net unrealized losses on debt and
equity securities available for sale (5,057,000) (5,673,000)
-------------- --------------
Total shareholder's equity 461,231,000 442,060,000
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $8,510,381,000 $7,783,697,000
============== ==============
See notes to financial statements.
4
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ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (Continued)
<TABLE>
CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<CAPTION>
Three Months Six Months
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income $40,384,000 $32,089,000 $79,037,000 $60,334,000
----------- ----------- ----------- -----------
Interest expense on:
Fixed annuity contracts (19,694,000) (17,957,000) (38,630,000) (34,623,000)
Guaranteed investment contracts (4,481,000) --- (8,753,000) ---
Senior indebtedness (1,426,000) --- (1,621,000) (16,000)
Subordinated notes payable
to Parent (632,000) (608,000) (1,265,000) (1,203,000)
----------- ----------- ----------- -----------
Total interest expense (26,233,000) (18,565,000) (50,269,000) (35,842,000)
----------- ----------- ----------- -----------
NET INVESTMENT INCOME 14,151,000 13,524,000 28,768,000 24,492,000
----------- ----------- ----------- -----------
NET REALIZED INVESTMENT GAINS
(LOSSES) 2,037,000 (577,000) (10,763,000) (5,368,000)
----------- ----------- ----------- -----------
Fee income:
Variable annuity fees 25,192,000 19,675,000 49,482,000 40,032,000
Asset management fees 6,361,000 6,662,000 12,864,000 13,687,000
Net retained commissions 7,974,000 5,345,000 14,269,000 9,971,000
----------- ----------- ----------- -----------
TOTAL FEE INCOME 39,527,000 31,682,000 76,615,000 63,690,000
----------- ----------- ----------- -----------
Other income and expenses:
Surrender charges 1,151,000 1,909,000 2,412,000 3,366,000
General and administrative
expenses (18,313,000) (13,030,000) (35,310,000) (25,716,000)
Amortization of deferred
acquisition costs (12,900,000) (12,009,000) (25,746,000) (23,951,000)
Other, net (1,957,000) (354,000) (3,005,000) 826,000
----------- ----------- ----------- -----------
TOTAL OTHER INCOME AND EXPENSES (32,019,000) (23,484,000) (61,649,000) (45,475,000)
----------- ----------- ----------- -----------
PRETAX INCOME 23,696,000 21,145,000 32,971,000 37,339,000
Income tax expense (8,954,000) (6,445,000) (12,403,000) (12,052,000)
----------- ----------- ----------- -----------
NET INCOME $14,742,000 $14,700,000 $20,568,000 $25,287,000
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
5
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (Continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended March 31,
-------------------------------
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,568,000 $ 25,287,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest credited to:
Fixed annuity contracts 38,630,000 34,623,000
Guaranteed investment contracts 8,753,000 ---
Net realized investment losses 10,763,000 5,368,000
Accretion of net discounts on
investments (3,916,000) (3,673,000)
Amortization of goodwill 584,000 584,000
Provision for deferred income taxes (11,339,000) (8,603,000)
Change in:
Accrued investment income (1,870,000) 909,000
Deferred acquisition costs (28,739,000) (3,767,000)
Other assets (7,629,000) (467,000)
Income taxes payable 13,524,000 14,332,000
Other liabilities (2,545,000) 1,083,000
Other, net 188,000 19,000
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 36,972,000 65,695,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of:
Bonds, notes and redeemable preferred
stocks available for sale (998,327,000) (316,021,000)
Other investments, excluding short-term
investments (4,112,000) (7,036,000)
Sales of:
Bonds, notes and redeemable preferred
stocks available for sale 749,024,000 199,084,000
Real estate --- 35,328,000
Other investments, excluding short-term
investments 1,398,000 312,000
Redemptions and maturities of:
Bonds, notes and redeemable preferred
stocks available for sale 151,333,000 19,434,000
Bonds, notes and redeemable preferred
stocks held for investment 71,000 10,824,000
Other investments, excluding short-term
investments 20,020,000 13,192,000
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (80,593,000) (44,883,000)
------------ ------------
6
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (Continued)
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended March 31,
-------------------------------
1996 1995
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Premium receipts on:
Fixed annuity contracts $377,752,000 $146,409,000
Guaranteed investment contracts 86,158,000 ---
Net exchanges to (from) the fixed
accounts of variable annuity contracts (93,739,000) 45,812,000
Withdrawal payments on:
Fixed annuity contracts (132,245,000) (140,047,000)
Guaranteed investment contracts (8,343,000) ---
Claims and annuity payments on fixed
annuity contracts (15,060,000) (17,397,000)
Net repayments of other
short-term financings (120,273,000) (33,798,000)
Capital contribution received 27,387,000 ---
Dividend paid (29,400,000) ---
Net increase in senior indebtedness 19,866,000 ---
------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 112,103,000 979,000
------------ ------------
NET INCREASE IN CASH AND SHORT-TERM
INVESTMENTS 68,482,000 21,791,000
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 249,209,000 157,438,000
------------ ------------
CASH AND SHORT-TERM INVESTMENTS AT
END OF PERIOD $317,691,000 $179,229,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on indebtedness $ 2,606,000 $ 664,000
============ ============
Income taxes paid $ 10,253,000 $ 465,000
============ ============
See notes to financial statements.
7
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
Anchor National Life Insurance Company (the "Company") is an indirect wholly
owned subsidiary of SunAmerica Inc. (the "Parent"). In the opinion of the
Company, the accompanying unaudited consolidated financial statements contain
all adjustments (consisting of only normal recurring accruals) necessary to
present fairly the Company's consolidated financial position as of March 31,
1996 and September 30, 1995, the results of its consolidated operations for the
three and six months ended March 31, 1996 and 1995 and its consolidated cash
flows for the six months ended March 31, 1996 and 1995. The results of
operations for the three and six months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year. The
accompanying unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements for the fiscal
year ended September 30, 1995, contained in the Company's Annual Report on Form
10-K. Certain items have been reclassified to conform to the current period's
presentation.
2. Reclassification of Securities Held for Investment
--------------------------------------------------
On December 1, 1995, the Company reassessed the appropriateness of classifying
a portion of its portfolio of bonds, notes and redeemable preferred stock as
held for investment (the "Held for Investment Portfolio"). This reassessment
was made pursuant to the provisions of "Special Report: A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities," issued by the Financial Accounting Standards Board in
November 1995. As a result of its reassessment, the Company reclassified all
of its Held for Investment Portfolio as available for sale. At December 1,
1995, the amortized cost of the Held for Investment Portfolio aggregated
$157,830,000 and its fair value was $166,215,000. Upon reclassification, the
resulting net unrealized gain of $8,385,000 was credited to Net Unrealized
Gains (Losses) on Debt and Equity Securities Available for Sale in the
shareholder's equity section of the balance sheet.
8
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of financial
condition and results of operations of Anchor National Life Insurance Company
(the "Company") for the three and six months ended March 31, 1996 and 1995.
RESULTS OF OPERATIONS
NET INCOME totaled $14.7 million in both the second quarters of 1996 and
1995. For the six months, net income amounted to $20.6 million in 1996,
compared with $25.3 million in 1995.
PRETAX INCOME totaled $23.7 million in the second quarter of 1996 and
$21.1 million in the second quarter of 1995. For the six months, pretax income
totaled $33.0 million in 1996 and $37.3 million in 1995. This $4.3 million
decline primarily resulted from increased net realized investment losses and
general and administrative expenses, partially offset by increases in net
investment income and fee income.
NET INVESTMENT INCOME, which is the spread between the income earned on
invested assets and the interest paid on fixed annuities and other
interest-bearing liabilities, increased to $14.2 million in the second quarter
of 1996 from $13.5 million in the second quarter of 1995. These amounts
represent net investment spreads of 2.57% on average invested assets (computed
on a daily basis) of $2.20 billion in the second quarter of 1996 and 3.30% on
average invested assets of $1.64 billion in the second quarter of 1995. For
the six months, net investment income increased to $28.8 million in 1996 from
$24.5 million in 1995, and represented net investment spreads of 2.78% and
3.05%, respectively, on average invested assets of $2.07 billion and $1.61
billion, respectively.
Net investment spreads also include the effect of income earned on the
excess of average invested assets over average interest-bearing liabilities.
This excess amounted to $171.9 million in the second quarter of 1996, $108.1
million in the second quarter of 1995, $152.6 million in the six months of 1996
and $99.8 million in the six months of 1995. The difference between the
Company's yield on average invested assets and the rate paid on average
interest-bearing liabilities was 2.17% in the second quarter of 1996, 2.99% in
the second quarter of 1995, 2.39% in the six months of 1996 and 2.75% in the
six months of 1995.
Investment income totaled $40.4 million in the second quarter of 1996,
compared with $32.1 million in the second quarter of 1995. For the six months,
investment income amounted to $79.0 million in 1996, up $18.7 million from the
$60.3 million recorded in 1995. These amounts represent yields on average
invested assets of 7.35% and 7.84% in the second quarters of 1996 and 1995,
respectively, and 7.63% and 7.51% in the six months of 1996 and 1995,
respectively. Over the last ten fiscal quarters, the Company's quarterly
investment yields on average invested assets have ranged from 7.17% to 8.79%;
however, there can be no assurance that the Company will achieve similar yields
in future periods.
9
<PAGE>
Investment income increased in the second quarter of 1996 as a result of
a higher level of average invested assets, partially offset by a decline in the
portfolio yield. The higher investment yield in the six months of 1996
compared with 1995 primarily resulted from higher earnings on investments in
partnerships. Partnership income totaled $2.3 million in 1996 and $0.9 million
in 1995 which represented yields of 11.15% on related average assets of $42.0
million in 1996, compared with 3.55% on related average assets of $49.1 million
in 1995.
Total interest expense aggregated $26.2 million in the second quarter of
1996 and $18.6 million in the second quarter of 1995. For the six months,
interest expense aggregated $50.3 million in 1996, compared with $35.8 million
in 1995. The average rate paid on all interest-bearing liabilities was 5.18%
in the second quarter of 1996, compared with 4.85% in the second quarter of
1995. For the six months, the average rate paid on all interest-bearing
liabilities was 5.24% in 1996, compared with 4.76% in 1995. Interest-bearing
liabilities averaged $2.03 billion during the second quarter of 1996, compared
with $1.53 billion during the second quarter of 1995. For the six months,
interest-bearing liabilities averaged $1.92 billion in 1996, compared with
$1.51 billion in 1995.
The increases in the average rates paid on all interest-bearing
liabilities during 1996 primarily resulted from increased average crediting
rates on the Company's fixed annuity contracts. Average fixed annuity
crediting rates were 5.04% in the second quarter of 1996 and 4.80% in the
second quarter of 1995. For the six months, average fixed annuity crediting
rates were 5.07% in 1996 and 4.70% in 1995. The higher average crediting rate
on fixed annuity contracts in 1996 reflects the crediting rates on contracts
issued and repriced during the 1995 calendar year. In response to prevailing
interest rates, these crediting rates were generally greater than those on
fixed annuities outstanding in 1995.
The growth in average invested assets since 1995 primarily reflects sales
of the Company's fixed-rate products, consisting of the fixed accounts of its
variable annuity products and guaranteed investment contracts ("GICs"). Since
March 31, 1995, fixed annuity premiums have aggregated $515.7 million. Fixed
annuity premiums totaled $315.2 million in the second quarter of 1996, compared
with $86.4 million in the second quarter of 1995. For the six months, fixed
annuity premiums totaled $377.8 million in 1996, compared with $146.4 million
in 1995. In 1995 the Company began to issue GICs, which guarantee the payment
of principal and interest at fixed and variable rates for a term of one year.
The Company's GICs that are purchased by asset management firms permit
withdrawals with notice of 90 days. Contracts that are purchased by banks or
state and local governmental authorities may permit scheduled book value
withdrawals subject to terms of the underlying indenture or agreement. In
pricing GICs, the Company analyzes cash flow information and prices accordingly
so that it is compensated for possible withdrawals prior to maturity (see
"Financial Condition and Liquidity"). Since March 31, 1995, GIC premiums have
aggregated $361.2 million; however, sales of this product did not begin until
the third quarter of 1995. GIC premiums for both the second quarter and the
six months of 1996 totaled $86.2 million.
NET REALIZED INVESTMENT GAINS totaled $2.0 million in the second quarter
of 1996, compared with net realized investment losses of $0.6 million in the
second quarter of 1995. These amounts represent 0.37% and 0.14%, respectively,
of average invested assets. Net realized investment losses in 1995 include
10
<PAGE>
impairment writedowns of $2.0 million. Therefore, net gains from sales of
investments totaled $2.0 million in the second quarter of 1996 and $1.4 million
in the second quarter of 1995. For the six months, net realized investment
losses totaled $10.8 million in 1996, compared with $5.4 million in 1995.
These amounts represent 1.04% and 0.67%, respectively, of average invested
assets and include impairment writedowns of $13.9 million and $3.8 million,
respectively. Therefore, for the six months, net gains from sales of
investments totaled $3.1 million in 1996, compared with net losses of $1.6
million in 1995.
Net gains in 1996 include $4.3 million of net gains ($1.6 million in the
second quarter) realized on $690.3 million of sales of bonds ($580.0 million
in the second quarter), which were primarily made to maximize total return, and
$150.9 million of redemptions of bonds ($106.2 million in the second quarter).
Net losses in 1995 include $4.8 million of net losses ($0.6 million in
the second quarter) realized on $206.4 million of sales of bonds ($160.1
million in the second quarter), all of which were primarily made to maximize
total return.
Impairment writedowns in 1996 reflect $14.9 million of provision (none
in the second quarter) applied to certain real estate owned in Arizona on
December 31, 1995. Prior to that date, the statutory carrying value of this
real estate had been guaranteed by the Company's ultimate parent, SunAmerica
Inc. On December 31, 1995, the Parent made a capital contribution to the
Company through the Company's direct parent in exchange for the termination of
its guaranty with respect to this real estate. Accordingly, the Company
reduced the carrying value of this real estate to estimated fair value to
reflect the termination of the guaranty. The Parent continues to guarantee the
statutory carrying value of the Company's other real estate owned in Arizona.
Impairment writedowns in 1995 include $3.8 million applied to bonds ($2.0
million in the second quarter). Impairment writedowns in the first quarter of
1995 included $1.8 million of additional provisions applied to certain
interest-only strips ("IOs"). IOs, a type of MBS used as an asset-liability
matching tool to hedge against rising interest rates, are investment grade
securities that give the holder the right to receive only the interest payments
on a pool of underlying mortgage loans. At March 31, 1996, the amortized cost
of the IO's held by the Company was $4.1 million and their fair value was $5.5
million.
VARIABLE ANNUITY FEES are based on the market value of assets supporting
variable annuity contracts in separate accounts. Such fees increased to $25.2
million in the second quarter of 1996 from $19.7 million in the second quarter
of 1995. For the six months, variable annuity fees totaled $49.5 million in
1996, compared with $40.0 million in 1995. These increases reflect growth in
average variable annuity assets, principally due to increased market values and
the receipt of variable annuity premiums, partially offset by surrenders.
Variable annuity assets averaged $5.59 billion during the second quarter of
1996 and $4.40 billion during the second quarter of 1995. For the six months,
variable annuity assets averaged $5.44 billion in 1996, compared with $4.41
billion in 1995. Variable annuity premiums, which exclude premiums allocated
to the fixed accounts of variable annuity products, have aggregated $800.3
million since March 31, 1995. Variable annuity premiums totaled $224.5 million
in the second quarter of 1996, up significantly from $109.2 million in the
second quarter of 1995. For the six months, variable annuity premiums totaled
$434.1 million in 1996, compared with $211.0 million in 1995. These increases
11
<PAGE>
in premiums may be attributed, in part, to a heightened demand for equity
investments, principally as a result of generally improved market performance
in the 1996 periods. The Company has encountered increased competition in the
variable annuity marketplace during recent years and anticipates that the
market will remain highly competitive for the foreseeable future.
ASSET MANAGEMENT FEES, which include investment advisory fees and 12b-1
distribution fees, are based on the market value of assets managed in mutual
funds and private accounts by SunAmerica Asset Management Corp. Such fees
totaled $6.4 million on average assets managed of $2.15 billion in the second
quarter of 1996 and $6.7 million on average assets managed of $2.03 billion in
the second quarter of 1995. For the six months, asset management fees totaled
$12.9 million on average assets managed of $2.15 billion in 1996, compared with
$13.7 million on average assets managed of $2.07 billion in 1995. Asset
management fees are not proportionate to average assets managed primarily due
to changes in product mix. Sales of mutual funds, excluding sales of money
market accounts have aggregated $179.7 million since March 31, 1995. Mutual
fund sales totaled $63.6 million in the second quarter of 1996, compared with
$30.9 million in the second quarter of 1995. For the six months, such sales
totaled $99.9 million in 1996, compared with $60.5 million in 1995. Higher
mutual fund sales in the 1996 periods reflect the combined effects of
additional advertising, the favorable performance records of certain of the
Company's mutual funds and heightened demand for equity investments,
principally as a result of improved market performance. Redemptions of mutual
funds, excluding redemptions of money market accounts, amounted to $102.1
million in the second quarter of 1996, compared with $109.9 million in the
second quarter of 1995. For the six months, such redemptions amounted to $199.6
million in 1996 and $250.4 million in 1995.
NET RETAINED COMMISSIONS are primarily derived from commissions on the
sales of nonproprietary investment products by the Company's broker-dealer
subsidiary, after deducting the substantial portion of such commissions that
is passed on to registered representatives. Net retained commissions totaled
$8.0 million in the second quarter of 1996 and $5.3 million in the second
quarter of 1995. For the six months, net retained commissions totaled $14.3
million in 1996 compared with $10.0 million in 1995. Broker-dealer sales
(mainly sales of general securities, mutual funds and annuities) totaled $2.57
billion in the second quarter of 1996 and $1.43 billion in the second quarter
of 1995. For the six months, such sales totaled $4.32 billion in 1996 and
$2.42 billion in 1995. The significant increases in sales and net retained
commissions during the 1996 periods reflect a greater number of registered
representatives and higher average production. Sales in 1996 also reflect
generally favorable market conditions. Increases in net retained commissions
are not proportionate to increases in sales primarily due to differences in
sales mix.
SURRENDER CHARGES on fixed and variable annuities totaled $1.2 million
in the second quarter of 1996 and $1.9 million in the second quarter of 1995.
For the six months, surrender charges totaled $2.4 million in 1996 and $3.4
million in 1995. Surrender charges generally are assessed on annuity
withdrawals at declining rates during the first five to seven years of the
contract. Withdrawal payments, which include surrenders and lump-sum annuity
benefits, totaled $223.6 million in the second quarter of 1996 and $235.6
million in the second quarter of 1995. Annualized, these payments represent
12.6% and 16.2%, respectively, of average fixed and variable annuity reserves.
for the six months, withdrawal payments totaled $438.8 million in 1996 and
12
<PAGE>
$448.1 million in 1995, and annualized, represent 12.7% and 15.4%,
respectively, of average fixed and variable annuity reserves. Withdrawals
include variable annuity payments from the separate accounts totaling $151.8
million in the second quarter of 1996 and $159.9 million in the second quarter
of 1995, $306.3 million in the six months of 1996 and $302.7 million in the six
months of 1995. Although variable annuity surrenders have increased slightly
for the six months, principally as a result of growth in the variable annuity
separate accounts, variable annuity withdrawal rates have declined due to the
success of the Company's retention efforts. Variable annuity surrenders
represent 10.9% and 14.5%, respectively, of average variable annuity
liabilities in the second quarter of 1996 and the second quarter of 1995. For
the six months, variable annuity surrenders represent 11.3% and 13.7%,
respectively, of average variable annuity liabilities in 1996 and 1995. The
declines in fixed annuity surrenders to $71.8 million in the second quarter of
1996 from $75.7 million in the second quarter of 1995 and $132.4 million for
the six months of 1996 from $145.4 million for the six months of 1995 results
primarily from unusually high surrenders in 1995 principally due to policies
coming off surrender charge restrictions and a greater volume of surrenders on
a closed block of business in 1995. Management anticipates that withdrawal
rates will remain relatively stable for the foreseeable future and the
Company's investment portfolio has been structured to provide sufficient
liquidity for anticipated withdrawals.
GENERAL AND ADMINISTRATIVE EXPENSES totaled $18.3 million in the second
quarter of 1996, compared with $13.0 million in the second quarter of 1995.
For the six months, general and administrative expenses totaled $35.3 million
in 1996, compared with $25.7 million in 1995. General and administrative
expenses in 1996 include expenses related to a national advertising campaign,
as well as additional administrative expenses relating to a growing block of
business. General and administrative expenses remain closely controlled
through a company-wide cost containment program and represent approximately 1%
of average total assets.
AMORTIZATION OF DEFERRED ACQUISITION COSTS totaled $12.9 million in the
second quarter of 1996 and $12.0 million in the second quarter of 1995. For
the six months, such amortization totaled $25.7 million in 1996 and $24.0
million in 1995. This increase was primarily due to additional fixed and
variable annuity and mutual fund sales and the subsequent amortization of
related deferred commissions and other acquisition costs.
INCOME TAX EXPENSE totaled $9.0 million in the second quarter of 1996,
$6.4 million in the second quarter of 1995, $12.4 million in the six months of
1996 and $12.1 million in the six months of 1995, and represented effective tax
rates of 38% in 1996 and 32% in 1995. Tax rates are higher in 1996 than 1995
because a larger proportion of the total income was from subsidiaries located
in states with higher income tax rates.
FINANCIAL CONDITION AND LIQUIDITY
SHAREHOLDER'S EQUITY decreased by $25.2 million to $461.2 million at
March 31, 1996 from $486.4 million at December 31, 1995, primarily as a result
of a $29.4 million dividend paid on March 18, 1996. Shareholder's equity at
March 31, 1996 was also unfavorably impacted by the recording of a $5.1 million
net unrealized loss on debt and equity securities available for sale, which
represents a $10.6 million decline over the $5.5 million net unrealized gain
13
<PAGE>
recorded at December 31, 1995. These decreases were partially offset by the
recording of $14.7 million of net income in the second quarter of 1996.
TOTAL ASSETS increased by $666.0 million to $8.51 billion at March 31,
1996 from $7.84 billion at December 31, 1995, principally due to a $335.8
million increase in invested assets and a $316.1 million increase in the
separate accounts for variable annuities.
INVESTED ASSETS at March 31, 1996 totaled $2.30 billion, compared with
$1.96 billion at December 31, 1995. This $335.8 million increase primarily
resulted from sales of fixed annuities and guaranteed investment contracts
("GICs") and a $84.9 million increase in amounts payable to brokers for
purchases of securities.
The Company manages most of its invested assets internally. The
Company's general investment philosophy is to hold fixed maturity assets for
long-term investment. Thus, it does not have a trading portfolio. Effective
December 1, 1995, pursuant to guidelines issued by the Financial Accounting
Standards Board, the Company determined that all of its portfolio of bonds,
notes and redeemable preferred stocks (the "Bond Portfolio") is available to
be sold in response to changes in market interest rates, changes in prepayment
risk, the Company's need for liquidity and other similar factors. Accordingly,
the Company no longer classifies a portion of its Bond Portfolio as held for
investment.
THE BOND PORTFOLIO had an aggregate amortized cost that exceeded its fair
value by $9.8 million at March 31, 1996. At December 31, 1995, the fair value
of the Bond Portfolio was $14.7 million above its amortized cost. The net
unrealized losses on the Bond Portfolio since December 31, 1995 principally
reflect the higher relative prevailing interest rates at March 31, 1996 and
their corresponding effect on the fair value of the Bond Portfolio.
Approximately $1.80 billion or 99.8% of the Bond Portfolio (at amortized
cost) at March 31, 1996 was rated by Standard and Poor's Corporation ("S&P"),
Moody's Investors Service ("Moody's"), Duff and Phelps Credit Rating Co.
("D&P"), Fitch Investor Service, Inc. ("Fitch") or under comparable statutory
rating guidelines established by the National Association of Insurance
Commissioners ("NAIC") and implemented by either the NAIC or the Company. At
March 31, 1996, approximately $1.65 billion (at amortized cost) was rated
investment grade by one or more of these agencies or under the NAIC guidelines,
including $1.15 billion of U.S. government/agency securities and mortgage-
backed securities ("MBSs").
At March 31, 1996, the Bond Portfolio included $153.7 million (fair
value, $151.0 million) of bonds not rated investment grade by S&P, Moody's,
D&P, Fitch or the NAIC. Based on their March 31, 1996 amortized cost, these
non-investment-grade bonds accounted for 1.80% of the Company's total assets
and 6.65% of invested assets.
Non-investment-grade securities generally provide higher yields and
involve greater risks than investment-grade securities because their issuers
typically are more highly leveraged and more vulnerable to adverse economic
conditions than investment-grade issuers. In addition, the trading market for
these securities is usually more limited than for investment-grade securities.
The Company intends that its holdings of such securities not exceed current
levels, but its policies may change from time to time, including in connection
with any possible acquisition. The Company had no material concentrations of
non-investment-grade securities at March 31, 1996.
14
<PAGE>
<TABLE>
The following table summarizes the Company's rated bonds by rating classification as of March 31, 1996 (dollars in
thousands):
<CAPTION>
Issues not rated by S&P/Moody's/
Issues Rated by S&P/Moody's/D&P/Fitch D&P/Fitch, By NAIC Category Total
- ---------------------------------------------- ----------------------------------- ----------------------------------
S&P/(Moody's)/ Estimated NAIC Estimated Percent of Estimated
[D&P]/{Fitch} Amortized fair category Amortized fair Amortized invested fair
category(1) cost value (2) cost value cost assets(3) value
- --------------- ---------- ---------- -------- ---------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AAA to A-
(Aaa to A3)
[AAA to A-]
{AAA to A-} $1,206,225 $1,197,768 1 $ 177,895 $ 180,012 $ 1,384,120 59.87% $ 1,377,780
BBB+ to BBB-
(Baa1 to Baa3)
[BBB+ to BBB-]
{BBB+ to BBB-} 142,777 143,097 2 120,459 120,114 263,236 11.39 263,211
BB+ to BB-
(Ba1 to Ba3)
[BB+ to BB-]
{BB+ to BB-} 17,348 17,264 3 5,597 5,653 22,945 .99 22,917
B+ to B- (B1 to B3)
[B+ to B-]
{B+ to B-} 73,690 73,135 4 52,026 51,822 125,716 5.44 124,957
CCC+ to C
(Caa to C)
[CCC]
{CCC+ to C-} 4,458 2,520 5 -- -- 4,458 0.19 2,520
C1 to D
[DD]
{D} -- -- 6 628 629 628 0.03 629
---------- ---------- ---------- ---------- ----------- -----------
TOTAL RATED ISSUES $1,444,498 $1,433,784 $ 356,605 $ 358,230 $ 1,801,103 $ 1,792,014
========== ========== ========== ========== =========== ===========
Footnotes appear on the following page.
15
<PAGE>
Footnotes to the table of rated bonds by rating classification
---------------------------------------------------------------
(1) S&P rates debt securities in rating categories ranging from AAA (the highest) to D (in payment default). A plus (+)
or minus (-) indicates the debt's relative standing within the rating category. A security rated BBB- or higher is
considered investment grade. Moody's rates debt securities in rating categories ranging from Aaa (the highest) to
C (extremely poor prospects of ever attaining any real investment standing). The number 1, 2 or 3 (with 1 the highest
and 3 the lowest) indicates the debt's relative standing within the rating category. A security rated Baa3 or higher
is considered investment grade. D&P rates debt securities in rating categories ranging from AAA (the highest) to DD
(in payment default). A plus (+) or minus (-) indicates the debt's relative standing within the rating category.
A security rated BBB- or higher is considered investment grade. Fitch rates debt securities in rating categories
ranging from AAA (the highest) to D (in payment default). A plus (+) or a minus (-) indicates the debt's relative
standing within the rating category. A security rated BBB- or higher is considered investment grade. Issues are
categorized based on the highest of the S&P, Moody's, D&P and Fitch ratings if rated by multiple agencies.
(2) Bonds and short-term promissory instruments are divided into six quality categories for NAIC rating purposes, ranging
from 1 (highest) to 5 (lowest) for nondefaulted bonds plus one category, 6, for bonds in or near default. These six
categories correspond with the S&P/Moody's/D&P/Fitch rating groups listed above, with categories 1 and 2 considered
investment grade. A substantial portion of the assets in the NAIC categories were rated by the Company based on its
implementation of NAIC rating guidelines.
(3) At amortized cost.
</TABLE>
16
<PAGE>
SENIOR SECURED LOANS ("Secured Loans") are included in the Bond
Portfolio and their amortized cost aggregated $132.8 million at March 31, 1996.
Secured Loans are senior to subordinated debt and equity, and are secured by
assets of the issuer. At March 31, 1996, Secured Loans consisted of loans to
37 borrowers spanning 14 industries, with 24.5% of these assets (at amortized
cost) concentrated in the leisure industry and 19.3% in the air transportation
industry. No other industry constituted more than 8% of these assets.
While the trading market for Secured Loans is more limited than for
publicly traded corporate debt issues, management believes that participation
in these transactions has enabled the Company to improve its investment yield.
Although, as a result of restrictive financial covenants, Secured Loans involve
greater risk of technical default than do publicly traded investment-grade
securities, management believes that the risk of loss upon default for its
Secured Loans is mitigated by their financial covenants and senior secured
positions. The Company's Secured Loans are rated by S&P, Moody's, D&P, Fitch
or under comparable statutory rating guidelines established by the NAIC and
implemented by either the NAIC or the Company.
MORTGAGE LOANS aggregated $92.6 million at March 31, 1996 and consisted
of 14 first mortgage loans with an average loan balance of approximately
$6.6 million, collateralized by properties located in 8 states. Approximately
24% of the portfolio was office, 22% was hotel, 18% was retail, 18% was
multifamily residential and 18% was other types. At March 31, 1996,
approximately 22% of the portfolio was secured by properties located in
Colorado, 18% of the portfolio was secured by properties located in New Jersey
and approximately 17% of the portfolio was secured by properties in California.
No more than 13% of the portfolio was secured by properties in any other single
state. At March 31, 1996, there were 4 loans with an outstanding balance of
$10 million or more, the largest of which had a balance of approximately $21
million, which collectively aggregated approximately 64% of the portfolio. At
March 31, 1996, approximately 34% of the mortgage loan portfolio consisted of
loans with balloon payments due before April 1, 1999. At March 31, 1996, loans
delinquent by more than 90 days totaled $1.6 million (1.7% of total mortgages).
There were no loans foreclosed upon and transferred to real estate in the
balance sheet during the six months in 1996. At March 31, 1996, mortgage loans
having an aggregate carrying value of $23.1 million had been restructured. Of
this amount, $16.5 million was restructured during fiscal 1995 and $6.6 million
was restructured during fiscal 1992. No mortgage loans were restructured
during the six months in 1996.
Approximately 65% of the mortgage loans in the portfolio at March 31,
1996 were seasoned loans underwritten to the Company's standards and purchased
at or near par from another financial institution which was downsizing its
portfolio. Such loans generally have higher average interest rates than loans
that could be originated today. The balance of the mortgage loan portfolio has
been originated by the Company under strict underwriting standards. Commercial
mortgage loans on properties such as offices, hotels and shopping centers
generally represent a higher level of risk than do mortgage loans secured by
multifamily residences. This greater risk is due to several factors, including
the larger size of such loans and the effects of general economic conditions
on these commercial properties. However, due to the seasoned nature of the
17
<PAGE>
Company's mortgage loans and its strict underwriting standards, the Company
believes that it has reduced the risk attributable to its mortgage loan
portfolio while maintaining attractive yields.
REAL ESTATE aggregated $40.9 million at March 31, 1996 and consisted of
non-income producing land in the Phoenix, Arizona metropolitan area. Of this
amount, the Company has undertaken to dispose of $28.4 million during the next
year, either to affiliated or nonaffiliated parties; and SunAmerica Inc., the
ultimate parent, has guaranteed that the Company will receive its statutory
carrying value of these assets.
OTHER INVESTED ASSETS aggregated $50.3 million at March 31, 1996,
including $34.7 million of investments in limited partnerships and an aggregate
of $15.6 million of miscellaneous investments, including policy loans, CMO
residuals and leveraged leases. The Company's limited partnership interests
primarily include partnerships, accounted for by using the cost method of
accounting, that invest mainly in equity securities.
ASSET-LIABILITY MATCHING is utilized by the Company to minimize the risks
of interest rate fluctuations and disintermediation. The Company believes that
its fixed-rate liabilities should be backed by a portfolio principally composed
of fixed maturities that generate predictable rates of return. The Company
does not have a specific target rate of return. Instead, its rates of return
vary over time depending on the current interest rate environment, the slope
of the yield curve, the spread at which fixed maturities are priced over the
yield curve and general competitive conditions within the industry. Its
portfolio strategy is designed to achieve adequate risk-adjusted returns
consistent with its investment objectives of effective asset-liability
matching, liquidity and safety.
The Company designs its fixed-rate products and conducts its investment
operations in order to closely match the duration of the assets in its
investment portfolio to its annuity and GIC obligations. The Company seeks to
achieve a predictable spread between what it earns on its assets and what it
pays on its liabilities by investing principally in fixed maturities. The
Company's fixed-rate products incorporate surrender charges or other
limitations on when contracts can be surrendered for cash to encourage
persistency. Approximately 56% of the Company's fixed annuity reserves had
surrender penalties or other restrictions at March 31, 1996.
As part of its asset-liability matching discipline, the Company conducts
detailed computer simulations that model its fixed-maturity assets and
liabilities under commonly used stress-test interest rate scenarios. Based on
the results of these computer simulations, the investment portfolio has been
constructed with a view to maintaining a desired investment spread between the
yield on portfolio assets and the rate paid on its reserves under a variety of
possible future interest rate scenarios. At March 31, 1996, the weighted
average life of the Company's investments was approximately 4.6 years and the
duration was approximately 2.8. Weighted average life is defined as the
average time to receipt of all principal, incorporating the effects of
18
<PAGE>
scheduled amortization and expected prepayments, weighted by book value.
Duration is a common option-adjusted measure for the price sensitivity of a
fixed-income portfolio to changes in interest rates. It is the calculation of
the relative percentage change in market value resulting from small shifts in
interest rates, and recognizes the changes in portfolio cashflows resulting
from embedded options such as prepayments and bond calls.
The Company also seeks to provide liquidity by using reverse repurchase
agreements ("Reverse Repos"), dollar roll transactions ("Dollar Rolls") and by
investing in MBSs. It also seeks to enhance its spread income by using Reverse
Repos and Dollar Rolls. Reverse Repos involve a sale of securities and an
agreement to repurchase the same securities at a later date at an agreed upon
price and are generally over-collateralized. Dollar Rolls are similar to
Reverse Repos except that the repurchase involves securities that are only
substantially the same as the securities sold and the arrangement is not
collateralized, nor is it governed by a repurchase agreement. MBSs are
generally investment-grade securities collateralized by large pools of mortgage
loans. MBSs generally pay principal and interest monthly. The amount of
principal and interest payments may fluctuate as a result of prepayments of the
underlying mortgage loans.
There are risks associated with some of the techniques the Company uses
to provide liquidity, enhance its spread income and match its assets and
liabilities. The primary risk associated with Dollar Rolls and Reverse Repos
is counterparty risk. The Company believes, however, that the counterparties
to its Dollar Rolls and Reverse Repos are financially responsible and that the
counterparty risk associated with those transactions is minimal. Counterparty
risk associated with Dollar Rolls is further mitigated by the Company's
participation in an MBS trading clearinghouse. The sell and buy transactions
that are submitted to this clearinghouse are marked to market on a daily basis
and each participant is required to over-collateralize its net loss position
by 30% with either cash, letters of credit or government securities. The
primary risk associated with MBSs is that a changing interest rate environment
might cause prepayment of the underlying obligations at speeds slower or faster
than anticipated at the time of their purchase.
INVESTED ASSETS EVALUATION routinely includes a review by the Company of
its portfolio of debt securities. Management identifies monthly those
investments that require additional monitoring and carefully reviews the
carrying value of such investments at least quarterly to determine whether
specific investments should be placed on a nonaccrual basis and to determine
declines in value that may be other than temporary. In making these reviews
for bonds, management principally considers the adequacy of collateral (if
any), compliance with contractual covenants, the borrower's recent financial
performance, news reports and other externally generated information concerning
the creditor's affairs. In the case of publicly traded bonds, management also
considers market value quotations, if available. For mortgage loans,
management generally considers information concerning the mortgaged property
and, among other things, factors impacting the current and expected payment
status of the loan and, if available, the current fair value of the underlying
collateral.
19
<PAGE>
The carrying values of bonds that are determined to have declines in
value that are other than temporary are reduced to net realizable value and no
further accruals of interest are made. The valuation allowances on mortgage
loans are based on losses expected by management to be realized on transfers
of mortgage loans to real estate, on the disposition and settlement of mortgage
loans and on mortgage loans that management believes may not be collectible in
full. Accrual of interest is suspended when principal and interest payments
on mortgage loans are past due more than 90 days.
DEFAULTED INVESTMENTS, comprising all investments (at amortized cost)
that are in default as to the payment of principal or interest, totaled $6.6
million at March 31, 1996, including $5.0 million (fair value, $2.8 million)
of bonds and notes and $1.6 million of mortgage loans whose fair value was
equal to their amortized cost. At March 31, 1996, defaulted investments
constituted 0.3% of total invested assets at amortized cost. At December 31,
1995, defaulted investments totaled $5.0 million which constituted 0.3% of
total invested assets at amortized cost.
SOURCES OF LIQUIDITY are readily available to the Company in the form of
existing cash and short-term investments, Reverse Repo capacity on invested
assets and, if required, proceeds from invested asset sales. At March 31,
1996, approximately $919.3 million of the Company's Bond Portfolio had an
aggregate unrealized gain of $18.9 million, while approximately $876.2 million
of the Bond Portfolio had an aggregate unrealized loss of $28.7 million. In
addition, the Company's investment portfolio also currently provides
approximately $19.8 million of monthly cash flow from scheduled principal and
interest payments.
Management is aware that prevailing market interest rates may shift
significantly and has strategies in place to manage either an increase or
decrease in prevailing rates. In a rising interest rate environment, the
Company's average cost of funds would increase over time as it prices its new
and renewing annuities and GICs to maintain a generally competitive market
rate. Management would seek to place new funds in investments that were
matched in duration to, and higher yielding than, the liabilities assumed. The
Company believes that liquidity to fund withdrawals would be available through
incoming cash flow, the sale of short-term or floating-rate instruments or
Reverse Repos on the Company's substantial MBS segment of the Bond Portfolio,
thereby avoiding the sale of fixed-rate assets in an unfavorable bond market.
In a declining rate environment, the Company's cost of funds would
decrease over time, reflecting lower interest crediting rates on its fixed
annuities and GICs. Should increased liquidity be required for withdrawals,
the Company believes that a significant portion of its investments could be
sold without adverse consequences in light of the general strengthening that
would be expected in the bond market.
20
<PAGE>
REGULATION
The Company is subject to regulation and supervision by the states in
which it is authorized to transact business. State insurance laws establish
supervisory agencies with broad administrative and supervisory powers related
to granting and revoking licenses to transact business, regulating marketing
and other trade practices, operating guaranty associations, licensing agents,
approving policy forms, regulating certain premium rates, regulating insurance
holding company systems, establishing reserve requirements, prescribing the
form and content of required financial statements and reports, performing
financial and other examinations, determining the reasonableness and adequacy
of statutory capital and surplus, regulating the type and amount of investments
permitted, limiting the amount of dividends that can be paid and the size of
transactions that can be consummated without first obtaining regulatory
approval and other related matters.
During the last decade, the insurance regulatory framework has been
placed under increased scrutiny by various states, the federal government and
the NAIC. Various states have considered or enacted legislation that changes,
and in many cases increases, the states' authority to regulate insurance
companies. Legislation has been introduced from time to time in Congress that
could result in the federal government assuming some role in the regulation of
insurance companies. In recent years, the NAIC has approved and recommended
to the states for adoption and implementation several regulatory initiatives
designed to reduce the risk of insurance company insolvencies. These
initiatives include new investment reserve requirements, risk-based capital
standards and restrictions on an insurance company's ability to pay dividends
to its stockholders. The NAIC is also currently developing model laws to
govern insurance company investments. Current proposals are still being
debated and the Company is monitoring developments in this area and the effects
any changes would have on the Company.
SunAmerica Asset Management Corp. is registered with the Securities and
Exchange Commission (the "Commission") as a registered investment adviser under
the Investment Advisers Act of 1940. The mutual funds that it markets are
subject to regulation under the Investment Company Act of 1940. SunAmerica
Asset Management and the mutual funds are subject to regulation and examination
by the Commission. In addition, variable annuities and the related separate
accounts of the Company are subject to regulation by the Commission under the
Securities Act of 1933 and the Investment Company Act of 1940.
The Company's broker-dealer subsidiary is subject to regulation and
supervision by the states in which it transacts business, as well as by the
National Association of Securities Dealers, Inc. (the "NASD"). The NASD has
broad administrative and supervisory powers relative to all aspects of business
and may examine the subsidiary's business and accounts at any time.
21
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders
----------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
The Company received approvals from the State of California Department of
Insurance and the Arizona Department of Insurance to redomesticate to the state
of Arizona effective January 1, 1996.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
EXHIBITS
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
No Current Report on Form 8-K was filed during the three months ended March 31,
1996.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
Date: May 14, 1996 By:/s/ SCOTT L. ROBINSON
- ----------------------- ------------------------
Scott L. Robinson
Senior Vice President and Director
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ SCOTT L. ROBINSON Senior Vice President and May 14, 1996
- ------------------------ Director (Principal Financial ------------
Scott L. Robinson Officer)
/s/ N. SCOTT GILLIS Senior Vice President and May 14, 1996
- ------------------------ Controller (Principal ------------
N. Scott Gillis Accounting Officer)
23
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
LIST OF EXHIBITS FILED
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND INCOME STATEMENT OF ANCHOR NATIONAL LIFE
INSURANCE COMPANY'S FORM 10-Q FOR THE SIX MONTHS ENDED MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 1,795,516,000
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 3,209,000
<MORTGAGE> 92,599,000
<REAL-ESTATE> 40,899,000
<TOTAL-INVEST> 2,300,200,000
<CASH> 317,691,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 411,208,000
<TOTAL-ASSETS> 8,510,381,000
<POLICY-LOSSES> 2,036,239,000
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 53,866,000
<COMMON> 3,511,000
0
0
<OTHER-SE> 457,720,000
<TOTAL-LIABILITY-AND-EQUITY> 8,510,381,000
0
<INVESTMENT-INCOME> 76,151,000
<INVESTMENT-GAINS> (10,763,000)
<OTHER-INCOME> 76,615,000
<BENEFITS> 47,383,000
<UNDERWRITING-AMORTIZATION> 25,746,000
<UNDERWRITING-OTHER> (593,000)
<INCOME-PRETAX> 32,971,000
<INCOME-TAX> 12,403,000
<INCOME-CONTINUING> 20,568,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,568,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
